January 21, 2025 • 38 mins
Mike Armstrong and Paul Discuss Trump planning 25% tariffs on Mexico and Canada by February 1st. Why are economists expecting inflation to go higher under Trump? How will Trump reshape the US energy sector? What is the latest news on the TikTok ban? CEOs and President Trump want workers back in the office.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
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):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is the Financial
Exchange with Mike Armstrong and Paul Lane, your exclusive look
at business and financial news affecting your day, your city,
(00:43):
your world. Stay informed and up to date about economic
and market trends plus breaking business news every day. The
Financial Exchange is a proud partner of the Disabled American
Veterans Department of Massachusetts. Help us support our great American
heroes by visiting dav I've Cave Doc Boston and making
a donation today. This is the Financial Exchange with Mike
(01:06):
Armstrong and Paul Lane.
Speaker 2 (01:11):
Good morning, Happy Tuesday. I hope everyone dug out of
the snowstorm all right. It was pretty modest where I was,
but I know up to eight inches in some parts
of New England. I believe it's Mike Armstrong, Paul Lane,
and Tucker Silva with you on a week that I
think we will have no shortage of economic news to address.
(01:31):
The Trump administration took office yesterday and did so amidst
a just blizzard of executive orders and number of things
for us to talk about. And before we even get
into that, reminder that it's earning season. So we'll be
hearing from Netflix this afternoon after the bell. Schwab reported
(01:54):
earnings before the bell three a m. Reported as well.
Tomorrow we'll be hearing from doctor Gamble, Johnson and Johnson
Abbott Labs. Thursday, we'll be hearing biggest ones here, ge Aerospace,
the one of the largest remaining portions of General Electric
and Texas instruments. In addition to that, let me see
(02:17):
what we've got on the economic news calendar of the week.
Not a ton fortunately, but existing home sales coming out
on Friday, as well as a flash for the purchasing
manager's index as well. But let's start right off with
the new Trump administration and what they did, and I think,
almost equally importantly, what they did not do on day
(02:40):
one in office yesterday, Like I said, just a fury
of number of executive orders, a lot of undoing of
Biden policies. But when I looked over it, you know,
I guess first thing, when I'm thinking about an incoming
Trump administration of what we are going to focus on,
there's four main categories of items that this administration is
(03:01):
looking to do. In my mind, it's cut taxes, deregulate,
change policies on immigration, and tariffs. They fall into those
broad four categories. And what I think we saw on
day one yesterday, which again take GrITT of salt, you
had like six hours to do all of this, was
a lot on what I would consider to be more
(03:23):
social related issues rather than firm economic policy. So where
do you want to dive in to start here, Paul,
Because I don't think I want to spend a lot
of time talking about presidential pardons or you know, things
like there's been a push to have people in the
Department of Government, if different departments of the US government
(03:44):
paying attention to efficiency and orders about IRS pausing hiring.
Those are all interesting, but broadly speaking, I think they
are more statements about the view for America rather than
anything that is worthwhile discussing in terms of its broad
impact on americans economic lives. Instead, the absence of any
(04:08):
sort of tariffs I think was very notable on day one.
Speaker 3 (04:10):
That's for the purposes of the financial exchange of the
show that we run. That's where we have to lead off, Mike.
Is this idea that there was pretty much broad assumption
out there that he would come into office day when
with some form of terrorists. I think that was the
thought across the board, And the biggest takeaway to your
point is we didn't see anything. There is nothing concrete
(04:31):
that has been mentioned in forms of terists going into effect. However,
what was mentioned as a potential policy change would be
twenty five percent tariffs on Mexico and Canada by February first,
So that has sent those two countries scrambling as to
determine how to adjust to those potential teriffs. And again,
(04:54):
even with this notion of these tariffs being instituted on
February first, there were words used by President Trump, such as,
I think we'll do it by February. First, we are
thinking in terms of twenty five percent on Mexico and
Canada because they are allowing vast numbers of people across
(05:14):
the border. That was in response to questions from reporters
in the Oval Office. So even still not concrete.
Speaker 2 (05:21):
Not concrete and interesting the way he put it right.
When we talk about tariffs as an economic tool, frequently
he's talking about or economists, supporters of Donald Trump, detractors
from Donald Trump used tariffs and talk about tariffs in
light of we need to rectify a trade issue. We
need to rectify an imbalance of power or an imbalance
(05:42):
of trade practices such as China subsidizing massive industries. In
my view, my reading of this would be, hey, we're
threatening Mexico and Canada because they're allowing vast numbers of
people across the border, so want to avoid the tariffs.
Here's a really piece of low hanging fruit for Canada
and Mexico to agree to something and say, hey, we've
(06:04):
avoided twenty five percent tariffs by making these firm commitments
and pledges when it comes to people crossing the US border.
Speaker 3 (06:10):
That's where it leans more on the side of perhaps
a negotiation tactic, pairing a social issue more so with
an economic potential punishment and form of tariffs. This idea
and how get in particular, you know, how drugs get
lumped lumped in here too, you know, like that.
Speaker 4 (06:26):
Not to say that Fennel isn't.
Speaker 3 (06:29):
A substantial issue is but this idea that that has
to correlate to tariffs on Mexico and Canada, it does
speak to this idea that perhaps it is a negotiation tactic.
And also on the immigration front from Canada, I never
viewed that as a real substantial problem that this country has,
you know, influx of people from Canada.
Speaker 2 (06:49):
There was a period of time. Again I had to
research it myself because it's not something we talk about heavily,
but there was over the course of the last few
years some serious objections that many made about actual immigration
coming over the Canadian border. It was, from what can
be you know, from what most have reported on, dealt
with pretty quickly and not as much of an issue
(07:09):
after a few months, but nonetheless was an actual substantial problem.
And so I don't know if we're talking about one
of those four economic pillars that we've mentioned in the
incoming Trump administration, terras being a big one. It's interesting
to me that nothing was done on day one. No
tariffs on China, no tariffs on Europe, no tariffs on
(07:29):
Mexico or Canada. It's not that he didn't have time.
He had time to, you know, sign into law many
new executive orders around policy. And again I think very
telling that there was not something built in ready to
go saying yes, we're going to this day one, and
I think it leads me to believe that it is
(07:50):
something of a negotiating tactic. Doesn't mean that it won't
go into place, right he said February one, we're talking
about twenty five percent tariffs.
Speaker 4 (07:56):
I do not doubt that.
Speaker 2 (07:57):
I do not doubt that there's a distinct possibility of
some form of tariffs going into place on Mexico and Canada.
But I think very clearly what he has done here
has left a door open for that not to happen.
Speaker 4 (08:09):
Yes, yes, in.
Speaker 2 (08:10):
Terms of impacted industries here, the Peterson Institute for International
Economics put together a view and look into imports from
Mexico and Canada and looking at who and what industries
would be hit the hardest under these proposed terraffs, and
it purely just looks at hey, dollar amounts in twenty
(08:33):
twenty three of US imports by different areas. Heaviest in
terms of dollar amounts of imports transportation equipment, so I
believe that that would include all sorts of commercial and
personal use vehicles. So as you can imagine, that's a
huge number. It was came in in twenty twenty three
at nearly one hundred and ninety six billion dollars worth
(08:54):
of transportation equipment imports. Fuel interesting one hundred and forty
five billion. I'm not sure if that's hydro electricity or
other forms of fuel imports, but that was the second
largest in terms of dollar value of imports across the
Mexican and Canadian borders. After that, you had machinery. I
(09:16):
guess pretty obviously, right, if you're manufacturing some pretty heavy machinery,
it's going to have a big piece there. Electronics and
electrical machinery then taking the fourth spot, and other than that,
I didn't see any massive categories above that. I mean,
we're still talking about tens of billions of dollars that
would be very heavily impacted by these proposed twenty five
(09:38):
percent tariffs. But again my takeaway from I don't want
to read too much into things. It was what a
quarter of a day that Donald Trump had to actually
act as US president. But the compelling piece to me
is not what he did do. It's what he didn't
do via executive order on day one as president that
(09:59):
I think is about what his policy actually looks like
when it comes to tariffs.
Speaker 3 (10:03):
Yeah, you know, I was all ready to dive into
the proposed or the potential impacts on some of these
auto manufacturers, because that would be the ones that are
the largest hit by any types of tariff being instituted.
