March 12, 2025 • 38 mins
Chuck Zodda and Marc Fandetti discuss the current skepticism deepening as Goldman cuts S&P 500 target. Chuck looks at recent S&P 500 data to highlight why the current dip might not lead to a recession. Multiple jobholder rates are the highest they've been since the Great Depression. Is it really harder for Gen X to save for retirement than it was for Baby Boomers? Airlines cut forecast, raising an early alarm about consumer spending.
Mark as Played
Transcript
Episode Transcript
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Speaker 1 (00:00):
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(00:42):
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(01:06):
and Mark fan, Detti, Mark, you a.
Speaker 2 (01:11):
Big blood sweat and tears fan.
Speaker 3 (01:13):
What is that like just generally expending blood sweat and tears?
Speaker 1 (01:17):
No?
Speaker 2 (01:17):
The band?
Speaker 3 (01:18):
Oh, I didn't know there was a band, so I
guess not.
Speaker 2 (01:21):
Tucker, that's a band.
Speaker 3 (01:23):
Moving on.
Speaker 2 (01:24):
You guys have never heard of Blood Sweat and Tears.
Speaker 3 (01:26):
Oh no, I thought that was just the same. I
don't feel it as bad.
Speaker 2 (01:29):
Really, I've never heard of that band. I mean, they
only I think they were had like a fifteen year career.
Uh yeah, we've got one, two, three, four, five, six, seven, eight, nine, ten,
eleven CDs. Lois is saying yes, okay, no she is not?
Is not?
Speaker 3 (01:46):
What's well?
Speaker 2 (01:49):
Yes or no? Yeah? Yeah, Lois has heard of him.
Speaker 3 (01:52):
I can't translate our hand signals.
Speaker 2 (01:54):
Okay, well, my entire base I think my entire open
for this segment is completely gone now. But uh no, no, no,
Tucker's saying punt Are you saying? Oh? Whatever? I thought
you were saying? Punt on? What I'm talking about, which
is what I'm gonna do Anyways, Now you'll never know
(02:14):
where I was going with.
Speaker 3 (02:15):
It's like our first day working together. Nobody knows what
anybody else is talking about this like Tower of Babel.
Speaker 2 (02:20):
Who's on first?
Speaker 1 (02:21):
Right?
Speaker 2 (02:23):
Anyways, here's the deal.
Speaker 1 (02:24):
I haven't heard of them.
Speaker 2 (02:25):
Stocks when I woke up this morning were who or first?
Speaker 4 (02:30):
Just go?
Speaker 2 (02:32):
We're gone? Stocks? When I woke up this morning, futures
were up half a percent to three quarters of a percent.
We got a CPI report this morning at eight thirty.
Then that was good. It was it was fine, like
it came in better than expected, but some of the
underlying stuff still not quite as as strong as you'd
like to be. And obviously the CPI report from this
(02:55):
morning was pre tariff you know this is it was
coming from mid February. To my knowledge, I don't know
if anything had been imposed aside from ten percent China
tariffs at that point. And so there's a lot more
that's come into force in the last two weeks that
clearly changes the state of play. But in any case,
the S and P five hundred decided, hey, we like
(03:15):
what we see, and so it said not it, but
like the people buying and selling it said okay. S
and P five hundred closed yesterday at fifty five seventy two.
We're gonna open it fifty six twenty four and go
up to fifty six forty two, so you had about
a seventy point rally compared to yesterday's close. As of
right now, the SMP is down twenty points on the day,
(03:36):
so it's given back ninety points in the first hour
and a half of trading, which is not good. Like
that's almost two percent at this point that it has
fallen intraday, it's only down you know, half a percent,
because again it's you know, net net. But you got
the Dow off four hundred points now, the S and
P's down twenty five. Nasdaq, which was up two percent
(03:56):
now up just thirteen points, or one tenth of a percent.
So this is a market that right now is seeing
rallies viciously sold into. At this point, no one wants
to hold the gains for very long. It's a very
uncertain market. Tenure US Treasury is completely flat at the
moment at four point two eighty six percent. We have
(04:19):
Oil West Texas Intermediate up a dollar forty four a
barrel to sixty seven sixty nine. The TRIPAA national average
for gas prices down one tenth of a cent over
night to three h eight even still can't get that
below three dollars nationwide, though New Hampshire, Massachusetts, and Rhode
Island now all three of them below three dollars in
(04:40):
the New England region at the moment. And we've got
gold today up eight dollars and fifty cents an ounce
to twenty nine twenty nine and forty cents mark. This
is a great, great, great segue that I couldn't have
planned any better to a couple of different pieces, one
from Bloomberg. US stock skepticism deepens as Goldman cuts s
(05:04):
and P five hundred target the second slow down a recession,
It's still not clear, and that's what's got the market
on edge. So I've had this epiphany in the last
week to week and a half because I begin to appropriate.
I'm beginning asked about it just left and right by
people like is the US in recession? Like does this
(05:25):
mean we're heading for recession? That the stock markets down?
Like this my answer where I've come to. And it
took me a while to coagulate my thoughts.
Speaker 3 (05:37):
Sorry, that's probably within the realm of reasonable uses of
that word. I've just never I think it works. I
think a blood coagulated exactly, plotting.
Speaker 2 (05:48):
Well, So here's the thing blood. It comes together and
hard and so it's like, yeah, to cause of transformation
into a soft taste.
Speaker 3 (05:56):
I'm not the arbiter. Don't pay any attention.
Speaker 2 (05:59):
I'm I'm I'm fully sticking with coagulate here because I'm
solidifying and like and like.
Speaker 3 (06:06):
Like compounding here and coagulate.
Speaker 2 (06:10):
Yes you can. You can listen to me coagulate as well.
So here's where I've gotten to.
Speaker 3 (06:16):
What's happening right now?
Speaker 2 (06:17):
The S and P five hundred typically sees a twelve
a ten percent decline, usually every twelve to eighteen months.
Sometimes it can be longer. I think we had one
in the twenty tens where it went like three years
without a ten percent market correction. It might have even
been longer. I can't remember quite honestly. But you usually
see a ten percent dip in markets every twelve to
(06:38):
twenty four months like that. That's pretty standard in the
S and P five hundred. But Mark, we don't have
recessions every twelve to twenty four months.
Speaker 3 (06:48):
Oh thank god.
Speaker 2 (06:49):
How frequency of recessions is usually every like seven to
ten years.
Speaker 3 (06:53):
Like that's probably what we're up to now.
Speaker 2 (06:55):
That's kind of like the norm and so where my
thoughts are on this is that the fear of a
recession is typically what gets you that eight to ten
percent drop in markets. And just think back over the
last couple of years. As an example, in the spring
of twenty twenty three, when Silicon Valley Bank blew up
(07:17):
and everyone was scrambling like, hey, what does this mean?
What you know, what is this gonna do? Like is
is there something bigger that's coming? The S and P
five hundred during that time again, spring of twenty twenty
three went from around forty two hundred think he got
up to like forty one ninety five down to thirty
eight hundred, nine percent drop. Recession did not materialize, and
(07:42):
the S and P five hundred went on its merry
way and continued on later on that year in the
fall or heading into the fall, we once again had
recession fears. I remember we were talking about the labor
market at the end of twenty twenty three, like, hey,
is there something that's that's building here that that's making
us nervous? Again, the S and P five hundred fell
from around forty six hundred down to forty one hundred
(08:02):
and then bounced when recession didn't happen little more.
Speaker 3 (08:05):
Does that mean the stock mark? To you? Does that
mean the stock market's a bad indicator?
Speaker 2 (08:09):
No, it's to me, it means that the first ten
percent drop that you have is built on investor sentiment
and fear. In order to get more than that, the
economic data has to worsen. Is kind of where I'm at, because, yeah,
let's like, let's let's think about what we're actually seeing here.
(08:33):
Right before this all started, the S and P five
hundred was trading like twenty two times forward earnings. Today
it's trading at twenty or the other way that you
can look at it. Maybe it's still trading at twenty
two times forward earnings. But we're just sucking ten percent
growth out as a possibility, like if there's a chance
there's a recession. And so, in my mind, that first
(08:55):
ten percent drop is just the fear response in markets.
