Latest / The Financial Exchange Show / How will Trump respond to the deal between India and the EU?

Transcript

How will Trump respond to the deal between India and the EU? · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:03
Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
0:05
Speaker 1: registered investment advisor. All opinions expressed are solely those of
0:09
Speaker 1: the hosts. Do not reflect the opinions of Armstrong Advisory
0:11
Speaker 1: or anyone else. Investments can lose money. This program does
0:14
Speaker 1: not offer any specific financial or investment advice. Please consult
0:18
Speaker 1: your own financial, tax, and estate planning advisors before making
0:20
Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
0:24
Speaker 1: this program do not endorse each other or their services.
0:26
Speaker 1: Armstrong and Money Matters Radio do not compensate each other
0:29
Speaker 1: for referrals and are not affiliated. This is the Financial
0:34
Speaker 1: Exchange with Mike Armstrong and Paul Lane, your exclusive look
0:39
Speaker 1: at business and financial news affecting your day, your city,
0:43
Speaker 1: your world. Stay informed and up to date about economic
0:46
Speaker 1: and market trends plus breaking business news every day. The
0:50
Speaker 1: Financial Exchange is a proud partner of the Disabled American
0:54
Speaker 1: Veterans Department of Massachusetts. Help us support our great American
0:58
Speaker 1: heroes by visiting dav I dot Boston and making a
1:02
Speaker 1: donation today. This is the Financial Exchange with Mike Armstrong
1:07
Speaker 1: and Paul Lane.
1:09
Speaker 2: Good morning, Happy Tuesday, Welcome back to the Financial Exchange.
1:14
Speaker 2: It's Mike, Paul and Tucker with you on a busy week.
1:18
Speaker 2: We've got a FED meeting tomorrow. We've got earnings coming
1:20
Speaker 2: out all this week. United Healthcare, raytheon, Boeing all reported
1:25
Speaker 2: earnings this morning. Tomorrow, we'll hear from Microsoft Meta Tesla
1:29
Speaker 2: after the bell. Thursday, we'll be hearing from Apple Visa MasterCard.
1:34
Speaker 2: So a busy week for both earnings and economic news
1:39
Speaker 2: to digest. And interesting market so far and trading this morning,
1:42
Speaker 2: as the Dow is off about three quarters of a percent,
1:45
Speaker 2: whereas the Nasdaq is up by one full percentage points
1:48
Speaker 2: among the other movers out there, Dow being dragged down
1:52
Speaker 2: by United Healthcare, whose stock is off nineteen and a
1:55
Speaker 2: quarter percent this morning. That follows an announcement from the
1:59
Speaker 2: Trump administration that reimbursement to insurance companies for Medicare plans
2:05
Speaker 2: would be increasing twenty twenty seven by only zero point
2:09
Speaker 2: zero nine percent. Investors and executives at those health insurance
2:13
Speaker 2: had been expecting reimbursements to increase four to six percent.
2:17
Speaker 2: So effectively, what you have is health insurance. Specifically those
2:22
Speaker 2: who have been making a growth play in the medicare
2:26
Speaker 2: advantage plan space getting absolutely crushed today, with United Healthcare
2:31
Speaker 2: down over nineteen percent, Humana at last lookdown twenty percent,
2:34
Speaker 2: and CVS Health off about ten and a half percent.
2:37
Speaker 2: The likely outcome for all of this, in addition to
2:39
Speaker 2: the stocks getting clobbered today, is all of those companies
2:42
Speaker 2: and others taking a good hard look at their medicare
2:45
Speaker 2: advantage businesses trying to figure out which ones are not
2:48
Speaker 2: terribly profitable for them, exiting some of those markets in
2:51
Speaker 2: all likelihood, as well as cutting back on benefits for
2:55
Speaker 2: beneficiaries of those plans come twenty twenty seven. But a
2:58
Speaker 2: lot of time for them to plan that game out
3:00
Speaker 2: in the meantime their stocks getting absolutely clobbered in early
3:03
Speaker 2: trading today.
3:04
Speaker 3: Yeah, and it seems like there could be some adjustment
3:06
Speaker 3: on that final number there in terms of the cost increase,
3:09
Speaker 3: but it's going to certainly be way less than anticipated.
3:12
Speaker 2: I suppose that's an interesting point that I hadn't even considered.
3:15
Speaker 2: You know, the President Trump himself is famous for throwing
3:18
Speaker 2: out numbers that obviously shake things up quite a bit
3:22
Speaker 2: before going to the negotiating table, and kind of reshuffling
3:25
Speaker 2: the deck there, and it is quite possible that in
3:28
Speaker 2: spite of me taking this new seriously, investors clearly taking
3:30
Speaker 2: it seriously that no, it's as starting negotiating point, and
3:33
Speaker 2: we could see further changes there. But you know, net
3:37
Speaker 2: what I would would anticipate in this case is further
3:41
Speaker 2: changes to how those plans work, but ultimately, you know,
3:46
Speaker 2: perhaps a positive step in the right direction for cost control.
3:49
Speaker 2: I know nobody really likes to hear that, especially on
3:51
Speaker 2: the medicare side of things, But if we're all going
3:56
Speaker 2: to constantly complain about the cost of health care health
3:59
Speaker 2: and insurance we're seeing you know, Affordable Care Act premiums
4:03
Speaker 2: obviously skyrocket this year, then somebody is going to get
4:08
Speaker 2: hurt in all of this. Either the government is going
4:11
Speaker 2: to play a larger role in paying the bills and
4:14
Speaker 2: absorbing those costs and either running up the deficit or
4:17
Speaker 2: passing it along in some other way. Insurers are going
4:20
Speaker 2: to take a hit to profit margins like we're seeing
4:22
Speaker 2: play out in stocks today, or insurance are going to
4:27
Speaker 2: see higher costs through higher premiums and or lower reimbursements
4:31
Speaker 2: for the care that they are provided. So there is
4:35
Speaker 2: no easy fix to the health insurance system. And as
4:37
Speaker 2: much as I and others like to complain about the
4:40
Speaker 2: businesses of United health Care and others, and I'm not
4:42
Speaker 2: saying there there is plenty to complain about with how
4:45
Speaker 2: how they conduct their businesses, They're not ultimately the full
4:49
Speaker 2: ones to blame there. There are plenty of others who are,
4:53
Speaker 2: you know, causing the cost of healthcare in the United
4:56
Speaker 2: States to be delivered at an extremely high price.
