April 25, 2024 • 35 mins
Mike Armstrong and Paul Lane discuss why the Fed could cause housing to get more expensive. US White-Collar job growth stalls, even in pandemic boomtowns. TikTok ultimatum puts a target on the backs of US companies operating in China. If a sale of TikTok is forced, what will it sell for? About 1 in 4 US adults over 50 say they expect to never retire. US fertility rates drops to a record low. Companies are already finding work arounds for the non compete ruling.
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Financial Exchange with Mike Armstrong and PaulLane. Welcome back to the Financial Exchange
if you're just joining us now.The markets are in the midst of a
fairly significant sell off here. We'vegot the Dow at the moment off six
hundred and fifty three points one pointseven percent, the S and P off
sixty seven points one point three percent, and the NASDAC off about two hundred
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and sixty three points, closing inon one point seven percent. As we
open up the eleven o'clock hour hereRussell two off twenty nine points nearly one
and a half percent, and theyield on the ten year Treasury spiking a
bit up to four point seven zerosix percent. It was a little bit
higher earlier. Today, price ofa barrel of oil down to eighty two
dollars and fourteen cents down one eighttenths of one percent, and a ounce
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of gold will go for two threehundred and forty eight dollars as of this
morning. Anything else catching your eyesin markets, Paul, Now, the
bond spike to me, we talkedabout in the first hour show. That
was definitely a surprising outcome from thisGDP report. But to recap on the
GDP side, we saw a firstreading of GDP growth for the first quarter
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of twenty twenty four, following tworeally strong quarters. The fourth quarter of
twenty twenty three, you saw GDPgrowing at three point four percent. We
came down to less than half ofthat in the first quarter of twenty twenty
four, one point six percent readon GDP in the first quarter of twenty
twenty four. We also heard fromMeta chief executive Mark Zuckerberg, sorry almost
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aid Elon Musk for some reason,Mark Zuckerberg yesterday on that company's earnings,
which earnings themselves quite solid, continuedgrowth as Meta has done over the last
twelve months, but investors quite concernedabout their plans for those profits which are
to pour back into both the metaverseand artificial intelligence, and some investors saying,
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where's the payoff going to be?After the bell today, we'll hear
from Alphabet, parent company of Google, as well as Microsoft, and the
same focus is going to be onthose two companies. Are you investing heavily
in artificial intelligence soon? When canwe expect to see a profit from it?
Or are you pivoting? Are you, you know, just seeing sales
growth elsewhere, So all eyes willbe on those two companies because they do
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represent five trillion dollars worth of combinedmarket capitalization and about eleven percent of the
overall s and P. Five hundredpeace from Bloomberg today from Connor sen housing
will get more expensive because of theFed. Help me understand that one,
Paul, because that is not theThat's certainly not the goal of the Federal
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Reserve when they bump interest rates isto make things more expensive. Now,
what Connor's pointing out is the classic, you know, economic concept of supply
versus demand. And what the storyhas been in the United States on the
supply side is it's been underdeveloped acrossthis country for the last fifteen plus years
since the two thousand and eight housingcrisis as a country as a whole.
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Now different areas vary more than others, we have just underproduced in terms of
housing capacity on the supply side.And what Connor points out in this piece
is this idea that by increasing borrowingcosts and increasing the FED fund rates so
that builders out there who are verytied to barring money on whether it be
a variable line of credit or afixed line of credit have to pay a
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higher interest rate for the capital thatthey're borrowing to build homes. It's going
to deter them from building it.The Fed's job is to keep inflation under
controlled. But inflation is many components, right, It's not just the cost
of shelter. That's a big componentof CPI, about a third of it,
but there's another two thirds out there, eggs, you know, on
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and on and on these other listof items that they have to focus on.
They can't be the solution for everything. That is just not what they're
built to do. They have alimited tool set to work with, and
it's not can you do? Iwould agree there. It's not the Federal
Reserves job to build housing. Let'sclarify. It's not their job to combat
climate change. It's not their jobto cook pauled dinner tonight. Their job
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is to maintain a reasonable level ofemployment and maintain reasonable prices. Everything else
is just being added on here.The housing piece that's interesting to me is
you have to go way back inthe history books for this one, but
in the nineteen seventies, the waythat they measured housing inflation included a rent
calculation, but it also included mortgagepayments, and so at that point in
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time, what they were seeing is, oh boy, our policy of raising
interest rates to cut down on inflationis actually leading to more inflation in the
way that we measure it because ofthe fact that it included mortgage payments on
a lot of variable rate mortgages.So you know what they did, No,
they just changed how we calculate inflation. Honestly, that's what they did.
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In the seventies, they introduced thisthing called rent. Yeah, owner's
equivalent rent, where they're saying,hey, we don't really care what your
mortgage payment is. That's not therelevant piece of inflation. We care about
what you could rent your home outfor if we were on the market right
now. That's how we're going tomeasure whether inflation is being combated here or
not. So we say, youknow, hey, yeah, higher interest
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rates should lead to lower cost well, you know, practically speaking in a
number of different ways. No,they lead to higher costs. We just
don't count those towards inflation. Right, you want a car today, that
car payment's going to be a lotmore expensive. You have a bunch of
debt outstanding on your credit card,Those costs went up substantially over the last
few years, neither of which contributeto inflation. By the way, neither
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of those things contribute to CPI.We look at in terms of car prices,
we look at, you know,car sales price. We don't look
at monthly payments based on the interestrate on the debt. We do not
look at the new mortgage rates thatyou're getting. We look at other things
like insurance costs on that home orcar. We look at the car price,
the sale price on the home,the rent that you pay, but
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we don't actually look at the costof debt and how that contributes. And
so this once again, I don'tsuggest that we do anything about that.
I think that the Fed's method ofdriving rates higher to eventually control demand is
the proper way to handle things.But when we ask questions of people like
how are you feeling about this economy, what does it feel like inflation is
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and they give economist answers that don'tmake sense to them that inflation seems to
be getting worse. This is abig part of it. Definitely, if
you had an outstanding credit card bill, inflation did get worse for you because
that rate on that credit card increaseda lot, and you know, regardless
of where egg prices might have gonein the last six months, if you
have one thousand dollars out standing ona credit card, then that bill just
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keeps going up and up. Ora home equity line of credit or any
other revolving type of debt, thenthe inflation story is pretty real for you
still at this stage. Yeah,Or if you've bought a home and you're
borrowing at seven or eight percent versusyou know, three or four. Yeah,
we've talked about, you know,with the combination of increase housing prices
plus mortgage rates, you know,the average mortgage payment I think when we
say forty percent higher on the fifty. Yeah, So, yeah, you
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can see how people would be respondingpretty negatively to inflation. Even though,
yeah, the way that we measureCPI or PCE, which is coming out
tomorrow, inflation, it's showing,you know, market improvement compared to twenty
twenty two. White colored job growthseems to be stalling, even in a
lot of those pandemic boom towns thatwe've been talking about. Shouldn't be any
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surprise anybody listening here that, yeah, pandemic boom towns like Austin, Texas
are not seeing quite the same jobgrowth that they did previously. But I
did find the statistic interesting. Sohiring in professional services, finance, and
technology, those three categories, thosehirings are running at about one third the
rate of the overall labor market,So not one third of the rate of
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all the other jobs, but onethird of the rate of the entire labor
market, which speaks to how muchfaster hiring is happening in areas like healthcare,
construction, government work, things alongthose lines. And if you have
a position in you know, advertisingsales for YouTube, or you're you're an
engineer in some of these spaces,or you're in the finance industry, you
know, spreading sheets for a living. Yet it's not exactly as robust as
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these labor reports are showing right now, and so some parts of the country,
like San Francisco, where they relyon a huge portion of that type
of labor to grow their city andgrow their tax base, struggling quite a
bit. That's a direct impact ofthose growth companies out there, whether it
be in the startup space, there'sjust been a lot less activity there,
whether it's mergers and acquisitions, IPOs. A lot of that is tethered to
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the lending market. It's more expensiveto raise capital and as such you're cutting
headcount or not hiring as many peopleto expand those types of companies. So
the same thing would apply for consultingand banks out there, and that's why
you're seeing like those sectors of themarket be a little bit weaker. The
other areas, though, have pickedup the slock. We've still seen a
strong labor market, but it's beenthese other areas that have been weaker for
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some time now. The latest newson inflation, the FED, the economy,
and how the markets are reacting everymorning right here on the Financial Exchange
Radio Network. The Financial Exchange isnow available on your Alexis smart speaker has
to play the Financial Exchange and catchup on anything you might have missed.
