May 16, 2025 • 38 mins
Chuck Zodda and Mike Armstong chat with Jenny Tang, VP and Economist Boston Federal Reserve Bank, about how the Fed approaches researching and creating models on inflation, how important consumer expectations are, and the balance between large and small businesses. Gen X's biggest retirement worry isn't money. Travelers are trying their hardest to avoid Newark. Paul LaMonica, Barron's, joins the show to chat about Coinbase's wild week.
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Episode Transcript
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Speaker 1 (00:00):
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(00:42):
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(01:06):
and Mike Armstrong.
Speaker 2 (01:08):
Good morning, Welcome back to the Financial Exchange. We're joined
now by a special guest, Jenny Tank. She's the vice
president and a research economist with a group over at
the Federal Reserve Bank of Boston and is going to
be joining us for a few minutes now talk about
the work that they're doing and some models that they've developed.
Speaker 3 (01:25):
Jenny, thanks so much for joining us, appreciate it.
Speaker 4 (01:29):
Thank you for having me on.
Speaker 2 (01:30):
So by way of background, Chuck and I talk about
the Federal Reserve and meetings and Jay Powell frequently, but
I think most people aren't really familiar with the work
that say, your group and groups that the that the
different regional.
Speaker 3 (01:46):
Banks do on a day to day basis.
Speaker 2 (01:48):
So can you kind of talk through your team and
the type of research that you do with the Federal
Reserve Bank of Boston.
Speaker 4 (01:53):
Sure, of course. So my team at the Boston side,
we support our policy maker, President Susent Collins, in preparations
for the deliberations primarily at the F and C meetings.
We also do a lot of longer term research projects
(02:14):
to understand different topics and economics that are important for
policy making as well, and we are part of a
department really that has several other groups focusing on different
aspects of the economy, all with the goal of generating
useful research and supporting the policy.
Speaker 5 (02:34):
Jenny, when we talk about areas of research that are
kind of front of mind for people right now, one
of them obviously has to be inflation, and it concerns
about where inflation may go given the imposition of tariffs.
Speaker 3 (02:48):
When we talk about how you actually.
Speaker 5 (02:51):
Model inflation, can you explain to our listeners kind of
what goes into that, just because I think sometimes we
get this feeling like inflation is is, you know, something
like physics, where there are hard and fast rules, but
it's much more nuanced, and I'm curious if you can
give some insight into how you're approaching it these days.
Speaker 4 (03:08):
Sure. So, we've actually in our team recently developed a
model of inflation, particularly focusing on the PCE inflation Index,
which is the one targeted by the Fire Reserve. And
so one thing we saw, especially during the pandemic, and
I think it's still very much an issue now in
(03:31):
the arena of tariffs, is that you can have inflation
coming from different sources, and in particular, I think it's
especially important for policy to separate out inflation that's due
to demand versus supply. And the reason for this is
because demand driven inflation tends to move together with employment,
so that the two objective of the fire reserve system,
(03:54):
the stable prices of maximum employment, are not at odds.
But when you see supply driven inflation, as we did
during the pandemic, and as we potentially might due to terrorists,
that usually comes with slower activity. So taming this type
of inflation to achieve our stable price goal would generally
(04:15):
require slowing employment below the maximum employment goal. So this
generates a policy trade off, and so we developed a
model to kind of separate out the different sources of
inflation to help better inform policy.
Speaker 2 (04:28):
Jenny, when you look at things like expectations, we just
got the University of Michigan survey out a little bit
over an hour ago. How important do you find consumer
expectations for inflation to be these days compared to say,
in previous times or are they never really heavily weighted
in your models?
Speaker 4 (04:47):
So they definitely played a much larger role during the
high inflation period of the nineteen seventies. Over time, I
think you know maybe I'm biased, but I think due
to largely due to good policy and the FED being
able to establish credibility and controlling inflation, they have played
(05:10):
a lesser role they subsided during the pandemic. I think
we saw, you know, just a tiny hint of expectations
being a little bit wobbly and contributing just like a
hair more than in the past. But really like expectations
stayed well anchored, they stayed stable, and they're not I
(05:31):
think currently a big factor in inflation.
Speaker 3 (05:36):
Jenny.
Speaker 5 (05:36):
One of the things that we saw yesterday was the
CFO of Walmart indicated that they would start having to
pass through terrorf related price increases in the coming week.
So obviously, when when the biggest or one of the
biggest retailers in the country says that, we take notice,
most people don't work for the biggest retailer in the country.
(05:57):
Even in the retail space, there's a lot of small
and medium sized businesses that still import a ton of
their products that they sell here in the US. What
kind of insights do you have as to how those
smaller businesses may end up either absorbing or passing through
the tariff costs to their customers.
Speaker 4 (06:15):
Yeah, I think that's definitely an area that we're very
interested in. These smaller businesses. They're an important kind of
growth engine in the economy. They generate a lot of employment.
They also are a type of business that we don't
have a lot of visibility into in terms of publicly
available data, and so at the Bank, in collaboration with
(06:36):
Morning Console and some other academic researchers, we developed survey
some survey questions that we fielded towards the end of
last year to try to understand how tariffs were affecting
these smaller businesses, and we did indeed see in our
survey methodology that there was a causal effect of tariffs
(07:00):
on essentially raising the cost expectations of importers and their
price expectations as well that they would have to pass
along some of these cost increases to their customers, with
non importers less so interestingly, there we actually saw that
their cost and price expectations were slightly going down, which
(07:22):
could reflect an expectation of lower demands possibly.
Speaker 2 (07:26):
Jenny, When you take a look at the regional economy
of the New England area, which the Boston Fed obviously covers,
are there any regional differences you're seeing in the state
of employment or in the state of inflation and expectations
compared to say, for instance, areas where housing inventory is
up significantly or unemployment picture might be changing more rapidly
than say in the Greater Boston region.
Speaker 4 (07:49):
I think currently we're seeing a lot of what the
same kind of thing that we're seeing across the country,
and that could be in part because the you know,
the most kind of salient thing affecting the country right
now is a more national issue of these impoor terriffs.
I think longer term, we might start to see some
(08:13):
other dynamics that New England stands out for. In particular,
we may see kind of the effects of things going
on in the education sector, for example, impacting us more
as you know, we're kind of that's a big sector
for our economy. Similarly, we may see some immigration policies
(08:37):
start to affect some of the sectors that we have
here a bit more in terms of like tourism, you
think of tape cod places.
Speaker 3 (08:43):
Like that, yep, yep.
Speaker 5 (08:45):
I know that inflation obviously is front and center. As
you know, we discussed with people, you know, nervous about
what could happen from a terriff implementation standpoint. But the
other piece that the FED is obviously focused on is employment.
And we talked about this idea of full employment fairly
often and how it relates to, you know, how the
(09:07):
FED may manage policy and what it means for average Americans.
Speaker 3 (09:12):
Any thoughts as to how the idea.
Speaker 5 (09:14):
Of full employment may have evolved into where Look, we've
been sitting near four percent unemployment for a couple of
years now, which is, you know, lower than I think
most economists would have been comfortable with for you know,
the last forty or fifty years. Any thoughts as to
how that may be evolving in the idea of full
employment right?
Speaker 4 (09:33):
I think this example you bring up of we've been
sitting with four percent for a long time is a
good one. I think the notion of what unemployment rate
constitutes full employment is really something that evolves quite a
lot over time. And this has to do with more
structural factors like how our industries are organized. You know,
(09:56):
we used to be much more manufacturing heavy and now
we're more service the economy, so things like that. It
can also be influenced by demographics, the you know, educational
makeup of the workforce, and so this thing, this is
something we expect to evolve over time. I think in
this notion of maximum employment, a lot of people also
(10:18):
like to think of maximum sustainable employment. And so we've
learned over time, especially in the time like before the pandemic,
that we can be at unemployment levels that are very
low relative to historical standards and still have that seem
sustainable in the sense that the employment itself, the labor
(10:39):
market itself, is not really contributing to inflationary pressures. And
so this, this measure of full employment based on unemployment
rates is something that we certainly do monitor a lot
over time and try to estimate over time.