4:58
Speaker 3: Yeah, just look at the pharmacy marriage. We could go
5:02
Speaker 3: on and on.
5:03
Speaker 2: Big text borrowing spree raises fears of AI risks in
5:07
Speaker 2: the US bond market. There's a piece from the Financial
5:09
Speaker 2: Times today and it's speaking specifically about what is anticipated
5:13
Speaker 2: from major companies and they're borrowing over the course of
5:17
Speaker 2: the next few years to build out this AI infrastructure.
5:20
Speaker 2: And I don't think any of us have a real
5:23
Speaker 2: great idea of what this looks like. But it is
5:26
Speaker 2: also seemingly safe to say that companies are about to
5:30
Speaker 2: embark on a pretty big borrowing spree, meaning issuing new
5:34
Speaker 2: debt out in public and private markets. And so again,
5:38
Speaker 2: you know, just taking this on the surface, if there
5:42
Speaker 2: is a bunch of new debt that enters the market
5:44
Speaker 2: over the course of the next five years in order
5:46
Speaker 2: to build all this out, supply and demand here, supply
5:51
Speaker 2: of new debt goes up, price likely comes down if
5:55
Speaker 2: demand does not increase, meaning interest rates maybe need to
5:58
Speaker 2: go up in order to facilitate something if it's genuinely
6:01
Speaker 2: that large at scale.
6:03
Speaker 3: Yeah, it's interesting the corporate bond market for those who
6:06
Speaker 3: are not familiar, it's companies going out there and issuing
6:09
Speaker 3: debt and then paying a rate of interest for the
6:11
Speaker 3: bondholder to provide that capital over a period of time.
6:14
Speaker 3: For the most part, very broadly speaking, it's usually telecoms
6:18
Speaker 3: and financial companies that are the ones issuing this debt.
6:21
Speaker 3: Not entirely, but they tend to be some of the
6:23
Speaker 3: bigger players. But as outlined here, it seems like, and
6:27
Speaker 3: this has been not something that has been a trend
6:30
Speaker 3: for the last few years, that some of these big
6:33
Speaker 3: tech companies like Microsoft and Oracle and Google and others
6:37
Speaker 3: will be more frequently issuing debt on these corporate bond
6:42
Speaker 3: investment grade raises here throughout the United States, And it
6:47
Speaker 3: is important to note that even though a lot of
6:50
Speaker 3: this is to finance the AI build out, of these businesses.
6:54
Speaker 3: The balance sheets of these companies differ greatly from some
6:58
Speaker 3: of these telecom and financial companies out there where there
7:01
Speaker 3: is tremendous amount of cash reserves on there and a
7:04
Speaker 3: lot of free cash flow that's generated. But still it
7:06
Speaker 3: is noteworthy that this shift, it is seismic in terms
7:10
Speaker 3: of the numbers that you're seeing from an issuance perspective.
7:12
Speaker 3: You're talking about these big hyperscalers issuing forty four billion
7:15
Speaker 3: dollars of debt in twenty twenty four, on the corporate
7:18
Speaker 3: bar markets one hundred and seventy billion and twenty twenty five,
7:21
Speaker 3: and Morgan staling projects over four hundred billion in twenty
7:25
Speaker 3: twenty six, so a ten x in a two year
7:28
Speaker 3: period from twenty four to twenty twenty six.
7:31
Speaker 2: A related issue on the AI side of things, did
7:34
Speaker 2: you happen to see commentary from Satynadella at Davos on
7:39
Speaker 2: just energy scarcity and you know what they're doing on AI.
7:43
Speaker 2: So it was on a panel in talking about AI
7:45
Speaker 2: with Larry Fink, the CEO of black Rock and Satinidella
7:49
Speaker 2: talking about all of this and an interesting comment again
7:52
Speaker 2: from the CEO of a company who while they have
7:56
Speaker 2: spent boatloads of money on artificial intelligence. I definitely do
8:00
Speaker 2: not point to them and say that they have any
8:02
Speaker 2: leadership in customer facing tools on artificial intelligence. By all
8:06
Speaker 2: accounts there Copilot has been a pretty messy rollout and
8:11
Speaker 2: not getting a ton of adoption and seeing some drawbacks.
8:15
Speaker 2: Gemini and chat GPT remain at the kind of top
8:18
Speaker 2: of that discussion, I think when it comes to most
8:21
Speaker 2: usable tools that are out there. But his quote here,
8:24
Speaker 2: and I'll just read he's referring to tokens and tokens
8:28
Speaker 2: referring to AI build out. But we will quickly lose
8:32
Speaker 2: even the social permission to actually take something like energy,
8:35
Speaker 2: which is a scarce resource, and use it to generate
8:38
Speaker 2: these tokens. If these tokens are not improving health outcomes,
8:41
Speaker 2: education outcomes, public sector efficiency, private sector competitiveness across all
8:45
Speaker 2: sectors small and large. And I think that is a
8:49
Speaker 2: under discussed topic of this. This endeavor that they are
8:55
Speaker 2: going on is by its very nature, you are spending
8:59
Speaker 2: a boatload of energy, you are driving up utility costs
9:03
Speaker 2: for consumers across the globe. And to this point, it
9:07
Speaker 2: is really tough to point to anything in this stuff
9:10
Speaker 2: that has had a public benefit of any sort. I mean, yes,
9:14
Speaker 2: everybody out there can use Gemini for free, but does
9:17
Speaker 2: anybody look at and say that's improved my life to
9:20
Speaker 2: this point? And so I just found that comment to
9:23
Speaker 2: be interesting coming from one of the CEOs that is
9:26
Speaker 2: most plugged into the development of artificial intelligence and also
9:31
Speaker 2: very much trying to play catchup.
9:32
Speaker 3: Also funny that Microsoft, within the last fifteen hours it
9:36
Speaker 3: came out that they have fifteen more data centers that
9:39
Speaker 3: want approval at the former Wisconsin fox Con site. So
9:42
Speaker 3: maybe a little bit of a political pandering with some
9:45
Speaker 3: of that contary there. And to be fair, you mentioned
9:48
Speaker 3: that like they're not tied into Gemini, some of the
9:50
Speaker 3: big players, they've got a twenty eight percent stake in
9:52
Speaker 3: open ai, so they are you know, they've invested not
9:57
Speaker 3: a you know, backbreaking for them amount of money, but
10:01
Speaker 3: a significant sum in the fortunes of open ai, so
10:05
Speaker 3: that they have certainly in the space.