This is the Financial Exchange Radio Network. Yesterday President Bien sided was it yesterday?
(10:26):
The TikTok ban? I think itwas yesterday day before signed Tuesday evening.
Recently, very recently, this week, President Biden signed into law,
among other things, a ban onthe TikTok platform that will go into place
within two hundred and seventy days unlessthe platform is sold by its parent company.
Byte Dance takes about nine months,is what we're talking about here,
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and very likely the US government willface lawsuits over this from TikTok as well
as some of their users on Idon't really know what, because I'm not
much of a espionage type Act expert. I mean, for context here,
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we do this type of thing interms of disallowing foreign entities to own all
sorts of stuff. I know thisis being posed as a very new thing,
but if, for instance, youwant to own the radio station that
this program is airing across, youcannot be a foreign citizen, or at
least you couldn't back in the eighties. I think same goes for network televisions
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telecom companies in general. So again, there's no law in the books that
would necessarily allow that to go forwardtoday. But this concept of a certain
piece of technology being required to beoperated and owned by an American entity is
not a completely new concept, andI want to start there as a premis
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because I know that that's the casewith radio stations. I believe it's the
case with cell phone services as wellas you know cable program network television programs
as well, so, I thinkthat's an important distinction here. Nonetheless,
this is very likely to end upin court, and I think one of
the top questions that Bloomberg asks andothers are asking is where is China likely
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to retaliate based on this, becauseover the last year or so, China's
been pretty hesitant to retaliate all thatdirectly on new sanctions and other items.
I think mainly out of concern thatthey would do work more harm to their
own economy than good. Yeah,they're in a tough spot as it is.
We've covered their property market and justhow dismal that is, and just
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the Chinese economy in general is reallyin a transition phase. To put it
nicely, or otherwise you could justsay it's really lousy right now. And
the number is the term that I'veused before, dumpster fire is fair.
Micron was one company that kind ofgot caught in the crosshairs on some of
the restrictions on chips that were slappeddown, and as a result, China
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launched a probe into Micron, andthey were really impacted by that probe on
their business front. Similarly, you'vegot on the social media network front,
where Meta and snap are no longeravailable to China's going to say that,
like, what are you gonna do? Band Meta, We're not there,
Snapchat same story, WhatsApp not inthe country, so LinkedIn not there.
So the direct retaliation, you know, China's already banned, all effectively banned.
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I think some of them just pulledout because in the case of LinkedIn,
for example, the Chinese Communist Partywas insisting that Microsoft take down negative
posts about the Communist Party even outsideof China, and they just said,
forget this, We're just leaving China. So like, where are you going
to retaliate? I think is afair question. And yeah, some of
(13:45):
the semiconductor companies. If I'm Apple, I think it's unlikely. But I
have to be concerned here too.I was just gonna go there, Mike,
I'd be shaking in my boots ifI was Apple. We've covered on
the show recently the slowdown in demandfor their iPhone products in China. I
have theorized that that's largely because ofthe pushing of the Chinese government to buy
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domestic and buy Huawei phones and otheroptions and steer clear from iPhones. Think
about it this way, right,So Apple products I believe are forbidden from
government devices. Yes, China.So let's say you are not a government
worker in China, but your dictatorgovernment is telling its own employees you may
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not own an Apple product out ofeither fear, patriotism, or just concern
for other things. If I'm inthat position, even if it's just fear
of my own government, I'm goingto be hesitant to go buy a new
Apple iPhone compared to a decade agowhen the Communist Party was embracing Apple with
(14:48):
open arms. And I think that'sperfectly logical, whether it's whatever the you
know, the push is, youknow, regardless of how direct the Communist
Party is and telling people to notbuy iPhones, I think the insinuation is
there, yep. And I cansee why that's happening. And they're the
next They would be the target hit. You know. We joked about Meta
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and Snap not being options, butApple would be the one to come after
if you were trying to do somewhatof a tip for tat deal. Again
comes down to though, are yougoing to harm yourself more than because the
manufacturing, Because if Apple starts seeingtheir sales declined in China, that dramatically.
They've already started to pick up manufacturingin India and Vietnam in other places,
(15:31):
And if you ban them from beingsold in your country, why am
I here manufacturing if I have noaccess to the market. I know that
you manufacture this stuff better than anybodyelse, cheaper than anybody else, and
it's going to be tough to replicateanywhere else in the world. But if
I really can't sell my product inyour country, I'm not going to have
as much of a presence there.So it is this interesting tit for tat
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where they want to be able tostrike back, I'm sure, but how
they do it without further sinking theireconomy into a tough sty situation is kind
of an entertaining question, quite honestly. The piece that we mentioned earlier,
they've got two hundred and seventy daysto potentially divest of TikTok, and now
the guessing game begins and the biddinggame begins. In terms of what this
(16:15):
company could be worth, I don'tthink anybody really knows, because I'm not
sure. I'm not even sure wehave real clear information into revenue and sales
and profitability for this Chinese own company. Allegedly, people familiar with the matter
said that their revenue from advertising,aligance live streaming last year was about twenty
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two billion. That would imply avaluation of one hundred and ten billion,
depending on what multiple you want touse. But to be clear, it's
unclear what the valuation and what therevenue really looks like. To be clear,
it's unclear when you're dealing with China, got it, and that's just
how China goes in general. Butit is certainly something that is going to
(16:56):
be of interest what US company couldpossibly take over and would be willing to
pay whatever premium they decide in orderto take over the US operations of TikTok.