Speaker 2 (10:56):
Jenny, that's all the time we have, but want to
say we really appreciate you coming on. This was very
informative and we'd love to talk to you again sometime soon.
So thank you so much for joining us today.
Speaker 4 (11:07):
Thank you for having me.
Speaker 3 (11:08):
That's Jenny Tang.
Speaker 2 (11:09):
She's a vice president and economist in the Federal Reserve
Bank of Boston's Research department and is also orders of
magnitude more qualified to talk about the state of the
economy than Chuck or myself. I found that really, really
helpful conversation. We're going to take a quick break. When
we come back, a little bit of trivia. Here is
next on the Financial Exchange.
Speaker 1 (11:27):
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Speaker 6 (12:01):
Time for trivia here on the Financial Exchange and Today
is Pierce Brosnan's seventy second birthday. The Irish actor is
most famous for his four films run as James Bond
in the nineties and early two thousands. Brosnen was originally
slated to begin his run as Bond in the late eighties,
but he couldn't get out of his contract with NBC.
(12:25):
Trivia question today What TV Show? Starred Pierce Brosnan from
nineteen eighty two to nineteen eighty seven. Once again, What
TV show starred Peirece Brosnan from nineteen eighty two to
nineteen eighty seven. Be the fifth person today to text
us at six one seven three six two thirteen eighty
(12:45):
five with the correct answer, and you'll win a Financial
Exchange Show t shirt once again. The fifth correct response
to text us at six one seven three six two
thirteen eighty five will be our winner. See complete contest
rules at Financial Exchange Show dot com.
Speaker 3 (13:01):
Do we have a new James Bond after Daniel Craig
yet has not been announced? Has not? Nope.
Speaker 5 (13:07):
Yeah, it's been a while since we've had a Bond movie.
Speaker 3 (13:12):
Uh what two years ago? I'm gonna say four or five.
They have no time to die? Yeah, wow twenty twenty one.
You're right, and.
Speaker 5 (13:21):
They've been kind of sporadic like it used to be
you'd get one every two or three years, and they
kind of thinned out after Skyfall. So yeah, I don't know,
just uh, just saying, uh, this is a nice segue
to our next topic. This is Generation x's biggest retirement worry,
and it's not money, it's where are the James Bond movies?
Speaker 2 (13:43):
They are quite concerned about this. I hear it over
and over again from forty five to six year olds.
Speaker 3 (13:48):
So here's the thing.
Speaker 5 (13:49):
It says that the the biggest retirement worry is not money,
but it's still money.
Speaker 3 (13:54):
It is money.
Speaker 5 (13:55):
It's specifically how much is gonna cost? Yeah, so it's
like I would say that is a money problem. It
seems like, you know, a specific one. What specific health
care concerns do gen xers have and are they different
from what we've seen from baby No.
Speaker 2 (14:11):
I think they are of similar concern, which is, hey,
you know, where is my health insurance going to come from? Specifically,
where is my health insurance going to come from? Before
sixty five? But I'm also sure that some of this
is just misinformation and misguided. I don't think that most
people under the age of sixty have any real idea
(14:32):
how Medicare works when it kicks in and just how
affordable and happy.
Speaker 3 (14:39):
People are with it.
Speaker 2 (14:40):
But a real legitimate concern that you know it definitely
exists out there is hey, what if I can't make
it to sixty five? What if I get laid off
at sixty two years old and suddenly I'm out there
shopping for health insurance? And market Watch does an an
interview with a sixty year old who named Laura, who
is paying thirty three thousand dollars a year for health
(15:04):
insurance for it, says his family. So I guess a
guy named Laura. But in any case, it can oftentimes
be that much, especially if you still have children under
the age of what is it twenty six now, where
they have to fall off family health insurance. Yeah, this
is not irregular, I guess would be. My point is
if you are trying to buy your own health insurance
(15:26):
plan and it is not being subsidized by Obamacare, these
are real costs that people face. I have seen eighteen
hundred dollars per month per person on these types of
health insurance plans that are out there. I don't think
those are their only concerns. I think this generation is
also seeing one of the most dramatic increases and costs
(15:47):
for long term care for their parents that anyone's ever seen,
and so that is also playing into these factors of
concern for upcoming retirees.
Speaker 3 (15:55):
Juck. Yeah, I think it's clearly. And here's the thing.
Speaker 5 (16:01):
It's something where I think we also have to acknowledge
that the trajectory for the US healthcare system is probably
not sustainable as it stands right now.
Speaker 3 (16:14):
Especially an end of life care. Yeah.
Speaker 5 (16:16):
No, it's like there's no way to make not just
the dollars add up, but also just the sheer amount
of people that are needed to work in that industry
as well. And so as if you're someone who's a
gen xer saying, Okay, what does this look like, you know,
I'm nervous about what this could be. You know, twenty
(16:36):
thirty years from now, there's huge changes that could be
a foot by then. So I think it's okay to say, hey,
this is what it is now, but by the time
you get to the point where some of those things
are concerns, it might not be relevant to you in
the same way.
Speaker 3 (16:50):
That it is today. All of that haven't been said.
Speaker 2 (16:52):
I do think a lot of this concern is misplaced, because,
like I mentioned, I don't think most people know how
these systems work. If you are in the position where
you are close to that let's call it fifty five
to sixty five age range, and you are trying to
understand how healthcare costs could frankly ruin your financial plan,
(17:14):
you are not alone in this fear. But I will
also say that once it's gone through, and once you've
studied it, and once you've worked with a professional to understand, Hey,
this is actually how I can go and get reasonably
affordable health insurance and position my assets in a way
so that I won't have to pay thirty three thousand
dollars a year for health insurance before I hit Medicare.
(17:35):
That's all doable. It does require some intentionality to it.
You do have to position things and be really goals
based with everything. But there are ways to do this,
and it's one of the areas that I consistently surprise
my clients with on Hey, this is how you can
actually afford to retire before sixty five and not get
blown away by health insurance costs. If you have questions
(17:56):
along those lines and you're trying to understand how this
system works, the folks Armstrong Advisory Group have the expertise
needed to walk you through that and make sure it
fits in with the strategies of your overall plan. Phone
number for the Armstrong Advisory Group eight hundred three nine
three four zero zero one. There are solutions out there
that could let you retire early. Don't work longer than
(18:16):
you have to call us at eight hundred three nine
three four zero zero one.
Speaker 1 (18:20):
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 5 (18:36):
Mike, we got ice cream prices going up right as
summer kicks off.
Speaker 3 (18:39):
Give me a break. What gives coconut oil?
Speaker 5 (18:43):
I heard, yes, apparently, So here's the deal, and I'll
quote here from Bloomberg. Coconut oil, a key ingredient in
industrial made gelatos, is going up in price, and the
price has gone parabolic in the wholesale market, setting fresh
record highs every month so far in twenty twenty five.
Worse for the price gainser likely as demand outstripped supply,
(19:03):
making one of my guilty indulgences even more expensive.
Speaker 2 (19:07):
Can't believe I forgot to renew my coconut oil contracts,
futures contracts.
Speaker 3 (19:12):
Again.
Speaker 5 (19:13):
This is just one of these things where you're like, Okay,
how does this end up, you know, becoming a thing,
And basically what it boils down to is Most coconut
oil is produced in the Philippines. In Indonesia, about almost
seventy five percent is produced there, and you had bad
weather plus trade shocks, and that has pushed coconut oil
(19:33):
prices through the roof. Let's take a quick break. When
we come back, we get the trivia answer after this.
Speaker 1 (19:40):
Bringing the latest financial news straight to your radio every day,
it's the Financial Exchange on the Financial Exchange Radio Network.