10:07
Speaker 2: I just think, you know, I think back to my
10:08
Speaker 2: own commentary from the course of the last three years
10:11
Speaker 2: and when I when I looked at the landscape of
10:15
Speaker 2: current big tech companies that with these tools being created,
10:20
Speaker 2: would seemingly have a very willing customer base, and Microsoft
10:24
Speaker 2: was my top of the list, right right, Like, if
10:25
Speaker 2: you can help me build a PowerPoint slide with AI
10:28
Speaker 2: and make it actually usable and functional, or write a
10:31
Speaker 2: formula and accel because I don't know how to write macros,
10:34
Speaker 2: or you know, edit a word document in a more seeming,
10:38
Speaker 2: you know, seamless fashion using AI. I looked at that
10:41
Speaker 2: and said, Wow, what low hanging fruit here. They can
10:43
Speaker 2: integrate these tools directly into their products, and I would
10:46
Speaker 2: pay more for them.
10:47
Speaker 3: Right.
10:47
Speaker 2: They haven't done that.
10:48
Speaker 3: No, Microsoft Office, it doesn't seem like has evolved that
10:51
Speaker 3: much over the last ten or fifteen years.
10:54
Speaker 2: But even the specifically the last three right, no evolution
10:57
Speaker 2: of the last three.
10:57
Speaker 3: Yeah.
10:58
Speaker 2: And if you I guess, I guess Outlook would be
11:01
Speaker 2: the one area where you can point to you to say, yeah,
11:03
Speaker 2: there's been some pretty significant changes on the outlook with
11:06
Speaker 2: the copilot ad in there.
11:09
Speaker 3: Yeah, but does it change the way you do email?
11:12
Speaker 3: You've writ emails or receive emails over the last three years.
11:15
Speaker 1: No.
11:16
Speaker 3: I feel like if someone came out of retirement who
11:18
Speaker 3: had stopped working in twenty eighteen and came back and
11:21
Speaker 3: looked at Microsoft just specifically the tools. They wouldn't be
11:24
Speaker 3: that lost in terms of what's changed there.
11:27
Speaker 2: Let's take a quick break. When we come back a
11:29
Speaker 2: little bit. Trivia's next on the Financial Exchange.
11:31
Speaker 1: The Financial Exchange is now available every day from eleven
11:34
Speaker 1: to noon non Serious XMS Business Radio Channel one thirty two.
11:38
Speaker 1: Stay informed about the latest from Wall Street, fiscal policy,
11:41
Speaker 1: and breaking business news. Every day. The Financial Exchange is
11:45
Speaker 1: life on Serious XMS Business Radio Channel one thirty two.
11:48
Speaker 1: This is the Financial Exchange Radio Network. Find daily interviews
11:53
Speaker 1: and full shows of the Financial Exchange on our YouTube page.
11:57
Speaker 1: Subscribe to our page and get caught up on anything
12:00
Speaker 1: and everything you might have missed. This is the Financial
12:03
Speaker 1: Exchange Radio Network.
12:11
Speaker 4: This segment of the Financial Exchange is brought to by
12:13
Speaker 4: the US Virgin Islands Department of Tourism. Experience America's Caribbean
12:18
Speaker 4: fall naturally in rhythm with the heartbeat of the islands
12:20
Speaker 4: while enjoying incredible beaches, a world class cuisine, and unforgettable sunsets.
12:25
Speaker 4: The weather is perfect all year rounds. I had to
12:27
Speaker 4: visit USBI dot com and book your trip to Saint Croix,
12:31
Speaker 4: Saint Thomas or Saint John. Enjoy one und all three
12:34
Speaker 4: and enjoy the vacation of a lifetime. The USVII is
12:37
Speaker 4: America's Caribbean paradise. Plan your winter escape now at visit
12:41
Speaker 4: USVII dot com. That's visit USVII dot com. And boy
12:47
Speaker 4: do I want to escape? Time for trivia here on
12:50
Speaker 4: the Financial Exchange and on this day. In nineteen eighty four,
12:53
Speaker 4: Michael Jackson suffered serious second and third degree burns to
12:57
Speaker 4: his scalp when pyrotechnics loaded prematurely during the filming of
13:02
Speaker 4: a commercial. Despite the accident, the commercial was eventually completed
13:06
Speaker 4: and aired. So trivia question today, Michael Jackson suffered serious
13:11
Speaker 4: scalp burns after his hair caught fire while filming a
13:15
Speaker 4: commercial for which company? Once again, Michael Jackson suffered serious
13:19
Speaker 4: scalp burns after his hair caught fire while filming a
13:23
Speaker 4: commercial for which company? Be the fifth person today that
13:28
Speaker 4: text us at six one seven three six two thirteen
13:31
Speaker 4: eighty five with correct answer along with keyword trivia, and
13:34
Speaker 4: you win a Financial Exchange Show T shirt once again.
13:37
Speaker 4: The fifth correct response to Texas to the number six
13:40
Speaker 4: one seven three six two thirteen eighty five with the
13:43
Speaker 4: correct answer along with keyword trivia. We'll win that T shirt.
13:47
Speaker 4: See complete contest rules at Financial Exchange Show dot com.
13:52
Speaker 2: European Union and India have inked a free trade agreement,
13:56
Speaker 2: calling it the mother of all deals between India and
13:59
Speaker 2: the European Union, the largest democracy in the world. As
14:03
Speaker 2: a reminder, the deal, you know, specifics are still a
14:08
Speaker 2: little bit scamp, but we do know that it's a
14:10
Speaker 2: pretty large free trade agreement. There are some specific exemptions
14:14
Speaker 2: to industries that both yeah, sorry not countries, both the
14:18
Speaker 2: European Union and India are interested in still protecting, but
14:23
Speaker 2: a lot more in the way of goods to flow
14:25
Speaker 2: freely between these two blocks. The obvious backdrop to all
14:30
Speaker 2: of this, I think is the war in Russia, war
14:34
Speaker 2: in Ukraine. India for the last several years has continued
14:38
Speaker 2: to buy Russian oil. The US sanctioned them and and
14:43
Speaker 2: you know, threatened imposed tariffs on both the European Union,
14:47
Speaker 2: the European Union and India trying to incentivize a little
14:50
Speaker 2: bit more action on those fronts, and this deal seems
14:55
Speaker 2: to run in the face of that to some degree.