The one piece that'll add on thedeadline is that the president, I
believe, does have the ability toextend it to twelve months. Nine months
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is the initial one, but thenhe can grant an extension for additional three
But bottom line, in the nextyear or so, something needs to be
resolved or for all the TikTok usersout there, then they will be out
of luck. I'm gonna have toreturn that light stand that I bought for
all my fancy dance videos that Ipost on TikTok. I'm not sure,
not sure what the resale value ison that thing. And also to be
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clear on whatever valuation is out there, the Chinese government has made very clear
that they don't want this sold andthat they're going to allow it in the
first place, So we can hypothesizeabout pricing. Pricing might not be relevant
because they might not be able tobe sold. True. Bringing the latest
(18:04):
financial news straight to your radio everyday, It's the Financial Exchange on the
Financial Exchange Radio Network. The FinancialExchange streams live on YouTube. Like our
page and stay up to date onbreaking business news all morning. Long Face
is the Financial Exchange Radio Network.Two pieces on retirement that we have,
(18:29):
one from the Wall Street Journal,another from Is This the Globe maybe quoting
from the ARP. In both casessome changing patterns in terms of people's work
and retirement habits. According to theWall Street Journal, some twenty eight percent
of workers said that they expect toretire at age sixty five. Age sixty
five is also the median answer tothe question for workers, so the most
(18:52):
common middle answer is age sixty fiveis when they intend to retire. In
spite of the fact that the fullretirement age for Social Security these days pushing
up to sixty seven years old,and I guess I would agree, Like
when I talk to people, Ithink sixty five is the most common answer
that I get to. I wouldagree, And it's important to note that
that's the age that you can enrollin Medicare, And yeah, that seems
(19:15):
like a very common one. Ispeople want to know that their healthcare is
going to be covered, but you'llhave an option that each change one thousand
dollars a month for private health insurance. However, while that goal for years
now has been sixty five, themedian actual age of retirement has been sixty
(19:37):
two, which I find fascinating thatyou know, also lines up with the
earliest you can claim Social Security benefits, so that part's interesting. While at
the same time, one in fourUS adults over the age of fifty say
they expect to never retire. Andto me, this is all a story
about expectations versus reality, and Ithink think is a really really important one
(20:00):
to drive home. Paul. Iknow you have. I have as well,
met with people who have every intentionof working till sixty five, sixty
eight, seventy, whatever that numberis. For you or according to ARP,
forever planning to work, you know, throughout their retirement. The fact
of the matter is a sometimes healthor lifestyle or other things don't allow for
(20:25):
that. Especially as you're getting intoyour sixties. You've got potentially family stuff,
grandkids that you want to help carefor. You might have health problems,
your spouse may have health problems.And quite honestly, whether I like
it or not, our labor markethas a pretty evident bias towards younger workers.
Bias in favor of younger sure,of course, and so when you
(20:48):
look at layoffs, when you lookat voluntary bias, who do they always
target. It's the older workers.And so that ability, even if you
have every intention, that ability towork towards age sixty five, is a
big one that I end up talkingto clients about. Is you know,
yeah, I know that's your goal. I hope you get there, but
we need to plan for that notbeing a distinct possibility. Right, Like
(21:10):
what happens if you will get laidoff in your early sixties and you need
to find another job and it endsup being forty percent less than what you
were working for before, which,unfortunately, again agism is a real thing
out there that's been a reality fora lot of people over the decades.
Yeah, you also have depending onthe sector, so technology tends to skew
(21:32):
younger, right, So there's theimpetus to kind of force out those older
employees Mike, like you were mentioning. And then there's other areas of work
that are physical in nature that whereyou may want to go to sixty plus,
but the nature of the job justdictates that your body breaks down before
here. You're a line worker foreversource, it's going to be tough to
maybe climb up that pole at ageseventy compared to when you're forty. If
(21:53):
you are facing down retirement in thenext decade, and you're trying to figure
out all the answers to the questions, how long do I need to work,
how long will I realistically be ableto work? And what happens if
I can't get to that eventual goal? Will I still be all right?
These are the types of questions thatfinancial advisors assist with. If you're facing
(22:14):
down these types of questions and tryingto figure out how that four oh one
K or pension or social security areall going to work together. To build
your retirement strategy. Call the ArmstrongAdvisory Group phone numbers eight hundred three nine
three for zero zero one. Thisis at the core of everything Armstrong Advisory
(22:34):
Group does with our clients. Again, to speak with an advisor at aag
Armstrong Advisor Group, the phone numberis eight hundred three nine three for zero
zero one, or you can alsorequest an appointment online at Armstrong Advisory dot
com. The proceeding was paid forby Armstrong Advisory Group, a registered investment
advisor. Nothing in the ad orin any Armstrong guide a specific financial,
(22:56):
legal, or tax advice. Consultyour own financial, tax into state planning
advisors before me making any investment decisions. Armstrong may contact you to offer investment
advisory services. I was going totalk about Sadi Arabia, but it just
seemed a little bit too heavy.Well, we'll have to punt that one
to tomorrow. I'm instead going totalk about US fertility rates, which is
also not exactly a good news story. The total fertility rate in the United
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States fell to one point six totwo berths per woman in twenty twenty three.
It's a two percent decline from ayear earlier, and drum roll the
lowest rate recorded since the government begantracking the data in the nineteen thirties.
Tucker, Paul myself, congratulations allon bucking the trend here. All of
(23:37):
you are above that one point sixy two average. So way to go,
keep on chugging. I'm for one, put in my hand. I
will not keep on chugging. No, no thanks. Drink from that fire
hose there, Tucker. But hereis why. Let's bring this back to
why this actually matters again. Ithink you can make a compelling argument to
(24:00):
me that this doesn't necessarily matter forproductivity, it doesn't necessarily matter for quality
of life. We've seen other countrieswith far worse fertility rates and growth population
growth rates that while their stock marketmight not be great, the quality of
your life in Japan. I don'tthink anybody looks at and says, oh
God, what a terrible place tolive. The problem that this potentially and
(24:25):
very likely creates or makes worse isthat many of our social programs are built
on the idea that the population continuesto grow. The two biggest ones that
I'm thinking of happen to be socialsecurity in medicare, but there are plenty
others as well, and if youhave fewer and fewer people eventually aging into
social security and medicare, then Imean it's tough to make the problem that
(24:51):
we already have any worse than italready is. So I don't think the
low birth rates yesterday are going tomake the eight years on soci security that
we have left turn into six.But long term, any of the fixes
that are going to be proposed,right, if you're fixed to social security
as oh, we're just going toraise taxes a little bit and pull back
the retirement age, that becomes moredifficult to slower the population growth is.
(25:11):
So this is a real phenomena we'vebeen experiencing for years. The fact that
we marked an all time low isnot exactly a great sign. The question
also is again to me, there'sa few ways to fix the social programs
issue. Either you completely dramatically reframehow all these programs work in terms of
(25:33):
taxation, benefits, et cetera.Or you find a way to grow the
population and birth rates are following.So immigration is the logical alternative there if
you're not going to, like Isaid, dramatically reform our social program Yeah,
there's a stat that always blows meaway. Pertaining to Social Security mic
where in nineteen forty there were fortytwo workers per retiree being paid out benefits.
(25:56):
That ratio today sits at three workerspaying for every one retirees benefits.
So there's just far less workers inthe system paying. What was that nineteen
forty nineteen forty forty two to oneper per retiree paying taxes to fund their
benefits. Now that ratio sits atthree to one. And per the demographics,
(26:18):
the piece that you're mentioning at bytwenty fifty projected to be two to
one, done by a study hereat UVM that I was reading here.
That don't work to good, No, it does. It's going to be
a real problem, real flip ofthe pyramid, and that's not what you
want. And Social Security, Medicareand the budgeting issues that this country has.
