May 2, 2024 • 38 mins
Chuck Zodda and Mike Armstrong react to the optimistic comments made by Jerome Powell about inflation and the future of interest rates. What does the Fed's moves mean for mortgages and credit cards? Labor market data says everything is great, for many looking for a job that isn't the case. Google's antitrust suit is set to conclude this week. Will Big Tech get another victory?
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Boston is presented by Veterans Development Corporation. This is the Financial Exchange with Chuck
Zada and Mike Armstrong. Chuck,Mike and Tucker with you here. It
is the day after the May meetingof the Federal Reserve Open Market Committee,
and can best be summed up bymy favorite Shakespeare quote, full of sound
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and fury, signifying nothing. Andwe saw this in afternoon trading yesterday,
which was just a wild day.Might I add that we that we saw
in not even a day, wildhour in markets. So J Powell gets
up, he's got the purple tieon. Did you guys see the purple
tie yesterday? Not live classic purpletie, you know, just you know,
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nice steady, you know, nothingfancy, just classic, and the
S and P five hundred just beforehe was speaking at four twenty I'm sorry
at two twenty pm, was tradingat five twenty nine point fourty seven.
J. Powell starts speaking and themarket says, oh, Jay's being pretty
dubbish here. We're gonna rally sixtypoints to five thy eighty four and forty
(02:10):
seven, lovely, And then weclosed just below where we ended where we
started there at about five thousand andseventeen, So we we round tripped in
span of about an hour and ahalf and I don't really know why quite
honestly, it was just noise.But let's talk about what Jay Powell said
(02:32):
and also what he didn't say.First thing, Powell did not say explicitly
that they were considering hikes, whichis something that I thought would have been
hawk as she said, look,we're you know, our next move is
most likely gonna be down like we'rewe're just you know, gonna have to
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watch what the data does, blahblah. But he did not explicitly say,
hey, we might have to hikenext time, which I thought was
notable or not next time, butnext move. So I thought that was
somewhat notable. And it is askedpretty explicitly about that a bunch of times,
like at least three. I thinkthat I that I caught other things
of note, not in terms ofwhat he said, but what the FED
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did. The FED is making someadjustments to their quantitative tightening program. Did
you notice this, mic I did, Yeah, still continuing to sell off
bonds by at a slower pace.Was I believe the takeaway? So here
is what is going on is thatthe Federal Reserve owns a whole bunch of
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bonds. The last time I checkedit somewhere in the ballpark of like seven
and a half trillion dollars now intreasuries and mortgage backed securities. And what
the Fed has been doing is asthose bonds mature, because they don't just
sit there like they're all kind ofcreeping towards maturity, just like we're all
creeping towards death. And so asthose analogy exactly when a bond mature is
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it dies, right like, that'skind of what it is. And so
as those mature, what the FEDhas been doing is they've been letting sixty
billion dollars in treasuries mature each monthwithout rolling them back into the balance sheet.
So it's it's pretty much the balancesheet has been shrinking by about sixty
billion dollars in treasuries per month.And what the Fed said that they were
(04:19):
going to do going forward is slowthe pace of that of that maturation that
they allow from sixty billion dollars amonth to twenty five billion dollars a month.
And what this means, if you'relooking for kind of the meat of
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it, is that the Fed isgoing to be holding if you look at
it over the course of a fullyear do thirty five billion dollars times twelve,
they're going to be holding four hundredand twenty billion dollars more in treasuries
a year from now than they wouldhave otherwise, which means four hundred and
twenty billion dollars in treasuries are notmaking it to the open market that need
(05:01):
to be sold on the open market, meaning you're keeping longer term rates lower.
Yes, supply and demand. Hey, if there are fewer bonds coming
to market in the same number ofbuyers, great yields can be lower because
prices will be higher because there's goingto be more competition for the remaining bonds.
So that's one of the things thatI think you can interpret as dubbish
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because look, even with deficits,you know, two trillion dollars a year,
four hundred and twenty billion dollars isstill a big chunk of change.
M It's not nothing like that's athat's a decent supply that Janet Yellen doesn't
need to figure out, Hey,how do I sell these, how do
I place these? What do Ihave to do with this? So I
think that that's something that's that's meaningfulthere. So what we end up with.
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And where this matters, in myopinion, is not so much what's
happening in short term rates, becausethe feed hasn't moved anything. They haven't
moved anything in what six months now. I think right the long end of
the curve is where all the actionis. And we've got a fascinating setup
right now that's happening on the USten year where at the start of this
year, beginning of this year,US tenure opened at three point nine six
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percent, today it's at four pointsix four percent. But for the last
month now, since not last month, but almost last month, last three
weeks, since April twelfth, we'vebasically between been between four point five and
four point seventy five on the tenure. You've kind of been coiling in this
narrow range for the last three weeksafter you know, some some meaningful volatility
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and rates over the last couple ofyears, quite honestly, and so this
has provided a little bit of stabilityto markets now over that time where the
S and P five hundred is basicallyflat over the last couple of weeks after
you know, some dips earlier inApril, and so I think that this
is one of the most important thingsthat we watch here as far as two
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things. Number one is markets.The second piece is housing. Which do
you want to touch first? MicHouses are housing? Housing? We let's
talk housing talk, Yeah, let'slet's let's talk housing here. According to
Mortgage News Daily, the national averagethirty year fixed rate mortgages at seven point
four to one percent. That's upfrom six point six percent at the start
of the year. Mortgage rates haverisen almost one percent since the start of
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the year. So the next movethat you see in the ten year treasury
is gonna have big implications for housingbecause the thirty year fixed rate mortgage tracks
the ten year treasury pretty closely.If the next move on the ten year
is up to five to five anda quarter percent and you actually get eight
percent mortgage rates, nothing slowed downthis housing market so far this year.
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You still have volumes that are movingup, you still have more activity,
you've got more sellers. But weonly touched eight percent mortgage rates for two
days in October of last year,the eighteenth and nineteenth of October. Other
than that, we have not seeneight percent mortgage rates since you gotta go
back to two thousand, twenty fouryear interesting, Okay. You know,
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if if you were buying a hometoday, if you're a millennial who's you
know, in their thirties, orif you're you know, buss your heart,
if you're a gen zer in yourtwenties trying to buy a home today,
you literally have never seen mortgage ratesthis high, right And it doesn't
mean they can't go higher. Imean, look, they could in theory.
I mean we back in the Alot of our listeners will tell you
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in nineteen eighty one, mortgage rateswere eighteen nineteen percent. That was the
thing. I don't think we're goingback there, because it's it's kind of
different right now. But what doesthat mean for housing? If you see
mortgage rates with an eight in frontof them, g that's a that's a
big psychological hurdle to ge get over, you know, especially given where pricing
still is. So that could besomething that you know, does slow housing
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and potentially drive some recessionary impulses inthe economy. That could happen. On
the other hand, Mike, let'ssay that inflation data starts to look a
little bit better. I know whatI think, But what do you think
happens if we go back down fromseven and a half down to six and
a half percent on mortgage rates.The market absolutely takes off and gets not
(09:09):
nutty because there's enough there's now abig enough increase in terms of inventory to
not make it like it was intwenty twenty one, but it probably goes
pretty buck wild. You get mortgagerates into the sixes, you're gonna have
more inventory because more people can sell. Yeah, it's great for volume and
for economic activity. Yep. Itactually probably hurts pricing a little bit because
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I bet sellers outpaced buyers at first. You know, there's a lot of
people. I've talked to a lotof people that are itching to sell their
homes, but they don't want toright now because they're like, I'm still
sitting on these low mortgage rates.I don't want to take out a mortgage
at seven and a half if Ican avoid it. Yep. On the
margins, you're starting to see fewerpeople doing that. So it's you know,
there's more inventory, but there area lot of people that are itching
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to be able to list if ratesjust get a little bit lower. So
we're at another inflection point here,and we've you know, it's it's something
where we've been seeing these kind ofevery three to four months, and you
know, this next one is onthat tenure that I think is really important
to watch because if it drives higher, I do think that could be something
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that drives a potential recession in thesecond half of this year. If it
drives lower, then then this economyis going to be cooking again by the
second half of this year in myopinion. Yeah, I mean to I
guess, really baseline set where thingshave gone over the last six months.
