January 15, 2025 • 38 mins
Chuck Zodda and Marc Fandetti discuss the CPI report that came in better than expected and some of the key elements to watch for on inflation. What is Trump planning to do to achieve energy dominance? The $2T home insurance nightmare is only getting worse. Falling birth rates raise prospect of sharp decline in living standards. What are some of the less-known trends in inflation?
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Speaker 1 (00:00):
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(01:06):
and Mark Vandetti.
Speaker 2 (01:10):
Chuck Mark Tucker with you here, and we've got the
stock market in the midst of a good sized rally today.
The DAW's up six hundred and fifty six points, SMP's
up ninety six, NAZEK up four to sixteen, so anywhere
from like a one and a half to two and
a quarter percent rally taking place in equity markets today.
(01:30):
Bond's also rallying. Tenure yield down twelve point five basis
points to four point sixty six three percent, so that
is always fun to see if you are shopping around
for a mortgage that'll help out as soon as today.
Oil West Text Intermediate up a dollar twenty four to
seventy eight seventy four a barrel. The TRIPAA national average
(01:51):
for gas prices also now starting to pick up on
higher oil prices coming through up one point eight cents
overnight to three dollars and eight point nine cents nationally,
so you are again moving up on that front. And
you've got gold up eighteen seventy ouns to twenty seven
(02:11):
oh one even this all on the back of a
CPI report that came out at eight thirty mark. What
did that report show.
Speaker 3 (02:18):
Yeah, the government reported today, Chuck that headline CPI inflation
rose point four percent, that's month over month November to December.
This is higher than November's point three percent increase. But
in twenty twenty four, inflation went up again by the
CPI Consumer Price Index headline number by just under three
percent two point nine percent. That's not terrific relative to
(02:41):
the Fed's long term goal, but it's lower than twenty
twenty three's three point three percent and much lower than
twenty twenty two six point four percent rates, So progress
year over year in a larger sense, biggest contributor in December. Now,
I was personally surprised at how big the headline jump was.
I haven't seen a point four percent month over month
(03:01):
print for a while, but I probably shouldn't have been,
because we know energy prices went up by a lot,
and they're a component of headline inflation. They're about six
and a half percent of headline inflation. Not quite the
biggest constituent. Food is bigger, but they're big, and energy
prices went up by a little over two and a
half percent, so they were the big driver. And because
you don't want to get fooled, by one offs and prices.
(03:24):
The statisticians that the Department of Labor also calculate something
we call core inflate.
Speaker 4 (03:28):
No, we don't call it. Everybody calls it core inflation.
Speaker 3 (03:30):
That's headline less food and energy, and there the results
were a little tamer, so called core inflation ex Food
and energy inflation was up by zero point two percent
month over month, down from zero point three percent the
month before. And there were some subcomponents of core that
researchers watch closely, like shelter, which tends to be persistent
(03:54):
and is a huge contributor to core, and for that matter,
headline inflation that were flat month over month. So the
market loved this morning's report. I don't quite get the overreaction,
but you talked in the last hour about reasons why
the bond market might have been ready to rally, But
the core inflation news, I guess, was the key takeaway.
Though I should mention that other measures of the trend
(04:15):
in inflation, which is what CORE tries to get at,
were less encouraging today, and maybe we'll talk about that
later in the hour.
Speaker 2 (04:24):
Speaking about energy, piece here a Wall Street Journal exclusive
Trump plans quote energy dominance executive orders after inauguration. What
is being discussed in terms of potential policies roll out?
What types of things are they discussing here?
Speaker 4 (04:42):
Yeah, allow more.
Speaker 3 (04:44):
I guess this is the operationalization of his drill drill, drill,
A rallying cry, make more land available, loosen regulations, do
what you can by executive order. I guess you can
make more federal land available for drilling by executive order,
(05:04):
and over time, which he may need the help of
Congress on, reduce regulatory burdens on exploration and production companies.
Of course, these commodity oil, like many commodities, are priced
in a global market and subject to global factors. It's
not obvious that a president with a wave of his
pen can make it easier to explore for and pull oil,
(05:29):
or any commodity for that matter, out of the ground,
even if they very aggressively and earnestly wanted to. So
we'll see oil prices aren't acting like they think this
is going to be see changing.
Speaker 5 (05:40):
Well.
Speaker 2 (05:40):
I think another question is do energy companies actually want
to drill more?
Speaker 4 (05:45):
I can answer that no, they don't.
Speaker 2 (05:47):
And the reason why we say that is because, remember,
the United States is not the only place that you
can drill for oil. We produce today about was it
twelve thirteen percent of world oil. The US is the
largest producer of oil in the world. But ultimately there
are plenty of places that you can produce oil. And
so I think the piece that I look at on
(06:07):
this is, Hey, you have a situation where for the
last several years, even when presented with higher prices, companies
of oil companies have maintained really strict discipline. And the
reason why they haven't overextended themselves is because back in
the twenty tens, coming out of the Great Recession, you
(06:30):
had oil prices that got up into the you know,
eighty ninety a barrel range, and a lot of US
you know, energy companies said, oh, this is great, Like
we can make all this money. Let's let's you know,
deploy all this capex, let's let's drill, and let's just
get as much oil as we can out of the ground.
And in twenty fifteen, might have even been late twenty fourteen,
(06:51):
I forget the exact timing on it. Russia, who was
unhappy with, you know, starting to lose market share in
the global oil sales market. They said, you know what,
screw it, We're gonna just turn on the spigots and
pump out as much oil as we can to drive
the price down. And it took the price of oil
(07:12):
on West Texas Intermediate. If you look at where it
went the price of oil heading into this I haven't
pulled up here now. So at the end of July
of fourteen, West Texas Intermediate was at ninety eight a barrel.
Late in fourteen is when Russia did this, And by
January of twenty sixteen, the price of oil was twenty
(07:35):
nine dollars a barrel, cut seventy dollars off the cost
of oil, and these energy companies just had their lunch
absolute And anyone who's listening who was invested in energy
stocks during the twenty tens, you're nodding along, going yep,
I remember it. It was like the worst decade to invest
in energy stocks in a long long time. It was
(07:57):
just absolutely brutal for them. And so the people that
run these oil companies, they are sitting there now and
they have these these memories are fresh in their mind.
I mean, to anyone listening, you think back to like
twenty fourteen, twenty fifteen, you're like, yeah, I remember that
pretty well, and it just left scars on these oil executives.
(08:18):
And so my question, I guess is, look, the Trump
administration can say we're gonna make this easier for oil companies.
I have no doubt that they will, Like I'm not
saying that they're going to make it harder. The question
is do oil companies actually want to drill more? And
I don't know that the facts are in evidence. Do
they want it to be easier and cheaper when they
(08:39):
do drill? Yes? Absolutely, of course. They want fewer regulations,
fewer costs they have to pay for drilling, and they're
gonna get it.
Speaker 4 (08:47):
Yeah, oh yeah, the wait get it.
Speaker 2 (08:49):
The question is does it result in more energy being produced?
The net amount of oil that the US produces is
probably going to go up, because it's going up for
the last fifteen to twenty years. Ever since the frackers,
you know, figured out how to do it in the
mid two thousands, you've had a nice upward trend in
US energy production aside from the Great Recession. But are
(09:13):
you going to see some huge transformation where all of
a sudden energy companies wake up and say, you know what,
this is the time to increase US production by twenty
five percent.
Speaker 4 (09:24):
No, of course not.
Speaker 2 (09:25):
No, I don't think so.
Speaker 3 (09:27):
As a producer, you want higher prices, and that's much
of the country now.
Speaker 4 (09:30):
We are a net or exporter.
Speaker 3 (09:33):
Yeah, I go, okay there, let's just put it that way.
We make more oil than we consume, even though the
relationships start to get complicated because we still import oil.
And that's hard for me and non energy experts to understand.
But we produce a lot of oil. Half of what
we produce, though, comes from so called fracking, this new
technique that came about in the eighties and it was
perfected in the early two thousands. Fracking's more expensive. You
(09:57):
need to get a higher price for your product for
it to be profitable. So frackers who gave lavishly to
Trump's campaign need a higher oil price to satisfy their shareholders.
