January 2, 2025 • 38 mins
Mike Armstrong and Paul Lane discuss markets rising over 20% for the second straight year. What are 'experts' predicting for markets in 2025? China is retaliating against American companies. Can dockworkers get a new deal without going on strike in 2025? A look at what new Massachusetts laws take effect in 2025 and who they impact.
Mark as Played
Transcript
Episode Transcript
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Speaker 1 (00:00):
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(00:42):
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(01:06):
and Paul.
Speaker 2 (01:07):
Lane, Happy New Year, Welcome to twenty twenty five. Here
at the Financial Exchange, it's Mike, Paul and Tucker with
you on a shortened trading week Thursday, heading into the
weekend here and the first trading day of twenty twenty five,
with some little leftover optimism coming to markets, with all
(01:28):
of them in the green for the start of twenty
twenty five, at least, after closing out December on a
fairly negative note, with all markets down in December, with
a bit of a reverse Santa Claus rally, a little
Santa Claus sell off heading into the end of the year,
but tackling this week as we head into like I said,
a shortened trading week ahead of a big week the
(01:50):
second week of January. Friday of next week is when
we will get that big jobs report for the month
of December and a number of other economic data points.
I think it's a good time to kind of reflect
on twenty twenty four and what we saw, what was regular,
what was irregular, and of course everything today being written
about expectations for the coming new year, which, by the way,
(02:12):
any of these stories that were printed in the first
week of twenty twenty four were completely wrong. So take
all of this with a grain of salt. Any forecast
that you're seeing about twenty twenty five, and frankly, we
won't be making any of them for markets for twenty twenty.
Speaker 3 (02:26):
Five because I think that's useless.
Speaker 2 (02:27):
I do generally think that trying to predict what markets
are going to do on the first day of the
year is a useless exercise, and any short term market
predictions are just as such. But we did have the
second year in a row of equity markets defined by
the SMP five hundred increasing by more than twenty percent.
You had the SMP close out the year I think
(02:47):
without dividends up a good twenty three plus percent this year.
That was after twenty four percent in twenty twenty three,
and it marks the first time since the late nineties
where that's done that on a back to back basis,
and I think speaks to some optimism about where things
are going over the next few years.
Speaker 4 (03:09):
Yeah, I think that's a good place to start.
Speaker 5 (03:11):
Is more so not sitting here saying this is what's
going to happen in twenty twenty five. But I like
the idea of sort of doing a bull and a
bare case for this year, sort of laying out if
everything goes right, how will things how could things potentially
fair if everything goes wrong, or if these things go wrong,
how does things potentially fair out? Like you mentioned twenty four,
(03:33):
all the expectations going in was this idea of significant
rate cuts, potential for recession. We sit here on the
first day of twenty twenty five. You can convincingly say
that that did not happen in terms.
Speaker 3 (03:44):
Of it was not a recession in twenty twenty four.
Speaker 5 (03:46):
The recession piece did not occur. In terms of rate cuts,
we did see some of those, a lot of them
sort of stuffed in the back half of the year,
back quarter of the year where we came in with
four rate cuts total a full percentage point in terms
of the Fed Fund rate heading into twenty twenty five,
I think, Mike, it is a good exercise to look at, Okay,
(04:08):
you and I going back and forth on bull and
bear case for for what sure, what markets could look
like this year, not knowing where things are going to go,
but sort of staying in those two different camps. You know,
I'll start it from a bull perspective here in terms
of what we would be looking for for the US
economy heading into twenty twenty five. Here, unemployment has got
(04:28):
to stay in and around four percent or so we
had hit.
Speaker 2 (04:31):
We're at four two fourth three right now, So I
think so long as it's under four and a half percent,
we remain in a relatively calm economy.
Speaker 5 (04:39):
We had hit about three and a half or three
point six percent at the ultimate low. Obviously over the
course of twenty twenty four, that did creep up a bit.
If we can stay, like you said, in around that level,
that's something that will keep the economy in a good place.
On inflation, another area where a tremendous amount of progress
was made in twenty twenty four, Risks still loom out there,
(05:00):
and there are areas of inflation reports that you could
point to that perhaps there is some more sickiness than
anticipated there. And of course the political policies that have
been bantered about we'll talk about that a little bit too,
and how they could impact things. But inflation has stuck
on a headline basis around two and a half percent
or so. A lot of that has come off the
(05:20):
backs of a very low energy market from an oil
price perspective. If you look at core PCEE, which serve
core any of the core measures which strip out food
and energy, that number is more like three point two
or three point three percent. That needs to stay in
and around that level, perhaps even progressing down even further.
Those are two critical components of the economy still being
(05:42):
in a good place. And then the last one that
I sort of partitioned out was the consumer. The consumer
has been truly the white night in this economic resiliency
that we've seen over the course of the last couple
of years. People have been getting out there and continuing
to spend. That needs to continue. You need to see
corporate earnings growth. And the last one that I'll add
to the corporate aarnings growth is a lot of the
(06:03):
stock market enthusiasm that we saw in twenty twenty four
was based on the R and D spending from the
biggest companies out there in the AI space, whether it
is Google, Amazon, Meta, you know less so Apple on
the AI side, but in video was the beneficiary of
all those spending dollars. That needs to continue in place
(06:25):
as well to really kind of keep that bolcase going.
Speaker 2 (06:27):
Not only the spending, but you need to start seeing
some of the results, I think exactly. Yeah, you've had Microsoft,
you've had in Vidio, others pour billions of dollars into
research and development on artificial intelligence, and so do you
start to see some payoff on those Do you start
to see companies adopting the technology, paying for the technology,
and using it to become more efficient. That's one of
(06:50):
the critical pieces that's not really front and center to
most people's views on the economy because you don't you
don't see it every day.
Speaker 3 (06:58):
But productivity in.
Speaker 2 (07:00):
The United States has made the United States exceptional over
the last few years. It is far surpassed what you
have seen everywhere else in the world by and large.
I'm sure there's some exceptions, but in the developed world,
no country has seen the productivity gains of the United
States have seen over the last few years.
Speaker 3 (07:15):
And so will you see that continue in some meaningful way?
Speaker 2 (07:19):
Because that's the holy grail, right If you can produce
more stuff without working more hours. Yep, that's the holy grail.
That's how a society develops. On the inflation side of things,
to your point, in terms of practically speaking, what needs
to happen there for the stars to align in inflation
to go down. Like you mentioned, the last reading we
got was for November, which was showing two point seven
(07:41):
percent year over year inflation, helped out by a lot
of lower energy prices. You know, energy prices over that
same time period down three percent, gasoline down eight percent.
And while we can strip that out, the fact of
the matter is that low energy prices tend to down
other prices as well, whether you're talking about food, whether
(08:03):
you're talking about UH, you know, electricity generation or.
Speaker 4 (08:09):
Even good because of the transportation to get them there.
Speaker 2 (08:13):
And so should that reverse, then it can have this
reverberating effect throughout the economy of prices going up. And
so you're looking for a consumer that continues to spend,
is still comfortable doing so, is uh is not getting
into too much debt, but also you know, it does
not spend to the level that we see inflation tick
back up, and therefore the Fed react to those higher
(08:35):
spending and higher inflation numbers. You want this, uh, this
Goldilock scenario once again of consumers continuing to spend, but
neither tariffs nor other who knows, geopolitical tensions in the
Middle East or whatever it might be, sending prices to
an uncomfortably high level again, because if you see that happen,
(08:56):
even if even if it's it's you know, I don't
think anyone goes into twenty twenty five expecting any sort
of repeat of COVID era inflation levels. But you don't
need nine percent inflation for this market to get very concerned, right,
You don't even need three and a half percent inflation
for these markets to get quite concerned. Because going into
(09:18):
twenty twenty five, the expectation is that the FED is
able to continue to cut rates to some degree that
the expectation is that the inflation levels remain below three percent,
and if they diverge elsewhere, you're.
