January 6, 2025 • 38 mins
Chuck Zodda and Mike Armstrong discuss the narratives surrounding markets for 2025. Unemployed office workers are having a harder time finding new jobs. Biden signs bill to increase Social Security benefits for millions of public workers. Why does Japan continue to pour money into US markets? Trump team mulls narrowing universal tariffs.
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Episode Transcript
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Speaker 1 (00:01):
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(00:21):
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(00:43):
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(01:06):
Chuck Zada and Mike Armstrong.
Speaker 2 (01:11):
If you thought that this was gonna be the first
full week of trading for twenty twenty four, you're wrong.
Mark's gonna be closed on Friday in observe, rather on
Thursday in observance of the final day of Jimmy Carter's
state funeral. And so we still cannot get to a
full week of trading. Third week in a row that
we do not have a full week of equity trading,
(01:33):
at least in markets. It's Chuck, Mike and Tucker with you,
and so that obviously, does, you know, disrupt the trading schedule.
I know that's not really the thing we should be
concerned about generally with the funeral, There's one thing that
you should be concerned about, and that's paying respect to
someone who's had a life well lived, and so that
is ultimately the important thing.
Speaker 3 (01:55):
It's a weird series of closures too. So you've got
these st exchange closed, the bond market is open but
closes early. Banks are open, the post office is open
but closing early as well, I believe, So.
Speaker 2 (02:10):
Continue the jobless claims data is gonna be on Wednesday
instead of Thursday.
Speaker 4 (02:14):
Now, so even the bls.
Speaker 3 (02:15):
Getting government agencies are closed. Yeah, so you've you've got
some stuff. They still have fed.
Speaker 2 (02:21):
Speeches scheduled for Thursday. There's five of them. Yeah, you know,
and I'm pretty sure they were a government agency, so yeah,
we're pretty sure they weren't invited to speak at the funeral,
so who knows what they're going to be talking about.
Speaker 4 (02:33):
But like.
Speaker 2 (02:36):
Again, this is my first day back in twenty twenty five,
all fired up, and you gotta have five fed speakers
on the day of an ex president's funeral.
Speaker 4 (02:44):
Are you kidding me? Read the room, people, You can't
push them to Friday.
Speaker 3 (02:49):
Yeah, read the room.
Speaker 4 (02:50):
What are we doing here?
Speaker 2 (02:52):
But in any case, so in terms of things to
actually watch this week, the big one is gonna be
the job support on Friday.
Speaker 4 (02:59):
We're gonna get it.
Speaker 2 (02:59):
AM previous jobs report just as a recap, two hundred
and twenty seven thousand jobs created, but the an employment
rate moved up to four point two percent. That's because
these are two different surveys that produce those two different results. Yeah,
consensus estimate right now between one hundred and sixty and
two hundred thousand jobs created with the unemployment rate being
(03:21):
at four to two or four to three. That's what
the expectation is for this job's report here.
Speaker 3 (03:27):
So you know, looking top down for you know, a
general view of the labor market would be that's pretty
darn good, is hey, You're creating jobs in the two
hundred thousand range and the unemployment rate is sticking around
four point two percent. Interestingly, you know what markets seem
most concerned about today happens to be interest rates. We've
(03:48):
talked at length about where the ten year treasury is gone,
where mortgage rates have gone. If you get a you know,
crummy jobs report this Friday, might you see yields moving
and equity markets moving up? Quite possibly, So we're back
into this mode of bad news. Might be some semblance
of good news, although I don't ever like to see
deterioration in the labor market.
Speaker 4 (04:07):
No, And the question is which job market do we get?
Speaker 2 (04:10):
Because from April through August, that five month reporting period,
four out of those five jobs reports showed fewer than
one hundred and fifty thousand jobs created, which is where
you start getting concerned. You start floating around like one
hundred thousand and ninety eight thousand. You had a seventy
eight thousand in August, You're kind of like, this is,
you know, approaching stall speed. The last three you've gone
(04:31):
two fifty five thirty six. Remember October was when we
had the hurricane, so we kind of tossed that out
and now to twenty seven. So the question is, Okay,
if you average that two twenty seven and thirty six,
which I think you kind of have to because you know,
like we talked about how the October number was hot
(04:52):
garbage for you know, hurricane related reasons. Okay, you're still
like one hundred and twenty five thousand on average there,
and so you've got this one outlier to the upside
in September, and other than that, it really has not
been impressive for the last six months now.
Speaker 3 (05:07):
Right, So when do you start labeling this as Trump's fault?
Because I was talking to Vinnie Penn the other day and.
Speaker 2 (05:13):
He was saying, oh, we already have to get into
that on on on I think so the third you know,
business day of the year, we're already getting into like
who's the blame for this?
Speaker 3 (05:21):
Vinny Penn was telling me that he posted on Facebook
or Instagram that his Duncan coffee went up by eleven cents,
and somebody commented, welcome to the Trump economy, and he
found that quite humorous.
Speaker 2 (05:34):
We still can't do thanks Obama. Yeah, I mean sure,
you know, like I'm kind of hoping we can do.
Speaker 4 (05:39):
That for like our entire life.
Speaker 3 (05:40):
It's just like a nice meme that continues, you know,
or I don't know, so in any case, Thanks Lincoln.
There will be some Fed speakers this week, there will
be a few other data points, but really what matters
out of this week is the Friday jobs report. That's
the end all be all for the week in terms
of its impact and effect on the overall economy and markets.
(06:04):
For what we are looking for this.
Speaker 2 (06:06):
Week, Yeah, I think everything else, as you mentioned, is
going to dovetail off of what we get in that report. Now, granted,
you do still have some significant volatility in markets right now. Sure,
just as an example, like you take a look at
what we saw and granted this was on very low volumes,
but you look at like what we saw last week
(06:27):
and the last day of twenty twenty four saw like
a two percentage point swing from high to low and closed.
You know, in the middle of that range, you saw
a significant upward swing on Friday, like it's there's some
volatility out there. But despite that, we get back to
my favorite Shakespeare quote. This market has been full of
(06:49):
sound and fear, a signifying nothing. It has been within
a two percent trading range since the election. It has
not gone below fifty eight hundred actually about a call
it three and a half percent range. Now, it's not
gone below fifty eight hundred or above sixty one hundred.
It's just hanging out there and spent most of its
time really between like fifty nine hundred and six thousand,
(07:09):
in about a two percent range. And so you look
at this and you say, what what do you make
of this market? And the answer is, hey, there is
no catalyst driving it forward at this point. The story
that has driven the last twelve months has been, hey,
(07:31):
people thought that twenty four was going to be, you know,
potentially a crappy year with slow growth. The growth has
been fast and earnings have been good, and that's driven markets,
and earnings expectations have expanded as well.
Speaker 3 (07:42):
So let's yeah, let's define that. Because I was asking
Paul this as well going into twenty twenty four, it
seemed to me that the expectation was for let me
think about the risk to the twenty twenty four economy
was do we get that recession that people were worried
about since twenty twenty two.
Speaker 2 (07:59):
We talked aout heading into Q four of twenty three, yep,
where we were entering that tipping point, and the data
that we got in Q four, you and I said, Hey,
this is good enough. The recession is not going to
be here. And the market picked that up over the
course of the year.
Speaker 3 (08:12):
And the excitement about twenty twenty four was, Oh, we've
got you know, some companies that are doing some really
innovative stuff on artificial intelligence, and you know, a lot
of different growth in terms of you know, a market
that can continue to chug along there, but with that
tail risk of recession. If we define the narrative going
into twenty twenty five, how do you see it, Chuck,
(08:33):
Because I see it as a investors taking a look
at twenty five and seeing enormous opportunity from deregulation, tax
cuts with a tail risk of inflation, I think is
the overall narrative. And so if I think of that
wall of worry that you need to climb in order
for markets to surprise, you to the upside again, it
(08:53):
would be Okay, do you get some of those positives
without that inflationary tail risk?
Speaker 4 (08:58):
Yeah, I think ultimate.
Speaker 2 (09:01):
I look at, hey, what's projected for earnings growth? Because
as good friend Larry a couple of likes say, earnings
are the mother's milk of stocks. Calendar youar twenty twenty
five fact set, which is a data aggregator consensus earnings
estimate growth is at fourteen point eight percent. So it's saying, yeah,
you are going to see like some steep earnings growth,
(09:23):
Like that's that's fast. If you look at the long
term historical average for earnings growth, it's half that. It's
less than half that. Actually it's around seven percent. And
so actually I think it's around four percent. Like I'll
get into it later, but this is projecting a really
fast year of earnings growth. And the risk is that
(09:44):
for whatever reason, that doesn't develop. Because you're priced for
you're priced right now, sitting here today, and this was
at this was on January third, so it was Friday.
