July 29, 2025 • 38 mins
At the conclusion of its two-day policy meeting, the Federal Reserve will announce its decision on interest rates. President Trump wants the Feds to cut rates, but officials have resisted out of concern that Trump's tariffs will push up inflation. Greg Stoller, professor at Boston University’s Questrom School of Business, joined Dan to discuss both interest rates and tariffs.
You can hear NightSide with Dan Rea, Live! Weeknights From 8PM-12AM on WBZ - Boston's News Radio.
You can hear NightSide with Dan Rea, Live! Weeknights From 8PM-12AM on WBZ - Boston's News Radio.
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Episode Transcript
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Speaker 1 (00:00):
It's Nightside with Dan Ray. I'm WBSY Costin's Radio.
Speaker 2 (00:06):
All right, thank you very much, Dan Watkins. My name
is Dan Ray. I'm the host of this program and
we have two more hours to go. I want to
thank my guests to my Carlos last hour, they really
did a good job. Everybody stayed pretty much on topic,
which is what we try to do. What we try
to do here on Nightside is to do different topics.
Sometimes they are reoccurring topics, but we try to wait
(00:30):
until there's a further development in that topic and why
it becomes more important. And again, a lot of us
can learn from some of the guests that we have.
We have very smart people who know more about topics
than we do, and sometimes you can challenge those individuals
(00:51):
and have a legitimate conversation with them and learn a
little bit. So that's what we try to do on Nightside.
We want to inform you, we want to entertain you,
and we want to make you better prepared as you walk,
as you work your way through life. It's as simple
as that. One of my outstanding guests is now joining us. Hey,
he's been with us a couple of times in the
(01:12):
last couple of months. Greg, Professor Greg Staller, he is
with the Boston University quest From School of Business. He
knows probably more about China than virtually anybody I know,
maybe anybody that you might know, in large part because
(01:33):
he has led students there about fifty times in the
last several years on work trips. Welcome back, Professor Staller.
How are you tonight?
Speaker 3 (01:44):
Good evening? Damn? Thank you?
Speaker 2 (01:46):
Yeah, no, tell us a little bit again. I can
repeat your background, but which I have in front of me.
Thank you very much, But I'd much prefer to you
to put it in context. You've taught at BC, you've
taught it BU and through all of that you have
I've emphasized taking American college students and postgraduate students with
(02:06):
you on trips to not only China, but to other
Asian countries. Tell us why and what did you accomplish?
Speaker 4 (02:15):
Sure, so, I think it's really important that you can
only teach so much in what I call a four
walled classroom, and the only way to reinforce a lot
of these topics is to put students in the field.
So I've been fortunate enough since nineteen ninety nine to
be leading these experiences.
Speaker 3 (02:34):
These are all full semester classes.
Speaker 4 (02:37):
This past spring break, the prior academic year, I brought
twenty four students from across Boston University to Hong Kong
and Ho Chi Min City and Vietnam. The year before
we did Tokyo and Osaka and Japan. Year before that
we did Singapore. And I just got back from Sweden
where we wrapped up an international case competition that started
(02:57):
off with sixty four teams a twenty years universities in
twelve countries.
Speaker 2 (03:02):
How'd you guys do.
Speaker 5 (03:04):
We?
Speaker 4 (03:05):
Unfortunately, Bu did not make the cut. We had it's
all anonymous, it's all competitive, but we had finalists from Georgia, Italy, Ireland,
you Mass, Boston, Stanford, and and Indonesia.
Speaker 2 (03:19):
Well you messd Boston in there, like I like that?
That's how Yeah.
Speaker 4 (03:23):
No, it was very It was very cool to see
all of these schools that made it successfully through their
regional competitions, and they really wowed our clients in that
Stockholm in one of the cities in the north, named
those distant.
Speaker 2 (03:36):
Well that's great. Okay. So so this experience that you've
built up, obviously is very important. Now we learned when
supply chains were interrupted during COVID, and we found out
that a lot of our medicines actually are manufactured in
places like China, Vietnam and other countries that you've that
(03:58):
you have visited and worked in. So this is a
real pool of experience which which we're we appreciate having.
So let's let's start with some of the basics. Tomorrow afternoon,
sometime around two or two thirty. Is this their annual
meeting out in Jackson Hall, the Federal Reserve.
Speaker 4 (04:19):
Correct, So this is what it's called the Federal Open
Market Committee meeting. There are several members that range from
people being what are called board of governors to actually
heads of their respective events.
Speaker 3 (04:35):
So for example, they're one of the.
Speaker 4 (04:37):
Governors is from Chicago, one of the governors leads Saint Louis,
another governor needs leads Kansas City. And then you have
people who are on the panel that are just what
you would call a general gubernatorial board member.
Speaker 2 (04:51):
Is that at large, they may have some expertise and
they vote as to whether or not interest rates are
going to stay the same increased lower. So tomorrow the
focus is going to be are they going to lower
the rates a quarter of a percent? And that's what
President Trump desperately wants. Why does he desperately want those
(05:17):
interest rates lowered? They haven't been lowered in a while.
Speaker 3 (05:20):
We know they have not been lowered in a while.
I think it really depends on what side of the
political fence you're on. I think that from President Trump's perspective,
his approval rating is currently thirty seven percent, just slightly
higher than it is all time worse rating of thirty
four percent at the end of his first term. And
(05:40):
lower interest rates make people feel better and happier. And
we know that there are real political differences in this
country right now. The midterm elections are coming up, and
I think this is a way of him trying to
keep the populace happy. If anybody who's listening tonight happens
to be from Massachusetts, you might remember that Governor Bill
(06:02):
Wills eliminated some tolls in Massachusetts before one of the elections,
just to keep a potential elector at happy.
Speaker 2 (06:10):
Well. At the same time, in defense of government world,
I must add that voters in Massachusetts had been promised
that when the bonds were paid off, the tolls would
come down, and they kept borrowing money to make sure
that the toll collectors continued to collect salaries, and and
I think taking the tolls down in the toll boots down.
(06:31):
Actually it was the right thing to do. It was
it was long overdue in my opinion.
Speaker 6 (06:35):
Correct.
Speaker 3 (06:36):
But I'm just using that as a political office.
Speaker 2 (06:43):
So is it possible, Is it possible in your mind
that perhaps Donald Trump believes that that it is time
to lower the interest rates. I mean, there are economists,
and there are members of the the Federal Reserve Board
of Governors who have already staked out the positions that
the an interest rate cut in view of what's going on,
(07:03):
is long overdue. And of course economists are like expert
witnesses and in jury trials. They're a dime a dozen
for the most.
Speaker 3 (07:15):
Hundred percent. But you know, as I always do to
prepare for your show, let's talk about the advantages and disadvantages. Right, So,
lower interest rates are going to stimulate borrowing and spending
for individuals and businesses. It's going to be cheaper to
borrow money. They can potentially boost financial markets as corporate
(07:36):
profitability is going to get stronger, and it's going to
decrease demand for housing because people can afford higher mortgage payments. That,
of course, you know, as costs go down, businesses can
do more hiring. That's in support and against the big
number one concern, whether they're a dime a dozen or not,
is that lower interest rates are going to over stimulate
(07:59):
themy So you have the risk of installation and asset bubbles.
For people who want fixed incomes and they're relying on bonds,
they're going to get less money if the bond issuers
reprice them. You could have compressed profit margins for banks,
and central banks such as the FED, might need to
resort to what I'm calling unconventional tools like quantitative easing
(08:24):
to put money back in the economy like we did
during the financial crisis. So I can make a case
on either side as to whether those interest rates should
go down, And as I said earlier, really depends whether
you're on the left side or the right side of defense.
Speaker 2 (08:38):
Quite literally, Well, I think it also would depend upon
whether you're in office or out of office. That if job,
if Kamala Harris had been elected president, I suspect she
would be taking the position that President Trump has and
maybe in both cases they might actually say Okay, it
(09:00):
happens to be good for them politically, but it also
might be good at this point because I don't think
interest rates have been lowered for how many years now.
Speaker 3 (09:10):
Interest rates have not been lowered substantially since two and
twenty three. That was more of an inflation response, etc.
