September 9, 2024 • 36 mins
Chuck Zodda and Mike Armstrong discuss the state of American's wallets. Americans have a new piggy bank to raid - their houses. When chasing more dividends leaves you with less. U.S. prepares to challenge Google's online ad dominance. Are greedy companies to blame for grocery inflation?
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Episode Transcript
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Speaker 1 (00:00):
The Financial Exchange is produced by Money Matters Radio and
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(00:20):
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(00:43):
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(01:04):
by Veterans Development Corporation. This is the Financial Exchange with
Chuck Zada and Mike Armstrong.
Speaker 2 (01:13):
Chuck, Mike and Tucker with you as we kick off
the second hour the show. We got markets that are
in the green, but pairing some of their earlier gains
from the open. The Dow is now three hundred and
ninety two points, still up about one percent. SMB's up
thirty three, its gains cut in half over the course
of the day, was up over sixty at one point,
(01:34):
NASDAG up sixty points, only about a third of a
percent today, but all three major US indices still in
the green, which is a welcome site after not a
very good Friday. The ten year US Treasury at the
moment basically flat, up two tenths of a basis point
to three point seventy one to two percent. Oil today
is up eighty six cents a barrel to sixty eight
(01:55):
to fifty three, still hanging out in the high sixties
for a couple days here and as a result the
TRIPA national average for gas prices down another three tenths
of ascent over night to three twenty seven a gallon nationally.
Remember about a month and a half ago, we were
kicking around the three fifties, so gas prices continuing to
slide as we head into the fall.
Speaker 3 (02:16):
Here.
Speaker 2 (02:17):
Finally, we've got gold today up a dollar sixty ounce
to twenty five, twenty six and twenty cents, and those
are the major market moves that we are seeing. Mike,
there is a piece today in the Wall Street JOURNALI
It's titled the State of America's Wallets, And it's not
(02:37):
asking like have you had your wallet for ten years?
And is it beat up? Look like Costanzas, But instead
it's saying, Hey, what are Americans you know, sitting on
in terms of cash and things along those lines, What
do Americans have an outstanding credit card debt? And things
that you would you know, pick up in uh, you know,
(02:59):
your wallet? And what are we seeing as far as
changes and trends and things like that.
Speaker 3 (03:06):
There was a literal one in here that I found
to be just a I don't know, interesting but kind
of useless statistic, which was Americans carried an average of
seventy four dollars in cash in their wallets and purses
in twenty twenty three, which is up from sixty dollars
in twenty nineteen, So I guess that speaks to inflation.
But in a increasingly cashless society, I'm not sure that
(03:28):
it matters how much cash the average person is carrying
in their back pocket.
Speaker 2 (03:33):
You guys in the same boat, you carry a little
bit of cash with you at all times most of
the time. Not gold bars, no coins, a lot of
plastic you know, plastic bars toonies. Yeah, I mean, just
an increasingly an important one in my view, but nonetheless interesting.
So one piece they looked at was wages. I would
(03:54):
say that that's arguably the most important piece in this
entire article is how have wages done over the last
few years, And unsurprisingly they're up. Weekly pay is sitting
at one one hundred and fifty one dollars. That's the median.
I believe it's up twenty three percent from twenty nineteen.
So what that actually means is that median earnings we're
(04:16):
about three and a half percent higher in the second
quarter of twenty twenty four compared to the beginning of
twenty nineteen. That's inflation adjusted dollars three and a half
percent higher than where they were back in twenty nineteen.
In one regard, that's you know, an improvement on where
we were back in say, twenty twenty two, when wages
had not been keeping pace. In another it means that we've
(04:38):
made you know, average households made just a tiny bit
more than inflation over the last few years. But again,
look at that over the long term trend. I think
that's actually quite the improvement bank accounts. According to data
from the JP Morgan Chase Institute, the median bank account
meaning again fifty percent of balances or higher fifty percent
(04:59):
are low, or the median bank account balance is three
ninety one dollars. That's still up fourteen percent from twenty nineteen,
but obviously down from the twenty twenty one highs of
north of five thousand shortly after the last round of
stimulus checks went out. This is one of those numbers that,
when cited, I think people read it a couple different ways.
(05:22):
I actually view this as, you know, something that I'm
pretty optimistic.
Speaker 3 (05:25):
About, that bank account balances are up fourteen percent.
Speaker 2 (05:28):
Not even that they're up more than half of households
have at least three thousand dollars in the bank. Yeah, Like,
that's not like we always hear these, you know, surveys
like Hey, X number of people can't you know, pay
for a four hundred dollars this and that.
Speaker 3 (05:44):
Actually, I'm gonna take the other side of this. I'm
not sure I'm convinced of that that being the case.
So they're taking a look at you know, median accounts. Yeah,
if you're a wealthier household, you're gonna have more accounts.
But this is median, Like, how many accounts does a
wealthy household have I don't know, but two hundred No,
but arguab twice as many as a poorhousehold. I don't know.
I'm genuinely asking because I'm not sure, And so I
(06:05):
wonder if that is bringing up the median.
Speaker 2 (06:07):
Oh no, So this is this is on a per
person basis. This is per person that they're looking at.
Speaker 3 (06:12):
Then that's good.
Speaker 2 (06:14):
So I look at that, and I say, look, that's actually,
you know, not bad. If you want the bad side
of it, it's the credit card balances have continued to
rise and delinquencies have continued to rise.
Speaker 3 (06:26):
I'm gonna again take a look at the other side
of this. So balances now for people that carry a
balance month to month up to six two eighteen dollars
in the first quarter. Well, know, that's bad, right, let's
start there. It's bad, but it was at fifty eight
hundred bucks at the end of twenty nineteen.
Speaker 2 (06:43):
Here's why.
Speaker 3 (06:44):
It's in a six and a half percent increase over
that time period. And I guess on my point it
would be well, prices are up well more than six
and a half percent, but on the other hand, wage
tis are up three and a half percent, so that
should allow you to pay down that credit card debt.
Speaker 2 (06:59):
And the interest rate some of these are higher now.
So instead of interest being seventeen percent on average, it's
now twenty three percent. And so you, like, you do
the math out and you're like, okay, seventeen percent of
six thousand we are talking. You know, you're paying you know,
nine hundred and fifty nine hundred and seventy dollars a month,
I'm sorry a year in interest before Now you're paying
(07:19):
somewhere around fifteen hundred bucks a year in interest.
Speaker 3 (07:21):
The other bad part of this slightly more than half
of credit card users in twenty nineteen we're paying off
their balance every month. Now slightly half slightly more than
half are carrying a balance a month of a month.
Speaker 2 (07:31):
Yeap, So that not really a great sign there. Let's
see you wanta talk car ownership, I'd prefer not to
because the data is just awful, quite honestly. So you've
got higher car loan interest rates and vehicles have gotten
more expensive, and so now you end up with people
(07:53):
having to hold onto their cars longer, and the ones
that are replacing them more often have just astronomical mon
monthly bills that they are spending in order to buy vehicles,
and auto insurance has gone through the roof as well.
The car picture is kind of gross right now. Quite
like I got a shower after reading some of the data. Yeah,
(08:15):
we're just really bad at that decision. We are, we are,
And you got delinquencies. This is one of the other
areas where delinquencies are moving up. It's really credit cards
and auto loans where you're seeing the vast majority of
the movement. Neither one of those is a big enough
area to cause the US economy any meaningful trouble, but
they are areas that can absolutely cause individual households a
(08:36):
lot of trouble. Yeah, and the car piece is really
kind of concerning right now.