Forward pe ratio for the S and P five hundred,
So S and P price divided by next twelve months
projected earnings.
Speaker 4 (10:04):
It was twenty one point four x.
Speaker 2 (10:06):
Which is steep. Yeah, okay, it's it's a steep valuation.
Doesn't mean that you know, things fall apart tomorrow.
Speaker 4 (10:12):
I've said this before.
Speaker 2 (10:12):
Evaluation is a horrible predictor of what's going to happen.
You know, in markets, they can remain in the short term,
medium term, it can be.
Speaker 4 (10:20):
Long term, it can be more predictive.
Speaker 3 (10:22):
Yeah, but yeah, short term kind of useless.
Speaker 2 (10:25):
So ultimately you look at this and you say, Okay,
it's a steeply priced market with high expectations for earnings growth.
If something causes that to falter, and that something could
be higher inflation, lower margins, lower sale like whatever it is.
You know, recession. You can play out a million different things,
both getting stuck in the Suez Canal. Sure, weird stuff happens.
(10:50):
We know this at this point. The risk here is that, hey,
those earnings projections have to come in and that multiple
needs to come in, and so you end up with
a potential downturn as as a result of it. Do
stock market downturns last forever?
Speaker 4 (11:04):
Generally?
Speaker 1 (11:04):
No?
Speaker 2 (11:06):
I say generally, because I leave open the possibility that
there's something we haven't seen yet. Because you never know
what you're gonna get, but generally, no, they don't last forever.
So again, this is the stage with which we're entering,
you know, twenty twenty five, and we've got a wide
range of outcomes here because you've got policy uncertainty on
(11:28):
the Fed side, no one quite knows what the Fed's
gonna do this year, sure, And on the fiscal and
trade side of things, you got a new administration that
starts two weeks from today, and we're still searching for
clues as to exactly what policy is going to be implemented.
Washington Post was out with a report today, Hey, Trump
administration is considering tariffs on all countries, but targeted at
(11:50):
a few, you know, small areas. Trump comes out with
a tweet Washington Post is lying, they don't know what
I'm gonna do, So like, yeah, we don't know what's
going to happen right now, and we need a little
bit of humility as a result of that.
Speaker 4 (12:05):
Let's take a quick break here.
Speaker 2 (12:06):
When we come back, we'll talk about what is going
on in the job market.
Speaker 1 (12:10):
Right after this, well streamwatch a full update on the
markets performance today week days of ten thirty only here
on the Financial Exchange Radio Network text us six one
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and questions about today's show and let us know what
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the Financial Exchange Radio Network.
Speaker 5 (12:34):
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Speaker 4 (13:10):
Piece from the Wall Street Journal.
Speaker 2 (13:13):
Unemployed office workers, we're having a harder time finding new jobs.
Speaker 4 (13:16):
This messages with the data and.
Speaker 2 (13:19):
Stories that we've been seeing over the past really like
nine months, I think probably since like the start of
Q two in that people are reporting staying on unemployment longer.
They're having a harder time finding new work.
Speaker 4 (13:35):
And this is.
Speaker 2 (13:38):
This is I think the main evidence that we have
of the slowdown in the labor market right now, because
the unemployment rate, even though it you know, moved up
last month, that's kind of stabilized over the last four
or five at least. There's no clear trend there right now,
and we're not seeing an uptick in new unemployment claims.
Speaker 4 (13:56):
It's just people are longer.
Speaker 3 (13:59):
Yes, that stagnant is the word that I've used a
few times now. And you know the stats behind this.
More than one point six million of those jobless workers
that are out there, there's seven million people who are unemployed.
One point six million are saying that it's taken them
at least six months, so they've been they've been unemployed
for six months or more. And that's a big number
(14:20):
in recent history. That numbers up more than fifty percent
since the end of twenty twenty two, that portion of
or that number of workers who have been unemployed for
six months or more. We're seeing it in a few
concentrated areas, but you know some that I think would
find surprising, Like certainly, if you work in recruiting for tech,
it's going to be it's been a tough time to
find to find work, but really across the board, in
(14:42):
a few specific areas you're not seeing as much hiring.
So job postings on DEED for software development, data science,
marketing roles, those are all at least twenty percent below
the pre pandemic levels of job openings.
Speaker 4 (14:55):
Can we talk.
Speaker 2 (14:55):
About something there that I just yes, it struck me recently.
What's the main thing that big tech is working on
right now? And in the places that like big tech
is talking about using it? Isn't it in those exact workers?
Speaker 3 (15:12):
So, like, isn't there this horrible thing where like science
and marketing rules?
Speaker 2 (15:16):
Yeah, isn't there a horrible thing where the company that
you're working for is building your extinction?
Speaker 3 (15:24):
Yeah, it's not fun. Like isn't that just like wild?
Speaker 1 (15:28):
Yeah?
Speaker 2 (15:29):
Not like outsourceing, but like no, we're building things that
can you know, write stuff for marketing handle data science,
and you know, like they're building their replacement they are. Yeah,
and what if those jobs don't come back? Well, that's
the entire promise of artificial intelligence.
Speaker 4 (15:47):
I know.
Speaker 2 (15:48):
But what if this is like the cutting edge of
what we're seeing here and what does it mean over
the next decade. I'm not saying that that will be
the case, but I.
Speaker 3 (16:00):
Refuse to believe that definitively at least that you know,
what we are seeing here is purely the effect of
artificial intelligence. Yet again, evidence starts to stack up, and
you know, it's still early on, but it very well
could be. You know, the overall hiring rate in the
information industry generally it's thirty percent below the pandemic. Finance
(16:22):
hiring twenty eight percent below the pandemic. That's an area
in finance, at least where I have a tougher time
drawing the AI line.
Speaker 4 (16:32):
I know there falls into that category because.
Speaker 3 (16:34):
Like investment banking would I'm sure corporate finance roles at
most companies, accounting roles at most companies would account there.
So I believe that it might be happening in areas
like investment banking to some degree. But generally, speaking from
what I have heard, if you are a large banker
financial institution, your approach to the use of artificial intelligence
(16:55):
is very conservative and slow.
Speaker 4 (16:57):
Right now, I.
Speaker 2 (16:58):
Guess I'm wondering more, you know, finance, does that get
wrapped up in like mortgage origination, because if that does
how much of that is just because rates are high
in no one's refinancing right now.
Speaker 3 (17:09):
Yeah. So, where you have seen a lot of the
job growth over the last twelve months, health care and government.
That's where on the government side, it's not as though
the total number of employee employees have greatly expanded over
the last six years. It's merely that those jobs could
not be hired for during the crazy stages of COVID,
(17:29):
when people were getting wage increases all over the place.
Guess what government jobs were not getting big wage increases.
They lost a lot of people. Healthcare, same story, big
catch up period of time. A lot of nurses got
burnt out and retired, or a lot of people just
in the healthcare sector in general moved out during the
last five years, and they're making up for the last
time there. But at some point you do make up
(17:51):
for that lost time, and you cannot. I would assume
that government jobs are not going to be the uh,
the tide that lifts all boats for the next three
years in terms of jobs.
Speaker 4 (18:05):
You wouldn't expect it to be.
Speaker 3 (18:06):
No, nor would you really want it to be if not,
I'm being honest.
Speaker 2 (18:10):
No, So I think the message on the job market
that I continue to get is there's no signs of
the bottom falling out, but there's also no real sign.
Speaker 4 (18:24):
Of improvement there either.
Speaker 2 (18:26):
I mean, it's just it's very messy and very slow,
and I think people are generally hunkering down and saying, look,
I'm comfortable where I am, and even if I'm not,
I can't really find much else. And if you are
looking for work, it's a slog right now. Yeah, and
(18:47):
this is this is before we even get to Hey,
you've started to see residential construction, you know, numbers as
far as units under construction dropping the last six months,
but residential construction and plot has not dropped off yet.
Speaker 4 (19:02):
That's a strange.
Speaker 2 (19:03):
Divergence that you don't normally see, so that I'm trying to,
you know, also look at that and say, hey, there
is another shoe that hasn't maybe dropped here. But I
can't reconcile a lot of this right now.
Speaker 4 (19:16):
It's still just messy. Let's take a quick break here.
