January 13, 2025 • 38 mins
Chuck Zodda and Mike Armstrong discuss Wall Street getting globbered despite blockbuster jobs report. Is a storm brewing in the global bond market? Why are so many companies posting fake job openings? What happens to the wealth in the homes of California residents impacted by the fires?
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Episode Transcript
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Speaker 1 (00:00):
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(00:42):
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(01:06):
and Mike Armstob.
Speaker 2 (01:09):
Chuck, Mike and Tucker with you kicking off what is
going to be the busiest week of the year. I know,
obviously we had a job report last week and that
was certainly important. It's not to poop poo it or anything, obviously,
given you know, the market activity that we saw on Friday,
clearly it means something. But this week we've got economic
data pretty much every day. But today tomorrow we get
(01:31):
Producer Price Index data coming out at eight thirty am. Wednesday,
we're going to be getting Consumer Price Index, so the
CPI comes out on Wednesday. Some smaller reports too, but
I'm not going to go through.
Speaker 3 (01:42):
All of those.
Speaker 2 (01:43):
Thursday retail sales and jobless claims, and Friday we get
building permits and housing starts. So it is a really
quite a busy week for us as we get things
started here. But I think before we, you know, jump
forward to this week, we've we got to look back
a little bit at what happened on Friday, because hey,
(02:03):
we had a really good job support, two hundred and
fifty six thousand jobs created, the unemployment rate dropped from
four point two to four point one percent, and yet
all three major US n disees off anywhere from about
one and a half to one and three quarters percent.
Speaker 3 (02:18):
What gives, Michael, What gives?
Speaker 1 (02:20):
Yeah?
Speaker 4 (02:20):
What gives is what we have been warning and talking
about for a few weeks now, which is we're back
to a market of bad news is good news and
good news is bad news. Seems to be the conclusion
here as far as I can tell. And markets are
much more interested in where rates are going, at least temporarily,
than they are on how much growth this economy is
(02:41):
going to present and what it means for consumers. And
I think Friday, as you mentioned, was the perfect example
of that, but we've seen a few others as well,
and the overall result here, right, I mean, what's happened
now is the ten year US Treasury yield has climbed
to over four and three quarters percent. You've had more
(03:03):
the average thirty year fixed rate mortgage climbing to seven
and a quarter percent, and so and then you're again
left with an incoming Trump administration who's looking at an
economy that is healthy and you know it is showing
some signs of rebound after you know, some weakness in
the second half of last year. But an incoming Trump
(03:23):
administration that has a number of key policy priorities, none
of which are likely to bring down borrowing costs come
twenty twenty five, so far as I can.
Speaker 2 (03:32):
Tell, Yeah, And I think that when we talk about,
you know, the growth rate of the economy, I think
the read that I get on this in terms of hey,
wire stocks selling off there is, Look, you've got bond
rates moving up, and I think that equity owners are
concerned that as rates move up, it potentially slows the
economy and that in turn then impacts all of the
(03:55):
projected earnings growth and so on and so forth. So
it's hey, rates move up, and can stock stomach higher rates? Now,
there have been times, most notably you take a look
at twenty twenty two where investors were saying, no, they're
not gonna be able to stomach that. And in reality
(04:16):
what we saw was, yeah, we did see some earnings
declines across you know, multiple parts of the economy. It
was something where higher rates absolutely impacted companies' ability to
make money. In twenty twenty three, remember the end of
twenty three, we saw the ten year treasury rise to
five percent at one point, and stock sold off a
(04:39):
little bit, but not that much, And so the read was, yeah,
there was some concern there, but not as much as
what we saw in twenty twenty two. Because in some situations, Mike,
higher rates can reflect overall health in the economy if
the concern for inflation isn't there and if the growth
is there to support it. This is more a question
(04:59):
I think of, will those higher rates bite the economy
in such a way that the growth that's projected over
the next twelve to eighteen months doesn't materialize, right.
Speaker 4 (05:10):
And to be clear, I mean the sell off that
we are seeing everyone's making a big deal of because
it's January, and god knows, we're going to see the pieces.
Watch out because this is what happens when the markets
go down in jail. We haven't seen them yet, I know,
but they're coming. Just give a time, jock. But you know, ultimately,
what have we seen here? You know, a five percent
sell off thereabouts from peaks back in beginning of December.
(05:32):
Yeah that bullmark, Yeah, so somewhere in that range. So
I don't think you can categorize it as a twenty
twenty two reaction to interest rates to this point. But yeah, look,
it's an all important question, and the readings we will
be getting on inflation while this week's you know it
would well, it'd be quite surprising if we saw a
(05:54):
significant miss on inflation based on data that we already have.
But those will be pretty important readings here on the
state of the economy because we are seeing once again
a relatively tight labor market as we head into twenty
twenty five.
Speaker 2 (06:08):
And so we do get a piece here today, and
this one is kind of the opposite of what we
got at this time last year. Remember it was four
days into last year and we were getting the pieces
you referenced where well, January is not starting well, and
that means the whole year's gonna be bad this time.
(06:31):
And again, I haven't read like every financial news piece everywhere.
I'm sure if you go to like certain corners of
the internet there's some of that going on. But this
you have from Barons. The headline is the market is overreacting.
Don't lose your head, question, Mike, because this we probably.
Speaker 4 (06:47):
Need to all lose our heads now, Barons is saint
don't well.
Speaker 2 (06:51):
A couple things. The first one is this begs the question,
not raises it is the market actually overreacting.
Speaker 4 (07:02):
We just talked about a five percent market swing from
December fourth on interest rates that have moved up. Let
me see, how how much has the ten year yield
ten years up over December fourth.
Speaker 2 (07:14):
Well, I'll go even back further. I know it's been
since September. Since since December fourth is a reference, but
you know, the ten years up about one point one
five percent overall since December fourth. Uh, it is up
about half a percent.
Speaker 4 (07:28):
And so it doesn't seem like a gross overreaction to me.
Speaker 3 (07:31):
No, like it.
Speaker 2 (07:32):
It doesn't seem like this huge overreaction. It seems completely life.
If the market has sold off, you know, thirty five percent,
then I think you'd be like, well, the market's overreacted this. Yeah,
yields have moved up, and there's been some you know,
concerns about you know this and that, and a five
percent sell off is not crazy. I mean this to
(07:55):
me that The bothersome point here is it makes it
makes the lack of volatility that we saw last year
seem as if oh, that's how things are supposed to be,
when really you're supposed to see some ups and downs
and equity markets that's the nature of the beast. Forgive
me for being a broken record, but it's a feature,
(08:16):
not a bug. This is not a market overreacting. This
is a market that is reacting appropriately in my opinion,
and quite honestly, is evidence that we have properly functioning
markets because they don't just go up all the time.
Speaker 1 (08:32):
Yeah.
Speaker 4 (08:33):
The other piece that I think kind of got missed,
at least in the title of one of the pieces
that we had today. The first story that we had
covered US stocks got clawbird Friday despite a blockbuster jobs report.
No stocks got clawbired on Friday, That's what you want
to describe it as because of not in spite of
the blockbuster jobs report that was a causal effect. Is
(08:56):
had that been a net loss of jobs in the
month of December.
Speaker 1 (09:00):
I do genuinely believe.
Speaker 4 (09:02):
Markets might have gone up on that news because investors
right now, per the many stories that we're reading and
per market reaction too, don't seem immensely concerned about recession.
They don't seem intensely concerned about a downturn, and quite frankly,
I don't think they should be, only because in the
short term, if we see that type of slowdown, I
(09:25):
think an incoming Trump administration has a set of tools
they would love to pull out on that type of economy.