It's not something that's going to comeup as a red flag today or
(26:40):
tomorrow, but it looms as asignificant risk that needs to be resolved over
the next decade. Really sooner itshould be acted upon, sooner it won't
be. But yeah, the longeryou wait, the worse the outcomes have
to be. If you decide tomove tax rates eight years from now,
then you have to move them higherthan if you move them right now.
That seems logical to me, butI have to repeat that because our lawmakers
(27:00):
don't see don't count on that socialmind seem to get it quick break when
we come back. Stack Roulette onFinancial Exchange breaking business news as it happens
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Catch up at your convenience by visitingFinancial Exchange show dot com and clicking the
(27:21):
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has built an incredible partnership with theDisabled American Veterans Department in Massachusetts and we
(27:41):
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Well, I've got devastating news forall of our manor listeners at the
moment. As I mentioned earlier inthe show, Red Lobster is seeking a
(28:25):
buyer as they look to avoid filingfor bankruptcy. I know how big a
fan of Red Lobster all the coastalmain residents are. When it's just a
real tough time getting a good freshlobster roll up there, you turn to
Red Lobster. I'm, of coursekidding. The closest one to Main is
in I don't know what's closer Hertfordor Albany to me, but that's where
(28:47):
the closest ones are in New England. Unsurprisingly not a huge presence in New
England. Whenever there are some betteralternatives, wherever you turn around, you
have a significantly better alternative than RedLobster. Red Lobster was previously owned by
Olive Garden parents Darden Restaurants. Theydivested of the chain back in twenty fourteen,
and whether it is that divestiture followedby the revolving door of CEOs that's
(29:10):
been in there since twenty twenty.Maybe it's their unlimited shrimp deal or I
don't know if they change the recipeon their Cheddar Bay biscuits or what.
This is a company that has,well, they've got seven hundred locations with
long term leases in a restaurant segmentthat I think is struggling to stand out
right now, whether whether it's RedLobster or any of their non lobster competitors
(29:32):
in the what do we call thislike the casual dining fast casual? I
don't know if it's fast casual.No, it's not fast casual. Would
be like a Chipotle, right ora Panera. Yeah, that's fast casual.
This this is like casual dining.Yeah, yeah, that's where I'm
toss in this one. And like, honestly, I think they have not
Red Lobster particularly. I haven't beento a Red Lobster, so I'm not.
(29:53):
Oh no, I did go.I insisted my wife and I go
on the way to Chicago once.So yes, I have been to a
lobster. Takes that back not great. I've never been my person Meani,
But uh, you know when Iwhen I look at the prices of some
of these five Guys or Chipotle,right, and compare that to what it
(30:15):
cost me to sit down at arestaurant like this. We're talking about comparable
prices here for in some cases whatis a again different type of service,
But you know, you're sitting down, you've got a waiter, you've got
beverage options, and a full menulike you're looking at now, at price
differential between these types of products thatare very, very similar, and that
(30:36):
should be the selling point and Ithink has been the selling point for some
of these chains like TGI, Friday's, Applebee's and others who are pushing the
fact that hey, you can basicallyget this, you know, get a
meal for a similar price to thesefast casual places and actually sit down with
your family and enjoy it. Theyhave seven hundred locations, and so what's
the point. They're just shutting downentirely now bankruptcy trying to they're looking for
(30:57):
a buyer. But even if theyfind one, I think Chapter eleven is
in their future. But in alllikely, I mean, with seven hundred
locations, I don't think they're goingthe way at the ground round here where
I'm never going to see one again. My guess would be bank staff,
followed by you know, somebody comingin and buy it out, renegotiate all
the leases, renegotiate all the debtthat I'm sure private equity has loaded them
(31:17):
up with over the years, andemerge as a new, slimmer red Lobster
would be my guest less butter intheir future. Yeah, I can't speak
to the lopster roles, but nota problem that we have in the northeast
here. I'm gonna switch gears alittle bit and cover the story that pertains
to titles in the workplace. Wesaw the FTC come out with a ruling
(31:40):
yesterday where they were going to banand not acknowledge non competes, and as
a result of that, there wasa kind of a loophole built into it
where for existing senior executives they wouldhonor those non competes over a certain period
of time. It's there's six monthsfor this to go into a So there's
(32:00):
a story here in the Wall StreetJournal that points out you might see numerous
amounts of senior promotions across the workspaceas they try to as employers try to
get employees grandfathered in under senior titlingin order to enforce non compete agreements.
So you could be seeing the seniorhair stylists out there to make sure she's
locked in he or she is lockedin to a non kid. I liked
(32:23):
the Wall Street Journal one. Theysearched for entry level openings on Indeed's job
board with senior as the keyword andgot more than eight thousand results for senior
entry level positions. You can gofrom a senior in college to a senior
associate. I've had this conversation withmy mom before where other people as well.
(32:43):
Whill they say, well, soand so is a senior vice president.
I was like, do you realizehalf those titles are bs? You
know, some of them have meritto them, depending at the company that
you have to you are at,but they're handed out very lightly in others
and nothing encapsulates is better than andthen Dwight's Swoot's role as an assistant to
the regional manager or assistant regional manager. That is the type of corporate shenanigans
(33:07):
that goes on quite often. Iunderstand for some business out there, they
are legitimately earned, but for othersout there, it is really just to
brush someone's ego in the right direction. Yeah, the piece on the non
competes is well, in my view, probably likely to lose in court,
It would be my guest. Idon't know how you if you missed out
on this, By the way thatthe Biden administration has basically said non competes
(33:30):
eventually are gone. M hm,like even for those senior executives where they're
grandfathering is I think they said thatthat was temporary and certainly no new one
tell out in correct? And howdo you how do you come down on
this, Mike? Because I wastalking about this with Mark on the show
yesterday where I kind of saw bothsides to this argument. I would logically
like to see a bill passed whereif you make under I don't know what
(33:53):
the threshold is, but if you'remaking under like fifty thousand dollars a year,
the idea that you can be subjectto a non compete, to me
is ridiculous and should be completely Yeah, socid. I saw somebody post yesterday
on Twitter that they had a jobthat they made forty seven thousand dollars and
they had to sign a non compete, right like that, that's to me,
it's absolutely ridiculous. However, Ialso think that the executive branch has
(34:15):
no business regulating it. That's true, right, Like Congress needs to pass
a bill here, and I thinkthey should. But yeah, I mean
asking your entry level sandwich maker tosign a non compete, which is a
real thing, by the way,really what Yeah? Yeah, there was
a big sandwich change across the countrythat was using non competes. Uh compete
(34:39):
you know if they still are.Jimmy Johns, Yeah, Jimmy Johns was
using non competes for years with sandwichmakers. They know our secrets, No,
they just don't want them to thick. That's the guy from Everybody Loves
Raven who does those ads right,yes, yes, but oh Brad Garrett.
Yeah. But to further that pointthough, on the non competes,
(34:59):
how often do you see them enforcedwhen the hairstylist leaves, Like, yeah,
it's there, but why was thelawyer going to go after the person
making forty seven grand? Like it'salmost not even worth your out there.