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Speaker 6 (20:05):
The Financial Exchange is a proud partner of the Disabled
American Veterans Department of Massachusetts. And you can register right
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Visit DAV five k dot Boston to register or to
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trivia question today was what TV show starred Pierce Brosden
from nineteen eighty two to nineteen eighty seven. That would
(20:47):
be Remington Steele. James from Rochester, New Hampshire is our
winner today, taking home a Financial Exchange Show t shirt.
Congrats to James, and we play trivia every day here
on the Financial Exchange. See complete contest rules at Financial
Exchange Show dot com.
Speaker 5 (21:06):
Mike, we got a piece of the Wall Street Journal.
It's titled travelers are trying their hardest to avoid Newark Airport.
Another one in the journal is well an exclusive from them.
It's titled this air traffic controller just averted a mid
air collision. Now he's speaking out, and this comes on
the back of a report I think it was yesterday
that Denver air Traffic Control lost contact with a number
(21:29):
of planes on Monday for a period of up to
six minutes. And it's it's pretty clear that we are
at a breaking point with the ability for local air
traffic control centers to basically maintain operations the way that
(21:50):
they need to. I don't know enough about the system
to be able to say it's because of X, Y
or Z, so I'm not going to be able to
assign blame unfortunately, because I know that's what everyone loves
to hear, is like, who's at fall for this? I
don't know, but it seems like we're getting to a
point where the system is stressed, and you're seeing little
(22:11):
cracks appearing here and there, and it almost feels like
we're heading towards like an air traffic controller walk out
just because I think things are getting untenable there.
Speaker 2 (22:21):
Yeah, it's I was gonna say the word funny. It's
not funny, but it's interesting how this happens, you know,
very slowly and then all at once, because you've been hearing,
you know, rumblings from air traffic controllers about the degree
of stress the garbage systems that they have to use.
That's been the case across all you know, airport technology
and airline technology. I shouldn't say in the planes the
(22:44):
technology is quite good, but you know, airline or technology
on the ground has been abysmo for quite some time.
But you know, we haven't heard about these types of
real safety issues until literally twenty twenty five, when several
of them have come in the last what thirty days now,
So I find that quite alarming. U the interview within
the Wall Street Journally, if you have a subscription, I
(23:06):
think is worth reading to just the level of stress
that these that these individuals endure. I don't know, you know,
if you're listening and don't have anyone who's worked in
the space. I know Tucker and I kind of independently
know the same person that works in this space and
has spoken to just the the levels of stress and
then follow on abuse, you know, substance abuse and things
(23:26):
along that line that can go with this job because
you are quite literally responsible for the lives of hundreds
of people every single minute, and at the same time
have been dealing with decades of short staffing issues and
now severe technology issues that leave these people i think,
literally walking out of their jobs trembling in many cases.
Speaker 5 (23:46):
Yeah, it's it's a real problem, especially because the the.
Speaker 3 (23:52):
Ability to safely use air travel.
Speaker 5 (23:54):
In the United States forms you know, it's it's kind
of the backbone on how a lot of there are
two principal backbones on how the US economy works. The
first is the shipping industry. And I'm not just talking
about like stuff that comes into the country. I'm talking
about even you know, all the all the goods and
stuff that travels up, you know, and up and down
(24:16):
different rivers and things like that. The Mississippi in particular,
still is a significant amount of stuff that moves on it,
just on you know, smaller ships that don't get necessarily
the amount of press.
Speaker 3 (24:27):
But air travel, when you talk about the ability to.
Speaker 5 (24:31):
I mean, look, quite honestly, if you use Amazon, it
does not exist without air travel being able to be
easily accessible and low cost. Yeah, and if that begins
to shift, then obviously, you know, things come to a
screeching halt. We don't exactly have a fantastic high speed
rail system to move people around the country instead.
Speaker 3 (24:54):
So yeah, this is concerning.
Speaker 2 (24:56):
I'm interested to hear that people are actually making these
decisions of avoiding Newark because you know, other safety issues
in the past haven't exactly you know, we didn't exactly
see people booking flights and taking a look at the
you know, whether or not they were going to be
on a seven thirty seven Max or not a few
years ago, and so this one's interesting to me that
(25:17):
people are intentionally attempting to avoid Newark. But you know,
the more of these that I would assume that these
are not unique issues to Newark and Denvery. It seems
to me that they are quite possibly going to spread
and how do consumers react?
Speaker 5 (25:33):
Yeah, so that is that's kind of what's going on
with aviation. And by the way, this already comes into
a time where you already have airlines indicating, hey, we're
gonna start cutting capacity later this year because of a
decrease that we are seeing in bookings. And so you
threw this on the pile, and it does raise some
questions for what you know, the next six to twelve
(25:54):
months look like for airlines, not in terms of you know, hey,
are any airlines going out of business? Not talking about that,
but just hey, what what does this mean for you know,
a larger potential slowdown in commercial aviation and how does
that impact the US economy. It's another thing just to
wonder about. You don't have to get you know, all
pessimistic and say this is going to be you know,
(26:15):
some huge problem for the US economy. But you just say, okay,
like put it into the throw it on the pile,
and you know, see how it all shakes out.
Speaker 3 (26:22):
But it's something to watch.
Speaker 5 (26:24):
I think, agreed, Let's see what else do we want
to talk about here. Do we want to talk is
that everythew if we go back real quick to price
increases and just the stay of the consume.
Speaker 3 (26:36):
Right, No, yeah, that's not okay with you. No, it's okay.
Speaker 2 (26:39):
There's a couple stats that I just wanted to point
out here because we made the point that hey, you know,
clearly Walmart is giving cover to many other companies now
to be able to go out there and raise prices.
But I keep going back to the consumer and their
ability to absorb those price increases. A few stats that
I want to share right now. According to the Saint
Louis Federal Reserve, the percentage of credit card debt that
(27:02):
is now thirty days or more delinquent is at the
highest level it's been since immediately after the Great Recession. Yep,
that's a pretty concerning number. According to the Education Department, also,
there are currently five million people in default on their
student loans across this country, and they believe that that
number is likely to climb to ten million by the
(27:25):
next couple of months.
Speaker 3 (27:27):
When we look at those two.
Speaker 2 (27:28):
Factors, I just look at this and generally wonder, look,
the credit card number that can always go higher and
you know, historically people tend to just keep loading up
those credit cards until the bank literally tells them no.
But these are two numbers that I look at and say, yeah,
I just don't know how much price absorption is going
to be out there on behalf the consumer.
Speaker 4 (27:50):
Yeah.
Speaker 5 (27:51):
Here's the other thing is there's this again kind of
this dichotomy between what we're seeing from what the bottom
fifty percent of wager owners are saying and what the
top ten percent in particular are saying, not just saying,
but doing. And here's one of the things that you
may see is, Look, you may see continue to get
(28:11):
worse for that low income household, but as long as
the high income earner is still spending the amount of
money they've been spending previously. And because of the way
that you know, wages are disproportionately skewed towards the high
end in the US, you may have like the ultimate
like cynical like kind of dystopia that you end up with,
(28:32):
which is the US doesn't necessarily go into recession, but
a lot of people feel like it does because they're
not their incomes aren't high enough to offset what's going on.
But the high income consumer can still plow through just
because their incomes are high enough that it doesn't matter.
Speaker 2 (28:47):
Yeah, just one more stat that I have to share
regarding student loans that just terrifies me. There are more
than two million people over the age of sixty two
with student loans outstanding, and more than four one hundred
and fifty thousand of them are in default and will
likely have their social securities garnished.
Speaker 3 (29:06):
Let's take a quick break here.
Speaker 5 (29:07):
When we return, we're gonna be joined by Paul Lamonica
from Barons right after this.
Speaker 1 (29:12):
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Speaker 4 (29:32):
Ladies and gentlemen, the weekend.
Speaker 5 (29:40):
As promise, we're now joined by Paul Monica from Barons
here to chat with us for a little bit today.
Speaker 3 (29:47):
Paul, how are you doing today?
Speaker 7 (29:48):
I'm good days.
