April 8, 2025 • 38 mins
Mike Armstrong and Paul Lane discuss the current state of the stock market and wonder where it will go from here. China vows to 'fight to the end' on tariffs as it props up markets. What happens to the price of American goods if tariffs are removed? Many US companies plan to keep China ties. How companies could adjust under tariffs. Should I keep checking my portfolio during economic uncertainty?
Listen
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 five K Boston and making a
donation today. This is the Financial Exchange with Mike Armstrong and.
Speaker 2 (01:06):
Fall Lane, Good morning, Welcome back to the Financial Exchange.
It's an interesting feature of volatility is that it does
tend to move in both directions, and we're sure getting
that today. Markets are ripping higher in early trading today
(01:27):
after what do you call yesterday a seesaw? It was
more than a seesaw. It was a big move yesterday.
We'll talk about that as well, but our first story
of the day has to continue to be about markets
which have been just all over the place. The S
and P five hundred yesterday briefly fell into bear market
territory before rallying some what do we do like rally
(01:50):
eight percent into midday. I believe the statistic that I
saw was that the price movements on the S and
P five hundred yesterday was more substantial than what you
saw for the five month time period from October through February.
So you saw more price movement in stocks yesterday than
(02:11):
you did for the entire five month period surrounding October
through February, which again just gives you a sense of
the volatility that was out there. Trade volumes were through
the roof. Multiple investment firms disclosed that they saw record
breaking transaction volume in trading yesterday and today at least
(02:32):
so far. At least because recall that yesterday at around
ten to ten thirty am, somewhere in that timeframe, we
saw markets up substantially. But today the Dow is up
thirteen hundred points three and a half percent, SMP up
one hundred eighty two three point six percent, in the
Nasdaq early trading up six hundred and thirty nine points,
(02:52):
or about four percent, as we've been doing the last
several days. Just want to remind everybody of the text
line on seven three six two thirteen eighty five. You
can text in questions there, Tucker, what's the what's the
email address for the for the show?
Speaker 3 (03:07):
If people don't worry, don't worry about it's whole thing.
You can go to Financial Exchange show dot com and
you can submit a question. Yeah, I have just a
ridiculously long email, so it's not worth it.
Speaker 2 (03:16):
Got it? So you can submit a question there. But
we'll be diving into questions throughout the show today. I'm
sure I think we got eight or nine of them
yesterday during the show and had a few come in after,
so we'll be diving in here and there. We don't
get into specific securities or anything like that, or we
really can't do that on air because we don't know
you particularly. But we will be trying to respond to
(03:39):
some of this stuff throughout the show. But so far,
in early trading, some optimism in markets, and there's some
rumors out there, there's some news out there in terms
of what happens next, but there's nothing really firm. I
think that you can point to you to say, oh,
here's what's moving markets higher. I think this is more
just a feature of Hey, when you have all of
(03:59):
the extreme fear burn through markets so rapidly like you
did if you missed yesterday's show, the downturn that you
saw on Thursday and Friday combined, that ten percent downturn
on the S and P five hundred was the largest
downturn that we have seen in some fifty years on
the stock market. Other than three occasions, there was twenty
(04:21):
three times. Twenty twenty's got to be one of those.
Twenty twenty was one of them. You got another guests
oh eight, Oh wait was a second one. The third
one was no eighties five Monday, yeah, seven. So those
were the three occasions where you had two day downturns
more severe than what we saw on Thursday and Friday
of last week. And so, yeah, there's a lot been
(04:41):
out there like, oh, you know, this is this is normal.
Markets go through ten percent corrections, that go through twenty
percent corrections quite often, and that that is true. But
we also made some history on Thursday and Friday of
last week. And the question on everyone's mind is where
do we go from here? Where do markets go from here,
where do tariffs go from here? And what does all
(05:01):
of that mean for me personally? So my first answer
is nobody knows. So don't believe anybody that says they
know that this market puke is over, that it's about
to turn a corner. It could be. I'm not saying
that we aren't there, but nobody has any idea where
all this stuff goes next, and markets are going to
probably continue to be volatile until we have some certainty
(05:23):
around that. Speaking of tariffs uncertainty, there was a meeting
yesterday with Israeli Prime Minister Benjaminette Yahoo in the White House.
There was no resolution on tariff's Reporters specifically asked the question,
you know, did these conversations lead to any progress on
tariff negotiations and the president's answer. President Trump's answer was
(05:46):
something along the lines of we'll see this is, you know,
the tariffs threat themselves is bringing a lot of people
to the negotiating table. We're getting good offers of deals here,
so I think that insinuates that there could be a
deal done. It wasn't a firm nob but it was
also not a firm Yes. The President separately said that
he had a great call with South Korea and says
that China wants to make a deal as well, which
(06:09):
is interesting and surprising given what we've heard so far
on China has been nothing but pure escalation. So let's
go to China first. Uh, the you know, massive trading partner,
the massive supplier of goods across the world, and where
that tit for tat has been going most recently. Initially,
tariff slapped on China in the fifty to sixty plus
(06:29):
percent range, depending on you know which source and what
we're talking about here, because there were already existing tariffs
in place, There were tariffs were regarding fentanyl in place,
and then there was an additional tariff put on place
for the reciprocal piece of this China then responded saying
that they were going to be putting tariffs on US
made goods being imported into China at the rate of
(06:50):
thirty some odd percent, at which point President Trump said, okay, well,
if that goes into place, we'll be looking at one
hundred and four percent tariffs on Chinese made goods coming
into the United States. We've talked about trade threats and
tariff threats. This isn't This is you know, the inaccurate
description of what a trade war looks like. Granted, none
of it's in effect yet, but these are the signs
(07:11):
of a trade war between US and China, which I
would say, nowhere else has it escalated to trade war
category yet.
Speaker 4 (07:18):
No, this is you know, tip for tad, trade war,
whatever sort of vernacular you want to use. This is
going to be something that it seems like would be
more drawn out. Obviously, we're getting news this morning that
perhaps there is momentum for a deal in place, but
you'd have to project a little bit more pessimism in
terms of these negotiations here. China seems very dead set
(07:41):
on being pretty defiant in terms of what they're going
to do from a negotiating perspective. They had discussed internally
the idea of raising tariffs on farming imports from the
United States, banning Hollywood movies, investigating American IP gains. They
had gone after DuPont Chemicals, which does about nineteen percent
(08:02):
of their revenue in China, with.
Speaker 1 (08:05):
Some direct measures.
Speaker 4 (08:06):
So it doesn't really seem like there would be a
tremendous amount of momentum for negotiation, but you know, you
can always get surprised here over the last couple of weeks,
but this seems to be the most challenging of all
the negotiations in place.
Speaker 2 (08:21):
China in response to all this, saying that they will
fight to the end after a Trump threatening the additional
fifty percent terrorists. And I think the lesson from years
of trade negotiations between the Trump administration and China is
that China, or at least the lesson for me. A
part of the lesson for me is that China does
not have a lot of great options when it comes
(08:41):
to slapping American goods on or stopping American goods with terrorists,
because they just don't import all that much stuff from
the United States, and.
Speaker 4 (08:49):
The fifth of what they what we export to them
is based on what they export to US.
Speaker 2 (08:55):
Space of twenty percent of our imports from China are
value to exports to China. Got it. The lessons from
them has been, hey, we have other tools in our belt, right,
you know, we might not be able to hit you
with tariffs, but instead we will dramatically lower our currency.
(09:15):
You know, we will devalue our currency and make our
goods look even cheaper. We will go after some of
your big companies, go after some of your big tech
companies and say, hey, Google, Facebook, you're not allowed to
do business here or LinkedIn. We're going to heavily restrict
you Microsoft product. So that's where the interesting stuff to
me will happen. Is Okay, where can they actually hit
the United States hard? And then on the other side
(09:38):
of that coin is let's just assume that trade tariffs
remain escalated with China. I don't know about the rest
of the world, but let's assume for a moment that
they do. What that means is that fewer goods coming
from China will be going to the United States. I
don't believe it means that they're just going to stay
in China. They're going to go somewhere else. Right, So, Apple,
(10:01):
for instance, will be covering later disclosed that they're planning
to take a lot more of their US shipments of
phones from India, and they're going to take the ones
that are done in China and put them somewhere else.