October November, December, you hadthese three months that basically showed inflation was
printing two percent. January February Marchyou had data sets showing inflation was printing
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four percent at first on the youknow Q four of last year data investors
were taking it as inflation is defeatedand the world is perfect. Then you
had these three months and it wascomplete reversal, saying rates can't go anywhere,
and the job is not done.What are you going to get out
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of the next six months? That'sthat's really the end. All be all
right, and everybody has their forecast. Everybody has their predictions, even Jerome
pell and the Federal Reserve is sittinghere and saying, we don't really know.
We think that it's probably not goingto go so high that we need
to raise rates, but we don'tknow. We have to wait and see.
And I wish they would just leaveit at that that, Hey,
we don't know and we have towait and see. This Freederal Reserve has
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a bit of a bias towards tellingyou what they think they're going to do,
which is lower rates. But I'llbe the first say I don't know
where we're going to go over thenext three months in terms of inflation.
We're going to have to wait andsee if it goes and reverses itself.
Here's just something that I'll throw outthere. You mentioned that, Hey,
you had this three month period whereinflation looked like it was around two.
(11:48):
Then we had this three month periodwhere it looked like it was around four.
Mike, what's the average of twoand four? Three? Most of
my right now? Two plus four? Yeah? Okay, yeah, I
look, you did the math.I appreciate you doing that. Form Bank.
It's live, it's live radio.I gotta be careful with that.
Most of the data that I seeout there in terms of how you know,
(12:11):
people way smarter than me are modelingthis, are showing inflation that's consistent
with a three to three and ahalf percent long term range, and maybe
what we are getting here is justnoise around that. And where I'm starting
to go is that this rebound andinflation it may continue, like you might
see a few more months that look, you know, kind of in that
(12:33):
four percent range. But I'm startingto settle on the idea that, hey,
maybe inflation is just going to runthree to three and a half going
forward for you know, I feelthe next five years. If I may
pull a quote then from yesterday's pressconference on that subject, Chuck absolutely quote,
of course, we're not satisfied withthree percent inflation, Powell said,
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quote three percent can't end a sentencewith satisfied. Well, and that's because
they boxed themselves in, because,like I'm not saying the three to three
and a half percent inflation is theend of the world, but according to
your own power, it is.And that's the problem is that in the
nineteen nineties, which many of uscan probably look at as one of the
one or two best economies that we'vebeen in our lifetimes, you had three
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percent inflation. That's not the endof the world. The end of the
world is like what we saw acouple of years. Well, even like,
that's not the end of the world. The end of the world is
what like Turkey's going through right nowwith sixty five percent inflation, that's,
you know, really bad. Ithink that when we look at where we
stand here, we may find that, hey, over the next three to
(13:39):
four years, we might average threepercent inflation, which means rates may not
need to move up much, ifat all, But you also might not
have much room to come down.And that may be where we end up
landing, is that it's just kindof sticky in this three to three and
a half range, which isn't necessarilythe end of the world. But if
(14:03):
if you have a two percent targetand you can never hit it, and
you never really try to hit it, is it really a target? Like
That's the question that I think wehave to now ask, is what the
heck are you doing? Man?Let's take a quick break, and when
we come back, let's talk alittle bit more about what the recent action
(14:26):
from the FED means in terms ofwe already talked mortgages. Let's talk a
little bit credit cards, auto loans. We'll talk about those and some other
consumer facing areas right after this businessand financial news affecting the markets and your
wallet. We've got it all straightfrom Wall Street right here on the Financial
Exchange Radio Network. Find daily interviewsand full shows of the Financial Exchange on
(14:50):
our YouTube page. Like us onYouTube and get caught up on anything and
everything you might have missed. Thisis the Financial Exchange Radio Network. All
right, Mike, let's talk alittle bit about where things go on rates
for a lot of financial products thatlisteners might be considering or might currently have
(15:15):
at this point. Start credit cardrates at first. What are we seeing
on that side of things? Thoseare gonna be the ones that are tied
to, specifically the Fed funds rate, and those ones are going to be
staying as high as they have been. I don't know if you have the
average outstanding credit card interest rate,but I mean certainly see, oh you
do. Mid twenties would be myguess. Twenty two point sixty three percent
(15:37):
not too far away. Yeah,And I would imagine that just you know,
a couple of years ago, youwere looking at an average that honestly
wasn't all that much lower, butmaybe fifteen percent would be my guess as
of like twenty twenty or twenty twentyone. These things tend to be outrageous
and just about any interest rate environment, but a big uptick over the last
few years. So that's what we'reseeing on the credit card side of things.
(16:00):
Auto loans. When we talk aboutauto loans and what we are seeing
there, according to data from Edmonds, the average rate on new car loans
was seven point two percent in March. The average rate on used car loans
was eleven point nine percent in March, both of these up from the year
before at seven and eleven point fourpercent, respectively. Car loans they tend
(16:22):
to track pretty closely the five yeartreasury note. And the reason four that
is that most car loans think abouthow long they are. They're typically three
to six years now, and sothat five year treasury yield is typically a
benchmark for what you see on autoloans. Anything to add on that side
of things, Yeah, two things. One, I think that we should
(16:45):
just reiterate this that it's looking lessand less likely like these rates come down
this year. And so for everybodythat's listening out there, when I mentioned
that to people, they get kindof surprised, like, oh, mortgage
rates are at seven and a halfpercent, and guess what. The latest
indications are that they're not really goinganywhere, and so if you're planning on
that, please adjust your planning andkind of understand where things are looking right
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now. The other piece that I'lljust mention about all this is interest rates
on credit cards, interest rates onauto loans, mortgages. None of these
things factor into the Bureau of LaborStatistics ways of measuring inflation, and I'm
not necessarily saying that they should.But when you have Jamie Diamond the other
day was talking about how, yeah, the average American's doing pretty well,
(17:30):
and he got roasted for it becauseyou know, a lot of Americans aren't
doing well. And that's what Ikeep looking at is, let's say you
are in that bottom fifty percent ofwealth. I'm not even talking about the
you know, the bottom ten orthe bottom eighty, like, the bottom
half, you are going to bemore susceptible to a lot of these changing
interest rates than maybe the top half. Right, if you're in that bottom
(17:51):
half, you might not have amortgage yet, you might be paying rent
instead. You are more likely tohave an outstanding credit card balance, or
to have a home equity line orsome form of debt that is adjusting on
an adjustable rate basis, And soyou might be looking at these three and
a half percent inflation numbers and saying, well, hell, that's not my
experience. And this is why Ithink this speaks to a lot of what
(18:14):
we continue to see in terms ofpeople's opinions on the economy and why they
might not trust the inflation data.Is Yeah, if you have a credit
card balance outstanding, not only hasthe balance probably grown because of inflation and
products, but the interest rate andtherefore the minimum payment on that credit card
has continued to grow as well.One other thing that I'll add, just
on the auto loan side of things, just from having talked to a number
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of people who work at dealerships,even if you are buying a car new
or used, in a lot ofcases, there is a strong incentive for
the dealer to finance that vehicle becausethey receive compensation from the financing arm in
order to do so. Even ifyou're considering paying cash, if you have
the ability to do so, takea look at the financing that's available and
(19:02):
use it to negotiate yourself a betterdeal on the car. Make sure there
is no prepayment penalty on those loans, and oftentimes you might be able to
take one or two thousand dollars offthe price of the car by financing it
and then paying that loan off onceit is in your possession. But again,
make sure there are no pre paymentpenalties, because if there are,
(19:22):
they could eat through that savings.But just something of note there. Let's
take a quick break. When wecome back. Wall Street Watch is next,
and then we're talking the jobs market. Like us on Facebook and follow
(19:45):
us on Twitter at TFE show.Breaking business news is always first right here
on the Financial Exchange Radio Network.Time now for Wall Street Watch, a
complete look and what's moving market sofar today on the Financial Exchange Radio Network.