Speaker 3 (29:49):
How you guys doing.
Speaker 5 (29:51):
We're doing pretty well and I want to talk with
you today about Coinbase.
Speaker 3 (29:55):
It's been kind of a wild week for them. I guess, to.
Speaker 7 (30:01):
Put it mildly, that might be a bit of an understatement.
The stock is still up, it looks like more than
thirty percent in just the past five days. And that's
despite the fact that there is an SEC investigation that
the company confirmed, and there was hacking. It looked like,
(30:26):
you know, some cyber criminals maybe you know, trying to
force coinbase to pay some sort of ransom. But despite that,
you know, the stock got added to the SP five
hundred earlier this week, and that really seems to be
what's driving prices much higher.
Speaker 3 (30:46):
This notion.
Speaker 7 (30:47):
I guess that, you know, Coinbase's addition to the SP
five hundred inclusion is kind of a validation of you know,
the digital assets business and cryptocurrencies rent large, and you
know comes shortly after the company announced decent earnings and
a big acquisition last week as well. It's a lot
going on.
Speaker 5 (31:08):
Here's what I guess I'm struggling to figure out with
regards to to Coinbase.
Speaker 3 (31:12):
All of the like diehard crypto.
Speaker 5 (31:14):
People that I know in my world are basically like, hey,
keep your crypto away from an exchange so it can't
be hacked, and like, you know, you want to hold
on to it yourself, you know, and on some kind
of disconnected device. Everyone I know who is you know,
just like a basic retail trader. Now there's all these
you know, bitcoin ETFs in this and that they can
(31:36):
access those through regular brokerage platforms. What value does coinbase
provide that is unique, I guess, And where's like.
Speaker 3 (31:46):
The the the.
Speaker 5 (31:48):
Reason why they have to be the one to exist
and grow.
Speaker 7 (31:52):
No, it's a great question. I mean, obviously, the advent
of bitcoin et apps have made it a little bit
easier for the average retail investor to buy and have
access to crypto without purchasing bitcoin directly or coinbas stock.
But you know, I think the coin base counter argument
(32:12):
is that they have a big custodial business, which means
that you have crypto wallets where Coinbase is helping them
manage where they're a little bit more secure. You don't
need your you know, the keys and other things for
security that make it sometimes a little bit more difficult
(32:32):
to buy and sell crypto and manage those those assets.
And then the dera bit deal that they just announced
last week, this crypto's options company. If investors are really sophisticated,
that are you know, vary into crypto. Having a derivatives
platform is yet another way for crypto investors to try
(32:56):
and profit from what's a very volatile asset still, So,
you know, I think you're right. If you are an
average kind of buy and hold investor who wants to
dabble in crypto, you probably don't need as many of
the sophisticated products that point base offers. But you know,
there are plenty of people out there that are really,
(33:17):
really into digital currencies and see it as the way
of the future. Is both a means of you know,
commerce as well as an investable asset that could rival
the dollar in gold.
Speaker 3 (33:29):
What's next for coinbase?
Speaker 5 (33:30):
You mentioned the acquisition that they just made trying to
get into that derivative space more heavily.
Speaker 3 (33:34):
Is there any area that is.
Speaker 5 (33:36):
Out there that they want to cover that they don't
currently have coverage on that they could be a player
in for their acquisitions or further development.
Speaker 7 (33:43):
Yeah, I wouldn't be I wouldn't say that they are
not in international markets, but that is an area where
I wouldn't be surprised that they look to do a
little bit more to broaden out beyond what's you know,
a pretty heavy US investor base. Something clearly one of
the virtues of cryptocurrencies that you know, bitcoin bowls, would
(34:07):
you know, taut is that it is a borderless security
or currency if you will, I mean, you can be uh,
you know, owning bitcoin around the world, you know, pretty seamlessly,
and it you know, is not subject to the whims
of central bank interest rate policies for example. So it
(34:28):
might be something like gold that is uh, you know,
something that you know maybe benefits when you see dollar weakness,
for example, but you know, I wouldn't be surprised if
they look to do more internationally. That's that's probably an
area of focus.
Speaker 5 (34:43):
Very good, Paul, appreciate you joining us today, and I
hope you have a fantastic weekend.
Speaker 7 (34:49):
I think a lot of it will depend on whether
or not tonight is good, and I think we probably
have differing views about that.
Speaker 5 (34:56):
Let me let me ask you, actually, Paul, what do
you think happens tonight and that that game.
Speaker 7 (35:01):
I'm going to be optimistic and think that the Knicks
do win it at home, since I hope that they'll
play a little bit more their favorite tider defense, you know,
particularly on white.
Speaker 5 (35:13):
Feels to me She's obviously coming off, you know, a
big emotional win two nights ago, but I wonder how
much of that they can tap into. Again, what I
will say if they do win tonight, I think it's
season seven.
Speaker 3 (35:24):
It's either Nickson six or seasons I would agree.
Speaker 7 (35:26):
I would agree there, and yeah, I mean this is
still obviously a very talented team without Tatum and heart
goes out. I mean, you'd never want to see that.
That was just gutreaching.
Speaker 6 (35:36):
By the way, the get in BRYCE for Madison Square
Garden tonight is about six hundred and thirty five dollars.
Speaker 3 (35:40):
I saw that. That seems like nice. It does.
Speaker 7 (35:44):
My son's going to the Yankees Mets game, but I
think he's going to be more attuned to his phone
for any Knicks updates.
Speaker 5 (35:50):
Plenty of tickets available for that one, so it should
be good. Paul, thanks again for joining us.
Speaker 7 (35:55):
Thanks a lot of guys have a good one.
Speaker 5 (35:57):
That is Paul Lamonica from Baron's talking about coinbase. Mike,
what else we have that we want to cover?
Speaker 3 (36:03):
We have minivans, Chuck.
Speaker 2 (36:05):
I want to talk about minivans because they are having
a sales renaissance this year. Finally, people are listening to me.
The Kia Carnival is up so far sixty percent in
sales in year to date twenty twenty five. The Toyota Sienna,
which dominates that market, up fifty four percent through April.
The Honda Odyssey up twenty nine percent year over year
(36:27):
in sales. The Crisis Pacifica is the only one that
is struggling. But just like kind of all of Stilantis
right now, go about case of the entire minivan market
seems to be having a moment for practicality and just
you know how famously good looking these cars are. We
just bought our note new Toyota Sienna this week actually,
(36:48):
and it might be might be picking it up today,
I'm not sure. But they're having their moment, folks, and
I'm very excited. I have that everybody else is getting
on the minivan bandwagon because it's the best.
Speaker 5 (36:59):
Car for kids under not even under ten mic over
you Like, here's the thing that I come back to about,
you know, the mini vans, the like having driven one
on like a couple of vacations and stuff like that.
Speaker 3 (37:12):
Yep.
Speaker 5 (37:13):
The fact that the floor is so low makes it
so easy to access that third row if you need
to number like. It's it's just you have so much
flexibility as to what you can do. There's just a
massive amount of space in there. And look like, here's
the thing, and.
Speaker 3 (37:27):
You look cool driving No, Like, let's be honest, you
don't look the coolest.
Speaker 5 (37:32):
But if we're gonna be completely real with ourselves, you're
not the coolest anyways. Correct, it'll be false advertising if
you were driving around in a portie.
Speaker 2 (37:41):
Yeah, the Portsia isn't gonna make me look cool either,
so it will.
Speaker 5 (37:47):
You know, you open the book and you're like, I
was expecting war in peace and I got you know,
c spot run right, So it's fine.
Speaker 3 (37:56):
I'm the same. I'm the same way.
Speaker 2 (37:58):
Glad that everybody else is finally coming to their senses
in buying minivans like me.
Speaker 5 (38:02):
No, I'm I'm I'm very pro minivan. I do have
to uh say, they remember I was gonna get that
new uh VW one.
Speaker 3 (38:09):
The uh hasn't gone so well for them well.