Speaker 2 (19:21):
When we come back, we're gonna do a little bit
of Wall Street Watch, and then we're talking a Social
Security update right after this.
Speaker 1 (19:42):
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 5 (20:01):
All markets are rallying to begin the week as investors
ready for a big week ahead, including jolts tomorrow, FED
meet in minutes on Wednesday in the December jobs report
on Friday.
Speaker 4 (20:12):
At the moment, the Dow is up by.
Speaker 5 (20:15):
Six tenths of a percent, or two hundred and fifty
nine points, SMP five hundred up over one percent or
sixty eight points in the NASDAC rallying big time today,
up one in three couarters of a percent or three
hundred and forty nine points. Russell two thousand is up
by nearly three quarters of a percent as well. Ten
year treasure yield up by four basis points at four
(20:35):
points sixty three percent, and crude oil up about one
percent higher today at seventy four dollars and sixty nine
cents a barrel. Several chip makers are seeing gains today
after fox Conn, who is a key assembler of Nvidia
and Apple products, reported record revenue for the fourth quarter.
In Nvidia up by five percent, Micron Technology shares up
(20:57):
by ten percent in broadcast, and AMD are up by
three percent.
Speaker 4 (21:03):
Meanwhile, news out.
Speaker 5 (21:04):
Of the media world this morning where Disney's Hulu plus
Live TV will be combined with streamer Fubo, merging together
two internet TV bundles. The two companies announced this morning
the venture will be thirty percent on by Fubo and
seventy percent by Disney and form the second largest digital
pay TV provider after YouTube TV. Fubo shares rallying one
(21:27):
hundred and sixty percent, while Disney shares up by one percent. Elsewhere,
Bueing was upgraded to overweight a Barclays, where the firm
said a tough twenty twenty four for Boeing stock could
give way for a rebound in the new year on
strong deliveries and production. Boeing shares are up by about
a half a percent and as reminder, equity markets will
(21:47):
be closed on Thursday to mourn the death of former
President Jimmy Carter.
Speaker 4 (21:52):
I'm Tucker Silvan.
Speaker 1 (21:53):
That's Wallstreet Watch.
Speaker 2 (21:54):
Talk a little bit about the Social Security Fairness Act,
which was signed into law by President Biden yesterday. This
is the bill that Basically what it does is it
gets rid of the Windfall Elimination Provision and the Government
Pension Offset, the WEB and the GPO that have been
(22:16):
in place since the nineteen eighties when they were put
in place to try to shore make some security more sustainable.
Speaker 3 (22:23):
So by Reagan, yes, or under Reagan. Under Reagan, I
don't think he drafted the bill.
Speaker 2 (22:29):
People always forget that Reagan actually like raised taxes, Like
this wasn't a tax raised, but it kind of was
because you ended up paying into the system and not
getting anything. So by default it's kind of the same thing.
But Reagan, Bush and Clinton all raised taxes. This was
back when we actually, you know, dealt with the deficit sensibly.
And since then you've had Bush two who cut taxes,
(22:52):
Obama who let some of the Bush tax cuts expire
but not all of them. Yeah, and then also pushed
you know, a whole bunch of other spending through the
Affordable Care Act Sure, and then Trump who cut taxes,
Biden who campaigned on raising taxes but didn't raise taxes
and in fact added more.
Speaker 3 (23:08):
Spending, gramatically added more spending.
Speaker 2 (23:09):
And now you have Trump coming in saying I'm going
to cut taxes again and hopefully try to manage it
based on lowering government spending. But there's not really a
great track record of lowering government spending research.
Speaker 3 (23:20):
So, if we may, let's spend a minute, assuming that
some of our listeners have no idea what the WEB
or GPO are. If you live in the state of Alaska, Colorado, Louisiana, Maine, Massachusetts, Nevada,
or Ohio, listen up in particular, because pretty much all
of the state employees in those seven states do not
(23:40):
pay into Social Security while they work.
Speaker 4 (23:43):
Correct.
Speaker 3 (23:44):
There are many other states where some of those workers do,
some of them don't. Maybe the firefighters or cops in
your state do or don't pay into Social Security. But
here's the deal. Let's imagine for a moment that you
are a Massachusetts police officer who worked for the force
for thirty years. You worked for the Commonwealth of Massachusetts,
you get a pension. You did not pay into Social
(24:05):
Security for any of that period of time.
Speaker 4 (24:06):
Yep.
Speaker 3 (24:07):
You then leave the police force and you go work
in private security for the last fifteen years of your
career because you had a forty five year career, and
during those fifteen years you do pay into Social Security
for a period of time. Under the windfall lamination provision,
your social Security benefits would be dramatically lowered because you
spent thirty years in the public sector. Even though hey,
(24:28):
I worked, I paid into Social Security. My social Security
benefit already accounts for the fact that I only spent
fifteen years in the private sector. It uses an average
of my highest thirty earnings years, and so it's already
lower because of that. But the web hit my benefit
and lowered it because of my work in the public sector.
Speaker 2 (24:45):
And a lot of times that the impact you're talking
like seventy to ninety percent.
Speaker 4 (24:49):
Of the benefit is reduced.
Speaker 3 (24:50):
The GPO, the government pitchan offset works in a different way.
Let's assume here for a minute that you spent your
entire career in the workforce, never paid into Social Security yep.
But your but your husband did husband worked in whatever
accounting for a private firm. You would be normally eligible
for a spousal Social Security benefit off of your husband's
(25:11):
work as a police officer for the state of Massachusetts.
You would have that benefit in most cases entirely eliminated yep.
Because of that government pension offset. Both of those things
going away. So in particular for workers in Maine, Massachusetts.
I mean, look, everybody knows somebody who worked for the state,
and so a teacher, a police officer, a firefighter, like,
(25:33):
we all know those people, and those people are in
particular are going to be benefited a lot by this,
and it's going to really reshape a lot of their
retirement because in many cases, this is not twenty bucks
a month, right, this is hundreds of dollars a month,
if not thousands of dollars in a month in so
security benefits that are suddenly going to be eligible for
starting in twenty twenty five, actually before that, So this
(25:57):
impacts all benefits after December of twenty twenty three.
Speaker 2 (26:01):
So you're actually going to see people impacted by this.
They will receive a lump sum check orm sum payment
for all of twenty twenty four to make up that
shortfall and then start receiving the benefits again basically effective immediately.
Speaker 3 (26:15):
So obvious good news. If you are affected by one
of these eliminations that are no longer going to be
in place, bad news. I don't think we already spelled
it out for you. So Security Trust Fund is going
to run out in like eight or nine years. Anyway,
this just shortens the lifespan, not significantly. There's not you know,
there's not twenty million workers that are subject to this
in one way, shape or form. It's a relatively small
(26:36):
group because, like I said, only seven states predominantly play
to this. But for those that are impacted, it can
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(26:57):
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Speaker 1 (27:39):
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Speaker 2 (27:54):
Mike, why will Japan can? Why does Japan continue trying
to invest in the United Slime States?
Speaker 3 (28:02):
Because it's one of the most attractive places to invest
for just about any investor, and we also have fairly
good relations with Japan.
Speaker 2 (28:09):
Let me give you a different question, just because this
is the title of this New York Times piece, was
why Japan won't stop trying to invest in the US?
Speaker 3 (28:17):
Yeah, I guess. The The piece here also was, hey,
will the nip On Steel deal getting rejected change Japanese
views on investment in the United States? And my answer
would be almost certainly.
Speaker 4 (28:29):
Not, probably not.
Speaker 2 (28:30):
They want to generate investment returns, and ultimately they view.
One way to do so, as you know, taking stakes
in American companies or buying them outright. Let me ask
you a different question, why did nip On Steel want
to buy us Steal given the fact that US Steal
has basically said, look, without this merger, we're not sure
(28:51):
we're going to be able to continue to exist.
Speaker 3 (28:54):
I don't have an answer that question.
Speaker 2 (28:55):
Can you tell me no other than hey, we you know,
we can operate economy of scale and sure, but when
you talk about, hey, there's better opportunities for growth, yeah,
US steel is not one of.
Speaker 3 (29:07):
The manufacturing in the United States. Doesn't seem like a
great growth opportunity, I suppose, But I suppose one way
to look at it would be I'd be willing to
bet that if there were one industry the United States
government is willing to protect and to subsidize and to fund,
it would be manufacturing of steel products within its borders.
(29:27):
And so maybe nip On was looking at it from
that perspective as, Hey, it might not be a huge,
huge growth industry, but we're likely to receive subsidies and
basically be guaranteed to find a way to exist in
this industry. Should we stay on the right side of
the US government, which won't happen because the US government
has now blocked the deal.