I understand there shouldn't be one inthe first place, but how often do
you even pursue that what money dothey have. Markets remain strongly in negative
territory, with the Nasdaq leading theway down, off over two hundred and
fifty five points at the moment onepoint six percent. We'll have a full
(35:21):
market recap tomorrow, as well asupdates on Google and Microsoft earnings. Have
a great day, everybody,
The Financial Exchange is produced by MoneyMatters Radio and is hosted by employees of
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(00:41):
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(01:07):
Financial Exchange with Mike Armstrong and PaulLane. Welcome back to the Financial Exchange
if you're just joining us now.The markets are in the midst of a
fairly significant sell off here. We'vegot the Dow at the moment off six
hundred and fifty three points one pointseven percent, the S and P off
sixty seven points one point three percent, and the NASDAC off about two hundred
(01:30):
and sixty three points, closing inon one point seven percent. As we
open up the eleven o'clock hour hereRussell two off twenty nine points nearly one
and a half percent, and theyield on the ten year Treasury spiking a
bit up to four point seven zerosix percent. It was a little bit
higher earlier. Today, price ofa barrel of oil down to eighty two
dollars and fourteen cents down one eighttenths of one percent, and a ounce
(01:53):
of gold will go for two threehundred and forty eight dollars as of this
morning. Anything else catching your eyesin markets, Paul, Now, the
bond spike to me, we talkedabout in the first hour show. That
was definitely a surprising outcome from thisGDP report. But to recap on the
GDP side, we saw a firstreading of GDP growth for the first quarter
(02:14):
of twenty twenty four, following tworeally strong quarters. The fourth quarter of
twenty twenty three, you saw GDPgrowing at three point four percent. We
came down to less than half ofthat in the first quarter of twenty twenty
four, one point six percent readon GDP in the first quarter of twenty
twenty four. We also heard fromMeta chief executive Mark Zuckerberg, sorry almost
(02:36):
aid Elon Musk for some reason,Mark Zuckerberg yesterday on that company's earnings,
which earnings themselves quite solid, continuedgrowth as Meta has done over the last
twelve months, but investors quite concernedabout their plans for those profits which are
to pour back into both the metaverseand artificial intelligence, and some investors saying,
(02:57):
where's the payoff going to be?After the bell today, we'll hear
from Alphabet, parent company of Google, as well as Microsoft, and the
same focus is going to be onthose two companies. Are you investing heavily
in artificial intelligence soon? When canwe expect to see a profit from it?
Or are you pivoting? Are you, you know, just seeing sales
growth elsewhere, So all eyes willbe on those two companies because they do
(03:20):
represent five trillion dollars worth of combinedmarket capitalization and about eleven percent of the
overall s and P. Five hundredpeace from Bloomberg today from Connor sen housing
will get more expensive because of theFed. Help me understand that one,
Paul, because that is not theThat's certainly not the goal of the Federal
(03:42):
Reserve when they bump interest rates isto make things more expensive. Now,
what Connor's pointing out is the classic, you know, economic concept of supply
versus demand. And what the storyhas been in the United States on the
supply side is it's been underdeveloped acrossthis country for the last fifteen plus years
since the two thousand and eight housingcrisis as a country as a whole.
(04:03):
Now different areas vary more than others, we have just underproduced in terms of
housing capacity on the supply side.And what Connor points out in this piece
is this idea that by increasing borrowingcosts and increasing the FED fund rates so
that builders out there who are verytied to barring money on whether it be
a variable line of credit or afixed line of credit have to pay a
(04:26):
higher interest rate for the capital thatthey're borrowing to build homes. It's going
to deter them from building it.The Fed's job is to keep inflation under
controlled. But inflation is many components, right, It's not just the cost
of shelter. That's a big componentof CPI, about a third of it,
but there's another two thirds out there, eggs, you know, on
(04:46):
and on and on these other listof items that they have to focus on.
They can't be the solution for everything. That is just not what they're
built to do. They have alimited tool set to work with, and
it's not can you do? Iwould agree there. It's not the Federal
Reserves job to build housing. Let'sclarify. It's not their job to combat
climate change. It's not their jobto cook pauled dinner tonight. Their job
(05:13):
is to maintain a reasonable level ofemployment and maintain reasonable prices. Everything else
is just being added on here.The housing piece that's interesting to me is
you have to go way back inthe history books for this one, but
in the nineteen seventies, the waythat they measured housing inflation included a rent
calculation, but it also included mortgagepayments, and so at that point in
(05:35):
time, what they were seeing is, oh boy, our policy of raising
interest rates to cut down on inflationis actually leading to more inflation in the
way that we measure it because ofthe fact that it included mortgage payments on
a lot of variable rate mortgages.So you know what they did, No,
they just changed how we calculate inflation. Honestly, that's what they did.
(05:57):
In the seventies, they introduced thisthing called rent. Yeah, owner's
equivalent rent, where they're saying,hey, we don't really care what your
mortgage payment is. That's not therelevant piece of inflation. We care about
what you could rent your home outfor if we were on the market right
now. That's how we're going tomeasure whether inflation is being combated here or
not. So we say, youknow, hey, yeah, higher interest
(06:18):
rates should lead to lower cost well, you know, practically speaking in a
number of different ways. No,they lead to higher costs. We just
don't count those towards inflation. Right, you want a car today, that
car payment's going to be a lotmore expensive. You have a bunch of
debt outstanding on your credit card,Those costs went up substantially over the last
few years, neither of which contributeto inflation. By the way, neither
(06:38):
of those things contribute to CPI.We look at in terms of car prices,
we look at, you know,car sales price. We don't look
at monthly payments based on the interestrate on the debt. We do not
look at the new mortgage rates thatyou're getting. We look at other things
like insurance costs on that home orcar. We look at the car price,
the sale price on the home,the rent that you pay, but
(06:58):
we don't actually look at the costof debt and how that contributes. And
so this once again, I don'tsuggest that we do anything about that.
I think that the Fed's method ofdriving rates higher to eventually control demand is
the proper way to handle things.But when we ask questions of people like
how are you feeling about this economy, what does it feel like inflation is
(07:20):
and they give economist answers that don'tmake sense to them that inflation seems to
be getting worse. This is abig part of it. Definitely, if
you had an outstanding credit card bill, inflation did get worse for you because
that rate on that credit card increaseda lot, and you know, regardless
of where egg prices might have gonein the last six months, if you
have one thousand dollars out standing ona credit card, then that bill just
(07:43):
keeps going up and up. Ora home equity line of credit or any
other revolving type of debt, thenthe inflation story is pretty real for you
still at this stage. Yeah,Or if you've bought a home and you're
borrowing at seven or eight percent versusyou know, three or four. Yeah,
we've talked about, you know,with the combination of increase housing prices
plus mortgage rates, you know,the average mortgage payment I think when we
say forty percent higher on the fifty. Yeah, So, yeah, you
(08:07):
can see how people would be respondingpretty negatively to inflation. Even though,
yeah, the way that we measureCPI or PCE, which is coming out
tomorrow, inflation, it's showing,you know, market improvement compared to twenty
twenty two. White colored job growthseems to be stalling, even in a
lot of those pandemic boom towns thatwe've been talking about. Shouldn't be any
(08:28):
surprise anybody listening here that, yeah, pandemic boom towns like Austin, Texas
are not seeing quite the same jobgrowth that they did previously. But I
did find the statistic interesting. Sohiring in professional services, finance, and
technology, those three categories, thosehirings are running at about one third the
rate of the overall labor market,So not one third of the rate of
(08:50):
all the other jobs, but onethird of the rate of the entire labor
market, which speaks to how muchfaster hiring is happening in areas like healthcare,
construction, government work, things alongthose lines. And if you have
a position in you know, advertisingsales for YouTube, or you're you're an
engineer in some of these spaces,or you're in the finance industry, you
know, spreading sheets for a living. Yet it's not exactly as robust as
(09:15):
these labor reports are showing right now, and so some parts of the country,
like San Francisco, where they relyon a huge portion of that type
of labor to grow their city andgrow their tax base, struggling quite a
bit. That's a direct impact ofthose growth companies out there, whether it
be in the startup space, there'sjust been a lot less activity there,
whether it's mergers and acquisitions, IPOs. A lot of that is tethered to
(09:39):
the lending market. It's more expensiveto raise capital and as such you're cutting
headcount or not hiring as many peopleto expand those types of companies. So
the same thing would apply for consultingand banks out there, and that's why
you're seeing like those sectors of themarket be a little bit weaker. The
other areas, though, have pickedup the slock. We've still seen a
strong labor market, but it's beenthese other areas that have been weaker for
(10:01):
some time now. The latest newson inflation, the FED, the economy,
and how the markets are reacting everymorning right here on the Financial Exchange
Radio Network. The Financial Exchange isnow available on your Alexis smart speaker has
to play the Financial Exchange and catchup on anything you might have missed.