But I pause a bit, just because is it really
worth going down that rabbit hole when there are so
many caveats in place?
Speaker 4 (10:23):
I think it's worth making the point.
Speaker 2 (10:25):
I think it is because here's the piece that I
think far too often gets overlooked. We have a sitting
US president who's talking about twenty five percent tariffs on
our two closest neighbors.
Speaker 4 (10:37):
You have to explore that.
Speaker 2 (10:38):
You have to take the man at his word, and
you have to assume, yeah, you do, because he's a
sitting US president. And before that he was president elect,
and so I think if you just the danger that
I see out there is everyone just saying, oh, well,
you know, he's not serious about that, or he's not
serious about this. There are plenty of things that people
did not think he was fundamentally serious about that he
(10:59):
took care of on like it, hate it, whatever your
perspective is. There are many many items that left and
right said no, there's no way he will go and
do that, and on day one he did. And so
I think you do have to take it seriously. But
I will take it as if you're a fan of
free trade and didn't want to see tariffs going on
in Mexico and Canada, if you're a US automaker and
(11:20):
didn't want to have to face those types of higher prices,
I think there's good news for you in the fact
that it did not go into place on day one.
Let's take a quick break. When we come back, I
want to talk about inflation. We've seen a vast calm
down in the pace of inflation and some pretty interesting
stuff happening on expectations. Now, quick break, we'll be right
(11:41):
back on the financial exchange.
Speaker 1 (11:43):
Thanks to US six one seven, three, six two thirteen
eighty five with your comments and questions about today's show
and let us know what you think about the stories
we are covering. This is the Financial Exchange Radio Network.
The Financial Exchange streams live on YouTube and stay up
to date on breaking business news all morning. Loan Base
(12:04):
is the Financial Exchange Radio Network.
Speaker 5 (12:08):
The Financial Exchange is a proud partner of the Disabled
American Veterans Department of Massachusetts.
Speaker 4 (12:14):
By making a donation, you can.
Speaker 5 (12:16):
Support the Veteran Advancement Program, which offers permanent and transitional
affordable housing to veterans and their dependence. The DAV of
Massachusetts is the only DAV department in the country to
lead a veterans housing initiative for single vets and those
with families. Visit DAV fivek dot Boston to make a
donation today and make no for this year's five K
(12:38):
to be held on Saturday, November eighth. That's DAV five
k dot Boston.
Speaker 2 (12:45):
With an incoming Trump administration, there is well a number
of different things that people are looking, but I think
when it comes to markets, there is clearly a transition
that's happened over the course of the last month and
a half or so where investors have become less concerned
to recession, which I think is a positive sign, but
they have clearly, at least investors, I won't say this
(13:06):
about the general public, but investors at least have also
grown more concern about milk or are concerned about inflation.
And you see that in the release of data points
and how markets react on a day to day basis.
It's what I've been talking about, is you know, good
news is bad news, bad news is good news. Good example, here,
you had a real blockbuster jobs report two fridays ago, Yes,
(13:28):
two fridays ago, markets sold off pretty substantially. You had
it better than expected inflation reports, and markets moved up,
and so investors appear to be optimistic about growth, optimistic
the labor market's going to hold up, but slightly concerned
about inflation, and economists who were pulled as they are
regularly share some of those concerns. The consumer price index
(13:51):
is now expected to rise two point seven percent in
December of twenty twenty five. That's compared with projections of
just two point three percent three months ago. If I'm
going to try and be as objective as possible, hear
about this and really not put any of my political
opinions into this. If you take Donald Trump at his
(14:14):
word on the campaign trail leading into this, I think
any rational person has to say, Okay, compared to say
a Kamala Harris presidency, there seems to be a higher
potential for growth and inflation. Those two seem to come
hand in hand, and they normally would anyway. Whether or
(14:34):
not we will genuinely get higher inflation, I think is
anybody's guest. But if I'm just comparing the two on
policy and discussions of what they actually want to do
and are capable of doing, the Trump administration definitely has
at least theoretically a higher possibility of higher inflation. And
so this seems rather rational to me. We can talk
about that, and then I want to get into some
(14:55):
things that are completely irrational when it comes to inflation expectations.
But what are your thought so far? And again, what
he said on the campaign trail, I'm not sure is
useful for what is actually going to go into policy.
Speaker 3 (15:06):
Yeah, to spin it back to something that we were
speaking about in the first segment, This idea that was
mentioned yesterday about twenty five percent terraces on Mexico and Canada.
Let's just drill down in terms of the inflationary impact
you could see on your day to day lives as
a consumer specific to the auto manufacturing sector, because that's
where many of these companies that we all own cars
(15:27):
from import product from. Whether you're looking at Stillantis, which
does forty percent of its imports from either Mexico Canada,
GM at thirty percent, and Ford at twenty five percent,
there's about four million finished vehicles that come from either
Mexico or Canada, and according to Woolf Research, these potential
tariffs would add three thousand dollars on top of use
(15:49):
new car prices, where I believe we're sitting at an
average new car prices somewhere forty five thousand or so.
So that's a direct impact that many of us would feel,
and then you extrapolate that out first there. Ultimately what
ends up happening is a tariff is a tax on
the end consumer to maintain margins for a company. It
gets passed down to us as US consumers. And that
(16:11):
speaks to Mike's point earlier about this idea that if
you are going to take those policies that were bantered
about on the campaign trailer face value, it would be
inflation and nature. I don't love getting into this idea
of spending too much time on projections for inflation going forward, because,
as we've seen, it's incredibly fickle. It's almost impossible to project,
(16:32):
and it's a moving target always.
Speaker 2 (16:34):
For instance, could you convince me that, like Paul said,
car costs are going to go up because of tariff's Yes,
how much does that get offset by a Trump administration
who seems to want to dramatically drill drill, Yeah, oil
and natural gas, defloration and drilling. So again, all of
this stuff is really really tough to know how it
works out. One thing that I think is completely irrational.
(16:56):
I wanted to bring up is expectations about inflation by
hearty affiliation. This is something that we've drawn attention to before,
but according to the University of Michigan, they do surveys
of consumers every month on their own expectations about inflation.
Prior to the election, you had Democrats on average expecting
(17:17):
just one and a half percent inflation over the course
of the next twelve months and Republicans expecting three point
six percent over the course the next twelve months. The
most recent survey, which was conducted in January, shows that
Republicans now expect only zero point one percent inflation over
the next twelve months, and Democrats now expect four point
(17:38):
two percent inflation over the next twelve months. First, I'll
pick on Republicans. We have almost never seen a twelve
month time period with zero point one percent inflation outside
of recessions, so I don't think so. Yeah, that seems
very unlikely that we are going to get there, unless
(18:01):
most of us aren't working anymore, in which case, yeah, sure, Democrats,
we are currently sitting at two point nine percent, and
two months ago you said that inflation was gonna be
one and a half percent, and now your expectations have
nearly tripled to four point two percent.
Speaker 4 (18:16):
Hate to tell you, but the president doesn't have that
much impact on inflation.
Speaker 2 (18:19):
That is also crazy. So I bring this stuff up because,
quite honestly, it's disturbing to me how much we associate
our party affiliation with our positive or negative views on
things like the economy. I understand that we all have
grievances and differences of opinion of how policy is going
(18:41):
to work, but this is lunacy and it could hurt
you too, Right, Like, if you look at this and say, okay, well,
I'm going to use this to I assume if you
believe that inflation is going to only be zero point
one percent over the course of the next twelve months,
then you think there are items that might get cheaper
over the course the next twelve months, so you might
not purchase them. If you're wrong, then that could be
(19:03):
terrible for you. If you're a Democrat and you believe
that inflation is going to be four point two percent
over the course of the next twelve months, maybe you're
pulling purchases ahead of time, which could ruin you financially.
I just I get really concerned when we see politics
dividing our views on what should be pretty clear facts
in one direction or another. Quick break Wall Street Watch
(19:26):
is coming up next.
Speaker 1 (19:42):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch. A complete look at what's moving markets so
far today right here on the Financial Exchange Radio Network.
Speaker 5 (20:03):
On the first trading session of Trump two point zero,
markets are narrowly in positive territories. Investors are digesting President
Trump's first day executive orders, in addition to Trump's remarks
about possible tariffs.
Speaker 4 (20:16):
On Mexico and Canada.