Speaker 4 (29:45):
Let's take a quick break here.
Speaker 2 (29:46):
When we come back, let's discuss a little bit more
detail what the Washington Post is reporting about Trump and
tariffs right after this.
Speaker 1 (29:57):
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(30:20):
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Speaker 2 (30:35):
Washington Post, citing three people familiar with discussions but who
all contributed anonymously, indicated this morning that President elect Trump
is considering a tariff plan that would only tariff targeted industries,
but would apply to all imports from all countries. Now, obviously,
(30:57):
this would be a departure from the Broad Bay tariffs
that the Trump campaign had been discussing previously. This piece,
he says, Trump's transition team didn't immediately respond to a
request for comment. I can however, tell you that the
president himself or the President elect himself did respond via
(31:18):
I don't know what online portal this was, just because
I'm not snapchat. It was, yes, snapface, I believe, or
maybe my chat. But in any case, the president did respond,
and I want to get his exact quote right, just
because it's important to Here we go, the story in
the Washington Post, quoting so called anonymous sources which don't exist,
(31:39):
incorrectly states that my tariff policy will be paired back.
That is wrong. The Washington Post knows it's wrong. It's
just another example of fake news. So nobody knows anything.
Speaker 4 (31:53):
Yeah, I mean, like.
Speaker 3 (31:54):
This isn't a typical, especially of a Trump administration. And
I mean, would anybody be shocked if this did come
to come to pass?
Speaker 1 (32:06):
I mean, I.
Speaker 3 (32:06):
Guess part yes, the a paired down version of the tariffs.
It would not shock me one little bit were that
the case. But clearly, incoming President Donald Trump wants to
go to the negotiating table with the assumption that there
will be universal tariffs on all countries of ten to
twenty percent. And if he walks that back a little
bit as a negotiating tactic, great, But I'm certain he
(32:28):
doesn't want that being reported on and anybody going into
negotiations with that presumption. But again, I think you should really,
as we've talked about, take somebody at their word. If
he's saying I've said this for a while, I intend
to impose tariffs at ten to twenty percent on every
country for all products coming into the United States. That
assume that that's going to be.
Speaker 2 (32:46):
The case, right, I think that there's a baseline assumption,
assumption that you need to work from. Now, whether it's
the exact amount or whether it's phased in or how
it you know, exactly it ends up playing out. Okay,
there's room for interpretation there, but the guy's been pretty
consistent on this for the last year. The rate has
(33:06):
differed the implementations there. Like, I'm not saying we know
any of the specifics, but also look at the people
that are coming on board and what they've talked about.
The incoming Treasury Secretary has talked about using broad based
tariffs to you know, try to rebalance things from a
trade perspective. The incoming head of the Council of Economic
(33:27):
Advisors has talked about how broad based tariffs can you know,
help to reverse decades of trade imbalances. When people tell
you who they are, you have to believe them. Now,
whether it's going to work or not, I don't know.
I'll be the first to admit I'm not gonna sit
here and be like, no, this can never work, because
(33:48):
I admit that I'm not a super genius who knows everything.
It could work, it could go very badly, or it
could not be implemented and will never know.
Speaker 4 (33:57):
I don't know. But everyone has this rush to like
stake out.
Speaker 2 (34:04):
Their their claim of like where they're gonna be and
what's gonna Nobody knows anything.
Speaker 3 (34:08):
I'll stake Wait, I'll stake some sort of claim. Should
the seriousness of these tariffs get to the point where
markets begin to react negatively, and by that I mean
like a signet. I'm not talking about, oh, the stock
market went down by half percent for a day.
Speaker 2 (34:21):
You're talking like ten to fifteen percent pullback or more.
Speaker 3 (34:24):
Then I suspect that there will be some real conversation
about watering them down. Until something like that happens. Then
we're going to continue to get this narrative from the
incoming Trump administration, and I think they'll stick that way
until there is evidence of people being genuinely concerned about it.
And I don't see any evidence of that today.
Speaker 4 (34:40):
I'm not sure.
Speaker 2 (34:41):
I hear you, I I everyone that I talk to
who is plugged into that universe. Yep, it's talking about
how they're they're resolute, and they're emboldened and and YadA YadA, yep.
And maybe maybe I'm getting Charlie browned, but I'm that
I'm buying that people are underestimating what's going to happen here.
(35:05):
The underestimation has like has me potentially overestimating in the
opposite direction. It's possible, but uh, two weeks, well, I
don't know.
Speaker 4 (35:16):
If we'll know in two weeks.
Speaker 3 (35:17):
No, we won't know anything about terrorists.
Speaker 2 (35:19):
They're probably not gonna announce it, like the evening of
the inauguration would be my guess.
Speaker 4 (35:24):
Maybe during a speech, first just.
Speaker 3 (35:32):
List every country individually.
Speaker 4 (35:35):
Wouldn't it be.
Speaker 3 (35:35):
Great if just the incoming president, Donald Trump listing countries
for the last forty minutes, one.
Speaker 2 (35:40):
Hundred ninety three countries, and then at the end just
ten percent.
Speaker 4 (35:47):
I don't know.
Speaker 2 (35:49):
I get kind of a kick out of it, But again,
I'm the one who wanted the Fed to just raise
rates five percent right at the beginnings. Indeed, let's see
US yields hit fourteen month high before one hundred nineteen
billion dollars in debt sales. So we've got bond yields
that have been moving up over the last two months now,
pretty much since the election. They had a brief break
in late November where they moved lower, but have you know,
(36:12):
resumed their upward move over the last month now. And
this is a place where I do think yields maybe
off sides to the upside a little bit, because everyone's
talking about like, oh, the debt's unsustainable and this and that,
and there's so much debt that needs to be rolled over,
and there's gonna be inflation because of tariffs and YadA, YadA, YadA.
(36:33):
The number one thing that tends to drive yields in
the long run, not like at every you know, week,
month or whatever, is the overall growth rate of the
United States. And Michael, I don't know if you've taken
a look at the Atlanta Fed's GDP now number lately.
Speaker 4 (36:49):
No I have.
Speaker 2 (36:51):
I was Actually I'm the idiot who on his vacation
gets push notifications from the Atlanta Fed as to what
GDP now is currently reading.
Speaker 3 (37:02):
That might be the nerdiest thing I know about it.
Speaker 2 (37:04):
If you think I'm joking, Mike, If you think I'm joking,
I'm not.
Speaker 4 (37:10):
What is that moment that you like?
Speaker 2 (37:11):
What is this one from Friday eleven, twenty nine, Am
read right here? Just read It's the second from the bottom.
Your screen blank out, so I can't so OKAYT try
that again?
Speaker 4 (37:21):
No, no, here you go, Here you go.
Speaker 2 (37:23):
It's uh, it's it's coming up in just a second.
Speaker 5 (37:25):
I'm more surprised they send out notifications in the first place.
Speaker 3 (37:27):
Here you go, the one that says Q four GDP
growth Q four GDP growth On January third, the GDP
now model estimate for real GDP growth in the fourth
quarter of twenty twenty four is two point to four percent,
down from two six on January second.
Speaker 4 (37:39):
Thank you.
Speaker 3 (37:39):
That is exciting stuff.
Speaker 2 (37:41):
So that's what I get when I'm sitting by the pool, Yes,
is which I kind of like because it keeps me
plugged in. I turn all my other notifications off, but
I keep the Atlanta Fed Really like those guys.
Speaker 3 (37:51):
Yeah, anyways, true super fan.
Speaker 2 (37:54):
So actually I don't want one of them, but the
Saint Louis fed does make t shirts. Yeah, any time
to get In early December, GDP now was showing three
point four percent growth. It's now at two four. There
has been a deceleration in the data over the last
month and bonds are not picking up on it. Whether
(38:15):
that's proven right or wrong.
Speaker 4 (38:17):
We'll see.
Speaker 2 (38:18):
But growth does appear to be slowing now and bonds
are moving.
Speaker 4 (38:21):
The other way.
Speaker 2 (38:22):
Quick break here. We've got more financial exchange coming up.
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(01:06):
Chuck Zada and Mike Armstrong.
Speaker 2 (01:11):
If you thought that this was gonna be the first
full week of trading for twenty twenty four, you're wrong.