They could have produced more over the past, however many years. Again,
they produce about half of ar oil now according to
the Energy administ Information Agency. They don't want a lower price.
(10:20):
So this particular promise of the incoming administration, the promise
to both deregulate oil and lower prices or satisfy the
oil industry. I should say and lower prices. Those two
promises are intention just like the promise to lower inflation
prices generally, but at the same time increase tariffs and
(10:44):
expand the economy more vigorously. Those two promises are intention.
A lot of the promises made by the incoming or
any new administration or intention. It'll be really interesting to
see how they get resolved.
Speaker 2 (10:56):
It's not to say that this is all going to
end badly. It's much more, Hey, this has to resolve someway,
and how is it going to actually play out? We
don't really know. We have to wait and see how
this all goes, especially because we still don't have a
ton of specifics. But we're starting to get closer. I mean, look,
we are five days away, so we're we're just about there.
(11:18):
I've I'm so glad we're not gonna have to speculate anymore. Again.
We've talked about my big complaint in this whole you
know process over the last two months is it doesn't
need to be two months. You're elected, great, move in
the next week, Like, why do we need a two
month gap? You don't have to take the covered wagon
from New York down used to two months four months.
Speaker 4 (11:41):
Was it March?
Speaker 3 (11:42):
What was the inauguration date? I have no idea prior
to I want to say prior to Lincoln.
Speaker 2 (11:47):
Well, and again, part of that was because you had
to literally blow up the wagon and get everyone down
to DC like it was a whole production. Today, Great,
hop on the next jet blue flight, hop on the
next Delthard light like call a day.
Speaker 4 (12:02):
Yeah, but you need this.
Speaker 3 (12:03):
You need the Senate to conform, to advise and consent
on his nominees. The Senate was just sworn in a
few weeks ago. That process takes a little bit of
time to gear up.
Speaker 2 (12:11):
So my solution is, don't move the inauguration, move the election,
make it the look, make it like the first week
in December. Cut the time in half. It should be
a month between. Four weeks is fine. You mean to
tell me that you're running for president and you can't
figure out how to get your staff.
Speaker 4 (12:30):
In order, thinking all that, if you can't get.
Speaker 2 (12:32):
Your staff in order in four weeks, then you shouldn't
be president of the United States. Like, what are we
really doing here?
Speaker 3 (12:41):
Yeah, we should be able to do it real quick,
more quickly. It feels like it happened though at a
pretty brisk pace. I mean it took some states.
Speaker 2 (12:49):
Oh my goodness, the amount of time that we've had
to spend speculating about, well, this tariff happened with that one.
Speaker 3 (12:54):
That's because he keeps chanting. Frankly, Trump is being a
little bit more, probably for negotiation reasons.
Speaker 4 (12:59):
But he's stock.
Speaker 2 (13:02):
But cut the time down.
Speaker 4 (13:03):
But he's unusual.
Speaker 3 (13:04):
He will just call him skilled in the art of
creating uncertainty. Yes, I guess for leverage. Yes, So that's
it's been magnified by his style. Otherwise you normally wouldn't
hear anything from a candidate.
Speaker 2 (13:14):
Put the time down, make it a month, it'll be fine.
Speaker 4 (13:17):
We don't feel that urgency. But if it's gonna go
like this.
Speaker 2 (13:22):
Quicker these days, you know everything's quicker. You don't need
a month between the send him in that evening. You
know you're out, buddy, Send him in, Like why do
we have a lame duck president? Like when when when
people have voted you out? Move on, Let's let's let's
get going. I don't know, we don't need this whole
(13:44):
time in between. Let's take a quick break, speaking of
time in between, and when we come back, we've got
trivia right after this.
Speaker 1 (13:51):
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Speaker 5 (14:25):
And sign contributae here on the Financial Exchange. On this
day in two thousand and nine, a US Airways flight
had to land on the Hudson River shortly after takeoff.
All passengers and crew members survived what became known as
the Miracle on the Hudson Trivia question today, what is
the name of the pilot who landed that plane on
(14:46):
the Hudson River? Once again, what is the name of
the pilot who landed that plane on the Hudson River?
Be the seventh person today a Texas at six one
seven three six, two thirteen eighty five with the correct
answer Financial Exchange showed T shirt once again. The seventh
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(15:09):
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Speaker 2 (15:13):
Piece in Bloomberg opinion, the two trillion dollar home insurance
nightmar is getting worse, and yeah it is. So here's
the deal. H Home insurance rates are skyrocketing around the
country obviously, Like the places where you've heard this the
most are you know, Florida and the Gulf Coast, where
you've seen premiums double triple, even quadruple in some cases
(15:34):
over the last several years. Uh, California is heading in
that direction because since the nineteen eighties they have not
allowed for more than seven percent annual premium increases in
order to try to keep home insurance rates low. As
insurance have left that market, they've now been forced to
pivot and are starting to approve, you know, increases even
just for one year in the thirty to fifty percent range.
(15:57):
So look, this is this is going to be in
my opinion, like when you look at where recessions come from,
it's usually always something on the financial side where people
went too far in one direction, and you know, the
last one was mortgages back in two thousand and eight.
(16:20):
In my opinion, the insurance markets for both home and
auto insurance are completely broken. And if I had to
pick out where the next financial crisis is going to be,
it's not going to be in banks. It's going to
be with insurers. In my opinion.
Speaker 3 (16:35):
Yeah, there are a lot of possible culprits. I hadn't
thought about their size and the potential impact of, say,
the failure of a major insurer, though they should be hedging.
Speaker 4 (16:46):
These I'll call them my abilities.
Speaker 3 (16:49):
And there are markets where you can do that. You
can offload your risks as an insurance company.
Speaker 2 (16:54):
But someone else picks up that someone else does.
Speaker 3 (16:56):
But it's in theory diffused catastrophe bonds provide an outlet
for that risk. But as you like to point out,
risk can be sort of dissipated. It can be spread
out but never eliminated. And this was the problem in
OH eight. Risk on mortgages was spread out, it was
not eliminated. It's it's not funny, that's nervous. That's a
nervous chuckle. I don't know, chuck, I don't know what
(17:18):
the long run, you know, we say the market is broken,
but actuarily it is what it is. The risks are
growing fast and they're more varied than they used to be.
How do you price that as an actuary?
Speaker 2 (17:32):
Mike and I talked about this a little bit last week.
Actuaries can price it. The questions are state insurance Commission's
going to allow them to?
Speaker 4 (17:40):
You'll put those into the marketull out.
Speaker 2 (17:41):
And this is where we are right now. And this
is not just exclusive to California and Florida again, two
states that have dramatically different governance but are obviously going
through very similar things in terms of insurance markets that
are completely broken and have had insurance leaving the for
you know, various different reasons this is going to be.
(18:04):
I mean, you look at just about anywhere in the
United States and the natural disasters that you are seeing,
and the cost of dealing with them is continuing to
move higher. And insurance money, it doesn't just get created
out of thin air. I think we all need to
do some homework in understanding what insurance is and what
(18:25):
it isn't because when you put insurance on your when
you go and take out a policy for homeowner's insurance,
it specifies this is what we cover. Here are situations
where you are not covered, Here's how much we will pay,
and here's you know what you're entitled to. Nowhere in
it does it say you're going to rebuild this exactly,
(18:48):
and have you know all the stuff you used to
and this and that. And this is why I think
sometimes there's a disconnect in terms of how people you know,
look what people think. Home insurance doesn't wait, they don't.
They just say, well, my home is destroyed, Like why
won't my insurance cover it? And it's like, well, you
have a policy that said it didn't cover fire, and
your home was just destroyed by a fire. So you
(19:10):
you've got to do your research on this stuff and
understand what your covered perils are, what they aren't, what
your coverages are. And this is stuff you got to
be looking at every single year. And if the prices
are moving in the wrong direction, you got to figure
out ways to mitigate that, either through carrier changes, changes
to deductibles, things that you can do there. But it's
not just going to go away. You can't stick your
(19:31):
head in the sand because this is here to stay
as an issue. Quick Break Trivia Answers Next.