Speaker 2 (09:31):
Sure, yeah, it's we've talked about this that. In that situation,
then you do have something where you say, okay, we
can cut taxes this way, and there's something that makes
sense there that doesn't make sense, you know, necessarily in
a hotter economy with higher inflation than we saw during
the first Trump term. So again, I think that in
(09:51):
terms of where this market is right now, it remains
one that is steeply priced. It remains one that is
pricing in an awful lot of growth, and even though
markets have come in a little bit, if there are
further hiccups, you would expect markets to chop around as well. Now,
I think there's probably a case to be made in
(10:13):
terms of like what this piece is you know, maybe
trying to say, but I don't think quite gets there,
which is, Hey, if you're a long term investor, who
doesn't you know, study this stuff day in and day out. Yeah,
you probably don't need to pay as much attention to this. Uh,
you know what's going on in markets. A five percent
dip in markets is something that you know happens two
(10:34):
or three times a year normally. So if you want
to make the case of hey, this is normal, don't
freak out. If you're an equity investor, Okay, that's a
reasonable case. But like the market is overreacting.
Speaker 3 (10:47):
No, it's not. Market's not overreacting.
Speaker 4 (10:51):
That's probably a disclosure that we need to put on
just about ninety percent of the stories that we cover
on this program, which right really call attention to those
ones where we say, oh, even as a long term investor,
you need to understand what the heck's going on here,
and we do. But yeah, at pieces like this are
meant to grab a headline and not meant to really
(11:12):
portray a full lot of information for the average investor.
Speaker 2 (11:15):
Just take a quick break here when we come back.
We just talked about what's going on in equity markets,
what's going on with the bond of rooneys.
Speaker 3 (11:22):
We'll fill you in on that after.
Speaker 1 (11:24):
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Speaker 5 (11:50):
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Speaker 2 (12:27):
Global Bond Tantrum is a wrenching and worrisome start to
new year. That's the headline from Bloomberg. And I do
think there's something just that's, you know, worth talking about
here in a couple of respects. The first is that
word global, where I know that's so often we are
just insulated in Hey, what does this mean for like
my town or my city, or my state or my
(12:49):
country where countrywise, we look at the US and we say, hey,
yielda going up in the US. Is this like something
that's related to you know, US specifically, And the answer,
in my opinion is no, because you do have bond
yields across the globe.
Speaker 3 (13:04):
That are moving up.
Speaker 2 (13:05):
And it's not something where you look at the UK
and say, hey, you know the UK is impacted by
you know, tax rates in the US UH and and
how you know that the US deficit looks. It's not
something where you look at Japan and say something similar.
So I think there there is something that's afoot here,
but it is clearly not a US only problem. In
the US is not the only country that exists. Every
(13:27):
other country has agency as well. Like it's it's not
just what we do. But I do think the interesting
piece on this is, look, you do have this sell
off that's been happening in bonds across the globe. What
is the reason for it? How much further can it go?
And when do we get to a point where markets
(13:48):
don't just sag a little bit, but they start, you know,
breaking in different areas.
Speaker 4 (13:52):
Yeah, and I guess importantly has it been overdone, which
none of us will know until it's into rearview, But
there's one quote in here that I was interested in
your take on chat because quote shift upward in yields
is part of a natural re alignment after years of
a near zero rate environment following the emergency measures taken
(14:14):
after the Financial crisis and then COVID, And far too
often I feel like there's pieces written like this where
it attributes a very short term rise in yields, which
is what we've seen over the last what do you
call it three months or so, to some long term
trend And I just have a really tough time saying
with any sort of definitive opinion on this that, oh, yeah,
(14:37):
we saw the interest rate on the ten year yield move,
you know, a full percentage point over the last ninety
days because we're just normalizing out of the Great Financial
Crisis and COVID, Like, I don't think so. Can you
make an argument that we won't ever see three percent
mortgage rates and those were result of COVID and the
Great Recession? Sure, but attributing this most recent rise to that,
(15:00):
I just don't see the connection.
Speaker 2 (15:02):
No, It's something where I again I don't know why
this happens, but we often like to attribute something that's happening.
You know, in the short term, we like to attribute
that to, you know, some broader theme that's playing out,
when sometimes it's just completely random noise.
Speaker 3 (15:25):
Mike, you, I know, you're.
Speaker 2 (15:26):
Not a basketball, baseball or football guy. So let's let's
stick with hockey. What what's the most goals you've scored
in a game? Well, personally yeah, you no, no, like
you know you.
Speaker 4 (15:37):
Personally, I've once gotten a hot hat trick, but one time.
Speaker 3 (15:40):
Okay, So Mike Armstrong scores a hat trick, do you
remember the date that.
Speaker 2 (15:44):
You scored that hat trick? I do not, Come on,
You're you're only hat trick and you don't know the dates.
So Mike scores a hat trick, and you know, the
people following Mike's you know, prospect career for the NHL,
they look at that and they say, well, this is
all part of his growth and development and we can
expect a whole lot more of this or is it
just hey, Mike shots found the open net on that
(16:06):
night and that was just kind of how it worked.
Speaker 3 (16:08):
So to bring this back more.
Speaker 4 (16:09):
Atrivial to the fact that I was playing against ten year.
Speaker 2 (16:12):
Olds, which is also great, Like you got to play
with people your height level, I understand, but it's something
where to bring it back to the bond market. Look,
just because you have a short term move here, it
doesn't mean that you're you know, seeing this permanent not
even permanent, this this path to normalization after COVID, as
(16:32):
we talked about, you know last week, Hey, all the
people that were freaking out about you know, the US
deficit when the tenure ran up to five percent in
twenty twenty three.
Speaker 4 (16:42):
That's where I was gonna go It. Ring is very
similar to those same arguments as oh, yeah, all of
a sudden, the bond market's paying attention to deficits, or
all of a sudden we're returning to the normal of
post COVID and Great recession. It's like, well, probably not.
It seems like an odd time to choose now to
readjust to the normal economy.
Speaker 3 (17:03):
So yeah, you could.
Speaker 4 (17:04):
Convince me that investors are being overly pessimistic when it
comes to inflation and selling their bonds really with a
heavy push here. But if you're going to try and
make a case that it's some you know, big macro shift,
I think you're just cherry picking data points to fit
your argument.
Speaker 2 (17:21):
Yeah, I mean, if if you were too over the
next three to four months, see a slow down in
growth in the United States, just that you know, finally
materializes after like two years of talking about it and
the ten year goes back to like three and a half.
Do we suddenly sit here and say, well, now you know,
the market is pricing in the lower growth rate that's
(17:43):
expected in the US and the law no like it.
You can't extrapolate that into something bigger. Sometimes it's just
what's going on short term, and sometimes it might just
be not even stuff that's related to the economy. I
think sometimes people don't realize that there's stuff that happens
in markets that is purely structural as a result of
(18:06):
how people and companies need to access them. At the
end of the month, you always see a bunch of
rebalancing flows, particularly in foreign exchange, as companies figure out, hey,
what did we bring in this month? How much do
we need to hold in different currencies? And you just
move stuff to where it needs to go. And and
if you were to wake up after one of those
days and be like, oh, gee, what happened with you know,
(18:28):
the pound relative to the US. Is this something bigger? No, Like,
sometimes it's just that TJ Max sold a bunch of
you know, Japanese stuff into the US, and so they
need to, you know, figure out how to make you know,
their YenS and dollars work together. It's like, it's oftentimes
no more than that going on, and it doesn't need
(18:49):
to be some broader thing or this big theme. Sometimes
it's just, hey, it's corporate month end and this stuff's happening,
and so I find it, you know, bother. Some when
when we have to make everything into like some bigger theme,
sometimes it's just, hey, some dudes needed to sell some
stuff today and that's what happened or this month or
(19:10):
this week. Now, sometimes these things can become you know,
bigger themes.