Speaker 5 (38:12):
And and the pricing features not really up to uh
not up to snuff, So I don't think that one's
gonna happen for me. We're done for the day, done
for the week. Y'all have a great weekend. See you
back here on Monday.
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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(00:42):
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(01:06):
and Mike Armstrong.
Speaker 2 (01:08):
Good morning, Welcome back to the Financial Exchange. We're joined
now by a special guest, Jenny Tank. She's the vice
president and a research economist with a group over at
the Federal Reserve Bank of Boston and is going to
be joining us for a few minutes now talk about
the work that they're doing and some models that they've developed.
Speaker 3 (01:25):
Jenny, thanks so much for joining us, appreciate it.
Speaker 4 (01:29):
Thank you for having me on.
Speaker 2 (01:30):
So by way of background, Chuck and I talk about
the Federal Reserve and meetings and Jay Powell frequently, but
I think most people aren't really familiar with the work
that say, your group and groups that the that the
different regional.
Speaker 3 (01:46):
Banks do on a day to day basis.
Speaker 2 (01:48):
So can you kind of talk through your team and
the type of research that you do with the Federal
Reserve Bank of Boston.
Speaker 4 (01:53):
Sure, of course. So my team at the Boston side,
we support our policy maker, President Susent Collins, in preparations
for the deliberations primarily at the F and C meetings.
We also do a lot of longer term research projects
(02:14):
to understand different topics and economics that are important for
policy making as well, and we are part of a
department really that has several other groups focusing on different
aspects of the economy, all with the goal of generating
useful research and supporting the policy.
Speaker 5 (02:34):
Jenny, when we talk about areas of research that are
kind of front of mind for people right now, one
of them obviously has to be inflation, and it concerns
about where inflation may go given the imposition of tariffs.
Speaker 3 (02:48):
When we talk about how you actually.
Speaker 5 (02:51):
Model inflation, can you explain to our listeners kind of
what goes into that, just because I think sometimes we
get this feeling like inflation is is, you know, something
like physics, where there are hard and fast rules, but
it's much more nuanced, and I'm curious if you can
give some insight into how you're approaching it these days.
Speaker 4 (03:08):
Sure. So, we've actually in our team recently developed a
model of inflation, particularly focusing on the PCE inflation Index,
which is the one targeted by the Fire Reserve. And
so one thing we saw, especially during the pandemic, and
I think it's still very much an issue now in
(03:31):
the arena of tariffs, is that you can have inflation
coming from different sources, and in particular, I think it's
especially important for policy to separate out inflation that's due
to demand versus supply. And the reason for this is
because demand driven inflation tends to move together with employment,
so that the two objective of the fire reserve system,
(03:54):
the stable prices of maximum employment, are not at odds.
But when you see supply driven inflation, as we did
during the pandemic, and as we potentially might due to terrorists,
that usually comes with slower activity. So taming this type
of inflation to achieve our stable price goal would generally
(04:15):
require slowing employment below the maximum employment goal. So this
generates a policy trade off, and so we developed a
model to kind of separate out the different sources of
inflation to help better inform policy.
Speaker 2 (04:28):
Jenny, when you look at things like expectations, we just
got the University of Michigan survey out a little bit
over an hour ago. How important do you find consumer
expectations for inflation to be these days compared to say,
in previous times or are they never really heavily weighted
in your models?
Speaker 4 (04:47):
So they definitely played a much larger role during the
high inflation period of the nineteen seventies. Over time, I
think you know maybe I'm biased, but I think due
to largely due to good policy and the FED being
able to establish credibility and controlling inflation, they have played
(05:10):
a lesser role they subsided during the pandemic. I think
we saw, you know, just a tiny hint of expectations
being a little bit wobbly and contributing just like a
hair more than in the past. But really like expectations
stayed well anchored, they stayed stable, and they're not I
(05:31):
think currently a big factor in inflation.
Speaker 3 (05:36):
Jenny.
Speaker 5 (05:36):
One of the things that we saw yesterday was the
CFO of Walmart indicated that they would start having to
pass through terrorf related price increases in the coming week.
So obviously, when when the biggest or one of the
biggest retailers in the country says that, we take notice,
most people don't work for the biggest retailer in the country.
(05:57):
Even in the retail space, there's a lot of small
and medium sized businesses that still import a ton of
their products that they sell here in the US. What
kind of insights do you have as to how those
smaller businesses may end up either absorbing or passing through
the tariff costs to their customers.
Speaker 4 (06:15):
Yeah, I think that's definitely an area that we're very
interested in. These smaller businesses. They're an important kind of
growth engine in the economy. They generate a lot of employment.
They also are a type of business that we don't
have a lot of visibility into in terms of publicly
available data, and so at the Bank, in collaboration with
(06:36):
Morning Console and some other academic researchers, we developed survey
some survey questions that we fielded towards the end of
last year to try to understand how tariffs were affecting
these smaller businesses, and we did indeed see in our
survey methodology that there was a causal effect of tariffs
(07:00):
on essentially raising the cost expectations of importers and their
price expectations as well that they would have to pass
along some of these cost increases to their customers, with
non importers less so interestingly, there we actually saw that
their cost and price expectations were slightly going down, which
(07:22):
could reflect an expectation of lower demands possibly.
Speaker 2 (07:26):
Jenny, When you take a look at the regional economy
of the New England area, which the Boston Fed obviously covers,
are there any regional differences you're seeing in the state
of employment or in the state of inflation and expectations
compared to say, for instance, areas where housing inventory is
up significantly or unemployment picture might be changing more rapidly
than say in the Greater Boston region.
Speaker 4 (07:49):
I think currently we're seeing a lot of what the
same kind of thing that we're seeing across the country,
and that could be in part because the you know,
the most kind of salient thing affecting the country right
now is a more national issue of these impoor terriffs.
I think longer term, we might start to see some
(08:13):
other dynamics that New England stands out for. In particular,
we may see kind of the effects of things going
on in the education sector, for example, impacting us more
as you know, we're kind of that's a big sector
for our economy. Similarly, we may see some immigration policies
(08:37):
start to affect some of the sectors that we have
here a bit more in terms of like tourism, you
think of tape cod places.
Speaker 3 (08:43):
Like that, yep, yep.
Speaker 5 (08:45):
I know that inflation obviously is front and center. As
you know, we discussed with people, you know, nervous about
what could happen from a terriff implementation standpoint. But the
other piece that the FED is obviously focused on is employment.
And we talked about this idea of full employment fairly
often and how it relates to, you know, how the
(09:07):
FED may manage policy and what it means for average Americans.
Speaker 3 (09:12):
Any thoughts as to how the idea.
Speaker 5 (09:14):
Of full employment may have evolved into where Look, we've
been sitting near four percent unemployment for a couple of
years now, which is, you know, lower than I think
most economists would have been comfortable with for you know,
the last forty or fifty years. Any thoughts as to
how that may be evolving in the idea of full
employment right?
Speaker 4 (09:33):
I think this example you bring up of we've been
sitting with four percent for a long time is a
good one. I think the notion of what unemployment rate
constitutes full employment is really something that evolves quite a
lot over time. And this has to do with more
structural factors like how our industries are organized. You know,
(09:56):
we used to be much more manufacturing heavy and now
we're more service the economy, so things like that. It
can also be influenced by demographics, the you know, educational
makeup of the workforce, and so this thing, this is
something we expect to evolve over time. I think in
this notion of maximum employment, a lot of people also
(10:18):
like to think of maximum sustainable employment. And so we've
learned over time, especially in the time like before the pandemic,
that we can be at unemployment levels that are very
low relative to historical standards and still have that seem
sustainable in the sense that the employment itself, the labor
(10:39):
market itself, is not really contributing to inflationary pressures. And
so this, this measure of full employment based on unemployment
rates is something that we certainly do monitor a lot
over time and try to estimate over time.
Speaker 2 (10:56):
Jenny, that's all the time we have, but want to
say we really appreciate you coming on. This was very
informative and we'd love to talk to you again sometime soon.
