November 12, 2024 • 38 mins
Mike Armstrong and Paul Lane discuss why small caps and banks have been rallying since the election. Home Depot lifts full-year outlook after third-quarter sales rise. OPEC trims demand forecast for fourth straight month. How Trump can leverage an economy Americans dislike. Will Trump's tariffs plan lead to high drama?
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:22):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is The Financial Exchange,
with Mike Armstrong and Paul Lange, your exclusive look at
business and financial news affecting your day, your city, your world.
(00:45):
Stay informed and up to date about economic and market
trends plus breaking business news every day. The Financial Exchange
is a proud partner of the Disabled American Veterans Department
of Massachusetts. Help us support our great American heroes by
visiting DAV FIVEK dot Boston and making a donation today.
The DAV five K Boston is presented by Veterans Development Corporation.
(01:08):
This is the Financial Exchange with Mike Armstone and Paul Lane.
Speaker 2 (01:14):
Good morning, welcome back to the Financial Exchange. We're officially
one week out from US elections here and continues to
be the main topic of conversation is what will the
economy under Trump administration two point to zero look like?
And we'll be continued to dive in there. We've also
got a reading on inflation coming out tomorrow. The CPI
(01:36):
will be out Thursday, We've got our initial jobless claims,
and then Friday, a whole slew of different economic data,
import prices, Empire State manufacturing a big one from retail sales.
Is always important to look at industrial production, production, capacity, utilization.
But it continues to be a busy week of debating
what the Trump economy will look like. And we're also
(01:58):
welcoming back Paul to the show, who was off the
last couple of weeks. I can't remember why. Something about
a hospital visit and some screaming. From what I understand that.
Speaker 3 (02:08):
Sounds really bleak.
Speaker 4 (02:09):
Uh.
Speaker 3 (02:09):
It was a positive, positive news. But in addition to
the family, so.
Speaker 2 (02:13):
New member of the Financial Exchange team and Armstrong Advisory
group family.
Speaker 3 (02:18):
If I make any slips or just completely go blank. Yeah,
everyone knows why that lack of sleep and having my
head buried in diapers and bottles. Phil last week or
so I heard, there was a presidential one.
Speaker 2 (02:34):
Yeah yeah, yeah, yeah, Well, you know, congratulations from all
of us, Paul, Thank you so much doing your job
to keep the US population growing, joining the UH joining
the three Kids club, which which you know I'm also
a member of. So exciting stuff there. Stocks this morning
edging slightly lower, really is kind of a vacuum of
(02:54):
data coming out right now. We've had earnings from Home Depot,
but other than that, just kind of waiting on appointments,
waiting on the final results of house races to see
the makeup of Congress, and and you know, really you know,
waiting on obviously specific policy to come from the Trump
administration regarding tariffs, taxes and everything in between. But you know,
(03:15):
so far, there have been a few trends that have
played out in markets over the last week other than
just the general trend of markets moving higher on the
election news. One would be the play out of financial
stocks up. You've had you know, a few companies run
by close advisors to the next president doing well Tesla
(03:36):
in particular. Obviously, bank stocks have done quite well on
some deregulation news and then generally a trend towards smaller
sized companies, and you know, theories abound as to why
that might be. It's not terribly obvious why small cap
companies would do better than large ones in a in
a Trump environment, But a few of the theories that
(03:57):
have been thrown out would be, Hey, if you do
a bunch of deregulation as a percentage of you know,
total firm revenue or total firm expenses, it's a lot
more expensive for a small company to adhere to compliance
and rules than it is for say, Goldman Sachs to
comply with you know, all the sorts of rules and
regulations that are out there, and that applies to energy companies, financials,
(04:20):
all sorts of different companies. You also have the theory that, hey,
you know, if you're a smaller sized company, you're probably
doing more business within the borders of the United States,
so maybe not as susceptible to tariffs should they come
in the future. And then I guess the final piece
on all of that. Nope, I lost the final piece
so it was those two.
Speaker 3 (04:40):
Can I post a question back to you, and this
is a fall up on the head in the sand
for the past week or so. Is Tesla's meteoric rise
that we've seen over the course last week. Obviously we
know how closely aligned Elon Musk is to President Trump,
but the swell that they've seen is just astounding. And
I just am trying to speculate to other than him
(05:01):
being a close advisor and constituent with Trump, where how
that's such a significant benefit to Tesla as a company monetarily.
Speaker 2 (05:10):
So I guess one, I'm not sure there is a firm,
firm connection here. I think a lot of it might
be purely what you just speculately said is, hey, this
is a key advisor to President Trump. He's going to
have his ear, and you know, I think reasonably you
can expect that policies towards a company like Tesla will
be a little bit more favorable than if you had
(05:32):
had a Harris administration moving in. I think that's a
fair statement. Other things that come to mind, though, Let's
say that you do see stiff tariffs on foreign automakers
importing cars into the United States, the Hyundas, the Toyotas
of the world, who are producing cars in Mexico and
(05:53):
other parts of the globe. That doesn't affect Tesla very much, right,
they do a lot, you know, pretty much all of
the cars that they bring and sell into the United
States are made here. Now, they also have a very
big manufacturing plant in China, and so that would be
the counterpoint on the Tesla argument as well. You know,
if we're going to start hitting China with all sorts
(06:13):
of trade issues, know that doesn't directly affect Tesla's business immediately,
because they're not producing those cars in China and importing
them into the United States. But you can imagine a
bit of a tit for tat here, right Elon Musk,
for all the benefits of being close to Trump, may
also be a target of the Chinese government if those
things compound substantial.
Speaker 3 (06:33):
Yeah, the way I was thinking about is just in
the EV space, there's already absurd tariffs in place, so
that we cannot import really any electrical vehicles from China as.
Speaker 2 (06:41):
It is China, true, but Korea, you know, other nations
do import them substantially. You know, what does that look
like in terms of favorability towards Elon Musk and Tesla. Again,
I think an open question, and you know, could you
convince me that some of the rally has been just
pure speculation without much thought to it. Yeah, absolutely sure,
(07:03):
But you know, I think there are some arguments here
that they could that they could substantially do better. The
other piece would be I have a tough time believing
that a Trump administration is going to have a lot
of favorable economic policy towards reducing gas powered vehicles. So
you know, where does that leave Elon Musk. But on
the other hand, does Tesla need those substantial benefits at
(07:29):
this point to get their business off the ground? Now
they're already the largest ev producer here in the United States.
They don't need the same subsidies that maybe a new
Ford plant or new General Motors plant would need to
get off the ground and compete. And so if that
stuff goes away, maybe it comparatively leaves Tesla in a
better position. Again, these are just pure speculation, But yeah,
(07:50):
as you mentioned, the stock has popped what it.
Speaker 3 (07:53):
Was twenty percent over the last five days, it seems
from what I was just looking at, so.
Speaker 2 (07:59):
Any others you've seen in markets to this point, right,
I mean, you've seen a broad based rally, there's a
general expectation of lower taxes, but other than that, I
don't think anybody has a real firm grasp on what
the overall Trump two point zero economy is going to
look like yet, and that's reasonable, it's very early.
Speaker 3 (08:20):
The tariffs piece is certainly something that we need to
continue to pars through as much information as we get
in regards to those issues and what those are going
to look like. Obviously getting the final results on what
the House is going to look like after all those elections,
I believe I was reading that it's still four more
seats that would be required in order to get a
(08:40):
majority for the Republicans, but there's still eighteen races that
have yet to be called, so that information is important. Certainly,
the small cap rally that we saw has been quite
impressive ten percent over the last five days or so
post election for those small caps, and then the overall
market rally in general that we've seen. On the interest
rate front, that's something that I certainly found interesting a
(09:02):
direct result after the election, where the US ten year
treasury spiked up to at one point a high of
four point seventy five percent, but I believe on closes
four point four to three percent is the highest that
we saw on the US ten year treasury that subsided
a little bit. Today we sit as the bond market
reopened after being closed yesterday at four point three eight percent.
It was four point three one percent ahead of the election.
(09:24):
So certainly on the interest rate side of things, that
is something interesting to follow. There was speculation that with
Trump getting into office that was going to increase deficits
and spending, and that's why we saw a little bit
of the run up on the US ten year treasure yields.