That inflation had been tamped down. It's been a while,
and currently the Federal fund rate stands it somewhere between
four point two five and four point five percent. Again,
(09:31):
if you're a statistician, it comes out to four point
three to three. But the idea being that it's been
a while for those interest rates to come down, And technically,
by the letter of the Fed's charter, the FED Governor
and his or her or their committee is supposed to
be nonpartisan and is not necessarily a tool of the
(09:54):
federal government. So it's fairly ironic that anybody, whether it
be the President, whether be a Supreme Court justice, or
you know, anybody, is actually commenting on what the chairman
should do. Quick fun fact, by the way, is that
there has never been a Federal Reserve governor fired in
the history of the system. They have to be uh
(10:17):
uh fired if you will, for cause, but it cannot
be removed for policy differences Powells, and.
Speaker 2 (10:24):
I think, yeah, he could threaten that, but I think
that even he will realize that that's not a.
Speaker 4 (10:30):
Smart thing to do it this way and by the way,
just to make sure all of the listeners are up
to date.
Speaker 3 (10:34):
His term runs through May of next year.
Speaker 2 (10:36):
Yep. And he was originally appointed by Donald Trump.
Speaker 1 (10:40):
That's right as well.
Speaker 2 (10:41):
We'll take a very quick break. My guess is Professor
Greg Staller. He is a professor business at the VU
Question School of Business. If you have a question, So
we've kind of touched upon that, we're going to get
to tariffs, We're going to get to some other This
is going to be a very interesting week. And the
stock market is riding high right now. Uh, and it
(11:02):
could take a bit of a dip depending upon what
happens in a variety of these areas. We've gone a
little long here, but I think it's been worth it.
We'll take a quick break. If you want to jump
on board and make a comment, ask a question, please
do it earlier rather than later. Six one, seven, two, five,
four ten thirty six one seven nine three one ten
(11:24):
thirty Back on Night's side right after this, talking the
economy and We're trying to make it understandable for everyone,
and I hope well with Professor Staller we always succeed.
Let me put it like that. We'll be back right
after this.
Speaker 1 (11:39):
It's Night Side with Dan Ray on Boston's News Radio.
Speaker 2 (11:45):
I guess this is Boston University Question School of Business
Professor Greg Stahler. We have talked about the Federal Reserve
meeting tomorrow and that decision will come sometime in the
middle of the afternoon. I need to open up the tariff's conversation.
The President is saying that they have successfully negotiated a
(12:06):
tariff not only with Japan, but of Vietnam, a whole
bunch of countries, of Britain, the European Union. He has
now again, Friday's an important day because he's saying that
if people haven't done a deal, the tariffs are going
(12:26):
to go into a place automatically, almost my operation of
dictate of I think that he has done better on
these than a lot of people expected, right or wrong.
Speaker 4 (12:40):
Professor I would absolutely agree with that, and again I
think it depends on what your perspective is. Is that
traditionally tariffs have been three to five percent. Again, I
went back to the seventeen hundreds in terms of my research,
and right now he's doing pretty well in that regard,
(13:01):
in the sense the UK is locked in at ten percent,
the EU is locked in at fifteen percent. In Japan
and Vietnam or you know, chech check check, they've completed
those deals and he's moving on to other countries.
Speaker 2 (13:14):
Yeah, Vietnam is in a twenty percent. The EU and
Japan got a better deal. As you said, they're in
it at fifteen percent. And I went back and looked
at at Vietnam. There was a period of time where
where Vietnam was like for about twenty years, just three
percent their goods coming into the US. So he has
(13:39):
tightened things up and he has made the playing field
a little more level for this country overall. When you
look at the numbers as they are today and where
they were, let's say a year.
Speaker 3 (13:52):
Ago, I would agree with that.
Speaker 4 (13:56):
You're absolutely right on in the sense that he is
generating money for the US Treasury, which is in and
of itself not a bad thing. And he believes that
a lot of countries have been taking advantage of the
United States. So even a ten percent baseline tariff is
making people think twice about just assuming that the United
(14:18):
States is desperate for imports, so we will just ship
them from overseas locations and the Americans will line up
around the corner to buy them.
Speaker 2 (14:26):
Yeah, and again, when you mentioned Canada and Mexico, two
of our most important trading partners north of US and
south of US are two neighbors. They have not agreed
to anything, and the tariff that would be imposed on
them would be twenty five percent correct, and he still
has some well, he's got some threatened tariffs out there.
(14:51):
Canada would get up to thirty five percent, in Mexico
thirty percent. So it's an interesting it's an interesting group
of numbers. I noticed that Taiwan, which is a very
important trading partner to US, particularly in terms of microchips,
computer chips, no deal has been done there.
Speaker 3 (15:17):
I strike that I maybe it's in progress. It's in progress.
Speaker 4 (15:21):
I mean, I think that he is running the country
almost as if a business, from a business mentality, in
the sense he's starting high with some ridiculously large numbers.
And you know, as you just rattled off, you know,
pick whatever country you want, twenty five percent here, thirty
five percent there. Even if he negotiates it down by
fifty percent, he's still far ahead of where the country
(15:46):
under Biden was in terms of two or three percent,
and in his first term three percent. So it's an
interesting strategy by saying, oh, we'll just you know, shock
at all campaign. We'll just call it a fifty percent tariff.
And by the way, when what's all said and done,
we'll get you fifteen percent, so you'll feel like he.
Speaker 1 (16:03):
Got a deal.
Speaker 2 (16:04):
Yeah, he's playing that. He's also doing that with Columbia
and also potentially with Harvard a different issue, but a
similar strategy. But my guest is Professor Gregory Stoller. He
teaches now at Boston University, taught for many years of BC,
(16:25):
now at BU at the BU Question School of Business.
We're going to talk about the economy and where it
stands and what clouds Professor Stoler might be concerned about
on the horizon or if they are looking or if
the economy is looking a little bit better. I'm a
(16:45):
little bit concerned about valuations, to be really honest.
Speaker 3 (16:48):
With you, because as am I.
Speaker 2 (16:52):
That guess into stock areas, which I don't want to
venture too far into because that's not our job. And
we have to be very careful what we say about that,
but there's there's a number of things we don't have
to be careful about. We'll be back on nights Side.
Got some lines at six months seven two, five, four
to ten thirty and six months seven nine three ten thirty.
Being right back on Nightside with Professor Gregor Stoller of
(17:15):
Boston University Questrom School of Business.
Speaker 1 (17:20):
It's nights Side with Dan Ray on wb Boston's news radio.
Speaker 2 (17:26):
My guest is Professor Gregory Staller at BU IS at
the BU Question School of Business. In terms of concerns
that you have, what do you see short term, long
term from an economic point of view? And again, I
know you're not going to put a political hat on here,
just tell me.
Speaker 3 (17:46):
What do you thank you.
Speaker 4 (17:47):
I think my biggest concern is going to be twofold
one is inflation and prices going up and corporate hiring.
I think that evaluations are very high. Against your point,
Either you nor I are giving any investment advice, but
I remain concerned that companies are starting to shed their
payrolls in an effort to maintain their profitability. I'm not
(18:11):
so sure whether that is going to be able to
continue ad nauseum without something giving. And I think that
it's great that the NASDAC and the NYS is hitting
all time highs. I'm concerned that if inflation is introduced
a little bit higher than it is now. I mean,
the consumer Price Index recently came in at two point
seven percent, higher than the FEDS two percent target, that
(18:33):
could have medium to long term bad implications for the economy.
Speaker 2 (18:38):
All right, let's that's a great general assessment. Let's get
some phone calls from some of our listeners and great, again,
folks don't hesitate. Professor Staller is really an easy guy
to talk to, and he puts it in language that
I think all of us can understand, and some that
(19:00):
affects every one of us differently. Again, you know, folks
who are on fixed incomes, they're very concerned about inflation.
Folks who are just starting out, they're concerned about things
like mortgage rates, and so they would probably some young
people would like to see And again, if I'm generalizing here, professors,
(19:21):
stop me, but a lot of young people might say, oh, gee,
it would be great to see mortgage rates come down
and we can get into the housing market a little
more quickly. At the same time, maybe their parents or
grandparents might say, hey, wait a second, we're on fixed
income here, we're concerned. We're concerned about them going the
other way, right, And.
Speaker 4 (19:41):
I tell my students all the time that it's trying
to balance a three legged stool in the sense that yeah,
you're solving one problem but potentially treating others downstream.
Speaker 2 (19:51):
Okay, let's start it off with Derek in Boston. Derek,
you're first tonight on this part of night's ode with
Professor Gregg Staller. Be you question of school of Business.