Speaker 1 (19:42):
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Speaker 5 (20:06):
Trivia question today was what is the name of the
pilot who landed the plane on the Hudson River. There'll
be Chelsea Sullenberger aka Sully. Winner today of the Financial
Exchange Show t shirt was Michael from Stowe Mask.
Speaker 2 (20:21):
Congrats to Michael.
Speaker 5 (20:22):
And we played trivia every day here on the Financial Exchange.
See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (20:32):
All right, piece here in the Financial Times titled falling
birth rates raised prospect of sharp decline in living standards.
I'll quote from here a McKinsey report investigating the economic
impact of declines and birth rates found the UK, Germany,
Japan and the US all have to see productivity rise
(20:52):
at double the pace seen over the past decade to
maintain the same growth in living standards witnessed in the
nineteen nineties. Okay, so a couple things on this that
I have thoughts about. First, if they looked at those
four countries, take a look at China and tell me
how much their productivity would have to rise in order
(21:14):
to maintain the same growth in living standards that they've seen.
Because if you think the demographics are bad in the UK, Germany, Japan,
and the US, they're worse in China. Next. I think
that when you look at productivity growth, part of me
wonders if it's a chicken and egg situation in that, Hey,
(21:38):
if your living standards are fine with the productivity growth
that you have, how like how much do you need
to push the envelope? Because like, if basically what I'm saying,
if there isn't a problem, how many resources get devoted
to solving it? Not many. On the other hand, if
you start to see living standards decline, and the case
(21:58):
they're making is like, look, you don't have enough people
and so you won't be able to produce all the
stuff that you need, won't companies spend more money trying
to build automation solutions to whatever those problems are increased
productivity because they say, hey, there's a market that we
can sell to, but we don't have enough people. We
need to figure out alternate ways of producing the stuff
(22:20):
that's needed. I kind of wonder if it's a chicken
and egg thing.
Speaker 3 (22:23):
Yeah, we don't really know what causes economic growth. Unfortunately,
we know that the labor force growth is a key
part of it. But populations have grown throughout history and
we haven't always had economic growth, So so productivity growth
is the key to growth models that became widespread in
the twentieth century. Productivity growth is a residual in those
(22:49):
It falls out of the accounting. It's what cannot be
explained by growth in the labor force and growth in
the so called stock of capital, just all the stuff
we used to produce goods and services. And it's not
as easy as ratcheting up investment to get productivity growth.
The two are correlated, but that doesn't mean that just
(23:11):
rising investment, raising investment, spending more capital and discriminately is
going to increase productivity growth. So I never know really
what to make of this. On the surface, it's not
a good thing. You can't have economic growth without labor
force growth and productivity growth. Productivity growth might make up
for some of the slow down in labor force growth,
and it's really been dramatic in the nineteen sixties. From
(23:35):
the nineteen sixties to today, let me just make sure
I just pulled the right series here. Labor force was
growing at one point three percent in the sixties, one
point one percent in the seventies, dropped off in the eighties,
little over one point two percent in the nineties, and
a lot of this is all just demographic and immigration.
By the way, we can control the Spickett to a degree,
and it's now half that rate. It's been slowing down
(23:58):
virtually every decade since the nineties nineties, So I guess
it is and it is not a problem Chuck either way,
there's no easy solution.
Speaker 2 (24:07):
I feel like every time we talk about this that
there are a couple of things that come to mind.
The first is you bring up, you know, falling birth rates,
and everyone's like, oh, like, we got to do something
about this. But then like you tell people that means
that there's gonna be more people in your town, and
they're like, no, don't build any more housing. I don't
want I don't want more people here, like we've we've
got enough. And then on top of that, you say, oh, well,
(24:29):
like you know, it must be a money thing, like
that's why people aren't having kids, because that's what they say.
But the countries that have actually gone and tried to
incentivize you know, higher birth rates. Have found that giving
people more money to have kids doesn't actually do it.
Speaker 4 (24:46):
So now in the wealthyer you get, the fewer kids
you have too.
Speaker 2 (24:49):
It's I think part of it, quite honestly. And and
and look like everyone makes their own decisions about kids.
Like the single worst thing that I think we could
do is like basically forcing people to have children. I mean,
I can't imagine any worse environment to grow up in.
Alcohol good point, how do you do that? But I
(25:11):
guess what I'm what I'm getting at on this is that, Look,
they're all different reasons why people choose to either have
children or not have children, Like there's no right or
wrong way to do it. Historically, the reason why people
had kids was pretty darn simple. You needed people to
do all of the work involved with staying alive throughout
(25:34):
much of human history. You needed people to you know,
handle the farming stuff. You needed like you literally needed
people to like, hey, I gotta you know, we've great,
We've got to you know, chop all the firewood for
this year in order to stay warm in the winter
that you didn't just have like the oil truck pull
up to the front of your house and do that.
So the reason why people had kids historically in human
(25:55):
society was A, you needed them in order to survive,
and B there's a decent chance, like a fifty to
fifty shot, that half of them weren't going to make
it to age five.
Speaker 3 (26:07):
Till the NIST, it wasn't reliable birth control until the
twentieth century. So his wealth rises and his education levels rise,
people have fewer kids. This is a basic empirical sort
of fact.
Speaker 2 (26:17):
And so I think I don't know that we are
going to get to a point where we see a
dramatic reversal in birth rates. Is where I'm going. I
think we need to figure out how to deal with this.
It depends rather than expecting things to reverse somehow.
Speaker 3 (26:32):
And my point is I don't think there's much you
can do about it, Chuck, because you can't just wave it.
Just like you can't wave a wand and increase oil production,
you can't wave a wand and increase productivity. I'll say again, economist,
don't you were going to say baby production? I don't
really end I don't really under serving in.
Speaker 2 (26:47):
A number of levels.
Speaker 3 (26:48):
Yeah, yeah, you can't just dictate that or think really
hard about it, or devote a lot of effort to it,
and by force of will get productivity to rise. It's
not it's not that easy. Economic growth both is a
recent phenomenon. By that, I mean roughly the mid seventeen
hundreds starting in the UK to present. Before that, there
was very little economic growth, like a couple tenths a
(27:11):
decade on average.
Speaker 4 (27:12):
It's hard for it.
Speaker 3 (27:14):
Takes centuries just to get a new pair of shoes
or a better one. It's hard for us to conceive
of that because we're so used to living standards doubling
within our lifetime, which they continue to though the doubling
the time to doubling is slower than it used to be.
Speaker 2 (27:28):
Do you know why cobblers are called cobblers? You're talking
about getting a pair of shoes, because historically, the way
it would work, like, you'd have a pair of shoes
made when you were you know, basically when your feet
were fully grown, and as they wore out, you would
take them to the cobbler who would cobble something together
with spare scraps of leather and things like that, and
you'd basically wear the same shoes for most of your life.
(27:51):
That was kind of how it worked. So that's where
the term cobbler.
Speaker 4 (27:54):
Why is that not a last name?
Speaker 3 (27:55):
We've got Coopers and Tanners and Smiths, and do you
know any is Cobbler a surname?
Speaker 4 (28:01):
Uh?
Speaker 2 (28:02):
I know?
Speaker 4 (28:03):
Or is that just to know?
Speaker 2 (28:04):
The only thing that I know that's a cobbler is
an apple cobbler, which is delicious. Oh the actually oh
the okay, okay, yes, the actual dessert which is delicious.
Speaker 4 (28:11):
That was a person. I'm like, what the hell do
they do?
Speaker 2 (28:14):
No?
Speaker 4 (28:14):
But an apple cobbler? Yeah, it's yeah, you'd really fascinating, Tucker.
Speaker 2 (28:18):
Do you know anyone with the last name Cobbler?
Speaker 1 (28:20):
No?
Speaker 4 (28:21):
And no, nor does he want to take anything any day?
Hell are we talking about? No?
Speaker 2 (28:26):
It was just a question.
Speaker 4 (28:27):
I've had a very eye went there.
Speaker 2 (28:28):
No, I've had a very eventful twenty minutes. I want
to play.
Speaker 4 (28:32):
For retracted Chuck everything.
Speaker 2 (28:33):
Okay, I am I. I got this message on my
phone at eleven fourteen am. This is from Wichita, Kansas
number that called me. We'll see if this this works here. Hi,
this is Comcast Exfinity.