Speaker 5 (19:14):
But.
Speaker 2 (19:17):
Everyone wants to be first to saying it. But there's
no one keeps the scoreboard of you know, who's right
and who's wrong on this stuff.
Speaker 4 (19:25):
No, we only reward those work temporarily.
Speaker 2 (19:27):
Right quick break, when we come back, we've got Wall
Street Watch, and then.
Speaker 3 (19:32):
Let's talk about fake job postings.
Speaker 1 (19:34):
After that. 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
(19:56):
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Radio Network.
Speaker 5 (20:01):
Coming off a losing week where all three major averages
shed about two percent on the heels of surging bond yields,
markets today are mixed territories investors await the kickoff to
fourth quarter earning season in addition to it an inflation
reading on Wednesday. Right now, the Dow is up by
a third of a percent or one hundred and thirty
two points, SMP five hundreds down by about two thirds
(20:23):
of a percent or thirty six points, and the Nasdaq
is down one and a third of a percent or
two hundred and sixty points. Russell two thousand down by
two thirds of a percent as well. Ten You're Treasure
reeled up by one basis point now at four point
seventy nine percent, and crude oil up one and two
thirds of a percent, rating at seventy seven dollars and
eighty one cents a barrel. Maderna share is sinking twenty
(20:46):
two percent after the biotech company lowered its twenty twenty
five sales guidance by about one billion dollars as it
continues to cut costs. Maderna now expects twenty twenty five
revenue to come in between one and a half and
two and a half billion dollars, most of which will
come in the second half of the year. In a release,
the company said the majority of those sales will come
(21:07):
from its COVID shot and newly launched vaccine for RSV. Meanwhile,
the US and posted caps on how many advanced AI
chips can be exported to certain countries, overriding in videos
objections and Video shares down by about three percent, while
other chip makers are also seeing losses on the day. Elsewhere,
several crypto stocks, including Coinbase and micro Strategy are seeing
(21:30):
losses as the price of bitcoin slid further to just
north of ninety thousand dollars. Coin Based down by five percent,
while micro Strategy shares down by three percent. Over to
the retail sector, where Macy's provided disappointing fourth quarter guidance
while its comparable store sales are expected to be roughly flat,
that stock down by six percent. Abercrombie and Fitch shares
(21:52):
sinking by eighteen percent, despite the retailer raising its outlook
for the fourth quarter on strong holiday sales. Expectations. The
company now expects fourth quarter net sales to grow between
seven and eight percent, compared with previous guidance of five
to seven percent growth. Those holiday expectations are still lower
than the year ago period, however, suggesting a slowdown in growth,
(22:15):
and Lulu Lemon height its revenue and profit guidance for
the fourth quarter. However, that stock down by about a
third of a percent. I'm Tucker Silvan, that's Wall Street Watch, Mike.
Speaker 3 (22:26):
What's a fake job posting?
Speaker 4 (22:30):
It's something where there's a number of different reasons that
companies are doing it, But it's a job posting that
a company generally doesn't have any real intent to hire
a person on. And there's a few different reasons that
companies seem to be doing this. It's all kind of conjecture,
because no company is going to admit that they have
it posting out there that they never intend to hire for.
(22:53):
But some of the reasons given seem to be that
they just keep the job posting up to make it
seem like they are in still growth mode, which is
just super crappy and insinuate something about just how poor
the company's growth trajectory actually might be. Others would be, Hey,
we're just going to keep this posting open because we're
(23:14):
always on the look for this type of role and
we're just waiting for some exceptional candidate to come around.
That's one in a million. That one I still have
an issue with, but certainly less of one than just
a fake one. But the other job postings that are
serious out there are scams. This article is can talk
about that at length, but I think there are a
number of different people who have gotten text messages about
(23:36):
fake jobs. That's one thing. But they do still exist
on job boards where they're attempting to get you to
apply to a job that is either something that is
not what it seems or is a genuine scam to
try and get you to turn over information so it
can run the gambit chuck.
Speaker 2 (23:52):
And so the big thing on this, this is from
a piece in the Wall Street Journal, is that it
becomes frustrating for individuals who are applying for these jobs
where they're like, oh, like this sounds really, you know, interesting,
but the company has no intention of filling that job actually,
And it's not saying that this is like all that
(24:13):
you see, but it's something that hey, if you're out
there trying to get a job, and you're spending you know,
time and effort working on you know, putting together cover
letters and this and that, and hey, you've you know,
you're sending out you know, dozens of these. Yeah, the
fact that you know, one out of every five might
be for a position that is not actually being hired
(24:37):
for is kind of a waste of your time. Now,
that's kind of the nature of the beast in the
job market. I mean, it's for every.
Speaker 3 (24:46):
One of those.
Speaker 2 (24:47):
I'm sure there are stories from employers about how, hey,
we scheduled an interview with candidate X, and when the
time came, they didn't show up for their interview.
Speaker 3 (24:55):
So it's it. This is not.
Speaker 2 (24:57):
A well of those horrible employers, How could they do this?
Speaker 3 (25:01):
It's much more.
Speaker 2 (25:03):
This stuff is always present in the job market to
a certain extent, and it's kind of the cost of
doing business. The other thing that I have a question
on is like, we don't have any historical data on this.
So this was figured out by a company called Greenhouse. Sure,
Greenhouse did not exist, to the best of my knowledge,
back in nineteen seventy, so we don't have any information
(25:25):
unlike some kind of longitudinal study, like, hey, has this
problem been getting worse? Has it been getting better? Or
is it about the same. It's much more. This is
what we're seeing right now. And there's probably always some
of this, just like they're probably always are some interviewees
that don't show up for their interview, and this stuff
(25:45):
gets baked into the system. But it does make for
a frustrating process. I think is something that's worthwhile to
note well.
Speaker 4 (25:51):
And my conclusion is, you know, much like other types
of Again, I don't want to describe this as necessarily
a scam, but much like many other types of things
that are frustrating in this sense, the ability for a
company to post a job has gotten orders of magnitude
cheaper over the years, and so therefore the ability for
(26:14):
fake job posts to exist. There was probably a lot,
at least financially more burdensome back in the nineteen seventies,
because you generally probably wouldn't print and add in a
newspaper for a job that you weren't actually intending to
hire for my sorry.
Speaker 2 (26:27):
Go ahead, no, you're fine. My mom was a college counselor.
While she worked, she helped to you know, get people
placed into different schools and this and that, and one
of the things that by the end of her career
that she said was, look, it's great that they have
like this common application that allows you to submit you know,
one set of you know, paperwork to different schools with
(26:48):
a couple of changes here and there. But honestly, it's
made it so easy to apply to schools that instead
of you know, actually having to like filter down your
list and do the work, it became just, oh, like,
I'm going to apply and I'm applying to twenty five
schools instead of you know, maybe seven or eight that
I should.
Speaker 3 (27:04):
And you see the.
Speaker 2 (27:05):
Same thing, Like, it's kind of the same type of
thing where hey, if it's so easy for someone to
post a job now, but also if it's so easy
to just you know, click on LinkedIn and be like
here's my resume, like you you don't have to think
about it in either one of those situations, are you
actually improving the hiring process or have you just pretended
(27:26):
to make it easier. But now, as an example, if
you are a let's say that you are a company
that's hiring, well, gee, because it's so easy to post
on LinkedIn, you get two hundred resumes. How do you
sort through that? Well, now you're you know, causing You're like, well,
we got to hire like someone to do that, or
we've got to you know, have AI do that, and
(27:47):
maybe the AI misses something that a human would and
now you've actually missed out on your good candidate. Like
are you actually building a better hiring process? And how
often do HR departments go through those reviews to be
like are we actually doing this better? Or does it
just feel good because like this is what everyone else
is doing.