It's hey, is there something out there that we need
to be worried about? In order to progress beyond the
ten percent drop, the economic data has to conclusively worsen.
Let's talk about the two most recent times that we've
seen that data conclusively worsen. Twenty twenty two inflation went
(09:19):
to nine percent, and oil prices were through the roof.
And remember you couldn't like everything was back order delayed this,
and that the economy was bad. We didn't technically enter
a recession in twenty twenty two, but we made the
argument at the time it didn't matter. It was a
bad economy whether you formally declared a recession or not.
The S and P five hundred ended up falling a
(09:41):
little bit north of twenty percent over the course of
the year because the economic data got bad. It wasn't
just the fear of bad, it was the reality of bad.
The one before that, twenty twenty all happened in a
span of like three weeks. Twenty twenty two played out
over the course of ten months from January through October
twenty twenty played out in a course of March where
(10:04):
the S and P five hundred lost thirty five percent
in three weeks, the fastest ever decline of that magnitude,
because stuff was being shut down all around the world
because of the outbreak of COVID nineteen and so ultimately,
you know, when we look at this and this question
of slow down or recession, it's still not clear. The
(10:26):
answer is you're right, it still isn't clear because the
economic data by and large is very similar to what
it was over the last couple months. We just got
the job support for February, no big meaningful change. There's
some stuff under the hood that you look at and
you're like, okay, like I'm concerned about this, but nothing big.
(10:46):
Weekly jobless claims are still within sniffing distance of what
they've been at in previous you know, years, and the
norms of what we see there the place where we've
seen a little bit of dodginess, retail sales maybe a
canary in the coal mine slowing down in February, but
it's unclear if that was just people at front loaded
good purchases because of tariffs, are people actually nervous about
the like, we don't know. And other than that, a
(11:09):
lot of the other data that we get on either
a weekly or monthly basis is not really showing any
meaningful statistical change. It's just kind of going along. So
the point that I get to, I think mark is
look the next few months and how the economic data
moves is going to determine the next move for markets here,
because fear can only take you so far. Eventually, if
(11:31):
you want to not want, if you expect to see
a bear market for you know, the index, you have
to actually see the bad stuff start printing in the
economic data and earnings reports. That's kind of where I am,
and to this point, it just hasn't been printing, not
at a high enough frequency. At least you get some
(11:52):
scattered stuff here and there. But you know, in Vidia's earnings,
yes the stock ended up getting punshed, but the earnings
were fine. You know Apple's earnings, the stock got punished,
the earnings were fine. Actually, the Apple was the one
tech company that didn't really get punished. So I think
that where I am on this is it's unclear if
(12:12):
the US is going to go into recession or not.
If the data continues to worsen and the worstening expands
to new areas in the next three to four months,
sure there's a real problem there. But we've also seen
this story multiple times in the last two to three years,
where you get a couple bad months of data and
then it doesn't go anywhere. And so I, as I've
(12:33):
been saying since twenty twenty two, let's just slow a
roll a little bit on the recession call and everything,
because it's just been so overprescribed at this point, as
you know, definitively happening. If it happens, you don't have
to be the first to say that you called a recession.
You can sometimes just wait to see how the data
(12:54):
unfolds and go from there.
Speaker 3 (12:57):
Yeah, recessions are not really predictable. Most of the post
war recess have been caused by monetary policy tightening, which
does have real effects. We talked about this in the
first hour. It's how the FED affects the real economy.
Others as was documented and worked one in the eighties,
caused by oil price increases. But we're far less sensitive
to those than we used to be.
Speaker 2 (13:15):
It's take a quick break. When we come back, we
got trivia and then we're going to be talking about
people that hold multiple jobs. What are we seeing in
those trends right now? We'll let you know after this.
Speaker 1 (13:24):
Tekst us six one, seven, three, six, two, thirteen eighty
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(13:47):
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Speaker 5 (13:53):
Here it's MP for TRIBBA. Here on the Financial Exchange
and on this day. Back in nineteen fifty seven, the
Cat the Hat was first published. Cat in the Hat
was a massive success for doctor Seuss and would go
on to be a second best selling book. So tribute
question today, what was doctor Seuss's best selling book?
Speaker 2 (14:14):
Once again?
Speaker 5 (14:15):
What was Doctor Seuss's best selling book? Be the seventh
person today to text us at six one seven three six,
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(14:35):
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Speaker 3 (14:45):
Uh.
Speaker 2 (14:45):
Piece here from Tucker. Where where did this come from?
I've never seen this?
Speaker 5 (14:49):
I have not either, but I did come across it. Okay,
I will confirm the source.
Speaker 2 (14:53):
Uh in any case. So last Friday we got a
jobs report.
Speaker 5 (14:57):
It's an outlook called Surewood.
Speaker 2 (14:59):
Does the Sheriff of Nottingham lived there?
Speaker 1 (15:01):
I don't know.
Speaker 2 (15:03):
There's a Robinhood reference. It's it's Sherwood Forest and Robinhood, right,
I don't know. I think I think so's it Nottingham Forest.
He was the sheriff of Nottingham. But I think it
was Sherwood Forest.
Speaker 3 (15:15):
I think that's where those Sherwood Forest confirmed vigilantes hung out.
Speaker 2 (15:22):
Okay, in any case, so reporting live from Sherwood Forest.
Sherwood says thats that multiple job holders in the United
States moved up to a record eight point nine million,
which is five point four percent of all employed workers,
the highest scene since April two thousand and nine, which
is obviously not a time period that you want to
(15:42):
be referencing. The other thing that we saw on this
is that in the U six number, the underemployment number,
the percentage of people reporting having a part time job
for economic reasons, meaning they wanted full time work but
could only get part time I'm moved significantly higher as well.
So this is some of the stuff we're under the
(16:04):
hood in the labor market. Even though the headline stuff
is just fine, you're starting to see a few cracks
that may be developing, and they're the kinds of things
that typically start to indicate coming labor market weakness, because
that's the stuff that happens first.
Speaker 3 (16:22):
Yeah, if you're a forecaster, this is why your job
is challenging, difficult, maybe even impossible. We've been reporting a
lot on the vacancy rate. That report comes out once
a month. We got it yesterday. We updated you on
it and said job opening said increased. We talk about
the unemployment rate. We talk about the unemployment rate for
people age twenty five to fifty four. We talk about
(16:43):
metrics like this which best helps you forecast inflation or
future growth. The short answer is it varies. These relationships change.
They're not stable. So we tell you we give you
a sort of a broad swath of potential indicators and
leave open the question of whether or not they're predictive
(17:03):
of anything, because even if they've worked in the past.
And here, the implication I think is, as you say, Chuck,
job market might be softer than the headline on employment
number indicates. So maybe there's not upward pressure on prices
coming from low unemployment, which is the historical relationship. It
would be a suggestion that the four percent ish unemployment
(17:25):
would be a strong indicator that the economy's running too hot.
Maybe that's not the case. We're not going to know
until after the fact. That's what makes the FEDS job
so hard.
Speaker 2 (17:35):
When you look at the labor market. Is one of
the potentially weird things about this economic cycle is normally
labor is a lagging indicator, and in this case it's
almost moving as a leading indicator. It's kind of weird
that unemployment normally moves up as the economy has already slowed.
In this case, the unemployment rate moved up last year
(17:55):
even though the economy accelerated into your end. According to GDP, Yeah,
it's possible.
Speaker 3 (18:02):
Kind of weird, right, Past relationships do break.
Speaker 2 (18:06):
Down when you look at the labor market. Are there
any areas that you look at and say, this is
most concerning to me.
Speaker 3 (18:16):
So I would use it to help forecast inflation. Oh,
question is sort of like I alluded to in the
last in my last comment, do you want to use
the vacancy right? Do you want to use the traditional
unemployment right? Do you want to use short term unemployed
who put pressure on wages or long term unemployed who
might not if they've been out of the labor force
for a while. Do you want to use measures like this?
And there are others out there. Forecasters researchers are constantly
(18:39):
updating their little models, and I belittle it a little
bit because models that worked well in the past tend
to not work well in the future, maybe because forecasts
are made public and then people act on them, and
it's expectations that cost the relationship to break down. You
get feedback, so to speak. There So Chuck, I don't know.