Speaker 3 (08:41):
I mean, we've been covering too the increasing number of
car owners who are just going without insurance right now
is another piece to this too. This isn't covered in
this piece, but we covered a few weeks ago where
increasingly frankly, because car insurance rates have gone crazy over
the last few years. I don't remember where that landed
(09:01):
in terms of inflation over the last several years, but
through the roof, in terms of the cost of insuring
your car, you've now got more uninsured drivers on the road.
What does that do in amo among many other things
of you know, causing potentially more hit and runs and
all sorts of problems. It drives up insurance costs for
the people that do ensure their car is even higher
(09:21):
and faster.
Speaker 2 (09:23):
Which is not good.
Speaker 3 (09:24):
No, because all of us have that rider on our
vehicle insurance. I think it's required to Massachusetts that you
have insurance against uninsured drivers.
Speaker 2 (09:31):
And finally, housing also ridiculously expensive right now.
Speaker 3 (09:37):
True, but it's the only one that I can look
at to say, I mean, you know, mortgages and things
like that have gotten more expensive, but home equity one
area I can look at to say dramatically improved over
the last five years.
Speaker 2 (09:47):
The problem is that most people don't want to tap
their home equity right now because interest rates have been
so high. We'll touch on how interest rates coming down
may shift the thinking on that over the next couple
of years, and how that could be something that acts
as nice little counterbalance to some of the slowdown that
we've been seeing in the US economy recently. But people,
it's it's one thing a few years ago when you
(10:08):
could say to someone, Hey, you're thinking about this project,
what about a home equity line of credit or a
home equity loan where yeah, you're paying three or four percent.
Oh yeah, that sounds great. Earlier this year, Hey homech
not even earlier this year. Earlier this week, Hey, home
equity line of credit? You could you could get one
and you're paying eight and a half percent. No I'm
(10:28):
not gonna do that. No, thank you like that? That
sounds not great. So we'll talk about how this may evolve,
because I do think this is one of the key
things to watch as we go through the next several years.
Speaker 1 (10:41):
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(11:01):
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Speaker 2 (11:12):
All right, Mike, let's talk a little bit about this
piece from Connorson and Bloomberg Opinion. It's titled Americans have
a new piggybank to raid their houses. We're talking last
segment about the idea of Hey, as interest rates come down,
home equity loans can start to, you know, look attractive
to people who may be considering projects and things along
those lines. And this piece really gets at the core
(11:35):
of that in that, Hey, right now, Americans have just
a monumental amount of equity in their homes at the moment.
I was looking at data just a minute ago, actually,
and this is from our friend Mike Simonson at Housing
Wire and all this research. One point eight percent of
(11:55):
mortgages right now have negative equity. That is the lowest
percentage of underwater homes in history.
Speaker 3 (12:03):
Yeah, I'm trying to I'm struggling to imagine what home
has negative equity right now.
Speaker 2 (12:07):
It must be the last year or two probably, I guess, Yeah,
it has to have been. I mean, think about how
prices have moved up. Like I'm gonna say, it has
to be bought in the last home and in one
of like eight states. Yeah, it's got to be. Hey,
I bought it last year in Austin, Texas or something
like that with two percent down right exactly. It's it's
(12:27):
something like that. The vast majority of homes have I
mean again, even other things that you're seeing here, fewer
than five percent of homes have under eighty percent loan
to value ratio. So there's a ton of equity in
homes at the moment. And if there's one thing that
I believe more than anything else about Americans in their
(12:48):
financial habits, and this is neither good nor bad. It
just is. When given the ability to borrow golleg willkers,
we do it like that's what Americans do. I'm not
saying it's good or bad. It just like it is.
And most of the time it ends up working out
fine in the aggregate. Occasionally you run into a two
thousand and seven, which is not great. Yeah, I wonder
(13:13):
we haven't seen this tack up a whole lot. Home
equity line applications, balances. None of that stuff has really
moved a whole lot. And you can make it an
easy argument that, hey, that's just because rates have been
so hi that people don't want to do it.
Speaker 3 (13:26):
And I'm you know, Paul was in that boat. Actually
he got a bunch of quotes to redo a porch
and said at eight and a half percent interest, no,
thank you, that drops down to five or six. You
do wonder, but I do wonder also the stigma attached
to lines of credit and how it just decimated households
back during the financial crisis.
Speaker 2 (13:47):
Can I share some data please? So in two thousand
and this is according to data from the Federal Reserve,
and they do a I think it's a weekly survey
they get data on this. Actually, at the start of
two thousand there was around one hundred billion dollars of
home equity lines of credit were revolving home equity loans outstanding.
(14:11):
By the time we got to the peak of the
financial crisis in March of two thousand and nine, we're
up to six hundred billion dollars six hundred billion dollars
the home equity loan. The amount outstanding on home equity
loans sextupled in a an eight year period, Like it
(14:31):
was just insane, yep, and we realized, hey, this is
this is dumb, We shouldn't do this. Over the next decade,
from two thousand and nine, actually decade plus two thousand
and nine to February of twenty two, the amount outstanding
on home equity lines of credit went from six hundred
billion down to two hundred and forty six. It was
a net drag just because again, like people were like
(14:52):
tapped out on this stuff. If you look in the
last year, though, the amount outstanding on home equity loans
has gone from two one hundred and fifty three billion
dollars up to two hundred and fifty eight with a
meaningful inflection point in June of this year, where we've
basically been adding a billion dollars in new home equity
loan exposure on a monthly basis. Now that's remember back
(15:15):
in the early two thousands, we're adding like eight to
ten billion dollars a month. We're adding a billion a month.
So don't get all freaked out at all, like we're
doing it all again. No, we're moving at like a
tenth of the pace in a world where stuff is
three times more expensive.
Speaker 3 (15:30):
Right, yeah, that's so important caveat there.
Speaker 2 (15:32):
Yes, but you're already starting to see a little bit
of an uptick on this, and this, in my humble opinion,
is actually a fantastic sign for the US economy.
Speaker 3 (15:44):
Which piece the moving up of the balances, or the
existence of the equity.
Speaker 2 (15:48):
The moving up of the balance is because there's so
much equity, we're we're not in trouble in the housing
market with people like having to get blown out of
their homes, with you know, taking big haircuts on short
sales and stuff.
Speaker 3 (16:02):
Sure, it's not.
Speaker 2 (16:02):
A threat here. And so when you see borrowers rightly saying, hey,
I've got this equity, interest rates have come down and
I've had a project I've put off for a couple
of years because rates have been through the roof. Good
for the family again, all else being equal, assuming like
they keep their job in Yaudiata, really good for the economy,
(16:24):
generates economic activity, and it's moving at a pace that's
not concerning.
Speaker 3 (16:28):
Yeah, I'll argue about the good for the family piece, right, Like,
you know, there are plenty of people who would say,
pay for that project in cash if you're going to
do it, and and don't manage around that debt. And
I think that's a reasonable argument to make at the
household level. But if you're talking about the predictive future
(16:48):
of the state of the economy, yeah, expanding debt levels,
I think is a very, you know, tremendously attractive viewpoint
for the future of the economy.
Speaker 2 (17:00):
I'm gonna poo pooh the people that say you shouldn't
do that, take, you know, taking out debt.
Speaker 4 (17:04):
Yeah.
Speaker 2 (17:05):
Everyone likes to be like, oh, like, I'm being so responsible,
and this is the response. It's not irresponsible to use
debt inherran like, it's not inherently irresponsible to use debt, Like, yes,
you can do it badly, but that's like saying, hey,
just because Battlefield Earth was a horrible movie means no
one should make movies. No, they just made a bad one.