Go ahead, Derek.
Speaker 5 (20:02):
Thank you so much, Stan, and thank you President Starler.
I appreciate it taking the time tonight to answer my
question to the point of interest rates. As we know,
depending decision whether the interest rates will historically lower or
remain the same as currently looming. That being said, assuming
that the rates do get lowered, should yourself and the
(20:24):
rest of us believe that the vision and reasoning behind
that proposed lower decision would be temporary or opposing that,
should we expect that to be the fixed, long term
decision that he would be trending towards regarding our economy
impactfully and generally.
Speaker 2 (20:39):
Great question, really great questions.
Speaker 4 (20:42):
I think Derek that the challenge here is that interest
rates are a policy decision that's made by a twelve
member committee. That's something that they can control directly. But
once they make that decision, it might take months, if
not years, to undo it if things go awry, in
(21:03):
the sense that, yeah, you might be able to say,
here's twenty five basis points, let's make it cheaper money
for everybody. But inflation starts rearing its ugly head or
you start having stock market to clients because of it,
that's not something that.
Speaker 3 (21:15):
You can immediately undo.
Speaker 4 (21:17):
There's no control z or undo like you would do
in Microsoft Word or itself.
Speaker 5 (21:23):
God, that's very good impact, that's very interesting to hear.
But contrary, if they don't lower the interest rates, would
that make us inclined to think that the containment of
these maintained rates is most likely the long term economical focus?
Great question, you're not going to stay the same for
a long term or eventually you think they're going to change.
Speaker 3 (21:43):
At some point?
Speaker 4 (21:44):
And the great question, I mean, I think Derek that
what you have to do understand right now is economically,
if at a broke don't fix it right now. In
spite of the fact that interest rates have not been
changed to Dan's point in several months or even years,
the three major stocking disees.
Speaker 3 (22:02):
The S and P five hundred, NASDAC, and NYSESE are.
Speaker 4 (22:05):
Hitting almost daily highs and the company profits are soaring.
So I guess doing what we're doing right now and
kicking that proverbial economic can down the road until another
meeting of the FED. I don't necessarily think it's such
a bad idea, and of course I understand it from
President Trump's perspective. Doing it now is going to make
(22:27):
people feel better, because when people have more money in
their pocket, even if it's psychological, they just feel better
and they feel happier.
Speaker 5 (22:36):
Right, It's more of an incentive that makes sense.
Speaker 2 (22:39):
Derek, you go to school. Those are pretty good questions.
Speaker 5 (22:43):
I've actually s been at Dean College. I'm going to
be a rising senior. Come this fall?
Speaker 2 (22:48):
Good for you? Is this your first time calling my show?
Speaker 1 (22:52):
It is?
Speaker 2 (22:53):
How you get your run of applause? How does you
find us well?
Speaker 5 (22:58):
I've hes been listening to you for a while WBS.
I listened during the morning and occasion at night, and
you've done a really good job, Dan profess dollars and
great tonight. But in general, you've done a really great job.
You've brought in great guests, You've proposed and discussed great topics.
I truly believe that everything you discussed is definitely important,
(23:18):
and that it should be, like you said at the beginning,
opposed and challenged by new people and recurring people to
gain different perspectives from all around the world, or all
around the nation or the state even just so everyone
can share their input and just say what they believe
is the case.
Speaker 2 (23:35):
You have captured what Nightside is supposed to be all about.
And I'm honored that you would listen, and I'm really
impressed that you would call and congratulations to Dean College.
What are your plans if you're a rising senior this
time a year from now, you'll be well into the
job market. What type of work are you looking to do?
Speaker 5 (23:56):
That's a very good question. It's funny. I'll keep it short,
but I originally went in as sport manager major love sports.
Then work out so well, switch to business, being a
great insight inside that field and inside that career. But additionally,
over time again my career path and vision has kind
of changed. Also now I'm folksing and looking more into
(24:17):
law potentially, as I'm also taking a paralegal course inside
of law this summer which is going very well. So
hopefully something within business or law is where I'm looking
to pursue. To answer your question, well.
Speaker 2 (24:29):
I'll tell you you're going to be a success wherever
you go, that's for sure. Uh, Professor, quite a tribute
that this young man is to Deem College. So a
great call, Derek, Thanks so much.
Speaker 5 (24:45):
Hope you to keep up and keep up the great
keep up the great people that you put on the show,
because it's been very fascinating from the start and it
remains to that this day.
Speaker 2 (24:53):
So tell all your friends about night side. Okay, thanks
Derek talk.
Speaker 5 (24:57):
Thank you for the nice conflimence. I appreciate it and
well deserved. Oh it's the question answering.
Speaker 2 (25:01):
All right, that's a great night. Good night. All right.
Let me go to John and Hingham. John, you're next
on nights. I'm a professor, great staller of Boston University,
Question School of Business.
Speaker 6 (25:13):
Yeah, good evening, Dan, good evening, professor, first time, very
good professor, you're too.
Speaker 2 (25:21):
Wait hold on, John, your first time caller as well.
Speaker 6 (25:25):
Yes, you gotta get you a round the boss.
Speaker 2 (25:28):
This is great.
Speaker 4 (25:28):
I mean yes, love it, love it, love it, love it.
Speaker 2 (25:31):
Yeah. These are the type callers that you attract, which
is which makes me so fond of you as a guest.
Speaker 3 (25:37):
Go right ahead, thank you, thank you.
Speaker 6 (25:39):
Okay, well, professor, I'm in your week. I'm an MBA
from Bathiston College.
Speaker 2 (25:46):
Great school, you're I'm sure you're a part.
Speaker 6 (25:48):
Of that school. And that was in nineteen eighty.
Speaker 2 (25:52):
By the way, By the way, Babiston College just received
a five star rating from money dot com, which is
the the website now of what was Money magazine. There
were only four schools in Massachusetts. Babson was one of them, Williams,
Harvard and MIT. And also I believe that Babson, in
(26:14):
terms of their undergraduates turned out last year in twenty
twenty four, average salary for a Babson senior was, I think,
on average, tops in the nation. Believe it or not.
So it's at babsents a great school.
Speaker 6 (26:30):
Oh I believe that.
Speaker 1 (26:31):
Then.
Speaker 6 (26:32):
Well, I graduated with Miami in nineteen eighty. In nineteen eighty,
if everyone remembers, Jimmy Carter was president, yes, he was
inflation was totally out of control. Yes, it was mortgage rates.
Mortgage rates, professor, if you remember, they were between ten
and twelve percent, there.
Speaker 2 (26:51):
Was highest sixty percent. I can't remember them being as
high as sixteen percent.
Speaker 6 (26:56):
Okay, absolutely, yeah, there are a Blessing State College grad.
Speaker 3 (27:03):
You remember those days.
Speaker 2 (27:05):
I'm sure yes, I.
Speaker 6 (27:06):
Do now now. In terms of housing, I was lucky
enough in nineteen eighty to buy a beautiful house at
Ham for sixty five thousand dollars and now it's worth
six hundred and fifty thousand dollars. And God love the
young kids today. Anyone thinking and they can buy a house.
(27:28):
I don't think it's within their scope, you, professor.
Speaker 3 (27:32):
I think that is, you know.
Speaker 4 (27:33):
Going back to Derek's call a few minutes ago, the
nice part about lower interest rates is that you can
afford higher housing values because it costs less to borrow
the money. The problem is that as housing goes up,
it's very difficult for a first time buyer to even
afford anything unless they are going to go way out
(27:56):
into the suburbs. If they're looking, you know, to live
in a major city and they're willing to commune. That's
the problem is that I've been thinking about that today
in preparation for tonight.
Speaker 3 (28:05):
For a seller, it's fantastic is that.
Speaker 4 (28:07):
You literally are printing more money being able to sell that.
Speaker 3 (28:11):
Same piece of real estate for a higher amounts of money.
Speaker 4 (28:13):
But for a first time buyer, unless they're going to
help from their parents or other relatives, it's going to
be a very sobering discussion when you go to get
bank financing.
Speaker 2 (28:24):
I think there was a study earlier this week that
said the average cost of a home in I'm not
sure if it was Boston or Greater Boston is now
officially a million dollars.
Speaker 5 (28:35):
That's correct, yes, and a lot of that is.
Speaker 2 (28:38):
Pulled up by you know, the the townhouses on Beacon
Hill and back day. So it doesn't mean that you
can't find places for less than a million, but it's
getting pricing. Go ahead, Jonam. So we kind of took
the conversation away from what is your point?