They're going to sell them to some other part of
the world that doesn't have tariffs on Chinese manufactured goods
to temporarily try and get around some of these teriff issues.
(10:22):
What that practically means, in my mind is there's gonna
be a whole bunch of dumping of stuff that this
extra capacity that's in China that suddenly floods the rest
of the world with all sorts of goods if this
stuff stays in place for a while, And so, how
does the rest of the world behave? Right? If you're Europe,
you don't necessarily want a bunch of super cheap Chinese
made products flooding your markets and destroying your car companies,
(10:46):
all of your manufacturers in Europe, you might be putting
up your own barriers to trade, or if you're quite
upset with the Trump administration saying hey, okay, we're going
to take this opportunity to cozy up to China and
find some sort of that can be struck while they
are on the rails. I genuinely don't know, but this
is why it makes all of this so challenging to
(11:07):
navigate and so complex in terms of where things turn next. Yeah,
I'm the supply chain front. I'm not sure.
Speaker 4 (11:13):
I haven't hosted with you guys for a bit, but
I can't emphasize enough. And maybe you guys have spoken
to it before. It's just the complexities of the supply
chains that are in place across China, and this is
not something that can just be unwound easily. I mean
you're talking about you talk to people in all sorts
of different industries, whether it's apparel or you know, technology.
(11:34):
The iPhones, for example, they source from Apple sources from
fifty different countries to assemble the iPhones. Yes, they're manufactured
primarily in China, but there are resources from.
Speaker 2 (11:46):
All over the all over the world that are.
Speaker 4 (11:48):
Used in that manufacturing process. So it's just it's not
something that can be readily corrected. And even if you
were to throw a ton of resources at it, you'd
be lucky to pull some of this off the shift
in a decade. It just is very complex, so it's
not something that can be easily resolved domestically at all.
Speaker 2 (12:07):
Let's take a quick break. Markets continue to be focused
on tomorrow's trade deadline and what may be announced from
the Trump White House before that deadline hits tomorrow. Coming back,
we'll start to tackle a few of the questions that
we received yesterday and today from you listeners. If you
would like to text the show, the number is six
one seven three six two thirteen eighty five. Again text
(12:28):
the show in at six one seven three six two
thirteen eighty five.
Speaker 1 (12:33):
Miss any of the show. The Financial Exchange Show podcast
is available on Apple, Spotify, and iHeartRadio. Hit the subscribe
button and leave us a five star review. This is
the Financial Exchange Radio Network. Well streetwatch a full update
on the markets performance today weekdays at ten thirty only
here on the Financial Exchange Radio Network.
Speaker 3 (12:56):
This segment of The Financial Exchange is brought to you
in part by the US Less Virgin Islands Department of Tourism.
The US Virgin Islands are Saint Croix, Saint Thomas and
Saint John and they are the perfect place to take
your next vacation. Enjoy spectacular beaches world class cuisine and
wide variety of watersports. Don't miss your chance to visit
America's Caribbean paradise the United States Virgin Islands. Go to
(13:20):
visit USVII dot com for more information and to book
your trip today. That's visit USVII dot com.
Speaker 2 (13:27):
Listener question that we got. If trade agreements are reached
and terraffs are removed, doesn't that mean that there'll be
no incentive to produce or purchase in America since foreign
prices will be at or even lower than they were
before this all started. In other words, I see how
terriffs make Overseas goods pricey, driving consumption and with a
(13:48):
production to American goods. But removing terras which seems to
be our hopes, won't it reverse that strategy entirely? So
great question. I think it's good to kind of walk
through the dynamics of how of this, how all of
this works, and you know the potential effects of all
of it. But first and foremost yes, I mean the
(14:08):
answer to your question is, if trade agreements are reached,
then that by definition does drive down the barriers and
incentives to produce those goods in America at least that
one financial incentive. There are plenty of others, right. There
are plenty of others where companies make decisions every day
(14:28):
to say, hey, because of domestic tax rates or because
of the market that we're selling into, we want to
have a presence of manufacturing in the United States. Some
of those are laws, such as the USMCA that requires
a certain portion of vehicles to be sourced in the
United States. Others are different types of incentives. But I
think the answer to the question by and large is yeah,
(14:51):
if we do reach trade deals with other countries, it
is going to remove some of the incentive to produce
things is domestically in the United States. And so to me,
the overarching question is do we get anything out of
those other countries? Right, So let's forget about China for
a moment here, because really unclear to me how that develops.
(15:12):
But let's take the European Union, which does have tariffs
in place on many American goods, and you know, allegedly,
according to reporting, they are seeing a whole bunch of
negotiations and you know, pushing to pass laws to potentially
bring down tariffs. And if it doesn't work, then to
respond to the United states with tariffs of their own
(15:32):
on new American goods, because you know, make no mistake,
the tariff rates that we have him now imposed or
announced on all these other countries, in almost every case
far exceed any of the barriers to trade that exist
on American products going into those countries. So Israel, we've
brought up the example. There are as of today, virtually
(15:52):
no tariffs on American made goods going into Israel. We,
according to these tariff announcements, will impose seventeen percent tariffs
on goods coming into the United States. I think my
other answer on tariffs is better summed up by actually
Ronald Reagan. This speech that he gave in I think
eighty seven has been going all across the internet, so
(16:14):
I'm sure plenty of people have already read it. But
I'm just going to quote Reagan for a moment here.
What eventually occurs is first homegrown industries. This is with
the imposition of tariffs. What eventually occurs is first homegrown
industries start relying on government protection in the form of
high tariffs. They stop competing and stop making the innovative
(16:34):
management and technological changes they need to succeed in world markets.
And then while all this is going on, something even
worse occurs. High terraffs inevitably lead to retaliation by foreign
countries and the triggering of fierce trade wars. The result
is more and more teriffs, higher and higher trade barriers,
and less and less competition. So soon, because of the
(16:55):
price is made artificially high by tariffs that subsidize inefficiency,
and poor men people stop buying. Then the worst happens.
Markets shrink and collapse, businesses and industries shut down, and
millions of people lose their jobs. This was again a
speech given by President Ronald Reagan in April of eighty
seven on tariffs on Japan. And you know international trade,
(17:18):
and you know, granted, the world is substantially different than
it was forty years ago when Ronald Reagan was delivering
this speech. I don't think he had any idea how
China would develop, and I think his attitudes towards trade
with China would probably be similar towards his to his
attitudes on trade with Japan at the time, which was, hey,
this is an unfair agreement and we need to rectify that. However,
(17:41):
I do agree on the overall thesis that hey, if
you have trade barriers in place permanently, which I don't
know if that's the goal of the Trump administration, but
they've certainly talked about it as though it is. Because
one of the goals was to raise tax revenue, and
if you want to raise tax revenue, it has to
be permanent, right, Like, you can't just raise the tax
(18:03):
revenue one time and say job well done. My biggest
concern is by doing that, you make industries and companies
who oftentimes don't have to compete. And I think you
can see some of that in the American auto industry,
by the way, right Like, I think you already see
some of that in the heavily protected American auto industry,
(18:25):
where go take a look at price points and technology
and a lot of American made cars today, and they're
just not selling overseas. They're selling here fine, but they're
not selling overseas because China is able to produce a
cheaper car that is, frankly, according to even CEOs of
(18:46):
American car companies like Jim Farley, a better product. And
so we're just left sitting here saying, hey, you know,
we've got these car companies that can sure sell into
the US market. But without the protections in place, might
not be competitive for the long term. Yeah.
Speaker 4 (19:00):
I mean, for me, they hit on some really great points.
Consumption is how our economy grows. I mean, if you
look at GDP, two thirds of it is tied to
US consumption. If you're going to see higher prices, that's
going to lead to lower consumption. And there just aren't
the mechanics in place to date to really make manufacturing
in the United States more cheap than it is in
other countries out there. Targeted tariffs I can understand on
(19:23):
specific industries that are tied to national security concerns, but
others like apparel, I don't see it.