Speaker 1 (28:48):
This is your final notice regarding your fifty percent discount
offer on your monthly.
Speaker 3 (28:52):
Bill which expires today.
Speaker 2 (28:54):
Very disappointing to send your rate from increasing.
Speaker 1 (28:57):
Call back now at the number on your caller IV
thank you.
Speaker 2 (29:02):
So I got that from a Kansas number and obviously
called them back right away. The first thing, I'm not
a Comcast subscriber, so I immediately knew that it was fake.
But I can totally see how. Look if if you
are one, and you know, maybe you had some discount
because you just moved in like a year ago, Okay,
like you might call back, but it's it's obviously a scam.
(29:23):
I then at eleven twenty nine am got a text message.
It says easy Drive m a alert. Your vehicle has
an unpaid toll bill to avoid excess of late fees.
Please settle promptly. Thank you for cooperation. It includes a
link to click on. It also tells me to please
reply why and blah blah blah and do this and
that and so in this case, I went to my
easy pass account just because I you know, I know
(29:46):
that I don't have an unpaid toll and I went
there and actually have sixteen dollars and eighty two cents
in my easy pass account right now, So that was
kind of exciting to me. But the point that I'm
making with this is both of these are obvious scams,
and if you're not constantly on the lookout for stuff
like this, it's easy to end up getting fooled and
(30:08):
you accidentally send your information to someone who shouldn't have it,
who's trying to scam you out of a whole bunch
of money. The Armstrong Advisory Group has put together a
guide this month titled seven common financial Frauds and Scams.
It's just about the precautions that you need to take
to make sure that you're not getting caught by these
Everyone likes to think they're smarter than the scammers. Everyone
(30:29):
likes to think that they're better and they won't fall,
you know, for these things. But you have to stay
on top of it, and so this guide helps to
give you some ideas of what you need to be
doing to protect yourself. How do you request it call
eight hundred three nine three four zero zero one. The
way I look at it, look, each year you spend
two thousand hours working. Over the course of a career,
(30:51):
you spend like eighty thousand hours working to build up
your nest egg, spend like half an hour reading this
to figure out what you know not to do to
undo that all. I think this is hugely important. There's
so much this that goes on right now. Please make
sure you're taking the appropriate precautions. The guide if you
want to request it, it's seven common financial Frauds and Scams.
(31:14):
Call eight hundred three nine three for zero zero one.
That number again is eight hundred three nine three for
zero zero one.
Speaker 1 (31:23):
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 estate planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 2 (31:38):
Follow up on a story that we covered first last year,
Capital One is accused of cheating millions of customers out
of interest rate payments. The Consumer of Financial Protection Bureau
accused Capital One of freezing the rates of its three
sixty Savings accounts at low levels and then not telling
people that the bank offered a new account that offered
better rates without telling three sixty Savings customers. I was
(32:01):
one of these by the way, who my Capital one
account was not being paid the interest that I thought
I was going to get, and eventually I had to
open up a new account in order to get what was,
you know, the new rate and things like that. Capitol
one says that they're deeply disappointed to see the CFPB
continue to reacing pattern of filing eleventh hour lawsuits ahead
(32:24):
of a change in administration. Okay, so what so you're
you're not denying that you did this, You're just saying, hey,
you waited too long to do this, and hopefully the
next administration doesn't follow through on it. Man, Like, what
a scummy thing to do.
Speaker 4 (32:39):
Yeah, that's terrible. So that's terrible.
Speaker 2 (32:41):
I gotta tell you, I've been a Capital one three
sixty customers since before they were Capital one three sixty,
back when they were I in g direct. If anyone listening,
you know, remembers Capital one bought that business maybe eight
nine years ago. Pretty sure on this leg again, when
Capitol one comes out and says stuff like that, kind
of done, kind of done something right. Sorry, Like there's
(33:04):
other places that you can get good interest rates with
online banks, And if you're gonna treat your customers like
that and then basically like spit in the face of
someone who's saying, hey, you treated your people wrong. Sorry, guys,
kind of done.
Speaker 3 (33:18):
That's so appalling. I almost don't believe it. Kind of
dogs person would say that.
Speaker 4 (33:22):
Who said that? Was it?
Speaker 3 (33:23):
It's just a spokesperson or was it a C suite
executive to it?
Speaker 2 (33:26):
Said Capital One said in a statement, So I think
it was going.
Speaker 4 (33:28):
So a good vet. It went through there in house
attorney and stuff.
Speaker 2 (33:33):
Wow, we strongly disagree with their claims and will vigorously
defend themselves in court. The new account was marketed widely,
including on national television. Well, look, I was a Capital One.
I generally like to think of myself as not being
hugely dumb. I'm at least like kind of intelligent. And
I had no idea that they had like launched a
(33:53):
new account and that the old one that was marketed
that way was no longer eligible for the higher rates.
So yeah, I would say it was a little bit deceptive.
Quick break here, when we come back, we got stack Roulette.
Speaker 1 (34:06):
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(34:29):
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Speaker 5 (34:39):
This segment of The Financial Exchange is brought to you
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Speaker 2 (35:24):
Mark what do you got for me for stack roulette?
Speaker 3 (35:26):
Well, markets reacted jubulantly to the core the x food
and energy component of inflation, coming in ato point two
percent month over month, which was pretty tame, though maybe
not as low as the Fed needs it to be.
There are other measures, though, of the trend in inflation.
We talk sometimes about the median, which just means the
one in the middle, or other forms of calculating inflation
(35:51):
that trim the extremes that can happen from month to month,
whether they come from food, energy, insurance, or cell phone prices.
There's a Federal Reserve Bank that calculates media and another
measure of trimmed inflation every month. It's the Federserve Bank
of Cleveland. They came out with that number this morning.
Median CPI point three trimmed means, so they trimmed roughly
(36:11):
the ten percent right and leftmost extreme observations also point three.
Speaker 4 (36:17):
You don't need.
Speaker 3 (36:18):
Sophisticated mathematics to annualize those. Just multiply by twelve. That
suggests inflation. If you want to annualize this month somewhere
in the mid threes. And if you want to take
the last three and six months for a slightly long
term perspective, you also get inflation in the load to
mid three. So I'm not sure the markets exuberances justified
as we talked about earlier, Chuck, I.
Speaker 2 (36:38):
Want to talk a little bit about Walmart did either.
If you happen to see that they rolled out a
new logo today.
Speaker 5 (36:46):
Needed a magnifying glass to see the difference, but yes,
I did see it.
Speaker 2 (36:49):
So Walmart rolled out a new logo. They wrote a
whole page of stuff about it. It basically looks like
they did select all and then made the text bold yeah,
and like the yellow star like a little bigger Yeah,
they bolded everything. Yeah. It's like, you pay somebody for this. Really,
(37:15):
how much do you think they paid to do this?
Speaker 5 (37:17):
The person?
Speaker 2 (37:18):
No, Walmart? Like, what do you think the dollar value
is that they spent on figures? Hitting both figures? Probably?
I mean, I guess it's good work if you can
get it. And companies are always doing this kind of stuff,
and I get that you want your brand to be current.
It's just I mean, this is it Mark, this is
(37:45):
it I'm holding up my computer. I know no one
listening can see, but it's literally they the color blues
a little different. They're calling it true blue, which feels
like is gonna get in them into a fight with
Is that JED blue? The blue? Yeah?
Speaker 1 (38:03):
Ye?
Speaker 2 (38:04):
Are they gonna buy Jed blue? Are they gonna buy
an airline? If it's a hint, yeah, maybe they're gonna
buy an airline. And then they're gonna Yeah, they're gonna
be sending products through the sky right to your doorstep
by drone in Jersey.
Speaker 3 (38:22):
Somebody's got to think this stuff works. Though they're spending
money on it, they're not stupid people.
Speaker 2 (38:26):
Quick break for the rest of the day. We'll see
you tomorrow on the Financial Exchange
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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Armstrong and Money Matters Radio do not compensate each other
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(01:06):
and Mark Vandetti.
Speaker 2 (01:10):
Chuck Mark Tucker with you here, and we've got the
stock market in the midst of a good sized rally today.