Markets are in positive territory at themoment, one day after the Fed
(20:06):
kept interest rates steady as expected,where fitchairman Jerome Powell hinted it was unlikely
the Central Bank's next move will bea rate hike. Wall Street is also
ready for tomorrow morning's big jobs report. At the moment, the Dow is
up by half a percent. SMPfive hundred is up twenty points, just
over two thirds of a percent,and the Nasdaq is up by two thirds
(20:30):
of percent as well. Russell twothousand is up by half a percent.
Ten yure treasury yield is up bythree basis points at four point six to
two percent, and crude oil mostlyflat edging higher, trading just above seventy
nine dollars a barrel. Shares inBoston based Wayfair up by eleven percent after
(20:51):
the online furniture retailer set its salesdeclined during the first quarter. However,
the company narrowed its losses after cuttingthirteen percent of its workforce to start the
year. Wayfair also beat street expectationson the top and bottom lines, while
it saw its active customers grow nearlythree percent compared to a year ago.
(21:11):
Meanwhile, Moderna posted a narrow,unexpected loss for the first quarter as a
result of the pharmaceutical company's cost cuttingefforts. Sales of its COVID vaccine also
surpassed Esimate's that stock up by eightpercent. Elsewhere, a Peloton down by
eleven percent after the struggling fitness equipmentcompany announced that CEO Barry McCarthy would step
(21:32):
down. The company also announced itwould reduce its workforce by fifteen percent.
Chuck and Michael Moore and Peloton inthe next hour, Door dashed down by
twelve and a half percent after thefood delivery company posted a better than expect
a bigger than expected loss, excuseme. In the first quarter, Qualcom
up by nine percent after the chipmaker reported a small increase in first quarter
(21:53):
sales, saying its inroads into supplyingchips to automaker's help drive sales. And
after two today's closing bell, we'llget another major first quarter earnings report from
tech giant Apple. I'm Tucker Silvan. That's Wall Street Watch, Mike.
I want to talk about this piecefrom the Wall Street Journal. It's titled
a strong job market question mark.Try telling that to these workers. Job
(22:17):
Seekers say getting hired is deceptively hard, and recruiters agree that qualified candidates are
often passed over. Your thoughts,I guess my first thought would be asked
those same workers if they'd prefer thisjob marker at the twenty eleven one everything's
relative. Look, it's possible toboth have a very strong labor market,
which I would describe right now asa very strong labor market that is also
(22:41):
challenging for some workers. And there'sa few statistics here that you can point
to about how it may be challenging. One in fifty American workers jumped from
one company to another back in Marchof this year. So that number is
among the lowest in three decades.So the churn rate, which was really
high over the last few years,has come back down. Employers, i
(23:03):
think, are asking a lot moreof their employees than they were just a
couple of years ago. They're havingan easier time retaining there is less of
a pressure on increasing wages. Butoverall, again and this is not me
just quoting government data, whether you'relooking at data from the US government,
whether you're looking at data from privatepayroll providers such as ADP, some alliteration,
(23:30):
you're still showing a labor market thatis quite tight in terms of unemployment
and continues to actually add employees ata pace faster than we have people turning
eighteen years old. Do you havea different conclusion than me. No,
here's the thing. Look, anecdotally, I'm sure that there are people that
(23:52):
can't find a job, that areapplying over and over and over and can't
get an interview and can't you know, get where they're trying to go.
And I'm I'm one hundred percent sure. It's frustrating. I've been there myself.
I mean, I was in themiddle of you know, two thousand
and nine when the world had kindof fallen apart. I was one of
those people that had sent out,you know, dozens of resumes. Quite
(24:15):
honestly, like close to one hundredand fifty I think it was by the
time it was all said and done, and I think I had maybe like
three interviews, and like, it'sit's it's hard, it sucks. I
think it's challenging to try to extrapolatethat and say that there's like a systemic
problem in the labor market right now, because whether you're talking about government published
(24:40):
data, privately published data, it'sall kind of pointing in the same direction,
which is that, yeah, thelabor market's not as in favor of
workers as it was back in twentytwenty one, in twenty twenty two,
because that was just unsustainably hot.But you know what, what are the
(25:00):
pieces that we're gonna publish when unemploymentgoes to ten Are we going to publish?
Like what what do you even writeat that point. Yeah, And
this is the problem is that Ifeel like in financial media there is active
rooting for recession now like it's it'sbad, mic, I'm really sorry,
(25:23):
but it's it's getting bad. Andit's not to say that things are perfect
because they're not. Like it's it'spossible to say, hey, inflation's too
high, the job market's slowing,Like you can say these things without having
to make it something bigger that oh, is this a sign of recession.
No, it's probably not. Ijust I think what what is challenging for
(25:47):
me is for someone to write astory about the challenges of the labor market
while not acknowledging that the unemployment rateis at multi decades lows, that the
number of jobs added to the economyand wage growth have also seen kind of
record breaking numbers over the last fewyears and continue to maintain themselves. Again,
you can say all that and acknowledgeall of that while still acknowledging that,
(26:08):
yeah, there are challenges, Like, if you're a technology recruiter,
it might be a more challenging marketthan you saw a couple of years ago.
If you worked in coding for abig tech company, you might not
have the same skill set that theyare looking for on the artificial intelligence side,
and that can be dramatically challenging.But if you say all that and
then don't acknowledge that, oh,and by the way, unemployments lower than
(26:30):
it has been for any time inthe last decade, and multi government and
non government sources really fundamentally confirm allof that, regardless of the revisions that
you see on a month to monthbasis, then it just seems dishonest.
One area that I'll say, Ithink maybe overstating the tightness of the labor
market. If I'm trying to cherrypick data and find some of this the
(26:52):
surveys that are done on the jobopenings, I'm starting to see more and
more evidence in this article points ofthe same thing that come companies are just
keeping jobs open for a long periodof time that they have no intent to
actually fill at any point in timebecause it's become so cheap to put a
job out on a board. Andso yeah, if you want to take
a look at that one data pointand say, I don't believe that the
(27:15):
number of jobs that are open,which as of March was eight point five
million job openings, I don't believethat that data point is true. I'm
with you. I like that that'sprobably overstated. And so any of the
data points on people saying, hey, there's this many jobs open per this
many people looking for work, thosecould be overstating the tightness the labor market.
But everything else Again, if wehad a fundamental difference in where private
(27:40):
data was showing versus government data wasshowing, i'd say, oh, look
out, this could be a pivotpoint. But consistently, over the last
twelve months, both surveys that weget from private and governmental institutions are showing
the same thing, which is,overall, it's a pretty darn tight labor
market. It might not be thejob in your specific industry, but jobs
(28:00):
are getting created at still a inmy opinion, very surprisingly fast clip.