So that's something that certainly is a lot of focus
because that has direct impact to a housing market that's
(09:45):
been really itching for lower interest rates, and that's not
what we saw in an initial, you know, kind of
whipsaw reaction to the election results.
Speaker 2 (09:55):
Let's take a quick break when we come back, we're
going to take a brief politics Trump two point oh break. Here.
We had earnings from Home Depot this morning. I want
to dive in there as it is attached to interest
rates and what we're seeing there. Quick break Home Depot earnings.
Speaker 1 (10:09):
When we return, this is your home for the most
comprehensive coverage of the economy and the trends on Wall Street.
Face is the Financial Exchange Radio Network. If you missed
any of today's show, catch up whenever you want on
our YouTube page. Find daily show segments and full shows.
Just go to YouTube dot com and search for the
Financial Exchange. This is your home for breaking business and
(10:32):
financial news. This is the Financial Exchange Radio Network.
Speaker 4 (10:37):
The Financial Exchange has built an incredible partnership with the
Disabled American Veterans Department of Massachusetts and once again we
were thrilled to take part in this year's DAV five
K Boston. For those of you who took part your gifts,
we're much appreciated and will support services such as the
Veteran Advancement Program, which offers permanent and affordable housing opportunities
(11:00):
veterans and their dependents. Thank you again for your support.
The DAV five K Boston is presented by Veterans Development
Corporation PAIL.
Speaker 2 (11:08):
We were discussing interest rates a little bit before the
break here and you know, taking a look at recent moves.
On September sixteenth, on the ten year treasury, we reached
a recent low ten year Treasury got as low as
three point six one percent back on September sixteenth. Since
then it has just been a solid push back upwards,
(11:30):
and not entirely related to the the election, although you know,
some have theorized that this is in part related to
a Donald Trump trade but nonetheless, the ten year today
sitting at four point three seven And I bring that
up because it is the key driver of mortgage rates,
which are now, according to Mortgage News Daily, sitting at
six point nine to two percent on the thirty year fixed.
(11:53):
All that brings me to Home Depot earnings, which reported
before the bell today. Stock is off by about a
quarter of a percent this morning. Having a reasonably solid
year in most years would be you know, knock them
to cover off the ball, but up eighteen percent so
far for the year and facing well, frankly, just facing
a slowdown is what Home Depot is dealing with right now,
(12:15):
and I think it can be largely explained by the
lack of housing market activity. But you know, Home Depot
really doing quite a bit to battle against that that
pullback and spending. But there really is only let's put
it this way, there's only so many twenty foot skeletons
you can sell.
Speaker 3 (12:36):
It was incredible how popular it became.
Speaker 2 (12:39):
I couldn't see it all over town. Yeah you saw one, and.
Speaker 3 (12:41):
Then they just they'd exploded in popularity. But to your point,
to further in hone in on what home Depot strategy
has been. Obviously, we all know they did tremendously well
COVID in post COVID as everyone was locked inside and
there was a tremendous amount of focusing on spending on
durable goods. Now there's been a much greater larger on
consumer spending to leisure and hospitality, and that trend has
(13:03):
still continued on through the end of twenty twenty four here.
So there's been a strategic pivot, not necessarily pivot, but
maybe more enhanced focus on the professional side of things.
So half of home Depot's revenue comes from selling to
I'd hardly call myself a do it your selfer in
that camp, but well, let's say guys like Mike and I,
or maybe guys more sophisticated than at least I'll put
(13:24):
myself in the do it yourself bottom percentile there, And
the other half of revenue comes from professionals, from contractors,
roofers and home pros, and they had made their biggest
acquisition earlier this year, acquiring SRS Distributors for eighteen point
twenty five billion, and that was putting more investment on
the home professional side of things, catering to those people
(13:46):
who do large scale jobs, who are contractors and roofers,
and that's where they've been focusing because there's more demand
on that segment and less so demand on the do
it yourself project side of things.
Speaker 2 (13:58):
Yeah, the chief financial officer was quote saying, the consumers
are deferring purchases waiting for lower rates, and I think
that was the key takeaway really across their business that
you know, there's just not the volume of stuff going
on because home equity line rates are high, mortgage rates
are high, and everybody well, frankly, everybody going into this
fall was expecting substantially lower rates come the spring and
(14:21):
probably was just waiting on things. Comp store sales were
down one point three percent, so there you're looking at,
you know, how did sales do in stores that were
open for the last twelve months, So you can really
you know, look at comparable stores and you know that's
not terrible, you know, given what we've seen with rates
and the anticipation of rates falling. I don't think seeing
your sales drop by one point three percent is really
(14:43):
a bad news story. Hence, while you're not seeing a
big sell off here, in fact, analysts were expecting more
like a three percent drop in sales. So that's pretty
solid performance to expectations. But quite frankly, in a market
where there's only like, I don't even know them most
recent number eight nine hundred thousand homes for sale, it's
(15:03):
going to be challenging for Home Depot to adapt to
that and to deal with it. I was talking to
someone the other day that was in a kind of
interesting position. So they had with a commercial property they had,
they had a balloon payment come due, and so they decided, hey,
short term, I'm just going to put this on our
home equity line of credit, and so they they bumped
up the home equity line. And so I was meeting
(15:24):
with them yesterday and their home equity line of credit
is sitting at seven percent. These days, they're getting refinance
options to turn this thing into a fixed rate mortgage,
which you know is always appealing with you know, when
you've got a big bucket of money sitting out in
that line of credit to say, Okay, I'm going to
lock in the rate here and just know my expected
schedule here I found interesting. But they were getting fifteen
(15:46):
year mortgage rate quotes at six and a half percent,
and I said, gee, I'm you know, it's tough because
I could see that six and a half percent going
up a little bit over the next few months. Right,
you might get that higher, so you might want to
lock it in now. But on the other hand, I
could also see the seven percent going down two six
and a half or below over the next few months,
And so what do you do in that scenario? And
(16:08):
it was a bit of a push in those circumstances.
But we're just in this uniquely strange period where the
FED seems to be on a path of lower rates,
although it's unclear how much, whereas longer term rates are
very much reacting immediately to this, you know, political scenario
and drome. Powell and the FED are saying, well, let's
wait and see what happens.
Speaker 3 (16:29):
Sure, and then you have all the subjects that we're
going to cover on the tariff side of things, where
you sit and say, gee, we're projecting all these rate cuts,
you know, heading into year end and perhaps going through
twenty twenty five, does that persist or is there inflationary
pressure from some of the economic measures that we may
see heading into next year.
Speaker 2 (16:47):
Yeah, so tremendous amount of I don't know, just continued
questions about the state of the US housing market and when,
if ever, it's going to shift back in the other direction.
To get the actual data point there, as of October
of this year, there were nine hundred fifty three thousand,
eight hundred and fourteen active listings for properties for sale
(17:11):
in the United States. Taking a look at that same
data point in October of twenty nineteen, there were one
point two million. So, I mean, we're climbing, we're heading
in the right direction, but you know, and that is
the highest we've seen since post COVID, So you know,
we're we are definitively heading in the right direction here
in terms of listings. But when you're still a good
(17:32):
what's that twenty five percent thirty percent lower than pre COVID,
you can see where it's tough for home depot to
continue in that direction.
Speaker 3 (17:38):
With mortgage rates on the thirty year fix. Looking at
the Saint Louis fed sitting at about six point eight
percent today. That reached a low of about six point
one back in September. So that's the other piece of
the equation is where is that thirty year.
Speaker 2 (17:51):
Going to settle? Oil price is moving up slightly as
OPEK is trimming their demand forecast for the fourth straight
month in a row. They're now expecting demands to grow
by only one point eight two million barrels a day
this year, followed by one point five four million barrels
a day for the next. We've talked a fair bit
about oil markets in the context of twenty twenty four
(18:14):
compared to decades past, and I've made the argument that frankly,
what OPEC does and says is not nearly as important
as where they were a few decades ago, with the
with America's ability to pump out more oil than the
Saudis these days. Nonetheless, what they do and say does
move markets here and there. Oil now sitting at sixty
nine dollars per barrel on West Texas crude. In terms
(18:37):
of gasoline prices around the Northeast as well as the
overall United States, you're now sitting an average just above
three bucks per gallon. Three dollars and eight cents is
the national average according to Triple A. Here in Massachusetts
are sitting at three dollars and four cents. I'm rounding
on these New Hampshire at two ninety seven, main at
three oh four, Vermont sitting at three thirteen, Rhode Island.