The DAW's up six hundred and fifty six points, SMP's
up ninety six, NAZEK up four to sixteen, so anywhere
from like a one and a half to two and
a quarter percent rally taking place in equity markets today.
(01:30):
Bond's also rallying. Tenure yield down twelve point five basis
points to four point sixty six three percent, so that
is always fun to see if you are shopping around
for a mortgage that'll help out as soon as today.
Oil West Text Intermediate up a dollar twenty four to
seventy eight seventy four a barrel. The TRIPAA national average
(01:51):
for gas prices also now starting to pick up on
higher oil prices coming through up one point eight cents
overnight to three dollars and eight point nine cents nationally,
so you are again moving up on that front. And
you've got gold up eighteen seventy ouns to twenty seven
(02:11):
oh one even this all on the back of a
CPI report that came out at eight thirty mark. What
did that report show.
Speaker 3 (02:18):
Yeah, the government reported today, Chuck that headline CPI inflation
rose point four percent, that's month over month November to December.
This is higher than November's point three percent increase. But
in twenty twenty four, inflation went up again by the
CPI Consumer Price Index headline number by just under three
percent two point nine percent. That's not terrific relative to
(02:41):
the Fed's long term goal, but it's lower than twenty
twenty three's three point three percent and much lower than
twenty twenty two six point four percent rates, So progress
year over year in a larger sense, biggest contributor in December. Now,
I was personally surprised at how big the headline jump was.
I haven't seen a point four percent month over month
(03:01):
print for a while, but I probably shouldn't have been,
because we know energy prices went up by a lot,
and they're a component of headline inflation. They're about six
and a half percent of headline inflation. Not quite the
biggest constituent. Food is bigger, but they're big, and energy
prices went up by a little over two and a
half percent, so they were the big driver. And because
you don't want to get fooled, by one offs and prices.
(03:24):
The statisticians that the Department of Labor also calculate something
we call core inflate.
Speaker 4 (03:28):
No, we don't call it. Everybody calls it core inflation.
Speaker 3 (03:30):
That's headline less food and energy, and there the results
were a little tamer, so called core inflation ex Food
and energy inflation was up by zero point two percent
month over month, down from zero point three percent the
month before. And there were some subcomponents of core that
researchers watch closely, like shelter, which tends to be persistent
(03:54):
and is a huge contributor to core, and for that matter,
headline inflation that were flat month over month. So the
market loved this morning's report. I don't quite get the overreaction,
but you talked in the last hour about reasons why
the bond market might have been ready to rally, But
the core inflation news, I guess, was the key takeaway.
Though I should mention that other measures of the trend
(04:15):
in inflation, which is what CORE tries to get at,
were less encouraging today, and maybe we'll talk about that
later in the hour.
Speaker 2 (04:24):
Speaking about energy, piece here a Wall Street Journal exclusive
Trump plans quote energy dominance executive orders after inauguration. What
is being discussed in terms of potential policies roll out?
What types of things are they discussing here?
Speaker 4 (04:42):
Yeah, allow more.
Speaker 3 (04:44):
I guess this is the operationalization of his drill drill, drill,
A rallying cry, make more land available, loosen regulations, do
what you can by executive order. I guess you can
make more federal land available for drilling by executive order,
(05:04):
and over time, which he may need the help of
Congress on, reduce regulatory burdens on exploration and production companies.
Of course, these commodity oil, like many commodities, are priced
in a global market and subject to global factors. It's
not obvious that a president with a wave of his
pen can make it easier to explore for and pull oil,
(05:29):
or any commodity for that matter, out of the ground,
even if they very aggressively and earnestly wanted to. So
we'll see oil prices aren't acting like they think this
is going to be see changing.
Speaker 5 (05:40):
Well.
Speaker 2 (05:40):
I think another question is do energy companies actually want
to drill more?
Speaker 4 (05:45):
I can answer that no, they don't.
Speaker 2 (05:47):
And the reason why we say that is because, remember,
the United States is not the only place that you
can drill for oil. We produce today about was it
twelve thirteen percent of world oil. The US is the
largest producer of oil in the world. But ultimately there
are plenty of places that you can produce oil. And
so I think the piece that I look at on
(06:07):
this is, Hey, you have a situation where for the
last several years, even when presented with higher prices, companies
of oil companies have maintained really strict discipline. And the
reason why they haven't overextended themselves is because back in
the twenty tens, coming out of the Great Recession, you
(06:30):
had oil prices that got up into the you know,
eighty ninety a barrel range, and a lot of US
you know, energy companies said, oh, this is great, Like
we can make all this money. Let's let's you know,
deploy all this capex, let's let's drill, and let's just
get as much oil as we can out of the ground.
And in twenty fifteen, might have even been late twenty fourteen,
(06:51):
I forget the exact timing on it. Russia, who was
unhappy with, you know, starting to lose market share in
the global oil sales market. They said, you know what,
screw it, We're gonna just turn on the spigots and
pump out as much oil as we can to drive
the price down. And it took the price of oil
(07:12):
on West Texas Intermediate. If you look at where it
went the price of oil heading into this I haven't
pulled up here now. So at the end of July
of fourteen, West Texas Intermediate was at ninety eight a barrel.
Late in fourteen is when Russia did this, And by
January of twenty sixteen, the price of oil was twenty
(07:35):
nine dollars a barrel, cut seventy dollars off the cost
of oil, and these energy companies just had their lunch
absolute And anyone who's listening who was invested in energy
stocks during the twenty tens, you're nodding along, going yep,
I remember it. It was like the worst decade to invest
in energy stocks in a long long time. It was
(07:57):
just absolutely brutal for them. And so the people that
run these oil companies, they are sitting there now and
they have these these memories are fresh in their mind.
I mean, to anyone listening, you think back to like
twenty fourteen, twenty fifteen, you're like, yeah, I remember that
pretty well, and it just left scars on these oil executives.
(08:18):
And so my question, I guess is, look, the Trump
administration can say we're gonna make this easier for oil companies.
I have no doubt that they will, Like I'm not
saying that they're going to make it harder. The question
is do oil companies actually want to drill more? And
I don't know that the facts are in evidence. Do
they want it to be easier and cheaper when they
(08:39):
do drill? Yes? Absolutely, of course. They want fewer regulations,
fewer costs they have to pay for drilling, and they're
gonna get it.
Speaker 4 (08:47):
Yeah, oh yeah, the wait get it.
Speaker 2 (08:49):
The question is does it result in more energy being produced?
The net amount of oil that the US produces is
probably going to go up, because it's going up for
the last fifteen to twenty years. Ever since the frackers,
you know, figured out how to do it in the
mid two thousands, you've had a nice upward trend in
US energy production aside from the Great Recession. But are
(09:13):
you going to see some huge transformation where all of
a sudden energy companies wake up and say, you know what,
this is the time to increase US production by twenty
five percent.
Speaker 4 (09:24):
No, of course not.
Speaker 2 (09:25):
No, I don't think so.
Speaker 3 (09:27):
As a producer, you want higher prices, and that's much
of the country now.
Speaker 4 (09:30):
We are a net or exporter.
Speaker 3 (09:33):
Yeah, I go, okay there, let's just put it that way.
We make more oil than we consume, even though the
relationships start to get complicated because we still import oil.
And that's hard for me and non energy experts to understand.
But we produce a lot of oil. Half of what
we produce, though, comes from so called fracking, this new
technique that came about in the eighties and it was
perfected in the early two thousands. Fracking's more expensive. You
(09:57):
need to get a higher price for your product for
it to be profitable. So frackers who gave lavishly to
Trump's campaign need a higher oil price to satisfy their shareholders.
They could have produced more over the past, however many years. Again,
they produce about half of ar oil now according to
the Energy administ Information Agency. They don't want a lower price.
(10:20):
So this particular promise of the incoming administration, the promise
to both deregulate oil and lower prices or satisfy the
oil industry. I should say and lower prices. Those two
promises are intention just like the promise to lower inflation
prices generally, but at the same time increase tariffs and
(10:44):
expand the economy more vigorously. Those two promises are intention.
A lot of the promises made by the incoming or
any new administration or intention. It'll be really interesting to
see how they get resolved.