Speaker 5 (09:31):
Gonna see evaluations take a huge They would take a
huge hit in that scenario if there is a pivot
in thinking that all of a sudden, we're not looking
at cuts, but we'll look at how are they going
to continue to buy?
Speaker 4 (09:41):
Battle how you're inflation? That would be what's.
Speaker 2 (09:44):
At stakeing let's take a quick quick break here. When
we come back, I want to continue this conversation of
bowl case versus bear case when it comes to the
overall US economy and markets, and really just start setting
the milestones for hey, how are we going to budge
this economy in this administration? For twenty twenty five And
then finally, I also do want to talk about just
(10:06):
the last two years of market gains. How rare is
what we saw recently and what should be expected out
of markets in the future.
Speaker 3 (10:12):
Quick Break will be right back from the Financial Exchange.
Speaker 1 (10:15):
Well streamwatch a full update on the markets performance todate
weekdays at ten thirty only here on the Financial Exchange
Radio Network. Thankst us six one seven, three six two
thirteen eighty five with your comments and questions about today's
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Speaker 6 (10:49):
This segment of the Financial Exchange is brought to you
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Speaker 4 (11:37):
Not good vibes for Tucker.
Speaker 2 (11:39):
Tucker's goett a little choked up. It's just very emotional
through my.
Speaker 6 (11:43):
Back up, first, through my back up yesterday, so I
have a hard time breathing.
Speaker 4 (11:48):
We back, Oh Jesus, car really.
Speaker 3 (11:50):
Mike, since since bet since about a week back.
Speaker 4 (11:56):
Okay, there's a car accident.
Speaker 2 (12:02):
So I asked the question before, which fortunately I know
the answer to, because I was curious of just how
rare these twenty percent plus or minus years that we've
had of the last couple have been. And so I
went and pulled some data on the composite that they,
you know, created that it is designed to mimic the
(12:22):
S and P five hundred going back to the nineteen twenties,
and we have seen a lot of you know, twenty
plus years just over the last decade.
Speaker 3 (12:29):
You saw obviously the last two.
Speaker 2 (12:31):
Twenty twenty one was over twenty percent, twenty nineteen was
over twenty percent. So there's been quite a few of them.
And so I was curious, like we all talk about how, yeah,
the S and P five hundred long term, depending on
what time period, you're looking at eight percent a year,
ten percent a year more recently like twelve percent a year.
Speaker 3 (12:49):
So you know, what should we anticipate year to year?
Speaker 2 (12:52):
Because Goldman, Sachs and JP Morgan are all putting out
ten percent forecast for twenty twenty five, which is about
the safest thing you can do.
Speaker 4 (12:58):
It's just as like I don't have any So here's
a number.
Speaker 2 (13:02):
So I took a look at it, and for the
ninety seven calendar years that I was able to get
data on, I was curious in how many of those
did the S and P five hundred or like I said,
the composite that didn't exist prior to I think nineteen
seventy something that makes up the S and P five hundred,
How many of those calendar years did the SMP go
up by more than twenty percent or down by greater
(13:23):
than twenty percent thirty four out of ninety seven.
Speaker 3 (13:26):
Years, about a little bit more than a third of
the time.
Speaker 2 (13:29):
In fact, equity markets go up by more than twenty
percent or down by more than twenty percent. And that's
why I just I go back to you know, what
people come to expect, and you know, we talked about
it all the time. How you see people putting together
forecasts saying, oh, yeah, flatline the markets, and my portfolio
is going to grow at eight percent a year. And
(13:50):
the fact of the matter is that almost never happens.
And I think that's an important clarification for people to
expect and anticipate, is yeah, years like this feel really good.
Guess what, They're not uncommon, right, Nor is the opposite
of the thirty four it's it can't be.
Speaker 5 (14:05):
I would feel like positive to negative it would be
a heavier percentage on the positive stuff, of course. Yeah, yeah,
I mean, how many do you like? There's probably no
more than of negative years. And the S and P
over a drop of twenty percent got to be.
Speaker 3 (14:19):
Count only six, ok, kind of only six.
Speaker 2 (14:22):
Going back to the nineteen twenties, where the calendar year
has been great than twenty but there's been you know,
twenty twenty two, for example, is not on this list
because it right below the twenty five percent, but then
it bounced back in the other direction and then finished
the calendar year below that twenty percent threshold, and so
it doesn't account for that either. But we all have
this this number built in the back of our mind
(14:44):
as oh, yeah, the market should do ten percent, they
should do oh and they do twenty three percent. Wow,
that must be incredibly rare. No, No, it's fairly common
for things to happen like this. There tends to be
a lot of momentum in one direction or the other
when we talk about markets. But again, as we head
to twenty twenty five, we talked about these bull and
bear cases, and you know, I think where I have
(15:06):
settled in, as you know, a very likely scenario here,
which does not tell you which direction markets will go.
But my general feeling is that this administration is very
serious about a few things. Increasing tariffs on a number
of different trading partners is one of them. They also
(15:27):
seem very serious about cutting taxes. So I tend to
think that those two items, along with deregulation, are likely
to be front and center but quite frankly, I just
don't know how to play out deregulation because I have
no idea which industries will be most affected and how
that will end up playing out. And so when I
start to think about twenty twenty five, I tend to
(15:49):
think that rates in the US are going to be
higher than most of the rest of the world. I
tend to think that taxes are going to be getting
cut at the same time that other countries are going
to have a tougher time doing so due to budget constraints.
Speaker 4 (16:02):
And I cut where taxes, yeah, I would just say
voted back in at the same levels, right or in
corporate I think.
Speaker 2 (16:10):
That we will certainly see a renewal of the Trump
tax cuts, but I think that there will be further
cuts because quite honestly, if they just renew where they were,
there's no gain there, right, There's nothing to write home about.
There's nothing to actually stimulate the economy in that case.
And so if the administration wants to follow through on
their pledges, I think they have to find somewhere else
to cut.
Speaker 3 (16:32):
Beyond.
Speaker 2 (16:33):
And I don't know that it comes on the corporate side,
but I think that generally speaking, you see them go
lower somewhere on the tariff side of things. That's going
to play to the price level, and it feeds into
why I think rates are going to be higher for longer.
Probably means a stronger US dollar, which works against the
Trump administration and some of the trade and balanced questions.
Speaker 3 (16:51):
That they end up having for the future.
Speaker 2 (16:54):
But again, I don't think that that spells out a
bear or bowl case for markets because I.
Speaker 3 (16:59):
Don't know where the inflation comes in.
Speaker 2 (17:01):
I think that's going to be an all important factor
when it comes to how markets perform in twenty twenty five.
Speaker 5 (17:06):
Yeah, this is more of a big picture commentary less
so me saying anything for twenty twenty five is it
was interesting just sort of when you read these recap pieces.
One of the things that stuck out to me is
just the idea that we now feel as if we
are in a period that we are cemented at higher
rates than we were customed to over twenty fourteen to
(17:27):
twenty twenty two. Looking at that period, the US ten
year treasury never really hit three percent over that period
of time, and it's just interesting to reflect back and
see how long we've operated really at those extremely low
level rates, and we're now in much more of a
normalized rate period where you have the US ten year
treasury sitting at four and a half percent and actually
(17:47):
the ability to collect some money market interests things that
we're not possible before.
Speaker 3 (17:52):
Yeah, I think it's just important.
Speaker 2 (17:54):
I think when you head into a new administration too,
to figure out, Okay, what are the benchmarks we're going
to judge this administration on. I'm sure a lot of
people are gonna look at the stock market. I think
that's a crappy indicator because it doesn't really tie to
what the current president is doing I see the last
two years. But nonetheless, I'm sure that we will use
that as a benchmark. Unemployment is an easy one to
look at. Wage gains are an easy one to look at.