Mark's gonna be closed on Friday in observe, rather on
Thursday in observance of the final day of Jimmy Carter's
state funeral. And so we still cannot get to a
full week of trading. Third week in a row that
we do not have a full week of equity trading,
(01:33):
at least in markets. It's Chuck, Mike and Tucker with you,
and so that obviously, does, you know, disrupt the trading schedule.
I know that's not really the thing we should be
concerned about generally with the funeral, There's one thing that
you should be concerned about, and that's paying respect to
someone who's had a life well lived, and so that
is ultimately the important thing.
Speaker 3 (01:55):
It's a weird series of closures too. So you've got
these st exchange closed, the bond market is open but
closes early. Banks are open, the post office is open
but closing early as well, I believe, So.
Speaker 2 (02:10):
Continue the jobless claims data is gonna be on Wednesday
instead of Thursday.
Speaker 4 (02:14):
Now, so even the bls.
Speaker 3 (02:15):
Getting government agencies are closed. Yeah, so you've you've got
some stuff. They still have fed.
Speaker 2 (02:21):
Speeches scheduled for Thursday. There's five of them. Yeah, you know,
and I'm pretty sure they were a government agency, so yeah,
we're pretty sure they weren't invited to speak at the funeral,
so who knows what they're going to be talking about.
Speaker 4 (02:33):
But like.
Speaker 2 (02:36):
Again, this is my first day back in twenty twenty five,
all fired up, and you gotta have five fed speakers
on the day of an ex president's funeral.
Speaker 4 (02:44):
Are you kidding me? Read the room, people, You can't
push them to Friday.
Speaker 3 (02:49):
Yeah, read the room.
Speaker 4 (02:50):
What are we doing here?
Speaker 2 (02:52):
But in any case, so in terms of things to
actually watch this week, the big one is gonna be
the job support on Friday.
Speaker 4 (02:59):
We're gonna get it.
Speaker 2 (02:59):
AM previous jobs report just as a recap, two hundred
and twenty seven thousand jobs created, but the an employment
rate moved up to four point two percent. That's because
these are two different surveys that produce those two different results. Yeah,
consensus estimate right now between one hundred and sixty and
two hundred thousand jobs created with the unemployment rate being
(03:21):
at four to two or four to three. That's what
the expectation is for this job's report here.
Speaker 3 (03:27):
So you know, looking top down for you know, a
general view of the labor market would be that's pretty
darn good, is hey, You're creating jobs in the two
hundred thousand range and the unemployment rate is sticking around
four point two percent. Interestingly, you know what markets seem
most concerned about today happens to be interest rates. We've
(03:48):
talked at length about where the ten year treasury is gone,
where mortgage rates have gone. If you get a you know,
crummy jobs report this Friday, might you see yields moving
and equity markets moving up? Quite possibly, So we're back
into this mode of bad news. Might be some semblance
of good news, although I don't ever like to see
deterioration in the labor market.
Speaker 4 (04:07):
No, And the question is which job market do we get?
Speaker 2 (04:10):
Because from April through August, that five month reporting period,
four out of those five jobs reports showed fewer than
one hundred and fifty thousand jobs created, which is where
you start getting concerned. You start floating around like one
hundred thousand and ninety eight thousand. You had a seventy
eight thousand in August, You're kind of like, this is,
you know, approaching stall speed. The last three you've gone
(04:31):
two fifty five thirty six. Remember October was when we
had the hurricane, so we kind of tossed that out
and now to twenty seven. So the question is, Okay,
if you average that two twenty seven and thirty six,
which I think you kind of have to because you know,
like we talked about how the October number was hot
(04:52):
garbage for you know, hurricane related reasons. Okay, you're still
like one hundred and twenty five thousand on average there,
and so you've got this one outlier to the upside
in September, and other than that, it really has not
been impressive for the last six months now.
Speaker 3 (05:07):
Right, So when do you start labeling this as Trump's fault?
Because I was talking to Vinnie Penn the other day and.
Speaker 2 (05:13):
He was saying, oh, we already have to get into
that on on on I think so the third you know,
business day of the year, we're already getting into like
who's the blame for this?
Speaker 3 (05:21):
Vinny Penn was telling me that he posted on Facebook
or Instagram that his Duncan coffee went up by eleven cents,
and somebody commented, welcome to the Trump economy, and he
found that quite humorous.
Speaker 2 (05:34):
We still can't do thanks Obama. Yeah, I mean sure,
you know, like I'm kind of hoping we can do.
Speaker 4 (05:39):
That for like our entire life.
Speaker 3 (05:40):
It's just like a nice meme that continues, you know,
or I don't know, so in any case, Thanks Lincoln.
There will be some Fed speakers this week, there will
be a few other data points, but really what matters
out of this week is the Friday jobs report. That's
the end all be all for the week in terms
of its impact and effect on the overall economy and markets.
(06:04):
For what we are looking for this.
Speaker 2 (06:06):
Week, Yeah, I think everything else, as you mentioned, is
going to dovetail off of what we get in that report. Now, granted,
you do still have some significant volatility in markets right now. Sure,
just as an example, like you take a look at
what we saw and granted this was on very low volumes,
but you look at like what we saw last week
(06:27):
and the last day of twenty twenty four saw like
a two percentage point swing from high to low and closed.
You know, in the middle of that range, you saw
a significant upward swing on Friday, like it's there's some
volatility out there. But despite that, we get back to
my favorite Shakespeare quote. This market has been full of
(06:49):
sound and fear, a signifying nothing. It has been within
a two percent trading range since the election. It has
not gone below fifty eight hundred actually about a call
it three and a half percent range. Now, it's not
gone below fifty eight hundred or above sixty one hundred.
It's just hanging out there and spent most of its
time really between like fifty nine hundred and six thousand,
(07:09):
in about a two percent range. And so you look
at this and you say, what what do you make
of this market? And the answer is, hey, there is
no catalyst driving it forward at this point. The story
that has driven the last twelve months has been, hey,
(07:31):
people thought that twenty four was going to be, you know,
potentially a crappy year with slow growth. The growth has
been fast and earnings have been good, and that's driven markets,
and earnings expectations have expanded as well.
Speaker 3 (07:42):
So let's yeah, let's define that. Because I was asking
Paul this as well going into twenty twenty four, it
seemed to me that the expectation was for let me
think about the risk to the twenty twenty four economy
was do we get that recession that people were worried
about since twenty twenty two.
Speaker 2 (07:59):
We talked aout heading into Q four of twenty three, yep,
where we were entering that tipping point, and the data
that we got in Q four, you and I said, Hey,
this is good enough. The recession is not going to
be here. And the market picked that up over the
course of the year.
Speaker 3 (08:12):
And the excitement about twenty twenty four was, Oh, we've
got you know, some companies that are doing some really
innovative stuff on artificial intelligence, and you know, a lot
of different growth in terms of you know, a market
that can continue to chug along there, but with that
tail risk of recession. If we define the narrative going
into twenty twenty five, how do you see it, Chuck,
(08:33):
Because I see it as a investors taking a look
at twenty five and seeing enormous opportunity from deregulation, tax
cuts with a tail risk of inflation, I think is
the overall narrative. And so if I think of that
wall of worry that you need to climb in order
for markets to surprise, you to the upside again, it
(08:53):
would be Okay, do you get some of those positives
without that inflationary tail risk?
Speaker 4 (08:58):
Yeah, I think ultimate.
Speaker 2 (09:01):
I look at, hey, what's projected for earnings growth? Because
as good friend Larry a couple of likes say, earnings
are the mother's milk of stocks. Calendar youar twenty twenty
five fact set, which is a data aggregator consensus earnings
estimate growth is at fourteen point eight percent. So it's saying, yeah,
you are going to see like some steep earnings growth,
(09:23):
Like that's that's fast. If you look at the long
term historical average for earnings growth, it's half that. It's
less than half that. Actually it's around seven percent. And
so actually I think it's around four percent. Like I'll
get into it later, but this is projecting a really
fast year of earnings growth. And the risk is that
(09:44):
for whatever reason, that doesn't develop. Because you're priced for
you're priced right now, sitting here today, and this was
at this was on January third, so it was Friday.
Forward pe ratio for the S and P five hundred,
So S and P price divided by next twelve months
projected earnings.
Speaker 4 (10:04):
It was twenty one point four x.
Speaker 2 (10:06):
Which is steep. Yeah, okay, it's it's a steep valuation.
Doesn't mean that you know, things fall apart tomorrow.
Speaker 4 (10:12):
I've said this before.
Speaker 2 (10:12):
Evaluation is a horrible predictor of what's going to happen.
You know, in markets, they can remain in the short term,
medium term, it can be.