Speaker 2 (10:56):
It's not to say that this is all going to
end badly. It's much more, Hey, this has to resolve someway,
and how is it going to actually play out? We
don't really know. We have to wait and see how
this all goes, especially because we still don't have a
ton of specifics. But we're starting to get closer. I mean, look,
we are five days away, so we're we're just about there.
(11:18):
I've I'm so glad we're not gonna have to speculate anymore. Again.
We've talked about my big complaint in this whole you
know process over the last two months is it doesn't
need to be two months. You're elected, great, move in
the next week, Like, why do we need a two
month gap? You don't have to take the covered wagon
from New York down used to two months four months.
Speaker 4 (11:41):
Was it March?
Speaker 3 (11:42):
What was the inauguration date? I have no idea prior
to I want to say prior to Lincoln.
Speaker 2 (11:47):
Well, and again, part of that was because you had
to literally blow up the wagon and get everyone down
to DC like it was a whole production. Today, Great,
hop on the next jet blue flight, hop on the
next Delthard light like call a day.
Speaker 4 (12:02):
Yeah, but you need this.
Speaker 3 (12:03):
You need the Senate to conform, to advise and consent
on his nominees. The Senate was just sworn in a
few weeks ago. That process takes a little bit of
time to gear up.
Speaker 2 (12:11):
So my solution is, don't move the inauguration, move the election,
make it the look, make it like the first week
in December. Cut the time in half. It should be
a month between. Four weeks is fine. You mean to
tell me that you're running for president and you can't
figure out how to get your staff.
Speaker 4 (12:30):
In order, thinking all that, if you can't get.
Speaker 2 (12:32):
Your staff in order in four weeks, then you shouldn't
be president of the United States. Like, what are we
really doing here?
Speaker 3 (12:41):
Yeah, we should be able to do it real quick,
more quickly. It feels like it happened though at a
pretty brisk pace. I mean it took some states.
Speaker 2 (12:49):
Oh my goodness, the amount of time that we've had
to spend speculating about, well, this tariff happened with that one.
Speaker 3 (12:54):
That's because he keeps chanting. Frankly, Trump is being a
little bit more, probably for negotiation reasons.
Speaker 4 (12:59):
But he's stock.
Speaker 2 (13:02):
But cut the time down.
Speaker 4 (13:03):
But he's unusual.
Speaker 3 (13:04):
He will just call him skilled in the art of
creating uncertainty. Yes, I guess for leverage. Yes, So that's
it's been magnified by his style. Otherwise you normally wouldn't
hear anything from a candidate.
Speaker 2 (13:14):
Put the time down, make it a month, it'll be fine.
Speaker 4 (13:17):
We don't feel that urgency. But if it's gonna go
like this.
Speaker 2 (13:22):
Quicker these days, you know everything's quicker. You don't need
a month between the send him in that evening. You
know you're out, buddy, Send him in, Like why do
we have a lame duck president? Like when when when
people have voted you out? Move on, Let's let's let's
get going. I don't know, we don't need this whole
(13:44):
time in between. Let's take a quick break, speaking of
time in between, and when we come back, we've got
trivia right after this.
Speaker 1 (13:51):
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(14:14):
This is the Financial Exchange Radio Network, AHI.
Speaker 5 (14:25):
And sign contributae here on the Financial Exchange. On this
day in two thousand and nine, a US Airways flight
had to land on the Hudson River shortly after takeoff.
All passengers and crew members survived what became known as
the Miracle on the Hudson Trivia question today, what is
the name of the pilot who landed that plane on
(14:46):
the Hudson River? Once again, what is the name of
the pilot who landed that plane on the Hudson River?
Be the seventh person today a Texas at six one
seven three six, two thirteen eighty five with the correct
answer Financial Exchange showed T shirt once again. The seventh
correct response to text us at six one seven three six,
two thirteen eighty five will get that T shirt. See
(15:09):
complete contest rules at Financial Looks Shane Show dot Com.
Speaker 2 (15:13):
Piece in Bloomberg opinion, the two trillion dollar home insurance
nightmar is getting worse, and yeah it is. So here's
the deal. H Home insurance rates are skyrocketing around the
country obviously, Like the places where you've heard this the
most are you know, Florida and the Gulf Coast, where
you've seen premiums double triple, even quadruple in some cases
(15:34):
over the last several years. Uh, California is heading in
that direction because since the nineteen eighties they have not
allowed for more than seven percent annual premium increases in
order to try to keep home insurance rates low. As
insurance have left that market, they've now been forced to
pivot and are starting to approve, you know, increases even
just for one year in the thirty to fifty percent range.
(15:57):
So look, this is this is going to be in
my opinion, like when you look at where recessions come from,
it's usually always something on the financial side where people
went too far in one direction, and you know, the
last one was mortgages back in two thousand and eight.
(16:20):
In my opinion, the insurance markets for both home and
auto insurance are completely broken. And if I had to
pick out where the next financial crisis is going to be,
it's not going to be in banks. It's going to
be with insurers. In my opinion.
Speaker 3 (16:35):
Yeah, there are a lot of possible culprits. I hadn't
thought about their size and the potential impact of, say,
the failure of a major insurer, though they should be hedging.
Speaker 4 (16:46):
These I'll call them my abilities.
Speaker 3 (16:49):
And there are markets where you can do that. You
can offload your risks as an insurance company.
Speaker 2 (16:54):
But someone else picks up that someone else does.
Speaker 3 (16:56):
But it's in theory diffused catastrophe bonds provide an outlet
for that risk. But as you like to point out,
risk can be sort of dissipated. It can be spread
out but never eliminated. And this was the problem in
OH eight. Risk on mortgages was spread out, it was
not eliminated. It's it's not funny, that's nervous. That's a
nervous chuckle. I don't know, chuck, I don't know what
(17:18):
the long run, you know, we say the market is broken,
but actuarily it is what it is. The risks are
growing fast and they're more varied than they used to be.
How do you price that as an actuary?
Speaker 2 (17:32):
Mike and I talked about this a little bit last week.
Actuaries can price it. The questions are state insurance Commission's
going to allow them to?
Speaker 4 (17:40):
You'll put those into the marketull out.
Speaker 2 (17:41):
And this is where we are right now. And this
is not just exclusive to California and Florida again, two
states that have dramatically different governance but are obviously going
through very similar things in terms of insurance markets that
are completely broken and have had insurance leaving the for
you know, various different reasons this is going to be.
(18:04):
I mean, you look at just about anywhere in the
United States and the natural disasters that you are seeing,
and the cost of dealing with them is continuing to
move higher. And insurance money, it doesn't just get created
out of thin air. I think we all need to
do some homework in understanding what insurance is and what
(18:25):
it isn't because when you put insurance on your when
you go and take out a policy for homeowner's insurance,
it specifies this is what we cover. Here are situations
where you are not covered, Here's how much we will pay,
and here's you know what you're entitled to. Nowhere in
it does it say you're going to rebuild this exactly,
(18:48):
and have you know all the stuff you used to
and this and that. And this is why I think
sometimes there's a disconnect in terms of how people you know,
look what people think. Home insurance doesn't wait, they don't.
They just say, well, my home is destroyed, Like why
won't my insurance cover it? And it's like, well, you
have a policy that said it didn't cover fire, and
your home was just destroyed by a fire. So you
(19:10):
you've got to do your research on this stuff and
understand what your covered perils are, what they aren't, what
your coverages are. And this is stuff you got to
be looking at every single year. And if the prices
are moving in the wrong direction, you got to figure
out ways to mitigate that, either through carrier changes, changes
to deductibles, things that you can do there. But it's
not just going to go away. You can't stick your
(19:31):
head in the sand because this is here to stay
as an issue. Quick Break Trivia Answers Next.
Speaker 1 (19:42):
Bringing the latest financial news straight to your radio every day.
It's the Financial Exchange on the Financial Exchange Radio Network
text US. It's six one seven, three, six two one
three eighty five with your comments and questions about today's
show and let us know what you think about the
store we are covering. This is the Financial Exchange Radio Network.
Speaker 5 (20:06):
Trivia question today was what is the name of the
pilot who landed the plane on the Hudson River. There'll
be Chelsea Sullenberger aka Sully. Winner today of the Financial
Exchange Show t shirt was Michael from Stowe Mask.