(18:16):
Tax rates are a really easy one to judge an
administration on. I wonder what the other benchmarks are that
people have in mind. You know, inflation is certainly one
of them, Unemployments certainly one of them. We had Mark
and I had come up with our own number of
these when we were doing the show a few weeks ago,
and people had texted in things like deregulation, which we
(18:37):
had a really tough time. How do you put your
numerically putting your arms around it right? Like is there
more or less regulation? At the end of the Trump administration,
Mark actually found the federal like registrar for regulations and said, okay,
well here's the total pages. Maybe you can do it
that way, like how many pages get cut out? But
you know, I think anyone trying to judge how an
(18:59):
administration you have to have a framework going in to
say this is what I'm going to judge it by
home prices would be another one that comes to mind,
but I honestly don't know.
Speaker 5 (19:08):
Up or down can success to impact that Sometimes with
GDP growth, it's unfair too because you're catching a tailwind
or headwind just because of the timing of when you
come into office. The one that you mentioned I do
like because it is more of you know, the period
of time that you're in.
Speaker 3 (19:25):
Let's take a quick break.
Speaker 2 (19:26):
When we come back, full market recap coming up with
Wall Street Watch.
Speaker 3 (19:29):
That's next. Like us on.
Speaker 1 (19:42):
Facebook and follow us on Twitter at DFE show. Breaking
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here the Financial Exchange Radio Network on.
Speaker 6 (20:02):
The first trading session of twenty twenty five, markets are
in positive territory, albeit lowering the gains than at the
opening bell.
Speaker 4 (20:12):
The Dow is now up by.
Speaker 6 (20:14):
Only sixty eight points, or about a tenth of a percent.
SMP five hundred is up by over a quarter percent
or fifteen points in the Nasdak up over a quarter
percent as well, or fifty four points. Russe In two
thousand is rallying up over one and a quarter percent
so far today. Ten year Treasure reeled down by two
basis points at four point five four percent, and crew
(20:36):
to Oil up two and a quarter percent, trading at
seventy three dollars in thirty three cent se barrel. Overall,
for twenty twenty four, the SMP five hundred jump twenty
three percent, the Dow climb thirteen percent, and the Nasdaq
surged twenty nine percent for the year. This morning, Tesla
shares down by six percent as investors digest the electric
(20:56):
car makers new sales data from the fourth quarter. We're
just south of four hundred and ninety six thousand vehicles
were delivered, short of expectations of five hundred and fifteen
thousand units. Meanwhile, shares and Synaptics are up by six
percent after the semiconductor company announced a partnership with Google
on EDGEAI. Through the collaboration, Google's machine learning core will
(21:19):
be integrated on Synaptics Astros hardware Elsewhere. Goldman Sachs added
both Uber and the Region Cruise line to its conviction
buy list for January. Uber stock up by four percent,
while Norwegian's shares are up by one percent. Jeffries upgraded
Top Golf Calaway brands to buy from hold with a
firm noted shares appear to be over sold and hiked
(21:41):
its price target to thirteen dollars from eleven dollars per share.
Top Golf Calaway shares are jumping by twelve percent on
the news, and after retreating in the final days of
twenty twenty four, Micro Strategy shares are rebounding by above
five percent today as Bitcoin climbed back above that ninety
six thousand dollars threshold. I'm Tucker Silvan, that's Wall Street Watch.
Speaker 2 (22:04):
I mentioned in that Tesla piece. Tucker, I mean, stock's
still up a good fifty percent over the last twelve months,
and what climbed like eighty percent after the Trump after
the Trump election win. But yeah, the sales numbers are
ultimately what's going to drive this thing forward or backward.
They face far more competition today than they did even
just a few years ago. It's still mainly competition from
(22:27):
luxury car brands. You don't see a lot of demand for, say,
you know, the Nissan leafs out there in terms of
all electric vehicles.
Speaker 3 (22:36):
But I'll be very interested interested to see especially too.
I've heard some grumblings.
Speaker 1 (22:42):
You know.
Speaker 2 (22:43):
Granted, we live in Massachusetts and so it's a fairly
liberal state, and that's understating it quite a bit. But
I do wonder with Elon Musk's attachment to the Trump
administration if that affects sales in any way, shape or form.
The big purchasers of these vehicles have been in states
(23:03):
like California, like Massachusetts, and so my read into it
is that a lot of them have been you know, liberal,
and do you see that affecting sales in some way,
shape or form. I'll do it's complete conjecture at this point,
but if you've heard grumblings from neighbors and things like that,
I'd be interested to know you can always text the
show at six one, seven, three, six, two, thirteen eighty five.
(23:27):
But moving on, let's move over to China, because almost certainly,
in addition to the other pieces that we talked about,
conflict and trade with China is going to be front
and center of this Trump administration. We're only just beginning
to see how that takes shape. There's a piece from
the New York Times today about China hitting dozens of
(23:48):
US companies with trade controls, which is largely just symbolic
and irrelevant at this point. But one thing that does
seem quite a bit different compared to the last Trump
administration is just the overall general attitude towards China that
has shifted. And I think that's largely a result of
(24:09):
the Trump's Donald Trump's first administration of bringing that to
the forefront of American policy and putting more of a
focus on the trade tactics and the conflict with China.
And what's different this time is you buy and large
do not hear executives coming to Washington or going down
tomorrow Lago and really petitioning the Trump administration to say,
(24:30):
don't move forward with tariffs.
Speaker 3 (24:31):
They are a strategic.
Speaker 2 (24:32):
Partner, and I wonder how much of that is just
an acknowledgment from the business community that China's not that
strategic anymore, versus how much of it is just concerned
about public backlash in regard to defending trade with China
in this environment. You had commentary from the quote from
Senator Tom Cotton the other day quote if you get
(24:55):
in the ring on China's behalf, you should expect to
be punched. So you know, how many executives are just
staying quiet and playing this through the back channels instead
of out in public.
Speaker 3 (25:07):
Is another question though, Oh.
Speaker 4 (25:08):
Why would you want to say anything?
Speaker 5 (25:10):
I mean, it's just to me from a strategic standpoint,
and it would make no sense to speak out in
favor of China at this point for fear of retribution
from a political standpoint. Also, the other thing that's happened
outside of the politics side of things, Mike, is I
feel a lot of companies realized after twenty twenty. You know,
think about Trump starts his first turn in twenty eighteen,
(25:32):
twenty twenty in the supply chain crisis during COVID that
they needed to diversify their supply chains and that the
way that China was operating in terms of the way
it handles COVID and also just its business policies in general.
It seems as if more companies at least acknowledge the
fact that they represent a national security risk in some senses,
and that it's fickle how quickly that China can pivot
(25:56):
as to how it treats a company. And that's why
they would be less likely to come out and say,
you know, they're so in favor of go one way
or the other on it.
Speaker 2 (26:08):
Yeah, I'm just I guess I'm suspect of the Wall
Street Journal's conclusion that you know, they're not outspoken because
American businesses no longer see China as the land of opportunity.
I tend to think that if you're a business out there,
you are still in every single way thinking about how
your product will sell in China, how your service might
(26:29):
play in China, even if it's not as much of
a focus. You know, we talk about how Starbucks has
been struggling in China, general motors basically pulling out and
writing off a large portion of their business there. It's
a different approach today. But you can't tell me that
Disney when they create a new movie or general motors
when they create a new car, isn't thinking about, hey,
(26:50):
will this work in China? Will I be able to
approach this market in the same way.
Speaker 4 (26:54):
Oh, there's certainly they still need to think about it.
Speaker 5 (26:56):
But I think I play it on the other end, Mike,
and look at it from the manufacturing side of things,
where they are just so critical in many companies in
terms of sourcing materials or sourcing any type of manufacturing.
Speaker 4 (27:08):
That you may not.
Speaker 5 (27:10):
To want to come out and publicly support them, but
to get your product manufactured at the cheapest rate out there,
you have decades of institutional knowledge in the manufacturing side
that maybe it's not the land of opportunity, but it's
still probably it still is convincingly the cheapest gain in
town with the best economies of scale to get your
(27:30):
product out. And we can talk about Vietnam and India
and some of these other countries in Cambodia, but they
don't get Apple.