14:58
Speaker 2: We've talked at length about you know, India at its
15:01
Speaker 2: own interests, and this deal quite potentially is pretty historic
15:06
Speaker 2: and significant. But it does raise a lot of questions
15:09
Speaker 2: to me about the European Union and just what exactly
15:11
Speaker 2: they prioritize at this point. The quote from Scott Bessen,
15:15
Speaker 2: Treasury Secretary on Sunday ABC News Sunday, the US has
15:19
Speaker 2: made much bigger sacrifices than Europeans have. We put twenty
15:22
Speaker 2: five percent tariffs on India for buying Russian oil. Guess
15:25
Speaker 2: what happened last week, The Europeans signed a trade deal
15:28
Speaker 2: with India. It is a very interesting backdrop to all this.
15:32
Speaker 3: Yeah, it seems like a little bit of playing both
15:34
Speaker 3: sides defence on India's part.
15:37
Speaker 2: Yeah, I mean, look, I think India loves this idea.
15:42
Speaker 2: They can continue to buy Russian oil if they so choose,
15:44
Speaker 2: and now have a new trading partner in the European
15:48
Speaker 2: Union where they can export a lot of goods to
15:51
Speaker 2: at a pretty cheap price, maybe open up some of
15:54
Speaker 2: their car companies and tech firms to the block. So
15:58
Speaker 2: I think there's some pretty big incentives there on the
16:02
Speaker 2: European Union side of things. Obviously, one of the fastest
16:05
Speaker 2: growing popularly or perhaps the fastest growing population in the world,
16:08
Speaker 2: not not quite but one of the largest and faster
16:11
Speaker 2: growing populations out there and is Indian at the largest
16:15
Speaker 2: populated country in the world. I think they surpassed China
16:17
Speaker 2: last year. In any case, you can see the potential
16:21
Speaker 2: incentives there. But I think Besson's point is a salient one.
16:25
Speaker 2: Like yes, by the way, it is, okay, it was
16:28
Speaker 2: correct for once. It's a salient one. Right. You have
16:32
Speaker 2: a war going on in your doorstep, you have a
16:35
Speaker 2: big push from the United States to you fund that war,
16:38
Speaker 2: better beef up NATO. And in the meantime, you are
16:41
Speaker 2: inking a trade deal with a country who has, under
16:44
Speaker 2: no uncertainty terms, propped up the Russian government too. Again,
16:48
Speaker 2: you know, are they fully propping up the Russian government
16:50
Speaker 2: by buying their oil? No, of course not. They have
16:52
Speaker 2: multiple other funding sources. But how does that exactly jive
16:58
Speaker 2: with voters? How do people feel about that? I think
17:00
Speaker 2: it's an interesting question. But ultimately, you know, whether it's
17:03
Speaker 2: this story or the new story we covered last week
17:06
Speaker 2: with you know, ties increasing between China and Canada, that
17:09
Speaker 2: is the risk that we run in the United States
17:12
Speaker 2: of this combative stance we have on trade. Is the
17:16
Speaker 2: European Union, India both felt probably threatened from the US
17:20
Speaker 2: stance on trade, from US swinging our weight around and said, Okay,
17:25
Speaker 2: if that trade relationship is going to be volatile for
17:27
Speaker 2: the foreseeable future, where do I replace that with? In
17:31
Speaker 2: order to make sure that my companies who employ the
17:33
Speaker 2: majority of my people have somebody to sell their goods to.
17:37
Speaker 3: Right the de globalization and then you know other nations
17:41
Speaker 3: teaming up together to avoid US volatility. It seems like
17:45
Speaker 3: that's part of it here. I love the Mother of
17:47
Speaker 3: all deals things. It seems like ripping out a page
17:50
Speaker 3: of Trump's book for that was the European Commissioner President
17:53
Speaker 3: Ursula von der Lane coming up with that quote. It
17:57
Speaker 3: seems like every every deal now needs a little one
18:00
Speaker 3: liner with it.
18:01
Speaker 2: Big beautiful bill, the Oba the Mother of all deals. Yeah,
18:05
Speaker 2: it does seem that way. A bit gold continues to
18:09
Speaker 2: be in the news as the dollar sinks to a
18:11
Speaker 2: new four month low. Gold recently stored above five thousand
18:15
Speaker 2: dollars in ounce. Perhaps a bit related here with the
18:18
Speaker 2: US dollar today moving lower against the euro, lower against
18:23
Speaker 2: the Japanese yen, lower against the pound, and lower against
18:27
Speaker 2: actually up against the Australian dollar. So there's that, but
18:30
Speaker 2: generally the US dollar moving lower pretty substantially as the
18:34
Speaker 2: FED meeting comes into focus, and perhaps some pressure from
18:37
Speaker 2: this European Union Indian trade deal as well. Again, the
18:41
Speaker 2: relationship between the dollar and gold is not one which
18:45
Speaker 2: is unique to the United States. You are seeing gold
18:48
Speaker 2: appreciate in every major currency out there, so that piece
18:51
Speaker 2: isn'to unique. But the US dollar has certainly weakened pretty
18:55
Speaker 2: substantially against, for instance, the Euro over the course of
18:59
Speaker 2: the last year and a half, as well as baskets
19:02
Speaker 2: of other currencies, and at this point the dollar against
19:06
Speaker 2: the Euro is training at the lowest level it has
19:08
Speaker 2: now since July of twenty twenty one. So that's again
19:13
Speaker 2: a pretty significant move and certainly makes American manufactured goods
19:17
Speaker 2: look more attractive. But honestly, we're just not the manufacturing
19:20
Speaker 2: powerhouse that we were sixty years ago. Maybe this moves
19:24
Speaker 2: us in the right direction on that.
19:25
Speaker 3: Combined quite a year for commodities over the last year
19:27
Speaker 3: or two.