Speaker 2 (20:21):
Congrats to Michael.
Speaker 5 (20:22):
And we played trivia every day here on the Financial Exchange.
See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (20:32):
All right, piece here in the Financial Times titled falling
birth rates raised prospect of sharp decline in living standards.
I'll quote from here a McKinsey report investigating the economic
impact of declines and birth rates found the UK, Germany,
Japan and the US all have to see productivity rise
(20:52):
at double the pace seen over the past decade to
maintain the same growth in living standards witnessed in the
nineteen nineties. Okay, so a couple things on this that
I have thoughts about. First, if they looked at those
four countries, take a look at China and tell me
how much their productivity would have to rise in order
(21:14):
to maintain the same growth in living standards that they've seen.
Because if you think the demographics are bad in the UK, Germany, Japan,
and the US, they're worse in China. Next. I think
that when you look at productivity growth, part of me
wonders if it's a chicken and egg situation in that, Hey,
(21:38):
if your living standards are fine with the productivity growth
that you have, how like how much do you need
to push the envelope? Because like, if basically what I'm saying,
if there isn't a problem, how many resources get devoted
to solving it? Not many. On the other hand, if
you start to see living standards decline, and the case
(21:58):
they're making is like, look, you don't have enough people
and so you won't be able to produce all the
stuff that you need, won't companies spend more money trying
to build automation solutions to whatever those problems are increased
productivity because they say, hey, there's a market that we
can sell to, but we don't have enough people. We
need to figure out alternate ways of producing the stuff
(22:20):
that's needed. I kind of wonder if it's a chicken
and egg thing.
Speaker 3 (22:23):
Yeah, we don't really know what causes economic growth. Unfortunately,
we know that the labor force growth is a key
part of it. But populations have grown throughout history and
we haven't always had economic growth, So so productivity growth
is the key to growth models that became widespread in
the twentieth century. Productivity growth is a residual in those
(22:49):
It falls out of the accounting. It's what cannot be
explained by growth in the labor force and growth in
the so called stock of capital, just all the stuff
we used to produce goods and services. And it's not
as easy as ratcheting up investment to get productivity growth.
The two are correlated, but that doesn't mean that just
(23:11):
rising investment, raising investment, spending more capital and discriminately is
going to increase productivity growth. So I never know really
what to make of this. On the surface, it's not
a good thing. You can't have economic growth without labor
force growth and productivity growth. Productivity growth might make up
for some of the slow down in labor force growth,
and it's really been dramatic in the nineteen sixties. From
(23:35):
the nineteen sixties to today, let me just make sure
I just pulled the right series here. Labor force was
growing at one point three percent in the sixties, one
point one percent in the seventies, dropped off in the eighties,
little over one point two percent in the nineties, and
a lot of this is all just demographic and immigration.
By the way, we can control the Spickett to a degree,
and it's now half that rate. It's been slowing down
(23:58):
virtually every decade since the nineties nineties, So I guess
it is and it is not a problem Chuck either way,
there's no easy solution.
Speaker 2 (24:07):
I feel like every time we talk about this that
there are a couple of things that come to mind.
The first is you bring up, you know, falling birth rates,
and everyone's like, oh, like, we got to do something
about this. But then like you tell people that means
that there's gonna be more people in your town, and
they're like, no, don't build any more housing. I don't
want I don't want more people here, like we've we've
got enough. And then on top of that, you say, oh, well,
(24:29):
like you know, it must be a money thing, like
that's why people aren't having kids, because that's what they say.
But the countries that have actually gone and tried to
incentivize you know, higher birth rates. Have found that giving
people more money to have kids doesn't actually do it.
Speaker 4 (24:46):
So now in the wealthyer you get, the fewer kids
you have too.
Speaker 2 (24:49):
It's I think part of it, quite honestly. And and
and look like everyone makes their own decisions about kids.
Like the single worst thing that I think we could
do is like basically forcing people to have children. I mean,
I can't imagine any worse environment to grow up in.
Alcohol good point, how do you do that? But I
(25:11):
guess what I'm what I'm getting at on this is that, Look,
they're all different reasons why people choose to either have
children or not have children, Like there's no right or
wrong way to do it. Historically, the reason why people
had kids was pretty darn simple. You needed people to
do all of the work involved with staying alive throughout
(25:34):
much of human history. You needed people to you know,
handle the farming stuff. You needed like you literally needed
people to like, hey, I gotta you know, we've great,
We've got to you know, chop all the firewood for
this year in order to stay warm in the winter
that you didn't just have like the oil truck pull
up to the front of your house and do that.
So the reason why people had kids historically in human
(25:55):
society was A, you needed them in order to survive,
and B there's a decent chance, like a fifty to
fifty shot, that half of them weren't going to make
it to age five.
Speaker 3 (26:07):
Till the NIST, it wasn't reliable birth control until the
twentieth century. So his wealth rises and his education levels rise,
people have fewer kids. This is a basic empirical sort
of fact.
Speaker 2 (26:17):
And so I think I don't know that we are
going to get to a point where we see a
dramatic reversal in birth rates. Is where I'm going. I
think we need to figure out how to deal with this.
It depends rather than expecting things to reverse somehow.
Speaker 3 (26:32):
And my point is I don't think there's much you
can do about it, Chuck, because you can't just wave it.
Just like you can't wave a wand and increase oil production,
you can't wave a wand and increase productivity. I'll say again, economist,
don't you were going to say baby production? I don't
really end I don't really under serving in.
Speaker 2 (26:47):
A number of levels.
Speaker 3 (26:48):
Yeah, yeah, you can't just dictate that or think really
hard about it, or devote a lot of effort to it,
and by force of will get productivity to rise. It's
not it's not that easy. Economic growth both is a
recent phenomenon. By that, I mean roughly the mid seventeen
hundreds starting in the UK to present. Before that, there
was very little economic growth, like a couple tenths a
(27:11):
decade on average.
Speaker 4 (27:12):
It's hard for it.
Speaker 3 (27:14):
Takes centuries just to get a new pair of shoes
or a better one. It's hard for us to conceive
of that because we're so used to living standards doubling
within our lifetime, which they continue to though the doubling
the time to doubling is slower than it used to be.
Speaker 2 (27:28):
Do you know why cobblers are called cobblers? You're talking
about getting a pair of shoes, because historically, the way
it would work, like, you'd have a pair of shoes
made when you were you know, basically when your feet
were fully grown, and as they wore out, you would
take them to the cobbler who would cobble something together
with spare scraps of leather and things like that, and
you'd basically wear the same shoes for most of your life.
(27:51):
That was kind of how it worked. So that's where
the term cobbler.
Speaker 4 (27:54):
Why is that not a last name?
Speaker 3 (27:55):
We've got Coopers and Tanners and Smiths, and do you
know any is Cobbler a surname?
Speaker 4 (28:01):
Uh?
Speaker 2 (28:02):
I know?
Speaker 4 (28:03):
Or is that just to know?
Speaker 2 (28:04):
The only thing that I know that's a cobbler is
an apple cobbler, which is delicious. Oh the actually oh
the okay, okay, yes, the actual dessert which is delicious.
Speaker 4 (28:11):
That was a person. I'm like, what the hell do
they do?
Speaker 2 (28:14):
No?
Speaker 4 (28:14):
But an apple cobbler? Yeah, it's yeah, you'd really fascinating, Tucker.
Speaker 2 (28:18):
Do you know anyone with the last name Cobbler?
Speaker 1 (28:20):
No?
Speaker 4 (28:21):
And no, nor does he want to take anything any day?
Hell are we talking about? No?
Speaker 2 (28:26):
It was just a question.
Speaker 4 (28:27):
I've had a very eye went there.
Speaker 2 (28:28):
No, I've had a very eventful twenty minutes. I want
to play.
Speaker 4 (28:32):
For retracted Chuck everything.
Speaker 2 (28:33):
Okay, I am I. I got this message on my
phone at eleven fourteen am. This is from Wichita, Kansas
number that called me. We'll see if this this works here. Hi,
this is Comcast Exfinity.
Speaker 1 (28:48):
This is your final notice regarding your fifty percent discount
offer on your monthly.
Speaker 3 (28:52):
Bill which expires today.