Speaker 2 (27:36):
They don't have the Yeah, if you want the answer here,
go look at Apples r reporting, Go look at estimates
in terms of what portion of their products they still
to this day manufacturer in China, And there's your answer now. Granted, uh,
Tim Cook was incredibly successful during the Trump administration of
lobbying that administration to get a bunch of carbouts, and
they did. They were not subject to tariffs on Chinese product,
(28:00):
on Apple products coming out of China, and that is
largely I think as a result of Tim Cook CosIng
up to the administration and looking for those carve outs.
But they haven't moved much of their supply chain outside
of China. They've talked about it, but they fully recognize
that if they want to sell anything in China, and
b if they want to be able to still deliver
(28:21):
these phones at a reasonable costs they're still well made.
There's nowhere in the world that they can do it.
India they've tried, Vietnam they tried. They will continue to
explore those, but by and large, go look at where
Apple manufactures. It is still to this day, China. We'll
be covering a little bit more too, because one of
the big items China related will be the looming TikTok
(28:42):
band that's due to go into place on January nineteenth,
that I believe is now in the US Supreme Courts
hands in terms of whether or not they delay that
total ban that's due to go into place before Donald
Trump takes office.
Speaker 3 (28:56):
Quick break.
Speaker 2 (28:57):
When we come back, who remembers little doc workers strike
that was going into the election back in October and November. Well,
guess what back up on the table. Raise your head
if you forgot about that story, that's next here on
the Financial Exchange.
Speaker 1 (29:12):
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(29:34):
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Speaker 3 (29:45):
Paul.
Speaker 2 (29:45):
At the end of last year, US DOC workers were
attempting to negotiate it and ended up coming to a
short term contract to avoid a strike that would have
shut down the entire East Coast ports. We haven't seen
a negotiation on this many of those ports in a
very very long time, and should this not go forward,
(30:07):
you have the East and Gulf Coast all ports hypothetically
shutting down as a result of this. Which is responsible
for about half of all the country's container volumes. This
was kicked off until mid January, but guess what, it's
it's early January now, so the negotiations are starting back up.
Remind us what are the big sticking points here? What
(30:28):
are workers looking for? And you know where are the
likely likely hang ups going to be?
Speaker 5 (30:33):
So Back in October, the International long Shoreman's Association reached
a tentative deal with ocean carriers and operators on a
sixty two percent wage increase over a period of six years,
But that was a tentative deal. The real hang up
on the deal is outside of the wage increase piece,
is the use of semi automated machines at port terminals
for the next labor contract. The president of the union,
(30:57):
Herald Daggett, has said that he won't accept a contract
that allows for any degree of automation, which he sees
as a threat to dock worker jobs. And I was
just saying to Mike af Air, I'm certainly not ever
in favor of putting people out of work who are
doing really hard, important work for the US economy. But
this idea that any business out there would turn their
(31:19):
nose up at something that could make them more productive,
more efficient, and less capital intensive. It's just spits in
the face of capitalism in general. That's just not how
you stay competitive in a market.
Speaker 3 (31:31):
It's a story as you know, as old as time.
Speaker 2 (31:33):
Right, you can go back to the Luodites and you know,
breaking what are they found, like looms in terms of
textiles and things like that, that they would go around
and just destroy large manufacturing facilities. This is a story
as old a time, as old as time. But the
continued resolution of all of these has always been that
technology goes into place, it makes workers more efficient, some
(31:56):
of them lose their jobs, and in some cases people
are are worse off because we haven't historically done a
great job of retraining workers who lose.
Speaker 3 (32:06):
Their jobs due to automation.
Speaker 2 (32:08):
Right, Like, say what you want about all the productivity
increases that I've been talking about, and you know, all
of the positives that have come from a modernized US economy,
but there have been large swaths of the American public
that were left significantly worse off. When you know, manufacturing
got modernized in the automobile sector, or you know, the
(32:30):
rust belt has you know, lost thousands of American manufacturing jobs.
Speaker 3 (32:35):
And the reality.
Speaker 2 (32:37):
I think will be in this case that even if
they do get any sort of short term agreement on automation,
long term, you're not going to simply have us ports
be the least efficient in the world, right, I mean,
you're not going to have the most one of the
most expensive places in the world to have labor also
be one of the least automated ports in the world. Otherwise,
(32:59):
guess what volume won't go through us ports If that's
the case, if we become so inefficient and unloading and
loading you know, containers from us ports, the stuff will
go through Mexico, It'll go through Canada instead, because we
will folve that far behind.
Speaker 3 (33:15):
Eventually.
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Speaker 2 (34:25):
If you happen to be listening to us. In Massachusetts,
a number of new laws going into place in twenty
twenty five. First off, an expanded child tax credit. In
twenty twenty five, you'll be able to claim four hundred
and forty dollars per dependent when you file your taxes
in the Commonwealth if you operate a business in the
state of Massachusetts. We'll be moving over to what pretty
(34:47):
much every other state in the country uses, which is
referred to as a single sales factor, which relies solely
on the amount of a company's sales within the state. Previously,
the state had been using calculations based on a three
f factor equation of local employment, property holdings, and in
state stales. So we'll be getting away from that antiquated
way of doing things. There'll be a new rule going
(35:08):
into place in October requiring any job posting in Massachusetts
by employers with at least twenty five full time employees
to disclose salary ranges in those job postings and protecting
employees right to ask for salary ranges in the workplace.
Many other states, including New York and Colorado, have gone
this route as well, And importantly, I do not believe
(35:31):
it just implies to Massachusetts employers, but rather any employer
in the country who advertises a job in Massachusetts. Some employers,
by the way, the way they've gotten around this is
they've said, well, big ranges most certainly is.
Speaker 3 (35:45):
One of them.
Speaker 2 (35:46):
But the other thing they've done is they said, you know,
remote job which can be performed anywhere but Colorado or
New York, so they don't have to post the pay
ranges in there, because yeah, they don't want to go
about that. But anything else that caught your eye and try,
I guess no circuses, no big animals in circuses. In Massachusetts,
we became the eleventh state to enact a ban on
(36:08):
using big cats and other exotic creatures in traveling shows
when they come to Massachusetts.
Speaker 5 (36:13):
Yead To be clear, I still can have circuses, we
just can't have circuses with elephants tigers.
Speaker 3 (36:16):
So just boring circuses.
Speaker 5 (36:18):
You're trying to tell me, Yeah, our kids will suffer
greatly from that.
Speaker 3 (36:22):
Just a lot of clowns, perfect.
Speaker 5 (36:25):
Just what every kid wants to see. The zoos can
still happen, though, to be clear, nothing's changed there. There's
also a law striking down the long standing m CAST
graduation requirement that used to be the case where your
tenth grade m CAST you would need to pass that
in order to obtain a high school diploma. That will
no longer surprise.
Speaker 3 (36:44):
That that one passed. I don't really understand.
Speaker 2 (36:47):
You know, that was a voter referendum question that was
on the ballot in Massachusetts, and it just seems strange
to me to do away with a standard when you
have pretty consistently what's great as one of the best
education systems in the country. But nonetheless, I I know,
I know Matt Damon was in Boston pushing on this
one to do away with the standards.
Speaker 4 (37:09):
The pushback that I've heard on it and I'm not was,
but was that does a very important job.
Speaker 5 (37:20):
Now she's I'm just saying like she's not as connected
to as she once was. And she also worked in
a community that wasn't as harm by very financially well resourced,
but the country, the areas of the state that were
financially more challenged oftentimes would have more difficulty keeping up
with those standards. And also teachers felt that there was
(37:41):
too much time spent around gearing towards just making sure
someone passed the end cast. You know, the standardized test
shift in general is reflected in colleges where there's less
of a focus on that than there was previously. It
just seems like the economic disparity piece was really more
the reason for the pushback. I'm not saying and where
another I have a stance on it, but that's the
(38:02):
reason behind it.