Speaker 3 (17:27):
I agree that people overstate the don't ever use debt.
I use my credit card every single transaction, and I'm
fine with that, But I think there's also probably a
balancing act there, and would generally be cautious about borrowing
on your home for anything until you've really thought about
(17:48):
how that loan is going to be paid back, because
far too often it doesn't happen. YEP.
Speaker 2 (17:53):
Taking a look at markets as we had towards the
bottom of the hour, the Dow is still up three
seventy six, the S and P's up thirty five, Nasdaq
up seventy.
Speaker 1 (18:12):
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Speaker 3 (18:35):
Mike.
Speaker 2 (18:35):
There's a piece in the Wall Street Journal today. It's
titled when Chasing more dividends leaves You with less? And
what it gets at is the idea of hey, in
particular in the twenty tens, but with the idea that
interest rates might be coming down again, people start to
look around for Hey, whether what are other ways that
(18:55):
I can generate income into portfolio, you know, beyond what
I was doing previously. And so you see these different
high dividend products that are offered, in some cases not
even high dividend products just high income where they might
even be using like an option strategy to try to
generate income as well. And what's important to pay attention
(19:17):
to is not just the dividend payout, but also, hey,
what what kind of total return do you generate? Because
in some cases you can end up in a situation
where yes, you might get you know, great dividends that
help to you know, cover what your you know, expenses are,
but it's also at the cost of Hey, the principle
(19:40):
is being kind of whittled away through bad performance from
the underlying investments, and so you might not actually be
getting anywhere and it might not be sustainable for you.
Speaker 1 (19:49):
Yeah.
Speaker 3 (19:50):
The example is used of one of these that you
know advertised an eleven percent dividend deal that's seeing a
negative seventy percent decline so far this year. As an example,
there's this really runs across not this year. It was
a decline of seventy percent over the last thirteen years,
sorry thirteen.
Speaker 2 (20:06):
Which by the way, is a time that's been really
good for stocks, right, but not so much for this
this fun.
Speaker 3 (20:12):
And so, I mean, there's a few different ways to
look at this one. Whenever you see something that's advertising
and paying a rate that far exceeds what you see elsewhere.
You need to stop and pause and say, give it
the old sniff test, like, what is happening here? How
are they doing so? Because I see that the S
(20:32):
and P five hundred over thirty years has averaged what
like a two percent dividend?
Speaker 2 (20:37):
Right, yeah, and like on something like the fun that
you referenced, they found that again, even accounting for the dividends,
you still lost nine percent over a thirteen year period,
where hey, even if you had just taken in again,
you never know what the returns are going to be
on any of this stuff, But you say, okay, look
the market over that time period did significantly better, and
(20:59):
even if I'm paying capital gains taxed through liquidations, you
would have ended up in a better spot. Now that
might be reversed over the next decade because you don't know.
But just because something is paying you high dividends doesn't
mean that it still is generating the kind of performance
that you need for a long term strategy.
Speaker 3 (21:17):
Or that the share price will remain stable. I think
there's a far difference between this and say, like, you know,
there's plenty of funds that track the highest dividend payers
in the SMP, for example, which you know would still
pay a higher dividend rate, albeit far less. But even
in those cases, you might not recognize that, Hey, okay,
now I have no exposure to, for instance, technology stocks, right,
(21:38):
very limited exposure, or just exposure to very mature technology stocks,
which you know, go take a look at a few
of those. They haven't performed exceedingly well, and so the
temptation is clear there, and especially in yours. I mean
the utility sector, for example, has done exceedingly well and
tends to pay a high dividend rate this year in particular.
But it comes back to something that I see all
(21:59):
the time, Chuck, and I know you see it too,
which is people get caught on one feature of any
investment product. Yes, look how well it did last decade,
Look at the dividend rate, look at the price to
earnings ratio, And fundamentally, I've sometimes dug in and been like, well,
what is it? What does the company do? What is
that fund to do, what's its goal? What does it
(22:20):
attempt to accomplish? And unfortunately frequently the answer is I
don't know. I saw it on CNBC or I saw
it on this place or that place and just talked
about the David, I have no idea what the company does.
Speaker 2 (22:32):
He ratio is low. What do they do well? They
sell horses and buggies?
Speaker 1 (22:35):
Right?
Speaker 3 (22:36):
So what does require a bit more digging in than
just the surface of Okay, you know this is what
this does. And if you can't explain it to say,
your spouse, it's a pretty good sniff test of like, hey,
you know, what are we investing in? And do I
fully understand it. It's not to say that there isn't
(22:57):
a place for how yield and it and investing. There
are plenty of circumstances where that makes a ton of sense.
But it all comes back to understanding what it is
you're doing. And this really plays into not just investment selection,
but really every part of the investment process. You ask
yourself honestly, like when I take a look at my portfolio,
do I understand what it is that I'm investing in?
(23:20):
Would the average person consider it to be conservative or
aggressive or somewhere in between? Why do I own this
asset over here? What is it doing to help me
accomplish my goals ten years from now? Like those are
You don't need to be a chartered financial analyst to
be able to answer those types of questions about your portfolio,
and I would argue that everyone should be able to.
(23:44):
If you are listening to this now and you know,
just kind of scratch your head saying I'm not sure
that I could answer those questions about my own investment
lineup or financial plan. I'd love to introduce you to
the Armstrong Advisory Group and offer you a free time
to sit down with us. We have offices throughout New England.
We take meetings across the country. We can meet via zoom,
(24:05):
we can talk to you over the phone, we can
meet with you in one of our eleven or twelve
offices based here in New England, and we'll do a
deep dive with you to really understand what it is
you're trying to accomplish. Sit at the same side of
the table and provide some feedback for you on okay,
these are the paths forward and what seems to be
going well and what might not be going so well.
If this is ringing true to you, If if that
(24:26):
type of consultation would be useful, please give us a
call at eight hundred three nine three four zero zero one. Again,
we have offices throughout New England, but meet with folks
across the country and would be happy to sit down
with you too. That phone number once again, it's eight
hundred three nine three four zero zero one.
Speaker 1 (24:45):
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Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
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Speaker 2 (25:00):
Google about to be going into another anti trust trial, Yes,
that's right, their second one this year. At least the
DOJ is saying to Google, hey, you might be anti
competitive when it comes to your business, but we're not
when it comes to our anti trust lawsuits, because we
have two of them, and this one's going to be
(25:21):
taking place in the Eastern District of Virginia. And the
premise here is the DOJ is going right after Google
Ad Manager, which is the platform that Google uses to
basically take orders for ads coming into websites and then
place them onto the various websites that use Google Ads.
(25:42):
Down the road.
Speaker 3 (25:43):
Not that this case occurs in the court of public opinion,
but in the previous one, which was Google search dominance. Yes,
pretty easy for people to relate to. Almost anyone who's
used the Internet has used Google Search. A small fraction
of Internet users have used Google advertising technology, and so
I don't think everyone's quite aware of just how much
(26:05):
Google dominates this space, which is in part by because
of their dominance in search.
Speaker 2 (26:11):
Yeah, the way that Google's ad platform works, if you're
not familiar with it, it's really simple. You go and
create an account for Google Ad Manager, and you say,
here's my budget for the month, here are the types
of ads that I'd like to run, and here are
the people that I'd like to try to target. And
(26:31):
Google does all the rest of the work. Your ads
show up wherever. They determine algorithmically that your ads are
going to go, and it's based on what you say.