(19:01):
If I can manage to hover over you sitting over
at two ninety four, Connecticut at three oh five a gallon,
And let's get out to Oregon, which is sitting at
three fifty nine per gallon. Let's go ahead and take
a quick break here as markets are mainly just sitting
here in neutral territory for the moment. A little bit
(19:21):
of a flip happening in the Nasdaq will cover all
of that and more next with Wall Street Watch.
Speaker 1 (19:43):
Like us on Facebook and follow 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 at what's moving market so
far today right here on the Financial Exchange Radio Network.
Speaker 4 (20:02):
Well, markets are mostly quiet and in mixed territory following
another day of record highs. As Wall Street awaits tomorrow
morning's Consumer Price Index, for another inflation reading at the
moment that I was down by a quarter of a percent,
SMP five hundred is down by only four points, and
the Nasdaq is up by fifteen points. Russell two thousand
(20:24):
is pulling back by about half a percent. Ten year
Treasury iel up by six basis points at four point
three six percent, and crude oil up over three quarters
of a percent, trading at sixty eight dollars in sixty
one cents a barrel. Home Depot down by one percent
after the home improvement retailer beat third quarter earnings expectations
(20:44):
and lifted its full year outlook. During the quarter, home
Depots saw customers purchase grills in other outdoor products and
also prepared for hurricanes in the Southeast. The company sales
climbed more than six percent on a year over year basis. Meanwhile,
e commerce platform operator Shopify also reported better than expected
third quarter revenue and said growth could be even higher
(21:08):
in the fourth quarter. Shopify shares surging by twenty five percent. Elsewhere,
Live Nation up by four percent. After the music and
entertainment company b third quarter earnings expectations but narrowly missed
on revenue following a big summer concert season this year,
and Live Nation said it anticipates more growth next year.
(21:30):
Honeywell jumping by five percent after Elliott Management disclosed a
five billion dollar stake in the industrial giant, recommending the
Honeywell pursue separation of aerospace and automation. Netflix this morning
said that more than fifty percent of its new signups
were for AD supported plans and countries that offer the option.
Netflix launched its ad supported plan two years ago and
(21:52):
has now reached seventy million global monthly active users for
that tier. Netflix up by one percent, and shares enticson
foods are up by twelve percent. After the poultry process
in companies earnings and sales beat forecasts in the third
quarter on Tucker Silvan, that's Wall Street Watch.
Speaker 2 (22:09):
Poultry processing is a tough couple of words to get through, Tucker.
That was good.
Speaker 4 (22:12):
Still of Shopify share surgeing.
Speaker 2 (22:15):
Yeah, yeah, yeah, good good work all around, good literation.
I want to jump back in here to you know,
the economic the economy that Donald Trump is going to
inherit come January of next year. We've you know, he
has spent the last several wow, several months on the
campaign trail really, I think portraying, as Bloomber points at,
(22:38):
portray in the US economy as this epic disaster in
need of radical action, and so I think there is
likely going to be an expectation that he take radical
action on the economy, and there's a few areas where
he's likely to do so. I would, as we've talked about,
we tend to take a very balanced approach on this
show when it comes to things, and i'veoted out I
(23:01):
recognize how much Americans hate inflation. It has, you know,
been the main reason I think that Americans have been
responding so poorly to surveys on how the economy is doing.
But what I would have pointed out several times is
that in terms of the key metrics that you would
look at to judge and economy, and let's say, compared
to our peers in the developed world, the American economy
(23:23):
is close to as good as it has been ever historically.
We've got unemployments sitting at four point one percent. We've
got GDP growth growing still in the three percent range,
although it's been slowing down.
Speaker 1 (23:35):
We have.
Speaker 2 (23:38):
What are there some key factors here.
Speaker 3 (23:39):
We've invalation that's come back down to a reasonable level
at two point four percent from where it was.
Speaker 2 (23:44):
Inflation that has been declining, a you know, labor force
participation rate, and a you know, worker to population ratio
that's nearly as high as it has ever been.
Speaker 3 (23:56):
Real wages have been up recently recently.
Speaker 2 (23:58):
Yeah, and so look, portraying the economy as an epic
disaster was clearly a successful political thing to run on,
right like. That worked very clearly based on the results
that we are seeing right now, and I can see
why it worked. The question is going to be, how
do you thread this needle of an economy that by
(24:20):
all accounts definitely slowing down over the last few months,
but does not have nearly as much capacity for investment
and by that I mean the ability for unemployment to
go substantially lower, for GDP to tick back up without
another surge in inflation. How do you thread that needle
of truly growing things while not reigniting the key economic
(24:46):
metric that clearly all Americans despise. It is going to
be an especially unique challenge for any administration, including the
Trump administration, to now go and tackle come January of
next year.
Speaker 3 (24:57):
No, I think you did a good job of laying
that out, you can really carve up the economy two
different ways. One side you pointed out low unemployment, inflation
that's come back down to reasonable levels, real rages have
done okay, and GDP growth has been in a real
relatively good position. However, if you want to argue the
other side of things, inflation is the first thing you're
going to hang your hat on that that punishment that
(25:18):
consumers have endured over the last couple of years has
left a permanent mark. And then you have a little
bit of a slowdown in hiring and a housing market that,
like you mentioned, it's been pretty frozen. Yeah it's come
back a little bit, but it's been a really challenging
housing market. Those are kind of the two sides of
the coin. But you're in a position where a lot
of promises have been made from an economic side of things,
(25:40):
and I thought that Bloomberg did an interest a good
piece here of pointing out that sometimes the best action
to take is is no action, and you can't do
that now. No, you can't not basically suicide right now
it is, but having a bipartisan or a split in
the House is something that they re friends back in
(26:00):
nineteen ninety four where President Clinton had tried to go
through a huge healthcare reform, but then in his second term,
the Republicans took over both houses and basically put it
at a gridlock where he was unable to institute any
domestic policy. And what you had come up a good
time for the US economy, and what you had come
out of that was nothing based on Clinton's innovation. It
(26:21):
was Silicon Valley establishing some of these transformative companies that
have presided over the US economy now for decades, in
Apple and Microsoft and others really make the economy boom.
And it's just not to say we're at that point
this time around, but it will be interesting to see
where we land from a policy perspective. But I would
agree with you can't really just go by with nothing
(26:45):
to do going forward in terms of a policy.
Speaker 2 (26:47):
Front now whenever there are pieces written about this, and
I would agree that. Look, if you look at the
policies that Donald Trump campaigned on higher tariffs, much lower taxes.
I'm not talking about just extent the twenty seventeen Tax
Cuts and Jobs Act. I'm talking about all the pledges
he made on tips over time, social security. Those things,
(27:09):
you know, you go and implement all of those, you
can talk about them being inflationary. There's been a lot
written about that. I will say that the pieces that
I've read that have been written have not been terribly specific.
So I do want to get specific on some of
this stuff for a moment, Because in twenty twenty two,
Americans faced nine percent year over year inflation. That was
(27:29):
a result. At the time, nobody really knew exactly what
was causing it, whether it was purely the shutdowns from
COVID and restarting an economy, whether it was all the
stimulus that was passed. It turned out, now that we've
had a few years to look at it, that the
shutdowns and the you know, the supply chain issues that
(27:50):
we faced during COVID were a far bigger cause of
that inflation than the stimulus checks, which also contributed. What
I will point out is I am worried about a
potential resurgence of inflation depending on what Trump's policies look
like over the next four years. I am not even
remotely concerned about nine percent inflation. I think that's next
to an impossibility. You have to make some really really
(28:12):
bad decisions to get us to nine percent inflation again,
and I don't think that's what we should be worried about.
And that's also why I dislike some of these pieces
is they tend to be a little bit of alarmist.
If we get to four percent inflation again, that would
be really bad, but it would be nothing like what
we saw in twenty twenty two. And so I have
to take a step back and really, you know, really
(28:35):
reframe some of this stuff, because I think what Americans
are dealing with over the last few years and why
they've been so dissatisfied is because prices on average moved
up a good twenty five percent over a four year
time period. I can't really envision a scenario where we
get there again. I can see where we get, you know,
three or four percent inflation. That would be bad. Rates
(28:56):
would go higher, it would cause all sorts of problems,
but tough for me to see the type of psychological
damage that was inflicted on the American public like we
saw from twenty twenty through twenty twenty Four's that's the
piece that I want to be clear about, is might
we see inflation again? Yeah? Is going to be nine percent?