You do have to, as you and Mike Armstrong do
(18:59):
on this ship and Paulaine, look at a broad again
swath of economic indicators and make a judgment about what
they're telling you.
Speaker 2 (19:08):
Taking a look at markets right now, we've got again
just a ton of intra day volatility. The Dow is
now off two hundred and forty nine points, but the
S and P has rallied back thirty points, are a
little more than half a percent in the last ten
minutes to now be up five points. So this is
a market that just does not have a lot of
confidence in where it's going in either direction. The nasdag
(19:28):
Al's now up one hundred and nineteen points after being
flat ten minutes ago. Quick Break Trivia answers.
Speaker 4 (19:34):
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(19:57):
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Speaker 5 (20:12):
Trivia question today was what was Doctor Seuss's best selling book,
I'll Be Green Eggs and Ham. Green Eggs and Ham
has sold over two hundred million copies. And again in
second place was Cat and the hat winner today of
the new Financial Exchange Show tea shirt was Tom from Winchester, Mass.
Congrats to Tom, and we play trivia every day here
(20:35):
on the Financial Exchange. See complete contest rules at Financial
Exchange Show dot com.
Speaker 2 (20:41):
All right, we got a piece here from market Watch.
It's titled why It's harder for Generation X to save
for retirement than it was for Baby Boomers. And quite honestly,
I despise these things, these pieces that you make it
seem like any generation has it harder. For the longest
time look, I'm a millennial, and all the pieces written
(21:01):
in the twenty tens were like, well, millennials are never
going to accumulate wealth, They're behind on homeownership, They've got.
Speaker 3 (21:08):
It so hard.
Speaker 2 (21:11):
How are they ever going to survive financially? And the
funny thing is that if you look at the data now,
it actually shows that in many respects, millennials are better
off than their parents the boomers were at the same
time in their respective lives. And so, like you just
I'm a big believer in every generation has its own
(21:34):
unique challenges that they face. Economically, They're like, it's it's
impossible to have any situation that's perfect. But to say, oh, like,
it's definitely harder for this generation to do. No, Like,
there's pros and cons on all of this, And yes,
for certain people within a generation because of their job,
(21:55):
their salary, the way that their retirement plan works, like
all different things that individuals could possibly be disadvantaged or advantaged.
But overall, I don't believe that any generation inherently has
it easier or harder than others when it comes to
securing a safe retirement for themselves. That like, one of
(22:15):
the points this makes it's like, oh, like the you know,
the the demise of the pension plan is you know
a huge thing. Well what about some of the pensions
that you know ended up, you know, going bust and
having to renegotiate with their pensioners that are out there?
I mean, like those are things that you saw, what
you know, you go back through you know retirees who
(22:37):
again like different generation, but the greatest generation retired right
into the tech bubble. Does that mean like they had
a harder time saving for retirement than ever? Not like
it was just different. They they had a different experience,
you know, the Baby Boomers that are retiring right now.
(22:57):
I don't know, Like this piece is all about like
how easy it is for gen X compared to boomers.
Boomers are retiring into a downturn, and who knows if
it turns into a recession, like this turns tomorrow. So
I guess I look at this and yeah, there are
some unique challenges that gen X faces, but every generation
(23:19):
has those unique challenges and just being like, well gen
X has it harder than everyone else. I've heard about
the millennials before, and they're fine.
Speaker 3 (23:30):
In one sense, They've faced a much more severe headwind
in that sense is average wages before after inflation have
grown a lot slower than the stock market. So it's
more expensive to buy your own retirement today than it
was if you'd been born a generation or two before. Sure,
so in that sense it is tougher. In another sense, though,
(23:52):
if a millennial like you had started saving as you did.
Speaker 2 (23:57):
Why'd you say that so derisively?
Speaker 3 (24:00):
Because I wondering I want to reference him personally, or
is it more effective to just say a millennial? Yeah,
I don't know why it came out that.
Speaker 2 (24:08):
Way, came out like you were saying as if it
I admit it.
Speaker 3 (24:12):
I don't know why I need to think about the
way I'm feeling about millennials.
Speaker 2 (24:16):
I guess I appreciate it. I'm sort of.
Speaker 3 (24:18):
Sympathetic with the idea behind this article. I think they
could do a better job of explaining why everything has
grown faster than wages, home prices, stocks, all inflation has
almost grown faster real I'm using average hourly earnings here
for non manufacturing since two thousand, The real growth there
(24:39):
has been about a half a percent. That's much less.
I don't have it in front of me because the
series doesn't go back that far, but that's much less
than previous cohorts. So in a way, they do have
you millennials do have it harder. Was that as sneering, Yes,
I have trouble looking at you and saying, here's the
millennial generation in front of me, you and Tuck, because
(25:00):
everybody's experience is different. But anyway, Chuck, I guess my
point is, in some ways they're absolutely right. It's more
expensive now to fund your own retirement than it's ever been.
In other ways, though, that's a dumb statement because the
so called greatest generation born nineteen in the nineteen tens
or nineteen twenties fought in World War Two. My grandfather,
for example, lived to sixty four, had a pension. You
didn't have to think about funding his own retirement. And
(25:21):
you already made this point. So the challenges are different.
It's really hard to compare cohorts, particularly as you get
more distant in in time.
Speaker 2 (25:30):
Here's the big thing is every single individual out there
is facing their own unique challenges when it comes to
saving for retirement. The Armstrong Advisory Group has a guide
available this month. It's titled what can a Financial Advisor
Do for Me? Because not everyone is the same. There
are plenty of baby boomers who were saying, Hey, I
(25:50):
didn't have it that easy, and I'm still trying to
figure out how to retire. This guide is all about
how regardless of who you are, there are some value
things that you can get from financial advisors to help
guide you on your retirement path. How do you request
the guide Call eight hundred three nine three for zero
(26:11):
zero one. Again, it's titled what can a Financial Advisor
do for Me? If you've got questions about can I retire?
Is there a path for me to retire? This is
the guy that can show you how an advisor can
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(26:32):
That number one last time is eight hundred three nine
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Speaker 1 (26:38):
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 into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 2 (26:54):
Mark I want to touch a little bit on what
we are seeing from airlines here Delta earlier this week.
I'll give the quote from his from their CEO, we
just went through a little bit of a parade of horribles,
which is not really something that you want to hear
from an airline CEO. Because airlines have they've got a
(27:15):
few problems when it comes to managing their business. The
first is they have massive fixed costs. Mark you ever
buy an airplane.
Speaker 3 (27:23):
Like a model airplane, you buy an airportledge, No.
Speaker 2 (27:27):
Because you don't just have like ninety million dollars just
sitting around to buy.
Speaker 3 (27:30):
Where'd you park it?
Speaker 2 (27:31):
Wherever you want? It's an airplane.
Speaker 3 (27:33):
We got a garage downstairs.
Speaker 2 (27:34):
Yeah, it's no big deal, you know, shook clear. Yeah
it'll be fine, Like it'll be a little tight, but
you can get just don't take it down storrow and
it'll be okay.
Speaker 3 (27:44):
So sorry, I'm late. I had a dog fight.
Speaker 2 (27:47):
Okay, well played. So you've got huge costs associated with
just buying you know the stuff. Most air airlines don't
buy their planes a lot of times they're leasing them,
but they're still huge costs associated with that. You have
massive fixed costs associated with the gate space that you
need at airports. And this is before you even get
(28:09):
to entirely unionized workforces that you can't really downsize easily
in the event that you see a marginal drop in demand,
which leads to a huge drop in profit. Which is
why typically historically airlines in the United States, despite being
technological marvels, quite honestly, they are one of like the
three biggest industries that just burns, just lights money on
(28:29):
fire and burns it over the last seventy eighty years,
Like you go through airline bankruptcies and the list is
just massive because they just require so much capital. It's
it's basically them, Auto manufacturers and anything related to fashion
are like my three. Those are the three businesses I
be least likely.
Speaker 3 (28:50):
I don't want to get sidetracked, but yeah, what about it?
What do you mean, Like, why is that the margins
are cost.