And then it's also based on the other side, which is,
let's say I'm a website. I say, hey, here are
the people you know, here's my demographic, and here are
the kind of ads I want to run, and Google
provide me with, you know, the ads that are appropriate.
(26:53):
So if I'm using Google Ad manager. I don't go
and say, hey, I want these ads to run on ESPN. No,
if I want to do that, I just go to
ESPN and say I want to buy ads on your website. Rather,
it's this huge programmatic ad buy that just goes out
into the ether and ends up wherever. The problem with
it is it really has become the default way that
(27:17):
ads are placed online at this point. And a lot
of this stems from and I've talked about this a
lot in our show from Google bought a company back
in two thousand and eight called double Click, who is
the biggest ad market place in the time on the planet,
and Google signed an agreement with I forget if it
was the DOJ or the FTC, but they specifically said, look,
(27:40):
we are not going to merge double Click with Google's
ad program because it would be too hard and too complicated.
And that was one of the reasons why the government said, okay,
you can do this. Less than three years later they
announced they were integrating the two platforms. And now here
we are thirteen years after that, and it's like.
Speaker 3 (27:59):
Finally the governments do something about it.
Speaker 2 (28:00):
Yes, So this is something that again is kind of obscure,
but It all dates back to that purchase of double
click back in two thousand and eight and the integration
of the marketplace with the with basically the rest of
Google's business, uh and all of the data that Google has.
Speaker 3 (28:20):
It's interesting that it is happening at a time, by
the way, where I think you might be able to
argue that Google's influence in this ad space is waning
a little bit, right Like Amazon and Meta are picking
up some space, even Apple is, and so you know,
the lawsuit comes at Look, it's you know, it's Google,
So let's not be too concerned about them. But they
just lost an anti trust case, and their influence in
(28:42):
the ad space Argua inarguably is is waning a little
bit with some of their you know, big pocketed peers
taking some.
Speaker 2 (28:50):
Let's take a quick break here. When we come back,
Stack Roulette.
Speaker 1 (28:55):
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Speaker 2 (29:53):
What do you got for me for stack?
Speaker 3 (29:55):
Roule at Mike Grocery prices everyone the bane of everyone's existence.
I spent good. I'll tell you every time I go
to market Basket, which isn't as frequently as I would
like because they just aren't located as close to me
as as I would like. But I was on my
way home from a weekend away and I stopped at
market Basket, and I spent a good three hundred and
eighty dollars at market Basket, which is tough to do
(30:15):
given everything shallots, the whole store, the whole store. But
that's I mean swordfish for eleven bucks, like anyway. They
love Market Basket. Favorite grocery store in New England, hands down.
But grocery prices are up. I'm trying to remember the
exact statistic, but it's high twenty percent range since pre
COVID they outpaced the overall range of inflation, which obviously
(30:39):
includes grocery prices. And so a lot of people are wondering,
what the hell's going on? Why groceries? Why is this
the main issue? I know, we had the Ukraine War
drive up food prices. We've had obviously inflation and wages,
and this is a it's a fairly labor heavy industry
when we talk about, you know, the manufacturing and production
(30:59):
of food. But greed has also been brought up, and
I think, you know, the Kroger CEO stepped in a
little bit when in March he wrote that the supermarket
chain's milk and egg prices were significantly higher than was
necessary to account for inflation. NPR interestingly took a look
at profit margins for companies financial disclosures, specifically in the
(31:22):
item makers, So you know Mandal's Pepsi Proctrick gamble. They
basically found that. Look, for almost all companies that we
analyzed between twenty eighteen and twenty twenty three, profit margins
either declined or grew by less than one percent. So
if you're trying to put your finger on the hey,
(31:43):
what's going on here with grocery prices and lawmakers, you know,
talking about blocking the Kroger Alberson's merger. I mean, maybe
the markups are occurring at the grocery store chains and
that's where the greed's coming in here, But it's clearly
still a very competitive mark market for grocery suppliers, I
think is the takeaway here. And I just don't find
(32:05):
corporate greed to be a satisfying explanation of pretty much
anything in the way of prices, unless they operate a monopoly.
Speaker 2 (32:13):
Even then, I'm not sure that it like it's.
Speaker 3 (32:16):
Yeah, look, it's nice to it's a nice scapegoat, but
it just doesn't really add up.
Speaker 2 (32:21):
Here's the thing. Company I've said this before, companies didn't
wake up in twenty one and say, hey, Mike, have
you heard of greed? Do you think we should get greedy.
Should we try this is greed something we should be doing.
That's that's not how it works. Companies, I'm of the opinion,
(32:43):
especially in the last two thousand years three thousand years,
have been greedy. It's like it's baked into humanity. It's
it's something that we have to try to fight against
because all of us have that a little bit. And
company are greedy like they just are. I'm sorry, but
(33:04):
it's the case. I know it's cynical, but they've always
been this way. And so if it were purely, oh like,
corporate greed, why didn't it show up any other time
in the last forty years.
Speaker 3 (33:14):
Yeah, I mean, look, there is definitely a compelling case
that Americans were more willing to accept price hikes over
the last three years compared to the twenty tens decades.
That's definitely the case. But unless you're telling me that, hey,
you know, Kroger and Roach Brothers and Market Basket don't
need to compete with each other and are colluding on prices,
(33:35):
then I just don't think you have a compelling case
for greed being the problem here.
Speaker 2 (33:38):
No, no, I concur either of you follow the PWHL's
inaugural season last year. No, this is the Professional Women's
Hockey League. They had six teams and they basically all
just launched without any branding, just because the thing came
together pretty quickly.
Speaker 3 (33:55):
Yeah. I was talking to somebody about this, and I
assume that they're going to start selling off some because
it was I mean, what was the name of the
Boston team, Boston? It's just yeah, Boston.
Speaker 2 (34:03):
Yeah. They announced the branding of the six teams today
and I think that they name wise, I think they
hit on five of the six Boston and he guess
is to what the Boston team is named? Fleet? Thank
you for already googling at Tucker. It's the Boston Fleet,
the Minnesota Frost, the Montreal Victoire, which I just think
(34:26):
is very clutch, the New York Sirens, the Ottawa Charge,
and the Toronto Scepters. So the only one that I'm
not sure is that the Ottawa Charge, Like it's just
kind of like, I don't know where does the team
play out of in Boston against Arena and Lowell? Okay,
your songs Arena Songus, Boston Songus, Rene and Lowell, And
(34:49):
so they also you know that showed all of the
logos and everything. So the Boston team, the logo that
they did for them, I love it for one reason,
but two separate reasons. Within it, it's this like stylized
anchor like B that looks like an anchor, kind of
a B that looks like it. It's like a sideways anchor,
(35:11):
like a sideways anchor, Okay, but if you rotate it,
it's a direct throwback to the Hartford Whaler's logo, like
the bottom of it. So I love it because a
it's kind of embracing some of the hockey heritage of
the New England region. But it also kind of tweaks
the Hartford fans who are like, hey, our team like
got we got hosed on this. Hey maybe this is
(35:32):
where you can you know, kind of go to, you know,
find your new team. But I think they they nailed
most of these. The only one where the logo's kind
of questionable to me, Tucker, I don't know if you're
you're looking at all these the New York Sirens logo.
It's Sirens with with kind of these blue echoes on
the side of it.
Speaker 3 (35:51):
It looks like the serious XM logo. For the record,
I was picturing a buzzing bee. Not the letter B.
Speaker 2 (35:59):
No, it's the letter B, the letter B. But yeah,
So the second p WHL season is going to be
kicking off soon with some new team names. So exciting
stuff there. Quick break for the rest of the day.