Speaker 6 (28:53):
No, none at all. I was wondering, why are interest
rates for our mortgage in the seven percent area right
now when inflation today is as bad as it was
in nineteen eighty, So I.
Speaker 2 (29:11):
Say, waste hold on inflation is not as bad today
as it was in nineteen eighty if that's the premise
of your question.
Speaker 6 (29:20):
In what respect? In what respect you meaning by that?
Speaker 2 (29:23):
There? Well, inflation in nineteen eighty, as you said, was
you know, you know, thirteen fourteen, fifteen, sixteen percent. That's
way higher than it is today. I understood you to
say that that you're you were asking the question of
why mortgage rates seven percent when inflation is as high
as today as it was in the nineteen eighties. Oh,
(29:46):
I say it to me.
Speaker 6 (29:47):
I stand corrected. You're absolutely right.
Speaker 2 (29:50):
Okay, So how does that affect your question?
Speaker 6 (29:53):
Okay? I guess my question is with the national debt
thirty sixth crullion dollar and interest rates where they are,
wouldn't be the expectation that interst rates would even go
higher than what they are now.
Speaker 4 (30:12):
So let me try and unpack your question, John, I
think it's important. It's important to explain that the federal
funds rate is not necessarily indicative of a retail mortgage
rate for two reasons.
Speaker 3 (30:27):
One is, most people, unless.
Speaker 4 (30:30):
They have stellar credit, are not able to borrow at
the federal funds rate traditionally called the prime rate, and
plus banks are going back to put in a margin,
because that's how they make their money. But I think
more importantly, and I don't want to turn this into
an economics class tonight, but you're also talking about the
short end versus the long end of something called the yieldter.
(30:52):
And just because the Fed changes interest rates, that doesn't
mean that mortgage interest rates for thirty year fixed mortgage
are automatically going.
Speaker 3 (31:01):
To come down.
Speaker 4 (31:02):
It's a little bit more complex than that, but I
think your point is well taken that in theory, all
else being equal, the lower the federal funds rate, the
cheaper mortgages are going to be so people can afford high,
more expensive houses.
Speaker 6 (31:18):
Oh okay, well, Jan, I don't want to take up anymore.
Speaker 2 (31:22):
John, I appreciate, appreciate your first handoll looking forward to
your second time call.
Speaker 6 (31:26):
Thank you very much.
Speaker 2 (31:27):
Ken, all right, thanks much. Let's keep We got to
take a break and we'll get to a couple more
calls at least, coming back with my guest, Professor Gregory
Staller of Boston University Questrom School of Business. Back on
night side, I got David in San Francisco and John
and Boston, and I get some room for you as well.
Back on nightside, after this, you're on.
Speaker 1 (31:46):
Night Side with Dan Ray on WBZ, Boston's news radio.
Speaker 2 (31:51):
We're j with Greg Staller, Professor Greg Staller of Boston
University Questrom School of Business. We're going to try to
get two calls in here, so I'm going to try
quickly with David in San Francisco. David, this is a gamble.
You've got to be quick for me. I'd like to
get you in one more in.
Speaker 7 (32:09):
Nice and Yeah. I looking at the Federal Reserve as
the bank of the banks. They've got a standard old
conservative techniques and when someone like Trump comes in and
tries to rip apart those standard techniques, interest rates actually
(32:30):
should be going up instead of going down. So if
somebody were to claim that climate change is not real,
the insurance companies know it's real. They're pulling out of Texas,
they're pulling out of Florida.
Speaker 2 (32:47):
David, you're trying to make this into a political conversation.
Speaker 7 (32:50):
And it's not political, Dan, It's real.
Speaker 2 (32:54):
It is political. It is political, David, and I'm going
to not put my guests in an awkward situation. If
you want to make a quick comment Greg on Trump's
being a different type of president and how that might.
Speaker 4 (33:09):
No, thank you, thank you again, and David, I'm happy
to take your question again. I'm trying to be nonpartisan.
I would gently push back at you that the FED
is supposed to be completely independent, particularly in setting monetary policy.
So whether you believe or anybody else believes that in
favor of President Trump or against President Trump, interest rates
(33:32):
should go up or go down, I think that really
stands with the decisions of the twelve member committee. It
is fairly unique that anybody, whether it's a US president,
whether it's anybody a local politician, a federal politician, is
commenting on that. But again, I think the whole theory
of this country is having checks and balances, both politically
(33:55):
and economically.
Speaker 2 (33:56):
All right, David, thank you very much for your call.
Let me go next to John, tell them we can
get you in here. Go right ahead. We only got
a couple of minutes.
Speaker 8 (34:04):
Uh yeah, I just googled on my phone about tariffs,
and you know, one of the things about tariffs is
they reduce productivity, innovation, it says, And that's pretty dangerous
right now in my opinion, is China being very innovative.
But it just said in conclusion, you know, it gave
(34:27):
a little bit of the pros and cons and it says, well,
sheriff tariffs can achieve some short term objectives like protecting
specific industries that often come at the expense of higher
consumer prices, inflation, reduced economic growth, potential job losses and
other sectors, and trade war.
Speaker 2 (34:47):
If I could just jump in here for a second
so I can direct your question to the professor, I
don't think that some of the concerns that were expressed
about these tariffs on April second, and so called Liberation Day,
when the market took a twenty percent hit in about
a week, I don't think that the higher prices that
(35:10):
were forecast have materialized. Now again, I know we're only
in July, about to enter August, but I think the
President has played this much more as a business man
than as somebody who is duty bound that he was
going to impose the highest tariffs that he could possibly impose.
(35:33):
Professor quick comment, if I could.
Speaker 4 (35:35):
I agree with you, I think like him or hate him.
He is running the country, as I said earlier, as
a business and he's looking at this from an economics perspective,
not even an economics perspective. A business perspective is that
the playing field has to be level for all different countries. Again,
as Dan said, I'm not trying to make a political
(35:58):
statement on one side of the aisle or not, but
I will say that it's very difficult to refute that
the stock market is reaching all time highs. Companies have
been reporting earnings for the past couple of weeks and
there really haven't been any bombshells. The biggest bombshell has
been Liberation Day or what's coming up in August first,
(36:18):
and potentially the Federal Open Market Committee tomorrow.
Speaker 3 (36:22):
But you know, it's very hard.
Speaker 4 (36:23):
To say that that's not doing well for the economy.
Speaker 7 (36:27):
Now.
Speaker 4 (36:28):
Again, to be fair to everyone who called in tonight,
we are looking at this through a short term lens,
and as Dan mentioned earlier, if you're looking at this
through a longer term lens, I don't think anybody can
comment to what's going to happen in twenty twenty six
or twenty twenty seven.
Speaker 2 (36:43):
Yep, that's that's right, John quick final comment before we got.
Speaker 8 (36:47):
To go, well, I mean, yeah, the stack market is
doing great, but it's for the rich. Okay, Yeah, I
got something in the stock market and a lot of.
Speaker 2 (37:00):
People involved in this stock market. John, again, I think
you want to politicize it more than we want to
politicize it. And I thank you, thank you for the
tom flat John flat out of time. I got you in,
but I wish I could give you more time. We
should call it earlier. Always try to call earlier. Thank
you very much. Professor Starller, thank you as always. This
was interesting. Let's see what happens tomorrow. I'm sort of
(37:22):
of the inclination that Trump has made a mistake trying
to bully Powell, and that that was a political mistake
that he made because Powell almost has to hold the
line or else he's going to look as if he's caving.
And I don't think anyone wants to look as if
they cave.
Speaker 4 (37:39):
So that's above my pay grade. I can't comment on politics.
That's your side of things. But from a statistical perspective,
there is a ninety six percent chance that interest rates
are not going to change. That is by a website
called fact set, and I've checked it with three other
websites that whether it's politically motivated or economically motivated, the
(38:03):
money as it stands right now is interstrates are going
to remain unchanged as of tomorrow, but who knows.
Speaker 2 (38:09):
Well, those betting markets are interesting, that's for sure. Professor
is like, oh, thank you so much, great great hour.
So a couple of great calls, a couple of different
type calls, but that's what you get. Life is like
a box of chocolate. You just never know. Thank you.
Speaker 3 (38:25):
And also is this Dan, Thank you so much for
the opportunity.