Speaker 2 (28:57):
It's not a fixed cost thing, it's just the margins
are bad. The capital require ronments are significant, and things
go out of favor so quickly that you can be
out of business like two years after your mine on
cloud nine pun intended. So you've got airlines that are
starting to cut forecasts, and they're saying, look, it's it's
not just one thing. We've got reductions in government spending,
in corporate spending, and in consumer spending that are hitting here,
(29:20):
and it's unclear how far that is going to go.
They are guiding that some of the international stuff is,
you know, holding up a little bit better at this point.
But one of the questions that the University of Michigan
asks during any of the surveys they do on a
monthly basis about consumer confidences, Hey, what's the likelihood of
(29:41):
you traveling overseas in I think it's the next six months.
And the number was basically cut in half from like
forty five percent of Americans to like twenty eight I
think in the last month. And so there are signs
out there that, remember, the US economy is powered by
conc zomer spending. You've had a weak retail sales report,
(30:03):
you get airlines now saying hey, there's something going on here,
and you start to get a few things adding up.
And what I will tell you is if consumer spending
starts to falter along with a week start to the
housing market this year, and you know, AI starting to
show signs of topping out. As far as you know
growth rates and things like that, the question that you
(30:23):
got to be asking is where does the growth come
from in the US economy. Then if those engines aren't
moving and you're starting to get a few early warning
signals that are out there.
Speaker 3 (30:32):
Yeah, recessions are hard to predict. Like we talked about
it earlier today.
Speaker 2 (30:36):
This could go away two months from now and be
just a wiggle.
Speaker 3 (30:38):
It does seem like though, if there were If you
were trying to induce a recession, one way to do
it might be some of the policy uncertainty that's being
injected into people's calculations right now could be. I mean,
if if you want to press your luck, freak people out.
Speaker 2 (30:57):
Take a quick break here. When we come back, we'll
do a little bit of stack roulette right after this.
Speaker 1 (31:03):
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Speaker 2 (32:04):
Mark, what do you have for me?
Speaker 3 (32:05):
For stack rou left Well, Chuck, this is normally a
lighthearted segment, so naturally I'm going to talk about the
whimsical subject of median CPI because we talked about it.
Speaker 2 (32:14):
Oh, I can't wait.
Speaker 3 (32:20):
You talked earlier in the show about how headline headline,
My god, your eyes rolled into the back of your
head when you did that. That's really unsettling, to be honest. Okay,
I'm going to try to center myself here. We talked
earlier in the show about how headline and even ex
food and energy so called core inflation, can be a
(32:40):
little bit misleading. They can seal what might really be
going on. They mask sometimes the trend in inflation. There
are other ways of getting it what's really going on
in inflation. FED follows these closely, though sadly it doesn't
target them. One is the median the price in the
middle literally and last month median CPI came in at
point three per month over month versus point two percent
(33:02):
for the more traditional measures that we talked about, median
CPI and other measures that try to get at the
same thing filtering outliers. Sure, kay, they've been stuck at
this point three percent, which is almost four percent annualized.
I'm doing a little bit of rounding up a few texts.
But you know, Chuck, we're not at two percent, is
my point. We're not even sniffing it based on.
Speaker 2 (33:20):
We're in a three to three and a half percent inflation.
Speaker 3 (33:22):
Now, I can personally live with that. You've said this
a bunch of times. Two percent feels like it's a
little bit arbitrary, even though.
Speaker 2 (33:28):
We've never averaged it. In the long run, it's it's
not even realistic.
Speaker 3 (33:31):
I'll make the arguments, so maybe a rain should be
what the FED targets. Ultimately we can argue about that
or more specialized people.
Speaker 2 (33:40):
Can infiflation should be like pornography. You know it when
you see it. Yeah, okay, you know you know it's
too high when you see it. That's what it is.
That that was I forget what the Supreme Court case
was that that basically laid that out like.
Speaker 3 (33:56):
Potter Stewart I think said it. I don't know what
case the case.
Speaker 2 (33:59):
It ended up being in a Supreme Court case like
he was the just hey, like this is like we
don't really have a bright line here, but you know what,
when you see it is more or less it.
Speaker 3 (34:08):
It's the same with high and way rising. You have
a problem, that's right, you know what, Yes, whether it's.
Speaker 2 (34:13):
Two percent or two and a half or three like,
who cares? The specifics don't matter. It's just, hey, you
know it when you see it, and right now it
still is higher than you'd like to see.
Speaker 3 (34:25):
So when it's not just background noise, the FED and
elected officials also, as we learned in the last election cycle,
have a problem. And I submit, and this is not
my assertion or even observation. Plenty of researchers feel this way.
Underlying inflation remains too high for the FED to seriously
cut absent are really absent strong evidence the economy is
actually going into or in recession, preemptive cuts for reasons
(34:49):
we've been talking about all morning long about the unpredictability
of recessions, risk a breakout of inflation.
Speaker 2 (34:56):
Yeah, yeah, it's look, I've said this before. Hey, if
the energy prices falling that we saw last year reverse
and for some reason increase all of a sudden, you're
not talking about three to three and a half percent
inflation now, you're talking about inflation going to five.
Speaker 3 (35:11):
That's what happened in the seventies.
Speaker 2 (35:12):
And this is the potential issue out there now. Based
on everything we're seeing as far as supplying demand on energy,
it doesn't seem like we're heading in that direction. It
seems it could be food.
Speaker 3 (35:21):
It could be supply chains because I sure could be
taped tariffs or something.
Speaker 2 (35:27):
It could be a supply chain disruption because of tariffs. Right,
you could absolutely see something like that. I am gonna
go I'm gonna do something a little more whimsical if
it's okay, I don't know if you could top that,
but okay, McDonald's revamping their ranks to speed burger breakthroughs.
Tucker what do you think of when you think about
like a burger breakthrough.
Speaker 5 (35:49):
I don't know, firing down a conveyor belt of some
sorts and out the window into customers hands.
Speaker 2 (35:54):
I'll quote here from the Wall Street Journal. The burger
Giant is shaking up its operations and development ranks as
it seeks to get new menu items and technology to
restaurants more quickly. Recent efforts to develop new sandwiches, including
a year's long process to upgrade McDonald's signature burgers, have
taken too long, said Chief executive Chris Kemzinski. So there's
actually a really interesting story here. At first, you're like
(36:15):
burger development, like what are we talking about. The thing
that you have to realize about McDonald's is they're not
actually a food company. They're a logistics company. And the
whole premise of McDonald's is that no matter where you
go in the world, you are going to get the
(36:36):
same big Mac that you got elsewhere, and they do
it through fantastic logistics and rollout of basically everything that
they do. And so on one hand, you look at
this and you're like, like, burger breakthroughs, what are we
talking about there? And basically what they're talking about is
how can we get something that is better and cheaper
(36:58):
out to people at the same level of consistency, which
is a huge it's a huge undertaking because I mean, look,
I'll go, let's say that I have pasta twice this
week at my own house. The exact consistency of the
pasta is not the same, and I'm cooking for four
of us and I can't get it perfectly outdente every time. Now,
(37:19):
part of this is because I'm using different noodles and
different types. You know, I got the far following. Do
I salt the water? Do I salt the water? He asks,
as if I'm not a real Italian? My goodness, there's
a pepper shortage, you know. Oh, in any case, this
I know that people like to, you know, sometimes rip
(37:39):
on McDonald's and this, and that I think that what
they do is miraculous because any McDonald's franchise that you
go to anywhere, you get the exact same thing, the consistency.
And I just think that there's actually a lot of
meat here quite honestly, when we're talking about these improvements
and if they can do things to speed that up. Yeah,
I think putting a better product on the table and
(38:01):
helping to get costs down and doing so. Yeah, that's
the whole ball game for them. So I looked at
the headline here, and I was like, what are we
talking about here? Is this like can you quantum burger
build a bun out of pickles or something? No, like
this is actually there's there's something here not just quantum burgers.
Let's take a quick break for the rest of the day.
Tomorrow we're back. We got producer price index and weekly
(38:23):
jobless claims. Tomorrow we'll recap that all on our Thursday show.