Yeah, anything else that you wantto add on this, No, I'm
good with the labor market. Again. I like, I will believe that
we head into a negative labor marketa bad labor market at some point.
But to acknowledge a point that youmade, If you don't sit back and
(28:22):
acknowledge when an economy is actually insome areas doing pretty well, then you're
you're just being dishonest. And missingmissing the ball. Like like I said
before, plenty of areas of thiseconomy that are uncomfortable for people. Uh,
the level of inflation, especially forthose that have outstanding revolving debt,
is definitely one of them. Sure, But if you go honestly ask that
(28:47):
person if they're as concerned about thatas they are their job or their you
know, their ability to get anew one in the future. The average
person is not that concerned about thelabor market right now, and I don't
think we should be. I don'tthink that anybody really should be, unless
you're in one of those key areasthat might see some compression of the next
few years. No, it's wehave to do a better job of keeping
(29:11):
this stuff in perspective and just writinghonestly about this, because there will be
a time. It might be thisfall, it might be a year from
now, it might be two.I have no idea, but there will
be There will be another recession.We have not reached the end of recessions.
And when it does come, ifyou're crying wolf the whole time,
(29:33):
well, what are you going towrite when you have unemployment at eight percent?
Because that is a bad labor market. And we're gonna have that again
at some point, because it happens. You get over leveraged and you know,
overextended, and companies in household sayyep, time to tighten the belts,
and you get a recession. Ithappens very frequently. Let's just not
(29:56):
pretend that it's happening right now.No, it's there will be a time
when you can say bad things therelike, but you have to be able
to balance this stuff. And that'swhat I get to. It just feels
like we're getting so freaking negative aboutyou know, like and I don't know
if it's just because we have accessto more data and we can see more
(30:19):
stuff because of the Internet than weused to. And you know, there's
always someone that you can interview that's, you know, has something bad to
I don't know what it is,but it can't just always be bad.
It can't be you know, somelike it. There has to be sometimes
when things are okay, at leastnot even saying they have to be perfect,
(30:41):
but at least acknowledge that they're okay. Not Gee, the job just
I can't. I can't do it, Mike, I can't. Let's take
a quick break and after this,Mike, did you know that there's been
a trial going on between Google andthe United States? Kind of kind of
forgot about it to be quite ahone. Well, Google's been a really
freaking good job of hiding it asbest possible. Ah, they control all
(31:03):
my search results. Of course Ihaven't seen it. Not only that,
but they also successfully appeal to thejudge to basically conceal the trial from public
because they were concerned about raide secretsgetting out the trade secrets from Google.
Oh, we own all the adsand we sell all the ads. Great
trade secret. Let's take a quickbreak. When we come back, we'll
talk about that. Miss any ofthe show. The Financial Exchange Show podcast
(31:26):
is available on Apple, Spotify,and iHeartRadio. Hit the subscribe button and
leave us a five star review.This is the Financial Exchange Radio Network.
Tekst us six one, seven,three, six two thirteen eighty five with
your comments and questions about today's showand let us know what you think about
the stories we are covering. Thisis the Financial Exchange Radio Network. The
(31:55):
Financial Change is a proud partner ofthe Disabled American Veterans Department Massachusetts. This
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(32:20):
medical appointments that supply both the physicaland mental care they need. For more
information or to make a donation,visit DAV FIVEK dot Boston. The DAV
five K Boston is presented by VeteransDevelopment Corporation Mike So. Today and tomorrow,
the Justice Department is sending its attorneyson the US versus Google case,
(32:42):
which most people probably don't even knowhas been going on because Google has done
a great job of hiding it tomake their closing arguments, and then at
some point in the next few months, the judge who's handling the case is
going to rule on what to doand if here we know nothing, if
history is any guideline, they willI mean again, big tech has done
(33:02):
a pretty good job of in atleast in the United States, dodging these
types of lawsuits and the implications thepremise of the lawsuit is Google, over
decades, paying Apple as well asother companies billions of dollars to automatically handle
searches on web browsers, smartphones,etc. So Google effectively and then the
(33:25):
big one being Apple here paying thema lot of money to effectively not go
and develop their own web browser whichwould have competed with Google. Instead saying,
hey, preload all your phones withGoogle on there as the default search
engine and don't go develop one yourself. Kind of a win win for both
Apple and Google over the last fewyears. They didn't need to compete with
Google on search and they were gettingpaid to not do so. You can
(33:50):
imagine how you can make the argumentthat that hurts consumers in terms of anti
competitive behavior. Right. I thinkgenerally most understand that competition leads to a
better product. But again, wedon't know anything going on in this trial,
because, like you said, Google'sdone a pretty good job of keeping
it hush hush. How do yougo and prove that consumers were harmed by
(34:14):
the lack of a new product comingout? That is going to be the
challenge, I think for the federalgovernment is to prove that out and show
that yes, individuals were harmed becauseApple or some other company did not develop
a competitor to Google. The USVirgin Islands is the perfect destination for your
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(35:21):
so head to visit USVII dot comfor more information and to reserve your trip
today. That's visit USVII dot com. Jack, can we Can we talk
about one more item on Google?Or were you gonna move on to something
else? No, you can doone more on Google. Do you use
Ways at all? Used to whenGoogle bought them, I stopped because they
stopped basically making any product updates products. Now that product is garbage. I
(35:45):
use Google Maps though, pron soif anyone's not familiar. Ways was a
competing navigation app, and mainly itwas used it. It was kind of
a crowdsourced navigation app in so faras people would report things like police officers,
broken down cars, et cetera.And that still happens the functionality of
(36:06):
anything else on that platform to go. And yesterday, for an example,
I was trying to navigate to playit against sports and just instructing ways to
attempt to do that, compared tojust pulling open Google Maps and saying,
yeah, show me the play itagainst sports in Portsmouth, New Hampshire and
navigate me there. Basically unusable becauseof what you just mentioned. Google bought
(36:28):
the product and effectively, without killingit, kneecapped it in in terms of
its effectiveness. Yeah, I don'tknow if they've made any updates to it
in like eight years. It's justit's a borderline unusable product. I want
to talk a little bit about theBaltimore Bridge, the Franciscott Key Bridge.
Chubb, who is the insure ofit, is likely going to be making
(36:52):
their full insurance payment of three hundredand fifty million dollars to the state of
Maryland in the next couple of weeks. This is according to Henry Daarr,
the head of Property claims for NorthAmerica for WTW, who is the bridge
is broker. Now, also,have you been following the salvage effort on
this thing? No, not really. It's it's mind blowing what they're doing.
There's there's eleven hundred people that aresalvaging this thing. And one of
(37:15):
the things that I noticed at firstis I'm like, why are they not
unloading like the cargo The cargo shipis just still sitting there filled with whatever
it's filled with, and I'm like, why are they not unloaded this?
And then I realized, Oh,if you unload the cargo ship, it's
going to move and the debris movesand potentially you damage more of the bridge
and make the salvage effort worse.So they actually what they have to do
(37:36):
on this thing is basically fully dissembleeverything while keeping the cargo ship in place.