Speaker 4 (38:28):
I just love doing this.
Speaker 3 (38:29):
I love connected with your listener, we love.
Speaker 2 (38:30):
Having you on my friend. We'll talk soon. Okay, thanks,
thank you. All right, well we get that. Not exactly
sure we're going to do I got a couple of
thoughts and uh, if stay with us, well we might
surprise you.
It's Nightside with Dan Ray. I'm WBSY Costin's Radio.
Speaker 2 (00:06):
All right, thank you very much, Dan Watkins. My name
is Dan Ray. I'm the host of this program and
we have two more hours to go. I want to
thank my guests to my Carlos last hour, they really
did a good job. Everybody stayed pretty much on topic,
which is what we try to do. What we try
to do here on Nightside is to do different topics.
Sometimes they are reoccurring topics, but we try to wait
(00:30):
until there's a further development in that topic and why
it becomes more important. And again, a lot of us
can learn from some of the guests that we have.
We have very smart people who know more about topics
than we do, and sometimes you can challenge those individuals
(00:51):
and have a legitimate conversation with them and learn a
little bit. So that's what we try to do on Nightside.
We want to inform you, we want to entertain you,
and we want to make you better prepared as you walk,
as you work your way through life. It's as simple
as that. One of my outstanding guests is now joining us. Hey,
he's been with us a couple of times in the
(01:12):
last couple of months. Greg, Professor Greg Staller, he is
with the Boston University quest From School of Business. He
knows probably more about China than virtually anybody I know,
maybe anybody that you might know, in large part because
(01:33):
he has led students there about fifty times in the
last several years on work trips. Welcome back, Professor Staller.
How are you tonight?
Speaker 3 (01:44):
Good evening? Damn? Thank you?
Speaker 2 (01:46):
Yeah, no, tell us a little bit again. I can
repeat your background, but which I have in front of me.
Thank you very much, But I'd much prefer to you
to put it in context. You've taught at BC, you've
taught it BU and through all of that you have
I've emphasized taking American college students and postgraduate students with
(02:06):
you on trips to not only China, but to other
Asian countries. Tell us why and what did you accomplish?
Speaker 4 (02:15):
Sure, so, I think it's really important that you can
only teach so much in what I call a four
walled classroom, and the only way to reinforce a lot
of these topics is to put students in the field.
So I've been fortunate enough since nineteen ninety nine to
be leading these experiences.
Speaker 3 (02:34):
These are all full semester classes.
Speaker 4 (02:37):
This past spring break, the prior academic year, I brought
twenty four students from across Boston University to Hong Kong
and Ho Chi Min City and Vietnam. The year before
we did Tokyo and Osaka and Japan. Year before that
we did Singapore. And I just got back from Sweden
where we wrapped up an international case competition that started
(02:57):
off with sixty four teams a twenty years universities in
twelve countries.
Speaker 2 (03:02):
How'd you guys do.
Speaker 5 (03:04):
We?
Speaker 4 (03:05):
Unfortunately, Bu did not make the cut. We had it's
all anonymous, it's all competitive, but we had finalists from Georgia, Italy, Ireland,
you Mass, Boston, Stanford, and and Indonesia.
Speaker 2 (03:19):
Well you messd Boston in there, like I like that?
That's how Yeah.
Speaker 4 (03:23):
No, it was very It was very cool to see
all of these schools that made it successfully through their
regional competitions, and they really wowed our clients in that
Stockholm in one of the cities in the north, named
those distant.
Speaker 2 (03:36):
Well that's great. Okay. So so this experience that you've
built up, obviously is very important. Now we learned when
supply chains were interrupted during COVID, and we found out
that a lot of our medicines actually are manufactured in
places like China, Vietnam and other countries that you've that
(03:58):
you have visited and worked in. So this is a
real pool of experience which which we're we appreciate having.
So let's let's start with some of the basics. Tomorrow afternoon,
sometime around two or two thirty. Is this their annual
meeting out in Jackson Hall, the Federal Reserve.
Speaker 4 (04:19):
Correct, So this is what it's called the Federal Open
Market Committee meeting. There are several members that range from
people being what are called board of governors to actually
heads of their respective events.
Speaker 3 (04:35):
So for example, they're one of the.
Speaker 4 (04:37):
Governors is from Chicago, one of the governors leads Saint Louis,
another governor needs leads Kansas City. And then you have
people who are on the panel that are just what
you would call a general gubernatorial board member.
Speaker 2 (04:51):
Is that at large, they may have some expertise and
they vote as to whether or not interest rates are
going to stay the same increased lower. So tomorrow the
focus is going to be are they going to lower
the rates a quarter of a percent? And that's what
President Trump desperately wants. Why does he desperately want those
(05:17):
interest rates lowered? They haven't been lowered in a while.
Speaker 3 (05:20):
We know they have not been lowered in a while.
I think it really depends on what side of the
political fence you're on. I think that from President Trump's perspective,
his approval rating is currently thirty seven percent, just slightly
higher than it is all time worse rating of thirty
four percent at the end of his first term. And
(05:40):
lower interest rates make people feel better and happier. And
we know that there are real political differences in this
country right now. The midterm elections are coming up, and
I think this is a way of him trying to
keep the populace happy. If anybody who's listening tonight happens
to be from Massachusetts, you might remember that Governor Bill
(06:02):
Wills eliminated some tolls in Massachusetts before one of the elections,
just to keep a potential elector at happy.
Speaker 2 (06:10):
Well. At the same time, in defense of government world,
I must add that voters in Massachusetts had been promised
that when the bonds were paid off, the tolls would
come down, and they kept borrowing money to make sure
that the toll collectors continued to collect salaries, and and
I think taking the tolls down in the toll boots down.
(06:31):
Actually it was the right thing to do. It was
it was long overdue in my opinion.
Speaker 6 (06:35):
Correct.
Speaker 3 (06:36):
But I'm just using that as a political office.
Speaker 2 (06:43):
So is it possible, Is it possible in your mind
that perhaps Donald Trump believes that that it is time
to lower the interest rates. I mean, there are economists,
and there are members of the the Federal Reserve Board
of Governors who have already staked out the positions that
the an interest rate cut in view of what's going on,
(07:03):
is long overdue. And of course economists are like expert
witnesses and in jury trials. They're a dime a dozen
for the most.
Speaker 3 (07:15):
Hundred percent. But you know, as I always do to
prepare for your show, let's talk about the advantages and disadvantages. Right, So,
lower interest rates are going to stimulate borrowing and spending
for individuals and businesses. It's going to be cheaper to
borrow money. They can potentially boost financial markets as corporate
(07:36):
profitability is going to get stronger, and it's going to
decrease demand for housing because people can afford higher mortgage payments. That,
of course, you know, as costs go down, businesses can
do more hiring. That's in support and against the big
number one concern, whether they're a dime a dozen or not,
is that lower interest rates are going to over stimulate
(07:59):
themy So you have the risk of installation and asset bubbles.
For people who want fixed incomes and they're relying on bonds,
they're going to get less money if the bond issuers
reprice them. You could have compressed profit margins for banks,
and central banks such as the FED, might need to
resort to what I'm calling unconventional tools like quantitative easing
(08:24):
to put money back in the economy like we did
during the financial crisis. So I can make a case
on either side as to whether those interest rates should
go down, And as I said earlier, really depends whether
you're on the left side or the right side of defense.
Speaker 2 (08:38):
Quite literally, Well, I think it also would depend upon
whether you're in office or out of office. That if job,
if Kamala Harris had been elected president, I suspect she
would be taking the position that President Trump has and
maybe in both cases they might actually say Okay, it
(09:00):
happens to be good for them politically, but it also
might be good at this point because I don't think
interest rates have been lowered for how many years now.
Speaker 3 (09:10):
Interest rates have not been lowered substantially since two and
twenty three. That was more of an inflation response, etc.
That inflation had been tamped down. It's been a while,
and currently the Federal fund rate stands it somewhere between
four point two five and four point five percent. Again,
(09:31):
if you're a statistician, it comes out to four point
three to three. But the idea being that it's been
a while for those interest rates to come down, And technically,
by the letter of the Fed's charter, the FED Governor
and his or her or their committee is supposed to
be nonpartisan and is not necessarily a tool of the
(09:54):
federal government. So it's fairly ironic that anybody, whether it
be the President, whether be a Supreme Court justice, or
you know, anybody, is actually commenting on what the chairman
should do. Quick fun fact, by the way, is that
there has never been a Federal Reserve governor fired in
the history of the system. They have to be uh
(10:17):
uh fired if you will, for cause, but it cannot
be removed for policy differences Powells, and.