Very very unlikely to get there anytime in the near future.
Let's take a quick break. When we come back, I
(29:18):
want to start digging into raff plants what this starts
to look like. My argument would be, you've kind of
got China on the ropes right now. Let's talk about
that and what it might look like from a Trump administration. Next.
Speaker 1 (29:30):
Text us at six one seven, three, six two one
three eighty five with your comments and questions about today's show,
and let us know what you think about the stories
we are covering. This is the Financial Exchange Radio Network.
Miss any of the show, catch up at your convenience
by visiting Financial Exchange Show dot com and clicking the
on demand icon, where you'll find all of our interviews
(29:51):
in full shows. This is your home for the latest
business and financial news in New England and around the country.
This is the Financial Exchange Radio Network.
Speaker 2 (30:08):
Without knowing the makeup of Congress, it's incredibly difficult to
know which tax priorities, which other economic priorities will be passed,
and which ones will not. But one that seems certain
is tariffs. The has been a lot talked about on
the campaign trail about the use of tariffs and how
Donald Trump views trade, which is fair trade over free trade.
(30:29):
I think is is you know, the term that has
been coined here, and I think more than likely front
and center is going to be China. There was, you know,
the key of the policy from twenty sixteen to twenty twenty.
Nothing that I have seen has indicated that Donald Trump
has had a change of heart when it comes to
trade with China, and so I think that is going
to be the crux of the issue. The thing that
(30:52):
has changed with China, in my view at least, has
been a bit of a bursting of the bubble over there, right,
You've had a real estate mark that's been in free fall.
Their economy has not recovered from COVID in the way
that the United States has. And my perspective on this
would be you've got kind of China on the ropes here.
If you really want to drive this home, there are
(31:12):
ways to do so. And I'll be interested to see
what the Trump administration two point zero approach to trade
with China is. What does this mean for TikTok? What
does this mean for you know, Chinese ev makers? And
I'll take the same approach that I have for a
while here, which is if your goal is truly to
(31:35):
drive change in China, then there's one thing that you
have to be able to do here in addition to
just you know, slapping tariffs on Chinese goods, it is
teaming up with Europe, Canada, and India to drive that
move home. And that's the piece I'm unsure that you know,
a Trump administration is willing to do here, and for
(31:56):
good reason, right like, Germany, for instance, has had very
close ties with China, and I can see why we
might want to object to that sort of thing. But
there seems to be recently a bit of a turn,
you know, you know, Europe has been getting more on
board with larger tariffs on Chinese evs. For example. India
kind of always drives its own path, but you know,
(32:17):
certainly not great relations with China and doesn't want to
see their Chinese made technology and electric vehicles within their borders.
And so can you once again thread this needle where
you say, hey, Europe, get in line. You know there
will be a number of strings attached to this. I'm sure. Yeah,
you've got to beef up defense spending, You've got to
(32:37):
do a whole bunch of other things. But can you
get a number of close allies in line to really
take it to China, because frankly, if you don't, if
you just go the same, you know, one point zero
version on tariffs on China and the United States goes
it alone, you're not going to change anything there. You
might hurt China's economy a little bit, but you're not
going to change how they view world exports and over
(33:00):
supplying the world with all sorts of products.
Speaker 3 (33:02):
It's a lot to really consider and try and parse through.
In particular, what is it going to be more of
a negotiating tactic these tariffs that are mentioned or certainly
we're going to see some tariffs, but the extent of
them and how much of them are negotiating taxes versus
how much of them are just going to be instituted
to raise revenue for the federal government. That's what you
(33:25):
need to continue to focus on. I thought, reading through
some of the information, what blew me away is that
the relatively small percentage of the federal revenue that comes
from tariffs in general, it is only two or three percent,
somewhere in that range. If you look at all the
revenue that the federal government had last year, less than
two percent of it was from tariffs. So even if
(33:47):
you were to jack up tariffs across the board at
ten percent from other importers out there outside of China,
sixty percent for China, it's not going to make a
huge dent into what the federal government derives from our
revenue perspective.
Speaker 2 (34:02):
No, certainly not. I mean the stuff that has been
talked about, by the way, you're talking about threatening tariffs
of sixty percent or more on goods from China, as
well as a universal ten to twenty percent levy on
imports from any country, And that's the piece that, again
in my view, has the ability to damage more than
help the United States. Again, it depends what your goal is. Right,
(34:24):
If you're just levering tariffs to try and pay for
tax cuts, then yeah, you do need to levery your
tariff on every imported good into the country and really
focus on that. If you're doing it because you say
China is not competing in a reasonable fashion in the world.
They are subsidizing many key industries and trying to export
(34:45):
their way out of recessions, and we want to change
that behavior, then yeah, slapping tariffs on imports from Mexico,
India and Europe is a terrible idea and won't drive
your message forward.
Speaker 4 (34:56):
Legacy planning is incredibly important, but if it isn't done properly,
you can create significant problems for your estate. Cushing and
Dolan are experts in the elder law, and their new
guide out this month is called Making the Most of
Gifting Assets. In it, you'll learn that while some gifts
to your children can be beneficial, others may not be,
(35:17):
especially if there are financial difficulties or divorce proceeding. Learn
how to protect yourself and your family by calling Cushing
in Dolan right now at eight six six eight four
eight five six nine nine. As for their brand new
guide called making the Making the most of Gifting Assets,
it contains a wealth of information about the gifting process,
(35:37):
including important details about what tax issues may arise from
a major gift like a home or a vacation property,
and what happens to the asset if the child has
has creditor issues. Call eight six six eight four eight
five six nine nine. That's eight six six eight four
eight five six nine nine, or you can request the
(35:57):
guide from their website Legal exhanshow dot com.
Speaker 1 (36:01):
The proceeding was paid for and the views expressed are
solely those of Cushing and Dolan. Cushing and Dolan and
or Armstrong Advisory may contact you offering legal or investment services.
Cushing and Armstrong did not endorse each other and are
not affiliated.
Speaker 2 (36:12):
Paul, I know that we've been talking a fair bit
about Tesla and Elon Musk's role within the Trump administration
when it comes, but sneakily, General Motors has been really
taking front and center here in terms of what they've
been doing this year. Their stock so far this year
is up a whopping sixty percent, trouncing every other competitor
(36:35):
there for it is down ten percent. Byd the Chinese manufacturer,
They're up twenty seven percent, Toyota's down six percent, Honda's
down thirteen percent, Volkswagen down twenty eight percent, Nissan down
thirty six percent. I don't know what le Atto is.
I'm gonna skip them. Stilantis down forty two and a
half percent, Neo down forty four percent, Lucid down forty
(36:56):
seven and a half percent, Rivian down fifty four point
nine percent. Now, Tesla, in fairness is up a good
thirty eight percent. But General Motors has been doing something
I think unexpected and clearly better than their rivals here
in terms of really just back to basics. It's not
as though they've rolled out a whole new line of
(37:17):
vehicles that's been immensely popular. They're not participating in some
EV bubble that we are misidentifying here. Really, what it's
come down to is executing on what Americans want, which
is large trucks and SUVs that don't break down frequently
as has been the case with Ford's issues, and it's
(37:39):
been going well for them.
Speaker 3 (37:41):
This was a move that was made by CEO Mary
Barra to save her job. Let's be clear. I mean
because in January of twenty twenty two, there was a
tremendous amount of focus on automas, vehicles and evs, and
she pivoted very quickly with stock buybacks and like you said,
focusing on the core common season. It's turned around the
company stock and its fortunes over the most recent history,
(38:03):
and it's proven to be a prescient decision. But if
she kept going down that road, I think her job
would have been nixed at that point.
Speaker 2 (38:10):
Yeah, But I mean good for her for realizing that, hey,
this is this is where the industry is turning, and
we don't need to focus on that quite as much.
Quick break, but a lot more to cover in the
second hour of the Financial Exchange. We'll be back with
a full market recap right after this
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:22):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is The Financial Exchange,
with Mike Armstrong and Paul Lange, your exclusive look at
business and financial news affecting your day, your city, your world.