This is the Financial Exchange Radio Network. Yesterday President Bien sided was it yesterday?
(10:26):
The TikTok ban? I think itwas yesterday day before signed Tuesday evening.
Recently, very recently, this week, President Biden signed into law,
among other things, a ban onthe TikTok platform that will go into place
within two hundred and seventy days unlessthe platform is sold by its parent company.
Byte Dance takes about nine months,is what we're talking about here,
(10:50):
and very likely the US government willface lawsuits over this from TikTok as well
as some of their users on Idon't really know what, because I'm not
much of a espionage type Act expert. I mean, for context here,
(11:11):
we do this type of thing interms of disallowing foreign entities to own all
sorts of stuff. I know thisis being posed as a very new thing,
but if, for instance, youwant to own the radio station that
this program is airing across, youcannot be a foreign citizen, or at
least you couldn't back in the eighties. I think same goes for network televisions
(11:35):
telecom companies in general. So again, there's no law in the books that
would necessarily allow that to go forwardtoday. But this concept of a certain
piece of technology being required to beoperated and owned by an American entity is
not a completely new concept, andI want to start there as a premis
(11:56):
because I know that that's the casewith radio stations. I believe it's the
case with cell phone services as wellas you know cable program network television programs
as well, so, I thinkthat's an important distinction here. Nonetheless,
this is very likely to end upin court, and I think one of
the top questions that Bloomberg asks andothers are asking is where is China likely
(12:18):
to retaliate based on this, becauseover the last year or so, China's
been pretty hesitant to retaliate all thatdirectly on new sanctions and other items.
I think mainly out of concern thatthey would do work more harm to their
own economy than good. Yeah,they're in a tough spot as it is.
We've covered their property market and justhow dismal that is, and just
(12:39):
the Chinese economy in general is reallyin a transition phase. To put it
nicely, or otherwise you could justsay it's really lousy right now. And
the number is the term that I'veused before, dumpster fire is fair.
Micron was one company that kind ofgot caught in the crosshairs on some of
the restrictions on chips that were slappeddown, and as a result, China
(13:01):
launched a probe into Micron, andthey were really impacted by that probe on
their business front. Similarly, you'vegot on the social media network front,
where Meta and snap are no longeravailable to China's going to say that,
like, what are you gonna do? Band Meta, We're not there,
Snapchat same story, WhatsApp not inthe country, so LinkedIn not there.
So the direct retaliation, you know, China's already banned, all effectively banned.
(13:24):
I think some of them just pulledout because in the case of LinkedIn,
for example, the Chinese Communist Partywas insisting that Microsoft take down negative
posts about the Communist Party even outsideof China, and they just said,
forget this, We're just leaving China. So like, where are you going
to retaliate? I think is afair question. And yeah, some of
(13:45):
the semiconductor companies. If I'm Apple, I think it's unlikely. But I
have to be concerned here too.I was just gonna go there, Mike,
I'd be shaking in my boots ifI was Apple. We've covered on
the show recently the slowdown in demandfor their iPhone products in China. I
have theorized that that's largely because ofthe pushing of the Chinese government to buy
(14:05):
domestic and buy Huawei phones and otheroptions and steer clear from iPhones. Think
about it this way, right,So Apple products I believe are forbidden from
government devices. Yes, China.So let's say you are not a government
worker in China, but your dictatorgovernment is telling its own employees you may
(14:28):
not own an Apple product out ofeither fear, patriotism, or just concern
for other things. If I'm inthat position, even if it's just fear
of my own government, I'm goingto be hesitant to go buy a new
Apple iPhone compared to a decade agowhen the Communist Party was embracing Apple with
(14:48):
open arms. And I think that'sperfectly logical, whether it's whatever the you
know, the push is, youknow, regardless of how direct the Communist
Party is and telling people to notbuy iPhones, I think the insinuation is
there, yep. And I cansee why that's happening. And they're the
next They would be the target hit. You know. We joked about Meta
(15:11):
and Snap not being options, butApple would be the one to come after
if you were trying to do somewhatof a tip for tat deal. Again
comes down to though, are yougoing to harm yourself more than because the
manufacturing, Because if Apple starts seeingtheir sales declined in China, that dramatically.
They've already started to pick up manufacturingin India and Vietnam in other places,
(15:31):
And if you ban them from beingsold in your country, why am
I here manufacturing if I have noaccess to the market. I know that
you manufacture this stuff better than anybodyelse, cheaper than anybody else, and
it's going to be tough to replicateanywhere else in the world. But if
I really can't sell my product inyour country, I'm not going to have
as much of a presence there.So it is this interesting tit for tat
(15:52):
where they want to be able tostrike back, I'm sure, but how
they do it without further sinking theireconomy into a tough sty situation is kind
of an entertaining question, quite honestly. The piece that we mentioned earlier,
they've got two hundred and seventy daysto potentially divest of TikTok, and now
the guessing game begins and the biddinggame begins. In terms of what this
(16:15):
company could be worth, I don'tthink anybody really knows, because I'm not
sure. I'm not even sure wehave real clear information into revenue and sales
and profitability for this Chinese own company. Allegedly, people familiar with the matter
said that their revenue from advertising,aligance live streaming last year was about twenty
(16:36):
two billion. That would imply avaluation of one hundred and ten billion,
depending on what multiple you want touse. But to be clear, it's
unclear what the valuation and what therevenue really looks like. To be clear,
it's unclear when you're dealing with China, got it, and that's just
how China goes in general. Butit is certainly something that is going to
(16:56):
be of interest what US company couldpossibly take over and would be willing to
pay whatever premium they decide in orderto take over the US operations of TikTok.