Speaker 5 (20:18):
As soon as early February. At the moment, the Dow
is up by about two thirds of a percent, or
two hundred and sixty five points. SMP five hundred is
up by four tenths of a percent or twenty five points.
In the NAZAC is up by about a tenth of
a percent or twenty two points. Russell two thousand is
up nearly nine tenths of a percent or twenty points.
Ten year Treasure reeled down by four basis points at
(20:40):
four point five to six percent, and crude oiled down
by just over two percent on the day, trading its
seventy six dollars in nineteen cents a barrel. Apple shares
down by three and a half percent after Jeffreys downgraded
the iPhone maker to an underperformed rating from hold, with
the analyst called it's a outlooks subdued and expects the
(21:02):
tech giant to miss its fiscal first quarter revenue growth
forecast of five percent. Meanwhile, shares in three M up
by four percent after the industrial giant posted fourth quarter
earnings that were stronger than expected booster boosted by higher
sales of industrial adhesives, tapes, and electronics Elsewhere. Home builder
d R. Horden also reported a fiscal fourth quarter beat,
(21:24):
where the company said customer incentives such as mortgage buydowns
had spurred demand that stock up by about a third
of a percent. The US Justice Department sued Walgreens, accusing
the drug store chain of helping fuel the opioid crisis
by filling millions of unlawful prescriptions. Walgreen shares down by
eleven percent and taking a look at the earnings calendar
(21:45):
for the week. Netflix will report after today's closing, Bell,
Procter and Gamble, Johnson and Johnson will REPORTE will report
tomorrow morning. Thursday, we'll see Intuitive Surgical and Texas Instruments,
and Friday, American Express and Verizon report. I'm Tucker Silva
and that's Wall Street Watch.
Speaker 2 (22:03):
I want to talk about the TikTok ban moment here,
but before we get there, I just had one more
piece on energy prices that I just I found compelling.
So I want to read from his Donald Trump's inaugural
address quote. We have something that no other manufacturing nation
will ever have the largest amount of oil and gas
of any country on Earth, and we are going.
Speaker 1 (22:22):
To use it.
Speaker 2 (22:23):
Goes on to say, we will bring prices down, fill
our strategic reserves up again right to the top, and
export American energy all over the world. With that quote,
I think there's my first thought at least is, hey,
this is an administration that is going to be very
friendly towards oil and gas companies. When you read through
the statements further though, you really have to parse his
(22:44):
words and think about it. His main definition I think
of success under all this is oil prices down today
as a result of at least in part of this,
Tucker mentioned that we've got oil prices down about two percent,
the SMP energy sector off by about two thirds of
(23:05):
a percent today. Those massive oil and gas companies that
again are likely to benefit from a deregulation and more
strategic importance to the overall economy should oil prices come down,
might not be in as good a position as some
investors potentially think.
Speaker 4 (23:22):
So we'll move on.
Speaker 2 (23:23):
Trump signed the executive order to stall the TikTok ban.
I think most have probably heard about this at this stage.
Speaker 4 (23:30):
This is big, This We've talked about it a world. Yeah.
Speaker 2 (23:33):
Well, I mean, did you guys see that TikTok? Was
it late last week or over the weekend? Went dark
for a period.
Speaker 4 (23:40):
Of I heard about it.
Speaker 3 (23:42):
I heard somebody jumps in on just people that you
don't get into this world much.
Speaker 4 (23:48):
Sure, all of a sudden had another care for it, and.
Speaker 2 (23:50):
From what I could tell, that had nothing to do
with US government. I think that that was perhaps TikTok
scaring some of their users a little bit, saying, hey,
this is what it's like if it actually disappears. But
I haven't seen any firm reporting on that. Tucker.
Speaker 4 (24:02):
It was fourteen hours, I believe.
Speaker 1 (24:04):
No.
Speaker 5 (24:04):
I was just going to say I was at the supermarket.
I heard one of the employees was talking about how
is app when dark?
Speaker 2 (24:10):
Oh?
Speaker 4 (24:10):
It sucks, man, They're sweet.
Speaker 3 (24:12):
I gotta tell you don't care because I don't have
the app. I don't think I fully realized its power
until I saw some of this stuff trickle out over there.
This algorithm is powerful, as I'll get up like this
has really locked people in, from my mother in law,
my sister in law, like many of them making commentaries
on issues that they normally would never.
Speaker 4 (24:34):
Be aware of because this algorithm is there. So because
the Chinese part is telling them too.
Speaker 3 (24:40):
And then that the whole social media just generate. Yeah,
it's it's big. It's far reaching. I mean one hundred
and seventy million US users that you're talking.
Speaker 4 (24:48):
About, that's the thing they'll pull.
Speaker 5 (24:49):
It's all age groups, I'm finding. Yeah, it's much more expansive.
Like it's too you're just out of your depth. I
you're just saying it's the teeny bopper.
Speaker 4 (25:00):
It's not that anymore. It's far wider spread. Yeah.
Speaker 2 (25:04):
In any case, the Trump administration has now ordered a
delay of the band. So the band was to take
effect today. I believe, given the weekend and all that,
the Trump administration has extended that ban for seventy five days.
As they, I guess say that we are looking to
potentially sell the app, which again is part of that
(25:27):
rule that there could be a delay put into place
if there is quote a I think it was quote
a legitimate offer or deal to sell the application. Big
questions about a legitimate offer to do so here. I
don't think there's anything real on the table yet, but
there has been certainly a softening of words both from
TikTok ownership as well as this new Trump administration. When
(25:49):
it comes to the app, and we'd covered this last weekend,
I continue to firmly believe that this thing needs to
be gone out of United States users' hands, needs to
be done quickly or a full divesture with no data
going to China, and neither of these scenarios at the
moment seem to be on the table. I want that
to happen. I am now more of the mindset that
(26:11):
it is not going to that this app is going
to continue to exist in some way, shape or form
with a Chinese ownership interest in it, even after the fact.
Speaker 3 (26:19):
I would agree with you, I don't think that it's
going to be successful in this idea of finding us bire.
I could be wrong.
Speaker 4 (26:27):
There's some questions as to.
Speaker 3 (26:28):
Whether the legality behind this seventy five day delay, whether
President Trump can actually do this through executive order, because
it doesn't really fall within his power necessarily to effectively.
Speaker 2 (26:42):
All he's done with this executive order is told his
own Justice Department to not enforce a law right which
that's you know, that's in his purview. But you have
to ask some questions right, So, who are the companies
here that are liable. One would be TikTok. Right, TikTok
is effectively breaking the law but knowing that it won't
be in fours under the Trump administration. But the financial
(27:03):
penalties for breaking this law are pretty substantial. I don't
remember what they are, but they are thousands of dollars
per user. If you are Apple and Google, you are
the main distributor of this application in the United States.
You're either on an Apple phone or you're accessing the
Google Play Store, and you are you are downloading the
app from those sources right now, You've been told by
(27:25):
the Trump administration that they are not going to sue
you for leaving it up there on the app store?
Is that enough of an insurance of an assurance?
Speaker 4 (27:33):
I have read that they've pulled it off the app store?
Really yes? That Speaking of the blackout and specific to
a coming back online.
Speaker 2 (27:40):
Tucker, do you can you open up your app store
and see if you're able to download TikTok but.
Speaker 3 (27:46):
Existing users had the capability to get back. That's what
I read here, at least through Monday.
Speaker 4 (27:52):
I believe not there.
Speaker 2 (27:54):
Okay, TikTok is not in the Apple App Store, So
they've taken those steps. Fascinating here because you have the
Trumpetministration on one hand saying we will not enforce this law.
You have Google and Apple, I think, effectively saying to
the Trump administration, not good enough. We don't have an
assurance that we will not be sued or will not
be found liable for allowing this thing to still exist,
(28:14):
so still exists on people's phones. TikTok seemingly taking the
risk of saying we will continue to allow users to
have it, and Apple and Google not going so far
as to say we are blocking access to the app overall,
because I do believe they could do that pretty easily,
but at least removing it from the App Store and
saying new users cannot download it. So, in any case,
(28:35):
we start a new seventy five day period. The Supreme
Court has already ruled in on this that TikTok has
no grounds to stand on. Will we see a deal
come together? What will that deal look like? Anyone's guess
at this stage. Let's take a quick break. When we
come back. We already talked about TikTok. Let's talk a
little bit about return to the office. I was talking
about it with just my wife just yesterday. Let's see
(28:58):
what some other big companies and employers are talking about
when it comes to working remotely. That's next here on
the Financial Exchange.