(00:45):
Stay informed and up to date about economic and market
trends plus breaking business news every day. The Financial Exchange
is a proud partner of the Disabled American Veterans Department
of Massachusetts. Help us support our great American heroes by
visiting DAV FIVEK dot Boston and making a donation today.
The DAV five K Boston is presented by Veterans Development Corporation.
(01:08):
This is the Financial Exchange with Mike Armstone and Paul Lane.
Speaker 2 (01:14):
Good morning, welcome back to the Financial Exchange. We're officially
one week out from US elections here and continues to
be the main topic of conversation is what will the
economy under Trump administration two point to zero look like?
And we'll be continued to dive in there. We've also
got a reading on inflation coming out tomorrow. The CPI
(01:36):
will be out Thursday, We've got our initial jobless claims,
and then Friday, a whole slew of different economic data,
import prices, Empire State manufacturing a big one from retail sales.
Is always important to look at industrial production, production, capacity, utilization.
But it continues to be a busy week of debating
what the Trump economy will look like. And we're also
(01:58):
welcoming back Paul to the show, who was off the
last couple of weeks. I can't remember why. Something about
a hospital visit and some screaming. From what I understand that.
Speaker 3 (02:08):
Sounds really bleak.
Speaker 4 (02:09):
Uh.
Speaker 3 (02:09):
It was a positive, positive news. But in addition to
the family, so.
Speaker 2 (02:13):
New member of the Financial Exchange team and Armstrong Advisory
group family.
Speaker 3 (02:18):
If I make any slips or just completely go blank. Yeah,
everyone knows why that lack of sleep and having my
head buried in diapers and bottles. Phil last week or
so I heard, there was a presidential one.
Speaker 2 (02:34):
Yeah yeah, yeah, yeah, Well, you know, congratulations from all
of us, Paul, Thank you so much doing your job
to keep the US population growing, joining the UH joining
the three Kids club, which which you know I'm also
a member of. So exciting stuff there. Stocks this morning
edging slightly lower, really is kind of a vacuum of
(02:54):
data coming out right now. We've had earnings from Home Depot,
but other than that, just kind of waiting on appointments,
waiting on the final results of house races to see
the makeup of Congress, and and you know, really you know,
waiting on obviously specific policy to come from the Trump
administration regarding tariffs, taxes and everything in between. But you know,
(03:15):
so far, there have been a few trends that have
played out in markets over the last week other than
just the general trend of markets moving higher on the
election news. One would be the play out of financial
stocks up. You've had you know, a few companies run
by close advisors to the next president doing well Tesla
(03:36):
in particular. Obviously, bank stocks have done quite well on
some deregulation news and then generally a trend towards smaller
sized companies, and you know, theories abound as to why
that might be. It's not terribly obvious why small cap
companies would do better than large ones in a in
a Trump environment, But a few of the theories that
(03:57):
have been thrown out would be, Hey, if you do
a bunch of deregulation as a percentage of you know,
total firm revenue or total firm expenses, it's a lot
more expensive for a small company to adhere to compliance
and rules than it is for say, Goldman Sachs to
comply with you know, all the sorts of rules and
regulations that are out there, and that applies to energy companies, financials,
(04:20):
all sorts of different companies. You also have the theory that, hey,
you know, if you're a smaller sized company, you're probably
doing more business within the borders of the United States,
so maybe not as susceptible to tariffs should they come
in the future. And then I guess the final piece
on all of that. Nope, I lost the final piece
so it was those two.
Speaker 3 (04:40):
Can I post a question back to you, and this
is a fall up on the head in the sand
for the past week or so. Is Tesla's meteoric rise
that we've seen over the course last week. Obviously we
know how closely aligned Elon Musk is to President Trump,
but the swell that they've seen is just astounding. And
I just am trying to speculate to other than him
(05:01):
being a close advisor and constituent with Trump, where how
that's such a significant benefit to Tesla as a company monetarily.
Speaker 2 (05:10):
So I guess one, I'm not sure there is a firm,
firm connection here. I think a lot of it might
be purely what you just speculately said is, hey, this
is a key advisor to President Trump. He's going to
have his ear, and you know, I think reasonably you
can expect that policies towards a company like Tesla will
be a little bit more favorable than if you had
(05:32):
had a Harris administration moving in. I think that's a
fair statement. Other things that come to mind, though, Let's
say that you do see stiff tariffs on foreign automakers
importing cars into the United States, the Hyundas, the Toyotas
of the world, who are producing cars in Mexico and
(05:53):
other parts of the globe. That doesn't affect Tesla very much, right,
they do a lot, you know, pretty much all of
the cars that they bring and sell into the United
States are made here. Now, they also have a very
big manufacturing plant in China, and so that would be
the counterpoint on the Tesla argument as well. You know,
if we're going to start hitting China with all sorts
(06:13):
of trade issues, know that doesn't directly affect Tesla's business immediately,
because they're not producing those cars in China and importing
them into the United States. But you can imagine a
bit of a tit for tat here, right Elon Musk,
for all the benefits of being close to Trump, may
also be a target of the Chinese government if those
things compound substantial.
Speaker 3 (06:33):
Yeah, the way I was thinking about is just in
the EV space, there's already absurd tariffs in place, so
that we cannot import really any electrical vehicles from China as.
Speaker 2 (06:41):
It is China, true, but Korea, you know, other nations
do import them substantially. You know, what does that look
like in terms of favorability towards Elon Musk and Tesla. Again,
I think an open question, and you know, could you
convince me that some of the rally has been just
pure speculation without much thought to it. Yeah, absolutely sure,
(07:03):
But you know, I think there are some arguments here
that they could that they could substantially do better. The
other piece would be I have a tough time believing
that a Trump administration is going to have a lot
of favorable economic policy towards reducing gas powered vehicles. So
you know, where does that leave Elon Musk. But on
the other hand, does Tesla need those substantial benefits at
(07:29):
this point to get their business off the ground? Now
they're already the largest ev producer here in the United States.
They don't need the same subsidies that maybe a new
Ford plant or new General Motors plant would need to
get off the ground and compete. And so if that
stuff goes away, maybe it comparatively leaves Tesla in a
better position. Again, these are just pure speculation, But yeah,
(07:50):
as you mentioned, the stock has popped what it.
Speaker 3 (07:53):
Was twenty percent over the last five days, it seems
from what I was just looking at, so.
Speaker 2 (07:59):
Any others you've seen in markets to this point, right,
I mean, you've seen a broad based rally, there's a
general expectation of lower taxes, but other than that, I
don't think anybody has a real firm grasp on what
the overall Trump two point zero economy is going to
look like yet, and that's reasonable, it's very early.
Speaker 3 (08:20):
The tariffs piece is certainly something that we need to
continue to pars through as much information as we get
in regards to those issues and what those are going
to look like. Obviously getting the final results on what
the House is going to look like after all those elections,
I believe I was reading that it's still four more
seats that would be required in order to get a
(08:40):
majority for the Republicans, but there's still eighteen races that
have yet to be called, so that information is important. Certainly,
the small cap rally that we saw has been quite
impressive ten percent over the last five days or so
post election for those small caps, and then the overall
market rally in general that we've seen. On the interest
rate front, that's something that I certainly found interesting a
(09:02):
direct result after the election, where the US ten year
treasury spiked up to at one point a high of
four point seventy five percent, but I believe on closes
four point four to three percent is the highest that
we saw on the US ten year treasury that subsided
a little bit. Today we sit as the bond market
reopened after being closed yesterday at four point three eight percent.
It was four point three one percent ahead of the election.
(09:24):
So certainly on the interest rate side of things, that
is something interesting to follow. There was speculation that with
Trump getting into office that was going to increase deficits
and spending, and that's why we saw a little bit
of the run up on the US ten year treasure yields.
So that's something that certainly is a lot of focus
because that has direct impact to a housing market that's
(09:45):
been really itching for lower interest rates, and that's not
what we saw in an initial, you know, kind of
whipsaw reaction to the election results.
Speaker 2 (09:55):
Let's take a quick break when we come back, we're
going to take a brief politics Trump two point oh break. Here.
We had earnings from Home Depot this morning. I want
to dive in there as it is attached to interest
rates and what we're seeing there. Quick break Home Depot earnings.