We'll see you tomorrow though,
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(01:04):
by Veterans Development Corporation. This is the Financial Exchange with
Chuck Zada and Mike Armstrong.
Speaker 2 (01:13):
Chuck, Mike and Tucker with you as we kick off
the second hour the show. We got markets that are
in the green, but pairing some of their earlier gains
from the open. The Dow is now three hundred and
ninety two points, still up about one percent. SMB's up
thirty three, its gains cut in half over the course
of the day, was up over sixty at one point,
(01:34):
NASDAG up sixty points, only about a third of a
percent today, but all three major US indices still in
the green, which is a welcome site after not a
very good Friday. The ten year US Treasury at the
moment basically flat, up two tenths of a basis point
to three point seventy one to two percent. Oil today
is up eighty six cents a barrel to sixty eight
(01:55):
to fifty three, still hanging out in the high sixties
for a couple days here and as a result the
TRIPA national average for gas prices down another three tenths
of ascent over night to three twenty seven a gallon nationally.
Remember about a month and a half ago, we were
kicking around the three fifties, so gas prices continuing to
slide as we head into the fall.
Speaker 3 (02:16):
Here.
Speaker 2 (02:17):
Finally, we've got gold today up a dollar sixty ounce
to twenty five, twenty six and twenty cents, and those
are the major market moves that we are seeing. Mike,
there is a piece today in the Wall Street JOURNALI
It's titled the State of America's Wallets, And it's not
(02:37):
asking like have you had your wallet for ten years?
And is it beat up? Look like Costanzas, But instead
it's saying, Hey, what are Americans you know, sitting on
in terms of cash and things along those lines, What
do Americans have an outstanding credit card debt? And things
that you would you know, pick up in uh, you know,
(02:59):
your wallet? And what are we seeing as far as
changes and trends and things like that.
Speaker 3 (03:06):
There was a literal one in here that I found
to be just a I don't know, interesting but kind
of useless statistic, which was Americans carried an average of
seventy four dollars in cash in their wallets and purses
in twenty twenty three, which is up from sixty dollars
in twenty nineteen, So I guess that speaks to inflation.
But in a increasingly cashless society, I'm not sure that
(03:28):
it matters how much cash the average person is carrying
in their back pocket.
Speaker 2 (03:33):
You guys in the same boat, you carry a little
bit of cash with you at all times most of
the time. Not gold bars, no coins, a lot of
plastic you know, plastic bars toonies. Yeah, I mean, just
an increasingly an important one in my view, but nonetheless interesting.
So one piece they looked at was wages. I would
(03:54):
say that that's arguably the most important piece in this
entire article is how have wages done over the last
few years, And unsurprisingly they're up. Weekly pay is sitting
at one one hundred and fifty one dollars. That's the median.
I believe it's up twenty three percent from twenty nineteen.
So what that actually means is that median earnings we're
(04:16):
about three and a half percent higher in the second
quarter of twenty twenty four compared to the beginning of
twenty nineteen. That's inflation adjusted dollars three and a half
percent higher than where they were back in twenty nineteen.
In one regard, that's you know, an improvement on where
we were back in say, twenty twenty two, when wages
had not been keeping pace. In another it means that we've
(04:38):
made you know, average households made just a tiny bit
more than inflation over the last few years. But again,
look at that over the long term trend. I think
that's actually quite the improvement bank accounts. According to data
from the JP Morgan Chase Institute, the median bank account
meaning again fifty percent of balances or higher fifty percent
(04:59):
are low, or the median bank account balance is three
ninety one dollars. That's still up fourteen percent from twenty nineteen,
but obviously down from the twenty twenty one highs of
north of five thousand shortly after the last round of
stimulus checks went out. This is one of those numbers that,
when cited, I think people read it a couple different ways.
(05:22):
I actually view this as, you know, something that I'm
pretty optimistic.
Speaker 3 (05:25):
About, that bank account balances are up fourteen percent.
Speaker 2 (05:28):
Not even that they're up more than half of households
have at least three thousand dollars in the bank. Yeah, Like,
that's not like we always hear these, you know, surveys
like Hey, X number of people can't you know, pay
for a four hundred dollars this and that.
Speaker 3 (05:44):
Actually, I'm gonna take the other side of this. I'm
not sure I'm convinced of that that being the case.
So they're taking a look at you know, median accounts. Yeah,
if you're a wealthier household, you're gonna have more accounts.
But this is median, Like, how many accounts does a
wealthy household have I don't know, but two hundred No,
but arguab twice as many as a poorhousehold. I don't know.
I'm genuinely asking because I'm not sure, And so I
(06:05):
wonder if that is bringing up the median.
Speaker 2 (06:07):
Oh no, So this is this is on a per
person basis. This is per person that they're looking at.
Speaker 3 (06:12):
Then that's good.
Speaker 2 (06:14):
So I look at that, and I say, look, that's actually,
you know, not bad. If you want the bad side
of it, it's the credit card balances have continued to
rise and delinquencies have continued to rise.
Speaker 3 (06:26):
I'm gonna again take a look at the other side
of this. So balances now for people that carry a
balance month to month up to six two eighteen dollars
in the first quarter. Well, know, that's bad, right, let's
start there. It's bad, but it was at fifty eight
hundred bucks at the end of twenty nineteen.
Speaker 2 (06:43):
Here's why.
Speaker 3 (06:44):
It's in a six and a half percent increase over
that time period. And I guess on my point it
would be well, prices are up well more than six
and a half percent, but on the other hand, wage
tis are up three and a half percent, so that
should allow you to pay down that credit card debt.
Speaker 2 (06:59):
And the interest rate some of these are higher now.
So instead of interest being seventeen percent on average, it's
now twenty three percent. And so you, like, you do
the math out and you're like, okay, seventeen percent of
six thousand we are talking. You know, you're paying you know,
nine hundred and fifty nine hundred and seventy dollars a month,
I'm sorry a year in interest before Now you're paying
(07:19):
somewhere around fifteen hundred bucks a year in interest.
Speaker 3 (07:21):
The other bad part of this slightly more than half
of credit card users in twenty nineteen we're paying off
their balance every month. Now slightly half slightly more than
half are carrying a balance a month of a month.
Speaker 2 (07:31):
Yeap, So that not really a great sign there. Let's
see you wanta talk car ownership, I'd prefer not to
because the data is just awful, quite honestly. So you've
got higher car loan interest rates and vehicles have gotten
more expensive, and so now you end up with people
(07:53):
having to hold onto their cars longer, and the ones
that are replacing them more often have just astronomical mon
monthly bills that they are spending in order to buy vehicles,
and auto insurance has gone through the roof as well.
The car picture is kind of gross right now. Quite
like I got a shower after reading some of the data. Yeah,
(08:15):
we're just really bad at that decision. We are, we are,
And you got delinquencies. This is one of the other
areas where delinquencies are moving up. It's really credit cards
and auto loans where you're seeing the vast majority of
the movement. Neither one of those is a big enough
area to cause the US economy any meaningful trouble, but
they are areas that can absolutely cause individual households a
(08:36):
lot of trouble. Yeah, and the car piece is really
kind of concerning right now.
Speaker 3 (08:41):
I mean, we've been covering too the increasing number of
car owners who are just going without insurance right now
is another piece to this too. This isn't covered in
this piece, but we covered a few weeks ago where
increasingly frankly, because car insurance rates have gone crazy over
the last few years. I don't remember where that landed
(09:01):
in terms of inflation over the last several years, but
through the roof, in terms of the cost of insuring
your car, you've now got more uninsured drivers on the road.