Speaker 2 (19:29):
Quick Break full market update next with Wall Street Watch.
Speaker 1 (19:42):
Like us on Facebook and follow us on Twitter at
TFFE 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 the Financial Exchange Radio Network.
Speaker 3 (20:03):
A more volatility on Wall Street Worth markets strong seeing
a strong rally as traders continue to keep a close
eye on tariff developments. Yesterday, President Trump said the US
would slap an additional fifty percent tariff on China if
the country follows through with its thirty four percent retaliation.
In turn, China said it will fight to the end
(20:24):
where It's Commerce ministry said it resolutely resolutely opposes Trump's
threat of escalating tariffs. At the moment, the Dow is
up by three point six percent, nearly fourteen points higher.
S and P five hundred is up three point nine percent,
or one hundred and ninety five points in the Nasdaq
(20:45):
up four point three percent or six hundred and seventy
one points, so Russell two thousand is up three point
two percent ten You're treasurrealed up by seven basis points
at four point two three percent, and crude oil up
just over one percent higher, trading at sixty one dollars
and forty two cents a barrel. Healthcare stocks are seeing
gains after The Wall Street Journal reported that the Trump
(21:07):
administration will increase payment rates for medicare insurers to five
point zero six percent next year, compared to the two
point twenty three percent increase proposed by the Biden administration.
Humanased shares are up eleven percent, CBS up by ten percent,
and United Health up by seven percent. Meanwhile, shares and
LEVI up over one percent after the company reiterated.
Speaker 2 (21:30):
Its full year outlook.
Speaker 3 (21:31):
However, the genes maker noted that it excludes any impact
from tariffs. Levi's first quarter adjusted at earnings were also
fifty two percent hire versus a year ago, while its
revenue climbed three percent compared to last year. Elsewhere, Broadcom
announced a ten billion dollars share repurchase program authorization through
year end, sending shares in the chip maker up by
(21:53):
eight percent. Marvell shares up by nine percent after the
company agreed to sell its auto ethernet business to Infinion
Technologies for two and a half billion dollars in cash
and is expected to close next year. And Walgreen's posted
better than expected adjusted quardally earnings, sending that stock up
by over one percent. The company withdrew its fiscal twenty
(22:16):
twenty five guidance given it is preparing to go private.
I'm Tucker Silvan.
Speaker 1 (22:21):
That's Wall Street.
Speaker 2 (22:22):
Watch many US companies, according to a survey, plan to
keep China ties. Wall's your journal printed this story and
they have some interesting stats in here and stuff to
point to. They surveyed two hundred American companies in the
past couple of that in the past couple of years
have exposure to China. It's according to the US Chamber
(22:44):
of Commerce Foundation. And you know interesting statistics here that hey,
while they're concerned about the relationship, they plan to keep
these ties. About seventy percent of forty members of the
US Chamber said they plan to maintain or inse engagements
in or with China. Over sixty percent of a group
(23:05):
of legal professionals and corporations indicated the same intention. Eighty
three percent of fifty six Chamber respondents cited China as
the top geography of concern. I have to say, I
I don't know that any of this is relevant anymore,
like it unless they took the survey yesterday and then
(23:25):
do it again like Thursday. This stuff has been so
fast moving. We did not know what the tariff rate
was going to be on Chinese made goods and still
don't today. But the even the hints of something to
the tune of fifty percent wasn't even announced until last Wednesday.
Businesses don't make their plans and respond to surveys that
quickly in terms of their change of plans, and so
(23:48):
this is interesting. It's compelling to me. We know that
there are many US companies with deep, deep ties to
Chinese manufacturers. In particular, even whether or not you keep
those and whether or not you're making contingency plans is
not going to be decided ahead of time right now
because you as a business don't know what those terifts
(24:08):
are going to look like.
Speaker 4 (24:09):
No, and you could also make the argument, and major
companies have like Walmart and Apple, that they've been trying
to diversify away from China. This dates back seven or
eight years ago in terms of Trump's first term in office,
where Apple, like we've talked about before, has been looking
to manufacture in India and other countries. But it takes,
like we've said before a long time time, why the
same thing applies to Walmart. But even with how it
(24:36):
seems so clear, not so clear, but it's often so
tied to negotiations that to bring up our listener text before,
if you are a company, are you really going to
reconsider re routing your whole manufacturing operation when the fragility
of these tariffs and the potential for negotiation maybe with China,
the argument could be made that we just may be
(24:57):
locked in a trade war with them, or decouple our
con me over a much longer period. That's fair, But
it's just it's hard to be a CEO and commit
to decouple away from China if you don't know how
long you're looking at from a tariff.
Speaker 2 (25:10):
Perspective, at least in the short term. I mean, you know,
tell me how many car jobs have come back to
the United States so far, right we those tarrats are
in place, right tariffs on foreign made cars are in place. Now.
I've heard some rumblings of you know, shutting down manufacturing
plants in Mexico or pausing them, or Volkswagen for instance,
(25:30):
informed all of their Audi dealers that hey, you're not
getting shipments of these cars because we don't want them
to enter the United States. We're going to reroute them elsewhere.
But none of them so far are saying, hey, we
opened up a new manufacturing plant in ten thous We're
hiring ten thousand people like that. Stuff may come, but
it comes a lot later.
Speaker 4 (25:47):
Also, Mike, I don't know if you guys who wants
those jobs. Who We have a prime working age in
this country twenty five to fifty four. That population eighty
two percent of them are working that prime population age,
and from an unemployment perspective, we sit at about four
point one or four point two percent. It's a pretty
strong job market where I guess you could make the
(26:08):
argument perhaps in the Midwest there is some demand for
maybe manufacturing to be bought back, But I just I
kind of kicked that around in my head to see
it would there be the substantial demand if that was
that's the route that you took.
Speaker 2 (26:22):
I mean, look, I don't know where it all goes.
I'm suspect of whether or not you can actually create
the jobs, but I do think to answer the question,
are there a bunch of people that are working close
to minimum wage at Walmart, Amazon fulfillment centers in other
places that will either take these jobs that would probably
pay a heck of a lot more to manufacture a
car given the union presence, or demand a rage increase
(26:45):
from Walmart or Amazon to stay there. You're right, unemployment's low,
but we do have a lot of people working in
kind of crap jobs in this economy. And so again,
where then you have to fill the backfill those quote
crap jobs that don't pay a whole lot wage and maybe.
Speaker 4 (27:01):
A perfectly But if you start to broaden out to
other sectors, then your whole you want, there's a whole
different level of you know, crap job when you're talking
about apparel and you know, just Nike factory and stuff
like that. I mean, that's a whole different level than
the automn manufacturers.
Speaker 2 (27:14):
Market chaos could inflict its own economic damage. We talked
about this a lot. The market is not the economy.
The economy is not the stock market, But in times
like this, I think it's worth reminding ourselves of why
the two actually matter. And my answer is fairly simple.
On this front. Market chaos could inflict its own economic
damage because a lot of very wealthy people tie their
(27:38):
spending habits to how their portfolio is doing right, And.
Speaker 4 (27:42):
In particular, we've quoted that stat before on the program,
where the top ten percent of Americans by income making
two hundred and fifty thousand or more are now responsible
for fifty percent of the spending of the country. And
so when you have a higher income population represented fifty
percent of the spending, typically those people who are making
(28:03):
two hundred and fifty thousand or more in that top
ten percentile of income, they are reliant upon investing a
significant amount of their savings in the market, and so
if they see those balances fluctuate, I do think it's
a fair argument to make that there could be some
hesitancy on spending on that side of things.
Speaker 2 (28:21):
Let's take a quick break when we come back. Had
another really good question text or it's more of a
statement text from a listener about tariffs in the nineteen eighties.
We'll cover that, and then piece from the Wall Street
Journal why you shouldn't check your portfolio right now. We'll
we tackle them that next here on the Financial Exchange.