Speaker 1 (10:09):
When we return, this is your home for the most
comprehensive coverage of the economy and the trends on Wall Street.
Face is the Financial Exchange Radio Network. If you missed
any of today's show, catch up whenever you want on
our YouTube page. Find daily show segments and full shows.
Just go to YouTube dot com and search for the
Financial Exchange. This is your home for breaking business and
(10:32):
financial news. This is the Financial Exchange Radio Network.
Speaker 4 (10:37):
The Financial Exchange has built an incredible partnership with the
Disabled American Veterans Department of Massachusetts and once again we
were thrilled to take part in this year's DAV five
K Boston. For those of you who took part your gifts,
we're much appreciated and will support services such as the
Veteran Advancement Program, which offers permanent and affordable housing opportunities
(11:00):
veterans and their dependents. Thank you again for your support.
The DAV five K Boston is presented by Veterans Development
Corporation PAIL.
Speaker 2 (11:08):
We were discussing interest rates a little bit before the
break here and you know, taking a look at recent moves.
On September sixteenth, on the ten year treasury, we reached
a recent low ten year Treasury got as low as
three point six one percent back on September sixteenth. Since
then it has just been a solid push back upwards,
(11:30):
and not entirely related to the the election, although you know,
some have theorized that this is in part related to
a Donald Trump trade but nonetheless, the ten year today
sitting at four point three seven And I bring that
up because it is the key driver of mortgage rates,
which are now, according to Mortgage News Daily, sitting at
six point nine to two percent on the thirty year fixed.
(11:53):
All that brings me to Home Depot earnings, which reported
before the bell today. Stock is off by about a
quarter of a percent this morning. Having a reasonably solid
year in most years would be you know, knock them
to cover off the ball, but up eighteen percent so
far for the year and facing well, frankly, just facing
a slowdown is what Home Depot is dealing with right now,
(12:15):
and I think it can be largely explained by the
lack of housing market activity. But you know, Home Depot
really doing quite a bit to battle against that that
pullback and spending. But there really is only let's put
it this way, there's only so many twenty foot skeletons
you can sell.
Speaker 3 (12:36):
It was incredible how popular it became.
Speaker 2 (12:39):
I couldn't see it all over town. Yeah you saw one, and.
Speaker 3 (12:41):
Then they just they'd exploded in popularity. But to your point,
to further in hone in on what home Depot strategy
has been. Obviously, we all know they did tremendously well
COVID in post COVID as everyone was locked inside and
there was a tremendous amount of focusing on spending on
durable goods. Now there's been a much greater larger on
consumer spending to leisure and hospitality, and that trend has
(13:03):
still continued on through the end of twenty twenty four here.
So there's been a strategic pivot, not necessarily pivot, but
maybe more enhanced focus on the professional side of things.
So half of home Depot's revenue comes from selling to
I'd hardly call myself a do it your selfer in
that camp, but well, let's say guys like Mike and I,
or maybe guys more sophisticated than at least I'll put
(13:24):
myself in the do it yourself bottom percentile there, And
the other half of revenue comes from professionals, from contractors,
roofers and home pros, and they had made their biggest
acquisition earlier this year, acquiring SRS Distributors for eighteen point
twenty five billion, and that was putting more investment on
the home professional side of things, catering to those people
(13:46):
who do large scale jobs, who are contractors and roofers,
and that's where they've been focusing because there's more demand
on that segment and less so demand on the do
it yourself project side of things.
Speaker 2 (13:58):
Yeah, the chief financial officer was quote saying, the consumers
are deferring purchases waiting for lower rates, and I think
that was the key takeaway really across their business that
you know, there's just not the volume of stuff going
on because home equity line rates are high, mortgage rates
are high, and everybody well, frankly, everybody going into this
fall was expecting substantially lower rates come the spring and
(14:21):
probably was just waiting on things. Comp store sales were
down one point three percent, so there you're looking at,
you know, how did sales do in stores that were
open for the last twelve months, So you can really
you know, look at comparable stores and you know that's
not terrible, you know, given what we've seen with rates
and the anticipation of rates falling. I don't think seeing
your sales drop by one point three percent is really
(14:43):
a bad news story. Hence, while you're not seeing a
big sell off here, in fact, analysts were expecting more
like a three percent drop in sales. So that's pretty
solid performance to expectations. But quite frankly, in a market
where there's only like, I don't even know them most
recent number eight nine hundred thousand homes for sale, it's
(15:03):
going to be challenging for Home Depot to adapt to
that and to deal with it. I was talking to
someone the other day that was in a kind of
interesting position. So they had with a commercial property they had,
they had a balloon payment come due, and so they decided, hey,
short term, I'm just going to put this on our
home equity line of credit, and so they they bumped
up the home equity line. And so I was meeting
(15:24):
with them yesterday and their home equity line of credit
is sitting at seven percent. These days, they're getting refinance
options to turn this thing into a fixed rate mortgage,
which you know is always appealing with you know, when
you've got a big bucket of money sitting out in
that line of credit to say, Okay, I'm going to
lock in the rate here and just know my expected
schedule here I found interesting. But they were getting fifteen
(15:46):
year mortgage rate quotes at six and a half percent,
and I said, gee, I'm you know, it's tough because
I could see that six and a half percent going
up a little bit over the next few months. Right,
you might get that higher, so you might want to
lock it in now. But on the other hand, I
could also see the seven percent going down two six
and a half or below over the next few months,
And so what do you do in that scenario? And
(16:08):
it was a bit of a push in those circumstances.
But we're just in this uniquely strange period where the
FED seems to be on a path of lower rates,
although it's unclear how much, whereas longer term rates are
very much reacting immediately to this, you know, political scenario
and drome. Powell and the FED are saying, well, let's
wait and see what happens.
Speaker 3 (16:29):
Sure, and then you have all the subjects that we're
going to cover on the tariff side of things, where
you sit and say, gee, we're projecting all these rate cuts,
you know, heading into year end and perhaps going through
twenty twenty five, does that persist or is there inflationary
pressure from some of the economic measures that we may
see heading into next year.
Speaker 2 (16:47):
Yeah, so tremendous amount of I don't know, just continued
questions about the state of the US housing market and when,
if ever, it's going to shift back in the other direction.
To get the actual data point there, as of October
of this year, there were nine hundred fifty three thousand,
eight hundred and fourteen active listings for properties for sale
(17:11):
in the United States. Taking a look at that same
data point in October of twenty nineteen, there were one
point two million. So, I mean, we're climbing, we're heading
in the right direction, but you know, and that is
the highest we've seen since post COVID, So you know,
we're we are definitively heading in the right direction here
in terms of listings. But when you're still a good
(17:32):
what's that twenty five percent thirty percent lower than pre COVID,
you can see where it's tough for home depot to
continue in that direction.
Speaker 3 (17:38):
With mortgage rates on the thirty year fix. Looking at
the Saint Louis fed sitting at about six point eight
percent today. That reached a low of about six point
one back in September. So that's the other piece of
the equation is where is that thirty year.
Speaker 2 (17:51):
Going to settle? Oil price is moving up slightly as
OPEK is trimming their demand forecast for the fourth straight
month in a row. They're now expecting demands to grow
by only one point eight two million barrels a day
this year, followed by one point five four million barrels
a day for the next. We've talked a fair bit
about oil markets in the context of twenty twenty four
(18:14):
compared to decades past, and I've made the argument that frankly,
what OPEC does and says is not nearly as important
as where they were a few decades ago, with the
with America's ability to pump out more oil than the
Saudis these days. Nonetheless, what they do and say does
move markets here and there. Oil now sitting at sixty
nine dollars per barrel on West Texas crude. In terms
(18:37):
of gasoline prices around the Northeast as well as the
overall United States, you're now sitting an average just above
three bucks per gallon. Three dollars and eight cents is
the national average according to Triple A. Here in Massachusetts
are sitting at three dollars and four cents. I'm rounding
on these New Hampshire at two ninety seven, main at
three oh four, Vermont sitting at three thirteen, Rhode Island.
(19:01):
If I can manage to hover over you sitting over
at two ninety four, Connecticut at three oh five a gallon,
And let's get out to Oregon, which is sitting at
three fifty nine per gallon. Let's go ahead and take
a quick break here as markets are mainly just sitting
here in neutral territory for the moment. A little bit
(19:21):
of a flip happening in the Nasdaq will cover all
of that and more next with Wall Street Watch.