Speaker 2 (38:03):
Markets remained in positive territory, had been bouncing around a
fair bit, but still all positive. NASDAC leading the way,
up four tenths of percent. We'll be back just after
the Stay tuned, folks,
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(01:06):
and Paul.
Speaker 2 (01:07):
Lane, Happy New Year, Welcome to twenty twenty five. Here
at the Financial Exchange, it's Mike, Paul and Tucker with
you on a shortened trading week Thursday, heading into the
weekend here and the first trading day of twenty twenty five,
with some little leftover optimism coming to markets, with all
(01:28):
of them in the green for the start of twenty
twenty five, at least, after closing out December on a
fairly negative note, with all markets down in December, with
a bit of a reverse Santa Claus rally, a little
Santa Claus sell off heading into the end of the year,
but tackling this week as we head into like I said,
a shortened trading week ahead of a big week the
(01:50):
second week of January. Friday of next week is when
we will get that big jobs report for the month
of December and a number of other economic data points.
I think it's a good time to kind of reflect
on twenty twenty four and what we saw, what was regular,
what was irregular, and of course everything today being written
about expectations for the coming new year, which, by the way,
(02:12):
any of these stories that were printed in the first
week of twenty twenty four were completely wrong. So take
all of this with a grain of salt. Any forecast
that you're seeing about twenty twenty five, and frankly, we
won't be making any of them for markets for twenty twenty.
Speaker 3 (02:26):
Five because I think that's useless.
Speaker 2 (02:27):
I do generally think that trying to predict what markets
are going to do on the first day of the
year is a useless exercise, and any short term market
predictions are just as such. But we did have the
second year in a row of equity markets defined by
the SMP five hundred increasing by more than twenty percent.
You had the SMP close out the year I think
(02:47):
without dividends up a good twenty three plus percent this year.
That was after twenty four percent in twenty twenty three,
and it marks the first time since the late nineties
where that's done that on a back to back basis,
and I think speaks to some optimism about where things
are going over the next few years.
Speaker 4 (03:09):
Yeah, I think that's a good place to start.
Speaker 5 (03:11):
Is more so not sitting here saying this is what's
going to happen in twenty twenty five. But I like
the idea of sort of doing a bull and a
bare case for this year, sort of laying out if
everything goes right, how will things how could things potentially
fair if everything goes wrong, or if these things go wrong,
how does things potentially fair out? Like you mentioned twenty four,
(03:33):
all the expectations going in was this idea of significant
rate cuts, potential for recession. We sit here on the
first day of twenty twenty five. You can convincingly say
that that did not happen in terms.
Speaker 3 (03:44):
Of it was not a recession in twenty twenty four.
Speaker 5 (03:46):
The recession piece did not occur. In terms of rate cuts,
we did see some of those, a lot of them
sort of stuffed in the back half of the year,
back quarter of the year where we came in with
four rate cuts total a full percentage point in terms
of the Fed Fund rate heading into twenty twenty five,
I think, Mike, it is a good exercise to look at, Okay,
(04:08):
you and I going back and forth on bull and
bear case for for what sure, what markets could look
like this year, not knowing where things are going to go,
but sort of staying in those two different camps. You know,
I'll start it from a bull perspective here in terms
of what we would be looking for for the US
economy heading into twenty twenty five. Here, unemployment has got
(04:28):
to stay in and around four percent or so we
had hit.
Speaker 2 (04:31):
We're at four two fourth three right now, So I
think so long as it's under four and a half percent,
we remain in a relatively calm economy.
Speaker 5 (04:39):
We had hit about three and a half or three
point six percent at the ultimate low. Obviously over the
course of twenty twenty four, that did creep up a bit.
If we can stay, like you said, in around that level,
that's something that will keep the economy in a good place.
On inflation, another area where a tremendous amount of progress
was made in twenty twenty four, Risks still loom out there,
(05:00):
and there are areas of inflation reports that you could
point to that perhaps there is some more sickiness than
anticipated there. And of course the political policies that have
been bantered about we'll talk about that a little bit too,
and how they could impact things. But inflation has stuck
on a headline basis around two and a half percent
or so. A lot of that has come off the
(05:20):
backs of a very low energy market from an oil
price perspective. If you look at core PCEE, which serve
core any of the core measures which strip out food
and energy, that number is more like three point two
or three point three percent. That needs to stay in
and around that level, perhaps even progressing down even further.
Those are two critical components of the economy still being
(05:42):
in a good place. And then the last one that
I sort of partitioned out was the consumer. The consumer
has been truly the white night in this economic resiliency
that we've seen over the course of the last couple
of years. People have been getting out there and continuing
to spend. That needs to continue. You need to see
corporate earnings growth. And the last one that I'll add
to the corporate aarnings growth is a lot of the
(06:03):
stock market enthusiasm that we saw in twenty twenty four
was based on the R and D spending from the
biggest companies out there in the AI space, whether it
is Google, Amazon, Meta, you know less so Apple on
the AI side, but in video was the beneficiary of
all those spending dollars. That needs to continue in place
(06:25):
as well to really kind of keep that bolcase going.
Speaker 2 (06:27):
Not only the spending, but you need to start seeing
some of the results, I think exactly. Yeah, you've had Microsoft,
you've had in Vidio, others pour billions of dollars into
research and development on artificial intelligence, and so do you
start to see some payoff on those Do you start
to see companies adopting the technology, paying for the technology,
and using it to become more efficient. That's one of
(06:50):
the critical pieces that's not really front and center to
most people's views on the economy because you don't you
don't see it every day.
Speaker 3 (06:58):
But productivity in.
Speaker 2 (07:00):
The United States has made the United States exceptional over
the last few years. It is far surpassed what you
have seen everywhere else in the world by and large.
I'm sure there's some exceptions, but in the developed world,
no country has seen the productivity gains of the United
States have seen over the last few years.
Speaker 3 (07:15):
And so will you see that continue in some meaningful way?
Speaker 2 (07:19):
Because that's the holy grail, right If you can produce
more stuff without working more hours. Yep, that's the holy grail.
That's how a society develops. On the inflation side of things,
to your point, in terms of practically speaking, what needs
to happen there for the stars to align in inflation
to go down. Like you mentioned, the last reading we
got was for November, which was showing two point seven
(07:41):
percent year over year inflation, helped out by a lot
of lower energy prices. You know, energy prices over that
same time period down three percent, gasoline down eight percent.
And while we can strip that out, the fact of
the matter is that low energy prices tend to down
other prices as well, whether you're talking about food, whether
(08:03):
you're talking about UH, you know, electricity generation or.
Speaker 4 (08:09):
Even good because of the transportation to get them there.
Speaker 2 (08:13):
And so should that reverse, then it can have this
reverberating effect throughout the economy of prices going up. And
so you're looking for a consumer that continues to spend,
is still comfortable doing so, is uh is not getting
into too much debt, but also you know, it does
not spend to the level that we see inflation tick
back up, and therefore the Fed react to those higher
(08:35):
spending and higher inflation numbers. You want this, uh, this
Goldilock scenario once again of consumers continuing to spend, but
neither tariffs nor other who knows, geopolitical tensions in the
Middle East or whatever it might be, sending prices to
an uncomfortably high level again, because if you see that happen,
(08:56):
even if even if it's it's you know, I don't
think anyone goes into twenty twenty five expecting any sort
of repeat of COVID era inflation levels. But you don't
need nine percent inflation for this market to get very concerned, right,
You don't even need three and a half percent inflation
for these markets to get quite concerned. Because going into
(09:18):
twenty twenty five, the expectation is that the FED is
able to continue to cut rates to some degree that
the expectation is that the inflation levels remain below three percent,
and if they diverge elsewhere, you're.
Speaker 5 (09:31):
Gonna see evaluations take a huge They would take a
huge hit in that scenario if there is a pivot
in thinking that all of a sudden, we're not looking
at cuts, but we'll look at how are they going
to continue to buy?
Speaker 4 (09:41):
Battle how you're inflation? That would be what's.