Speaker 4 (10:20):
Long term, it can be more predictive.
Speaker 3 (10:22):
Yeah, but yeah, short term kind of useless.
Speaker 2 (10:25):
So ultimately you look at this and you say, Okay,
it's a steeply priced market with high expectations for earnings growth.
If something causes that to falter, and that something could
be higher inflation, lower margins, lower sale like whatever it is.
You know, recession. You can play out a million different things,
both getting stuck in the Suez Canal. Sure, weird stuff happens.
(10:50):
We know this at this point. The risk here is that, hey,
those earnings projections have to come in and that multiple
needs to come in, and so you end up with
a potential downturn as as a result of it. Do
stock market downturns last forever?
Speaker 4 (11:04):
Generally?
Speaker 1 (11:04):
No?
Speaker 2 (11:06):
I say generally, because I leave open the possibility that
there's something we haven't seen yet. Because you never know
what you're gonna get, but generally, no, they don't last forever.
So again, this is the stage with which we're entering,
you know, twenty twenty five, and we've got a wide
range of outcomes here because you've got policy uncertainty on
(11:28):
the Fed side, no one quite knows what the Fed's
gonna do this year, sure, And on the fiscal and
trade side of things, you got a new administration that
starts two weeks from today, and we're still searching for
clues as to exactly what policy is going to be implemented.
Washington Post was out with a report today, Hey, Trump
administration is considering tariffs on all countries, but targeted at
(11:50):
a few, you know, small areas. Trump comes out with
a tweet Washington Post is lying, they don't know what
I'm gonna do, So like, yeah, we don't know what's
going to happen right now, and we need a little
bit of humility as a result of that.
Speaker 4 (12:05):
Let's take a quick break here.
Speaker 2 (12:06):
When we come back, we'll talk about what is going
on in the job market.
Speaker 1 (12:10):
Right after this, well streamwatch a full update on the
markets performance today week days of ten thirty only here
on the Financial Exchange Radio Network text us six one
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Speaker 4 (13:10):
Piece from the Wall Street Journal.
Speaker 2 (13:13):
Unemployed office workers, we're having a harder time finding new jobs.
Speaker 4 (13:16):
This messages with the data and.
Speaker 2 (13:19):
Stories that we've been seeing over the past really like
nine months, I think probably since like the start of
Q two in that people are reporting staying on unemployment longer.
They're having a harder time finding new work.
Speaker 4 (13:35):
And this is.
Speaker 2 (13:38):
This is I think the main evidence that we have
of the slowdown in the labor market right now, because
the unemployment rate, even though it you know, moved up
last month, that's kind of stabilized over the last four
or five at least. There's no clear trend there right now,
and we're not seeing an uptick in new unemployment claims.
Speaker 4 (13:56):
It's just people are longer.
Speaker 3 (13:59):
Yes, that stagnant is the word that I've used a
few times now. And you know the stats behind this.
More than one point six million of those jobless workers
that are out there, there's seven million people who are unemployed.
One point six million are saying that it's taken them
at least six months, so they've been they've been unemployed
for six months or more. And that's a big number
(14:20):
in recent history. That numbers up more than fifty percent
since the end of twenty twenty two, that portion of
or that number of workers who have been unemployed for
six months or more. We're seeing it in a few
concentrated areas, but you know some that I think would
find surprising, Like certainly, if you work in recruiting for tech,
it's going to be it's been a tough time to
find to find work, but really across the board, in
(14:42):
a few specific areas you're not seeing as much hiring.
So job postings on DEED for software development, data science,
marketing roles, those are all at least twenty percent below
the pre pandemic levels of job openings.
Speaker 4 (14:55):
Can we talk.
Speaker 2 (14:55):
About something there that I just yes, it struck me recently.
What's the main thing that big tech is working on
right now? And in the places that like big tech
is talking about using it? Isn't it in those exact workers?
Speaker 3 (15:12):
So, like, isn't there this horrible thing where like science
and marketing rules?
Speaker 2 (15:16):
Yeah, isn't there a horrible thing where the company that
you're working for is building your extinction?
Speaker 3 (15:24):
Yeah, it's not fun. Like isn't that just like wild?
Speaker 1 (15:28):
Yeah?
Speaker 2 (15:29):
Not like outsourceing, but like no, we're building things that
can you know, write stuff for marketing handle data science,
and you know, like they're building their replacement they are. Yeah,
and what if those jobs don't come back? Well, that's
the entire promise of artificial intelligence.
Speaker 4 (15:47):
I know.
Speaker 2 (15:48):
But what if this is like the cutting edge of
what we're seeing here and what does it mean over
the next decade. I'm not saying that that will be
the case, but I.
Speaker 3 (16:00):
Refuse to believe that definitively at least that you know,
what we are seeing here is purely the effect of
artificial intelligence. Yet again, evidence starts to stack up, and
you know, it's still early on, but it very well
could be. You know, the overall hiring rate in the
information industry generally it's thirty percent below the pandemic. Finance
(16:22):
hiring twenty eight percent below the pandemic. That's an area
in finance, at least where I have a tougher time
drawing the AI line.
Speaker 4 (16:32):
I know there falls into that category because.
Speaker 3 (16:34):
Like investment banking would I'm sure corporate finance roles at
most companies, accounting roles at most companies would account there.
So I believe that it might be happening in areas
like investment banking to some degree. But generally, speaking from
what I have heard, if you are a large banker
financial institution, your approach to the use of artificial intelligence
(16:55):
is very conservative and slow.
Speaker 4 (16:57):
Right now, I.
Speaker 2 (16:58):
Guess I'm wondering more, you know, finance, does that get
wrapped up in like mortgage origination, because if that does
how much of that is just because rates are high
in no one's refinancing right now.
Speaker 3 (17:09):
Yeah. So, where you have seen a lot of the
job growth over the last twelve months, health care and government.
That's where on the government side, it's not as though
the total number of employee employees have greatly expanded over
the last six years. It's merely that those jobs could
not be hired for during the crazy stages of COVID,
(17:29):
when people were getting wage increases all over the place.
Guess what government jobs were not getting big wage increases.
They lost a lot of people. Healthcare, same story, big
catch up period of time. A lot of nurses got
burnt out and retired, or a lot of people just
in the healthcare sector in general moved out during the
last five years, and they're making up for the last
time there. But at some point you do make up
(17:51):
for that lost time, and you cannot. I would assume
that government jobs are not going to be the uh,
the tide that lifts all boats for the next three
years in terms of jobs.
Speaker 4 (18:05):
You wouldn't expect it to be.
Speaker 3 (18:06):
No, nor would you really want it to be if not,
I'm being honest.
Speaker 2 (18:10):
No, So I think the message on the job market
that I continue to get is there's no signs of
the bottom falling out, but there's also no real sign.
Speaker 4 (18:24):
Of improvement there either.
Speaker 2 (18:26):
I mean, it's just it's very messy and very slow,
and I think people are generally hunkering down and saying, look,
I'm comfortable where I am, and even if I'm not,
I can't really find much else. And if you are
looking for work, it's a slog right now. Yeah, and
(18:47):
this is this is before we even get to Hey,
you've started to see residential construction, you know, numbers as
far as units under construction dropping the last six months,
but residential construction and plot has not dropped off yet.
Speaker 4 (19:02):
That's a strange.
Speaker 2 (19:03):
Divergence that you don't normally see, so that I'm trying to,
you know, also look at that and say, hey, there
is another shoe that hasn't maybe dropped here. But I
can't reconcile a lot of this right now.
Speaker 4 (19:16):
It's still just messy. Let's take a quick break here.
Speaker 2 (19:21):
When we come back, we're gonna do a little bit
of Wall Street Watch, and then we're talking a Social
Security update right after this.
Speaker 1 (19:42):
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 5 (20:01):
All markets are rallying to begin the week as investors
ready for a big week ahead, including jolts tomorrow, FED
meet in minutes on Wednesday in the December jobs report
on Friday.
Speaker 4 (20:12):
At the moment, the Dow is up by.
Speaker 5 (20:15):
Six tenths of a percent, or two hundred and fifty
nine points, SMP five hundred up over one percent or
sixty eight points in the NASDAC rallying big time today,
up one in three couarters of a percent or three
hundred and forty nine points. Russell two thousand is up
by nearly three quarters of a percent as well. Ten
year treasure yield up by four basis points at four
(20:35):
points sixty three percent, and crude oil up about one
percent higher today at seventy four dollars and sixty nine
cents a barrel. Several chip makers are seeing gains today
after fox Conn, who is a key assembler of Nvidia
and Apple products, reported record revenue for the fourth quarter.