19:28
Speaker 2: Quick break, We're gonna have Wall Street watching the trivia
19:31
Speaker 2: winner when we return.
19:41
Speaker 1: Bringing the latest financial news straight to your radio. Every day,
19:45
Speaker 1: it's the Financial Exchange on the Financial Exchange Radio Network
19:51
Speaker 1: Time Now for Wall Street watch a complete look at
19:54
Speaker 1: what's moving market so far today right here on the
19:58
Speaker 1: Financial Exchange Radio.
19:59
Speaker 4: Network their mix as Wall Street prepares for a FED
20:02
Speaker 4: meeting with the decision on interest rates tomorrow afternoon, in
20:05
Speaker 4: addition two big tech earnings. However, the big news on
20:09
Speaker 4: the day is negatively impacting several health insurance stocks. Right now,
20:14
Speaker 4: the Dow is down six ten seven percent, or two
20:17
Speaker 4: hundred and ninety six points, SMB five hundred up half
20:21
Speaker 4: a percent or thirty six points higher, Nasdaq now up
20:24
Speaker 4: over one percent or two hundred and thirty eight points,
20:27
Speaker 4: Rusted two thousand edging higher mostly flat. Ten year treasreeled
20:31
Speaker 4: flat as well at four point two one seven percent,
20:34
Speaker 4: and creude oil up nearly two percent higher, trading at
20:37
Speaker 4: sixty one dollars and seventy eight cents a barrel. Well,
20:40
Speaker 4: the Trump administration floated a proposal to hold Medicare rates
20:44
Speaker 4: almost flat next year, far less than expectations of a
20:48
Speaker 4: four to six percent increase. United Health shares are sinking
20:52
Speaker 4: eighteen percent, Humanis stock tumbling nineteen percent now, and CBS
20:57
Speaker 4: Health shares are down by twelve percent, again, all on
21:01
Speaker 4: that news. Meanwhile, general Motors reported a three point three
21:05
Speaker 4: billion dollar quarterly loss, but still reported better than expected
21:08
Speaker 4: earnings for the previous quarter. The automaker also issued a
21:12
Speaker 4: twenty twenty six outlook that exceeded analyst forecasts. Furthermore, GM
21:16
Speaker 4: upped its quarterly dibdend by twenty percent and announced a
21:20
Speaker 4: six billion dollar buyback program, GM stock rallying nine percent. Elsewhere,
21:25
Speaker 4: Boeing reported stronger than expected fourth quarter revenue and said
21:28
Speaker 4: it was making solid progress with its turnaround plan. Boeing
21:33
Speaker 4: shares are now up one percent on the day. American
21:35
Speaker 4: Airlines down by three percent after the carrier took a
21:38
Speaker 4: three hundred and twenty five million dollar revenue hit from
21:41
Speaker 4: the government shutdown. However, Americans still posted quarterly revenue growth
21:45
Speaker 4: and issued an encouraging annual outlook. And UPS announced it
21:49
Speaker 4: will eliminate an additional thirty thousand operational jobs as it
21:53
Speaker 4: winds down its partnership with Amazon. The cuts come after
21:57
Speaker 4: the company eliminated forty eight thousand in twenty twenty five.
22:02
Speaker 4: Ups yours are rising almost five percent. I'm Tucker Silvan.
22:07
Speaker 4: That is Wallst you're watching. On the previous segment, we
22:09
Speaker 4: asked you the trivia question. Michael Jackson suffered serious scalp
22:13
Speaker 4: burns after his hair caught fire while filming a commercial
22:17
Speaker 4: for which company that would be Pepsi colon from Weymouth,
22:21
Speaker 4: Mass is our winner today taking home a Financial ex
22:24
Speaker 4: Change Show T shirt and we play trivia every day
22:26
Speaker 4: here in the Financial Looks Change. See complete contest rules
22:29
Speaker 4: at Financial Looks chainshow dot com.
22:31
Speaker 2: This is a just a pretty wild market day. I
22:34
Speaker 2: know we're doing radio right now, so you're trying to
22:37
Speaker 2: follow this along as difficult, but there's something out there.
22:40
Speaker 2: You can go look at an S and P five
22:42
Speaker 2: hundred map where it just kind of gives you a
22:44
Speaker 2: graphical view of what's up and what's down and how
22:47
Speaker 2: big are the companies that are up or down for
22:48
Speaker 2: the day. And oftentimes you see, you know, most stuff
22:52
Speaker 2: in the red or most stuff in the green. It
22:53
Speaker 2: is just all over the board today with many companies
22:56
Speaker 2: down by more than one percent, many other companies up
22:59
Speaker 2: by more than one percent. Hence why you've got the
23:01
Speaker 2: weird stuff going on with Nasdaq up a full percentage
23:03
Speaker 2: point today and now down half percent. But a pretty
23:07
Speaker 2: big moving day and not atypical for a busy earnings
23:10
Speaker 2: week either, but just a fascinating map to look at
23:14
Speaker 2: today healthy four A one k's need strong public markets.
23:18
Speaker 2: It's a piece out today from Barons and speaks about
23:23
Speaker 2: the looming changes. Looming gives a negative connotation. It's not
23:28
Speaker 2: all negative, but the pending changes to four A one
23:31
Speaker 2: k's and what they might look like and how they
23:33
Speaker 2: are going to add complexity for investors that are out there.
23:37
Speaker 2: So Paul, maybe we can cover them together. There's obviously
23:40
Speaker 2: been already substantial changes to things like contribution limits wroth
23:44
Speaker 2: for a one k's who can contribute to what? But
23:47
Speaker 2: we're now talking about some other stuff when it comes
23:49
Speaker 2: to how for A one k's work, help me summarize
23:52
Speaker 2: kind of what's being tossed out there as potential new
23:56
Speaker 2: additions and complexities when it comes to people's primary retirement
23:59
Speaker 2: saving vehicle in the US.
24:00
Speaker 3: Yeah, So the biggest thing is going to be the
24:02
Speaker 3: addition of privately held investments within a four on K plan.
24:06
Speaker 3: So for most listeners out there that do participate in
24:08
Speaker 3: a four one K plan, many are by default slotted
24:11
Speaker 3: into these target date funds which will have a certain
24:14
Speaker 3: year that is predicated on when you anticipate you will retire.