What does that do in amo among many other things
of you know, causing potentially more hit and runs and
all sorts of problems. It drives up insurance costs for
the people that do ensure their car is even higher
(09:21):
and faster.
Speaker 2 (09:23):
Which is not good.
Speaker 3 (09:24):
No, because all of us have that rider on our
vehicle insurance. I think it's required to Massachusetts that you
have insurance against uninsured drivers.
Speaker 2 (09:31):
And finally, housing also ridiculously expensive right now.
Speaker 3 (09:37):
True, but it's the only one that I can look
at to say, I mean, you know, mortgages and things
like that have gotten more expensive, but home equity one
area I can look at to say dramatically improved over
the last five years.
Speaker 2 (09:47):
The problem is that most people don't want to tap
their home equity right now because interest rates have been
so high. We'll touch on how interest rates coming down
may shift the thinking on that over the next couple
of years, and how that could be something that acts
as nice little counterbalance to some of the slowdown that
we've been seeing in the US economy recently. But people,
it's it's one thing a few years ago when you
(10:08):
could say to someone, Hey, you're thinking about this project,
what about a home equity line of credit or a
home equity loan where yeah, you're paying three or four percent.
Oh yeah, that sounds great. Earlier this year, Hey homech
not even earlier this year. Earlier this week, Hey, home
equity line of credit? You could you could get one
and you're paying eight and a half percent. No I'm
(10:28):
not gonna do that. No, thank you like that? That
sounds not great. So we'll talk about how this may evolve,
because I do think this is one of the key
things to watch as we go through the next several years.
Speaker 1 (10:41):
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(11:01):
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Speaker 2 (11:12):
All right, Mike, let's talk a little bit about this
piece from Connorson and Bloomberg Opinion. It's titled Americans have
a new piggybank to raid their houses. We're talking last
segment about the idea of Hey, as interest rates come down,
home equity loans can start to, you know, look attractive
to people who may be considering projects and things along
those lines. And this piece really gets at the core
(11:35):
of that in that, Hey, right now, Americans have just
a monumental amount of equity in their homes at the moment.
I was looking at data just a minute ago, actually,
and this is from our friend Mike Simonson at Housing
Wire and all this research. One point eight percent of
(11:55):
mortgages right now have negative equity. That is the lowest
percentage of underwater homes in history.
Speaker 3 (12:03):
Yeah, I'm trying to I'm struggling to imagine what home
has negative equity right now.
Speaker 2 (12:07):
It must be the last year or two probably, I guess, Yeah,
it has to have been. I mean, think about how
prices have moved up. Like I'm gonna say, it has
to be bought in the last home and in one
of like eight states. Yeah, it's got to be. Hey,
I bought it last year in Austin, Texas or something
like that with two percent down right exactly. It's it's
(12:27):
something like that. The vast majority of homes have I
mean again, even other things that you're seeing here, fewer
than five percent of homes have under eighty percent loan
to value ratio. So there's a ton of equity in
homes at the moment. And if there's one thing that
I believe more than anything else about Americans in their
(12:48):
financial habits, and this is neither good nor bad. It
just is. When given the ability to borrow golleg willkers,
we do it like that's what Americans do. I'm not
saying it's good or bad. It just like it is.
And most of the time it ends up working out
fine in the aggregate. Occasionally you run into a two
thousand and seven, which is not great. Yeah, I wonder
(13:13):
we haven't seen this tack up a whole lot. Home
equity line applications, balances. None of that stuff has really
moved a whole lot. And you can make it an
easy argument that, hey, that's just because rates have been
so hi that people don't want to do it.
Speaker 3 (13:26):
And I'm you know, Paul was in that boat. Actually
he got a bunch of quotes to redo a porch
and said at eight and a half percent interest, no,
thank you, that drops down to five or six. You
do wonder, but I do wonder also the stigma attached
to lines of credit and how it just decimated households
back during the financial crisis.
Speaker 2 (13:47):
Can I share some data please? So in two thousand
and this is according to data from the Federal Reserve,
and they do a I think it's a weekly survey
they get data on this. Actually, at the start of
two thousand there was around one hundred billion dollars of
home equity lines of credit were revolving home equity loans outstanding.
(14:11):
By the time we got to the peak of the
financial crisis in March of two thousand and nine, we're
up to six hundred billion dollars six hundred billion dollars
the home equity loan. The amount outstanding on home equity
loans sextupled in a an eight year period, Like it
(14:31):
was just insane, yep, and we realized, hey, this is
this is dumb, We shouldn't do this. Over the next decade,
from two thousand and nine, actually decade plus two thousand
and nine to February of twenty two, the amount outstanding
on home equity lines of credit went from six hundred
billion down to two hundred and forty six. It was
a net drag just because again, like people were like
(14:52):
tapped out on this stuff. If you look in the
last year, though, the amount outstanding on home equity loans
has gone from two one hundred and fifty three billion
dollars up to two hundred and fifty eight with a
meaningful inflection point in June of this year, where we've
basically been adding a billion dollars in new home equity
loan exposure on a monthly basis. Now that's remember back
(15:15):
in the early two thousands, we're adding like eight to
ten billion dollars a month. We're adding a billion a month.
So don't get all freaked out at all, like we're
doing it all again. No, we're moving at like a
tenth of the pace in a world where stuff is
three times more expensive.
Speaker 3 (15:30):
Right, yeah, that's so important caveat there.
Speaker 2 (15:32):
Yes, but you're already starting to see a little bit
of an uptick on this, and this, in my humble opinion,
is actually a fantastic sign for the US economy.
Speaker 3 (15:44):
Which piece the moving up of the balances, or the
existence of the equity.
Speaker 2 (15:48):
The moving up of the balance is because there's so
much equity, we're we're not in trouble in the housing
market with people like having to get blown out of
their homes, with you know, taking big haircuts on short
sales and stuff.
Speaker 3 (16:02):
Sure, it's not.
Speaker 2 (16:02):
A threat here. And so when you see borrowers rightly saying, hey,
I've got this equity, interest rates have come down and
I've had a project I've put off for a couple
of years because rates have been through the roof. Good
for the family again, all else being equal, assuming like
they keep their job in Yaudiata, really good for the economy,
(16:24):
generates economic activity, and it's moving at a pace that's
not concerning.
Speaker 3 (16:28):
Yeah, I'll argue about the good for the family piece, right, Like,
you know, there are plenty of people who would say,
pay for that project in cash if you're going to
do it, and and don't manage around that debt. And
I think that's a reasonable argument to make at the
household level. But if you're talking about the predictive future
(16:48):
of the state of the economy, yeah, expanding debt levels,
I think is a very, you know, tremendously attractive viewpoint
for the future of the economy.
Speaker 2 (17:00):
I'm gonna poo pooh the people that say you shouldn't
do that, take, you know, taking out debt.
Speaker 4 (17:04):
Yeah.
Speaker 2 (17:05):
Everyone likes to be like, oh, like, I'm being so responsible,
and this is the response. It's not irresponsible to use
debt inherran like, it's not inherently irresponsible to use debt, Like, yes,
you can do it badly, but that's like saying, hey,
just because Battlefield Earth was a horrible movie means no
one should make movies. No, they just made a bad one.
Speaker 3 (17:27):
I agree that people overstate the don't ever use debt.
I use my credit card every single transaction, and I'm
fine with that, But I think there's also probably a
balancing act there, and would generally be cautious about borrowing
on your home for anything until you've really thought about
(17:48):
how that loan is going to be paid back, because
far too often it doesn't happen. YEP.