Then once all of the other debrisis out of the way, then
you can lift the cargo off thecargo ship and then try to move it
back through the channel to get itwith you know, back to you know,
the docks that you can see ifwhat the damage is to the actual
ship. But it's just it's remarkablewhat they're doing on this thing. They
(38:00):
did, unfortunately announce yesterday they haverecovered the fifth body from the salvage efforts
as well, So obviously, uh, you know, I think it gets
forgotten in this a lot. That'sit's a very tragic event that happened here,
but this, the salvage effort that'sunderway is just remarkable in terms of
what they're doing with the ship ofthis size. We are going to take
(38:22):
a quick break. Our two iscoming up in a bit
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(01:03):
Boston is presented by Veterans Development Corporation. This is the Financial Exchange with Chuck
Zada and Mike Armstrong. Chuck,Mike and Tucker with you here. It
is the day after the May meetingof the Federal Reserve Open Market Committee,
and can best be summed up bymy favorite Shakespeare quote, full of sound
(01:26):
and fury, signifying nothing. Andwe saw this in afternoon trading yesterday,
which was just a wild day.Might I add that we that we saw
in not even a day, wildhour in markets. So J Powell gets
up, he's got the purple tieon. Did you guys see the purple
tie yesterday? Not live classic purpletie, you know, just you know,
(01:49):
nice steady, you know, nothingfancy, just classic, and the
S and P five hundred just beforehe was speaking at four twenty I'm sorry
at two twenty pm, was tradingat five twenty nine point fourty seven.
J. Powell starts speaking and themarket says, oh, Jay's being pretty
dubbish here. We're gonna rally sixtypoints to five thy eighty four and forty
(02:10):
seven, lovely, And then weclosed just below where we ended where we
started there at about five thousand andseventeen, So we we round tripped in
span of about an hour and ahalf and I don't really know why quite
honestly, it was just noise.But let's talk about what Jay Powell said
(02:32):
and also what he didn't say.First thing, Powell did not say explicitly
that they were considering hikes, whichis something that I thought would have been
hawk as she said, look,we're you know, our next move is
most likely gonna be down like we'rewe're just you know, gonna have to
(02:53):
watch what the data does, blahblah. But he did not explicitly say,
hey, we might have to hikenext time, which I thought was
notable or not next time, butnext move. So I thought that was
somewhat notable. And it is askedpretty explicitly about that a bunch of times,
like at least three. I thinkthat I that I caught other things
of note, not in terms ofwhat he said, but what the FED
(03:13):
did. The FED is making someadjustments to their quantitative tightening program. Did
you notice this, mic I did, Yeah, still continuing to sell off
bonds by at a slower pace.Was I believe the takeaway? So here
is what is going on is thatthe Federal Reserve owns a whole bunch of
(03:34):
bonds. The last time I checkedit somewhere in the ballpark of like seven
and a half trillion dollars now intreasuries and mortgage backed securities. And what
the Fed has been doing is asthose bonds mature, because they don't just
sit there like they're all kind ofcreeping towards maturity, just like we're all
creeping towards death. And so asthose analogy exactly when a bond mature is
(03:57):
it dies, right like, that'skind of what it is. And so
as those mature, what the FEDhas been doing is they've been letting sixty
billion dollars in treasuries mature each monthwithout rolling them back into the balance sheet.
So it's it's pretty much the balancesheet has been shrinking by about sixty
billion dollars in treasuries per month.And what the Fed said that they were
(04:19):
going to do going forward is slowthe pace of that of that maturation that
they allow from sixty billion dollars amonth to twenty five billion dollars a month.
And what this means, if you'relooking for kind of the meat of
(04:40):
it, is that the Fed isgoing to be holding if you look at
it over the course of a fullyear do thirty five billion dollars times twelve,
they're going to be holding four hundredand twenty billion dollars more in treasuries
a year from now than they wouldhave otherwise, which means four hundred and
twenty billion dollars in treasuries are notmaking it to the open market that need
(05:01):
to be sold on the open market, meaning you're keeping longer term rates lower.
Yes, supply and demand. Hey, if there are fewer bonds coming
to market in the same number ofbuyers, great yields can be lower because
prices will be higher because there's goingto be more competition for the remaining bonds.
So that's one of the things thatI think you can interpret as dubbish
(05:23):
because look, even with deficits,you know, two trillion dollars a year,
four hundred and twenty billion dollars isstill a big chunk of change.
M It's not nothing like that's athat's a decent supply that Janet Yellen doesn't
need to figure out, Hey,how do I sell these, how do
I place these? What do Ihave to do with this? So I
think that that's something that's that's meaningfulthere. So what we end up with.
(05:44):
And where this matters, in myopinion, is not so much what's
happening in short term rates, becausethe feed hasn't moved anything. They haven't
moved anything in what six months now. I think right the long end of
the curve is where all the actionis. And we've got a fascinating setup
right now that's happening on the USten year where at the start of this
year, beginning of this year,US tenure opened at three point nine six
(06:08):
percent, today it's at four pointsix four percent. But for the last
month now, since not last month, but almost last month, last three
weeks, since April twelfth, we'vebasically between been between four point five and
four point seventy five on the tenure. You've kind of been coiling in this
narrow range for the last three weeksafter you know, some some meaningful volatility
(06:32):
and rates over the last couple ofyears, quite honestly, and so this
has provided a little bit of stabilityto markets now over that time where the
S and P five hundred is basicallyflat over the last couple of weeks after
you know, some dips earlier inApril, and so I think that this
is one of the most important thingsthat we watch here as far as two
(06:54):
things. Number one is markets.The second piece is housing. Which do
you want to touch first? MicHouses are housing? Housing? We let's
talk housing talk, Yeah, let'slet's let's talk housing here. According to
Mortgage News Daily, the national averagethirty year fixed rate mortgages at seven point
four to one percent. That's upfrom six point six percent at the start
of the year. Mortgage rates haverisen almost one percent since the start of
(07:15):
the year. So the next movethat you see in the ten year treasury
is gonna have big implications for housingbecause the thirty year fixed rate mortgage tracks
the ten year treasury pretty closely.If the next move on the ten year
is up to five to five anda quarter percent and you actually get eight
percent mortgage rates, nothing slowed downthis housing market so far this year.
(07:40):
You still have volumes that are movingup, you still have more activity,
you've got more sellers. But weonly touched eight percent mortgage rates for two
days in October of last year,the eighteenth and nineteenth of October. Other
than that, we have not seeneight percent mortgage rates since you gotta go
back to two thousand, twenty fouryear interesting, Okay. You know,
(08:01):
if if you were buying a hometoday, if you're a millennial who's you
know, in their thirties, orif you're you know, buss your heart,
if you're a gen zer in yourtwenties trying to buy a home today,
you literally have never seen mortgage ratesthis high, right And it doesn't
mean they can't go higher. Imean, look, they could in theory.
I mean we back in the Alot of our listeners will tell you
(08:24):
in nineteen eighty one, mortgage rateswere eighteen nineteen percent. That was the
thing. I don't think we're goingback there, because it's it's kind of
different right now. But what doesthat mean for housing? If you see
mortgage rates with an eight in frontof them, g that's a that's a
big psychological hurdle to ge get over, you know, especially given where pricing
still is. So that could besomething that you know, does slow housing
(08:46):
and potentially drive some recessionary impulses inthe economy. That could happen. On
the other hand, Mike, let'ssay that inflation data starts to look a
little bit better. I know whatI think, But what do you think
happens if we go back down fromseven and a half down to six and
a half percent on mortgage rates.The market absolutely takes off and gets not
(09:09):
nutty because there's enough there's now abig enough increase in terms of inventory to
not make it like it was intwenty twenty one, but it probably goes
pretty buck wild. You get mortgagerates into the sixes, you're gonna have
more inventory because more people can sell. Yeah, it's great for volume and
for economic activity. Yep. Itactually probably hurts pricing a little bit because
(09:31):
I bet sellers outpaced buyers at first. You know, there's a lot of
people. I've talked to a lotof people that are itching to sell their
homes, but they don't want toright now because they're like, I'm still
sitting on these low mortgage rates.I don't want to take out a mortgage
at seven and a half if Ican avoid it. Yep. On the
margins, you're starting to see fewerpeople doing that. So it's you know,
there's more inventory, but there area lot of people that are itching
(09:54):
to be able to list if ratesjust get a little bit lower. So
we're at another inflection point here,and we've you know, it's it's something
where we've been seeing these kind ofevery three to four months, and you
know, this next one is onthat tenure that I think is really important
to watch because if it drives higher, I do think that could be something
(10:15):
that drives a potential recession in thesecond half of this year. If it
drives lower, then then this economyis going to be cooking again by the
second half of this year in myopinion. Yeah, I mean to I
guess, really baseline set where thingshave gone over the last six months.