Speaker 2 (09:44):
At stakeing let's take a quick quick break here. When
we come back, I want to continue this conversation of
bowl case versus bear case when it comes to the
overall US economy and markets, and really just start setting
the milestones for hey, how are we going to budge
this economy in this administration? For twenty twenty five And
then finally, I also do want to talk about just
(10:06):
the last two years of market gains. How rare is
what we saw recently and what should be expected out
of markets in the future.
Speaker 3 (10:12):
Quick Break will be right back from the Financial Exchange.
Speaker 1 (10:15):
Well streamwatch a full update on the markets performance todate
weekdays at ten thirty only here on the Financial Exchange
Radio Network. Thankst us six one seven, three six two
thirteen 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.
Speaker 6 (10:49):
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Speaker 4 (11:37):
Not good vibes for Tucker.
Speaker 2 (11:39):
Tucker's goett a little choked up. It's just very emotional
through my.
Speaker 6 (11:43):
Back up, first, through my back up yesterday, so I
have a hard time breathing.
Speaker 4 (11:48):
We back, Oh Jesus, car really.
Speaker 3 (11:50):
Mike, since since bet since about a week back.
Speaker 4 (11:56):
Okay, there's a car accident.
Speaker 2 (12:02):
So I asked the question before, which fortunately I know
the answer to, because I was curious of just how
rare these twenty percent plus or minus years that we've
had of the last couple have been. And so I
went and pulled some data on the composite that they,
you know, created that it is designed to mimic the
(12:22):
S and P five hundred going back to the nineteen twenties,
and we have seen a lot of you know, twenty
plus years just over the last decade.
Speaker 3 (12:29):
You saw obviously the last two.
Speaker 2 (12:31):
Twenty twenty one was over twenty percent, twenty nineteen was
over twenty percent. So there's been quite a few of them.
And so I was curious, like we all talk about how, yeah,
the S and P five hundred long term, depending on
what time period, you're looking at eight percent a year,
ten percent a year more recently like twelve percent a year.
Speaker 3 (12:49):
So you know, what should we anticipate year to year?
Speaker 2 (12:52):
Because Goldman, Sachs and JP Morgan are all putting out
ten percent forecast for twenty twenty five, which is about
the safest thing you can do.
Speaker 4 (12:58):
It's just as like I don't have any So here's
a number.
Speaker 2 (13:02):
So I took a look at it, and for the
ninety seven calendar years that I was able to get
data on, I was curious in how many of those
did the S and P five hundred or like I said,
the composite that didn't exist prior to I think nineteen
seventy something that makes up the S and P five hundred,
How many of those calendar years did the SMP go
up by more than twenty percent or down by greater
(13:23):
than twenty percent thirty four out of ninety seven.
Speaker 3 (13:26):
Years, about a little bit more than a third of
the time.
Speaker 2 (13:29):
In fact, equity markets go up by more than twenty
percent or down by more than twenty percent. And that's
why I just I go back to you know, what
people come to expect, and you know, we talked about
it all the time. How you see people putting together
forecasts saying, oh, yeah, flatline the markets, and my portfolio
is going to grow at eight percent a year. And
(13:50):
the fact of the matter is that almost never happens.
And I think that's an important clarification for people to
expect and anticipate, is yeah, years like this feel really good.
Guess what, They're not uncommon, right, Nor is the opposite
of the thirty four it's it can't be.
Speaker 5 (14:05):
I would feel like positive to negative it would be
a heavier percentage on the positive stuff, of course. Yeah, yeah,
I mean, how many do you like? There's probably no
more than of negative years. And the S and P
over a drop of twenty percent got to be.
Speaker 3 (14:19):
Count only six, ok, kind of only six.
Speaker 2 (14:22):
Going back to the nineteen twenties, where the calendar year
has been great than twenty but there's been you know,
twenty twenty two, for example, is not on this list
because it right below the twenty five percent, but then
it bounced back in the other direction and then finished
the calendar year below that twenty percent threshold, and so
it doesn't account for that either. But we all have
this this number built in the back of our mind
(14:44):
as oh, yeah, the market should do ten percent, they
should do oh and they do twenty three percent. Wow,
that must be incredibly rare. No, No, it's fairly common
for things to happen like this. There tends to be
a lot of momentum in one direction or the other
when we talk about markets. But again, as we head
to twenty twenty five, we talked about these bull and
bear cases, and you know, I think where I have
(15:06):
settled in, as you know, a very likely scenario here,
which does not tell you which direction markets will go.
But my general feeling is that this administration is very
serious about a few things. Increasing tariffs on a number
of different trading partners is one of them. They also
(15:27):
seem very serious about cutting taxes. So I tend to
think that those two items, along with deregulation, are likely
to be front and center but quite frankly, I just
don't know how to play out deregulation because I have
no idea which industries will be most affected and how
that will end up playing out. And so when I
start to think about twenty twenty five, I tend to
(15:49):
think that rates in the US are going to be
higher than most of the rest of the world. I
tend to think that taxes are going to be getting
cut at the same time that other countries are going
to have a tougher time doing so due to budget constraints.
Speaker 4 (16:02):
And I cut where taxes, yeah, I would just say
voted back in at the same levels, right or in
corporate I think.
Speaker 2 (16:10):
That we will certainly see a renewal of the Trump
tax cuts, but I think that there will be further
cuts because quite honestly, if they just renew where they were,
there's no gain there, right, There's nothing to write home about.
There's nothing to actually stimulate the economy in that case.
And so if the administration wants to follow through on
their pledges, I think they have to find somewhere else
to cut.
Speaker 3 (16:32):
Beyond.
Speaker 2 (16:33):
And I don't know that it comes on the corporate side,
but I think that generally speaking, you see them go
lower somewhere on the tariff side of things. That's going
to play to the price level, and it feeds into
why I think rates are going to be higher for longer.
Probably means a stronger US dollar, which works against the
Trump administration and some of the trade and balanced questions.
Speaker 3 (16:51):
That they end up having for the future.
Speaker 2 (16:54):
But again, I don't think that that spells out a
bear or bowl case for markets because I.
Speaker 3 (16:59):
Don't know where the inflation comes in.
Speaker 2 (17:01):
I think that's going to be an all important factor
when it comes to how markets perform in twenty twenty five.
Speaker 5 (17:06):
Yeah, this is more of a big picture commentary less
so me saying anything for twenty twenty five is it
was interesting just sort of when you read these recap pieces.
One of the things that stuck out to me is
just the idea that we now feel as if we
are in a period that we are cemented at higher
rates than we were customed to over twenty fourteen to
(17:27):
twenty twenty two. Looking at that period, the US ten
year treasury never really hit three percent over that period
of time, and it's just interesting to reflect back and
see how long we've operated really at those extremely low
level rates, and we're now in much more of a
normalized rate period where you have the US ten year
treasury sitting at four and a half percent and actually
(17:47):
the ability to collect some money market interests things that
we're not possible before.
Speaker 3 (17:52):
Yeah, I think it's just important.
Speaker 2 (17:54):
I think when you head into a new administration too,
to figure out, Okay, what are the benchmarks we're going
to judge this administration on. I'm sure a lot of
people are gonna look at the stock market. I think
that's a crappy indicator because it doesn't really tie to
what the current president is doing I see the last
two years. But nonetheless, I'm sure that we will use
that as a benchmark. Unemployment is an easy one to
look at. Wage gains are an easy one to look at.
(18:16):
Tax rates are a really easy one to judge an
administration on. I wonder what the other benchmarks are that
people have in mind. You know, inflation is certainly one
of them, Unemployments certainly one of them. We had Mark
and I had come up with our own number of
these when we were doing the show a few weeks ago,
and people had texted in things like deregulation, which we
(18:37):
had a really tough time. How do you put your
numerically putting your arms around it right? Like is there
more or less regulation? At the end of the Trump administration,
Mark actually found the federal like registrar for regulations and said, okay,
well here's the total pages. Maybe you can do it
that way, like how many pages get cut out? But
you know, I think anyone trying to judge how an
(18:59):
administration you have to have a framework going in to
say this is what I'm going to judge it by
home prices would be another one that comes to mind,
but I honestly don't know.