The one piece that'll add on thedeadline is that the president, I
believe, does have the ability toextend it to twelve months. Nine months
(17:17):
is the initial one, but thenhe can grant an extension for additional three
But bottom line, in the nextyear or so, something needs to be
resolved or for all the TikTok usersout there, then they will be out
of luck. I'm gonna have toreturn that light stand that I bought for
all my fancy dance videos that Ipost on TikTok. I'm not sure,
not sure what the resale value ison that thing. And also to be
(17:38):
clear on whatever valuation is out there, the Chinese government has made very clear
that they don't want this sold andthat they're going to allow it in the
first place, So we can hypothesizeabout pricing. Pricing might not be relevant
because they might not be able tobe sold. True. Bringing the latest
(18:04):
financial news straight to your radio everyday, It's the Financial Exchange on the
Financial Exchange Radio Network. The FinancialExchange streams live on YouTube. Like our
page and stay up to date onbreaking business news all morning. Long Face
is the Financial Exchange Radio Network.Two pieces on retirement that we have,
(18:29):
one from the Wall Street Journal,another from Is This the Globe maybe quoting
from the ARP. In both casessome changing patterns in terms of people's work
and retirement habits. According to theWall Street Journal, some twenty eight percent
of workers said that they expect toretire at age sixty five. Age sixty
five is also the median answer tothe question for workers, so the most
(18:52):
common middle answer is age sixty fiveis when they intend to retire. In
spite of the fact that the fullretirement age for Social Security these days pushing
up to sixty seven years old,and I guess I would agree, Like
when I talk to people, Ithink sixty five is the most common answer
that I get to. I wouldagree, And it's important to note that
that's the age that you can enrollin Medicare, And yeah, that seems
(19:15):
like a very common one. Ispeople want to know that their healthcare is
going to be covered, but you'llhave an option that each change one thousand
dollars a month for private health insurance. However, while that goal for years
now has been sixty five, themedian actual age of retirement has been sixty
(19:37):
two, which I find fascinating thatyou know, also lines up with the
earliest you can claim Social Security benefits, so that part's interesting. While at
the same time, one in fourUS adults over the age of fifty say
they expect to never retire. Andto me, this is all a story
about expectations versus reality, and Ithink think is a really really important one
(20:00):
to drive home. Paul. Iknow you have. I have as well,
met with people who have every intentionof working till sixty five, sixty
eight, seventy, whatever that numberis. For you or according to ARP,
forever planning to work, you know, throughout their retirement. The fact
of the matter is a sometimes healthor lifestyle or other things don't allow for
(20:25):
that. Especially as you're getting intoyour sixties. You've got potentially family stuff,
grandkids that you want to help carefor. You might have health problems,
your spouse may have health problems.And quite honestly, whether I like
it or not, our labor markethas a pretty evident bias towards younger workers.
Bias in favor of younger sure,of course, and so when you
(20:48):
look at layoffs, when you lookat voluntary bias, who do they always
target. It's the older workers.And so that ability, even if you
have every intention, that ability towork towards age sixty five, is a
big one that I end up talkingto clients about. Is you know,
yeah, I know that's your goal. I hope you get there, but
we need to plan for that notbeing a distinct possibility. Right, Like
(21:10):
what happens if you will get laidoff in your early sixties and you need
to find another job and it endsup being forty percent less than what you
were working for before, which,unfortunately, again agism is a real thing
out there that's been a reality fora lot of people over the decades.
Yeah, you also have depending onthe sector, so technology tends to skew
(21:32):
younger, right, So there's theimpetus to kind of force out those older
employees Mike, like you were mentioning. And then there's other areas of work
that are physical in nature that whereyou may want to go to sixty plus,
but the nature of the job justdictates that your body breaks down before
here. You're a line worker foreversource, it's going to be tough to
maybe climb up that pole at ageseventy compared to when you're forty. If
(21:53):
you are facing down retirement in thenext decade, and you're trying to figure
out all the answers to the questions, how long do I need to work,
how long will I realistically be ableto work? And what happens if
I can't get to that eventual goal? Will I still be all right?
These are the types of questions thatfinancial advisors assist with. If you're facing
(22:14):
down these types of questions and tryingto figure out how that four oh one
K or pension or social security areall going to work together. To build
your retirement strategy. Call the ArmstrongAdvisory Group phone numbers eight hundred three nine
three for zero zero one. Thisis at the core of everything Armstrong Advisory
(22:34):
Group does with our clients. Again, to speak with an advisor at aag
Armstrong Advisor Group, the phone numberis eight hundred three nine three for zero
zero one, or you can alsorequest an appointment online at Armstrong Advisory dot
com. The proceeding was paid forby Armstrong Advisory Group, a registered investment
advisor. Nothing in the ad orin any Armstrong guide a specific financial,
(22:56):
legal, or tax advice. Consultyour own financial, tax into state planning
advisors before me making any investment decisions. Armstrong may contact you to offer investment
advisory services. I was going totalk about Sadi Arabia, but it just
seemed a little bit too heavy.Well, we'll have to punt that one
to tomorrow. I'm instead going totalk about US fertility rates, which is
also not exactly a good news story. The total fertility rate in the United
(23:17):
States fell to one point six totwo berths per woman in twenty twenty three.
It's a two percent decline from ayear earlier, and drum roll the
lowest rate recorded since the government begantracking the data in the nineteen thirties.
Tucker, Paul myself, congratulations allon bucking the trend here. All of
(23:37):
you are above that one point sixy two average. So way to go,
keep on chugging. I'm for one, put in my hand. I
will not keep on chugging. No, no thanks. Drink from that fire
hose there, Tucker. But hereis why. Let's bring this back to
why this actually matters again. Ithink you can make a compelling argument to
(24:00):
me that this doesn't necessarily matter forproductivity, it doesn't necessarily matter for quality
of life. We've seen other countrieswith far worse fertility rates and growth population
growth rates that while their stock marketmight not be great, the quality of
your life in Japan. I don'tthink anybody looks at and says, oh
God, what a terrible place tolive. The problem that this potentially and
(24:25):
very likely creates or makes worse isthat many of our social programs are built
on the idea that the population continuesto grow. The two biggest ones that
I'm thinking of happen to be socialsecurity in medicare, but there are plenty
others as well, and if youhave fewer and fewer people eventually aging into
social security and medicare, then Imean it's tough to make the problem that
(24:51):
we already have any worse than italready is. So I don't think the
low birth rates yesterday are going tomake the eight years on soci security that
we have left turn into six.But long term, any of the fixes
that are going to be proposed,right, if you're fixed to social security
as oh, we're just going toraise taxes a little bit and pull back
the retirement age, that becomes moredifficult to slower the population growth is.
(25:11):
So this is a real phenomena we'vebeen experiencing for years. The fact that
we marked an all time low isnot exactly a great sign. The question
also is again to me, there'sa few ways to fix the social programs
issue. Either you completely dramatically reframehow all these programs work in terms of
(25:33):
taxation, benefits, et cetera.Or you find a way to grow the
population and birth rates are following.So immigration is the logical alternative there if
you're not going to, like Isaid, dramatically reform our social program Yeah,
there's a stat that always blows meaway. Pertaining to Social Security mic
where in nineteen forty there were fortytwo workers per retiree being paid out benefits.
(25:56):
That ratio today sits at three workerspaying for every one retirees benefits.
So there's just far less workers inthe system paying. What was that nineteen
forty nineteen forty forty two to oneper per retiree paying taxes to fund their
benefits. Now that ratio sits atthree to one. And per the demographics,
(26:18):
the piece that you're mentioning at bytwenty fifty projected to be two to
one, done by a study hereat UVM that I was reading here.