Speaker 2 (10:24):
I think, yeah, he could threaten that, but I think
that even he will realize that that's not a.
Speaker 4 (10:30):
Smart thing to do it this way and by the way,
just to make sure all of the listeners are up
to date.
Speaker 3 (10:34):
His term runs through May of next year.
Speaker 2 (10:36):
Yep. And he was originally appointed by Donald Trump.
Speaker 1 (10:40):
That's right as well.
Speaker 2 (10:41):
We'll take a very quick break. My guess is Professor
Greg Staller. He is a professor business at the VU
Question School of Business. If you have a question, So
we've kind of touched upon that, we're going to get
to tariffs, We're going to get to some other This
is going to be a very interesting week. And the
stock market is riding high right now. Uh, and it
(11:02):
could take a bit of a dip depending upon what
happens in a variety of these areas. We've gone a
little long here, but I think it's been worth it.
We'll take a quick break. If you want to jump
on board and make a comment, ask a question, please
do it earlier rather than later. Six one, seven, two, five,
four ten thirty six one seven nine three one ten
(11:24):
thirty Back on Night's side right after this, talking the
economy and We're trying to make it understandable for everyone,
and I hope well with Professor Staller we always succeed.
Let me put it like that. We'll be back right
after this.
Speaker 1 (11:39):
It's Night Side with Dan Ray on Boston's News Radio.
Speaker 2 (11:45):
I guess this is Boston University Question School of Business
Professor Greg Stahler. We have talked about the Federal Reserve
meeting tomorrow and that decision will come sometime in the
middle of the afternoon. I need to open up the tariff's conversation.
The President is saying that they have successfully negotiated a
(12:06):
tariff not only with Japan, but of Vietnam, a whole
bunch of countries, of Britain, the European Union. He has
now again, Friday's an important day because he's saying that
if people haven't done a deal, the tariffs are going
(12:26):
to go into a place automatically, almost my operation of
dictate of I think that he has done better on
these than a lot of people expected, right or wrong.
Speaker 4 (12:40):
Professor I would absolutely agree with that, and again I
think it depends on what your perspective is. Is that
traditionally tariffs have been three to five percent. Again, I
went back to the seventeen hundreds in terms of my research,
and right now he's doing pretty well in that regard,
(13:01):
in the sense the UK is locked in at ten percent,
the EU is locked in at fifteen percent. In Japan
and Vietnam or you know, chech check check, they've completed
those deals and he's moving on to other countries.
Speaker 2 (13:14):
Yeah, Vietnam is in a twenty percent. The EU and
Japan got a better deal. As you said, they're in
it at fifteen percent. And I went back and looked
at at Vietnam. There was a period of time where
where Vietnam was like for about twenty years, just three
percent their goods coming into the US. So he has
(13:39):
tightened things up and he has made the playing field
a little more level for this country overall. When you
look at the numbers as they are today and where
they were, let's say a year.
Speaker 3 (13:52):
Ago, I would agree with that.
Speaker 4 (13:56):
You're absolutely right on in the sense that he is
generating money for the US Treasury, which is in and
of itself not a bad thing. And he believes that
a lot of countries have been taking advantage of the
United States. So even a ten percent baseline tariff is
making people think twice about just assuming that the United
(14:18):
States is desperate for imports, so we will just ship
them from overseas locations and the Americans will line up
around the corner to buy them.
Speaker 2 (14:26):
Yeah, and again, when you mentioned Canada and Mexico, two
of our most important trading partners north of US and
south of US are two neighbors. They have not agreed
to anything, and the tariff that would be imposed on
them would be twenty five percent correct, and he still
has some well, he's got some threatened tariffs out there.
(14:51):
Canada would get up to thirty five percent, in Mexico
thirty percent. So it's an interesting it's an interesting group
of numbers. I noticed that Taiwan, which is a very
important trading partner to US, particularly in terms of microchips,
computer chips, no deal has been done there.
Speaker 3 (15:17):
I strike that I maybe it's in progress. It's in progress.
Speaker 4 (15:21):
I mean, I think that he is running the country
almost as if a business, from a business mentality, in
the sense he's starting high with some ridiculously large numbers.
And you know, as you just rattled off, you know,
pick whatever country you want, twenty five percent here, thirty
five percent there. Even if he negotiates it down by
fifty percent, he's still far ahead of where the country
(15:46):
under Biden was in terms of two or three percent,
and in his first term three percent. So it's an
interesting strategy by saying, oh, we'll just you know, shock
at all campaign. We'll just call it a fifty percent tariff.
And by the way, when what's all said and done,
we'll get you fifteen percent, so you'll feel like he.
Speaker 1 (16:03):
Got a deal.
Speaker 2 (16:04):
Yeah, he's playing that. He's also doing that with Columbia
and also potentially with Harvard a different issue, but a
similar strategy. But my guest is Professor Gregory Stoller. He
teaches now at Boston University, taught for many years of BC,
(16:25):
now at BU at the BU Question School of Business.
We're going to talk about the economy and where it
stands and what clouds Professor Stoler might be concerned about
on the horizon or if they are looking or if
the economy is looking a little bit better. I'm a
(16:45):
little bit concerned about valuations, to be really honest.
Speaker 3 (16:48):
With you, because as am I.
Speaker 2 (16:52):
That guess into stock areas, which I don't want to
venture too far into because that's not our job. And
we have to be very careful what we say about that,
but there's there's a number of things we don't have
to be careful about. We'll be back on nights Side.
Got some lines at six months seven two, five, four
to ten thirty and six months seven nine three ten thirty.
Being right back on Nightside with Professor Gregor Stoller of
(17:15):
Boston University Questrom School of Business.
Speaker 1 (17:20):
It's nights Side with Dan Ray on wb Boston's news radio.
Speaker 2 (17:26):
My guest is Professor Gregory Staller at BU IS at
the BU Question School of Business. In terms of concerns
that you have, what do you see short term, long
term from an economic point of view? And again, I
know you're not going to put a political hat on here,
just tell me.
Speaker 3 (17:46):
What do you thank you.
Speaker 4 (17:47):
I think my biggest concern is going to be twofold
one is inflation and prices going up and corporate hiring.
I think that evaluations are very high. Against your point,
Either you nor I are giving any investment advice, but
I remain concerned that companies are starting to shed their
payrolls in an effort to maintain their profitability. I'm not
(18:11):
so sure whether that is going to be able to
continue ad nauseum without something giving. And I think that
it's great that the NASDAC and the NYS is hitting
all time highs. I'm concerned that if inflation is introduced
a little bit higher than it is now. I mean,
the consumer Price Index recently came in at two point
seven percent, higher than the FEDS two percent target, that
(18:33):
could have medium to long term bad implications for the economy.
Speaker 2 (18:38):
All right, let's that's a great general assessment. Let's get
some phone calls from some of our listeners and great, again,
folks don't hesitate. Professor Staller is really an easy guy
to talk to, and he puts it in language that
I think all of us can understand, and some that
(19:00):
affects every one of us differently. Again, you know, folks
who are on fixed incomes, they're very concerned about inflation.
Folks who are just starting out, they're concerned about things
like mortgage rates, and so they would probably some young
people would like to see And again, if I'm generalizing here, professors,
(19:21):
stop me, but a lot of young people might say, oh, gee,
it would be great to see mortgage rates come down
and we can get into the housing market a little
more quickly. At the same time, maybe their parents or
grandparents might say, hey, wait a second, we're on fixed
income here, we're concerned. We're concerned about them going the
other way, right, And.
Speaker 4 (19:41):
I tell my students all the time that it's trying
to balance a three legged stool in the sense that yeah,
you're solving one problem but potentially treating others downstream.
Speaker 2 (19:51):
Okay, let's start it off with Derek in Boston. Derek,
you're first tonight on this part of night's ode with
Professor Gregg Staller. Be you question of school of Business.
Go ahead, Derek.
Speaker 5 (20:02):
Thank you so much, Stan, and thank you President Starler.
I appreciate it taking the time tonight to answer my
question to the point of interest rates. As we know,
depending decision whether the interest rates will historically lower or
remain the same as currently looming. That being said, assuming
that the rates do get lowered, should yourself and the
(20:24):
rest of us believe that the vision and reasoning behind
that proposed lower decision would be temporary or opposing that,
should we expect that to be the fixed, long term
decision that he would be trending towards regarding our economy
impactfully and generally.