In Nvidia up by five percent, Micron Technology shares up
(20:57):
by ten percent in broadcast, and AMD are up by
three percent.
Speaker 4 (21:03):
Meanwhile, news out.
Speaker 5 (21:04):
Of the media world this morning where Disney's Hulu plus
Live TV will be combined with streamer Fubo, merging together
two internet TV bundles. The two companies announced this morning
the venture will be thirty percent on by Fubo and
seventy percent by Disney and form the second largest digital
pay TV provider after YouTube TV. Fubo shares rallying one
(21:27):
hundred and sixty percent, while Disney shares up by one percent. Elsewhere,
Bueing was upgraded to overweight a Barclays, where the firm
said a tough twenty twenty four for Boeing stock could
give way for a rebound in the new year on
strong deliveries and production. Boeing shares are up by about
a half a percent and as reminder, equity markets will
(21:47):
be closed on Thursday to mourn the death of former
President Jimmy Carter.
Speaker 4 (21:52):
I'm Tucker Silvan.
Speaker 1 (21:53):
That's Wallstreet Watch.
Speaker 2 (21:54):
Talk a little bit about the Social Security Fairness Act,
which was signed into law by President Biden yesterday. This
is the bill that Basically what it does is it
gets rid of the Windfall Elimination Provision and the Government
Pension Offset, the WEB and the GPO that have been
(22:16):
in place since the nineteen eighties when they were put
in place to try to shore make some security more sustainable.
Speaker 3 (22:23):
So by Reagan, yes, or under Reagan. Under Reagan, I
don't think he drafted the bill.
Speaker 2 (22:29):
People always forget that Reagan actually like raised taxes, Like
this wasn't a tax raised, but it kind of was
because you ended up paying into the system and not
getting anything. So by default it's kind of the same thing.
But Reagan, Bush and Clinton all raised taxes. This was
back when we actually, you know, dealt with the deficit sensibly.
And since then you've had Bush two who cut taxes,
(22:52):
Obama who let some of the Bush tax cuts expire
but not all of them. Yeah, and then also pushed
you know, a whole bunch of other spending through the
Affordable Care Act Sure, and then Trump who cut taxes,
Biden who campaigned on raising taxes but didn't raise taxes
and in fact added more.
Speaker 3 (23:08):
Spending, gramatically added more spending.
Speaker 2 (23:09):
And now you have Trump coming in saying I'm going
to cut taxes again and hopefully try to manage it
based on lowering government spending. But there's not really a
great track record of lowering government spending research.
Speaker 3 (23:20):
So, if we may, let's spend a minute, assuming that
some of our listeners have no idea what the WEB
or GPO are. If you live in the state of Alaska, Colorado, Louisiana, Maine, Massachusetts, Nevada,
or Ohio, listen up in particular, because pretty much all
of the state employees in those seven states do not
(23:40):
pay into Social Security while they work.
Speaker 4 (23:43):
Correct.
Speaker 3 (23:44):
There are many other states where some of those workers do,
some of them don't. Maybe the firefighters or cops in
your state do or don't pay into Social Security. But
here's the deal. Let's imagine for a moment that you
are a Massachusetts police officer who worked for the force
for thirty years. You worked for the Commonwealth of Massachusetts,
you get a pension. You did not pay into Social
(24:05):
Security for any of that period of time.
Speaker 4 (24:06):
Yep.
Speaker 3 (24:07):
You then leave the police force and you go work
in private security for the last fifteen years of your
career because you had a forty five year career, and
during those fifteen years you do pay into Social Security
for a period of time. Under the windfall lamination provision,
your social Security benefits would be dramatically lowered because you
spent thirty years in the public sector. Even though hey,
(24:28):
I worked, I paid into Social Security. My social Security
benefit already accounts for the fact that I only spent
fifteen years in the private sector. It uses an average
of my highest thirty earnings years, and so it's already
lower because of that. But the web hit my benefit
and lowered it because of my work in the public sector.
Speaker 2 (24:45):
And a lot of times that the impact you're talking
like seventy to ninety percent.
Speaker 4 (24:49):
Of the benefit is reduced.
Speaker 3 (24:50):
The GPO, the government pitchan offset works in a different way.
Let's assume here for a minute that you spent your
entire career in the workforce, never paid into Social Security yep.
But your but your husband did husband worked in whatever
accounting for a private firm. You would be normally eligible
for a spousal Social Security benefit off of your husband's
(25:11):
work as a police officer for the state of Massachusetts.
You would have that benefit in most cases entirely eliminated yep.
Because of that government pension offset. Both of those things
going away. So in particular for workers in Maine, Massachusetts.
I mean, look, everybody knows somebody who worked for the state,
and so a teacher, a police officer, a firefighter, like,
(25:33):
we all know those people, and those people are in
particular are going to be benefited a lot by this,
and it's going to really reshape a lot of their
retirement because in many cases, this is not twenty bucks
a month, right, this is hundreds of dollars a month,
if not thousands of dollars in a month in so
security benefits that are suddenly going to be eligible for
starting in twenty twenty five, actually before that, So this
(25:57):
impacts all benefits after December of twenty twenty three.
Speaker 2 (26:01):
So you're actually going to see people impacted by this.
They will receive a lump sum check orm sum payment
for all of twenty twenty four to make up that
shortfall and then start receiving the benefits again basically effective immediately.
Speaker 3 (26:15):
So obvious good news. If you are affected by one
of these eliminations that are no longer going to be
in place, bad news. I don't think we already spelled
it out for you. So Security Trust Fund is going
to run out in like eight or nine years. Anyway,
this just shortens the lifespan, not significantly. There's not you know,
there's not twenty million workers that are subject to this
in one way, shape or form. It's a relatively small
(26:36):
group because, like I said, only seven states predominantly play
to this. But for those that are impacted, it can
have a pretty massive change on your overall financial scenario
in retirement. And so if you're out there evaluating what
this might mean for you, maybe you are currently working
as a teacher and have been hesitant to go work
(26:57):
in the private sector because of this, or or vice versa.
You're working in the private sector and didn't want to
be subject to one of these, or you're already retired
and being subject to one of these and trying to
figure out what it means for you. Please give the
folks at Armstrong Advisory Group a call. Our advisors are
experts on the subjects of social security and pensions. We
work with clients all the time who are subject to
(27:17):
this sort of thing and can help you work through
what it will mean for your financial future. Give us
a call at eight hundred three nine three four zero
zero one. Again that's the number for the Armstrong Advisory Group.
You can give us a ring so we can talk
this through with you on how your social security benefits
might be impacted. Again that number eight hundred three nine
three four zero zero one.
Speaker 1 (27:39):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax and too state planning advisors before
making any investment decisions. Armstrong make contact you to offer
investment advisory services.
Speaker 2 (27:54):
Mike, why will Japan can? Why does Japan continue trying
to invest in the United Slime States?
Speaker 3 (28:02):
Because it's one of the most attractive places to invest
for just about any investor, and we also have fairly
good relations with Japan.
Speaker 2 (28:09):
Let me give you a different question, just because this
is the title of this New York Times piece, was
why Japan won't stop trying to invest in the US?
Speaker 3 (28:17):
Yeah, I guess. The The piece here also was, hey,
will the nip On Steel deal getting rejected change Japanese
views on investment in the United States? And my answer
would be almost certainly.
Speaker 4 (28:29):
Not, probably not.
Speaker 2 (28:30):
They want to generate investment returns, and ultimately they view.
One way to do so, as you know, taking stakes
in American companies or buying them outright. Let me ask
you a different question, why did nip On Steel want
to buy us Steal given the fact that US Steal
has basically said, look, without this merger, we're not sure
(28:51):
we're going to be able to continue to exist.
Speaker 3 (28:54):
I don't have an answer that question.
Speaker 2 (28:55):
Can you tell me no other than hey, we you know,
we can operate economy of scale and sure, but when
you talk about, hey, there's better opportunities for growth, yeah,
US steel is not one of.
Speaker 3 (29:07):
The manufacturing in the United States. Doesn't seem like a
great growth opportunity, I suppose, But I suppose one way
to look at it would be I'd be willing to
bet that if there were one industry the United States
government is willing to protect and to subsidize and to fund,
it would be manufacturing of steel products within its borders.
(29:27):
And so maybe nip On was looking at it from
that perspective as, Hey, it might not be a huge,
huge growth industry, but we're likely to receive subsidies and
basically be guaranteed to find a way to exist in
this industry. Should we stay on the right side of
the US government, which won't happen because the US government
has now blocked the deal.