Speaker 4 (28:05):
I recently saw a story from Reddit, so you know,
take it with a grain of salt as to whether
or not this actually occurred, but one Reddit user claim
to have used generative AI to be able to automatically
apply to about a thousand jobs that you know, met
certain search criterias, write up cover letters, and you know,
basically do a bunch of tasks you know, effectively, very quickly,
(28:27):
and therefore received fifty job interviews. And at first I
was like, oh, that seems a bit disingenuous, But I've
actually turned on that quite a bit because most certainly
a lot of companies are going to use artificial intelligence
to screen candidates out, uh, huh. And if you're good
enough at generative AI to use it to apply to
jobs and get an interview from that, then that seems
(28:49):
absolutely reasonable.
Speaker 2 (28:50):
We you And ultimately you're going to be judged on No,
Ultimately you're going to be judged on can you do
the work? And if you can't, then here's what's going on.
End up happening is that company is going to have
to adjust its hiring process. And maybe they don't go
through this because they get burned by it a bunch,
and maybe that goes away. Like this is how the market,
(29:10):
you know, either gives or takes based on you know,
the results that that you're getting from these types of things.
Speaker 3 (29:17):
But yeah, I mean, look, what.
Speaker 2 (29:20):
As long as you are not lying and making stuff up? Okay,
Like if if here's I will say, if the generative
AI is just making up stuff, problem, But if it's, hey,
here's my work experience generative and this is stuff the
generative AI can do. Here's my resume, here is the
(29:42):
the the job listing. Transform this resume into something that
like captures all of the buzzwords from this job listing
so that their AI will pick up on my AI's stuff.
Speaker 3 (29:55):
Fine, Like you.
Speaker 2 (29:56):
But if you are just you, it is hey, come
up with like a fake you know, resume of you know,
but that's I don't think that's what we're talking about here,
are we, Mike.
Speaker 4 (30:08):
No, No, that's not what we're describing here. And so yeah,
I'm right there with you. The application for jobs market
is well, it's already changed quite a bit. It's going
to continue to do so. And yeah, if you're a
company that's just leaving a job post up in perpetuity
just to seem like you're growing, then I have a
problem with you. But that's probably par for the course.
Speaker 2 (30:30):
Now, can I can I make a I don't want
to call it a prediction, but you want to know
what my my black Swan event is for the next
twenty years, And this is something like something I think
is unlikely, but at the same time, I wouldn't be
(30:51):
surprised if it happens. The Internet is going to kill
itself going to and what I mean by that is
we're going to have so much AI slop that's created
that we're going to pull back from the Internet because
(31:11):
we can't tell what's real there or not. And as
a result, the Internet is going to become useless for us,
and we're going to get back to having to actually
talk to people because we just don't trust anything that
we are seeing on the internet.
Speaker 1 (31:28):
I don't.
Speaker 4 (31:28):
I hope we do get to the point where we
don't trust things that we see on the internet. But
and that may be where we're heading. Unfortunately, that's one
piece that I see we are not there on. People
still trust far too much the internet more than they should.
Speaker 3 (31:43):
Take a quick break here.
Speaker 2 (31:44):
When we come back, we'll talk a little bit about
the latest coming out of la As far as hey.
People there losing their homes. It's where a lot of
their wealth is held. How do they move forward world
in which that wealth is at least temporarily not there
the way it used to be.
Speaker 1 (32:06):
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Speaker 2 (32:33):
Peace and Wall Street journals titled their Wealth is in
Their Homes, Their Homes are now ash. And what this
is talking about is, Look, I know that no one
likes to have sympathy.
Speaker 3 (32:43):
For people in la for whatever reason.
Speaker 2 (32:46):
But when you've got you know, people that have had
their homes burned to the ground, I hope that you
can find just a little bit of it and maybe
not make this into something else, because you have people,
just as an example, who might have bought their homes
as you know, average middle class people. They might have
spent you know, a few hundred thousand dollars twenty years
ago to go and buy a home, and now that
(33:08):
home by virtue of you know, being in a state
where they do a horrible job of building new homes
and you know, actually having a vibrant real estate market,
that home that was purchased for three hundred thousand is
now one point five million and burnt to the ground.
But the family that lives there hasn't you know, seen
their income go up five x. It's you know, there's
still a middle class family and now they're trying to rebuild.
(33:32):
And in a world in which you have all kinds
of insurance problems in the state and reports that are
coming out about you know, small local insurance that may
be insolvent and not able to pay all claims and
things like that. You've got questions from these families as to, hey,
we lived here for you know, twenty thirty forty years.
We don't know if we can afford to rebuild here
because we don't actually have the money to do so,
(33:54):
and we're not sure we're going to get enough from
our insurance claim to be able to cover know what's
there as well.
Speaker 4 (34:01):
Yeah, look, I think this is a pretty relatable story
for anybody on either of the coasts quite frankly, right,
I mean, you talk about the town from which we're
broadcasting right fifty years ago, very middle class town where
you could afford it as a trades person or you know,
in a middle class job. Today, home prices, yeah, are
(34:25):
appreciated too levels similar to what you're probably seeing across
Los Angeles. And for a lot of people, that was
their rainy day fund, it was their nest egg. And
you know, you certainly hope that most of those had
insurance coverage. But honestly, that group of people, the people
that you know did see that type of appreciation and
(34:48):
maybe bought it in the nineteen seventies are probably the
most likely group to be uninsured at the moment when
you talk about the cost, when you talk about the
fact they might not have a mortgage anymore, that cohort
is probably the most likely to said over the years, Hey,
I need to cut somewhere, and so either I'm going
for a really really slimmed down insurance package or I'm
doing without insurance entirely. You hope that's certainly the minority,
(35:11):
but it may exist. Look, ultimately, I think that with
a disaster of this size there will be a fair
bit of aid. But you bring up a very reasonable point.
These are densely populated areas. It's going to take years
to rebuild, and for a lot of folks it's going
to mean an inability to move back to an area
that they have in many cases raised families in and
(35:33):
and grown in and have jobs and all sorts of
things that are going to be massively disruptive. And Look,
this is one of the I think one of the
key risks to having a huge portion of wealth in
your home is you know, you buy its very nature
have a concentration risk that is unlike kind of any
(35:56):
other investment out there. When we talk about investing, not
that a lot of people were doing this as an investment.
It is their residence. But when you talk about having
a huge portion of your investible or uninvestable wealth in
value of real estate, this is one of those key
risks out there that we see and talk about frequently,
and hopefully most of it was insured, even if that
(36:18):
insurance market looks a lot different in the future.
Speaker 5 (36:21):
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Speaker 3 (37:22):
Mike, you see the Chuck E Cheese is making a
bit of a comeback.
Speaker 4 (37:26):
No, when did they enter bankruptcy? Was that last year,
the year before?
Speaker 2 (37:29):
I don't recall, but twenty twenty actually five years ago,
I believe it or not. I know, time flies. But
so they came out, you know, missing seven hundred and
five million dollars in debt. And the big thing they have,
I guess their locations that are still around. They've moved
more towards things like trampolines and you know, more active
(37:51):
type stuff and gotten rid of some of the stuff
that they used to have. They've also ballpets, what's that
p filled ballpits?
Speaker 3 (37:59):
You mean, I'm not going to.
Speaker 4 (38:04):
That's that's kind of what they were known for before.
Speaker 2 (38:07):
We're gonna take a break now, and uh yeah, well,
we'll come back and discuss that an hour two on
the Financial Exchange. We've got a lot more, including uh,
what we can expect from the Trump administration on tariffs, UH,
and where earning season is projected as well.
Speaker 3 (38:22):
All that and more coming up in a bit
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:20):
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(01:06):
and Mike Armstob.