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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Exchange with Chuck Zada and Mark Fandaddy, your exclusive look
at business and financial news affecting your day, your city,
(00:42):
your world. Stay informed and up to date about economic
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(01:06):
and Mark fan, Detti, Mark, you a.
Speaker 2 (01:11):
Big blood sweat and tears fan.
Speaker 3 (01:13):
What is that like just generally expending blood sweat and tears?
Speaker 1 (01:17):
No?
Speaker 2 (01:17):
The band?
Speaker 3 (01:18):
Oh, I didn't know there was a band, so I
guess not.
Speaker 2 (01:21):
Tucker, that's a band.
Speaker 3 (01:23):
Moving on.
Speaker 2 (01:24):
You guys have never heard of Blood Sweat and Tears.
Speaker 3 (01:26):
Oh no, I thought that was just the same. I
don't feel it as bad.
Speaker 2 (01:29):
Really, I've never heard of that band. I mean, they
only I think they were had like a fifteen year career.
Uh yeah, we've got one, two, three, four, five, six, seven, eight, nine, ten,
eleven CDs. Lois is saying yes, okay, no she is not?
Is not?
Speaker 3 (01:46):
What's well?
Speaker 2 (01:49):
Yes or no? Yeah? Yeah, Lois has heard of him.
Speaker 3 (01:52):
I can't translate our hand signals.
Speaker 2 (01:54):
Okay, well, my entire base I think my entire open
for this segment is completely gone now. But uh no, no, no,
Tucker's saying punt Are you saying? Oh? Whatever? I thought
you were saying? Punt on? What I'm talking about, which
is what I'm gonna do Anyways, Now you'll never know
(02:14):
where I was going with.
Speaker 3 (02:15):
It's like our first day working together. Nobody knows what
anybody else is talking about this like Tower of Babel.
Speaker 2 (02:20):
Who's on first?
Speaker 1 (02:21):
Right?
Speaker 2 (02:23):
Anyways, here's the deal.
Speaker 1 (02:24):
I haven't heard of them.
Speaker 2 (02:25):
Stocks when I woke up this morning were who or first?
Speaker 4 (02:30):
Just go?
Speaker 2 (02:32):
We're gone? Stocks? When I woke up this morning, futures
were up half a percent to three quarters of a percent.
We got a CPI report this morning at eight thirty.
Then that was good. It was it was fine, like
it came in better than expected, but some of the
underlying stuff still not quite as as strong as you'd
like to be. And obviously the CPI report from this
(02:55):
morning was pre tariff you know this is it was
coming from mid February. To my knowledge, I don't know
if anything had been imposed aside from ten percent China
tariffs at that point. And so there's a lot more
that's come into force in the last two weeks that
clearly changes the state of play. But in any case,
the S and P five hundred decided, hey, we like
(03:15):
what we see, and so it said not it, but
like the people buying and selling it said okay. S
and P five hundred closed yesterday at fifty five seventy two.
We're gonna open it fifty six twenty four and go
up to fifty six forty two, so you had about
a seventy point rally compared to yesterday's close. As of
right now, the SMP is down twenty points on the day,
(03:36):
so it's given back ninety points in the first hour
and a half of trading, which is not good. Like
that's almost two percent at this point that it has
fallen intraday, it's only down you know, half a percent,
because again it's you know, net net. But you got
the Dow off four hundred points now, the S and
P's down twenty five. Nasdaq, which was up two percent
(03:56):
now up just thirteen points, or one tenth of a percent.
So this is a market that right now is seeing
rallies viciously sold into. At this point, no one wants
to hold the gains for very long. It's a very
uncertain market. Tenure US Treasury is completely flat at the
moment at four point two eighty six percent. We have
(04:19):
Oil West Texas Intermediate up a dollar forty four a
barrel to sixty seven sixty nine. The TRIPAA national average
for gas prices down one tenth of a cent over
night to three h eight even still can't get that
below three dollars nationwide, though New Hampshire, Massachusetts, and Rhode
Island now all three of them below three dollars in
(04:40):
the New England region at the moment. And we've got
gold today up eight dollars and fifty cents an ounce
to twenty nine twenty nine and forty cents mark. This
is a great, great, great segue that I couldn't have
planned any better to a couple of different pieces, one
from Bloomberg. US stock skepticism deepens as Goldman cuts s
(05:04):
and P five hundred target the second slow down a recession,
It's still not clear, and that's what's got the market
on edge. So I've had this epiphany in the last
week to week and a half because I begin to appropriate.
I'm beginning asked about it just left and right by
people like is the US in recession? Like does this
(05:25):
mean we're heading for recession? That the stock markets down?
Like this my answer where I've come to. And it
took me a while to coagulate my thoughts.
Speaker 3 (05:37):
Sorry, that's probably within the realm of reasonable uses of
that word. I've just never I think it works. I
think a blood coagulated exactly, plotting.
Speaker 2 (05:48):
Well, So here's the thing blood. It comes together and
hard and so it's like, yeah, to cause of transformation
into a soft taste.
Speaker 3 (05:56):
I'm not the arbiter. Don't pay any attention.
Speaker 2 (05:59):
I'm I'm I'm fully sticking with coagulate here because I'm
solidifying and like and like.
Speaker 3 (06:06):
Like compounding here and coagulate.
Speaker 2 (06:10):
Yes you can. You can listen to me coagulate as well.
So here's where I've gotten to.
Speaker 3 (06:16):
What's happening right now?
Speaker 2 (06:17):
The S and P five hundred typically sees a twelve
a ten percent decline, usually every twelve to eighteen months.
Sometimes it can be longer. I think we had one
in the twenty tens where it went like three years
without a ten percent market correction. It might have even
been longer. I can't remember quite honestly. But you usually
see a ten percent dip in markets every twelve to
(06:38):
twenty four months like that. That's pretty standard in the
S and P five hundred. But Mark, we don't have
recessions every twelve to twenty four months.
Speaker 3 (06:48):
Oh thank god.
Speaker 2 (06:49):
How frequency of recessions is usually every like seven to
ten years.
Speaker 3 (06:53):
Like that's probably what we're up to now.
Speaker 2 (06:55):
That's kind of like the norm and so where my
thoughts are on this is that the fear of a
recession is typically what gets you that eight to ten
percent drop in markets. And just think back over the
last couple of years. As an example, in the spring
of twenty twenty three, when Silicon Valley Bank blew up
(07:17):
and everyone was scrambling like, hey, what does this mean?
What you know, what is this gonna do? Like is
is there something bigger that's coming? The S and P
five hundred during that time again, spring of twenty twenty
three went from around forty two hundred think he got
up to like forty one ninety five down to thirty
eight hundred, nine percent drop. Recession did not materialize, and
(07:42):
the S and P five hundred went on its merry
way and continued on later on that year in the
fall or heading into the fall, we once again had
recession fears. I remember we were talking about the labor
market at the end of twenty twenty three, like, hey,
is there something that's that's building here that that's making
us nervous? Again, the S and P five hundred fell
from around forty six hundred down to forty one hundred
(08:02):
and then bounced when recession didn't happen little more.
Speaker 3 (08:05):
Does that mean the stock mark? To you? Does that
mean the stock market's a bad indicator?
Speaker 2 (08:09):
No, it's to me, it means that the first ten
percent drop that you have is built on investor sentiment
and fear. In order to get more than that, the
economic data has to worsen. Is kind of where I'm at, because, yeah,
let's like, let's let's think about what we're actually seeing here.
(08:33):
Right before this all started, the S and P five
hundred was trading like twenty two times forward earnings. Today
it's trading at twenty or the other way that you
can look at it. Maybe it's still trading at twenty
two times forward earnings. But we're just sucking ten percent
growth out as a possibility, like if there's a chance
there's a recession. And so, in my mind, that first
(08:55):
ten percent drop is just the fear response in markets.
It's hey, is there something out there that we need
to be worried about? In order to progress beyond the
ten percent drop, the economic data has to conclusively worsen.
Let's talk about the two most recent times that we've
seen that data conclusively worsen. Twenty twenty two inflation went
(09:19):
to nine percent, and oil prices were through the roof.
And remember you couldn't like everything was back order delayed this,
and that the economy was bad. We didn't technically enter
a recession in twenty twenty two, but we made the
argument at the time it didn't matter. It was a
bad economy whether you formally declared a recession or not.