Speaker 1 (29:05):
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
(29:25):
Radio Network.
Speaker 2 (29:37):
Well, one more executive action from the new Trump administration
has to do with workers of the federal government and
where they operate. And this has been a theme we've
talked about JP Morgan Chase. We've talked about Amazon all
calling their workers back to the office, and in the
Amazon case in particular, we looked at that one and
if you missed it, Amazon required all of their workers
(30:00):
back in the office five.
Speaker 1 (30:02):
Days a week.
Speaker 2 (30:02):
I don't remember when they made the announcement, it was
some time I believe in the fourth quarter of last year,
maybe the third quarter. They then subsequently maybe a month later,
disclosed that they actually did not have enough office space
available for all those workers whom they called back to
the office, and we theorize that, look, this reads a
lot more like a push to reduce headcount without laying
(30:27):
off and therefore paying severance and all sorts of things
that you'd be contractually required to do, rather than a
real desire to have more people in the office. Because
you know what, Amazon executives, they may be many things, cutthroat,
including but stupid and uninformed doesn't seem to be one
of them. They seem to be pretty good at logistics
the last time I could tell, and I'm guessing that
(30:48):
they were well aware that they did not have enough
seats for all their workers. Should all of them come
back with the new Trump administration calling all people back
to the office, I don't think it's even availed. I
don't think Donald Trump genuinely cares or believes whether or
not workers are more effective in the office than at home.
(31:09):
I think it is very clearly an effort to say
we want fewer government workers. Here's a pretty good way
to cut a whole bunch of them at once without
doing some things that we might not be able to do,
such as cut government staff. I don't believe you can
easily do that via executive order that's more active and
active of Congress, and so this is within his powers,
(31:30):
and I think is very much an unveiled attempt to say,
we want fewer government workers, so we're going to make
life a little bit more difficult for them. And I
think that we're going to continue to see this. We've
talked about how it hasn't been as much of a
thing here in Boston. The work from home rate has
seemingly just kind of held steady over the course of
the last year or so in the Boston region, but
(31:51):
in other parts of the country it has been moving
further and further towards that return to office mandate. And
I think I've heard from many close to me who
have said, you know, the company says they're going to
listen and you know, continue to adjust the policy, but
they seem to be not doing so in turning a
blind eye and just want people back in the office.
(32:12):
And my point would be that if you're hearing that
type of thing from your employer, it's probably intentional and
there might be a good part of them that does
not actually want you back in the office. I'm not
talking about you in particular. I'm just saying with their
workforce in general, it's a pretty seemingly not easy way,
but it would be a low hanging fruit method of saying, Hey,
(32:35):
there's some employees that we want to reduce headcount by
some amount. Let's see what happens when we get these
people back in the office requiring it five days a week.
There will be some people that don't follow the mandate.
We can fire them for cause, there are other people
that will quit, and then let's see what we need
to adjust in terms of workforce from there, rather than
needing to do a big, expensive layoff with a whole
(32:57):
bunch of lawsuits that follow and potentially other issues along
with it.
Speaker 4 (33:00):
Yeah.
Speaker 3 (33:01):
I don't know if you bump into this with your clients,
but I have several that are kind of on the
cusp of retirement age, or perhaps at retirement age, but
they do have the ability to work remote for their job.
So they've always said to me that, hey, I enjoy
what I'm doing and I get to do it remotely,
so I'll continue to do that until I'm not able
to do that. And that speaks to this idea that hey,
it's an easy way to go after low hanging fruit
(33:21):
of that person who is at retirement age, and maybe
if they got that mandate, they just say, you know what,
I don't really feel like driving to the financial district
in Boston to do this job any longer. I'm just
gonna pack it up and hang it up.
Speaker 2 (33:32):
It also, to me speaks to the fact that I
don't know fundamentally how serious employers are about needing those
people back in the office. And so for those high
value employees, I was meeting with one just the other
week who's intending to retire in a few months, and
it was made very clear to him that if he
has any interest in working as a consultant or on
(33:54):
any other condition remotely or in person, they would have
him back no matter what. And so, while I do
think employers are generally going to mandate more people back
in the office, for those that have a skill set
that their employer wants wants, I think there's a lot
of flexibility.
Speaker 4 (34:08):
And here's the other.
Speaker 3 (34:09):
Thing, Mike, back to your Amazon point, if it was
a productivity issue and they had really seen that this
remote arrangement had seriously curtailed productivity, you bet you're you
know what, the people would be in the office sooner.
But I don't think that's really as widespread that the
productivity drop off has been so substantial from this initiative
of having, you know, a flexible work arrangement. But it
(34:30):
does speak to the inflection point that we may find
ourselves in in just the labor market in general. That
we've talked about this a lot in the show, that
the pendulum of power in terms of leverage between employee
and employer very much so the last six months or so.
You can point to this notion that the employer has
more of the leverage. You know, we are far past
(34:50):
the days of quits rates exceeding you know, four plus percent.
We're in an era where people are a little bit
more hesitant to jump into the labormarket and jump ship,
so you can, as an employer enforce these types of
policies more readily.
Speaker 5 (35:06):
The calendars turned and the cold is here to stay.
So now's the perfect time to plan that getaway to
the US Virgin Islands. Act now and take advantage of
a special promotion to Saint Croix, experience a vibe like
no other, receive a two hundred and fifty dollars per
person airfare credit and a free hotel night when you
book a five night minimum stay with any participating hotel
(35:29):
before June thirtieth of twenty twenty five. Sant Croi is
known for its incredible history and spectacular architecture, along with
world class cuisine, incredible golf courses, and a wide variety
of water sports. From the moment you arriveal fall naturally
and rhythm with the heartbeat of the islands. There's no
money to exchange, and travel from New England could not
(35:50):
be easier. America's Caribbean paradise is waiting for you. Experience
a vibe like no other on the island of Saint Croix.
Go to visit USVII dot com and use the code
Vibe twenty twenty five for more information and book your
trip today. That's visit USBI dot com and code vibe
twenty twenty five.
Speaker 2 (36:09):
Yeah, to your point, Paul, the divergence of this labor market,
it is truly a just a strange labor market. You
talked about how the hiring rate is quite low, and
you know to speak to that. The rate of hiring
right now sitting at three point three percent according to
the most recent data that puts US in like September
(36:33):
of eight, it puts US at the same rate of hiring.
In the early twenty tens, twenty eleven, twenty twelve, you
had numbers that were below that. But in recent history,
like it's only been during those recessions where that has
been the case. And I'm going to try and pull
some data. So that September of two thousand and eight
number that I mentioned, right.
Speaker 4 (36:51):
You had.
Speaker 2 (36:55):
The hiring rate at three point three percent, the unemployment
rate was above six percent. Today you have the unemployment
rate at four point one percent, in the hiring rate
at three point three percent. And so Catherine and Edwards
is an economist, and she wrote in Bloomberg today about
Americans having lost all of their leverage in the workforce.
And that's to me, at least very clearly not the case.
(37:16):
I think they have lost a substantial amount of leverage
from twenty twenty two. But to say that the American
worker now has very little in the way of leverage,
I think ignores the fact that the unemployment rate is
still incredibly low right right. And I bring it up
only because I want to point out that it can
get a lot worse.
Speaker 3 (37:33):
Oh yeah, right, Like just for any of us graduates
post two thousand and eight, you would just take any
job you could get.
Speaker 2 (37:39):
Yeah, And look, I'm hearing that from new grads today too, right, Like,
I totally get that. The difference is, you know, we're
we're facing a tough hiring market right now. There's no
doubt there's not a lot of turnover in the labor market,
and generally speaking, it's tougher to find a new job.
But you're not also competing with newly laid off millions
(37:59):
of Americans with families that are desperate for work. That
is a crucial difference, And I pointed out only because look,
it can get worse than this in certain situations. Quick break,
but a lot more to cover in the second hour
the financial Exchange, we'll have a full market recap and more.
Speaker 1 (38:16):
That's next. Stay tuned.
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):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is the Financial
Exchange with Mike Armstrong and Paul Lane, your exclusive look
at business and financial news affecting your day, your city,
(00:43):
your world. Stay informed and up to date about economic
and market trends plus breaking business news every day. The
Financial Exchange is a proud partner of the Disabled American
Veterans Department of Massachusetts. Help us support our great American
heroes by visiting dav I've Cave Doc Boston and making
a donation today. This is the Financial Exchange with Mike
(01:06):
Armstrong and Paul Lane.