Speaker 2 (01:09):
Chuck, Mike and Tucker with you kicking off what is
going to be the busiest week of the year. I know,
obviously we had a job report last week and that
was certainly important. It's not to poop poo it or anything, obviously,
given you know, the market activity that we saw on Friday,
clearly it means something. But this week we've got economic
data pretty much every day. But today tomorrow we get
(01:31):
Producer Price Index data coming out at eight thirty am. Wednesday,
we're going to be getting Consumer Price Index, so the
CPI comes out on Wednesday. Some smaller reports too, but
I'm not going to go through.
Speaker 3 (01:42):
All of those.
Speaker 2 (01:43):
Thursday retail sales and jobless claims, and Friday we get
building permits and housing starts. So it is a really
quite a busy week for us as we get things
started here. But I think before we, you know, jump
forward to this week, we've we got to look back
a little bit at what happened on Friday, because hey,
(02:03):
we had a really good job support, two hundred and
fifty six thousand jobs created, the unemployment rate dropped from
four point two to four point one percent, and yet
all three major US n disees off anywhere from about
one and a half to one and three quarters percent.
Speaker 3 (02:18):
What gives, Michael, What gives?
Speaker 1 (02:20):
Yeah?
Speaker 4 (02:20):
What gives is what we have been warning and talking
about for a few weeks now, which is we're back
to a market of bad news is good news and
good news is bad news. Seems to be the conclusion
here as far as I can tell. And markets are
much more interested in where rates are going, at least temporarily,
than they are on how much growth this economy is
(02:41):
going to present and what it means for consumers. And
I think Friday, as you mentioned, was the perfect example
of that, but we've seen a few others as well,
and the overall result here, right, I mean, what's happened
now is the ten year US Treasury yield has climbed
to over four and three quarters percent. You've had more
(03:03):
the average thirty year fixed rate mortgage climbing to seven
and a quarter percent, and so and then you're again
left with an incoming Trump administration who's looking at an
economy that is healthy and you know it is showing
some signs of rebound after you know, some weakness in
the second half of last year. But an incoming Trump
(03:23):
administration that has a number of key policy priorities, none
of which are likely to bring down borrowing costs come
twenty twenty five, so far as I can.
Speaker 2 (03:32):
Tell, Yeah, And I think that when we talk about,
you know, the growth rate of the economy, I think
the read that I get on this in terms of hey,
wire stocks selling off there is, Look, you've got bond
rates moving up, and I think that equity owners are
concerned that as rates move up, it potentially slows the
economy and that in turn then impacts all of the
(03:55):
projected earnings growth and so on and so forth. So
it's hey, rates move up, and can stock stomach higher rates? Now,
there have been times, most notably you take a look
at twenty twenty two where investors were saying, no, they're
not gonna be able to stomach that. And in reality
(04:16):
what we saw was, yeah, we did see some earnings
declines across you know, multiple parts of the economy. It
was something where higher rates absolutely impacted companies' ability to
make money. In twenty twenty three, remember the end of
twenty three, we saw the ten year treasury rise to
five percent at one point, and stock sold off a
(04:39):
little bit, but not that much, And so the read was, yeah,
there was some concern there, but not as much as
what we saw in twenty twenty two. Because in some situations, Mike,
higher rates can reflect overall health in the economy if
the concern for inflation isn't there and if the growth
is there to support it. This is more a question
(04:59):
I think of, will those higher rates bite the economy
in such a way that the growth that's projected over
the next twelve to eighteen months doesn't materialize, right.
Speaker 4 (05:10):
And to be clear, I mean the sell off that
we are seeing everyone's making a big deal of because
it's January, and god knows, we're going to see the pieces.
Watch out because this is what happens when the markets
go down in jail. We haven't seen them yet, I know,
but they're coming. Just give a time, jock. But you know, ultimately,
what have we seen here? You know, a five percent
sell off thereabouts from peaks back in beginning of December.
(05:32):
Yeah that bullmark, Yeah, so somewhere in that range. So
I don't think you can categorize it as a twenty
twenty two reaction to interest rates to this point. But yeah, look,
it's an all important question, and the readings we will
be getting on inflation while this week's you know it
would well, it'd be quite surprising if we saw a
(05:54):
significant miss on inflation based on data that we already have.
But those will be pretty important readings here on the
state of the economy because we are seeing once again
a relatively tight labor market as we head into twenty
twenty five.
Speaker 2 (06:08):
And so we do get a piece here today, and
this one is kind of the opposite of what we
got at this time last year. Remember it was four
days into last year and we were getting the pieces
you referenced where well, January is not starting well, and
that means the whole year's gonna be bad this time.
(06:31):
And again, I haven't read like every financial news piece everywhere.
I'm sure if you go to like certain corners of
the internet there's some of that going on. But this
you have from Barons. The headline is the market is overreacting.
Don't lose your head, question, Mike, because this we probably.
Speaker 4 (06:47):
Need to all lose our heads now, Barons is saint
don't well.
Speaker 2 (06:51):
A couple things. The first one is this begs the question,
not raises it is the market actually overreacting.
Speaker 4 (07:02):
We just talked about a five percent market swing from
December fourth on interest rates that have moved up. Let
me see, how how much has the ten year yield
ten years up over December fourth.
Speaker 2 (07:14):
Well, I'll go even back further. I know it's been
since September. Since since December fourth is a reference, but
you know, the ten years up about one point one
five percent overall since December fourth. Uh, it is up
about half a percent.
Speaker 4 (07:28):
And so it doesn't seem like a gross overreaction to me.
Speaker 3 (07:31):
No, like it.
Speaker 2 (07:32):
It doesn't seem like this huge overreaction. It seems completely life.
If the market has sold off, you know, thirty five percent,
then I think you'd be like, well, the market's overreacted this. Yeah,
yields have moved up, and there's been some you know,
concerns about you know this and that, and a five
percent sell off is not crazy. I mean this to
(07:55):
me that The bothersome point here is it makes it
makes the lack of volatility that we saw last year
seem as if oh, that's how things are supposed to be,
when really you're supposed to see some ups and downs
and equity markets that's the nature of the beast. Forgive
me for being a broken record, but it's a feature,
(08:16):
not a bug. This is not a market overreacting. This
is a market that is reacting appropriately in my opinion,
and quite honestly, is evidence that we have properly functioning
markets because they don't just go up all the time.
Speaker 1 (08:32):
Yeah.
Speaker 4 (08:33):
The other piece that I think kind of got missed,
at least in the title of one of the pieces
that we had today. The first story that we had
covered US stocks got clawbird Friday despite a blockbuster jobs report.
No stocks got clawbired on Friday, That's what you want
to describe it as because of not in spite of
the blockbuster jobs report that was a causal effect. Is
(08:56):
had that been a net loss of jobs in the
month of December.
Speaker 1 (09:00):
I do genuinely believe.
Speaker 4 (09:02):
Markets might have gone up on that news because investors
right now, per the many stories that we're reading and
per market reaction too, don't seem immensely concerned about recession.
They don't seem intensely concerned about a downturn, and quite frankly,
I don't think they should be, only because in the
short term, if we see that type of slowdown, I
(09:25):
think an incoming Trump administration has a set of tools
they would love to pull out on that type of economy.