Speaker 1 (19:43):
Like us on Facebook and follow 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 at what's moving market so
far today right here on the Financial Exchange Radio Network.
Speaker 4 (20:02):
Well, markets are mostly quiet and in mixed territory following
another day of record highs. As Wall Street awaits tomorrow
morning's Consumer Price Index, for another inflation reading at the
moment that I was down by a quarter of a percent,
SMP five hundred is down by only four points, and
the Nasdaq is up by fifteen points. Russell two thousand
(20:24):
is pulling back by about half a percent. Ten year
Treasury iel up by six basis points at four point
three six percent, and crude oil up over three quarters
of a percent, trading at sixty eight dollars in sixty
one cents a barrel. Home Depot down by one percent
after the home improvement retailer beat third quarter earnings expectations
(20:44):
and lifted its full year outlook. During the quarter, home
Depots saw customers purchase grills in other outdoor products and
also prepared for hurricanes in the Southeast. The company sales
climbed more than six percent on a year over year basis. Meanwhile,
e commerce platform operator Shopify also reported better than expected
third quarter revenue and said growth could be even higher
(21:08):
in the fourth quarter. Shopify shares surging by twenty five percent. Elsewhere,
Live Nation up by four percent. After the music and
entertainment company b third quarter earnings expectations but narrowly missed
on revenue following a big summer concert season this year,
and Live Nation said it anticipates more growth next year.
(21:30):
Honeywell jumping by five percent after Elliott Management disclosed a
five billion dollar stake in the industrial giant, recommending the
Honeywell pursue separation of aerospace and automation. Netflix this morning
said that more than fifty percent of its new signups
were for AD supported plans and countries that offer the option.
Netflix launched its ad supported plan two years ago and
(21:52):
has now reached seventy million global monthly active users for
that tier. Netflix up by one percent, and shares enticson
foods are up by twelve percent. After the poultry process
in companies earnings and sales beat forecasts in the third
quarter on Tucker Silvan, that's Wall Street Watch.
Speaker 2 (22:09):
Poultry processing is a tough couple of words to get through, Tucker.
That was good.
Speaker 4 (22:12):
Still of Shopify share surgeing.
Speaker 2 (22:15):
Yeah, yeah, yeah, good good work all around, good literation.
I want to jump back in here to you know,
the economic the economy that Donald Trump is going to
inherit come January of next year. We've you know, he
has spent the last several wow, several months on the
campaign trail really, I think portraying, as Bloomber points at,
(22:38):
portray in the US economy as this epic disaster in
need of radical action, and so I think there is
likely going to be an expectation that he take radical
action on the economy, and there's a few areas where
he's likely to do so. I would, as we've talked about,
we tend to take a very balanced approach on this
show when it comes to things, and i'veoted out I
(23:01):
recognize how much Americans hate inflation. It has, you know,
been the main reason I think that Americans have been
responding so poorly to surveys on how the economy is doing.
But what I would have pointed out several times is
that in terms of the key metrics that you would
look at to judge and economy, and let's say, compared
to our peers in the developed world, the American economy
(23:23):
is close to as good as it has been ever historically.
We've got unemployments sitting at four point one percent. We've
got GDP growth growing still in the three percent range,
although it's been slowing down.
Speaker 1 (23:35):
We have.
Speaker 2 (23:38):
What are there some key factors here.
Speaker 3 (23:39):
We've invalation that's come back down to a reasonable level
at two point four percent from where it was.
Speaker 2 (23:44):
Inflation that has been declining, a you know, labor force
participation rate, and a you know, worker to population ratio
that's nearly as high as it has ever been.
Speaker 3 (23:56):
Real wages have been up recently recently.
Speaker 2 (23:58):
Yeah, and so look, portraying the economy as an epic
disaster was clearly a successful political thing to run on,
right like. That worked very clearly based on the results
that we are seeing right now, and I can see
why it worked. The question is going to be, how
do you thread this needle of an economy that by
(24:20):
all accounts definitely slowing down over the last few months,
but does not have nearly as much capacity for investment
and by that I mean the ability for unemployment to
go substantially lower, for GDP to tick back up without
another surge in inflation. How do you thread that needle
of truly growing things while not reigniting the key economic
(24:46):
metric that clearly all Americans despise. It is going to
be an especially unique challenge for any administration, including the
Trump administration, to now go and tackle come January of
next year.
Speaker 3 (24:57):
No, I think you did a good job of laying
that out, you can really carve up the economy two
different ways. One side you pointed out low unemployment, inflation
that's come back down to reasonable levels, real rages have
done okay, and GDP growth has been in a real
relatively good position. However, if you want to argue the
other side of things, inflation is the first thing you're
going to hang your hat on that that punishment that
(25:18):
consumers have endured over the last couple of years has
left a permanent mark. And then you have a little
bit of a slowdown in hiring and a housing market that,
like you mentioned, it's been pretty frozen. Yeah it's come
back a little bit, but it's been a really challenging
housing market. Those are kind of the two sides of
the coin. But you're in a position where a lot
of promises have been made from an economic side of things,
(25:40):
and I thought that Bloomberg did an interest a good
piece here of pointing out that sometimes the best action
to take is is no action, and you can't do
that now. No, you can't not basically suicide right now
it is, but having a bipartisan or a split in
the House is something that they re friends back in
(26:00):
nineteen ninety four where President Clinton had tried to go
through a huge healthcare reform, but then in his second term,
the Republicans took over both houses and basically put it
at a gridlock where he was unable to institute any
domestic policy. And what you had come up a good
time for the US economy, and what you had come
out of that was nothing based on Clinton's innovation. It
(26:21):
was Silicon Valley establishing some of these transformative companies that
have presided over the US economy now for decades, in
Apple and Microsoft and others really make the economy boom.
And it's just not to say we're at that point
this time around, but it will be interesting to see
where we land from a policy perspective. But I would
agree with you can't really just go by with nothing
(26:45):
to do going forward in terms of a policy.
Speaker 2 (26:47):
Front now whenever there are pieces written about this, and
I would agree that. Look, if you look at the
policies that Donald Trump campaigned on higher tariffs, much lower taxes.
I'm not talking about just extent the twenty seventeen Tax
Cuts and Jobs Act. I'm talking about all the pledges
he made on tips over time, social security. Those things,
(27:09):
you know, you go and implement all of those, you
can talk about them being inflationary. There's been a lot
written about that. I will say that the pieces that
I've read that have been written have not been terribly specific.
So I do want to get specific on some of
this stuff for a moment, Because in twenty twenty two,
Americans faced nine percent year over year inflation. That was
(27:29):
a result. At the time, nobody really knew exactly what
was causing it, whether it was purely the shutdowns from
COVID and restarting an economy, whether it was all the
stimulus that was passed. It turned out, now that we've
had a few years to look at it, that the
shutdowns and the you know, the supply chain issues that
(27:50):
we faced during COVID were a far bigger cause of
that inflation than the stimulus checks, which also contributed. What
I will point out is I am worried about a
potential resurgence of inflation depending on what Trump's policies look
like over the next four years. I am not even
remotely concerned about nine percent inflation. I think that's next
to an impossibility. You have to make some really really
(28:12):
bad decisions to get us to nine percent inflation again,
and I don't think that's what we should be worried about.
And that's also why I dislike some of these pieces
is they tend to be a little bit of alarmist.
If we get to four percent inflation again, that would
be really bad, but it would be nothing like what
we saw in twenty twenty two. And so I have
to take a step back and really, you know, really
(28:35):
reframe some of this stuff, because I think what Americans
are dealing with over the last few years and why
they've been so dissatisfied is because prices on average moved
up a good twenty five percent over a four year
time period. I can't really envision a scenario where we
get there again. I can see where we get, you know,
three or four percent inflation. That would be bad. Rates
(28:56):
would go higher, it would cause all sorts of problems,
but tough for me to see the type of psychological
damage that was inflicted on the American public like we
saw from twenty twenty through twenty twenty Four's that's the
piece that I want to be clear about, is might
we see inflation again? Yeah? Is going to be nine percent?
Very very unlikely to get there anytime in the near future.