Speaker 1 (28:37):
If you missed any of today's show, catch up whenever
you want on our YouTube page. Find daily show segments
and full shows. Just go to YouTube dot com and
search for the Financial Exchange. This is your home for
breaking business and financial news. This is the Financial Exchange
Radio Network, business and financial news affecting the markets and
(28:57):
your wallet. We've got it all from Wall Street right
here on the Financial Exchange Radio Network.
Speaker 2 (29:13):
Listener texts came in during the last segment. Funny story.
I can go back to nineteen eighty four when they
put tariffs on motorcycles over seven hundred and fifty CC's.
Do you know what they did? This would be foreign
makers of motorcycles they made seven hundreds. I always refer
to my motorcycle as a tariff baby. This is what happens.
And in the eighties that did happen. It is quite
(29:33):
different this time because in the past, generally speaking, when
the United States has used tariffs, they've been ultra targeted.
This example is a prime one. Hey, world only going
to tariff motorcycles over a certain power. In this instance,
if you make anything in India, China, Israel, anywhere across
(29:54):
the globe, we're going to face a significant tariff for
it coming in. And so this type of gaming of
the system probably wouldn't work in this uh, in this space.
But the question is where do they get negotiated, because yeah,
once they start negotiating, then these games start being played
where okay, yeah, how can we how can we tinker
with our design to make sure we still meet the
(30:15):
rules of the USMCA, For example, is a a long
game of chess that's been played for decades here, uh,
piece in the Wall Street Journal, Here's why you shouldn't
check your portfolio right now. That is common advice that
is out there, and I'm not sure I agree with it,
but I do think for some people it can be
(30:36):
the right answer. Where are the pitfalls here, Paul? Like,
who should and shouldn't be checking their portfolio right now?
Speaker 4 (30:43):
Well, anyone who's you know, overly nervous about their portfolio
checking in on a daily basis does you really no
good and could actually lead to a negative impact where
you see the losses continue to pile up and then
you make an emotional decision, because I mean, this is
always intertwined our world investing in emotions. That's hard to
separate the two. The more that you're subjecting yourself to
(31:06):
that type of emotion by watching it frequently, the more
likely you are to make a decision one way or
another to you know, cut the bleeding and just say, hey,
I'm going to sell out entirely it it sort of
negates the long term assessment that you should have in
place on your portfolio.
Speaker 2 (31:23):
And make no mistake yesterday when you had that volatility.
There are plenty of people out there, probably some listening
right now, who sold everything in their portfolio because they
got nervous, and then what's happening today. They're missing out
on a twelve hundred point rally on the now as
we speak, because you never know when it's getting ugly,
(31:44):
when it's going to shift around, and you don't know
today if this is the start of something new in
terms of a market rally or just a dead cat
bounce that's going to erase itself tomorrow. I genuinely have
no idea. There's nothing substantial that's changed in terms of
the overall in there of today. It's just been Hey,
it's been a preally rough day, and some investors are
piling back into stocks. The counterpoint to this is if
(32:09):
you have a portfolio that you don't really know how
it's allocated, and you don't feel prepared for what could
be a substantial market draw down, then not only should
you be checking your portfolio, but you'd probably be doing
something about it. And that's the message that I always deliver,
and I recognize that not today, but the last several
(32:30):
days have been scary times. As I mentioned, the market
drawdown that you saw on Thursday and Friday last week
was the fourth largest in modern US history. So you know,
we are in somewhat uncharted territory here, and so if
you're sitting there evaluating where you are right now and
you are nervous, it's not a good enough reason to
(32:51):
necessarily make a whole bunch of changes. But if you
could use a second opinion on how you are situated,
whether or not it makes sense given your age, your
personal situation, how much you're planning to spend over the
next few years, whether or not you're looking to retire.
Maybe it's the kid's college money, maybe it's the money
for the new home, and you're not sure, Hey, is
(33:11):
this a buying opportunity or is this something that I
need to walk away from. Please let Armstrong Advisory Group
be that second opinion. We'll sit down with you. We'll
have a full conversation about what your goals look like,
how the portfolio is supposed to be used in your
scenario and how you envisioned it, and then what we
see as the potential pitfalls overexposure, under exposure, and opportunities
(33:33):
that you can take with that money as it accounts
as we continue to work our way through tariff volatility.
If you have those types of questions, give us a
ring at eight hundred three nine three for zero zero one.
If you're driving right now you can't pick up the phone.
You can also go to Armstrong Advisory dot com. We've
got a little blue get started button where you can
(33:54):
book a callback right on the website. But that phone
number again for the Armstrong Advisor Group for your free
second opinion is eight hundred three nine three four zero
zero one.
Speaker 1 (34:05):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial, tax, and estate planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 2 (34:21):
Second text from another listener, Why do other countries have
tariffs because they are advantageous. I've heard US ranchers, farmers,
and trimpers say that tariffs will benefit them. So first
things first, there are absolutely large swaths of the American
working public that will benefit from tariffs. I am not
blind to the idea that they are, not that I
(34:43):
don't believe the tariffs are universally bad across the board.
And yes, there are absolutely industries. The most notable one
has been the auto industry. Right like you've had forget
the name. Who's the head of the US the union
for the UAW. I forget his name? He's he's been
all over this saying, you know, this is huge fa
(35:06):
seawan fay for American industry and workers, the implementation and
the opposition of these tariffs. I would debate somewhat that
other countries have tariffs purely because they're advantageous. There are
plenty of countries out there where arguably the only reason
they have tariffs is because of special interest groups lobbying
their elected officials, bribing their elected officials to say, protect
(35:30):
these jobs by implementing tariffs. And then you look at
those companies thirty years later, and they are non competitive,
not in a good place. So I don't think we
fall far too often fall into this habit of assuming
that every other country is so organized and efficient and
good at managing their economy and we want to mimic that.
Like No, there are plenty of places that have tariffs
(35:51):
on goods because they're a corrupt politician that took a
bunch of bribes from a certain industry to make sure
that that one industry is protected in their country, and
to that end, I do think that reciprocal tariffs to
address those issues can be a good thing, like we're
dealing with with China, right, like what we're seeing in China,
I think is a is a reasonable approach. If there
(36:14):
are tariffs that I'm not aware of in other certain countries.
I do think that hey, tariffs, if used in that
strategic way to bring down barriers to trade and make
those countries actually compete with American made company American made goods,
probably a good idea. But I wouldn't also universally say that, hey,
countries only have tariffs in place because it's a great
(36:36):
economic policy, Like no, plenty of time, it's because you
have a correct politician or a politician that you know
came up in a certain industry and says, hey, I
want to make sure that German cars are always manufactured
in Germany. And so even though it's a garbage policy,
we're going to have huge barriers to trade and we're
going to have German cars. Might not be the good
(36:58):
example here, but you know, there are plenty of reasons
that tariffs get implemented outside of pure economic prowess.
Speaker 4 (37:05):
Yeah, nothing in the economy is necessarily black or white
where there is just a yes.
Speaker 2 (37:10):
Or no answer to it.
Speaker 4 (37:11):
In some instances, like you said, there can be strategic
reasons why tariffs can be advantageous, but I wouldn't paint
the broadbrush that they are always advantageous. I think that
if you study most economists and the research that they
put out, that typically the more free trade and the
more competition that are in industries, the better off the
end consumer is because you get the best product at
(37:31):
the most efficient price out there. But there certainly are
cases where you can make the argument that having those
tariffs in place can help a domestic industry or can
help national security concerns.
Speaker 2 (37:41):
I'll be the first to admit that too. I'm interested
to hear about the US ranchers and farmers and such, because, again,
not that I talk to them every day, but the
narrative that I've been hearing from the Midwest from ranchers
and farmers is, oh boy, trade war with China. They
buy a ton of aggs cultural That's why I.
Speaker 4 (38:01):
Was wondering when I read that text. I don't know
if that's that easy to say that their advantage.
Speaker 2 (38:06):
That's all I've been hearing from farmers is watch out
because if China reciprocates here, we are in deep trouble.