Speaker 2 (09:31):
Sure, yeah, it's we've talked about this that. In that situation,
then you do have something where you say, okay, we
can cut taxes this way, and there's something that makes
sense there that doesn't make sense, you know, necessarily in
a hotter economy with higher inflation than we saw during
the first Trump term. So again, I think that in
(09:51):
terms of where this market is right now, it remains
one that is steeply priced. It remains one that is
pricing in an awful lot of growth, and even though
markets have come in a little bit, if there are
further hiccups, you would expect markets to chop around as well. Now,
I think there's probably a case to be made in
(10:13):
terms of like what this piece is you know, maybe
trying to say, but I don't think quite gets there,
which is, Hey, if you're a long term investor, who
doesn't you know, study this stuff day in and day out. Yeah,
you probably don't need to pay as much attention to this. Uh,
you know what's going on in markets. A five percent
dip in markets is something that you know happens two
(10:34):
or three times a year normally. So if you want
to make the case of hey, this is normal, don't
freak out. If you're an equity investor, Okay, that's a
reasonable case. But like the market is overreacting.
Speaker 3 (10:47):
No, it's not. Market's not overreacting.
Speaker 4 (10:51):
That's probably a disclosure that we need to put on
just about ninety percent of the stories that we cover
on this program, which right really call attention to those
ones where we say, oh, even as a long term investor,
you need to understand what the heck's going on here,
and we do. But yeah, at pieces like this are
meant to grab a headline and not meant to really
(11:12):
portray a full lot of information for the average investor.
Speaker 2 (11:15):
Just take a quick break here when we come back.
We just talked about what's going on in equity markets,
what's going on with the bond of rooneys.
Speaker 3 (11:22):
We'll fill you in on that after.
Speaker 1 (11:24):
This text US six one seven, three, six two thirteen
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and let us know what you think about the stories
we are covering. This is the Financial Exchange Radio Network.
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(11:45):
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Speaker 2 (12:27):
Global Bond Tantrum is a wrenching and worrisome start to
new year. That's the headline from Bloomberg. And I do
think there's something just that's, you know, worth talking about
here in a couple of respects. The first is that
word global, where I know that's so often we are
just insulated in Hey, what does this mean for like
my town or my city, or my state or my
(12:49):
country where countrywise, we look at the US and we say, hey,
yielda going up in the US. Is this like something
that's related to you know, US specifically, And the answer,
in my opinion is no, because you do have bond
yields across the globe.
Speaker 3 (13:04):
That are moving up.
Speaker 2 (13:05):
And it's not something where you look at the UK
and say, hey, you know the UK is impacted by
you know, tax rates in the US UH and and
how you know that the US deficit looks. It's not
something where you look at Japan and say something similar.
So I think there there is something that's afoot here,
but it is clearly not a US only problem. In
the US is not the only country that exists. Every
(13:27):
other country has agency as well. Like it's it's not
just what we do. But I do think the interesting
piece on this is, look, you do have this sell
off that's been happening in bonds across the globe. What
is the reason for it? How much further can it go?
And when do we get to a point where markets
(13:48):
don't just sag a little bit, but they start, you know,
breaking in different areas.
Speaker 4 (13:52):
Yeah, and I guess importantly has it been overdone, which
none of us will know until it's into rearview, But
there's one quote in here that I was interested in
your take on chat because quote shift upward in yields
is part of a natural re alignment after years of
a near zero rate environment following the emergency measures taken
(14:14):
after the Financial crisis and then COVID, And far too
often I feel like there's pieces written like this where
it attributes a very short term rise in yields, which
is what we've seen over the last what do you
call it three months or so, to some long term
trend And I just have a really tough time saying
with any sort of definitive opinion on this that, oh, yeah,
(14:37):
we saw the interest rate on the ten year yield move,
you know, a full percentage point over the last ninety
days because we're just normalizing out of the Great Financial
Crisis and COVID, Like, I don't think so. Can you
make an argument that we won't ever see three percent
mortgage rates and those were result of COVID and the
Great Recession? Sure, but attributing this most recent rise to that,
(15:00):
I just don't see the connection.
Speaker 2 (15:02):
No, It's something where I again I don't know why
this happens, but we often like to attribute something that's happening.
You know, in the short term, we like to attribute
that to, you know, some broader theme that's playing out,
when sometimes it's just completely random noise.
Speaker 3 (15:25):
Mike, you, I know, you're.
Speaker 2 (15:26):
Not a basketball, baseball or football guy. So let's let's
stick with hockey. What what's the most goals you've scored
in a game? Well, personally yeah, you no, no, like
you know you.
Speaker 4 (15:37):
Personally, I've once gotten a hot hat trick, but one time.
Speaker 3 (15:40):
Okay, So Mike Armstrong scores a hat trick, do you
remember the date that.
Speaker 2 (15:44):
You scored that hat trick? I do not, Come on,
You're you're only hat trick and you don't know the dates.
So Mike scores a hat trick, and you know, the
people following Mike's you know, prospect career for the NHL,
they look at that and they say, well, this is
all part of his growth and development and we can
expect a whole lot more of this or is it
just hey, Mike shots found the open net on that
(16:06):
night and that was just kind of how it worked.
Speaker 3 (16:08):
So to bring this back more.
Speaker 4 (16:09):
Atrivial to the fact that I was playing against ten year.
Speaker 2 (16:12):
Olds, which is also great, Like you got to play
with people your height level, I understand, but it's something
where to bring it back to the bond market. Look,
just because you have a short term move here, it
doesn't mean that you're you know, seeing this permanent not
even permanent, this this path to normalization after COVID, as
(16:32):
we talked about, you know last week, Hey, all the
people that were freaking out about you know, the US
deficit when the tenure ran up to five percent in
twenty twenty three.
Speaker 4 (16:42):
That's where I was gonna go It. Ring is very
similar to those same arguments as oh, yeah, all of
a sudden, the bond market's paying attention to deficits, or
all of a sudden we're returning to the normal of
post COVID and Great recession. It's like, well, probably not.
It seems like an odd time to choose now to
readjust to the normal economy.
Speaker 3 (17:03):
So yeah, you could.
Speaker 4 (17:04):
Convince me that investors are being overly pessimistic when it
comes to inflation and selling their bonds really with a
heavy push here. But if you're going to try and
make a case that it's some you know, big macro shift,
I think you're just cherry picking data points to fit
your argument.
Speaker 2 (17:21):
Yeah, I mean, if if you were too over the
next three to four months, see a slow down in
growth in the United States, just that you know, finally
materializes after like two years of talking about it and
the ten year goes back to like three and a half.
Do we suddenly sit here and say, well, now you know,
the market is pricing in the lower growth rate that's
(17:43):
expected in the US and the law no like it.
You can't extrapolate that into something bigger. Sometimes it's just
what's going on short term, and sometimes it might just
be not even stuff that's related to the economy. I
think sometimes people don't realize that there's stuff that happens
in markets that is purely structural as a result of
(18:06):
how people and companies need to access them. At the
end of the month, you always see a bunch of
rebalancing flows, particularly in foreign exchange, as companies figure out, hey,
what did we bring in this month? How much do
we need to hold in different currencies? And you just
move stuff to where it needs to go. And and
if you were to wake up after one of those
days and be like, oh, gee, what happened with you know,
(18:28):
the pound relative to the US. Is this something bigger? No, Like,
sometimes it's just that TJ Max sold a bunch of
you know, Japanese stuff into the US, and so they
need to, you know, figure out how to make you know,
their YenS and dollars work together. It's like, it's oftentimes
no more than that going on, and it doesn't need
(18:49):
to be some broader thing or this big theme. Sometimes
it's just, hey, it's corporate month end and this stuff's happening,
and so I find it, you know, bother. Some when
when we have to make everything into like some bigger theme,
sometimes it's just, hey, some dudes needed to sell some
stuff today and that's what happened or this month or
(19:10):
this week. Now, sometimes these things can become you know,
bigger themes.
Speaker 5 (19:14):
But.
Speaker 2 (19:17):
Everyone wants to be first to saying it. But there's
no one keeps the scoreboard of you know, who's right
and who's wrong on this stuff.
Speaker 4 (19:25):
No, we only reward those work temporarily.