Speaker 2 (20:39):
Great question, really great questions.
Speaker 4 (20:42):
I think Derek that the challenge here is that interest
rates are a policy decision that's made by a twelve
member committee. That's something that they can control directly. But
once they make that decision, it might take months, if
not years, to undo it if things go awry, in
(21:03):
the sense that, yeah, you might be able to say,
here's twenty five basis points, let's make it cheaper money
for everybody. But inflation starts rearing its ugly head or
you start having stock market to clients because of it,
that's not something that.
Speaker 3 (21:15):
You can immediately undo.
Speaker 4 (21:17):
There's no control z or undo like you would do
in Microsoft Word or itself.
Speaker 5 (21:23):
God, that's very good impact, that's very interesting to hear.
But contrary, if they don't lower the interest rates, would
that make us inclined to think that the containment of
these maintained rates is most likely the long term economical focus?
Great question, you're not going to stay the same for
a long term or eventually you think they're going to change.
Speaker 3 (21:43):
At some point?
Speaker 4 (21:44):
And the great question, I mean, I think Derek that
what you have to do understand right now is economically,
if at a broke don't fix it right now. In
spite of the fact that interest rates have not been
changed to Dan's point in several months or even years,
the three major stocking disees.
Speaker 3 (22:02):
The S and P five hundred, NASDAC, and NYSESE are.
Speaker 4 (22:05):
Hitting almost daily highs and the company profits are soaring.
So I guess doing what we're doing right now and
kicking that proverbial economic can down the road until another
meeting of the FED. I don't necessarily think it's such
a bad idea, and of course I understand it from
President Trump's perspective. Doing it now is going to make
(22:27):
people feel better, because when people have more money in
their pocket, even if it's psychological, they just feel better
and they feel happier.
Speaker 5 (22:36):
Right, It's more of an incentive that makes sense.
Speaker 2 (22:39):
Derek, you go to school. Those are pretty good questions.
Speaker 5 (22:43):
I've actually s been at Dean College. I'm going to
be a rising senior. Come this fall?
Speaker 2 (22:48):
Good for you? Is this your first time calling my show?
Speaker 1 (22:52):
It is?
Speaker 2 (22:53):
How you get your run of applause? How does you
find us well?
Speaker 5 (22:58):
I've hes been listening to you for a while WBS.
I listened during the morning and occasion at night, and
you've done a really good job, Dan profess dollars and
great tonight. But in general, you've done a really great job.
You've brought in great guests, You've proposed and discussed great topics.
I truly believe that everything you discussed is definitely important,
(23:18):
and that it should be, like you said at the beginning,
opposed and challenged by new people and recurring people to
gain different perspectives from all around the world, or all
around the nation or the state even just so everyone
can share their input and just say what they believe
is the case.
Speaker 2 (23:35):
You have captured what Nightside is supposed to be all about.
And I'm honored that you would listen, and I'm really
impressed that you would call and congratulations to Dean College.
What are your plans if you're a rising senior this
time a year from now, you'll be well into the
job market. What type of work are you looking to do?
Speaker 5 (23:56):
That's a very good question. It's funny. I'll keep it short,
but I originally went in as sport manager major love sports.
Then work out so well, switch to business, being a
great insight inside that field and inside that career. But additionally,
over time again my career path and vision has kind
of changed. Also now I'm folksing and looking more into
(24:17):
law potentially, as I'm also taking a paralegal course inside
of law this summer which is going very well. So
hopefully something within business or law is where I'm looking
to pursue. To answer your question, well.
Speaker 2 (24:29):
I'll tell you you're going to be a success wherever
you go, that's for sure. Uh, Professor, quite a tribute
that this young man is to Deem College. So a
great call, Derek, Thanks so much.
Speaker 5 (24:45):
Hope you to keep up and keep up the great
keep up the great people that you put on the show,
because it's been very fascinating from the start and it
remains to that this day.
Speaker 2 (24:53):
So tell all your friends about night side. Okay, thanks
Derek talk.
Speaker 5 (24:57):
Thank you for the nice conflimence. I appreciate it and
well deserved. Oh it's the question answering.
Speaker 2 (25:01):
All right, that's a great night. Good night. All right.
Let me go to John and Hingham. John, you're next
on nights. I'm a professor, great staller of Boston University,
Question School of Business.
Speaker 6 (25:13):
Yeah, good evening, Dan, good evening, professor, first time, very
good professor, you're too.
Speaker 2 (25:21):
Wait hold on, John, your first time caller as well.
Speaker 6 (25:25):
Yes, you gotta get you a round the boss.
Speaker 2 (25:28):
This is great.
Speaker 4 (25:28):
I mean yes, love it, love it, love it, love it.
Speaker 2 (25:31):
Yeah. These are the type callers that you attract, which
is which makes me so fond of you as a guest.
Speaker 3 (25:37):
Go right ahead, thank you, thank you.
Speaker 6 (25:39):
Okay, well, professor, I'm in your week. I'm an MBA
from Bathiston College.
Speaker 2 (25:46):
Great school, you're I'm sure you're a part.
Speaker 6 (25:48):
Of that school. And that was in nineteen eighty.
Speaker 2 (25:52):
By the way, By the way, Babiston College just received
a five star rating from money dot com, which is
the the website now of what was Money magazine. There
were only four schools in Massachusetts. Babson was one of them, Williams,
Harvard and MIT. And also I believe that Babson, in
(26:14):
terms of their undergraduates turned out last year in twenty
twenty four, average salary for a Babson senior was, I think,
on average, tops in the nation. Believe it or not.
So it's at babsents a great school.
Speaker 6 (26:30):
Oh I believe that.
Speaker 1 (26:31):
Then.
Speaker 6 (26:32):
Well, I graduated with Miami in nineteen eighty. In nineteen eighty,
if everyone remembers, Jimmy Carter was president, yes, he was
inflation was totally out of control. Yes, it was mortgage rates.
Mortgage rates, professor, if you remember, they were between ten
and twelve percent, there.
Speaker 2 (26:51):
Was highest sixty percent. I can't remember them being as
high as sixteen percent.
Speaker 6 (26:56):
Okay, absolutely, yeah, there are a Blessing State College grad.
Speaker 3 (27:03):
You remember those days.
Speaker 2 (27:05):
I'm sure yes, I.
Speaker 6 (27:06):
Do now now. In terms of housing, I was lucky
enough in nineteen eighty to buy a beautiful house at
Ham for sixty five thousand dollars and now it's worth
six hundred and fifty thousand dollars. And God love the
young kids today. Anyone thinking and they can buy a house.
(27:28):
I don't think it's within their scope, you, professor.
Speaker 3 (27:32):
I think that is, you know.
Speaker 4 (27:33):
Going back to Derek's call a few minutes ago, the
nice part about lower interest rates is that you can
afford higher housing values because it costs less to borrow
the money. The problem is that as housing goes up,
it's very difficult for a first time buyer to even
afford anything unless they are going to go way out
(27:56):
into the suburbs. If they're looking, you know, to live
in a major city and they're willing to commune. That's
the problem is that I've been thinking about that today
in preparation for tonight.
Speaker 3 (28:05):
For a seller, it's fantastic is that.
Speaker 4 (28:07):
You literally are printing more money being able to sell that.
Speaker 3 (28:11):
Same piece of real estate for a higher amounts of money.
Speaker 4 (28:13):
But for a first time buyer, unless they're going to
help from their parents or other relatives, it's going to
be a very sobering discussion when you go to get
bank financing.
Speaker 2 (28:24):
I think there was a study earlier this week that
said the average cost of a home in I'm not
sure if it was Boston or Greater Boston is now
officially a million dollars.
Speaker 5 (28:35):
That's correct, yes, and a lot of that is.
Speaker 2 (28:38):
Pulled up by you know, the the townhouses on Beacon
Hill and back day. So it doesn't mean that you
can't find places for less than a million, but it's
getting pricing. Go ahead, Jonam. So we kind of took
the conversation away from what is your point?
Speaker 6 (28:53):
No, none at all. I was wondering, why are interest
rates for our mortgage in the seven percent area right
now when inflation today is as bad as it was
in nineteen eighty, So I.