Speaker 2 (01:11):
Good morning, Happy Tuesday. I hope everyone dug out of
the snowstorm all right. It was pretty modest where I was,
but I know up to eight inches in some parts
of New England. I believe it's Mike Armstrong, Paul Lane,
and Tucker Silva with you on a week that I
think we will have no shortage of economic news to address.
(01:31):
The Trump administration took office yesterday and did so amidst
a just blizzard of executive orders and number of things
for us to talk about. And before we even get
into that, reminder that it's earning season. So we'll be
hearing from Netflix this afternoon after the bell. Schwab reported
(01:54):
earnings before the bell three a m. Reported as well.
Tomorrow we'll be hearing from doctor Gamble, Johnson and Johnson
Abbott Labs. Thursday, we'll be hearing biggest ones here, ge Aerospace,
the one of the largest remaining portions of General Electric
and Texas instruments. In addition to that, let me see
(02:17):
what we've got on the economic news calendar of the week.
Not a ton fortunately, but existing home sales coming out
on Friday, as well as a flash for the purchasing
manager's index as well. But let's start right off with
the new Trump administration and what they did, and I think,
almost equally importantly, what they did not do on day
(02:40):
one in office yesterday, Like I said, just a fury
of number of executive orders, a lot of undoing of
Biden policies. But when I looked over it, you know,
I guess first thing, when I'm thinking about an incoming
Trump administration of what we are going to focus on,
there's four main categories of items that this administration is
(03:01):
looking to do. In my mind, it's cut taxes, deregulate,
change policies on immigration, and tariffs. They fall into those
broad four categories. And what I think we saw on
day one yesterday, which again take GrITT of salt, you
had like six hours to do all of this, was
a lot on what I would consider to be more
(03:23):
social related issues rather than firm economic policy. So where
do you want to dive in to start here, Paul,
Because I don't think I want to spend a lot
of time talking about presidential pardons or you know, things
like there's been a push to have people in the
Department of Government, if different departments of the US government
(03:44):
paying attention to efficiency and orders about IRS pausing hiring.
Those are all interesting, but broadly speaking, I think they
are more statements about the view for America rather than
anything that is worthwhile discussing in terms of its broad
impact on americans economic lives. Instead, the absence of any
(04:08):
sort of tariffs I think was very notable on day one.
Speaker 3 (04:10):
That's for the purposes of the financial exchange of the
show that we run. That's where we have to lead off, Mike.
Is this idea that there was pretty much broad assumption
out there that he would come into office day when
with some form of terrorists. I think that was the
thought across the board, And the biggest takeaway to your
point is we didn't see anything. There is nothing concrete
(04:31):
that has been mentioned in forms of terists going into effect. However,
what was mentioned as a potential policy change would be
twenty five percent tariffs on Mexico and Canada by February first,
So that has sent those two countries scrambling as to
determine how to adjust to those potential teriffs. And again,
(04:54):
even with this notion of these tariffs being instituted on
February first, there were words used by President Trump, such as,
I think we'll do it by February. First, we are
thinking in terms of twenty five percent on Mexico and
Canada because they are allowing vast numbers of people across
(05:14):
the border. That was in response to questions from reporters
in the Oval Office. So even still not concrete.
Speaker 2 (05:21):
Not concrete and interesting the way he put it right.
When we talk about tariffs as an economic tool, frequently
he's talking about or economists, supporters of Donald Trump, detractors
from Donald Trump used tariffs and talk about tariffs in
light of we need to rectify a trade issue. We
need to rectify an imbalance of power or an imbalance
(05:42):
of trade practices such as China subsidizing massive industries. In
my view, my reading of this would be, hey, we're
threatening Mexico and Canada because they're allowing vast numbers of
people across the border, so want to avoid the tariffs.
Here's a really piece of low hanging fruit for Canada
and Mexico to agree to something and say, hey, we've
(06:04):
avoided twenty five percent tariffs by making these firm commitments
and pledges when it comes to people crossing the US border.
Speaker 3 (06:10):
That's where it leans more on the side of perhaps
a negotiation tactic, pairing a social issue more so with
an economic potential punishment and form of tariffs. This idea
and how get in particular, you know, how drugs get
lumped lumped in here too, you know, like that.
Speaker 4 (06:26):
Not to say that Fennel isn't.
Speaker 3 (06:29):
A substantial issue is but this idea that that has
to correlate to tariffs on Mexico and Canada, it does
speak to this idea that perhaps it is a negotiation tactic.
And also on the immigration front from Canada, I never
viewed that as a real substantial problem that this country has,
you know, influx of people from Canada.
Speaker 2 (06:49):
There was a period of time. Again I had to
research it myself because it's not something we talk about heavily,
but there was over the course of the last few
years some serious objections that many made about actual immigration
coming over the Canadian border. It was, from what can
be you know, from what most have reported on, dealt
with pretty quickly and not as much of an issue
(07:09):
after a few months, but nonetheless was an actual substantial problem.
And so I don't know if we're talking about one
of those four economic pillars that we've mentioned in the
incoming Trump administration, terras being a big one. It's interesting
to me that nothing was done on day one. No
tariffs on China, no tariffs on Europe, no tariffs on
(07:29):
Mexico or Canada. It's not that he didn't have time.
He had time to, you know, sign into law many
new executive orders around policy. And again I think very
telling that there was not something built in ready to
go saying yes, we're going to this day one, and
I think it leads me to believe that it is
(07:50):
something of a negotiating tactic. Doesn't mean that it won't
go into place, right he said February one, we're talking
about twenty five percent tariffs.
Speaker 4 (07:56):
I do not doubt that.
Speaker 2 (07:57):
I do not doubt that there's a distinct possibility of
some form of tariffs going into place on Mexico and Canada.
But I think very clearly what he has done here
has left a door open for that not to happen.
Speaker 4 (08:09):
Yes, yes, in.
Speaker 2 (08:10):
Terms of impacted industries here, the Peterson Institute for International
Economics put together a view and look into imports from
Mexico and Canada and looking at who and what industries
would be hit the hardest under these proposed terraffs, and
it purely just looks at hey, dollar amounts in twenty
(08:33):
twenty three of US imports by different areas. Heaviest in
terms of dollar amounts of imports transportation equipment, so I
believe that that would include all sorts of commercial and
personal use vehicles. So as you can imagine, that's a
huge number. It was came in in twenty twenty three
at nearly one hundred and ninety six billion dollars worth
(08:54):
of transportation equipment imports. Fuel interesting one hundred and forty
five billion. I'm not sure if that's hydro electricity or
other forms of fuel imports, but that was the second
largest in terms of dollar value of imports across the
Mexican and Canadian borders. After that, you had machinery. I
(09:16):
guess pretty obviously, right, if you're manufacturing some pretty heavy machinery,
it's going to have a big piece there. Electronics and
electrical machinery then taking the fourth spot, and other than that,
I didn't see any massive categories above that. I mean,
we're still talking about tens of billions of dollars that
would be very heavily impacted by these proposed twenty five
(09:38):
percent tariffs. But again my takeaway from I don't want
to read too much into things. It was what a
quarter of a day that Donald Trump had to actually
act as US president. But the compelling piece to me
is not what he did do. It's what he didn't
do via executive order on day one as president that
(09:59):
I think is about what his policy actually looks like
when it comes to tariffs.
Speaker 3 (10:03):
Yeah, you know, I was all ready to dive into
the proposed or the potential impacts on some of these
auto manufacturers, because that would be the ones that are
the largest hit by any types of tariff being instituted.
But I pause a bit, just because is it really
worth going down that rabbit hole when there are so
many caveats in place?
Speaker 4 (10:23):
I think it's worth making the point.
Speaker 2 (10:25):
I think it is because here's the piece that I
think far too often gets overlooked. We have a sitting
US president who's talking about twenty five percent tariffs on
our two closest neighbors.
Speaker 4 (10:37):
You have to explore that.