Speaker 2 (19:27):
Right quick break, when we come back, we've got Wall
Street Watch, and then.
Speaker 3 (19:32):
Let's talk about fake job postings.
Speaker 1 (19:34):
After that. 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
(19:56):
markets so far today right here on the Financial Exchange
Radio Network.
Speaker 5 (20:01):
Coming off a losing week where all three major averages
shed about two percent on the heels of surging bond yields,
markets today are mixed territories investors await the kickoff to
fourth quarter earning season in addition to it an inflation
reading on Wednesday. Right now, the Dow is up by
a third of a percent or one hundred and thirty
two points, SMP five hundreds down by about two thirds
(20:23):
of a percent or thirty six points, and the Nasdaq
is down one and a third of a percent or
two hundred and sixty points. Russell two thousand down by
two thirds of a percent as well. Ten You're Treasure
reeled up by one basis point now at four point
seventy nine percent, and crude oil up one and two
thirds of a percent, rating at seventy seven dollars and
eighty one cents a barrel. Maderna share is sinking twenty
(20:46):
two percent after the biotech company lowered its twenty twenty
five sales guidance by about one billion dollars as it
continues to cut costs. Maderna now expects twenty twenty five
revenue to come in between one and a half and
two and a half billion dollars, most of which will
come in the second half of the year. In a release,
the company said the majority of those sales will come
(21:07):
from its COVID shot and newly launched vaccine for RSV. Meanwhile,
the US and posted caps on how many advanced AI
chips can be exported to certain countries, overriding in videos
objections and Video shares down by about three percent, while
other chip makers are also seeing losses on the day. Elsewhere,
several crypto stocks, including Coinbase and micro Strategy are seeing
(21:30):
losses as the price of bitcoin slid further to just
north of ninety thousand dollars. Coin Based down by five percent,
while micro Strategy shares down by three percent. Over to
the retail sector, where Macy's provided disappointing fourth quarter guidance
while its comparable store sales are expected to be roughly flat,
that stock down by six percent. Abercrombie and Fitch shares
(21:52):
sinking by eighteen percent, despite the retailer raising its outlook
for the fourth quarter on strong holiday sales. Expectations. The
company now expects fourth quarter net sales to grow between
seven and eight percent, compared with previous guidance of five
to seven percent growth. Those holiday expectations are still lower
than the year ago period, however, suggesting a slowdown in growth,
(22:15):
and Lulu Lemon height its revenue and profit guidance for
the fourth quarter. However, that stock down by about a
third of a percent. I'm Tucker Silvan, that's Wall Street Watch, Mike.
Speaker 3 (22:26):
What's a fake job posting?
Speaker 4 (22:30):
It's something where there's a number of different reasons that
companies are doing it, But it's a job posting that
a company generally doesn't have any real intent to hire
a person on. And there's a few different reasons that
companies seem to be doing this. It's all kind of conjecture,
because no company is going to admit that they have
it posting out there that they never intend to hire for.
(22:53):
But some of the reasons given seem to be that
they just keep the job posting up to make it
seem like they are in still growth mode, which is
just super crappy and insinuate something about just how poor
the company's growth trajectory actually might be. Others would be, Hey,
we're just going to keep this posting open because we're
(23:14):
always on the look for this type of role and
we're just waiting for some exceptional candidate to come around.
That's one in a million. That one I still have
an issue with, but certainly less of one than just
a fake one. But the other job postings that are
serious out there are scams. This article is can talk
about that at length, but I think there are a
number of different people who have gotten text messages about
(23:36):
fake jobs. That's one thing. But they do still exist
on job boards where they're attempting to get you to
apply to a job that is either something that is
not what it seems or is a genuine scam to
try and get you to turn over information so it
can run the gambit chuck.
Speaker 2 (23:52):
And so the big thing on this, this is from
a piece in the Wall Street Journal, is that it
becomes frustrating for individuals who are applying for these jobs
where they're like, oh, like this sounds really, you know, interesting,
but the company has no intention of filling that job actually,
And it's not saying that this is like all that
(24:13):
you see, but it's something that hey, if you're out
there trying to get a job, and you're spending you know,
time and effort working on you know, putting together cover
letters and this and that, and hey, you've you know,
you're sending out you know, dozens of these. Yeah, the
fact that you know, one out of every five might
be for a position that is not actually being hired
(24:37):
for is kind of a waste of your time. Now,
that's kind of the nature of the beast in the
job market. I mean, it's for every.
Speaker 3 (24:46):
One of those.
Speaker 2 (24:47):
I'm sure there are stories from employers about how, hey,
we scheduled an interview with candidate X, and when the
time came, they didn't show up for their interview.
Speaker 3 (24:55):
So it's it. This is not.
Speaker 2 (24:57):
A well of those horrible employers, How could they do this?
Speaker 3 (25:01):
It's much more.
Speaker 2 (25:03):
This stuff is always present in the job market to
a certain extent, and it's kind of the cost of
doing business. The other thing that I have a question
on is like, we don't have any historical data on this.
So this was figured out by a company called Greenhouse. Sure,
Greenhouse did not exist, to the best of my knowledge,
back in nineteen seventy, so we don't have any information
(25:25):
unlike some kind of longitudinal study, like, hey, has this
problem been getting worse? Has it been getting better? Or
is it about the same. It's much more. This is
what we're seeing right now. And there's probably always some
of this, just like they're probably always are some interviewees
that don't show up for their interview, and this stuff
(25:45):
gets baked into the system. But it does make for
a frustrating process. I think is something that's worthwhile to
note well.
Speaker 4 (25:51):
And my conclusion is, you know, much like other types
of Again, I don't want to describe this as necessarily
a scam, but much like many other types of things
that are frustrating in this sense, the ability for a
company to post a job has gotten orders of magnitude
cheaper over the years, and so therefore the ability for
(26:14):
fake job posts to exist. There was probably a lot,
at least financially more burdensome back in the nineteen seventies,
because you generally probably wouldn't print and add in a
newspaper for a job that you weren't actually intending to
hire for my sorry.
Speaker 2 (26:27):
Go ahead, no, you're fine. My mom was a college counselor.
While she worked, she helped to you know, get people
placed into different schools and this and that, and one
of the things that by the end of her career
that she said was, look, it's great that they have
like this common application that allows you to submit you know,
one set of you know, paperwork to different schools with
(26:48):
a couple of changes here and there. But honestly, it's
made it so easy to apply to schools that instead
of you know, actually having to like filter down your
list and do the work, it became just, oh, like,
I'm going to apply and I'm applying to twenty five
schools instead of you know, maybe seven or eight that
I should.
Speaker 3 (27:04):
And you see the.
Speaker 2 (27:05):
Same thing, Like, it's kind of the same type of
thing where hey, if it's so easy for someone to
post a job now, but also if it's so easy
to just you know, click on LinkedIn and be like
here's my resume, like you you don't have to think
about it in either one of those situations, are you
actually improving the hiring process or have you just pretended
(27:26):
to make it easier. But now, as an example, if
you are a let's say that you are a company
that's hiring, well, gee, because it's so easy to post
on LinkedIn, you get two hundred resumes. How do you
sort through that? Well, now you're you know, causing You're like, well,
we got to hire like someone to do that, or
we've got to you know, have AI do that, and
(27:47):
maybe the AI misses something that a human would and
now you've actually missed out on your good candidate. Like
are you actually building a better hiring process? And how
often do HR departments go through those reviews to be
like are we actually doing this better? Or does it
just feel good because like this is what everyone else
is doing.