The S and P five hundred ended up falling a
(09:41):
little bit north of twenty percent over the course of
the year because the economic data got bad. It wasn't
just the fear of bad, it was the reality of bad.
The one before that, twenty twenty all happened in a
span of like three weeks. Twenty twenty two played out
over the course of ten months from January through October
twenty twenty played out in a course of March where
(10:04):
the S and P five hundred lost thirty five percent
in three weeks, the fastest ever decline of that magnitude,
because stuff was being shut down all around the world
because of the outbreak of COVID nineteen and so ultimately,
you know, when we look at this and this question
of slow down or recession, it's still not clear. The
(10:26):
answer is you're right, it still isn't clear because the
economic data by and large is very similar to what
it was over the last couple months. We just got
the job support for February, no big meaningful change. There's
some stuff under the hood that you look at and
you're like, okay, like I'm concerned about this, but nothing big.
(10:46):
Weekly jobless claims are still within sniffing distance of what
they've been at in previous you know, years, and the
norms of what we see there the place where we've
seen a little bit of dodginess, retail sales maybe a
canary in the coal mine slowing down in February, but
it's unclear if that was just people at front loaded
good purchases because of tariffs, are people actually nervous about
the like, we don't know. And other than that, a
(11:09):
lot of the other data that we get on either
a weekly or monthly basis is not really showing any
meaningful statistical change. It's just kind of going along. So
the point that I get to, I think mark is
look the next few months and how the economic data
moves is going to determine the next move for markets here,
because fear can only take you so far. Eventually, if
(11:31):
you want to not want, if you expect to see
a bear market for you know, the index, you have
to actually see the bad stuff start printing in the
economic data and earnings reports. That's kind of where I am,
and to this point, it just hasn't been printing, not
at a high enough frequency. At least you get some
(11:52):
scattered stuff here and there. But you know, in Vidia's earnings,
yes the stock ended up getting punshed, but the earnings
were fine. You know Apple's earnings, the stock got punished,
the earnings were fine. Actually, the Apple was the one
tech company that didn't really get punished. So I think
that where I am on this is it's unclear if
(12:12):
the US is going to go into recession or not.
If the data continues to worsen and the worstening expands
to new areas in the next three to four months,
sure there's a real problem there. But we've also seen
this story multiple times in the last two to three years,
where you get a couple bad months of data and
then it doesn't go anywhere. And so I, as I've
(12:33):
been saying since twenty twenty two, let's just slow a
roll a little bit on the recession call and everything,
because it's just been so overprescribed at this point, as
you know, definitively happening. If it happens, you don't have
to be the first to say that you called a recession.
You can sometimes just wait to see how the data
(12:54):
unfolds and go from there.
Speaker 3 (12:57):
Yeah, recessions are not really predictable. Most of the post
war recess have been caused by monetary policy tightening, which
does have real effects. We talked about this in the
first hour. It's how the FED affects the real economy.
Others as was documented and worked one in the eighties,
caused by oil price increases. But we're far less sensitive
to those than we used to be.
Speaker 2 (13:15):
It's take a quick break. When we come back, we
got trivia and then we're going to be talking about
people that hold multiple jobs. What are we seeing in
those trends right now? We'll let you know after this.
Speaker 1 (13:24):
Tekst us six one, seven, three, six, two, thirteen eighty
five with your comments and questions about today's show, and
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(13:47):
Radio Network.
Speaker 5 (13:53):
Here it's MP for TRIBBA. Here on the Financial Exchange
and on this day. Back in nineteen fifty seven, the
Cat the Hat was first published. Cat in the Hat
was a massive success for doctor Seuss and would go
on to be a second best selling book. So tribute
question today, what was doctor Seuss's best selling book?
Speaker 2 (14:14):
Once again?
Speaker 5 (14:15):
What was Doctor Seuss's best selling book? Be the seventh
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(14:35):
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Speaker 3 (14:45):
Uh.
Speaker 2 (14:45):
Piece here from Tucker. Where where did this come from?
I've never seen this?
Speaker 5 (14:49):
I have not either, but I did come across it. Okay,
I will confirm the source.
Speaker 2 (14:53):
Uh in any case. So last Friday we got a
jobs report.
Speaker 5 (14:57):
It's an outlook called Surewood.
Speaker 2 (14:59):
Does the Sheriff of Nottingham lived there?
Speaker 1 (15:01):
I don't know.
Speaker 2 (15:03):
There's a Robinhood reference. It's it's Sherwood Forest and Robinhood, right,
I don't know. I think I think so's it Nottingham Forest.
He was the sheriff of Nottingham. But I think it
was Sherwood Forest.
Speaker 3 (15:15):
I think that's where those Sherwood Forest confirmed vigilantes hung out.
Speaker 2 (15:22):
Okay, in any case, so reporting live from Sherwood Forest.
Sherwood says thats that multiple job holders in the United
States moved up to a record eight point nine million,
which is five point four percent of all employed workers,
the highest scene since April two thousand and nine, which
is obviously not a time period that you want to
(15:42):
be referencing. The other thing that we saw on this
is that in the U six number, the underemployment number,
the percentage of people reporting having a part time job
for economic reasons, meaning they wanted full time work but
could only get part time I'm moved significantly higher as well.
So this is some of the stuff we're under the
(16:04):
hood in the labor market. Even though the headline stuff
is just fine, you're starting to see a few cracks
that may be developing, and they're the kinds of things
that typically start to indicate coming labor market weakness, because
that's the stuff that happens first.
Speaker 3 (16:22):
Yeah, if you're a forecaster, this is why your job
is challenging, difficult, maybe even impossible. We've been reporting a
lot on the vacancy rate. That report comes out once
a month. We got it yesterday. We updated you on
it and said job opening said increased. We talk about
the unemployment rate. We talk about the unemployment rate for
people age twenty five to fifty four. We talk about
(16:43):
metrics like this which best helps you forecast inflation or
future growth. The short answer is it varies. These relationships change.
They're not stable. So we tell you we give you
a sort of a broad swath of potential indicators and
leave open the question of whether or not they're predictive
(17:03):
of anything, because even if they've worked in the past.
And here, the implication I think is, as you say, Chuck,
job market might be softer than the headline on employment
number indicates. So maybe there's not upward pressure on prices
coming from low unemployment, which is the historical relationship. It
would be a suggestion that the four percent ish unemployment
(17:25):
would be a strong indicator that the economy's running too hot.
Maybe that's not the case. We're not going to know
until after the fact. That's what makes the FEDS job
so hard.
Speaker 2 (17:35):
When you look at the labor market. Is one of
the potentially weird things about this economic cycle is normally
labor is a lagging indicator, and in this case it's
almost moving as a leading indicator. It's kind of weird
that unemployment normally moves up as the economy has already slowed.
In this case, the unemployment rate moved up last year
(17:55):
even though the economy accelerated into your end. According to GDP, Yeah,
it's possible.
Speaker 3 (18:02):
Kind of weird, right, Past relationships do break.
Speaker 2 (18:06):
Down when you look at the labor market. Are there
any areas that you look at and say, this is
most concerning to me.
Speaker 3 (18:16):
So I would use it to help forecast inflation. Oh,
question is sort of like I alluded to in the
last in my last comment, do you want to use
the vacancy right? Do you want to use the traditional
unemployment right? Do you want to use short term unemployed
who put pressure on wages or long term unemployed who
might not if they've been out of the labor force
for a while. Do you want to use measures like this?
And there are others out there. Forecasters researchers are constantly
(18:39):
updating their little models, and I belittle it a little
bit because models that worked well in the past tend
to not work well in the future, maybe because forecasts
are made public and then people act on them, and
it's expectations that cost the relationship to break down. You
get feedback, so to speak. There So Chuck, I don't know.
You do have to, as you and Mike Armstrong do
(18:59):
on this ship and Paulaine, look at a broad again
swath of economic indicators and make a judgment about what
they're telling you.