Quick Break markets remain strongly in positive territory. We'll have
a full recap for you next year on the Financial
Exchange
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:20):
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 five K Boston and making a
donation today. This is the Financial Exchange with Mike Armstrong and.
Speaker 2 (01:06):
Fall Lane, Good morning, Welcome back to the Financial Exchange.
It's an interesting feature of volatility is that it does
tend to move in both directions, and we're sure getting
that today. Markets are ripping higher in early trading today
(01:27):
after what do you call yesterday a seesaw? It was
more than a seesaw. It was a big move yesterday.
We'll talk about that as well, but our first story
of the day has to continue to be about markets
which have been just all over the place. The S
and P five hundred yesterday briefly fell into bear market
territory before rallying some what do we do like rally
(01:50):
eight percent into midday. I believe the statistic that I
saw was that the price movements on the S and
P five hundred yesterday was more substantial than what you
saw for the five month time period from October through February.
So you saw more price movement in stocks yesterday than
(02:11):
you did for the entire five month period surrounding October
through February, which again just gives you a sense of
the volatility that was out there. Trade volumes were through
the roof. Multiple investment firms disclosed that they saw record
breaking transaction volume in trading yesterday and today at least
(02:32):
so far. At least because recall that yesterday at around
ten to ten thirty am, somewhere in that timeframe, we
saw markets up substantially. But today the Dow is up
thirteen hundred points three and a half percent, SMP up
one hundred eighty two three point six percent, in the
Nasdaq early trading up six hundred and thirty nine points,
(02:52):
or about four percent, as we've been doing the last
several days. Just want to remind everybody of the text
line on seven three six two thirteen eighty five. You
can text in questions there, Tucker, what's the what's the
email address for the for the show?
Speaker 3 (03:07):
If people don't worry, don't worry about it's whole thing.
You can go to Financial Exchange show dot com and
you can submit a question. Yeah, I have just a
ridiculously long email, so it's not worth it.
Speaker 2 (03:16):
Got it? So you can submit a question there. But
we'll be diving into questions throughout the show today. I'm
sure I think we got eight or nine of them
yesterday during the show and had a few come in after,
so we'll be diving in here and there. We don't
get into specific securities or anything like that, or we
really can't do that on air because we don't know
you particularly. But we will be trying to respond to
(03:39):
some of this stuff throughout the show. But so far,
in early trading, some optimism in markets, and there's some
rumors out there, there's some news out there in terms
of what happens next, but there's nothing really firm. I
think that you can point to you to say, oh,
here's what's moving markets higher. I think this is more
just a feature of Hey, when you have all of
(03:59):
the extreme fear burn through markets so rapidly like you
did if you missed yesterday's show, the downturn that you
saw on Thursday and Friday combined, that ten percent downturn
on the S and P five hundred was the largest
downturn that we have seen in some fifty years on
the stock market. Other than three occasions, there was twenty
(04:21):
three times. Twenty twenty's got to be one of those.
Twenty twenty was one of them. You got another guests
oh eight, Oh wait was a second one. The third
one was no eighties five Monday, yeah, seven. So those
were the three occasions where you had two day downturns
more severe than what we saw on Thursday and Friday
of last week. And so, yeah, there's a lot been
(04:41):
out there like, oh, you know, this is this is normal.
Markets go through ten percent corrections, that go through twenty
percent corrections quite often, and that that is true. But
we also made some history on Thursday and Friday of
last week. And the question on everyone's mind is where
do we go from here? Where do markets go from here,
where do tariffs go from here? And what does all
(05:01):
of that mean for me personally? So my first answer
is nobody knows. So don't believe anybody that says they
know that this market puke is over, that it's about
to turn a corner. It could be. I'm not saying
that we aren't there, but nobody has any idea where
all this stuff goes next, and markets are going to
probably continue to be volatile until we have some certainty
(05:23):
around that. Speaking of tariffs uncertainty, there was a meeting
yesterday with Israeli Prime Minister Benjaminette Yahoo in the White House.
There was no resolution on tariff's Reporters specifically asked the question,
you know, did these conversations lead to any progress on
tariff negotiations and the president's answer. President Trump's answer was
(05:46):
something along the lines of we'll see this is, you know,
the tariffs threat themselves is bringing a lot of people
to the negotiating table. We're getting good offers of deals here,
so I think that insinuates that there could be a
deal done. It wasn't a firm nob but it was
also not a firm Yes. The President separately said that
he had a great call with South Korea and says
that China wants to make a deal as well, which
(06:09):
is interesting and surprising given what we've heard so far
on China has been nothing but pure escalation. So let's
go to China first. Uh, the you know, massive trading partner,
the massive supplier of goods across the world, and where
that tit for tat has been going most recently. Initially,
tariff slapped on China in the fifty to sixty plus
(06:29):
percent range, depending on you know which source and what
we're talking about here, because there were already existing tariffs
in place, There were tariffs were regarding fentanyl in place,
and then there was an additional tariff put on place
for the reciprocal piece of this China then responded saying
that they were going to be putting tariffs on US
made goods being imported into China at the rate of
(06:50):
thirty some odd percent, at which point President Trump said, okay, well,
if that goes into place, we'll be looking at one
hundred and four percent tariffs on Chinese made goods coming
into the United States. We've talked about trade threats and
tariff threats. This isn't This is you know, the inaccurate
description of what a trade war looks like. Granted, none
of it's in effect yet, but these are the signs
(07:11):
of a trade war between US and China, which I
would say, nowhere else has it escalated to trade war
category yet.
Speaker 4 (07:18):
No, this is you know, tip for tad, trade war,
whatever sort of vernacular you want to use. This is
going to be something that it seems like would be
more drawn out. Obviously, we're getting news this morning that
perhaps there is momentum for a deal in place, but
you'd have to project a little bit more pessimism in
terms of these negotiations here. China seems very dead set
(07:41):
on being pretty defiant in terms of what they're going
to do from a negotiating perspective. They had discussed internally
the idea of raising tariffs on farming imports from the
United States, banning Hollywood movies, investigating American IP gains. They
had gone after DuPont Chemicals, which does about nineteen percent
(08:02):
of their revenue in China, with.
Speaker 1 (08:05):
Some direct measures.
Speaker 4 (08:06):
So it doesn't really seem like there would be a
tremendous amount of momentum for negotiation, but you know, you
can always get surprised here over the last couple of weeks,
but this seems to be the most challenging of all
the negotiations in place.
Speaker 2 (08:21):
China in response to all this, saying that they will
fight to the end after a Trump threatening the additional
fifty percent terrorists. And I think the lesson from years
of trade negotiations between the Trump administration and China is
that China, or at least the lesson for me. A
part of the lesson for me is that China does
not have a lot of great options when it comes
(08:41):
to slapping American goods on or stopping American goods with terrorists,
because they just don't import all that much stuff from
the United States, and.
Speaker 4 (08:49):
The fifth of what they what we export to them
is based on what they export to US.
Speaker 2 (08:55):
Space of twenty percent of our imports from China are
value to exports to China. Got it. The lessons from
them has been, hey, we have other tools in our belt, right,
you know, we might not be able to hit you
with tariffs, but instead we will dramatically lower our currency.
(09:15):
You know, we will devalue our currency and make our
goods look even cheaper. We will go after some of
your big companies, go after some of your big tech
companies and say, hey, Google, Facebook, you're not allowed to
do business here or LinkedIn. We're going to heavily restrict
you Microsoft product. So that's where the interesting stuff to
me will happen. Is Okay, where can they actually hit
the United States hard? And then on the other side
(09:38):
of that coin is let's just assume that trade tariffs
remain escalated with China. I don't know about the rest
of the world, but let's assume for a moment that
they do. What that means is that fewer goods coming
from China will be going to the United States. I
don't believe it means that they're just going to stay
in China. They're going to go somewhere else. Right, So, Apple,
(10:01):
for instance, will be covering later disclosed that they're planning
to take a lot more of their US shipments of
phones from India, and they're going to take the ones
that are done in China and put them somewhere else.
They're going to sell them to some other part of
the world that doesn't have tariffs on Chinese manufactured goods
to temporarily try and get around some of these teriff issues.