So thank you so much for joining us today.
Speaker 4 (11:07):
Thank you for having me.
Speaker 3 (11:08):
That's Jenny Tang.
Speaker 2 (11:09):
She's a vice president and economist in the Federal Reserve
Bank of Boston's Research department and is also orders of
magnitude more qualified to talk about the state of the
economy than Chuck or myself. I found that really, really
helpful conversation. We're going to take a quick break. When
we come back, a little bit of trivia. Here is
next on the Financial Exchange.
Speaker 1 (11:27):
Miss Any of the Show. Catch up at your convenience
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(11:50):
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Speaker 6 (12:01):
Time for trivia here on the Financial Exchange and Today
is Pierce Brosnan's seventy second birthday. The Irish actor is
most famous for his four films run as James Bond
in the nineties and early two thousands. Brosnen was originally
slated to begin his run as Bond in the late eighties,
but he couldn't get out of his contract with NBC.
(12:25):
Trivia question today What TV Show? Starred Pierce Brosnan from
nineteen eighty two to nineteen eighty seven. Once again, What
TV show starred Peirece Brosnan from nineteen eighty two to
nineteen eighty seven. Be the fifth person today to text
us at six one seven three six two thirteen eighty
(12:45):
five with the correct answer, and you'll win a Financial
Exchange Show t shirt once again. The fifth correct response
to text us at six one seven three six two
thirteen eighty five will be our winner. See complete contest
rules at Financial Exchange Show dot com.
Speaker 3 (13:01):
Do we have a new James Bond after Daniel Craig
yet has not been announced? Has not? Nope.
Speaker 5 (13:07):
Yeah, it's been a while since we've had a Bond movie.
Speaker 3 (13:12):
Uh what two years ago? I'm gonna say four or five.
They have no time to die? Yeah, wow twenty twenty one.
You're right, and.
Speaker 5 (13:21):
They've been kind of sporadic like it used to be
you'd get one every two or three years, and they
kind of thinned out after Skyfall. So yeah, I don't know,
just uh, just saying, uh, this is a nice segue
to our next topic. This is Generation x's biggest retirement worry,
and it's not money, it's where are the James Bond movies?
Speaker 2 (13:43):
They are quite concerned about this. I hear it over
and over again from forty five to six year olds.
Speaker 3 (13:48):
So here's the thing.
Speaker 5 (13:49):
It says that the the biggest retirement worry is not money,
but it's still money.
Speaker 3 (13:54):
It is money.
Speaker 5 (13:55):
It's specifically how much is gonna cost? Yeah, so it's
like I would say that is a money problem. It
seems like, you know, a specific one. What specific health
care concerns do gen xers have and are they different
from what we've seen from baby No.
Speaker 2 (14:11):
I think they are of similar concern, which is, hey,
you know, where is my health insurance going to come from? Specifically,
where is my health insurance going to come from? Before
sixty five? But I'm also sure that some of this
is just misinformation and misguided. I don't think that most
people under the age of sixty have any real idea
(14:32):
how Medicare works when it kicks in and just how
affordable and happy.
Speaker 3 (14:39):
People are with it.
Speaker 2 (14:40):
But a real legitimate concern that you know it definitely
exists out there is hey, what if I can't make
it to sixty five? What if I get laid off
at sixty two years old and suddenly I'm out there
shopping for health insurance? And market Watch does an an
interview with a sixty year old who named Laura, who
is paying thirty three thousand dollars a year for health
(15:04):
insurance for it, says his family. So I guess a
guy named Laura. But in any case, it can oftentimes
be that much, especially if you still have children under
the age of what is it twenty six now, where
they have to fall off family health insurance. Yeah, this
is not irregular, I guess would be. My point is
if you are trying to buy your own health insurance
(15:26):
plan and it is not being subsidized by Obamacare, these
are real costs that people face. I have seen eighteen
hundred dollars per month per person on these types of
health insurance plans that are out there. I don't think
those are their only concerns. I think this generation is
also seeing one of the most dramatic increases and costs
(15:47):
for long term care for their parents that anyone's ever seen,
and so that is also playing into these factors of
concern for upcoming retirees.
Speaker 3 (15:55):
Juck. Yeah, I think it's clearly. And here's the thing.
Speaker 5 (16:01):
It's something where I think we also have to acknowledge
that the trajectory for the US healthcare system is probably
not sustainable as it stands right now.
Speaker 3 (16:14):
Especially an end of life care. Yeah.
Speaker 5 (16:16):
No, it's like there's no way to make not just
the dollars add up, but also just the sheer amount
of people that are needed to work in that industry
as well. And so as if you're someone who's a
gen xer saying, Okay, what does this look like, you know,
I'm nervous about what this could be. You know, twenty
(16:36):
thirty years from now, there's huge changes that could be
a foot by then. So I think it's okay to say, hey,
this is what it is now, but by the time
you get to the point where some of those things
are concerns, it might not be relevant to you in
the same way.
Speaker 3 (16:50):
That it is today. All of that haven't been said.
Speaker 2 (16:52):
I do think a lot of this concern is misplaced, because,
like I mentioned, I don't think most people know how
these systems work. If you are in the position where
you are close to that let's call it fifty five
to sixty five age range, and you are trying to
understand how healthcare costs could frankly ruin your financial plan,
(17:14):
you are not alone in this fear. But I will
also say that once it's gone through, and once you've
studied it, and once you've worked with a professional to understand, Hey,
this is actually how I can go and get reasonably
affordable health insurance and position my assets in a way
so that I won't have to pay thirty three thousand
dollars a year for health insurance before I hit Medicare.
(17:35):
That's all doable. It does require some intentionality to it.
You do have to position things and be really goals
based with everything. But there are ways to do this,
and it's one of the areas that I consistently surprise
my clients with on Hey, this is how you can
actually afford to retire before sixty five and not get
blown away by health insurance costs. If you have questions
(17:56):
along those lines and you're trying to understand how this
system works, the folks Armstrong Advisory Group have the expertise
needed to walk you through that and make sure it
fits in with the strategies of your overall plan. Phone
number for the Armstrong Advisory Group eight hundred three nine
three four zero zero one. There are solutions out there
that could let you retire early. Don't work longer than
(18:16):
you have to call us at eight hundred three nine
three four zero zero one.
Speaker 1 (18:20):
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 5 (18:36):
Mike, we got ice cream prices going up right as
summer kicks off.
Speaker 3 (18:39):
Give me a break. What gives coconut oil?
Speaker 5 (18:43):
I heard, yes, apparently, So here's the deal, and I'll
quote here from Bloomberg. Coconut oil, a key ingredient in
industrial made gelatos, is going up in price, and the
price has gone parabolic in the wholesale market, setting fresh
record highs every month so far in twenty twenty five.
Worse for the price gainser likely as demand outstripped supply,
(19:03):
making one of my guilty indulgences even more expensive.
Speaker 2 (19:07):
Can't believe I forgot to renew my coconut oil contracts,
futures contracts.
Speaker 3 (19:12):
Again.
Speaker 5 (19:13):
This is just one of these things where you're like, Okay,
how does this end up, you know, becoming a thing,
And basically what it boils down to is Most coconut
oil is produced in the Philippines. In Indonesia, about almost
seventy five percent is produced there, and you had bad
weather plus trade shocks, and that has pushed coconut oil
(19:33):
prices through the roof. Let's take a quick break. When
we come back, we get the trivia answer after this.
Speaker 1 (19:40):
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Speaker 6 (20:05):
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trivia question today was what TV show starred Pierce Brosden
from nineteen eighty two to nineteen eighty seven. That would
(20:47):
be Remington Steele. James from Rochester, New Hampshire is our
winner today, taking home a Financial Exchange Show t shirt.
Congrats to James, and we play trivia every day here
on the Financial Exchange. See complete contest rules at Financial
Exchange Show dot com.