October November, December, you hadthese three months that basically showed inflation was
printing two percent. January February Marchyou had data sets showing inflation was printing
(10:41):
four percent at first on the youknow Q four of last year data investors
were taking it as inflation is defeatedand the world is perfect. Then you
had these three months and it wascomplete reversal, saying rates can't go anywhere,
and the job is not done.What are you going to get out
(11:01):
of the next six months? That'sthat's really the end. All be all
right, and everybody has their forecast. Everybody has their predictions, even Jerome
pell and the Federal Reserve is sittinghere and saying, we don't really know.
We think that it's probably not goingto go so high that we need
to raise rates, but we don'tknow. We have to wait and see.
And I wish they would just leaveit at that that, Hey,
we don't know and we have towait and see. This Freederal Reserve has
(11:24):
a bit of a bias towards tellingyou what they think they're going to do,
which is lower rates. But I'llbe the first say I don't know
where we're going to go over thenext three months in terms of inflation.
We're going to have to wait andsee if it goes and reverses itself.
Here's just something that I'll throw outthere. You mentioned that, Hey,
you had this three month period whereinflation looked like it was around two.
(11:48):
Then we had this three month periodwhere it looked like it was around four.
Mike, what's the average of twoand four? Three? Most of
my right now? Two plus four? Yeah? Okay, yeah, I
look, you did the math.I appreciate you doing that. Form Bank.
It's live, it's live radio.I gotta be careful with that.
Most of the data that I seeout there in terms of how you know,
(12:11):
people way smarter than me are modelingthis, are showing inflation that's consistent
with a three to three and ahalf percent long term range, and maybe
what we are getting here is justnoise around that. And where I'm starting
to go is that this rebound andinflation it may continue, like you might
see a few more months that look, you know, kind of in that
(12:33):
four percent range. But I'm startingto settle on the idea that, hey,
maybe inflation is just going to runthree to three and a half going
forward for you know, I feelthe next five years. If I may
pull a quote then from yesterday's pressconference on that subject, Chuck absolutely quote,
of course, we're not satisfied withthree percent inflation, Powell said,
(12:54):
quote three percent can't end a sentencewith satisfied. Well, and that's because
they boxed themselves in, because,like I'm not saying the three to three
and a half percent inflation is theend of the world, but according to
your own power, it is.And that's the problem is that in the
nineteen nineties, which many of uscan probably look at as one of the
one or two best economies that we'vebeen in our lifetimes, you had three
(13:18):
percent inflation. That's not the endof the world. The end of the
world is like what we saw acouple of years. Well, even like,
that's not the end of the world. The end of the world is
what like Turkey's going through right nowwith sixty five percent inflation, that's,
you know, really bad. Ithink that when we look at where we
stand here, we may find that, hey, over the next three to
(13:39):
four years, we might average threepercent inflation, which means rates may not
need to move up much, ifat all, But you also might not
have much room to come down.And that may be where we end up
landing, is that it's just kindof sticky in this three to three and
a half range, which isn't necessarilythe end of the world. But if
(14:03):
if you have a two percent targetand you can never hit it, and
you never really try to hit it, is it really a target? Like
That's the question that I think wehave to now ask, is what the
heck are you doing? Man?Let's take a quick break, and when
we come back, let's talk alittle bit more about what the recent action
(14:26):
from the FED means in terms ofwe already talked mortgages. Let's talk a
little bit credit cards, auto loans. We'll talk about those and some other
consumer facing areas right after this businessand financial news affecting the markets and your
wallet. We've got it all straightfrom Wall Street right here on the Financial
Exchange Radio Network. Find daily interviewsand full shows of the Financial Exchange on
(14:50):
our YouTube page. Like us onYouTube and get caught up on anything and
everything you might have missed. Thisis the Financial Exchange Radio Network. All
right, Mike, let's talk alittle bit about where things go on rates
for a lot of financial products thatlisteners might be considering or might currently have
(15:15):
at this point. Start credit cardrates at first. What are we seeing
on that side of things? Thoseare gonna be the ones that are tied
to, specifically the Fed funds rate, and those ones are going to be
staying as high as they have been. I don't know if you have the
average outstanding credit card interest rate,but I mean certainly see, oh you
do. Mid twenties would be myguess. Twenty two point sixty three percent
(15:37):
not too far away. Yeah,And I would imagine that just you know,
a couple of years ago, youwere looking at an average that honestly
wasn't all that much lower, butmaybe fifteen percent would be my guess as
of like twenty twenty or twenty twentyone. These things tend to be outrageous
and just about any interest rate environment, but a big uptick over the last
few years. So that's what we'reseeing on the credit card side of things.
(16:00):
Auto loans. When we talk aboutauto loans and what we are seeing
there, according to data from Edmonds, the average rate on new car loans
was seven point two percent in March. The average rate on used car loans
was eleven point nine percent in March, both of these up from the year
before at seven and eleven point fourpercent, respectively. Car loans they tend
(16:22):
to track pretty closely the five yeartreasury note. And the reason four that
is that most car loans think abouthow long they are. They're typically three
to six years now, and sothat five year treasury yield is typically a
benchmark for what you see on autoloans. Anything to add on that side
of things, Yeah, two things. One, I think that we should
(16:45):
just reiterate this that it's looking lessand less likely like these rates come down
this year. And so for everybodythat's listening out there, when I mentioned
that to people, they get kindof surprised, like, oh, mortgage
rates are at seven and a halfpercent, and guess what. The latest
indications are that they're not really goinganywhere, and so if you're planning on
that, please adjust your planning andkind of understand where things are looking right
(17:06):
now. The other piece that I'lljust mention about all this is interest rates
on credit cards, interest rates onauto loans, mortgages. None of these
things factor into the Bureau of LaborStatistics ways of measuring inflation, and I'm
not necessarily saying that they should.But when you have Jamie Diamond the other
day was talking about how, yeah, the average American's doing pretty well,
(17:30):
and he got roasted for it becauseyou know, a lot of Americans aren't
doing well. And that's what Ikeep looking at is, let's say you
are in that bottom fifty percent ofwealth. I'm not even talking about the
you know, the bottom ten orthe bottom eighty, like, the bottom
half, you are going to bemore susceptible to a lot of these changing
interest rates than maybe the top half. Right, if you're in that bottom
(17:51):
half, you might not have amortgage yet, you might be paying rent
instead. You are more likely tohave an outstanding credit card balance, or
to have a home equity line orsome form of debt that is adjusting on
an adjustable rate basis, And soyou might be looking at these three and
a half percent inflation numbers and saying, well, hell, that's not my
experience. And this is why Ithink this speaks to a lot of what
(18:14):
we continue to see in terms ofpeople's opinions on the economy and why they
might not trust the inflation data.Is Yeah, if you have a credit
card balance outstanding, not only hasthe balance probably grown because of inflation and
products, but the interest rate andtherefore the minimum payment on that credit card
has continued to grow as well.One other thing that I'll add, just
on the auto loan side of things, just from having talked to a number
(18:37):
of people who work at dealerships,even if you are buying a car new
or used, in a lot ofcases, there is a strong incentive for
the dealer to finance that vehicle becausethey receive compensation from the financing arm in
order to do so. Even ifyou're considering paying cash, if you have
the ability to do so, takea look at the financing that's available and
(19:02):
use it to negotiate yourself a betterdeal on the car. Make sure there
is no prepayment penalty on those loans, and oftentimes you might be able to
take one or two thousand dollars offthe price of the car by financing it
and then paying that loan off onceit is in your possession. But again,
make sure there are no pre paymentpenalties, because if there are,
(19:22):
they could eat through that savings.But just something of note there. Let's
take a quick break. When wecome back. Wall Street Watch is next,
and then we're talking the jobs market. Like us on Facebook and follow
(19:45):
us on Twitter at TFE show.Breaking business news is always first right here
on the Financial Exchange Radio Network.Time now for Wall Street Watch, a
complete look and what's moving market sofar today on the Financial Exchange Radio Network.