24:18
Speaker 3: So for a younger worker just starting out today, it
24:21
Speaker 3: may be twenty seventy or twenty sixty five or something
24:25
Speaker 3: like that, or for someone who's on the precipice of retirement,
24:28
Speaker 3: it may be that they are in the twenty twenty
24:30
Speaker 3: five or the twenty thirty fund. And the way that
24:32
Speaker 3: those funds work, they are a mixture of very broadly speaking,
24:36
Speaker 3: stocks and bonds. All of those instruments within them are
24:40
Speaker 3: publicly held companies as well as publicly issued debt that you, myself, Tucker,
24:46
Speaker 3: anybody could go out and buy shares in these types
24:50
Speaker 3: of companies, particularly on the equity side of things, private
24:53
Speaker 3: equity and venture capital, and some of these other areas
24:57
Speaker 3: are the privatized size of the market. Companies like open
25:01
Speaker 3: ai is a purely private company, where you have SpaceX,
25:05
Speaker 3: a purely private company that even if I wanted to
25:07
Speaker 3: buy in, I'm not able to. And so what they're
25:11
Speaker 3: talking about here is this shift in terms of the
25:13
Speaker 3: invest Act that was packed on passing No. Sumber eleventh
25:16
Speaker 3: to allow for investors to get exposure to those private markets.
25:20
Speaker 3: What are the benefits? Sometimes they can have stronger returns
25:23
Speaker 3: than US public markets, what are the drawbacks lesser liquidity,
25:27
Speaker 3: oftentimes higher cost, and so all of that needs to
25:30
Speaker 3: be sorted out. For years, it's just been the public
25:33
Speaker 3: markets that for one k's have access to. Now they're
25:35
Speaker 3: gradually opening the door into private markets.
25:38
Speaker 2: The other thing that we didn't cover as part of
25:40
Speaker 2: these changes, there's also been the kind of task approval
25:43
Speaker 2: of anuities to be placed into for a one K
25:45
Speaker 2: plans as well. I think the main point that I
25:48
Speaker 2: take away is we're talking about adding some very complex
25:52
Speaker 2: assets into the average Americans for a one K plan.
25:57
Speaker 2: And I say the average American because the average American
25:59
Speaker 2: probably doesn't pay a ton of close attention to the
26:03
Speaker 2: day to day investments in theirfore one K plan. The
26:05
Speaker 2: average American probably hasn't read a prospectus before or would
26:08
Speaker 2: know where to go to look at the expense ratio
26:12
Speaker 2: on a fund. Again, I'm not saying that everybody falls
26:16
Speaker 2: into this camp. I'm talking about the average person. And
26:19
Speaker 2: so I still have some very major questions about the
26:24
Speaker 2: introduction of these products into these into these plans, because
26:28
Speaker 2: if you're going to add complexity, then somebody is going
26:32
Speaker 2: to need to help guide those people through that added complexity.
26:35
Speaker 2: I mean today, Paul, without any of these assets in there,
26:39
Speaker 2: how often do you meet with people who lack a
26:43
Speaker 2: fundamental understanding of why one fund in their four O
26:46
Speaker 2: one K has performed better than another.
26:48
Speaker 3: Oh, I would say the vast overwhelming majority.
26:51
Speaker 2: What percentage of them actually know what percentage of the
26:54
Speaker 2: four on one K is invested in stocks versus bonds?
26:59
Speaker 1: Yeah?
27:00
Speaker 2: Portion of them know what they're paying for their four
27:01
Speaker 2: oh one K.
27:02
Speaker 3: Jeez, that's three percentage?
27:04
Speaker 1: Yeah.
27:05
Speaker 2: Even less so in spite of all of these disclosures
27:08
Speaker 2: that the government requires these companies to provide to their participants,
27:13
Speaker 2: in both of our experiences, very few people have the
27:16
Speaker 2: answers to some very basic questions. And so when you
27:18
Speaker 2: add the complexity of something like private equity into a
27:22
Speaker 2: four oh one K, I'm not saying don't do it.
27:25
Speaker 2: I'm merely saying, plan for some real confusion and misstep
27:29
Speaker 2: if it's not rolled out properly, if you have a
27:32
Speaker 2: four oh one K, a four H three B four
27:35
Speaker 2: fifty seven. Like, there's so many different types of these
27:38
Speaker 2: plans that are out there, depending on whether you work
27:40
Speaker 2: in the private sector, the public sector, a nonprofit. In
27:43
Speaker 2: any case, You're likely faced with dozens of decisions every
27:47
Speaker 2: year on these retirement plans. And I will throw a
27:51
Speaker 2: hand up there to say that even myself in my
27:53
Speaker 2: early career working in finance, I wasn't sure which type
27:56
Speaker 2: of account I should be contributing to at that stage
27:59
Speaker 2: of life. And it can have a meaningful impact on
28:03
Speaker 2: your financial future. If you have questions about your retirement
28:06
Speaker 2: plan and how to be using it most efficiently for
28:10
Speaker 2: the stage of life that you're in, give the folks
28:12
Speaker 2: at Armstrong Advisory Group a call. We sit down with
28:15
Speaker 2: our clients. We work with them directly on customizing their
28:19
Speaker 2: overall financial strategy for their financial future. The numbers eight
28:22
Speaker 2: hundred three nine three for zero zero one. Again, that's
28:26
Speaker 2: the Armstrong Advisory Group at eight hundred three nine three
28:29
Speaker 2: for zero zero one.
28:31
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
28:33
Speaker 1: registered investment advisor. Nothing in the ad or in any
28:36
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
28:39
Speaker 1: your own financial tax into state planning advisors before making
28:41
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
28:45
Speaker 1: advisory services.
28:46
Speaker 2: Zillow is out with their most buy or friendly markets
28:49
Speaker 2: of twenty twenty six. They've got ten of them Indianapolis, Atlanta, Charlotte, Jacksonville,
28:53
Speaker 2: Oklahoma City, Memphis, Detroit, Miami, Tampa, Pittsburgh. Here is my question, Paul,
29:00
Speaker 2: is this worthy of any more attention than when Jim
29:02
Speaker 2: Kramer comes out with his stock picks on CNBC?