Speaker 2 (10:38):
You have to take the man at his word, and
you have to assume, yeah, you do, because he's a
sitting US president. And before that he was president elect,
and so I think if you just the danger that
I see out there is everyone just saying, oh, well,
you know, he's not serious about that, or he's not
serious about this. There are plenty of things that people
did not think he was fundamentally serious about that he
(10:59):
took care of on like it, hate it, whatever your
perspective is. There are many many items that left and
right said no, there's no way he will go and
do that, and on day one he did. And so
I think you do have to take it seriously. But
I will take it as if you're a fan of
free trade and didn't want to see tariffs going on
in Mexico and Canada, if you're a US automaker and
(11:20):
didn't want to have to face those types of higher prices,
I think there's good news for you in the fact
that it did not go into place on day one.
Let's take a quick break. When we come back, I
want to talk about inflation. We've seen a vast calm
down in the pace of inflation and some pretty interesting
stuff happening on expectations. Now, quick break, we'll be right
(11:41):
back on the financial exchange.
Speaker 1 (11:43):
Thanks to US six one seven, three, six two thirteen
eighty five with your comments and questions about today's show
and let us know what you think about the stories
we are covering. This is the Financial Exchange Radio Network.
The Financial Exchange streams live on YouTube and stay up
to date on breaking business news all morning. Loan Base
(12:04):
is the Financial Exchange Radio Network.
Speaker 5 (12:08):
The Financial Exchange is a proud partner of the Disabled
American Veterans Department of Massachusetts.
Speaker 4 (12:14):
By making a donation, you can.
Speaker 5 (12:16):
Support the Veteran Advancement Program, which offers permanent and transitional
affordable housing to veterans and their dependence. The DAV of
Massachusetts is the only DAV department in the country to
lead a veterans housing initiative for single vets and those
with families. Visit DAV fivek dot Boston to make a
donation today and make no for this year's five K
(12:38):
to be held on Saturday, November eighth. That's DAV five
k dot Boston.
Speaker 2 (12:45):
With an incoming Trump administration, there is well a number
of different things that people are looking, but I think
when it comes to markets, there is clearly a transition
that's happened over the course of the last month and
a half or so where investors have become less concerned
to recession, which I think is a positive sign, but
they have clearly, at least investors, I won't say this
(13:06):
about the general public, but investors at least have also
grown more concern about milk or are concerned about inflation.
And you see that in the release of data points
and how markets react on a day to day basis.
It's what I've been talking about, is you know, good
news is bad news, bad news is good news. Good example, here,
you had a real blockbuster jobs report two fridays ago, Yes,
(13:28):
two fridays ago, markets sold off pretty substantially. You had
it better than expected inflation reports, and markets moved up,
and so investors appear to be optimistic about growth, optimistic
the labor market's going to hold up, but slightly concerned
about inflation, and economists who were pulled as they are
regularly share some of those concerns. The consumer price index
(13:51):
is now expected to rise two point seven percent in
December of twenty twenty five. That's compared with projections of
just two point three percent three months ago. If I'm
going to try and be as objective as possible, hear
about this and really not put any of my political
opinions into this. If you take Donald Trump at his
(14:14):
word on the campaign trail leading into this, I think
any rational person has to say, Okay, compared to say
a Kamala Harris presidency, there seems to be a higher
potential for growth and inflation. Those two seem to come
hand in hand, and they normally would anyway. Whether or
(14:34):
not we will genuinely get higher inflation, I think is
anybody's guest. But if I'm just comparing the two on
policy and discussions of what they actually want to do
and are capable of doing, the Trump administration definitely has
at least theoretically a higher possibility of higher inflation. And
so this seems rather rational to me. We can talk
about that, and then I want to get into some
(14:55):
things that are completely irrational when it comes to inflation expectations.
But what are your thought so far? And again, what
he said on the campaign trail, I'm not sure is
useful for what is actually going to go into policy.
Speaker 3 (15:06):
Yeah, to spin it back to something that we were
speaking about in the first segment, This idea that was
mentioned yesterday about twenty five percent terraces on Mexico and Canada.
Let's just drill down in terms of the inflationary impact
you could see on your day to day lives as
a consumer specific to the auto manufacturing sector, because that's
where many of these companies that we all own cars
(15:27):
from import product from. Whether you're looking at Stillantis, which
does forty percent of its imports from either Mexico Canada,
GM at thirty percent, and Ford at twenty five percent,
there's about four million finished vehicles that come from either
Mexico or Canada, and according to Woolf Research, these potential
tariffs would add three thousand dollars on top of use
(15:49):
new car prices, where I believe we're sitting at an
average new car prices somewhere forty five thousand or so.
So that's a direct impact that many of us would feel,
and then you extrapolate that out first there. Ultimately what
ends up happening is a tariff is a tax on
the end consumer to maintain margins for a company. It
gets passed down to us as US consumers. And that
(16:11):
speaks to Mike's point earlier about this idea that if
you are going to take those policies that were bantered
about on the campaign trailer face value, it would be
inflation and nature. I don't love getting into this idea
of spending too much time on projections for inflation going forward, because,
as we've seen, it's incredibly fickle. It's almost impossible to project,
(16:32):
and it's a moving target always.
Speaker 2 (16:34):
For instance, could you convince me that, like Paul said,
car costs are going to go up because of tariff's Yes,
how much does that get offset by a Trump administration
who seems to want to dramatically drill drill, Yeah, oil
and natural gas, defloration and drilling. So again, all of
this stuff is really really tough to know how it
works out. One thing that I think is completely irrational.
(16:56):
I wanted to bring up is expectations about inflation by
hearty affiliation. This is something that we've drawn attention to before,
but according to the University of Michigan, they do surveys
of consumers every month on their own expectations about inflation.
Prior to the election, you had Democrats on average expecting
(17:17):
just one and a half percent inflation over the course
of the next twelve months and Republicans expecting three point
six percent over the course the next twelve months. The
most recent survey, which was conducted in January, shows that
Republicans now expect only zero point one percent inflation over
the next twelve months, and Democrats now expect four point
(17:38):
two percent inflation over the next twelve months. First, I'll
pick on Republicans. We have almost never seen a twelve
month time period with zero point one percent inflation outside
of recessions, so I don't think so. Yeah, that seems
very unlikely that we are going to get there, unless
(18:01):
most of us aren't working anymore, in which case, yeah, sure, Democrats,
we are currently sitting at two point nine percent, and
two months ago you said that inflation was gonna be
one and a half percent, and now your expectations have
nearly tripled to four point two percent.
Speaker 4 (18:16):
Hate to tell you, but the president doesn't have that
much impact on inflation.
Speaker 2 (18:19):
That is also crazy. So I bring this stuff up because,
quite honestly, it's disturbing to me how much we associate
our party affiliation with our positive or negative views on
things like the economy. I understand that we all have
grievances and differences of opinion of how policy is going
(18:41):
to work, but this is lunacy and it could hurt
you too, Right, Like, if you look at this and say, okay, well,
I'm going to use this to I assume if you
believe that inflation is going to only be zero point
one percent over the course of the next twelve months,
then you think there are items that might get cheaper
over the course the next twelve months, so you might
not purchase them. If you're wrong, then that could be
(19:03):
terrible for you. If you're a Democrat and you believe
that inflation is going to be four point two percent
over the course of the next twelve months, maybe you're
pulling purchases ahead of time, which could ruin you financially.
I just I get really concerned when we see politics
dividing our views on what should be pretty clear facts
in one direction or another. Quick break Wall Street Watch
(19:26):
is coming up next.
Speaker 1 (19:42):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch. A complete look at what's moving markets so
far today right here on the Financial Exchange Radio Network.
Speaker 5 (20:03):
On the first trading session of Trump two point zero,
markets are narrowly in positive territories. Investors are digesting President
Trump's first day executive orders, in addition to Trump's remarks
about possible tariffs.
Speaker 4 (20:16):
On Mexico and Canada.
Speaker 5 (20:18):
As soon as early February. At the moment, the Dow
is up by about two thirds of a percent, or
two hundred and sixty five points. SMP five hundred is
up by four tenths of a percent or twenty five points.
In the NAZAC is up by about a tenth of
a percent or twenty two points. Russell two thousand is
up nearly nine tenths of a percent or twenty points.