Speaker 5 (21:06):
Mike, we got a piece of the Wall Street Journal.
It's titled travelers are trying their hardest to avoid Newark Airport.
Another one in the journal is well an exclusive from them.
It's titled this air traffic controller just averted a mid
air collision. Now he's speaking out, and this comes on
the back of a report I think it was yesterday
that Denver air Traffic Control lost contact with a number
(21:29):
of planes on Monday for a period of up to
six minutes. And it's it's pretty clear that we are
at a breaking point with the ability for local air
traffic control centers to basically maintain operations the way that
(21:50):
they need to. I don't know enough about the system
to be able to say it's because of X, Y
or Z, so I'm not going to be able to
assign blame unfortunately, because I know that's what everyone loves
to hear, is like, who's at fall for this? I
don't know, but it seems like we're getting to a
point where the system is stressed, and you're seeing little
(22:11):
cracks appearing here and there, and it almost feels like
we're heading towards like an air traffic controller walk out
just because I think things are getting untenable there.
Speaker 2 (22:21):
Yeah, it's I was gonna say the word funny. It's
not funny, but it's interesting how this happens, you know,
very slowly and then all at once, because you've been hearing,
you know, rumblings from air traffic controllers about the degree
of stress the garbage systems that they have to use.
That's been the case across all you know, airport technology
and airline technology. I shouldn't say in the planes the
(22:44):
technology is quite good, but you know, airline or technology
on the ground has been abysmo for quite some time.
But you know, we haven't heard about these types of
real safety issues until literally twenty twenty five, when several
of them have come in the last what thirty days now,
So I find that quite alarming. U the interview within
the Wall Street Journally, if you have a subscription, I
(23:06):
think is worth reading to just the level of stress
that these that these individuals endure. I don't know, you know,
if you're listening and don't have anyone who's worked in
the space. I know Tucker and I kind of independently
know the same person that works in this space and
has spoken to just the the levels of stress and
then follow on abuse, you know, substance abuse and things
(23:26):
along that line that can go with this job because
you are quite literally responsible for the lives of hundreds
of people every single minute, and at the same time
have been dealing with decades of short staffing issues and
now severe technology issues that leave these people i think,
literally walking out of their jobs trembling in many cases.
Speaker 5 (23:46):
Yeah, it's it's a real problem, especially because the the.
Speaker 3 (23:52):
Ability to safely use air travel.
Speaker 5 (23:54):
In the United States forms you know, it's it's kind
of the backbone on how a lot of there are
two principal backbones on how the US economy works. The
first is the shipping industry. And I'm not just talking
about like stuff that comes into the country. I'm talking
about even you know, all the all the goods and
stuff that travels up, you know, and up and down
(24:16):
different rivers and things like that. The Mississippi in particular,
still is a significant amount of stuff that moves on it,
just on you know, smaller ships that don't get necessarily
the amount of press.
Speaker 3 (24:27):
But air travel, when you talk about the ability to.
Speaker 5 (24:31):
I mean, look, quite honestly, if you use Amazon, it
does not exist without air travel being able to be
easily accessible and low cost. Yeah, and if that begins
to shift, then obviously, you know, things come to a
screeching halt. We don't exactly have a fantastic high speed
rail system to move people around the country instead.
Speaker 3 (24:54):
So yeah, this is concerning.
Speaker 2 (24:56):
I'm interested to hear that people are actually making these
decisions of avoiding Newark because you know, other safety issues
in the past haven't exactly you know, we didn't exactly
see people booking flights and taking a look at the
you know, whether or not they were going to be
on a seven thirty seven Max or not a few
years ago, and so this one's interesting to me that
(25:17):
people are intentionally attempting to avoid Newark. But you know,
the more of these that I would assume that these
are not unique issues to Newark and Denvery. It seems
to me that they are quite possibly going to spread
and how do consumers react?
Speaker 5 (25:33):
Yeah, so that is that's kind of what's going on
with aviation. And by the way, this already comes into
a time where you already have airlines indicating, hey, we're
gonna start cutting capacity later this year because of a
decrease that we are seeing in bookings. And so you
threw this on the pile, and it does raise some
questions for what you know, the next six to twelve
(25:54):
months look like for airlines, not in terms of you know, hey,
are any airlines going out of business? Not talking about that,
but just hey, what what does this mean for you know,
a larger potential slowdown in commercial aviation and how does
that impact the US economy. It's another thing just to
wonder about. You don't have to get you know, all
pessimistic and say this is going to be you know,
(26:15):
some huge problem for the US economy. But you just say, okay,
like put it into the throw it on the pile,
and you know, see how it all shakes out.
Speaker 3 (26:22):
But it's something to watch.
Speaker 5 (26:24):
I think, agreed, Let's see what else do we want
to talk about here. Do we want to talk is
that everythew if we go back real quick to price
increases and just the stay of the consume.
Speaker 3 (26:36):
Right, No, yeah, that's not okay with you. No, it's okay.
Speaker 2 (26:39):
There's a couple stats that I just wanted to point
out here because we made the point that hey, you know,
clearly Walmart is giving cover to many other companies now
to be able to go out there and raise prices.
But I keep going back to the consumer and their
ability to absorb those price increases. A few stats that
I want to share right now. According to the Saint
Louis Federal Reserve, the percentage of credit card debt that
(27:02):
is now thirty days or more delinquent is at the
highest level it's been since immediately after the Great Recession. Yep,
that's a pretty concerning number. According to the Education Department, also,
there are currently five million people in default on their
student loans across this country, and they believe that that
number is likely to climb to ten million by the
(27:25):
next couple of months.
Speaker 3 (27:27):
When we look at those two.
Speaker 2 (27:28):
Factors, I just look at this and generally wonder, look,
the credit card number that can always go higher and
you know, historically people tend to just keep loading up
those credit cards until the bank literally tells them no.
But these are two numbers that I look at and say, yeah,
I just don't know how much price absorption is going
to be out there on behalf the consumer.
Speaker 4 (27:50):
Yeah.
Speaker 5 (27:51):
Here's the other thing is there's this again kind of
this dichotomy between what we're seeing from what the bottom
fifty percent of wager owners are saying and what the
top ten percent in particular are saying, not just saying,
but doing. And here's one of the things that you
may see is, Look, you may see continue to get
(28:11):
worse for that low income household, but as long as
the high income earner is still spending the amount of
money they've been spending previously. And because of the way
that you know, wages are disproportionately skewed towards the high
end in the US, you may have like the ultimate
like cynical like kind of dystopia that you end up with,
(28:32):
which is the US doesn't necessarily go into recession, but
a lot of people feel like it does because they're
not their incomes aren't high enough to offset what's going on.
But the high income consumer can still plow through just
because their incomes are high enough that it doesn't matter.
Speaker 2 (28:47):
Yeah, just one more stat that I have to share
regarding student loans that just terrifies me. There are more
than two million people over the age of sixty two
with student loans outstanding, and more than four one hundred
and fifty thousand of them are in default and will
likely have their social securities garnished.
Speaker 3 (29:06):
Let's take a quick break here.
Speaker 5 (29:07):
When we return, we're gonna be joined by Paul Lamonica
from Barons right after this.
Speaker 1 (29:12):
This is your home for the most comprehensive coverage of
the economy and the trends on Wall Street. This is
the Financial Exchange Radio Network. The Financial Exchange streams live
on YouTube. Like our page and stay up to date
on breaking business news all morning long. This is the
Financial Exchange Radio Network.
Speaker 4 (29:32):
Ladies and gentlemen, the weekend.
Speaker 5 (29:40):
As promise, we're now joined by Paul Monica from Barons
here to chat with us for a little bit today.
Speaker 3 (29:47):
Paul, how are you doing today?
Speaker 7 (29:48):
I'm good days.
Speaker 3 (29:49):
How you guys doing.
Speaker 5 (29:51):
We're doing pretty well and I want to talk with
you today about Coinbase.
Speaker 3 (29:55):
It's been kind of a wild week for them. I guess, to.