29:05
Speaker 3: Ooh ooh, shots fired, Yeah, Kramer there. I would say,
29:11
Speaker 3: probably slightly more weight that I put on the Zillo.
29:14
Speaker 2: Buyers than I was asking the question, not answering it.
29:19
Speaker 2: You fired the shots there?
29:21
Speaker 4: No.
29:22
Speaker 2: To me, sounds much like any major portfolio manager or
29:28
Speaker 2: you know, CNBC personality host talking up their book and
29:32
Speaker 2: throwing shots in the dark about what's going to be
29:34
Speaker 2: best performing. I don't know that Zillo has any proven
29:37
Speaker 2: track record of telling me that these are the places
29:39
Speaker 2: to buy in twenty twenty six.
29:41
Speaker 3: They can use at least some of the data within
29:44
Speaker 3: their sight on the price adjustment, So they're saying, hey,
29:46
Speaker 3: most buyer friendly markets, and we're they're monitoring the monthly change,
29:50
Speaker 3: and it's pretty obvious that if you look at inventory,
29:54
Speaker 3: like we've done often on this show, that the Florida
29:56
Speaker 3: is a pretty good place to look, just because there's
29:58
Speaker 3: been a b fundance of inventory dumped on to Florida
30:02
Speaker 3: in terms of new construction and things like that, so
30:05
Speaker 3: that to me to see three or four of them
30:07
Speaker 3: within the top ten makes a whole lot of sense.
30:11
Speaker 3: A little bit surprised to not see a little bit
30:13
Speaker 3: more of the Sunbelt presence in the top ten area here,
30:17
Speaker 3: but also a little blown away on some of these
30:21
Speaker 3: typical home value numbers that they're using here. Some seem low.
30:25
Speaker 3: I'm sure these are medians, but the Boston one in particular,
30:29
Speaker 3: which somehow slots in the top fifty spot at number
30:33
Speaker 3: forty three at seven hundred and six thousand, I'm not
30:37
Speaker 3: really sure where they're pulling that number from. It seems
30:40
Speaker 3: a little low.
30:42
Speaker 2: Let's take a quick break when we come back. A
30:44
Speaker 2: bit of stack Roulette is next. On the Financial Exchange.
30:48
Speaker 1: The Financial Exchange is Life on Series XM's Business radio
30:52
Speaker 1: channel one thirty two week days from eleven to noon.
30:54
Speaker 1: Get the latest business and financial news from across the
30:57
Speaker 1: country and around the world, and keep up to date
31:00
Speaker 1: on how it might affect your wallet. That's the Financial Exchange,
31:04
Speaker 1: weekdays from eleven to noon on Series XM's Business Radio
31:07
Speaker 1: Channel one thirty two. Face. He's the Financial Exchange Radio Network.
31:12
Speaker 1: The Financial Exchange Show podcast drops every day on Apple, Spotify,
31:16
Speaker 1: and iHeartRadio. Hit that subscribe button and leave us a
31:19
Speaker 1: five star review. You're listening to the Financial Exchange Radio Network.
31:28
Speaker 4: Be sure to subscribe to our YouTube page. Well you'll
31:31
Speaker 4: find full shows of the Financial Exchange and any noteworthy
31:36
Speaker 4: discussions we had. You'll get caught up on anything and
31:39
Speaker 4: everything you might have missed right here on the Financial
31:41
Speaker 4: Exchange Radio Network. Just search the Financial Exchange on YouTube
31:47
Speaker 4: and be sure to hit that subscribe button.
31:50
Speaker 2: Elon Musk was out with a comment a few weeks ago,
31:55
Speaker 2: and everybody since then has picked on him and picked
31:58
Speaker 2: it apart, and I tend to agree. But he predicted
32:01
Speaker 2: that AI will create such abundance that in a decade
32:04
Speaker 2: or two people won't need to bother saving for retirement,
32:07
Speaker 2: and Alison Schraeger from Bloomberg picks apart that argument entirely,
32:12
Speaker 2: and I agree. I think that while AI could create abundance,
32:16
Speaker 2: I don't think it will be equally distributed. I think
32:18
Speaker 2: that the idea that will definitively create a whole bunch
32:22
Speaker 2: of abundance and productivity is a very big question, and
32:24
Speaker 2: so I discount the entire idea. But it got me thinking,
32:28
Speaker 2: and we've had this debate before, but is there any
32:32
Speaker 2: technological innovation that has happened in history that has changed
32:37
Speaker 2: lives for people in a single generation to the extent
32:41
Speaker 2: that Elon Musk is talking about, right, Because that's what
32:44
Speaker 2: he's arguing is, Hey, you living today won't need to
32:46
Speaker 2: save for retirement because of this new technology. And I'm
32:49
Speaker 2: trying to think of is there anything out there. The
32:51
Speaker 2: closest that I could come to was the electric grid.
32:55
Speaker 2: Imagine for a minute, you're born in eighteen eighty, you
32:58
Speaker 2: spend the first twenty to thirty years of your life
33:02
Speaker 2: operating by candlelight, you know, hauling ice from the local
33:07
Speaker 2: pond in order to cool your food. And by the
33:11
Speaker 2: time you're forty you can turn a switch and turn
33:15
Speaker 2: on the lights in your home.
33:16
Speaker 3: That's a big one.
33:17
Speaker 2: Like, I don't know, the Internet's not bigger than that,
33:20
Speaker 2: the mobile phone's not bigger than that, you know, refrigeration, electricity.
33:24
Speaker 2: There's likely nothing that changed the lives of a single
33:27
Speaker 2: generation more than the electric rid, And even that I
33:31
Speaker 2: think is less extreme than what Elon Musk is talking about.
33:34
Speaker 3: Maybe the proliferation of like grocery store markets and like
33:38
Speaker 3: food abundance and it being a situation where you don't
33:41
Speaker 3: have to be so overly concerned of harvesting what you
33:44
Speaker 3: have for food.
33:45
Speaker 2: Can somebody even that didn't take place on a single generation.
33:48
Speaker 3: No, it was very much fragmented in terms of its
33:51
Speaker 3: implementation over decades, probably where it just became a spot
33:55
Speaker 3: where anybody could walk into to a store to get
33:58
Speaker 3: food in the United States.