Speaker 4 (29:45):
Let's take a quick break here.
Speaker 2 (29:46):
When we come back, let's discuss a little bit more
detail what the Washington Post is reporting about Trump and
tariffs right after this.
Speaker 1 (29:57):
The Financial Exchange streams live YouTube. Like our page and
stay up to date on breaking business news. All morning Loan.
This is the Financial Exchange Radio Network. If you missed
any of today's show, catch up whenever you want on
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Just go to YouTube dot com and search for the
Financial Exchange. This is your home for breaking business and
(30:20):
financial news. This is the Financial Exchange Radio Network.
Speaker 2 (30:35):
Washington Post, citing three people familiar with discussions but who
all contributed anonymously, indicated this morning that President elect Trump
is considering a tariff plan that would only tariff targeted industries,
but would apply to all imports from all countries. Now, obviously,
(30:57):
this would be a departure from the Broad Bay tariffs
that the Trump campaign had been discussing previously. This piece,
he says, Trump's transition team didn't immediately respond to a
request for comment. I can however, tell you that the
president himself or the President elect himself did respond via
(31:18):
I don't know what online portal this was, just because
I'm not snapchat. It was, yes, snapface, I believe, or
maybe my chat. But in any case, the president did respond,
and I want to get his exact quote right, just
because it's important to Here we go, the story in
the Washington Post, quoting so called anonymous sources which don't exist,
(31:39):
incorrectly states that my tariff policy will be paired back.
That is wrong. The Washington Post knows it's wrong. It's
just another example of fake news. So nobody knows anything.
Speaker 4 (31:53):
Yeah, I mean, like.
Speaker 3 (31:54):
This isn't a typical, especially of a Trump administration. And
I mean, would anybody be shocked if this did come
to come to pass?
Speaker 1 (32:06):
I mean, I.
Speaker 3 (32:06):
Guess part yes, the a paired down version of the tariffs.
It would not shock me one little bit were that
the case. But clearly, incoming President Donald Trump wants to
go to the negotiating table with the assumption that there
will be universal tariffs on all countries of ten to
twenty percent. And if he walks that back a little
bit as a negotiating tactic, great, But I'm certain he
(32:28):
doesn't want that being reported on and anybody going into
negotiations with that presumption. But again, I think you should really,
as we've talked about, take somebody at their word. If
he's saying I've said this for a while, I intend
to impose tariffs at ten to twenty percent on every
country for all products coming into the United States. That
assume that that's going to be.
Speaker 2 (32:46):
The case, right, I think that there's a baseline assumption,
assumption that you need to work from. Now, whether it's
the exact amount or whether it's phased in or how
it you know, exactly it ends up playing out. Okay,
there's room for interpretation there, but the guy's been pretty
consistent on this for the last year. The rate has
(33:06):
differed the implementations there. Like, I'm not saying we know
any of the specifics, but also look at the people
that are coming on board and what they've talked about.
The incoming Treasury Secretary has talked about using broad based
tariffs to you know, try to rebalance things from a
trade perspective. The incoming head of the Council of Economic
(33:27):
Advisors has talked about how broad based tariffs can you know,
help to reverse decades of trade imbalances. When people tell
you who they are, you have to believe them. Now,
whether it's going to work or not, I don't know.
I'll be the first to admit I'm not gonna sit
here and be like, no, this can never work, because
(33:48):
I admit that I'm not a super genius who knows everything.
It could work, it could go very badly, or it
could not be implemented and will never know.
Speaker 4 (33:57):
I don't know. But everyone has this rush to like
stake out.
Speaker 2 (34:04):
Their their claim of like where they're gonna be and
what's gonna Nobody knows anything.
Speaker 3 (34:08):
I'll stake Wait, I'll stake some sort of claim. Should
the seriousness of these tariffs get to the point where
markets begin to react negatively, and by that I mean
like a signet. I'm not talking about, oh, the stock
market went down by half percent for a day.
Speaker 2 (34:21):
You're talking like ten to fifteen percent pullback or more.
Speaker 3 (34:24):
Then I suspect that there will be some real conversation
about watering them down. Until something like that happens. Then
we're going to continue to get this narrative from the
incoming Trump administration, and I think they'll stick that way
until there is evidence of people being genuinely concerned about it.
And I don't see any evidence of that today.
Speaker 4 (34:40):
I'm not sure.
Speaker 2 (34:41):
I hear you, I I everyone that I talk to
who is plugged into that universe. Yep, it's talking about
how they're they're resolute, and they're emboldened and and YadA YadA, yep.
And maybe maybe I'm getting Charlie browned, but I'm that
I'm buying that people are underestimating what's going to happen here.
(35:05):
The underestimation has like has me potentially overestimating in the
opposite direction. It's possible, but uh, two weeks, well, I
don't know.
Speaker 4 (35:16):
If we'll know in two weeks.
Speaker 3 (35:17):
No, we won't know anything about terrorists.
Speaker 2 (35:19):
They're probably not gonna announce it, like the evening of
the inauguration would be my guess.
Speaker 4 (35:24):
Maybe during a speech, first just.
Speaker 3 (35:32):
List every country individually.
Speaker 4 (35:35):
Wouldn't it be.
Speaker 3 (35:35):
Great if just the incoming president, Donald Trump listing countries
for the last forty minutes, one.
Speaker 2 (35:40):
Hundred ninety three countries, and then at the end just
ten percent.
Speaker 4 (35:47):
I don't know.
Speaker 2 (35:49):
I get kind of a kick out of it, But again,
I'm the one who wanted the Fed to just raise
rates five percent right at the beginnings. Indeed, let's see
US yields hit fourteen month high before one hundred nineteen
billion dollars in debt sales. So we've got bond yields
that have been moving up over the last two months now,
pretty much since the election. They had a brief break
in late November where they moved lower, but have you know,
(36:12):
resumed their upward move over the last month now. And
this is a place where I do think yields maybe
off sides to the upside a little bit, because everyone's
talking about like, oh, the debt's unsustainable and this and that,
and there's so much debt that needs to be rolled over,
and there's gonna be inflation because of tariffs and YadA, YadA, YadA.
(36:33):
The number one thing that tends to drive yields in
the long run, not like at every you know, week,
month or whatever, is the overall growth rate of the
United States. And Michael, I don't know if you've taken
a look at the Atlanta Fed's GDP now number lately.
Speaker 4 (36:49):
No I have.
Speaker 2 (36:51):
I was Actually I'm the idiot who on his vacation
gets push notifications from the Atlanta Fed as to what
GDP now is currently reading.
Speaker 3 (37:02):
That might be the nerdiest thing I know about it.
Speaker 2 (37:04):
If you think I'm joking, Mike, If you think I'm joking,
I'm not.
Speaker 4 (37:10):
What is that moment that you like?
Speaker 2 (37:11):
What is this one from Friday eleven, twenty nine, Am
read right here? Just read It's the second from the bottom.
Your screen blank out, so I can't so OKAYT try
that again?
Speaker 4 (37:21):
No, no, here you go, Here you go.
Speaker 2 (37:23):
It's uh, it's it's coming up in just a second.
Speaker 5 (37:25):
I'm more surprised they send out notifications in the first place.
Speaker 3 (37:27):
Here you go, the one that says Q four GDP
growth Q four GDP growth On January third, the GDP
now model estimate for real GDP growth in the fourth
quarter of twenty twenty four is two point to four percent,
down from two six on January second.
Speaker 4 (37:39):
Thank you.
Speaker 3 (37:39):
That is exciting stuff.
Speaker 2 (37:41):
So that's what I get when I'm sitting by the pool, Yes,
is which I kind of like because it keeps me
plugged in. I turn all my other notifications off, but
I keep the Atlanta Fed Really like those guys.
Speaker 3 (37:51):
Yeah, anyways, true super fan.
Speaker 2 (37:54):
So actually I don't want one of them, but the
Saint Louis fed does make t shirts. Yeah, any time
to get In early December, GDP now was showing three
point four percent growth. It's now at two four. There
has been a deceleration in the data over the last
month and bonds are not picking up on it. Whether
(38:15):
that's proven right or wrong.
Speaker 4 (38:17):
We'll see.
Speaker 2 (38:18):
But growth does appear to be slowing now and bonds
are moving.
Speaker 4 (38:21):
The other way.
Speaker 2 (38:22):
Quick break here. We've got more financial exchange coming up.
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