Markets are in positive territory at themoment, one day after the Fed
(20:06):
kept interest rates steady as expected,where fitchairman Jerome Powell hinted it was unlikely
the Central Bank's next move will bea rate hike. Wall Street is also
ready for tomorrow morning's big jobs report. At the moment, the Dow is
up by half a percent. SMPfive hundred is up twenty points, just
over two thirds of a percent,and the Nasdaq is up by two thirds
(20:30):
of percent as well. Russell twothousand is up by half a percent.
Ten yure treasury yield is up bythree basis points at four point six to
two percent, and crude oil mostlyflat edging higher, trading just above seventy
nine dollars a barrel. Shares inBoston based Wayfair up by eleven percent after
(20:51):
the online furniture retailer set its salesdeclined during the first quarter. However,
the company narrowed its losses after cuttingthirteen percent of its workforce to start the
year. Wayfair also beat street expectationson the top and bottom lines, while
it saw its active customers grow nearlythree percent compared to a year ago.
(21:11):
Meanwhile, Moderna posted a narrow,unexpected loss for the first quarter as a
result of the pharmaceutical company's cost cuttingefforts. Sales of its COVID vaccine also
surpassed Esimate's that stock up by eightpercent. Elsewhere, a Peloton down by
eleven percent after the struggling fitness equipmentcompany announced that CEO Barry McCarthy would step
(21:32):
down. The company also announced itwould reduce its workforce by fifteen percent.
Chuck and Michael Moore and Peloton inthe next hour, Door dashed down by
twelve and a half percent after thefood delivery company posted a better than expect
a bigger than expected loss, excuseme. In the first quarter, Qualcom
up by nine percent after the chipmaker reported a small increase in first quarter
(21:53):
sales, saying its inroads into supplyingchips to automaker's help drive sales. And
after two today's closing bell, we'llget another major first quarter earnings report from
tech giant Apple. I'm Tucker Silvan. That's Wall Street Watch, Mike.
I want to talk about this piecefrom the Wall Street Journal. It's titled
a strong job market question mark.Try telling that to these workers. Job
(22:17):
Seekers say getting hired is deceptively hard, and recruiters agree that qualified candidates are
often passed over. Your thoughts,I guess my first thought would be asked
those same workers if they'd prefer thisjob marker at the twenty eleven one everything's
relative. Look, it's possible toboth have a very strong labor market,
which I would describe right now asa very strong labor market that is also
(22:41):
challenging for some workers. And there'sa few statistics here that you can point
to about how it may be challenging. One in fifty American workers jumped from
one company to another back in Marchof this year. So that number is
among the lowest in three decades.So the churn rate, which was really
high over the last few years,has come back down. Employers, i
(23:03):
think, are asking a lot moreof their employees than they were just a
couple of years ago. They're havingan easier time retaining there is less of
a pressure on increasing wages. Butoverall, again and this is not me
just quoting government data, whether you'relooking at data from the US government,
whether you're looking at data from privatepayroll providers such as ADP, some alliteration,
(23:30):
you're still showing a labor market thatis quite tight in terms of unemployment
and continues to actually add employees ata pace faster than we have people turning
eighteen years old. Do you havea different conclusion than me. No,
here's the thing. Look, anecdotally, I'm sure that there are people that
(23:52):
can't find a job, that areapplying over and over and over and can't
get an interview and can't you know, get where they're trying to go.
And I'm I'm one hundred percent sure. It's frustrating. I've been there myself.
I mean, I was in themiddle of you know, two thousand
and nine when the world had kindof fallen apart. I was one of
those people that had sent out,you know, dozens of resumes. Quite
(24:15):
honestly, like close to one hundredand fifty I think it was by the
time it was all said and done, and I think I had maybe like
three interviews, and like, it'sit's it's hard, it sucks. I
think it's challenging to try to extrapolatethat and say that there's like a systemic
problem in the labor market right now, because whether you're talking about government published
(24:40):
data, privately published data, it'sall kind of pointing in the same direction,
which is that, yeah, thelabor market's not as in favor of
workers as it was back in twentytwenty one, in twenty twenty two,
because that was just unsustainably hot.But you know what, what are the
(25:00):
pieces that we're gonna publish when unemploymentgoes to ten Are we going to publish?
Like what what do you even writeat that point. Yeah, And
this is the problem is that Ifeel like in financial media there is active
rooting for recession now like it's it'sbad, mic, I'm really sorry,
(25:23):
but it's it's getting bad. Andit's not to say that things are perfect
because they're not. Like it's it'spossible to say, hey, inflation's too
high, the job market's slowing,Like you can say these things without having
to make it something bigger that oh, is this a sign of recession.
No, it's probably not. Ijust I think what what is challenging for
(25:47):
me is for someone to write astory about the challenges of the labor market
while not acknowledging that the unemployment rateis at multi decades lows, that the
number of jobs added to the economyand wage growth have also seen kind of
record breaking numbers over the last fewyears and continue to maintain themselves. Again,
you can say all that and acknowledgeall of that while still acknowledging that,
(26:08):
yeah, there are challenges, Like, if you're a technology recruiter,
it might be a more challenging marketthan you saw a couple of years ago.
If you worked in coding for abig tech company, you might not
have the same skill set that theyare looking for on the artificial intelligence side,
and that can be dramatically challenging.But if you say all that and
then don't acknowledge that, oh,and by the way, unemployments lower than
(26:30):
it has been for any time inthe last decade, and multi government and
non government sources really fundamentally confirm allof that, regardless of the revisions that
you see on a month to monthbasis, then it just seems dishonest.
One area that I'll say, Ithink maybe overstating the tightness of the labor
market. If I'm trying to cherrypick data and find some of this the
(26:52):
surveys that are done on the jobopenings, I'm starting to see more and
more evidence in this article points ofthe same thing that come companies are just
keeping jobs open for a long periodof time that they have no intent to
actually fill at any point in timebecause it's become so cheap to put a
job out on a board. Andso yeah, if you want to take
a look at that one data pointand say, I don't believe that the
(27:15):
number of jobs that are open,which as of March was eight point five
million job openings, I don't believethat that data point is true. I'm
with you. I like that that'sprobably overstated. And so any of the
data points on people saying, hey, there's this many jobs open per this
many people looking for work, thosecould be overstating the tightness the labor market.
But everything else Again, if wehad a fundamental difference in where private
(27:40):
data was showing versus government data wasshowing, i'd say, oh, look
out, this could be a pivotpoint. But consistently, over the last
twelve months, both surveys that weget from private and governmental institutions are showing
the same thing, which is,overall, it's a pretty darn tight labor
market. It might not be thejob in your specific industry, but jobs
(28:00):
are getting created at still a inmy opinion, very surprisingly fast clip.