34:00
Speaker 2: Interesting thought exercise Again, I think Elon Musk's comments are,
34:03
Speaker 2: like many of them crazy and not realistic, but interesting
34:07
Speaker 2: thought exercise. If you guys have listening, have any ideas
34:10
Speaker 2: of you know, any single innovation that changed the lives
34:13
Speaker 2: of a single generation, meaning it had to be a
34:17
Speaker 2: big innovation and happened quickly. Texta Texas show at six one, seven, three, six,
34:22
Speaker 2: two thirteen eighty five with your ideas. But I couldn't
34:25
Speaker 2: come up with anything better than that. One.
34:26
Speaker 3: Vehicles are or flight.
34:30
Speaker 2: It's a flight maybe, yeah, no, but you could still
34:32
Speaker 2: travel across the globe prior to flights. It's very slow,
34:36
Speaker 2: very slow. You know, it's not as though people had
34:38
Speaker 2: never been to France until flights came along. Sure, I
34:42
Speaker 2: don't know. I can't think of anything. What do you
34:43
Speaker 2: have for stacule?
34:45
Speaker 3: Not nearly as the thought provoking as that exercise. Here.
34:49
Speaker 3: Brian Nicola is the CEO of Starbucks. He's thank you
34:55
Speaker 3: like five cents but spelled I really don't like that
34:58
Speaker 3: the way it's spelled. Yeah, you take that, Brian.
35:03
Speaker 2: My biggest bone to pick with you is I dislike
35:05
Speaker 2: the way you spell your last name. Yeah.
35:07
Speaker 3: He spent his first full calendar year on the job
35:10
Speaker 3: trying to improve the experience in Starbucks stores, outputting them
35:15
Speaker 3: with ceramic mugs, replacing faulty power outlets, rewriting the whole
35:19
Speaker 3: guide book in terms of how barista's greet and serve customers,
35:24
Speaker 3: all sorts of other different condiment bars being added back in,
35:28
Speaker 3: and now he is trying to install more comfortable seating
35:32
Speaker 3: across Starbucks all over the place and trying to offer
35:35
Speaker 3: more superior customer service. The question will become does it
35:38
Speaker 3: does it matter? Does this you know? Is this too
35:41
Speaker 3: far gone? The transformation that Starbucks has undergone where it
35:45
Speaker 3: has become far more transactional than I think the founder,
35:48
Speaker 3: Howard Schultz would like to have seen over you know,
35:53
Speaker 3: his tenure stepping away from the company where it is
35:57
Speaker 3: much more about quickly getting your drink and getting out
36:01
Speaker 3: of there, and less focus on the experiential atmosphere that
36:04
Speaker 3: he kind of built the brand.
36:06
Speaker 2: I don't have an answer. I mean, Tucker, you you
36:08
Speaker 2: probably frequent Starbucks a little bit more often than I do.
36:10
Speaker 2: I know, pretty often, what.
36:12
Speaker 4: Go a few times a month.
36:13
Speaker 2: I'd say, what has been a noticeable difference in your opinion?
36:16
Speaker 4: I would say, uh, just more welcoming baristas kind of yes,
36:21
Speaker 4: what you have those? Yeah, oh yeah, definitely friendlier and
36:23
Speaker 4: there that.
36:24
Speaker 2: Was a bit jarring the first time I walked in,
36:26
Speaker 2: like in a positive way, but I walked in, you know,
36:28
Speaker 2: grabbed my order and they're like, hey, thank you, welcome,
36:30
Speaker 2: come on in, right, I think for a net positive,
36:35
Speaker 2: I do think that there was a little bit of
36:38
Speaker 2: yeah again, this it does seem pretty fake. But you know,
36:41
Speaker 2: prior to, you know, was there an attitude of like, Okay,
36:45
Speaker 2: I'm just here to pick up my order and there's
36:47
Speaker 2: there's no friendly weights to have. It's not my neighborhood
36:49
Speaker 2: coffee shop. Yeah, I think so, And maybe this takes
36:52
Speaker 2: a small step to improve that.
36:53
Speaker 3: And I think those Beuristas, to be fair, were quite
36:55
Speaker 3: overwhelmed by the just the profilation of mobile orders. It's
36:58
Speaker 3: not something that's new to Starbucks, but it just seems
37:00
Speaker 3: like it's become larger and larger of the experience is
37:03
Speaker 3: that mobile order. So the frustration with all the drinks
37:06
Speaker 3: that they have to produce there.
37:07
Speaker 4: Sorry, no, I was going to say, I do want
37:09
Speaker 4: to visit a store in the afternoon because I primarily
37:13
Speaker 4: when I do go it is early in the morning, obviously,
37:16
Speaker 4: But I'm curious to see what it looks like in
37:18
Speaker 4: the afternoon because they are going back to that coffee
37:21
Speaker 4: house vibe where they actually give you a ceramic mug
37:26
Speaker 4: and whatnot, you can sit down and have a coffee.
37:28
Speaker 4: I just want to see if people are actually doing that.
37:31
Speaker 2: I have my doubts.
37:32
Speaker 3: Yeah, me too.
37:34
Speaker 2: Also, nobody orders hot coffee at Starbucks anymore.
37:37
Speaker 3: Oh I do.
37:38
Speaker 2: I do too, But yeah, you're right, you go in there,
37:40
Speaker 2: especially the afternoon when it's all teenagers. It's giant pink,
37:42
Speaker 2: it's all those fancy drinks. Yeah. So, yeah, I don't know.
37:45
Speaker 2: I think nothing is going to revolutionize Starbucks quite the
37:48
Speaker 2: way that their mobile app did When they were really
37:50
Speaker 2: first to market, and not only among coffee chains but
37:52
Speaker 2: among fast service restaurants generally, and that was a huge
37:58
Speaker 2: change for their business. Yea positive for the financials anyway.
38:02
Speaker 2: Everybody's caught up now and so I think these are
38:04
Speaker 2: more changes around the edges, but clearly a necessity and
38:08
Speaker 2: potential positive. We've got to go. That's all the time
38:11
Speaker 2: we have from the Financial Exchange. As we close in
38:14
Speaker 2: on the noon hour, markets remain in mixed territory, with
38:16
Speaker 2: the Nasdaq leading the way up. We've got a FED
38:19
Speaker 2: meeting tomorrow, so tune in. Have a great rest of
38:21
Speaker 2: your day, folks,