Speaker 7 (30:01):
Put it mildly, that might be a bit of an understatement.
The stock is still up, it looks like more than
thirty percent in just the past five days. And that's
despite the fact that there is an SEC investigation that
the company confirmed, and there was hacking. It looked like,
(30:26):
you know, some cyber criminals maybe you know, trying to
force coinbase to pay some sort of ransom. But despite that,
you know, the stock got added to the SP five
hundred earlier this week, and that really seems to be
what's driving prices much higher.
Speaker 3 (30:46):
This notion.
Speaker 7 (30:47):
I guess that, you know, Coinbase's addition to the SP
five hundred inclusion is kind of a validation of you know,
the digital assets business and cryptocurrencies rent large, and you
know comes shortly after the company announced decent earnings and
a big acquisition last week as well. It's a lot
going on.
Speaker 5 (31:08):
Here's what I guess I'm struggling to figure out with
regards to to Coinbase.
Speaker 3 (31:12):
All of the like diehard crypto.
Speaker 5 (31:14):
People that I know in my world are basically like, hey,
keep your crypto away from an exchange so it can't
be hacked, and like, you know, you want to hold
on to it yourself, you know, and on some kind
of disconnected device. Everyone I know who is you know,
just like a basic retail trader. Now there's all these
you know, bitcoin ETFs in this and that they can
(31:36):
access those through regular brokerage platforms. What value does coinbase
provide that is unique, I guess, And where's like.
Speaker 3 (31:46):
The the the.
Speaker 5 (31:48):
Reason why they have to be the one to exist
and grow.
Speaker 7 (31:52):
No, it's a great question. I mean, obviously, the advent
of bitcoin et apps have made it a little bit
easier for the average retail investor to buy and have
access to crypto without purchasing bitcoin directly or coinbas stock.
But you know, I think the coin base counter argument
(32:12):
is that they have a big custodial business, which means
that you have crypto wallets where Coinbase is helping them
manage where they're a little bit more secure. You don't
need your you know, the keys and other things for
security that make it sometimes a little bit more difficult
(32:32):
to buy and sell crypto and manage those those assets.
And then the dera bit deal that they just announced
last week, this crypto's options company. If investors are really sophisticated,
that are you know, vary into crypto. Having a derivatives
platform is yet another way for crypto investors to try
(32:56):
and profit from what's a very volatile asset still, So,
you know, I think you're right. If you are an
average kind of buy and hold investor who wants to
dabble in crypto, you probably don't need as many of
the sophisticated products that point base offers. But you know,
there are plenty of people out there that are really,
(33:17):
really into digital currencies and see it as the way
of the future. Is both a means of you know,
commerce as well as an investable asset that could rival
the dollar in gold.
Speaker 3 (33:29):
What's next for coinbase?
Speaker 5 (33:30):
You mentioned the acquisition that they just made trying to
get into that derivative space more heavily.
Speaker 3 (33:34):
Is there any area that is.
Speaker 5 (33:36):
Out there that they want to cover that they don't
currently have coverage on that they could be a player
in for their acquisitions or further development.
Speaker 7 (33:43):
Yeah, I wouldn't be I wouldn't say that they are
not in international markets, but that is an area where
I wouldn't be surprised that they look to do a
little bit more to broaden out beyond what's you know,
a pretty heavy US investor base. Something clearly one of
the virtues of cryptocurrencies that you know, bitcoin bowls, would
(34:07):
you know, taut is that it is a borderless security
or currency if you will, I mean, you can be uh,
you know, owning bitcoin around the world, you know, pretty seamlessly,
and it you know, is not subject to the whims
of central bank interest rate policies for example. So it
(34:28):
might be something like gold that is uh, you know,
something that you know maybe benefits when you see dollar weakness,
for example, but you know, I wouldn't be surprised if
they look to do more internationally. That's that's probably an
area of focus.
Speaker 5 (34:43):
Very good, Paul, appreciate you joining us today, and I
hope you have a fantastic weekend.
Speaker 7 (34:49):
I think a lot of it will depend on whether
or not tonight is good, and I think we probably
have differing views about that.
Speaker 5 (34:56):
Let me let me ask you, actually, Paul, what do
you think happens tonight and that that game.
Speaker 7 (35:01):
I'm going to be optimistic and think that the Knicks
do win it at home, since I hope that they'll
play a little bit more their favorite tider defense, you know,
particularly on white.
Speaker 5 (35:13):
Feels to me She's obviously coming off, you know, a
big emotional win two nights ago, but I wonder how
much of that they can tap into. Again, what I
will say if they do win tonight, I think it's
season seven.
Speaker 3 (35:24):
It's either Nickson six or seasons I would agree.
Speaker 7 (35:26):
I would agree there, and yeah, I mean this is
still obviously a very talented team without Tatum and heart
goes out. I mean, you'd never want to see that.
That was just gutreaching.
Speaker 6 (35:36):
By the way, the get in BRYCE for Madison Square
Garden tonight is about six hundred and thirty five dollars.
Speaker 3 (35:40):
I saw that. That seems like nice. It does.
Speaker 7 (35:44):
My son's going to the Yankees Mets game, but I
think he's going to be more attuned to his phone
for any Knicks updates.
Speaker 5 (35:50):
Plenty of tickets available for that one, so it should
be good. Paul, thanks again for joining us.
Speaker 7 (35:55):
Thanks a lot of guys have a good one.
Speaker 5 (35:57):
That is Paul Lamonica from Baron's talking about coinbase. Mike,
what else we have that we want to cover?
Speaker 3 (36:03):
We have minivans, Chuck.
Speaker 2 (36:05):
I want to talk about minivans because they are having
a sales renaissance this year. Finally, people are listening to me.
The Kia Carnival is up so far sixty percent in
sales in year to date twenty twenty five. The Toyota Sienna,
which dominates that market, up fifty four percent through April.
The Honda Odyssey up twenty nine percent year over year
(36:27):
in sales. The Crisis Pacifica is the only one that
is struggling. But just like kind of all of Stilantis
right now, go about case of the entire minivan market
seems to be having a moment for practicality and just
you know how famously good looking these cars are. We
just bought our note new Toyota Sienna this week actually,
(36:48):
and it might be might be picking it up today,
I'm not sure. But they're having their moment, folks, and
I'm very excited. I have that everybody else is getting
on the minivan bandwagon because it's the best.
Speaker 5 (36:59):
Car for kids under not even under ten mic over
you Like, here's the thing that I come back to about,
you know, the mini vans, the like having driven one
on like a couple of vacations and stuff like that.
Speaker 3 (37:12):
Yep.
Speaker 5 (37:13):
The fact that the floor is so low makes it
so easy to access that third row if you need
to number like. It's it's just you have so much
flexibility as to what you can do. There's just a
massive amount of space in there. And look like, here's
the thing, and.
Speaker 3 (37:27):
You look cool driving No, Like, let's be honest, you
don't look the coolest.
Speaker 5 (37:32):
But if we're gonna be completely real with ourselves, you're
not the coolest anyways. Correct, it'll be false advertising if
you were driving around in a portie.
Speaker 2 (37:41):
Yeah, the Portsia isn't gonna make me look cool either,
so it will.
Speaker 5 (37:47):
You know, you open the book and you're like, I
was expecting war in peace and I got you know,
c spot run right, So it's fine.
Speaker 3 (37:56):
I'm the same. I'm the same way.
Speaker 2 (37:58):
Glad that everybody else is finally coming to their senses
in buying minivans like me.
Speaker 5 (38:02):
No, I'm I'm I'm very pro minivan. I do have
to uh say, they remember I was gonna get that
new uh VW one.
Speaker 3 (38:09):
The uh hasn't gone so well for them well.
Speaker 5 (38:12):
And and the pricing features not really up to uh
not up to snuff, So I don't think that one's
gonna happen for me. We're done for the day, done
for the week. Y'all have a great weekend. See you
back here on Monday.
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