Ten year Treasure reeled down by four basis points at
(20:40):
four point five to six percent, and crude oiled down
by just over two percent on the day, trading its
seventy six dollars in nineteen cents a barrel. Apple shares
down by three and a half percent after Jeffreys downgraded
the iPhone maker to an underperformed rating from hold, with
the analyst called it's a outlooks subdued and expects the
(21:02):
tech giant to miss its fiscal first quarter revenue growth
forecast of five percent. Meanwhile, shares in three M up
by four percent after the industrial giant posted fourth quarter
earnings that were stronger than expected booster boosted by higher
sales of industrial adhesives, tapes, and electronics Elsewhere. Home builder
d R. Horden also reported a fiscal fourth quarter beat,
(21:24):
where the company said customer incentives such as mortgage buydowns
had spurred demand that stock up by about a third
of a percent. The US Justice Department sued Walgreens, accusing
the drug store chain of helping fuel the opioid crisis
by filling millions of unlawful prescriptions. Walgreen shares down by
eleven percent and taking a look at the earnings calendar
(21:45):
for the week. Netflix will report after today's closing, Bell,
Procter and Gamble, Johnson and Johnson will REPORTE will report
tomorrow morning. Thursday, we'll see Intuitive Surgical and Texas Instruments,
and Friday, American Express and Verizon report. I'm Tucker Silva
and that's Wall Street Watch.
Speaker 2 (22:03):
I want to talk about the TikTok ban moment here,
but before we get there, I just had one more
piece on energy prices that I just I found compelling.
So I want to read from his Donald Trump's inaugural
address quote. We have something that no other manufacturing nation
will ever have the largest amount of oil and gas
of any country on Earth, and we are going.
Speaker 1 (22:22):
To use it.
Speaker 2 (22:23):
Goes on to say, we will bring prices down, fill
our strategic reserves up again right to the top, and
export American energy all over the world. With that quote,
I think there's my first thought at least is, hey,
this is an administration that is going to be very
friendly towards oil and gas companies. When you read through
the statements further though, you really have to parse his
(22:44):
words and think about it. His main definition I think
of success under all this is oil prices down today
as a result of at least in part of this,
Tucker mentioned that we've got oil prices down about two percent,
the SMP energy sector off by about two thirds of
(23:05):
a percent today. Those massive oil and gas companies that
again are likely to benefit from a deregulation and more
strategic importance to the overall economy should oil prices come down,
might not be in as good a position as some
investors potentially think.
Speaker 4 (23:22):
So we'll move on.
Speaker 2 (23:23):
Trump signed the executive order to stall the TikTok ban.
I think most have probably heard about this at this stage.
Speaker 4 (23:30):
This is big, This We've talked about it a world. Yeah.
Speaker 2 (23:33):
Well, I mean, did you guys see that TikTok? Was
it late last week or over the weekend? Went dark
for a period.
Speaker 4 (23:40):
Of I heard about it.
Speaker 3 (23:42):
I heard somebody jumps in on just people that you
don't get into this world much.
Speaker 4 (23:48):
Sure, all of a sudden had another care for it, and.
Speaker 2 (23:50):
From what I could tell, that had nothing to do
with US government. I think that that was perhaps TikTok
scaring some of their users a little bit, saying, hey,
this is what it's like if it actually disappears. But
I haven't seen any firm reporting on that. Tucker.
Speaker 4 (24:02):
It was fourteen hours, I believe.
Speaker 1 (24:04):
No.
Speaker 5 (24:04):
I was just going to say I was at the supermarket.
I heard one of the employees was talking about how
is app when dark?
Speaker 2 (24:10):
Oh?
Speaker 4 (24:10):
It sucks, man, They're sweet.
Speaker 3 (24:12):
I gotta tell you don't care because I don't have
the app. I don't think I fully realized its power
until I saw some of this stuff trickle out over there.
This algorithm is powerful, as I'll get up like this
has really locked people in, from my mother in law,
my sister in law, like many of them making commentaries
on issues that they normally would never.
Speaker 4 (24:34):
Be aware of because this algorithm is there. So because
the Chinese part is telling them too.
Speaker 3 (24:40):
And then that the whole social media just generate. Yeah,
it's it's big. It's far reaching. I mean one hundred
and seventy million US users that you're talking.
Speaker 4 (24:48):
About, that's the thing they'll pull.
Speaker 5 (24:49):
It's all age groups, I'm finding. Yeah, it's much more expansive.
Like it's too you're just out of your depth. I
you're just saying it's the teeny bopper.
Speaker 4 (25:00):
It's not that anymore. It's far wider spread. Yeah.
Speaker 2 (25:04):
In any case, the Trump administration has now ordered a
delay of the band. So the band was to take
effect today. I believe, given the weekend and all that,
the Trump administration has extended that ban for seventy five days.
As they, I guess say that we are looking to
potentially sell the app, which again is part of that
(25:27):
rule that there could be a delay put into place
if there is quote a I think it was quote
a legitimate offer or deal to sell the application. Big
questions about a legitimate offer to do so here. I
don't think there's anything real on the table yet, but
there has been certainly a softening of words both from
TikTok ownership as well as this new Trump administration. When
(25:49):
it comes to the app, and we'd covered this last weekend,
I continue to firmly believe that this thing needs to
be gone out of United States users' hands, needs to
be done quickly or a full divesture with no data
going to China, and neither of these scenarios at the
moment seem to be on the table. I want that
to happen. I am now more of the mindset that
(26:11):
it is not going to that this app is going
to continue to exist in some way, shape or form
with a Chinese ownership interest in it, even after the fact.
Speaker 3 (26:19):
I would agree with you, I don't think that it's
going to be successful in this idea of finding us bire.
I could be wrong.
Speaker 4 (26:27):
There's some questions as to.
Speaker 3 (26:28):
Whether the legality behind this seventy five day delay, whether
President Trump can actually do this through executive order, because
it doesn't really fall within his power necessarily to effectively.
Speaker 2 (26:42):
All he's done with this executive order is told his
own Justice Department to not enforce a law right which
that's you know, that's in his purview. But you have
to ask some questions right, So, who are the companies
here that are liable. One would be TikTok. Right, TikTok
is effectively breaking the law but knowing that it won't
be in fours under the Trump administration. But the financial
(27:03):
penalties for breaking this law are pretty substantial. I don't
remember what they are, but they are thousands of dollars
per user. If you are Apple and Google, you are
the main distributor of this application in the United States.
You're either on an Apple phone or you're accessing the
Google Play Store, and you are you are downloading the
app from those sources right now, You've been told by
(27:25):
the Trump administration that they are not going to sue
you for leaving it up there on the app store?
Is that enough of an insurance of an assurance?
Speaker 4 (27:33):
I have read that they've pulled it off the app store?
Really yes? That Speaking of the blackout and specific to
a coming back online.
Speaker 2 (27:40):
Tucker, do you can you open up your app store
and see if you're able to download TikTok but.
Speaker 3 (27:46):
Existing users had the capability to get back. That's what
I read here, at least through Monday.
Speaker 4 (27:52):
I believe not there.
Speaker 2 (27:54):
Okay, TikTok is not in the Apple App Store, So
they've taken those steps. Fascinating here because you have the
Trumpetministration on one hand saying we will not enforce this law.
You have Google and Apple, I think, effectively saying to
the Trump administration, not good enough. We don't have an
assurance that we will not be sued or will not
be found liable for allowing this thing to still exist,
(28:14):
so still exists on people's phones. TikTok seemingly taking the
risk of saying we will continue to allow users to
have it, and Apple and Google not going so far
as to say we are blocking access to the app overall,
because I do believe they could do that pretty easily,
but at least removing it from the App Store and
saying new users cannot download it. So, in any case,
(28:35):
we start a new seventy five day period. The Supreme
Court has already ruled in on this that TikTok has
no grounds to stand on. Will we see a deal
come together? What will that deal look like? Anyone's guess
at this stage. Let's take a quick break. When we
come back. We already talked about TikTok. Let's talk a
little bit about return to the office. I was talking
about it with just my wife just yesterday. Let's see
(28:58):
what some other big companies and employers are talking about
when it comes to working remotely. That's next here on
the Financial Exchange.
Speaker 1 (29:05):
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
(29:25):
Radio Network.
Speaker 2 (29:37):
Well, one more executive action from the new Trump administration
has to do with workers of the federal government and
where they operate. And this has been a theme we've
talked about JP Morgan Chase. We've talked about Amazon all
calling their workers back to the office, and in the
Amazon case in particular, we looked at that one and
if you missed it, Amazon required all of their workers
(30:00):
back in the office five.