Let's take a quick break. When we come back, I
(29:18):
want to start digging into raff plants what this starts
to look like. My argument would be, you've kind of
got China on the ropes right now. Let's talk about
that and what it might look like from a Trump administration. Next.
Speaker 1 (29:30):
Text us at six one seven, three, six two one
three eighty five with your comments and questions about today's show,
and let us know what you think about the stories
we are covering. This is the Financial Exchange Radio Network.
Miss any of the show, catch up at your convenience
by visiting Financial Exchange Show dot com and clicking the
on demand icon, where you'll find all of our interviews
(29:51):
in full shows. This is your home for the latest
business and financial news in New England and around the country.
This is the Financial Exchange Radio Network.
Speaker 2 (30:08):
Without knowing the makeup of Congress, it's incredibly difficult to
know which tax priorities, which other economic priorities will be passed,
and which ones will not. But one that seems certain
is tariffs. The has been a lot talked about on
the campaign trail about the use of tariffs and how
Donald Trump views trade, which is fair trade over free trade.
(30:29):
I think is is you know, the term that has
been coined here, and I think more than likely front
and center is going to be China. There was, you know,
the key of the policy from twenty sixteen to twenty twenty.
Nothing that I have seen has indicated that Donald Trump
has had a change of heart when it comes to
trade with China, and so I think that is going
to be the crux of the issue. The thing that
(30:52):
has changed with China, in my view at least, has
been a bit of a bursting of the bubble over there, right,
You've had a real estate mark that's been in free fall.
Their economy has not recovered from COVID in the way
that the United States has. And my perspective on this
would be you've got kind of China on the ropes here.
If you really want to drive this home, there are
(31:12):
ways to do so. And I'll be interested to see
what the Trump administration two point zero approach to trade
with China is. What does this mean for TikTok? What
does this mean for you know, Chinese ev makers? And
I'll take the same approach that I have for a
while here, which is if your goal is truly to
(31:35):
drive change in China, then there's one thing that you
have to be able to do here in addition to
just you know, slapping tariffs on Chinese goods, it is
teaming up with Europe, Canada, and India to drive that
move home. And that's the piece I'm unsure that you know,
a Trump administration is willing to do here, and for
(31:56):
good reason, right like, Germany, for instance, has had very
close ties with China, and I can see why we
might want to object to that sort of thing. But
there seems to be recently a bit of a turn,
you know, you know, Europe has been getting more on
board with larger tariffs on Chinese evs. For example. India
kind of always drives its own path, but you know,
(32:17):
certainly not great relations with China and doesn't want to
see their Chinese made technology and electric vehicles within their borders.
And so can you once again thread this needle where
you say, hey, Europe, get in line. You know there
will be a number of strings attached to this. I'm sure. Yeah,
you've got to beef up defense spending, You've got to
(32:37):
do a whole bunch of other things. But can you
get a number of close allies in line to really
take it to China, because frankly, if you don't, if
you just go the same, you know, one point zero
version on tariffs on China and the United States goes
it alone, you're not going to change anything there. You
might hurt China's economy a little bit, but you're not
going to change how they view world exports and over
(33:00):
supplying the world with all sorts of products.
Speaker 3 (33:02):
It's a lot to really consider and try and parse through.
In particular, what is it going to be more of
a negotiating tactic these tariffs that are mentioned or certainly
we're going to see some tariffs, but the extent of
them and how much of them are negotiating taxes versus
how much of them are just going to be instituted
to raise revenue for the federal government. That's what you
(33:25):
need to continue to focus on. I thought, reading through
some of the information, what blew me away is that
the relatively small percentage of the federal revenue that comes
from tariffs in general, it is only two or three percent,
somewhere in that range. If you look at all the
revenue that the federal government had last year, less than
two percent of it was from tariffs. So even if
(33:47):
you were to jack up tariffs across the board at
ten percent from other importers out there outside of China,
sixty percent for China, it's not going to make a
huge dent into what the federal government derives from our
revenue perspective.
Speaker 2 (34:02):
No, certainly not. I mean the stuff that has been
talked about, by the way, you're talking about threatening tariffs
of sixty percent or more on goods from China, as
well as a universal ten to twenty percent levy on
imports from any country, And that's the piece that, again
in my view, has the ability to damage more than
help the United States. Again, it depends what your goal is. Right,
(34:24):
If you're just levering tariffs to try and pay for
tax cuts, then yeah, you do need to levery your
tariff on every imported good into the country and really
focus on that. If you're doing it because you say
China is not competing in a reasonable fashion in the world.
They are subsidizing many key industries and trying to export
(34:45):
their way out of recessions, and we want to change
that behavior, then yeah, slapping tariffs on imports from Mexico,
India and Europe is a terrible idea and won't drive
your message forward.
Speaker 4 (34:56):
Legacy planning is incredibly important, but if it isn't done properly,
you can create significant problems for your estate. Cushing and
Dolan are experts in the elder law, and their new
guide out this month is called Making the Most of
Gifting Assets. In it, you'll learn that while some gifts
to your children can be beneficial, others may not be,
(35:17):
especially if there are financial difficulties or divorce proceeding. Learn
how to protect yourself and your family by calling Cushing
in Dolan right now at eight six six eight four
eight five six nine nine. As for their brand new
guide called making the Making the most of Gifting Assets,
it contains a wealth of information about the gifting process,
(35:37):
including important details about what tax issues may arise from
a major gift like a home or a vacation property,
and what happens to the asset if the child has
has creditor issues. Call eight six six eight four eight
five six nine nine. That's eight six six eight four
eight five six nine nine, or you can request the
(35:57):
guide from their website Legal exhanshow dot com.
Speaker 1 (36:01):
The proceeding was paid for and the views expressed are
solely those of Cushing and Dolan. Cushing and Dolan and
or Armstrong Advisory may contact you offering legal or investment services.
Cushing and Armstrong did not endorse each other and are
not affiliated.
Speaker 2 (36:12):
Paul, I know that we've been talking a fair bit
about Tesla and Elon Musk's role within the Trump administration
when it comes, but sneakily, General Motors has been really
taking front and center here in terms of what they've
been doing this year. Their stock so far this year
is up a whopping sixty percent, trouncing every other competitor
(36:35):
there for it is down ten percent. Byd the Chinese manufacturer,
They're up twenty seven percent, Toyota's down six percent, Honda's
down thirteen percent, Volkswagen down twenty eight percent, Nissan down
thirty six percent. I don't know what le Atto is.
I'm gonna skip them. Stilantis down forty two and a
half percent, Neo down forty four percent, Lucid down forty
(36:56):
seven and a half percent, Rivian down fifty four point
nine percent. Now, Tesla, in fairness is up a good
thirty eight percent. But General Motors has been doing something
I think unexpected and clearly better than their rivals here
in terms of really just back to basics. It's not
as though they've rolled out a whole new line of
(37:17):
vehicles that's been immensely popular. They're not participating in some
EV bubble that we are misidentifying here. Really, what it's
come down to is executing on what Americans want, which
is large trucks and SUVs that don't break down frequently
as has been the case with Ford's issues, and it's
(37:39):
been going well for them.
Speaker 3 (37:41):
This was a move that was made by CEO Mary
Barra to save her job. Let's be clear. I mean
because in January of twenty twenty two, there was a
tremendous amount of focus on automas, vehicles and evs, and
she pivoted very quickly with stock buybacks and like you said,
focusing on the core common season. It's turned around the
company stock and its fortunes over the most recent history,
(38:03):
and it's proven to be a prescient decision. But if
she kept going down that road, I think her job
would have been nixed at that point.
Speaker 2 (38:10):
Yeah, But I mean good for her for realizing that, hey,
this is this is where the industry is turning, and
we don't need to focus on that quite as much.
Quick break, but a lot more to cover in the
second hour of the Financial Exchange. We'll be back with
a full market recap right after this
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
CrimeLess: Hillbilly Heist
It’s 1996 in rural North Carolina, and an oddball crew makes history when they pull off America’s third largest cash heist. But it’s all downhill from there. Join host Johnny Knoxville as he unspools a wild and woolly tale about a group of regular ‘ol folks who risked it all for a chance at a better life. CrimeLess: Hillbilly Heist answers the question: what would you do with 17.3 million dollars? The answer includes diamond rings, mansions, velvet Elvis paintings, plus a run for the border, murder-for-hire-plots, and FBI busts.