Speaker 5 (19:08):
Up or down can success to impact that Sometimes with
GDP growth, it's unfair too because you're catching a tailwind
or headwind just because of the timing of when you
come into office. The one that you mentioned I do
like because it is more of you know, the period
of time that you're in.
Speaker 3 (19:25):
Let's take a quick break.
Speaker 2 (19:26):
When we come back, full market recap coming up with
Wall Street Watch.
Speaker 3 (19:29):
That's next. Like us on.
Speaker 1 (19:42):
Facebook and follow us on Twitter at DFE 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 the Financial Exchange Radio Network on.
Speaker 6 (20:02):
The first trading session of twenty twenty five, markets are
in positive territory, albeit lowering the gains than at the
opening bell.
Speaker 4 (20:12):
The Dow is now up by.
Speaker 6 (20:14):
Only sixty eight points, or about a tenth of a percent.
SMP five hundred is up by over a quarter percent
or fifteen points in the Nasdak up over a quarter
percent as well, or fifty four points. Russe In two
thousand is rallying up over one and a quarter percent
so far today. Ten year Treasure reeled down by two
basis points at four point five four percent, and crew
(20:36):
to Oil up two and a quarter percent, trading at
seventy three dollars in thirty three cent se barrel. Overall,
for twenty twenty four, the SMP five hundred jump twenty
three percent, the Dow climb thirteen percent, and the Nasdaq
surged twenty nine percent for the year. This morning, Tesla
shares down by six percent as investors digest the electric
(20:56):
car makers new sales data from the fourth quarter. We're
just south of four hundred and ninety six thousand vehicles
were delivered, short of expectations of five hundred and fifteen
thousand units. Meanwhile, shares and Synaptics are up by six
percent after the semiconductor company announced a partnership with Google
on EDGEAI. Through the collaboration, Google's machine learning core will
(21:19):
be integrated on Synaptics Astros hardware Elsewhere. Goldman Sachs added
both Uber and the Region Cruise line to its conviction
buy list for January. Uber stock up by four percent,
while Norwegian's shares are up by one percent. Jeffries upgraded
Top Golf Calaway brands to buy from hold with a
firm noted shares appear to be over sold and hiked
(21:41):
its price target to thirteen dollars from eleven dollars per share.
Top Golf Calaway shares are jumping by twelve percent on
the news, and after retreating in the final days of
twenty twenty four, Micro Strategy shares are rebounding by above
five percent today as Bitcoin climbed back above that ninety
six thousand dollars threshold. I'm Tucker Silvan, that's Wall Street Watch.
Speaker 2 (22:04):
I mentioned in that Tesla piece. Tucker, I mean, stock's
still up a good fifty percent over the last twelve months,
and what climbed like eighty percent after the Trump after
the Trump election win. But yeah, the sales numbers are
ultimately what's going to drive this thing forward or backward.
They face far more competition today than they did even
just a few years ago. It's still mainly competition from
(22:27):
luxury car brands. You don't see a lot of demand for, say,
you know, the Nissan leafs out there in terms of
all electric vehicles.
Speaker 3 (22:36):
But I'll be very interested interested to see especially too.
I've heard some grumblings.
Speaker 1 (22:42):
You know.
Speaker 2 (22:43):
Granted, we live in Massachusetts and so it's a fairly
liberal state, and that's understating it quite a bit. But
I do wonder with Elon Musk's attachment to the Trump
administration if that affects sales in any way, shape or form.
The big purchasers of these vehicles have been in states
(23:03):
like California, like Massachusetts, and so my read into it
is that a lot of them have been you know, liberal,
and do you see that affecting sales in some way,
shape or form. I'll do it's complete conjecture at this point,
but if you've heard grumblings from neighbors and things like that,
I'd be interested to know you can always text the
show at six one, seven, three, six, two, thirteen eighty five.
(23:27):
But moving on, let's move over to China, because almost certainly,
in addition to the other pieces that we talked about,
conflict and trade with China is going to be front
and center of this Trump administration. We're only just beginning
to see how that takes shape. There's a piece from
the New York Times today about China hitting dozens of
(23:48):
US companies with trade controls, which is largely just symbolic
and irrelevant at this point. But one thing that does
seem quite a bit different compared to the last Trump
administration is just the overall general attitude towards China that
has shifted. And I think that's largely a result of
(24:09):
the Trump's Donald Trump's first administration of bringing that to
the forefront of American policy and putting more of a
focus on the trade tactics and the conflict with China.
And what's different this time is you buy and large
do not hear executives coming to Washington or going down
tomorrow Lago and really petitioning the Trump administration to say,
(24:30):
don't move forward with tariffs.
Speaker 3 (24:31):
They are a strategic.
Speaker 2 (24:32):
Partner, and I wonder how much of that is just
an acknowledgment from the business community that China's not that
strategic anymore, versus how much of it is just concerned
about public backlash in regard to defending trade with China
in this environment. You had commentary from the quote from
Senator Tom Cotton the other day quote if you get
(24:55):
in the ring on China's behalf, you should expect to
be punched. So you know, how many executives are just
staying quiet and playing this through the back channels instead
of out in public.
Speaker 3 (25:07):
Is another question though, Oh.
Speaker 4 (25:08):
Why would you want to say anything?
Speaker 5 (25:10):
I mean, it's just to me from a strategic standpoint,
and it would make no sense to speak out in
favor of China at this point for fear of retribution
from a political standpoint. Also, the other thing that's happened
outside of the politics side of things, Mike, is I
feel a lot of companies realized after twenty twenty. You know,
think about Trump starts his first turn in twenty eighteen,
(25:32):
twenty twenty in the supply chain crisis during COVID that
they needed to diversify their supply chains and that the
way that China was operating in terms of the way
it handles COVID and also just its business policies in general.
It seems as if more companies at least acknowledge the
fact that they represent a national security risk in some senses,
and that it's fickle how quickly that China can pivot
(25:56):
as to how it treats a company. And that's why
they would be less likely to come out and say,
you know, they're so in favor of go one way
or the other on it.
Speaker 2 (26:08):
Yeah, I'm just I guess I'm suspect of the Wall
Street Journal's conclusion that you know, they're not outspoken because
American businesses no longer see China as the land of opportunity.
I tend to think that if you're a business out there,
you are still in every single way thinking about how
your product will sell in China, how your service might
(26:29):
play in China, even if it's not as much of
a focus. You know, we talk about how Starbucks has
been struggling in China, general motors basically pulling out and
writing off a large portion of their business there. It's
a different approach today. But you can't tell me that
Disney when they create a new movie or general motors
when they create a new car, isn't thinking about, hey,
(26:50):
will this work in China? Will I be able to
approach this market in the same way.
Speaker 4 (26:54):
Oh, there's certainly they still need to think about it.
Speaker 5 (26:56):
But I think I play it on the other end, Mike,
and look at it from the manufacturing side of things,
where they are just so critical in many companies in
terms of sourcing materials or sourcing any type of manufacturing.
Speaker 4 (27:08):
That you may not.
Speaker 5 (27:10):
To want to come out and publicly support them, but
to get your product manufactured at the cheapest rate out there,
you have decades of institutional knowledge in the manufacturing side
that maybe it's not the land of opportunity, but it's
still probably it still is convincingly the cheapest gain in
town with the best economies of scale to get your
(27:30):
product out. And we can talk about Vietnam and India
and some of these other countries in Cambodia, but they
don't get Apple.
Speaker 2 (27:36):
They don't have the Yeah, if you want the answer here,
go look at Apples r reporting, Go look at estimates
in terms of what portion of their products they still
to this day manufacturer in China, And there's your answer now. Granted, uh,
Tim Cook was incredibly successful during the Trump administration of
lobbying that administration to get a bunch of carbouts, and
they did. They were not subject to tariffs on Chinese product,
(28:00):
on Apple products coming out of China, and that is
largely I think as a result of Tim Cook CosIng
up to the administration and looking for those carve outs.