Speaker 1 (30:02):
Days a week.
Speaker 2 (30:02):
I don't remember when they made the announcement, it was
some time I believe in the fourth quarter of last year,
maybe the third quarter. They then subsequently maybe a month later,
disclosed that they actually did not have enough office space
available for all those workers whom they called back to
the office, and we theorize that, look, this reads a
lot more like a push to reduce headcount without laying
(30:27):
off and therefore paying severance and all sorts of things
that you'd be contractually required to do, rather than a
real desire to have more people in the office. Because
you know what, Amazon executives, they may be many things, cutthroat,
including but stupid and uninformed doesn't seem to be one
of them. They seem to be pretty good at logistics
the last time I could tell, and I'm guessing that
(30:48):
they were well aware that they did not have enough
seats for all their workers. Should all of them come
back with the new Trump administration calling all people back
to the office, I don't think it's even availed. I
don't think Donald Trump genuinely cares or believes whether or
not workers are more effective in the office than at home.
(31:09):
I think it is very clearly an effort to say
we want fewer government workers. Here's a pretty good way
to cut a whole bunch of them at once without
doing some things that we might not be able to do,
such as cut government staff. I don't believe you can
easily do that via executive order that's more active and
active of Congress, and so this is within his powers,
(31:30):
and I think is very much an unveiled attempt to say,
we want fewer government workers, so we're going to make
life a little bit more difficult for them. And I
think that we're going to continue to see this. We've
talked about how it hasn't been as much of a
thing here in Boston. The work from home rate has
seemingly just kind of held steady over the course of
the last year or so in the Boston region, but
(31:51):
in other parts of the country it has been moving
further and further towards that return to office mandate. And
I think I've heard from many close to me who
have said, you know, the company says they're going to
listen and you know, continue to adjust the policy, but
they seem to be not doing so in turning a
blind eye and just want people back in the office.
(32:12):
And my point would be that if you're hearing that
type of thing from your employer, it's probably intentional and
there might be a good part of them that does
not actually want you back in the office. I'm not
talking about you in particular. I'm just saying with their
workforce in general, it's a pretty seemingly not easy way,
but it would be a low hanging fruit method of saying, Hey,
(32:35):
there's some employees that we want to reduce headcount by
some amount. Let's see what happens when we get these
people back in the office requiring it five days a week.
There will be some people that don't follow the mandate.
We can fire them for cause, there are other people
that will quit, and then let's see what we need
to adjust in terms of workforce from there, rather than
needing to do a big, expensive layoff with a whole
(32:57):
bunch of lawsuits that follow and potentially other issues along
with it.
Speaker 4 (33:00):
Yeah.
Speaker 3 (33:01):
I don't know if you bump into this with your clients,
but I have several that are kind of on the
cusp of retirement age, or perhaps at retirement age, but
they do have the ability to work remote for their job.
So they've always said to me that, hey, I enjoy
what I'm doing and I get to do it remotely,
so I'll continue to do that until I'm not able
to do that. And that speaks to this idea that hey,
it's an easy way to go after low hanging fruit
(33:21):
of that person who is at retirement age, and maybe
if they got that mandate, they just say, you know what,
I don't really feel like driving to the financial district
in Boston to do this job any longer. I'm just
gonna pack it up and hang it up.
Speaker 2 (33:32):
It also, to me speaks to the fact that I
don't know fundamentally how serious employers are about needing those
people back in the office. And so for those high
value employees, I was meeting with one just the other
week who's intending to retire in a few months, and
it was made very clear to him that if he
has any interest in working as a consultant or on
(33:54):
any other condition remotely or in person, they would have
him back no matter what. And so, while I do
think employers are generally going to mandate more people back
in the office, for those that have a skill set
that their employer wants wants, I think there's a lot
of flexibility.
Speaker 4 (34:08):
And here's the other.
Speaker 3 (34:09):
Thing, Mike, back to your Amazon point, if it was
a productivity issue and they had really seen that this
remote arrangement had seriously curtailed productivity, you bet you're you
know what, the people would be in the office sooner.
But I don't think that's really as widespread that the
productivity drop off has been so substantial from this initiative
of having, you know, a flexible work arrangement. But it
(34:30):
does speak to the inflection point that we may find
ourselves in in just the labor market in general. That
we've talked about this a lot in the show, that
the pendulum of power in terms of leverage between employee
and employer very much so the last six months or so.
You can point to this notion that the employer has
more of the leverage. You know, we are far past
(34:50):
the days of quits rates exceeding you know, four plus percent.
We're in an era where people are a little bit
more hesitant to jump into the labormarket and jump ship,
so you can, as an employer enforce these types of
policies more readily.
Speaker 5 (35:06):
The calendars turned and the cold is here to stay.
So now's the perfect time to plan that getaway to
the US Virgin Islands. Act now and take advantage of
a special promotion to Saint Croix, experience a vibe like
no other, receive a two hundred and fifty dollars per
person airfare credit and a free hotel night when you
book a five night minimum stay with any participating hotel
(35:29):
before June thirtieth of twenty twenty five. Sant Croi is
known for its incredible history and spectacular architecture, along with
world class cuisine, incredible golf courses, and a wide variety
of water sports. From the moment you arriveal fall naturally
and rhythm with the heartbeat of the islands. There's no
money to exchange, and travel from New England could not
(35:50):
be easier. America's Caribbean paradise is waiting for you. Experience
a vibe like no other on the island of Saint Croix.
Go to visit USVII dot com and use the code
Vibe twenty twenty five for more information and book your
trip today. That's visit USBI dot com and code vibe
twenty twenty five.
Speaker 2 (36:09):
Yeah, to your point, Paul, the divergence of this labor market,
it is truly a just a strange labor market. You
talked about how the hiring rate is quite low, and
you know to speak to that. The rate of hiring
right now sitting at three point three percent according to
the most recent data that puts US in like September
(36:33):
of eight, it puts US at the same rate of hiring.
In the early twenty tens, twenty eleven, twenty twelve, you
had numbers that were below that. But in recent history,
like it's only been during those recessions where that has
been the case. And I'm going to try and pull
some data. So that September of two thousand and eight
number that I mentioned, right.
Speaker 4 (36:51):
You had.
Speaker 2 (36:55):
The hiring rate at three point three percent, the unemployment
rate was above six percent. Today you have the unemployment
rate at four point one percent, in the hiring rate
at three point three percent. And so Catherine and Edwards
is an economist, and she wrote in Bloomberg today about
Americans having lost all of their leverage in the workforce.
And that's to me, at least very clearly not the case.
(37:16):
I think they have lost a substantial amount of leverage
from twenty twenty two. But to say that the American
worker now has very little in the way of leverage,
I think ignores the fact that the unemployment rate is
still incredibly low right right. And I bring it up
only because I want to point out that it can
get a lot worse.
Speaker 3 (37:33):
Oh yeah, right, Like just for any of us graduates
post two thousand and eight, you would just take any
job you could get.
Speaker 2 (37:39):
Yeah, And look, I'm hearing that from new grads today too, right, Like,
I totally get that. The difference is, you know, we're
we're facing a tough hiring market right now. There's no
doubt there's not a lot of turnover in the labor market,
and generally speaking, it's tougher to find a new job.
But you're not also competing with newly laid off millions
(37:59):
of Americans with families that are desperate for work. That
is a crucial difference, And I pointed out only because look,
it can get worse than this in certain situations. Quick break,
but a lot more to cover in the second hour
the financial Exchange, we'll have a full market recap and more.
Speaker 1 (38:16):
That's next. Stay tuned.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
New Heights with Jason & Travis Kelce
Football’s funniest family duo — Jason Kelce of the Philadelphia Eagles and Travis Kelce of the Kansas City Chiefs — team up to provide next-level access to life in the league as it unfolds. The two brothers and Super Bowl champions drop weekly insights about the weekly slate of games and share their INSIDE perspectives on trending NFL news and sports headlines. They also endlessly rag on each other as brothers do, chat the latest in pop culture and welcome some very popular and well-known friends to chat with them. Check out new episodes every Wednesday. Follow New Heights on the Wondery App, YouTube or wherever you get your podcasts. You can listen to new episodes early and ad-free, and get exclusive content on Wondery+. Join Wondery+ in the Wondery App, Apple Podcasts or Spotify. And join our new membership for a unique fan experience by going to the New Heights YouTube channel now!
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.