Speaker 2 (19:08):
Taking a look at markets right now, we've got again
just a ton of intra day volatility. The Dow is
now off two hundred and forty nine points, but the
S and P has rallied back thirty points, are a
little more than half a percent in the last ten
minutes to now be up five points. So this is
a market that just does not have a lot of
confidence in where it's going in either direction. The nasdag
(19:28):
Al's now up one hundred and nineteen points after being
flat ten minutes ago. Quick Break Trivia answers.
Speaker 4 (19:34):
Next, bringing the latest financial news straight to your radio
every day. It's the Financial Exchange on the Financial Exchange
Radio Network. Miss any of the show, catch up in
your convenience by visiting Financial Exchange Show dot com and
(19:57):
clicking the on demand icon, where you'll find all of
our interviews in full shows. This is your home for
the latest business and financial news in New England and
around the country. This is the Financial Exchange Radio Network.
Speaker 5 (20:12):
Trivia question today was what was Doctor Seuss's best selling book,
I'll Be Green Eggs and Ham. Green Eggs and Ham
has sold over two hundred million copies. And again in
second place was Cat and the hat winner today of
the new Financial Exchange Show tea shirt was Tom from Winchester, Mass.
Congrats to Tom, and we play trivia every day here
(20:35):
on the Financial Exchange. See complete contest rules at Financial
Exchange Show dot com.
Speaker 2 (20:41):
All right, we got a piece here from market Watch.
It's titled why It's harder for Generation X to save
for retirement than it was for Baby Boomers. And quite honestly,
I despise these things, these pieces that you make it
seem like any generation has it harder. For the longest
time look, I'm a millennial, and all the pieces written
(21:01):
in the twenty tens were like, well, millennials are never
going to accumulate wealth, They're behind on homeownership, They've got.
Speaker 3 (21:08):
It so hard.
Speaker 2 (21:11):
How are they ever going to survive financially? And the
funny thing is that if you look at the data now,
it actually shows that in many respects, millennials are better
off than their parents the boomers were at the same
time in their respective lives. And so, like you just
I'm a big believer in every generation has its own
(21:34):
unique challenges that they face. Economically, They're like, it's it's
impossible to have any situation that's perfect. But to say, oh, like,
it's definitely harder for this generation to do. No, Like,
there's pros and cons on all of this, And yes,
for certain people within a generation because of their job,
(21:55):
their salary, the way that their retirement plan works, like
all different things that individuals could possibly be disadvantaged or advantaged.
But overall, I don't believe that any generation inherently has
it easier or harder than others when it comes to
securing a safe retirement for themselves. That like, one of
(22:15):
the points this makes it's like, oh, like the you know,
the the demise of the pension plan is you know
a huge thing. Well what about some of the pensions
that you know ended up, you know, going bust and
having to renegotiate with their pensioners that are out there?
I mean, like those are things that you saw, what
you know, you go back through you know retirees who
(22:37):
again like different generation, but the greatest generation retired right
into the tech bubble. Does that mean like they had
a harder time saving for retirement than ever? Not like
it was just different. They they had a different experience,
you know, the Baby Boomers that are retiring right now.
(22:57):
I don't know, Like this piece is all about like
how easy it is for gen X compared to boomers.
Boomers are retiring into a downturn, and who knows if
it turns into a recession, like this turns tomorrow. So
I guess I look at this and yeah, there are
some unique challenges that gen X faces, but every generation
(23:19):
has those unique challenges and just being like, well gen
X has it harder than everyone else. I've heard about
the millennials before, and they're fine.
Speaker 3 (23:30):
In one sense, They've faced a much more severe headwind
in that sense is average wages before after inflation have
grown a lot slower than the stock market. So it's
more expensive to buy your own retirement today than it
was if you'd been born a generation or two before. Sure,
so in that sense it is tougher. In another sense, though,
(23:52):
if a millennial like you had started saving as you did.
Speaker 2 (23:57):
Why'd you say that so derisively?
Speaker 3 (24:00):
Because I wondering I want to reference him personally, or
is it more effective to just say a millennial? Yeah,
I don't know why it came out that.
Speaker 2 (24:08):
Way, came out like you were saying as if it
I admit it.
Speaker 3 (24:12):
I don't know why I need to think about the
way I'm feeling about millennials.
Speaker 2 (24:16):
I guess I appreciate it. I'm sort of.
Speaker 3 (24:18):
Sympathetic with the idea behind this article. I think they
could do a better job of explaining why everything has
grown faster than wages, home prices, stocks, all inflation has
almost grown faster real I'm using average hourly earnings here
for non manufacturing since two thousand, The real growth there
(24:39):
has been about a half a percent. That's much less.
I don't have it in front of me because the
series doesn't go back that far, but that's much less
than previous cohorts. So in a way, they do have
you millennials do have it harder. Was that as sneering, Yes,
I have trouble looking at you and saying, here's the
millennial generation in front of me, you and Tuck, because
(25:00):
everybody's experience is different. But anyway, Chuck, I guess my
point is, in some ways they're absolutely right. It's more
expensive now to fund your own retirement than it's ever been.
In other ways, though, that's a dumb statement because the
so called greatest generation born nineteen in the nineteen tens
or nineteen twenties fought in World War Two. My grandfather,
for example, lived to sixty four, had a pension. You
didn't have to think about funding his own retirement. And
(25:21):
you already made this point. So the challenges are different.
It's really hard to compare cohorts, particularly as you get
more distant in in time.
Speaker 2 (25:30):
Here's the big thing is every single individual out there
is facing their own unique challenges when it comes to
saving for retirement. The Armstrong Advisory Group has a guide
available this month. It's titled what can a Financial Advisor
Do for Me? Because not everyone is the same. There
are plenty of baby boomers who were saying, Hey, I
(25:50):
didn't have it that easy, and I'm still trying to
figure out how to retire. This guide is all about
how regardless of who you are, there are some value
things that you can get from financial advisors to help
guide you on your retirement path. How do you request
the guide Call eight hundred three nine three for zero
(26:11):
zero one. Again, it's titled what can a Financial Advisor
do for Me? If you've got questions about can I retire?
Is there a path for me to retire? This is
the guy that can show you how an advisor can
help you there. The guide is titled what can a
Financial Advisor Do for Me? And you can request it
by calling eight hundred three nine three for zero zero one.
(26:32):
That number one last time is eight hundred three nine
three for zero zero one.
Speaker 1 (26:38):
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 into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 2 (26:54):
Mark I want to touch a little bit on what
we are seeing from airlines here Delta earlier this week.
I'll give the quote from his from their CEO, we
just went through a little bit of a parade of horribles,
which is not really something that you want to hear
from an airline CEO. Because airlines have they've got a
(27:15):
few problems when it comes to managing their business. The
first is they have massive fixed costs. Mark you ever
buy an airplane.
Speaker 3 (27:23):
Like a model airplane, you buy an airportledge, No.
Speaker 2 (27:27):
Because you don't just have like ninety million dollars just
sitting around to buy.
Speaker 3 (27:30):
Where'd you park it?
Speaker 2 (27:31):
Wherever you want? It's an airplane.
Speaker 3 (27:33):
We got a garage downstairs.
Speaker 2 (27:34):
Yeah, it's no big deal, you know, shook clear. Yeah
it'll be fine, Like it'll be a little tight, but
you can get just don't take it down storrow and
it'll be okay.
Speaker 3 (27:44):
So sorry, I'm late. I had a dog fight.
Speaker 2 (27:47):
Okay, well played. So you've got huge costs associated with
just buying you know the stuff. Most air airlines don't
buy their planes a lot of times they're leasing them,
but they're still huge costs associated with that. You have
massive fixed costs associated with the gate space that you
need at airports. And this is before you even get
(28:09):
to entirely unionized workforces that you can't really downsize easily
in the event that you see a marginal drop in demand,
which leads to a huge drop in profit. Which is
why typically historically airlines in the United States, despite being
technological marvels, quite honestly, they are one of like the
three biggest industries that just burns, just lights money on
(28:29):
fire and burns it over the last seventy eighty years,
Like you go through airline bankruptcies and the list is
just massive because they just require so much capital. It's
it's basically them, Auto manufacturers and anything related to fashion
are like my three. Those are the three businesses I
be least likely.
Speaker 3 (28:50):
I don't want to get sidetracked, but yeah, what about it?
What do you mean, Like, why is that the margins
are cost.