(10:22):
What that practically means, in my mind is there's gonna
be a whole bunch of dumping of stuff that this
extra capacity that's in China that suddenly floods the rest
of the world with all sorts of goods if this
stuff stays in place for a while, And so, how
does the rest of the world behave? Right? If you're Europe,
you don't necessarily want a bunch of super cheap Chinese
made products flooding your markets and destroying your car companies,
(10:46):
all of your manufacturers in Europe, you might be putting
up your own barriers to trade, or if you're quite
upset with the Trump administration saying hey, okay, we're going
to take this opportunity to cozy up to China and
find some sort of that can be struck while they
are on the rails. I genuinely don't know, but this
is why it makes all of this so challenging to
(11:07):
navigate and so complex in terms of where things turn next. Yeah,
I'm the supply chain front. I'm not sure.
Speaker 4 (11:13):
I haven't hosted with you guys for a bit, but
I can't emphasize enough. And maybe you guys have spoken
to it before. It's just the complexities of the supply
chains that are in place across China, and this is
not something that can just be unwound easily. I mean
you're talking about you talk to people in all sorts
of different industries, whether it's apparel or you know, technology.
(11:34):
The iPhones, for example, they source from Apple sources from
fifty different countries to assemble the iPhones. Yes, they're manufactured
primarily in China, but there are resources from.
Speaker 2 (11:46):
All over the all over the world that are.
Speaker 4 (11:48):
Used in that manufacturing process. So it's just it's not
something that can be readily corrected. And even if you
were to throw a ton of resources at it, you'd
be lucky to pull some of this off the shift
in a decade. It just is very complex, so it's
not something that can be easily resolved domestically at all.
Speaker 2 (12:07):
Let's take a quick break. Markets continue to be focused
on tomorrow's trade deadline and what may be announced from
the Trump White House before that deadline hits tomorrow. Coming back,
we'll start to tackle a few of the questions that
we received yesterday and today from you listeners. If you
would like to text the show, the number is six
one seven three six two thirteen eighty five. Again text
(12:28):
the show in at six one seven three six two
thirteen eighty five.
Speaker 1 (12:33):
Miss any of the show. The Financial Exchange Show podcast
is available on Apple, Spotify, and iHeartRadio. Hit the subscribe
button and leave us a five star review. This is
the Financial Exchange Radio Network. Well streetwatch a full update
on the markets performance today weekdays at ten thirty only
here on the Financial Exchange Radio Network.
Speaker 3 (12:56):
This segment of The Financial Exchange is brought to you
in part by the US Less Virgin Islands Department of Tourism.
The US Virgin Islands are Saint Croix, Saint Thomas and
Saint John and they are the perfect place to take
your next vacation. Enjoy spectacular beaches world class cuisine and
wide variety of watersports. Don't miss your chance to visit
America's Caribbean paradise the United States Virgin Islands. Go to
(13:20):
visit USVII dot com for more information and to book
your trip today. That's visit USVII dot com.
Speaker 2 (13:27):
Listener question that we got. If trade agreements are reached
and terraffs are removed, doesn't that mean that there'll be
no incentive to produce or purchase in America since foreign
prices will be at or even lower than they were
before this all started. In other words, I see how
terriffs make Overseas goods pricey, driving consumption and with a
(13:48):
production to American goods. But removing terras which seems to
be our hopes, won't it reverse that strategy entirely? So
great question. I think it's good to kind of walk
through the dynamics of how of this, how all of
this works, and you know the potential effects of all
of it. But first and foremost yes, I mean the
(14:08):
answer to your question is, if trade agreements are reached,
then that by definition does drive down the barriers and
incentives to produce those goods in America at least that
one financial incentive. There are plenty of others, right. There
are plenty of others where companies make decisions every day
(14:28):
to say, hey, because of domestic tax rates or because
of the market that we're selling into, we want to
have a presence of manufacturing in the United States. Some
of those are laws, such as the USMCA that requires
a certain portion of vehicles to be sourced in the
United States. Others are different types of incentives. But I
think the answer to the question by and large is yeah,
(14:51):
if we do reach trade deals with other countries, it
is going to remove some of the incentive to produce
things is domestically in the United States. And so to me,
the overarching question is do we get anything out of
those other countries? Right, So let's forget about China for
a moment here, because really unclear to me how that develops.
(15:12):
But let's take the European Union, which does have tariffs
in place on many American goods, and you know, allegedly,
according to reporting, they are seeing a whole bunch of
negotiations and you know, pushing to pass laws to potentially
bring down tariffs. And if it doesn't work, then to
respond to the United states with tariffs of their own
(15:32):
on new American goods, because you know, make no mistake,
the tariff rates that we have him now imposed or
announced on all these other countries, in almost every case
far exceed any of the barriers to trade that exist
on American products going into those countries. So Israel, we've
brought up the example. There are as of today, virtually
(15:52):
no tariffs on American made goods going into Israel. We,
according to these tariff announcements, will impose seventeen percent tariffs
on goods coming into the United States. I think my
other answer on tariffs is better summed up by actually
Ronald Reagan. This speech that he gave in I think
eighty seven has been going all across the internet, so
(16:14):
I'm sure plenty of people have already read it. But
I'm just going to quote Reagan for a moment here.
What eventually occurs is first homegrown industries. This is with
the imposition of tariffs. What eventually occurs is first homegrown
industries start relying on government protection in the form of
high tariffs. They stop competing and stop making the innovative
(16:34):
management and technological changes they need to succeed in world markets.
And then while all this is going on, something even
worse occurs. High terraffs inevitably lead to retaliation by foreign
countries and the triggering of fierce trade wars. The result
is more and more teriffs, higher and higher trade barriers,
and less and less competition. So soon, because of the
(16:55):
price is made artificially high by tariffs that subsidize inefficiency,
and poor men people stop buying. Then the worst happens.
Markets shrink and collapse, businesses and industries shut down, and
millions of people lose their jobs. This was again a
speech given by President Ronald Reagan in April of eighty
seven on tariffs on Japan. And you know international trade,
(17:18):
and you know, granted, the world is substantially different than
it was forty years ago when Ronald Reagan was delivering
this speech. I don't think he had any idea how
China would develop, and I think his attitudes towards trade
with China would probably be similar towards his to his
attitudes on trade with Japan at the time, which was, hey,
this is an unfair agreement and we need to rectify that. However,
(17:41):
I do agree on the overall thesis that hey, if
you have trade barriers in place permanently, which I don't
know if that's the goal of the Trump administration, but
they've certainly talked about it as though it is. Because
one of the goals was to raise tax revenue, and
if you want to raise tax revenue, it has to
be permanent, right, Like, you can't just raise the tax
(18:03):
revenue one time and say job well done. My biggest
concern is by doing that, you make industries and companies
who oftentimes don't have to compete. And I think you
can see some of that in the American auto industry,
by the way, right Like, I think you already see
some of that in the heavily protected American auto industry,
(18:25):
where go take a look at price points and technology
and a lot of American made cars today, and they're
just not selling overseas. They're selling here fine, but they're
not selling overseas because China is able to produce a
cheaper car that is, frankly, according to even CEOs of
(18:46):
American car companies like Jim Farley, a better product. And
so we're just left sitting here saying, hey, you know,
we've got these car companies that can sure sell into
the US market. But without the protections in place, might
not be competitive for the long term. Yeah.
Speaker 4 (19:00):
I mean, for me, they hit on some really great points.
Consumption is how our economy grows. I mean, if you
look at GDP, two thirds of it is tied to
US consumption. If you're going to see higher prices, that's
going to lead to lower consumption. And there just aren't
the mechanics in place to date to really make manufacturing
in the United States more cheap than it is in
other countries out there. Targeted tariffs I can understand on
(19:23):
specific industries that are tied to national security concerns, but
others like apparel, I don't see it.
Speaker 2 (19:29):
Quick Break full market update next with Wall Street Watch.
Speaker 1 (19:42):
Like us on Facebook and follow us on Twitter at
TFFE 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 the Financial Exchange Radio Network.