Speaker 2 (17:53):
Taking a look at markets as we had towards the
bottom of the hour, the Dow is still up three
seventy six, the S and P's up thirty five, Nasdaq
up seventy.
Speaker 1 (18:12):
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Speaker 3 (18:35):
Mike.
Speaker 2 (18:35):
There's a piece in the Wall Street Journal today. It's
titled when Chasing more dividends leaves You with less? And
what it gets at is the idea of hey, in
particular in the twenty tens, but with the idea that
interest rates might be coming down again, people start to
look around for Hey, whether what are other ways that
(18:55):
I can generate income into portfolio, you know, beyond what
I was doing previously. And so you see these different
high dividend products that are offered, in some cases not
even high dividend products just high income where they might
even be using like an option strategy to try to
generate income as well. And what's important to pay attention
(19:17):
to is not just the dividend payout, but also, hey,
what what kind of total return do you generate? Because
in some cases you can end up in a situation
where yes, you might get you know, great dividends that
help to you know, cover what your you know, expenses are,
but it's also at the cost of Hey, the principle
(19:40):
is being kind of whittled away through bad performance from
the underlying investments, and so you might not actually be
getting anywhere and it might not be sustainable for you.
Speaker 1 (19:49):
Yeah.
Speaker 3 (19:50):
The example is used of one of these that you
know advertised an eleven percent dividend deal that's seeing a
negative seventy percent decline so far this year. As an example,
there's this really runs across not this year. It was
a decline of seventy percent over the last thirteen years,
sorry thirteen.
Speaker 2 (20:06):
Which by the way, is a time that's been really
good for stocks, right, but not so much for this
this fun.
Speaker 3 (20:12):
And so, I mean, there's a few different ways to
look at this one. Whenever you see something that's advertising
and paying a rate that far exceeds what you see elsewhere.
You need to stop and pause and say, give it
the old sniff test, like, what is happening here? How
are they doing so? Because I see that the S
(20:32):
and P five hundred over thirty years has averaged what
like a two percent dividend?
Speaker 2 (20:37):
Right, yeah, and like on something like the fun that
you referenced, they found that again, even accounting for the dividends,
you still lost nine percent over a thirteen year period,
where hey, even if you had just taken in again,
you never know what the returns are going to be
on any of this stuff, But you say, okay, look
the market over that time period did significantly better, and
(20:59):
even if I'm paying capital gains taxed through liquidations, you
would have ended up in a better spot. Now that
might be reversed over the next decade because you don't know.
But just because something is paying you high dividends doesn't
mean that it still is generating the kind of performance
that you need for a long term strategy.
Speaker 3 (21:17):
Or that the share price will remain stable. I think
there's a far difference between this and say, like, you know,
there's plenty of funds that track the highest dividend payers
in the SMP, for example, which you know would still
pay a higher dividend rate, albeit far less. But even
in those cases, you might not recognize that, Hey, okay,
now I have no exposure to, for instance, technology stocks, right,
(21:38):
very limited exposure, or just exposure to very mature technology stocks,
which you know, go take a look at a few
of those. They haven't performed exceedingly well, and so the
temptation is clear there, and especially in yours. I mean
the utility sector, for example, has done exceedingly well and
tends to pay a high dividend rate this year in particular.
But it comes back to something that I see all
(21:59):
the time, Chuck, and I know you see it too,
which is people get caught on one feature of any
investment product. Yes, look how well it did last decade,
Look at the dividend rate, look at the price to
earnings ratio, And fundamentally, I've sometimes dug in and been like, well,
what is it? What does the company do? What is
that fund to do, what's its goal? What does it
(22:20):
attempt to accomplish? And unfortunately frequently the answer is I
don't know. I saw it on CNBC or I saw
it on this place or that place and just talked
about the David, I have no idea what the company does.
Speaker 2 (22:32):
He ratio is low. What do they do well? They
sell horses and buggies?
Speaker 1 (22:35):
Right?
Speaker 3 (22:36):
So what does require a bit more digging in than
just the surface of Okay, you know this is what
this does. And if you can't explain it to say,
your spouse, it's a pretty good sniff test of like, hey,
you know, what are we investing in? And do I
fully understand it. It's not to say that there isn't
(22:57):
a place for how yield and it and investing. There
are plenty of circumstances where that makes a ton of sense.
But it all comes back to understanding what it is
you're doing. And this really plays into not just investment selection,
but really every part of the investment process. You ask
yourself honestly, like when I take a look at my portfolio,
do I understand what it is that I'm investing in?
(23:20):
Would the average person consider it to be conservative or
aggressive or somewhere in between? Why do I own this
asset over here? What is it doing to help me
accomplish my goals ten years from now? Like those are
You don't need to be a chartered financial analyst to
be able to answer those types of questions about your portfolio,
and I would argue that everyone should be able to.
(23:44):
If you are listening to this now and you know,
just kind of scratch your head saying I'm not sure
that I could answer those questions about my own investment
lineup or financial plan. I'd love to introduce you to
the Armstrong Advisory Group and offer you a free time
to sit down with us. We have offices throughout New England.
We take meetings across the country. We can meet via zoom,
(24:05):
we can talk to you over the phone, we can
meet with you in one of our eleven or twelve
offices based here in New England, and we'll do a
deep dive with you to really understand what it is
you're trying to accomplish. Sit at the same side of
the table and provide some feedback for you on okay,
these are the paths forward and what seems to be
going well and what might not be going so well.
If this is ringing true to you, If if that
(24:26):
type of consultation would be useful, please give us a
call at eight hundred three nine three four zero zero one. Again,
we have offices throughout New England, but meet with folks
across the country and would be happy to sit down
with you too. That phone number once again, it's eight
hundred three nine three four zero zero one.
Speaker 1 (24:45):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 2 (25:00):
Google about to be going into another anti trust trial, Yes,
that's right, their second one this year. At least the
DOJ is saying to Google, hey, you might be anti
competitive when it comes to your business, but we're not
when it comes to our anti trust lawsuits, because we
have two of them, and this one's going to be
(25:21):
taking place in the Eastern District of Virginia. And the
premise here is the DOJ is going right after Google
Ad Manager, which is the platform that Google uses to
basically take orders for ads coming into websites and then
place them onto the various websites that use Google Ads.
(25:42):
Down the road.
Speaker 3 (25:43):
Not that this case occurs in the court of public opinion,
but in the previous one, which was Google search dominance. Yes,
pretty easy for people to relate to. Almost anyone who's
used the Internet has used Google Search. A small fraction
of Internet users have used Google advertising technology, and so
I don't think everyone's quite aware of just how much
(26:05):
Google dominates this space, which is in part by because
of their dominance in search.
Speaker 2 (26:11):
Yeah, the way that Google's ad platform works, if you're
not familiar with it, it's really simple. You go and
create an account for Google Ad Manager, and you say,
here's my budget for the month, here are the types
of ads that I'd like to run, and here are
the people that I'd like to try to target. And
(26:31):
Google does all the rest of the work. Your ads
show up wherever. They determine algorithmically that your ads are
going to go, and it's based on what you say.
And then it's also based on the other side, which is,
let's say I'm a website. I say, hey, here are
the people you know, here's my demographic, and here are
the kind of ads I want to run, and Google
provide me with, you know, the ads that are appropriate.