Speaker 2 (28:57):
It's not a fixed cost thing, it's just the margins
are bad. The capital require ronments are significant, and things
go out of favor so quickly that you can be
out of business like two years after your mine on
cloud nine pun intended. So you've got airlines that are
starting to cut forecasts, and they're saying, look, it's it's
not just one thing. We've got reductions in government spending,
in corporate spending, and in consumer spending that are hitting here,
(29:20):
and it's unclear how far that is going to go.
They are guiding that some of the international stuff is,
you know, holding up a little bit better at this point.
But one of the questions that the University of Michigan
asks during any of the surveys they do on a
monthly basis about consumer confidences, Hey, what's the likelihood of
(29:41):
you traveling overseas in I think it's the next six months.
And the number was basically cut in half from like
forty five percent of Americans to like twenty eight I
think in the last month. And so there are signs
out there that, remember, the US economy is powered by
conc zomer spending. You've had a weak retail sales report,
(30:03):
you get airlines now saying hey, there's something going on here,
and you start to get a few things adding up.
And what I will tell you is if consumer spending
starts to falter along with a week start to the
housing market this year, and you know, AI starting to
show signs of topping out. As far as you know
growth rates and things like that, the question that you
(30:23):
got to be asking is where does the growth come
from in the US economy. Then if those engines aren't
moving and you're starting to get a few early warning
signals that are out there.
Speaker 3 (30:32):
Yeah, recessions are hard to predict. Like we talked about
it earlier today.
Speaker 2 (30:36):
This could go away two months from now and be
just a wiggle.
Speaker 3 (30:38):
It does seem like though, if there were If you
were trying to induce a recession, one way to do
it might be some of the policy uncertainty that's being
injected into people's calculations right now could be. I mean,
if if you want to press your luck, freak people out.
Speaker 2 (30:57):
Take a quick break here. When we come back, we'll
do a little bit of stack roulette right after this.
Speaker 1 (31:03):
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Speaker 5 (31:30):
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Speaker 2 (32:04):
Mark, what do you have for me?
Speaker 3 (32:05):
For stack rou left Well, Chuck, this is normally a
lighthearted segment, so naturally I'm going to talk about the
whimsical subject of median CPI because we talked about it.
Speaker 2 (32:14):
Oh, I can't wait.
Speaker 3 (32:20):
You talked earlier in the show about how headline headline,
My god, your eyes rolled into the back of your
head when you did that. That's really unsettling, to be honest. Okay,
I'm going to try to center myself here. We talked
earlier in the show about how headline and even ex
food and energy so called core inflation, can be a
(32:40):
little bit misleading. They can seal what might really be
going on. They mask sometimes the trend in inflation. There
are other ways of getting it what's really going on
in inflation. FED follows these closely, though sadly it doesn't
target them. One is the median the price in the
middle literally and last month median CPI came in at
point three per month over month versus point two percent
(33:02):
for the more traditional measures that we talked about, median
CPI and other measures that try to get at the
same thing filtering outliers. Sure, kay, they've been stuck at
this point three percent, which is almost four percent annualized.
I'm doing a little bit of rounding up a few texts.
But you know, Chuck, we're not at two percent, is
my point. We're not even sniffing it based on.
Speaker 2 (33:20):
We're in a three to three and a half percent inflation.
Speaker 3 (33:22):
Now, I can personally live with that. You've said this
a bunch of times. Two percent feels like it's a
little bit arbitrary, even though.
Speaker 2 (33:28):
We've never averaged it. In the long run, it's it's
not even realistic.
Speaker 3 (33:31):
I'll make the arguments, so maybe a rain should be
what the FED targets. Ultimately we can argue about that
or more specialized people.
Speaker 2 (33:40):
Can infiflation should be like pornography. You know it when
you see it. Yeah, okay, you know you know it's
too high when you see it. That's what it is.
That that was I forget what the Supreme Court case
was that that basically laid that out like.
Speaker 3 (33:56):
Potter Stewart I think said it. I don't know what
case the case.
Speaker 2 (33:59):
It ended up being in a Supreme Court case like
he was the just hey, like this is like we
don't really have a bright line here, but you know what,
when you see it is more or less it.
Speaker 3 (34:08):
It's the same with high and way rising. You have
a problem, that's right, you know what, Yes, whether it's.
Speaker 2 (34:13):
Two percent or two and a half or three like,
who cares? The specifics don't matter. It's just, hey, you
know it when you see it, and right now it
still is higher than you'd like to see.
Speaker 3 (34:25):
So when it's not just background noise, the FED and
elected officials also, as we learned in the last election cycle,
have a problem. And I submit, and this is not
my assertion or even observation. Plenty of researchers feel this way.
Underlying inflation remains too high for the FED to seriously
cut absent are really absent strong evidence the economy is
actually going into or in recession, preemptive cuts for reasons
(34:49):
we've been talking about all morning long about the unpredictability
of recessions, risk a breakout of inflation.
Speaker 2 (34:56):
Yeah, yeah, it's look, I've said this before. Hey, if
the energy prices falling that we saw last year reverse
and for some reason increase all of a sudden, you're
not talking about three to three and a half percent
inflation now, you're talking about inflation going to five.
Speaker 3 (35:11):
That's what happened in the seventies.
Speaker 2 (35:12):
And this is the potential issue out there now. Based
on everything we're seeing as far as supplying demand on energy,
it doesn't seem like we're heading in that direction. It
seems it could be food.
Speaker 3 (35:21):
It could be supply chains because I sure could be
taped tariffs or something.
Speaker 2 (35:27):
It could be a supply chain disruption because of tariffs. Right,
you could absolutely see something like that. I am gonna
go I'm gonna do something a little more whimsical if
it's okay, I don't know if you could top that,
but okay, McDonald's revamping their ranks to speed burger breakthroughs.
Tucker what do you think of when you think about
like a burger breakthrough.
Speaker 5 (35:49):
I don't know, firing down a conveyor belt of some
sorts and out the window into customers hands.
Speaker 2 (35:54):
I'll quote here from the Wall Street Journal. The burger
Giant is shaking up its operations and development ranks as
it seeks to get new menu items and technology to
restaurants more quickly. Recent efforts to develop new sandwiches, including
a year's long process to upgrade McDonald's signature burgers, have
taken too long, said Chief executive Chris Kemzinski. So there's
actually a really interesting story here. At first, you're like
(36:15):
burger development, like what are we talking about. The thing
that you have to realize about McDonald's is they're not
actually a food company. They're a logistics company. And the
whole premise of McDonald's is that no matter where you
go in the world, you are going to get the
(36:36):
same big Mac that you got elsewhere, and they do
it through fantastic logistics and rollout of basically everything that
they do. And so on one hand, you look at
this and you're like, like, burger breakthroughs, what are we
talking about there? And basically what they're talking about is
how can we get something that is better and cheaper
(36:58):
out to people at the same level of consistency, which
is a huge it's a huge undertaking because I mean, look,
I'll go, let's say that I have pasta twice this
week at my own house. The exact consistency of the
pasta is not the same, and I'm cooking for four
of us and I can't get it perfectly outdente every time. Now,
(37:19):
part of this is because I'm using different noodles and
different types. You know, I got the far following. Do
I salt the water? Do I salt the water? He asks,
as if I'm not a real Italian? My goodness, there's
a pepper shortage, you know. Oh, in any case, this
I know that people like to, you know, sometimes rip
(37:39):
on McDonald's and this, and that I think that what
they do is miraculous because any McDonald's franchise that you
go to anywhere, you get the exact same thing, the consistency.
And I just think that there's actually a lot of
meat here quite honestly, when we're talking about these improvements
and if they can do things to speed that up. Yeah,
I think putting a better product on the table and
(38:01):
helping to get costs down and doing so. Yeah, that's
the whole ball game for them. So I looked at
the headline here, and I was like, what are we
talking about here? Is this like can you quantum burger
build a bun out of pickles or something? No, like
this is actually there's there's something here not just quantum burgers.
Let's take a quick break for the rest of the day.
Tomorrow we're back. We got producer price index and weekly
(38:23):
jobless claims. Tomorrow we'll recap that all on our Thursday show.
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