Yeah, anything else that you wantto add on this, No, I'm
good with the labor market. Again. I like, I will believe that
we head into a negative labor marketa bad labor market at some point.
But to acknowledge a point that youmade, If you don't sit back and
(28:22):
acknowledge when an economy is actually insome areas doing pretty well, then you're
you're just being dishonest. And missingmissing the ball. Like like I said
before, plenty of areas of thiseconomy that are uncomfortable for people. Uh,
the level of inflation, especially forthose that have outstanding revolving debt,
is definitely one of them. Sure, But if you go honestly ask that
(28:47):
person if they're as concerned about thatas they are their job or their you
know, their ability to get anew one in the future. The average
person is not that concerned about thelabor market right now, and I don't
think we should be. I don'tthink that anybody really should be, unless
you're in one of those key areasthat might see some compression of the next
few years. No, it's wehave to do a better job of keeping
(29:11):
this stuff in perspective and just writinghonestly about this, because there will be
a time. It might be thisfall, it might be a year from
now, it might be two.I have no idea, but there will
be There will be another recession.We have not reached the end of recessions.
And when it does come, ifyou're crying wolf the whole time,
(29:33):
well, what are you going towrite when you have unemployment at eight percent?
Because that is a bad labor market. And we're gonna have that again
at some point, because it happens. You get over leveraged and you know,
overextended, and companies in household sayyep, time to tighten the belts,
and you get a recession. Ithappens very frequently. Let's just not
(29:56):
pretend that it's happening right now.No, it's there will be a time
when you can say bad things therelike, but you have to be able
to balance this stuff. And that'swhat I get to. It just feels
like we're getting so freaking negative aboutyou know, like and I don't know
if it's just because we have accessto more data and we can see more
(30:19):
stuff because of the Internet than weused to. And you know, there's
always someone that you can interview that's, you know, has something bad to
I don't know what it is,but it can't just always be bad.
It can't be you know, somelike it. There has to be sometimes
when things are okay, at leastnot even saying they have to be perfect,
(30:41):
but at least acknowledge that they're okay. Not Gee, the job just
I can't. I can't do it, Mike, I can't. Let's take
a quick break and after this,Mike, did you know that there's been
a trial going on between Google andthe United States? Kind of kind of
forgot about it to be quite ahone. Well, Google's been a really
freaking good job of hiding it asbest possible. Ah, they control all
(31:03):
my search results. Of course Ihaven't seen it. Not only that,
but they also successfully appeal to thejudge to basically conceal the trial from public
because they were concerned about raide secretsgetting out the trade secrets from Google.
Oh, we own all the adsand we sell all the ads. Great
trade secret. Let's take a quickbreak. When we come back, we'll
talk about that. Miss any ofthe show. The Financial Exchange Show podcast
(31:26):
is available on Apple, Spotify,and iHeartRadio. Hit the subscribe button and
leave us a five star review.This is the Financial Exchange Radio Network.
Tekst us six one, seven,three, six two thirteen eighty five with
your comments and questions about today's showand let us know what you think about
the stories we are covering. Thisis the Financial Exchange Radio Network. The
(31:55):
Financial Change is a proud partner ofthe Disabled American Veterans Department Massachusetts. This
year's race is Saturday, November ninthat Fort Independence on Castle Island, and
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(32:20):
medical appointments that supply both the physicaland mental care they need. For more
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five K Boston is presented by VeteransDevelopment Corporation Mike So. Today and tomorrow,
the Justice Department is sending its attorneyson the US versus Google case,
(32:42):
which most people probably don't even knowhas been going on because Google has done
a great job of hiding it tomake their closing arguments, and then at
some point in the next few months, the judge who's handling the case is
going to rule on what to doand if here we know nothing, if
history is any guideline, they willI mean again, big tech has done
(33:02):
a pretty good job of in atleast in the United States, dodging these
types of lawsuits and the implications thepremise of the lawsuit is Google, over
decades, paying Apple as well asother companies billions of dollars to automatically handle
searches on web browsers, smartphones,etc. So Google effectively and then the
(33:25):
big one being Apple here paying thema lot of money to effectively not go
and develop their own web browser whichwould have competed with Google. Instead saying,
hey, preload all your phones withGoogle on there as the default search
engine and don't go develop one yourself. Kind of a win win for both
Apple and Google over the last fewyears. They didn't need to compete with
Google on search and they were gettingpaid to not do so. You can
(33:50):
imagine how you can make the argumentthat that hurts consumers in terms of anti
competitive behavior. Right. I thinkgenerally most understand that competition leads to a
better product. But again, wedon't know anything going on in this trial,
because, like you said, Google'sdone a pretty good job of keeping
it hush hush. How do yougo and prove that consumers were harmed by
(34:14):
the lack of a new product comingout? That is going to be the
challenge, I think for the federalgovernment is to prove that out and show
that yes, individuals were harmed becauseApple or some other company did not develop
a competitor to Google. The USVirgin Islands is the perfect destination for your
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(35:21):
so head to visit USVII dot comfor more information and to reserve your trip
today. That's visit USVII dot com. Jack, can we Can we talk
about one more item on Google?Or were you gonna move on to something
else? No, you can doone more on Google. Do you use
Ways at all? Used to whenGoogle bought them, I stopped because they
stopped basically making any product updates products. Now that product is garbage. I
(35:45):
use Google Maps though, pron soif anyone's not familiar. Ways was a
competing navigation app, and mainly itwas used it. It was kind of
a crowdsourced navigation app in so faras people would report things like police officers,
broken down cars, et cetera.And that still happens the functionality of
(36:06):
anything else on that platform to go. And yesterday, for an example,
I was trying to navigate to playit against sports and just instructing ways to
attempt to do that, compared tojust pulling open Google Maps and saying,
yeah, show me the play itagainst sports in Portsmouth, New Hampshire and
navigate me there. Basically unusable becauseof what you just mentioned. Google bought
(36:28):
the product and effectively, without killingit, kneecapped it in in terms of
its effectiveness. Yeah, I don'tknow if they've made any updates to it
in like eight years. It's justit's a borderline unusable product. I want
to talk a little bit about theBaltimore Bridge, the Franciscott Key Bridge.
Chubb, who is the insure ofit, is likely going to be making
(36:52):
their full insurance payment of three hundredand fifty million dollars to the state of
Maryland in the next couple of weeks. This is according to Henry Daarr,
the head of Property claims for NorthAmerica for WTW, who is the bridge
is broker. Now, also,have you been following the salvage effort on
this thing? No, not really. It's it's mind blowing what they're doing.
There's there's eleven hundred people that aresalvaging this thing. And one of
(37:15):
the things that I noticed at firstis I'm like, why are they not
unloading like the cargo The cargo shipis just still sitting there filled with whatever
it's filled with, and I'm like, why are they not unloaded this?
And then I realized, Oh,if you unload the cargo ship, it's
going to move and the debris movesand potentially you damage more of the bridge
and make the salvage effort worse.So they actually what they have to do
(37:36):
on this thing is basically fully dissembleeverything while keeping the cargo ship in place.
Then once all of the other debrisis out of the way, then
you can lift the cargo off thecargo ship and then try to move it
back through the channel to get itwith you know, back to you know,
the docks that you can see ifwhat the damage is to the actual
ship. But it's just it's remarkablewhat they're doing on this thing. They
(38:00):
did, unfortunately announce yesterday they haverecovered the fifth body from the salvage efforts
as well, So obviously, uh, you know, I think it gets
forgotten in this a lot. That'sit's a very tragic event that happened here,
but this, the salvage effort that'sunderway is just remarkable in terms of
what they're doing with the ship ofthis size. We are going to take
(38:22):
a quick break. Our two iscoming up in a bit
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