Speaker 2 (29:11):
Say, waste hold on inflation is not as bad today
as it was in nineteen eighty if that's the premise
of your question.
Speaker 6 (29:20):
In what respect? In what respect you meaning by that?
Speaker 2 (29:23):
There? Well, inflation in nineteen eighty, as you said, was
you know, you know, thirteen fourteen, fifteen, sixteen percent. That's
way higher than it is today. I understood you to
say that that you're you were asking the question of
why mortgage rates seven percent when inflation is as high
as today as it was in the nineteen eighties. Oh,
(29:46):
I say it to me.
Speaker 6 (29:47):
I stand corrected. You're absolutely right.
Speaker 2 (29:50):
Okay, So how does that affect your question?
Speaker 6 (29:53):
Okay? I guess my question is with the national debt
thirty sixth crullion dollar and interest rates where they are,
wouldn't be the expectation that interst rates would even go
higher than what they are now.
Speaker 4 (30:12):
So let me try and unpack your question, John, I
think it's important. It's important to explain that the federal
funds rate is not necessarily indicative of a retail mortgage
rate for two reasons.
Speaker 3 (30:27):
One is, most people, unless.
Speaker 4 (30:30):
They have stellar credit, are not able to borrow at
the federal funds rate traditionally called the prime rate, and
plus banks are going back to put in a margin,
because that's how they make their money. But I think
more importantly, and I don't want to turn this into
an economics class tonight, but you're also talking about the
short end versus the long end of something called the yieldter.
(30:52):
And just because the Fed changes interest rates, that doesn't
mean that mortgage interest rates for thirty year fixed mortgage
are automatically going.
Speaker 3 (31:01):
To come down.
Speaker 4 (31:02):
It's a little bit more complex than that, but I
think your point is well taken that in theory, all
else being equal, the lower the federal funds rate, the
cheaper mortgages are going to be so people can afford high,
more expensive houses.
Speaker 6 (31:18):
Oh okay, well, Jan, I don't want to take up anymore.
Speaker 2 (31:22):
John, I appreciate, appreciate your first handoll looking forward to
your second time call.
Speaker 6 (31:26):
Thank you very much.
Speaker 2 (31:27):
Ken, all right, thanks much. Let's keep We got to
take a break and we'll get to a couple more
calls at least, coming back with my guest, Professor Gregory
Staller of Boston University Questrom School of Business. Back on
night side, I got David in San Francisco and John
and Boston, and I get some room for you as well.
Back on nightside, after this, you're on.
Speaker 1 (31:46):
Night Side with Dan Ray on WBZ, Boston's news radio.
Speaker 2 (31:51):
We're j with Greg Staller, Professor Greg Staller of Boston
University Questrom School of Business. We're going to try to
get two calls in here, so I'm going to try
quickly with David in San Francisco. David, this is a gamble.
You've got to be quick for me. I'd like to
get you in one more in.
Speaker 7 (32:09):
Nice and Yeah. I looking at the Federal Reserve as
the bank of the banks. They've got a standard old
conservative techniques and when someone like Trump comes in and
tries to rip apart those standard techniques, interest rates actually
(32:30):
should be going up instead of going down. So if
somebody were to claim that climate change is not real,
the insurance companies know it's real. They're pulling out of Texas,
they're pulling out of Florida.
Speaker 2 (32:47):
David, you're trying to make this into a political conversation.
Speaker 7 (32:50):
And it's not political, Dan, It's real.
Speaker 2 (32:54):
It is political. It is political, David, and I'm going
to not put my guests in an awkward situation. If
you want to make a quick comment Greg on Trump's
being a different type of president and how that might.
Speaker 4 (33:09):
No, thank you, thank you again, and David, I'm happy
to take your question again. I'm trying to be nonpartisan.
I would gently push back at you that the FED
is supposed to be completely independent, particularly in setting monetary policy.
So whether you believe or anybody else believes that in
favor of President Trump or against President Trump, interest rates
(33:32):
should go up or go down, I think that really
stands with the decisions of the twelve member committee. It
is fairly unique that anybody, whether it's a US president,
whether it's anybody a local politician, a federal politician, is
commenting on that. But again, I think the whole theory
of this country is having checks and balances, both politically
(33:55):
and economically.
Speaker 2 (33:56):
All right, David, thank you very much for your call.
Let me go next to John, tell them we can
get you in here. Go right ahead. We only got
a couple of minutes.
Speaker 8 (34:04):
Uh yeah, I just googled on my phone about tariffs,
and you know, one of the things about tariffs is
they reduce productivity, innovation, it says, And that's pretty dangerous
right now in my opinion, is China being very innovative.
But it just said in conclusion, you know, it gave
(34:27):
a little bit of the pros and cons and it says, well,
sheriff tariffs can achieve some short term objectives like protecting
specific industries that often come at the expense of higher
consumer prices, inflation, reduced economic growth, potential job losses and
other sectors, and trade war.
Speaker 2 (34:47):
If I could just jump in here for a second
so I can direct your question to the professor, I
don't think that some of the concerns that were expressed
about these tariffs on April second, and so called Liberation Day,
when the market took a twenty percent hit in about
a week, I don't think that the higher prices that
(35:10):
were forecast have materialized. Now again, I know we're only
in July, about to enter August, but I think the
President has played this much more as a business man
than as somebody who is duty bound that he was
going to impose the highest tariffs that he could possibly impose.
(35:33):
Professor quick comment, if I could.
Speaker 4 (35:35):
I agree with you, I think like him or hate him.
He is running the country, as I said earlier, as
a business and he's looking at this from an economics perspective,
not even an economics perspective. A business perspective is that
the playing field has to be level for all different countries. Again,
as Dan said, I'm not trying to make a political
(35:58):
statement on one side of the aisle or not, but
I will say that it's very difficult to refute that
the stock market is reaching all time highs. Companies have
been reporting earnings for the past couple of weeks and
there really haven't been any bombshells. The biggest bombshell has
been Liberation Day or what's coming up in August first,
(36:18):
and potentially the Federal Open Market Committee tomorrow.
Speaker 3 (36:22):
But you know, it's very hard.
Speaker 4 (36:23):
To say that that's not doing well for the economy.
Speaker 7 (36:27):
Now.
Speaker 4 (36:28):
Again, to be fair to everyone who called in tonight,
we are looking at this through a short term lens,
and as Dan mentioned earlier, if you're looking at this
through a longer term lens, I don't think anybody can
comment to what's going to happen in twenty twenty six
or twenty twenty seven.
Speaker 2 (36:43):
Yep, that's that's right, John quick final comment before we got.
Speaker 8 (36:47):
To go, well, I mean, yeah, the stack market is
doing great, but it's for the rich. Okay, Yeah, I
got something in the stock market and a lot of.
Speaker 2 (37:00):
People involved in this stock market. John, again, I think
you want to politicize it more than we want to
politicize it. And I thank you, thank you for the
tom flat John flat out of time. I got you in,
but I wish I could give you more time. We
should call it earlier. Always try to call earlier. Thank
you very much. Professor Starller, thank you as always. This
was interesting. Let's see what happens tomorrow. I'm sort of
(37:22):
of the inclination that Trump has made a mistake trying
to bully Powell, and that that was a political mistake
that he made because Powell almost has to hold the
line or else he's going to look as if he's caving.
And I don't think anyone wants to look as if
they cave.
Speaker 4 (37:39):
So that's above my pay grade. I can't comment on politics.
That's your side of things. But from a statistical perspective,
there is a ninety six percent chance that interest rates
are not going to change. That is by a website
called fact set, and I've checked it with three other
websites that whether it's politically motivated or economically motivated, the
(38:03):
money as it stands right now is interstrates are going
to remain unchanged as of tomorrow, but who knows.
Speaker 2 (38:09):
Well, those betting markets are interesting, that's for sure. Professor
is like, oh, thank you so much, great great hour.
So a couple of great calls, a couple of different
type calls, but that's what you get. Life is like
a box of chocolate. You just never know. Thank you.
Speaker 3 (38:25):
And also is this Dan, Thank you so much for
the opportunity.
Speaker 4 (38:28):
I just love doing this.
Speaker 3 (38:29):
I love connected with your listener, we love.
Speaker 2 (38:30):
Having you on my friend. We'll talk soon. Okay, thanks,
thank you. All right, well we get that. Not exactly
sure we're going to do I got a couple of
thoughts and uh, if stay with us, well we might
surprise you.
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