(26:53):
So if I'm using Google Ad manager. I don't go
and say, hey, I want these ads to run on ESPN. No,
if I want to do that, I just go to
ESPN and say I want to buy ads on your website. Rather,
it's this huge programmatic ad buy that just goes out
into the ether and ends up wherever. The problem with
it is it really has become the default way that
(27:17):
ads are placed online at this point. And a lot
of this stems from and I've talked about this a
lot in our show from Google bought a company back
in two thousand and eight called double Click, who is
the biggest ad market place in the time on the planet,
and Google signed an agreement with I forget if it
was the DOJ or the FTC, but they specifically said, look,
(27:40):
we are not going to merge double Click with Google's
ad program because it would be too hard and too complicated.
And that was one of the reasons why the government said, okay,
you can do this. Less than three years later they
announced they were integrating the two platforms. And now here
we are thirteen years after that, and it's like.
Speaker 3 (27:59):
Finally the governments do something about it.
Speaker 2 (28:00):
Yes, So this is something that again is kind of obscure,
but It all dates back to that purchase of double
click back in two thousand and eight and the integration
of the marketplace with the with basically the rest of
Google's business, uh and all of the data that Google has.
Speaker 3 (28:20):
It's interesting that it is happening at a time, by
the way, where I think you might be able to
argue that Google's influence in this ad space is waning
a little bit, right Like Amazon and Meta are picking
up some space, even Apple is, and so you know,
the lawsuit comes at Look, it's you know, it's Google,
So let's not be too concerned about them. But they
just lost an anti trust case, and their influence in
(28:42):
the ad space Argua inarguably is is waning a little
bit with some of their you know, big pocketed peers
taking some.
Speaker 2 (28:50):
Let's take a quick break here. When we come back,
Stack Roulette.
Speaker 1 (28:55):
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here on the Financial Exchange Radio Network. Miss any of
the show. The Financial Exchange Show podcast 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.
Speaker 4 (29:18):
This segment of the Financial Exchange is brought to you
in part by the US Virgin Islands Department of Tourism.
Speaker 3 (29:24):
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(29:48):
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That's visit USVII dot com.
Speaker 2 (29:53):
What do you got for me for stack?
Speaker 3 (29:55):
Roule at Mike Grocery prices everyone the bane of everyone's existence.
I spent good. I'll tell you every time I go
to market Basket, which isn't as frequently as I would
like because they just aren't located as close to me
as as I would like. But I was on my
way home from a weekend away and I stopped at
market Basket, and I spent a good three hundred and
eighty dollars at market Basket, which is tough to do
(30:15):
given everything shallots, the whole store, the whole store. But
that's I mean swordfish for eleven bucks, like anyway. They
love Market Basket. Favorite grocery store in New England, hands down.
But grocery prices are up. I'm trying to remember the
exact statistic, but it's high twenty percent range since pre
COVID they outpaced the overall range of inflation, which obviously
(30:39):
includes grocery prices. And so a lot of people are wondering,
what the hell's going on? Why groceries? Why is this
the main issue? I know, we had the Ukraine War
drive up food prices. We've had obviously inflation and wages,
and this is a it's a fairly labor heavy industry
when we talk about, you know, the manufacturing and production
(30:59):
of food. But greed has also been brought up, and
I think, you know, the Kroger CEO stepped in a
little bit when in March he wrote that the supermarket
chain's milk and egg prices were significantly higher than was
necessary to account for inflation. NPR interestingly took a look
at profit margins for companies financial disclosures, specifically in the
(31:22):
item makers, So you know Mandal's Pepsi Proctrick gamble. They
basically found that. Look, for almost all companies that we
analyzed between twenty eighteen and twenty twenty three, profit margins
either declined or grew by less than one percent. So
if you're trying to put your finger on the hey,
(31:43):
what's going on here with grocery prices and lawmakers, you know,
talking about blocking the Kroger Alberson's merger. I mean, maybe
the markups are occurring at the grocery store chains and
that's where the greed's coming in here, But it's clearly
still a very competitive mark market for grocery suppliers, I
think is the takeaway here. And I just don't find
(32:05):
corporate greed to be a satisfying explanation of pretty much
anything in the way of prices, unless they operate a monopoly.
Speaker 2 (32:13):
Even then, I'm not sure that it like it's.
Speaker 3 (32:16):
Yeah, look, it's nice to it's a nice scapegoat, but
it just doesn't really add up.
Speaker 2 (32:21):
Here's the thing. Company I've said this before, companies didn't
wake up in twenty one and say, hey, Mike, have
you heard of greed? Do you think we should get greedy.
Should we try this is greed something we should be doing.
That's that's not how it works. Companies, I'm of the opinion,
(32:43):
especially in the last two thousand years three thousand years,
have been greedy. It's like it's baked into humanity. It's
it's something that we have to try to fight against
because all of us have that a little bit. And
company are greedy like they just are. I'm sorry, but
(33:04):
it's the case. I know it's cynical, but they've always
been this way. And so if it were purely, oh like,
corporate greed, why didn't it show up any other time
in the last forty years.
Speaker 3 (33:14):
Yeah, I mean, look, there is definitely a compelling case
that Americans were more willing to accept price hikes over
the last three years compared to the twenty tens decades.
That's definitely the case. But unless you're telling me that, hey,
you know, Kroger and Roach Brothers and Market Basket don't
need to compete with each other and are colluding on prices,
(33:35):
then I just don't think you have a compelling case
for greed being the problem here.
Speaker 2 (33:38):
No, no, I concur either of you follow the PWHL's
inaugural season last year. No, this is the Professional Women's
Hockey League. They had six teams and they basically all
just launched without any branding, just because the thing came
together pretty quickly.
Speaker 3 (33:55):
Yeah. I was talking to somebody about this, and I
assume that they're going to start selling off some because
it was I mean, what was the name of the
Boston team, Boston? It's just yeah, Boston.
Speaker 2 (34:03):
Yeah. They announced the branding of the six teams today
and I think that they name wise, I think they
hit on five of the six Boston and he guess
is to what the Boston team is named? Fleet? Thank
you for already googling at Tucker. It's the Boston Fleet,
the Minnesota Frost, the Montreal Victoire, which I just think
(34:26):
is very clutch, the New York Sirens, the Ottawa Charge,
and the Toronto Scepters. So the only one that I'm
not sure is that the Ottawa Charge, Like it's just
kind of like, I don't know where does the team
play out of in Boston against Arena and Lowell? Okay,
your songs Arena Songus, Boston Songus, Rene and Lowell, And
(34:49):
so they also you know that showed all of the
logos and everything. So the Boston team, the logo that
they did for them, I love it for one reason,
but two separate reasons. Within it, it's this like stylized
anchor like B that looks like an anchor, kind of
a B that looks like it. It's like a sideways anchor,
(35:11):
like a sideways anchor, Okay, but if you rotate it,
it's a direct throwback to the Hartford Whaler's logo, like
the bottom of it. So I love it because a
it's kind of embracing some of the hockey heritage of
the New England region. But it also kind of tweaks
the Hartford fans who are like, hey, our team like
got we got hosed on this. Hey maybe this is
(35:32):
where you can you know, kind of go to, you know,
find your new team. But I think they they nailed
most of these. The only one where the logo's kind
of questionable to me, Tucker, I don't know if you're
you're looking at all these the New York Sirens logo.
It's Sirens with with kind of these blue echoes on
the side of it.
Speaker 3 (35:51):
It looks like the serious XM logo. For the record,
I was picturing a buzzing bee. Not the letter B.
Speaker 2 (35:59):
No, it's the letter B, the letter B. But yeah,
So the second p WHL season is going to be
kicking off soon with some new team names. So exciting
stuff there. Quick break for the rest of the day.
We'll see you tomorrow though,
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