But they haven't moved much of their supply chain outside
of China. They've talked about it, but they fully recognize
that if they want to sell anything in China, and
b if they want to be able to still deliver
(28:21):
these phones at a reasonable costs they're still well made.
There's nowhere in the world that they can do it.
India they've tried, Vietnam they tried. They will continue to
explore those, but by and large, go look at where
Apple manufactures. It is still to this day, China. We'll
be covering a little bit more too, because one of
the big items China related will be the looming TikTok
(28:42):
band that's due to go into place on January nineteenth,
that I believe is now in the US Supreme Courts
hands in terms of whether or not they delay that
total ban that's due to go into place before Donald
Trump takes office.
Speaker 3 (28:56):
Quick break.
Speaker 2 (28:57):
When we come back, who remembers little doc workers strike
that was going into the election back in October and November. Well,
guess what back up on the table. Raise your head
if you forgot about that story, that's next here on
the Financial Exchange.
Speaker 1 (29:12):
The Financial Exchange streams live on YouTube. Like our page
and stay up to date on breaking business news all
morning long. This 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
(29:34):
business and financial news. This is the Financial Exchange Radio Network.
Speaker 3 (29:45):
Paul.
Speaker 2 (29:45):
At the end of last year, US DOC workers were
attempting to negotiate it and ended up coming to a
short term contract to avoid a strike that would have
shut down the entire East Coast ports. We haven't seen
a negotiation on this many of those ports in a
very very long time, and should this not go forward,
(30:07):
you have the East and Gulf Coast all ports hypothetically
shutting down as a result of this. Which is responsible
for about half of all the country's container volumes. This
was kicked off until mid January, but guess what, it's
it's early January now, so the negotiations are starting back up.
Remind us what are the big sticking points here? What
(30:28):
are workers looking for? And you know where are the
likely likely hang ups going to be?
Speaker 5 (30:33):
So Back in October, the International long Shoreman's Association reached
a tentative deal with ocean carriers and operators on a
sixty two percent wage increase over a period of six years,
But that was a tentative deal. The real hang up
on the deal is outside of the wage increase piece,
is the use of semi automated machines at port terminals
for the next labor contract. The president of the union,
(30:57):
Herald Daggett, has said that he won't accept a contract
that allows for any degree of automation, which he sees
as a threat to dock worker jobs. And I was
just saying to Mike af Air, I'm certainly not ever
in favor of putting people out of work who are
doing really hard, important work for the US economy. But
this idea that any business out there would turn their
(31:19):
nose up at something that could make them more productive,
more efficient, and less capital intensive. It's just spits in
the face of capitalism in general. That's just not how
you stay competitive in a market.
Speaker 3 (31:31):
It's a story as you know, as old as time.
Speaker 2 (31:33):
Right, you can go back to the Luodites and you know,
breaking what are they found, like looms in terms of
textiles and things like that, that they would go around
and just destroy large manufacturing facilities. This is a story
as old a time, as old as time. But the
continued resolution of all of these has always been that
technology goes into place, it makes workers more efficient, some
(31:56):
of them lose their jobs, and in some cases people
are are worse off because we haven't historically done a
great job of retraining workers who lose.
Speaker 3 (32:06):
Their jobs due to automation.
Speaker 2 (32:08):
Right, Like, say what you want about all the productivity
increases that I've been talking about, and you know, all
of the positives that have come from a modernized US economy,
but there have been large swaths of the American public
that were left significantly worse off. When you know, manufacturing
got modernized in the automobile sector, or you know, the
(32:30):
rust belt has you know, lost thousands of American manufacturing jobs.
Speaker 3 (32:35):
And the reality.
Speaker 2 (32:37):
I think will be in this case that even if
they do get any sort of short term agreement on automation,
long term, you're not going to simply have us ports
be the least efficient in the world, right, I mean,
you're not going to have the most one of the
most expensive places in the world to have labor also
be one of the least automated ports in the world. Otherwise,
(32:59):
guess what volume won't go through us ports If that's
the case, if we become so inefficient and unloading and
loading you know, containers from us ports, the stuff will
go through Mexico, It'll go through Canada instead, because we
will folve that far behind.
Speaker 3 (33:15):
Eventually.
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Speaker 2 (34:25):
If you happen to be listening to us. In Massachusetts,
a number of new laws going into place in twenty
twenty five. First off, an expanded child tax credit. In
twenty twenty five, you'll be able to claim four hundred
and forty dollars per dependent when you file your taxes
in the Commonwealth if you operate a business in the
state of Massachusetts. We'll be moving over to what pretty
(34:47):
much every other state in the country uses, which is
referred to as a single sales factor, which relies solely
on the amount of a company's sales within the state. Previously,
the state had been using calculations based on a three
f factor equation of local employment, property holdings, and in
state stales. So we'll be getting away from that antiquated
way of doing things. There'll be a new rule going
(35:08):
into place in October requiring any job posting in Massachusetts
by employers with at least twenty five full time employees
to disclose salary ranges in those job postings and protecting
employees right to ask for salary ranges in the workplace.
Many other states, including New York and Colorado, have gone
this route as well, And importantly, I do not believe
(35:31):
it just implies to Massachusetts employers, but rather any employer
in the country who advertises a job in Massachusetts. Some employers,
by the way, the way they've gotten around this is
they've said, well, big ranges most certainly is.
Speaker 3 (35:45):
One of them.
Speaker 2 (35:46):
But the other thing they've done is they said, you know,
remote job which can be performed anywhere but Colorado or
New York, so they don't have to post the pay
ranges in there, because yeah, they don't want to go
about that. But anything else that caught your eye and try,
I guess no circuses, no big animals in circuses. In Massachusetts,
we became the eleventh state to enact a ban on
(36:08):
using big cats and other exotic creatures in traveling shows
when they come to Massachusetts.
Speaker 5 (36:13):
Yead To be clear, I still can have circuses, we
just can't have circuses with elephants tigers.
Speaker 3 (36:16):
So just boring circuses.
Speaker 5 (36:18):
You're trying to tell me, Yeah, our kids will suffer
greatly from that.
Speaker 3 (36:22):
Just a lot of clowns, perfect.
Speaker 5 (36:25):
Just what every kid wants to see. The zoos can
still happen, though, to be clear, nothing's changed there. There's
also a law striking down the long standing m CAST
graduation requirement that used to be the case where your
tenth grade m CAST you would need to pass that
in order to obtain a high school diploma. That will
no longer surprise.
Speaker 3 (36:44):
That that one passed. I don't really understand.
Speaker 2 (36:47):
You know, that was a voter referendum question that was
on the ballot in Massachusetts, and it just seems strange
to me to do away with a standard when you
have pretty consistently what's great as one of the best
education systems in the country. But nonetheless, I I know,
I know Matt Damon was in Boston pushing on this
one to do away with the standards.
Speaker 4 (37:09):
The pushback that I've heard on it and I'm not was,
but was that does a very important job.
Speaker 5 (37:20):
Now she's I'm just saying like she's not as connected
to as she once was. And she also worked in
a community that wasn't as harm by very financially well resourced,
but the country, the areas of the state that were
financially more challenged oftentimes would have more difficulty keeping up
with those standards. And also teachers felt that there was
(37:41):
too much time spent around gearing towards just making sure
someone passed the end cast. You know, the standardized test
shift in general is reflected in colleges where there's less
of a focus on that than there was previously. It
just seems like the economic disparity piece was really more
the reason for the pushback. I'm not saying and where
another I have a stance on it, but that's the
(38:02):
reason behind it.
Speaker 2 (38:03):
Markets remained in positive territory, had been bouncing around a
fair bit, but still all positive. NASDAC leading the way,
up four tenths of percent. We'll be back just after
the Stay tuned, folks,
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