Speaker 3 (20:03):
A more volatility on Wall Street Worth markets strong seeing
a strong rally as traders continue to keep a close
eye on tariff developments. Yesterday, President Trump said the US
would slap an additional fifty percent tariff on China if
the country follows through with its thirty four percent retaliation.
In turn, China said it will fight to the end
(20:24):
where It's Commerce ministry said it resolutely resolutely opposes Trump's
threat of escalating tariffs. At the moment, the Dow is
up by three point six percent, nearly fourteen points higher.
S and P five hundred is up three point nine percent,
or one hundred and ninety five points in the Nasdaq
(20:45):
up four point three percent or six hundred and seventy
one points, so Russell two thousand is up three point
two percent ten You're treasurrealed up by seven basis points
at four point two three percent, and crude oil up
just over one percent higher, trading at sixty one dollars
and forty two cents a barrel. Healthcare stocks are seeing
gains after The Wall Street Journal reported that the Trump
(21:07):
administration will increase payment rates for medicare insurers to five
point zero six percent next year, compared to the two
point twenty three percent increase proposed by the Biden administration.
Humanased shares are up eleven percent, CBS up by ten percent,
and United Health up by seven percent. Meanwhile, shares and
LEVI up over one percent after the company reiterated.
Speaker 2 (21:30):
Its full year outlook.
Speaker 3 (21:31):
However, the genes maker noted that it excludes any impact
from tariffs. Levi's first quarter adjusted at earnings were also
fifty two percent hire versus a year ago, while its
revenue climbed three percent compared to last year. Elsewhere, Broadcom
announced a ten billion dollars share repurchase program authorization through
year end, sending shares in the chip maker up by
(21:53):
eight percent. Marvell shares up by nine percent after the
company agreed to sell its auto ethernet business to Infinion
Technologies for two and a half billion dollars in cash
and is expected to close next year. And Walgreen's posted
better than expected adjusted quardally earnings, sending that stock up
by over one percent. The company withdrew its fiscal twenty
(22:16):
twenty five guidance given it is preparing to go private.
I'm Tucker Silvan.
Speaker 1 (22:21):
That's Wall Street.
Speaker 2 (22:22):
Watch many US companies, according to a survey, plan to
keep China ties. Wall's your journal printed this story and
they have some interesting stats in here and stuff to
point to. They surveyed two hundred American companies in the
past couple of that in the past couple of years
have exposure to China. It's according to the US Chamber
(22:44):
of Commerce Foundation. And you know interesting statistics here that hey,
while they're concerned about the relationship, they plan to keep
these ties. About seventy percent of forty members of the
US Chamber said they plan to maintain or inse engagements
in or with China. Over sixty percent of a group
(23:05):
of legal professionals and corporations indicated the same intention. Eighty
three percent of fifty six Chamber respondents cited China as
the top geography of concern. I have to say, I
I don't know that any of this is relevant anymore,
like it unless they took the survey yesterday and then
(23:25):
do it again like Thursday. This stuff has been so
fast moving. We did not know what the tariff rate
was going to be on Chinese made goods and still
don't today. But the even the hints of something to
the tune of fifty percent wasn't even announced until last Wednesday.
Businesses don't make their plans and respond to surveys that
quickly in terms of their change of plans, and so
(23:48):
this is interesting. It's compelling to me. We know that
there are many US companies with deep, deep ties to
Chinese manufacturers. In particular, even whether or not you keep
those and whether or not you're making contingency plans is
not going to be decided ahead of time right now
because you as a business don't know what those terifts
(24:08):
are going to look like.
Speaker 4 (24:09):
No, and you could also make the argument, and major
companies have like Walmart and Apple, that they've been trying
to diversify away from China. This dates back seven or
eight years ago in terms of Trump's first term in office,
where Apple, like we've talked about before, has been looking
to manufacture in India and other countries. But it takes,
like we've said before a long time time, why the
same thing applies to Walmart. But even with how it
(24:36):
seems so clear, not so clear, but it's often so
tied to negotiations that to bring up our listener text before,
if you are a company, are you really going to
reconsider re routing your whole manufacturing operation when the fragility
of these tariffs and the potential for negotiation maybe with China,
the argument could be made that we just may be
(24:57):
locked in a trade war with them, or decouple our
con me over a much longer period. That's fair, But
it's just it's hard to be a CEO and commit
to decouple away from China if you don't know how
long you're looking at from a tariff.
Speaker 2 (25:10):
Perspective, at least in the short term. I mean, you know,
tell me how many car jobs have come back to
the United States so far, right we those tarrats are
in place, right tariffs on foreign made cars are in place. Now.
I've heard some rumblings of you know, shutting down manufacturing
plants in Mexico or pausing them, or Volkswagen for instance,
(25:30):
informed all of their Audi dealers that hey, you're not
getting shipments of these cars because we don't want them
to enter the United States. We're going to reroute them elsewhere.
But none of them so far are saying, hey, we
opened up a new manufacturing plant in ten thous We're
hiring ten thousand people like that. Stuff may come, but
it comes a lot later.
Speaker 4 (25:47):
Also, Mike, I don't know if you guys who wants
those jobs. Who We have a prime working age in
this country twenty five to fifty four. That population eighty
two percent of them are working that prime population age,
and from an unemployment perspective, we sit at about four
point one or four point two percent. It's a pretty
strong job market where I guess you could make the
(26:08):
argument perhaps in the Midwest there is some demand for
maybe manufacturing to be bought back, But I just I
kind of kicked that around in my head to see
it would there be the substantial demand if that was
that's the route that you took.
Speaker 2 (26:22):
I mean, look, I don't know where it all goes.
I'm suspect of whether or not you can actually create
the jobs, but I do think to answer the question,
are there a bunch of people that are working close
to minimum wage at Walmart, Amazon fulfillment centers in other
places that will either take these jobs that would probably
pay a heck of a lot more to manufacture a
car given the union presence, or demand a rage increase
(26:45):
from Walmart or Amazon to stay there. You're right, unemployment's low,
but we do have a lot of people working in
kind of crap jobs in this economy. And so again,
where then you have to fill the backfill those quote
crap jobs that don't pay a whole lot wage and maybe.
Speaker 4 (27:01):
A perfectly But if you start to broaden out to
other sectors, then your whole you want, there's a whole
different level of you know, crap job when you're talking
about apparel and you know, just Nike factory and stuff
like that. I mean, that's a whole different level than
the automn manufacturers.
Speaker 2 (27:14):
Market chaos could inflict its own economic damage. We talked
about this a lot. The market is not the economy.
The economy is not the stock market, But in times
like this, I think it's worth reminding ourselves of why
the two actually matter. And my answer is fairly simple.
On this front. Market chaos could inflict its own economic
damage because a lot of very wealthy people tie their
(27:38):
spending habits to how their portfolio is doing right, And.
Speaker 4 (27:42):
In particular, we've quoted that stat before on the program,
where the top ten percent of Americans by income making
two hundred and fifty thousand or more are now responsible
for fifty percent of the spending of the country. And
so when you have a higher income population represented fifty
percent of the spending, typically those people who are making
(28:03):
two hundred and fifty thousand or more in that top
ten percentile of income, they are reliant upon investing a
significant amount of their savings in the market, and so
if they see those balances fluctuate, I do think it's
a fair argument to make that there could be some
hesitancy on spending on that side of things.
Speaker 2 (28:21):
Let's take a quick break when we come back. Had
another really good question text or it's more of a
statement text from a listener about tariffs in the nineteen eighties.
We'll cover that, and then piece from the Wall Street
Journal why you shouldn't check your portfolio right now. We'll
we tackle them that next here on the Financial Exchange.
Speaker 1 (28:37):
If you missed any of today's show, catch up whenever
you want on our YouTube page. Find daily show segments
and full shows. Just go to YouTube dot com and
search for the Financial Exchange. This is your home for
breaking business and financial news. This is the Financial Exchange
Radio Network, business and financial news affecting the markets and
(28:57):
your wallet. We've got it all from Wall Street right
here on the Financial Exchange Radio Network.