That don't work to good, No, it does. It's going to be
a real problem, real flip ofthe pyramid, and that's not what you
want. And Social Security, Medicareand the budgeting issues that this country has.
It's not something that's going to comeup as a red flag today or
(26:40):
tomorrow, but it looms as asignificant risk that needs to be resolved over
the next decade. Really sooner itshould be acted upon, sooner it won't
be. But yeah, the longeryou wait, the worse the outcomes have
to be. If you decide tomove tax rates eight years from now,
then you have to move them higherthan if you move them right now.
That seems logical to me, butI have to repeat that because our lawmakers
(27:00):
don't see don't count on that socialmind seem to get it quick break when
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Well, I've got devastating news forall of our manor listeners at the
moment. As I mentioned earlier inthe show, Red Lobster is seeking a
(28:25):
buyer as they look to avoid filingfor bankruptcy. I know how big a
fan of Red Lobster all the coastalmain residents are. When it's just a
real tough time getting a good freshlobster roll up there, you turn to
Red Lobster. I'm, of coursekidding. The closest one to Main is
in I don't know what's closer Hertfordor Albany to me, but that's where
(28:47):
the closest ones are in New England. Unsurprisingly not a huge presence in New
England. Whenever there are some betteralternatives, wherever you turn around, you
have a significantly better alternative than RedLobster. Red Lobster was previously owned by
Olive Garden parents Darden Restaurants. Theydivested of the chain back in twenty fourteen,
and whether it is that divestiture followedby the revolving door of CEOs that's
(29:10):
been in there since twenty twenty.Maybe it's their unlimited shrimp deal or I
don't know if they change the recipeon their Cheddar Bay biscuits or what.
This is a company that has,well, they've got seven hundred locations with
long term leases in a restaurant segmentthat I think is struggling to stand out
right now, whether whether it's RedLobster or any of their non lobster competitors
(29:32):
in the what do we call thislike the casual dining fast casual? I
don't know if it's fast casual.No, it's not fast casual. Would
be like a Chipotle, right ora Panera. Yeah, that's fast casual.
This this is like casual dining.Yeah, yeah, that's where I'm
toss in this one. And like, honestly, I think they have not
Red Lobster particularly. I haven't beento a Red Lobster, so I'm not.
(29:53):
Oh no, I did go.I insisted my wife and I go
on the way to Chicago once.So yes, I have been to a
lobster. Takes that back not great. I've never been my person Meani,
But uh, you know when Iwhen I look at the prices of some
of these five Guys or Chipotle,right, and compare that to what it
(30:15):
cost me to sit down at arestaurant like this. We're talking about comparable
prices here for in some cases whatis a again different type of service,
But you know, you're sitting down, you've got a waiter, you've got
beverage options, and a full menulike you're looking at now, at price
differential between these types of products thatare very, very similar, and that
(30:36):
should be the selling point and Ithink has been the selling point for some
of these chains like TGI, Friday's, Applebee's and others who are pushing the
fact that hey, you can basicallyget this, you know, get a
meal for a similar price to thesefast casual places and actually sit down with
your family and enjoy it. Theyhave seven hundred locations, and so what's
the point. They're just shutting downentirely now bankruptcy trying to they're looking for
(30:57):
a buyer. But even if theyfind one, I think Chapter eleven is
in their future. But in alllikely, I mean, with seven hundred
locations, I don't think they're goingthe way at the ground round here where
I'm never going to see one again. My guess would be bank staff,
followed by you know, somebody comingin and buy it out, renegotiate all
the leases, renegotiate all the debtthat I'm sure private equity has loaded them
(31:17):
up with over the years, andemerge as a new, slimmer red Lobster
would be my guest less butter intheir future. Yeah, I can't speak
to the lopster roles, but nota problem that we have in the northeast
here. I'm gonna switch gears alittle bit and cover the story that pertains
to titles in the workplace. Wesaw the FTC come out with a ruling
(31:40):
yesterday where they were going to banand not acknowledge non competes, and as
a result of that, there wasa kind of a loophole built into it
where for existing senior executives they wouldhonor those non competes over a certain period
of time. It's there's six monthsfor this to go into a So there's
(32:00):
a story here in the Wall StreetJournal that points out you might see numerous
amounts of senior promotions across the workspaceas they try to as employers try to
get employees grandfathered in under senior titlingin order to enforce non compete agreements.
So you could be seeing the seniorhair stylists out there to make sure she's
locked in he or she is lockedin to a non kid. I liked
(32:23):
the Wall Street Journal one. Theysearched for entry level openings on Indeed's job
board with senior as the keyword andgot more than eight thousand results for senior
entry level positions. You can gofrom a senior in college to a senior
associate. I've had this conversation withmy mom before where other people as well.
(32:43):
Whill they say, well, soand so is a senior vice president.
I was like, do you realizehalf those titles are bs? You
know, some of them have meritto them, depending at the company that
you have to you are at,but they're handed out very lightly in others
and nothing encapsulates is better than andthen Dwight's Swoot's role as an assistant to
the regional manager or assistant regional manager. That is the type of corporate shenanigans
(33:07):
that goes on quite often. Iunderstand for some business out there, they
are legitimately earned, but for othersout there, it is really just to
brush someone's ego in the right direction. Yeah, the piece on the non
competes is well, in my view, probably likely to lose in court,
It would be my guest. Idon't know how you if you missed out
on this, By the way thatthe Biden administration has basically said non competes
(33:30):
eventually are gone. M hm,like even for those senior executives where they're
grandfathering is I think they said thatthat was temporary and certainly no new one
tell out in correct? And howdo you how do you come down on
this, Mike? Because I wastalking about this with Mark on the show
yesterday where I kind of saw bothsides to this argument. I would logically
like to see a bill passed whereif you make under I don't know what
(33:53):
the threshold is, but if you'remaking under like fifty thousand dollars a year,
the idea that you can be subjectto a non compete, to me
is ridiculous and should be completely Yeah, socid. I saw somebody post yesterday
on Twitter that they had a jobthat they made forty seven thousand dollars and
they had to sign a non compete, right like that, that's to me,
it's absolutely ridiculous. However, Ialso think that the executive branch has
(34:15):
no business regulating it. That's true, right, Like Congress needs to pass
a bill here, and I thinkthey should. But yeah, I mean
asking your entry level sandwich maker tosign a non compete, which is a
real thing, by the way,really what Yeah? Yeah, there was
a big sandwich change across the countrythat was using non competes. Uh compete
(34:39):
you know if they still are.Jimmy Johns, Yeah, Jimmy Johns was
using non competes for years with sandwichmakers. They know our secrets, No,
they just don't want them to thick. That's the guy from Everybody Loves
Raven who does those ads right,yes, yes, but oh Brad Garrett.
Yeah. But to further that pointthough, on the non competes,
(34:59):
how often do you see them enforcedwhen the hairstylist leaves, Like, yeah,
it's there, but why was thelawyer going to go after the person
making forty seven grand? Like it'salmost not even worth your out there.
I understand there shouldn't be one inthe first place, but how often do
you even pursue that what money dothey have. Markets remain strongly in negative
territory, with the Nasdaq leading theway down, off over two hundred and
fifty five points at the moment onepoint six percent. We'll have a full
(35:21):
market recap tomorrow, as well asupdates on Google and Microsoft earnings. Have
a great day, everybody,
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