Speaker 4 (28:05):
I recently saw a story from Reddit, so you know,
take it with a grain of salt as to whether
or not this actually occurred, but one Reddit user claim
to have used generative AI to be able to automatically
apply to about a thousand jobs that you know, met
certain search criterias, write up cover letters, and you know,
basically do a bunch of tasks you know, effectively, very quickly,
(28:27):
and therefore received fifty job interviews. And at first I
was like, oh, that seems a bit disingenuous, But I've
actually turned on that quite a bit because most certainly
a lot of companies are going to use artificial intelligence
to screen candidates out, uh, huh. And if you're good
enough at generative AI to use it to apply to
jobs and get an interview from that, then that seems
(28:49):
absolutely reasonable.
Speaker 2 (28:50):
We you And ultimately you're going to be judged on No,
Ultimately you're going to be judged on can you do
the work? And if you can't, then here's what's going on.
End up happening is that company is going to have
to adjust its hiring process. And maybe they don't go
through this because they get burned by it a bunch,
and maybe that goes away. Like this is how the market,
(29:10):
you know, either gives or takes based on you know,
the results that that you're getting from these types of things.
Speaker 3 (29:17):
But yeah, I mean, look, what.
Speaker 2 (29:20):
As long as you are not lying and making stuff up? Okay,
Like if if here's I will say, if the generative
AI is just making up stuff, problem, But if it's, hey,
here's my work experience generative and this is stuff the
generative AI can do. Here's my resume, here is the
(29:42):
the the job listing. Transform this resume into something that
like captures all of the buzzwords from this job listing
so that their AI will pick up on my AI's stuff.
Speaker 3 (29:55):
Fine, Like you.
Speaker 2 (29:56):
But if you are just you, it is hey, come
up with like a fake you know, resume of you know,
but that's I don't think that's what we're talking about here,
are we, Mike.
Speaker 4 (30:08):
No, No, that's not what we're describing here. And so yeah,
I'm right there with you. The application for jobs market
is well, it's already changed quite a bit. It's going
to continue to do so. And yeah, if you're a
company that's just leaving a job post up in perpetuity
just to seem like you're growing, then I have a
problem with you. But that's probably par for the course.
Speaker 2 (30:30):
Now, can I can I make a I don't want
to call it a prediction, but you want to know
what my my black Swan event is for the next
twenty years, And this is something like something I think
is unlikely, but at the same time, I wouldn't be
(30:51):
surprised if it happens. The Internet is going to kill
itself going to and what I mean by that is
we're going to have so much AI slop that's created
that we're going to pull back from the Internet because
(31:11):
we can't tell what's real there or not. And as
a result, the Internet is going to become useless for us,
and we're going to get back to having to actually
talk to people because we just don't trust anything that
we are seeing on the internet.
Speaker 1 (31:28):
I don't.
Speaker 4 (31:28):
I hope we do get to the point where we
don't trust things that we see on the internet. But
and that may be where we're heading. Unfortunately, that's one
piece that I see we are not there on. People
still trust far too much the internet more than they should.
Speaker 3 (31:43):
Take a quick break here.
Speaker 2 (31:44):
When we come back, we'll talk a little bit about
the latest coming out of la As far as hey.
People there losing their homes. It's where a lot of
their wealth is held. How do they move forward world
in which that wealth is at least temporarily not there
the way it used to be.
Speaker 1 (32:06):
This is your home for the most comprehensive coverage of
the economy and the trends on Wall Street. This is
the Financial Exchange Radio Network. Find daily interviews and full
shows of the Financial Exchange on our YouTube page. Like
us on YouTube and get caught up on anything and
everything you might have missed. This is the Financial Exchange
(32:27):
Radio Network.
Speaker 2 (32:33):
Peace and Wall Street journals titled their Wealth is in
Their Homes, Their Homes are now ash. And what this
is talking about is, Look, I know that no one
likes to have sympathy.
Speaker 3 (32:43):
For people in la for whatever reason.
Speaker 2 (32:46):
But when you've got you know, people that have had
their homes burned to the ground, I hope that you
can find just a little bit of it and maybe
not make this into something else, because you have people,
just as an example, who might have bought their homes
as you know, average middle class people. They might have
spent you know, a few hundred thousand dollars twenty years
ago to go and buy a home, and now that
(33:08):
home by virtue of you know, being in a state
where they do a horrible job of building new homes
and you know, actually having a vibrant real estate market,
that home that was purchased for three hundred thousand is
now one point five million and burnt to the ground.
But the family that lives there hasn't you know, seen
their income go up five x. It's you know, there's
still a middle class family and now they're trying to rebuild.
(33:32):
And in a world in which you have all kinds
of insurance problems in the state and reports that are
coming out about you know, small local insurance that may
be insolvent and not able to pay all claims and
things like that. You've got questions from these families as to, hey,
we lived here for you know, twenty thirty forty years.
We don't know if we can afford to rebuild here
because we don't actually have the money to do so,
(33:54):
and we're not sure we're going to get enough from
our insurance claim to be able to cover know what's
there as well.
Speaker 4 (34:01):
Yeah, look, I think this is a pretty relatable story
for anybody on either of the coasts quite frankly, right,
I mean, you talk about the town from which we're
broadcasting right fifty years ago, very middle class town where
you could afford it as a trades person or you know,
in a middle class job. Today, home prices, yeah, are
(34:25):
appreciated too levels similar to what you're probably seeing across
Los Angeles. And for a lot of people, that was
their rainy day fund, it was their nest egg. And
you know, you certainly hope that most of those had
insurance coverage. But honestly, that group of people, the people
that you know did see that type of appreciation and
(34:48):
maybe bought it in the nineteen seventies are probably the
most likely group to be uninsured at the moment when
you talk about the cost, when you talk about the
fact they might not have a mortgage anymore, that cohort
is probably the most likely to said over the years, Hey,
I need to cut somewhere, and so either I'm going
for a really really slimmed down insurance package or I'm
doing without insurance entirely. You hope that's certainly the minority,
(35:11):
but it may exist. Look, ultimately, I think that with
a disaster of this size there will be a fair
bit of aid. But you bring up a very reasonable point.
These are densely populated areas. It's going to take years
to rebuild, and for a lot of folks it's going
to mean an inability to move back to an area
that they have in many cases raised families in and
(35:33):
and grown in and have jobs and all sorts of
things that are going to be massively disruptive. And Look,
this is one of the I think one of the
key risks to having a huge portion of wealth in
your home is you know, you buy its very nature
have a concentration risk that is unlike kind of any
(35:56):
other investment out there. When we talk about investing, not
that a lot of people were doing this as an investment.
It is their residence. But when you talk about having
a huge portion of your investible or uninvestable wealth in
value of real estate, this is one of those key
risks out there that we see and talk about frequently,
and hopefully most of it was insured, even if that
(36:18):
insurance market looks a lot different in the future.
Speaker 5 (36:21):
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Speaker 3 (37:22):
Mike, you see the Chuck E Cheese is making a
bit of a comeback.
Speaker 4 (37:26):
No, when did they enter bankruptcy? Was that last year,
the year before?
Speaker 2 (37:29):
I don't recall, but twenty twenty actually five years ago,
I believe it or not. I know, time flies. But
so they came out, you know, missing seven hundred and
five million dollars in debt. And the big thing they have,
I guess their locations that are still around. They've moved
more towards things like trampolines and you know, more active
(37:51):
type stuff and gotten rid of some of the stuff
that they used to have. They've also ballpets, what's that
p filled ballpits?
Speaker 3 (37:59):
You mean, I'm not going to.
Speaker 4 (38:04):
That's that's kind of what they were known for before.
Speaker 2 (38:07):
We're gonna take a break now, and uh yeah, well,
we'll come back and discuss that an hour two on
the Financial Exchange. We've got a lot more, including uh,
what we can expect from the Trump administration on tariffs, UH,
and where earning season is projected as well.
Speaker 3 (38:22):
All that and more coming up in a bit
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