Speaker 2 (29:13):
Listener texts came in during the last segment. Funny story.
I can go back to nineteen eighty four when they
put tariffs on motorcycles over seven hundred and fifty CC's.
Do you know what they did? This would be foreign
makers of motorcycles they made seven hundreds. I always refer
to my motorcycle as a tariff baby. This is what happens.
And in the eighties that did happen. It is quite
(29:33):
different this time because in the past, generally speaking, when
the United States has used tariffs, they've been ultra targeted.
This example is a prime one. Hey, world only going
to tariff motorcycles over a certain power. In this instance,
if you make anything in India, China, Israel, anywhere across
(29:54):
the globe, we're going to face a significant tariff for
it coming in. And so this type of gaming of
the system probably wouldn't work in this uh, in this space.
But the question is where do they get negotiated, because yeah,
once they start negotiating, then these games start being played
where okay, yeah, how can we how can we tinker
with our design to make sure we still meet the
(30:15):
rules of the USMCA, For example, is a a long
game of chess that's been played for decades here, uh,
piece in the Wall Street Journal, Here's why you shouldn't
check your portfolio right now. That is common advice that
is out there, and I'm not sure I agree with it,
but I do think for some people it can be
(30:36):
the right answer. Where are the pitfalls here, Paul? Like,
who should and shouldn't be checking their portfolio right now?
Speaker 4 (30:43):
Well, anyone who's you know, overly nervous about their portfolio
checking in on a daily basis does you really no
good and could actually lead to a negative impact where
you see the losses continue to pile up and then
you make an emotional decision, because I mean, this is
always intertwined our world investing in emotions. That's hard to
separate the two. The more that you're subjecting yourself to
(31:06):
that type of emotion by watching it frequently, the more
likely you are to make a decision one way or
another to you know, cut the bleeding and just say, hey,
I'm going to sell out entirely it it sort of
negates the long term assessment that you should have in
place on your portfolio.
Speaker 2 (31:23):
And make no mistake yesterday when you had that volatility.
There are plenty of people out there, probably some listening
right now, who sold everything in their portfolio because they
got nervous, and then what's happening today. They're missing out
on a twelve hundred point rally on the now as
we speak, because you never know when it's getting ugly,
(31:44):
when it's going to shift around, and you don't know
today if this is the start of something new in
terms of a market rally or just a dead cat
bounce that's going to erase itself tomorrow. I genuinely have
no idea. There's nothing substantial that's changed in terms of
the overall in there of today. It's just been Hey,
it's been a preally rough day, and some investors are
piling back into stocks. The counterpoint to this is if
(32:09):
you have a portfolio that you don't really know how
it's allocated, and you don't feel prepared for what could
be a substantial market draw down, then not only should
you be checking your portfolio, but you'd probably be doing
something about it. And that's the message that I always deliver,
and I recognize that not today, but the last several
(32:30):
days have been scary times. As I mentioned, the market
drawdown that you saw on Thursday and Friday last week
was the fourth largest in modern US history. So you know,
we are in somewhat uncharted territory here, and so if
you're sitting there evaluating where you are right now and
you are nervous, it's not a good enough reason to
(32:51):
necessarily make a whole bunch of changes. But if you
could use a second opinion on how you are situated,
whether or not it makes sense given your age, your
personal situation, how much you're planning to spend over the
next few years, whether or not you're looking to retire.
Maybe it's the kid's college money, maybe it's the money
for the new home, and you're not sure, Hey, is
(33:11):
this a buying opportunity or is this something that I
need to walk away from. Please let Armstrong Advisory Group
be that second opinion. We'll sit down with you. We'll
have a full conversation about what your goals look like,
how the portfolio is supposed to be used in your
scenario and how you envisioned it, and then what we
see as the potential pitfalls overexposure, under exposure, and opportunities
(33:33):
that you can take with that money as it accounts
as we continue to work our way through tariff volatility.
If you have those types of questions, give us a
ring at eight hundred three nine three for zero zero one.
If you're driving right now you can't pick up the phone.
You can also go to Armstrong Advisory dot com. We've
got a little blue get started button where you can
(33:54):
book a callback right on the website. But that phone
number again for the Armstrong Advisor Group for your free
second opinion is eight hundred three nine three four zero
zero one.
Speaker 1 (34:05):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial, tax, and estate planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 2 (34:21):
Second text from another listener, Why do other countries have
tariffs because they are advantageous. I've heard US ranchers, farmers,
and trimpers say that tariffs will benefit them. So first
things first, there are absolutely large swaths of the American
working public that will benefit from tariffs. I am not
blind to the idea that they are, not that I
(34:43):
don't believe the tariffs are universally bad across the board.
And yes, there are absolutely industries. The most notable one
has been the auto industry. Right like you've had forget
the name. Who's the head of the US the union
for the UAW. I forget his name? He's he's been
all over this saying, you know, this is huge fa
(35:06):
seawan fay for American industry and workers, the implementation and
the opposition of these tariffs. I would debate somewhat that
other countries have tariffs purely because they're advantageous. There are
plenty of countries out there where arguably the only reason
they have tariffs is because of special interest groups lobbying
their elected officials, bribing their elected officials to say, protect
(35:30):
these jobs by implementing tariffs. And then you look at
those companies thirty years later, and they are non competitive,
not in a good place. So I don't think we
fall far too often fall into this habit of assuming
that every other country is so organized and efficient and
good at managing their economy and we want to mimic that.
Like No, there are plenty of places that have tariffs
(35:51):
on goods because they're a corrupt politician that took a
bunch of bribes from a certain industry to make sure
that that one industry is protected in their country, and
to that end, I do think that reciprocal tariffs to
address those issues can be a good thing, like we're
dealing with with China, right, like what we're seeing in China,
I think is a is a reasonable approach. If there
(36:14):
are tariffs that I'm not aware of in other certain countries.
I do think that hey, tariffs, if used in that
strategic way to bring down barriers to trade and make
those countries actually compete with American made company American made goods,
probably a good idea. But I wouldn't also universally say that, hey,
countries only have tariffs in place because it's a great
(36:36):
economic policy, Like no, plenty of time, it's because you
have a correct politician or a politician that you know
came up in a certain industry and says, hey, I
want to make sure that German cars are always manufactured
in Germany. And so even though it's a garbage policy,
we're going to have huge barriers to trade and we're
going to have German cars. Might not be the good
(36:58):
example here, but you know, there are plenty of reasons
that tariffs get implemented outside of pure economic prowess.
Speaker 4 (37:05):
Yeah, nothing in the economy is necessarily black or white
where there is just a yes.
Speaker 2 (37:10):
Or no answer to it.
Speaker 4 (37:11):
In some instances, like you said, there can be strategic
reasons why tariffs can be advantageous, but I wouldn't paint
the broadbrush that they are always advantageous. I think that
if you study most economists and the research that they
put out, that typically the more free trade and the
more competition that are in industries, the better off the
end consumer is because you get the best product at
(37:31):
the most efficient price out there. But there certainly are
cases where you can make the argument that having those
tariffs in place can help a domestic industry or can
help national security concerns.
Speaker 2 (37:41):
I'll be the first to admit that too. I'm interested
to hear about the US ranchers and farmers and such, because, again,
not that I talk to them every day, but the
narrative that I've been hearing from the Midwest from ranchers
and farmers is, oh boy, trade war with China. They
buy a ton of aggs cultural That's why I.
Speaker 4 (38:01):
Was wondering when I read that text. I don't know
if that's that easy to say that their advantage.
Speaker 2 (38:06):
That's all I've been hearing from farmers is watch out
because if China reciprocates here, we are in deep trouble.
Quick Break markets remain strongly in positive territory. We'll have
a full recap for you next year on the Financial
Exchange
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
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.
The Clifford Show
The Clifford Show with Clifford Taylor IV blends humor, culture, and behind-the-scenes sports talk with real conversations featuring athletes, creators, and personalities—spotlighting the grind, the growth, and the opportunities shaping the next generation of sports and culture.