Speaker 2 (28:54):
Very disappointing to send your rate from increasing.
Speaker 1 (28:57):
Call back now at the number on your caller IV
thank you.
Speaker 2 (29:02):
So I got that from a Kansas number and obviously
called them back right away. The first thing, I'm not
a Comcast subscriber, so I immediately knew that it was fake.
But I can totally see how. Look if if you
are one, and you know, maybe you had some discount
because you just moved in like a year ago, Okay,
like you might call back, but it's it's obviously a scam.
(29:23):
I then at eleven twenty nine am got a text message.
It says easy Drive m a alert. Your vehicle has
an unpaid toll bill to avoid excess of late fees.
Please settle promptly. Thank you for cooperation. It includes a
link to click on. It also tells me to please
reply why and blah blah blah and do this and
that and so in this case, I went to my
easy pass account just because I you know, I know
(29:46):
that I don't have an unpaid toll and I went
there and actually have sixteen dollars and eighty two cents
in my easy pass account right now, So that was
kind of exciting to me. But the point that I'm
making with this is both of these are obvious scams,
and if you're not constantly on the lookout for stuff
like this, it's easy to end up getting fooled and
(30:08):
you accidentally send your information to someone who shouldn't have it,
who's trying to scam you out of a whole bunch
of money. The Armstrong Advisory Group has put together a
guide this month titled seven common financial Frauds and Scams.
It's just about the precautions that you need to take
to make sure that you're not getting caught by these
Everyone likes to think they're smarter than the scammers. Everyone
(30:29):
likes to think that they're better and they won't fall,
you know, for these things. But you have to stay
on top of it, and so this guide helps to
give you some ideas of what you need to be
doing to protect yourself. How do you request it call
eight hundred three nine three four zero zero one. The
way I look at it, look, each year you spend
two thousand hours working. Over the course of a career,
(30:51):
you spend like eighty thousand hours working to build up
your nest egg, spend like half an hour reading this
to figure out what you know not to do to
undo that all. I think this is hugely important. There's
so much this that goes on right now. Please make
sure you're taking the appropriate precautions. The guide if you
want to request it, it's seven common financial Frauds and Scams.
(31:14):
Call eight hundred three nine three for zero zero one.
That number again is eight hundred three nine three for
zero zero one.
Speaker 1 (31:23):
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 estate planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 2 (31:38):
Follow up on a story that we covered first last year,
Capital One is accused of cheating millions of customers out
of interest rate payments. The Consumer of Financial Protection Bureau
accused Capital One of freezing the rates of its three
sixty Savings accounts at low levels and then not telling
people that the bank offered a new account that offered
better rates without telling three sixty Savings customers. I was
(32:01):
one of these by the way, who my Capital one
account was not being paid the interest that I thought
I was going to get, and eventually I had to
open up a new account in order to get what was,
you know, the new rate and things like that. Capitol
one says that they're deeply disappointed to see the CFPB
continue to reacing pattern of filing eleventh hour lawsuits ahead
(32:24):
of a change in administration. Okay, so what so you're
you're not denying that you did this, You're just saying, hey,
you waited too long to do this, and hopefully the
next administration doesn't follow through on it. Man, Like, what
a scummy thing to do.
Speaker 4 (32:39):
Yeah, that's terrible. So that's terrible.
Speaker 2 (32:41):
I gotta tell you, I've been a Capital one three
sixty customers since before they were Capital one three sixty,
back when they were I in g direct. If anyone listening,
you know, remembers Capital one bought that business maybe eight
nine years ago. Pretty sure on this leg again, when
Capitol one comes out and says stuff like that, kind
of done, kind of done something right. Sorry, Like there's
(33:04):
other places that you can get good interest rates with
online banks, And if you're gonna treat your customers like
that and then basically like spit in the face of
someone who's saying, hey, you treated your people wrong. Sorry, guys,
kind of done.
Speaker 3 (33:18):
That's so appalling. I almost don't believe it. Kind of
dogs person would say that.
Speaker 4 (33:22):
Who said that? Was it?
Speaker 3 (33:23):
It's just a spokesperson or was it a C suite
executive to it?
Speaker 2 (33:26):
Said Capital One said in a statement, So I think
it was going.
Speaker 4 (33:28):
So a good vet. It went through there in house
attorney and stuff.
Speaker 2 (33:33):
Wow, we strongly disagree with their claims and will vigorously
defend themselves in court. The new account was marketed widely,
including on national television. Well, look, I was a Capital One.
I generally like to think of myself as not being
hugely dumb. I'm at least like kind of intelligent. And
I had no idea that they had like launched a
(33:53):
new account and that the old one that was marketed
that way was no longer eligible for the higher rates.
So yeah, I would say it was a little bit deceptive.
Quick break here, when we come back, we got stack Roulette.
Speaker 1 (34:06):
Find daily interviews and full shows of the financial exchange
on how are YouTube page get cut up on anything
and everything you might have missed this is the Financial
Exchange Radio Network. Miss any of the show. Catch up
at your convenience by visiting Financial Exchange Show dot com
and clicking the on demand icon, where you'll find all
of our interviews in full shows. This is your home
(34:29):
for the latest business and financial news in New England
and around the country. This is the Financial Exchange Radio Network.
Speaker 5 (34:39):
This segment of The Financial Exchange is brought to you
in part by the US Virgin Islands Department of Tourism.
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Speaker 2 (35:24):
Mark what do you got for me for stack roulette?
Speaker 3 (35:26):
Well, markets reacted jubulantly to the core the x food
and energy component of inflation, coming in ato point two
percent month over month, which was pretty tame, though maybe
not as low as the Fed needs it to be.
There are other measures, though, of the trend in inflation.
We talk sometimes about the median, which just means the
one in the middle, or other forms of calculating inflation
(35:51):
that trim the extremes that can happen from month to month,
whether they come from food, energy, insurance, or cell phone prices.
There's a Federal Reserve Bank that calculates media and another
measure of trimmed inflation every month. It's the Federserve Bank
of Cleveland. They came out with that number this morning.
Median CPI point three trimmed means, so they trimmed roughly
(36:11):
the ten percent right and leftmost extreme observations also point three.
Speaker 4 (36:17):
You don't need.
Speaker 3 (36:18):
Sophisticated mathematics to annualize those. Just multiply by twelve. That
suggests inflation. If you want to annualize this month somewhere
in the mid threes. And if you want to take
the last three and six months for a slightly long
term perspective, you also get inflation in the load to
mid three. So I'm not sure the markets exuberances justified
as we talked about earlier, Chuck, I.
Speaker 2 (36:38):
Want to talk a little bit about Walmart did either.
If you happen to see that they rolled out a
new logo today.
Speaker 5 (36:46):
Needed a magnifying glass to see the difference, but yes,
I did see it.
Speaker 2 (36:49):
So Walmart rolled out a new logo. They wrote a
whole page of stuff about it. It basically looks like
they did select all and then made the text bold yeah,
and like the yellow star like a little bigger Yeah,
they bolded everything. Yeah. It's like, you pay somebody for this. Really,
(37:15):
how much do you think they paid to do this?
Speaker 5 (37:17):
The person?
Speaker 2 (37:18):
No, Walmart? Like, what do you think the dollar value
is that they spent on figures? Hitting both figures? Probably?
I mean, I guess it's good work if you can
get it. And companies are always doing this kind of stuff,
and I get that you want your brand to be current.
It's just I mean, this is it Mark, this is
(37:45):
it I'm holding up my computer. I know no one
listening can see, but it's literally they the color blues
a little different. They're calling it true blue, which feels
like is gonna get in them into a fight with
Is that JED blue? The blue? Yeah?
Speaker 1 (38:03):
Ye?
Speaker 2 (38:04):
Are they gonna buy Jed blue? Are they gonna buy
an airline? If it's a hint, yeah, maybe they're gonna
buy an airline. And then they're gonna Yeah, they're gonna
be sending products through the sky right to your doorstep
by drone in Jersey.
Speaker 3 (38:22):
Somebody's got to think this stuff works. Though they're spending
money on it, they're not stupid people.
Speaker 2 (38:26):
Quick break for the rest of the day. We'll see
you tomorrow on the Financial Exchange
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