May 20, 2025 • 38 mins
Mike Armstrong and Marc Fandetti discuss the next great job churn is already underway. Fed officials signal rates likely to stay on hold until at least September. A feared tsunami of cargo from China looks more like a swell. Used-car buyers are being charged an average of $640 in surprise fees. Elon Musk announces a step back from politics.
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Speaker 1 (00:00):
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(01:06):
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Speaker 2 (01:10):
Good morning, Welcome back to the Financial Exchange. It's Mike,
Mark and Tucker with you on a Tuesday. Stocks in
negative territory here been bumping around the negative one tenth
to half a percent range all morning. We've got the
Dow currently off one hundred and sixteen points one quarter
of one percent, the S and P five hundred off
twenty points one third of a percent, in the Nasdaq
(01:31):
off ninety one points or about one half of one percent.
The Rust two thousands actually flat for the day. In
the bond market, we did see the thirty year treasury
bond hit that five percent yield briefly before trending back down.
Yields not moving too much today. As of the moment,
the yield on the ten yure Treasury sitting at four
(01:52):
point four eight three percent. Oil prices down a bit,
down to about half percent at the moment, sixty two
dollars thirty eight cents per barrel on the West Texas crude,
and the national average for a gallon of gas sitting
at three dollars and eighteen cents. Speaking of ghastly, I
had to buy a new minivan recently. Our our ten
(02:13):
year old one actually accidentally got totaled in a car accident,
so everyone was safe, which was most important. But we
were in the market for a new minivan. It's a
new Toyota Siena. I've talked about my lame infatuation with
minivans at length on this program. Would either of you
like to guess, so it's a hybrid engine all we'll drive,
Would you like to guess how much range we get
(02:33):
out of this new car. It's a hybrid, it's not
a plug in, it's just a regular old hybrid.
Speaker 3 (02:37):
Yeah, okay, so if it's a hybrid, then you're probably
in the high thirties for a minivan.
Speaker 2 (02:42):
So yeah, miles per down. But like with the gas
plus the electric motor, we are getting a six hundred
and thirty mile range on this thing. Our previous one
was like three hundred. I don't know. I'm just impressed
by that because I only drive really old cars.
Speaker 3 (02:54):
Where you're asking miles per gallon, yeah, yeah.
Speaker 2 (02:55):
The miles per gallon is like thirties. But the range
on one of these vehicles, I said range, not miles
per ballon, Tucker, don't get all frustrated when you give
the wrong answer.
Speaker 3 (03:04):
I give the right answer. Go ahead, I don't know.
Speaker 2 (03:07):
I've just impressed that I'm gonna be able to drive
for six hundred plus miles on one tank of gas
and not have to refill. I'm very happy with that income.
Speaker 3 (03:14):
In a minivan.
Speaker 4 (03:16):
Look good for you, Michael.
Speaker 2 (03:17):
It's cool, all right, Get over yourselves. The minivans are hip,
they are back in fashion, and I look cool in
my all black minivan. Now, okay? Uh anything else catching
your eyes? In markets this morning?
Speaker 4 (03:31):
If you put your flashers on, do people think there's
a funeral? Mind?
Speaker 2 (03:34):
They do? Yeah? Yeah, it does look a bit like
it does look a bit like a hearse. I'm aware
of that, so I try not to put the flashers on.
But yeah, if driving really slowly, sometimes a copple blast
by on his motorcycle and try and clear traffic for me.
So it's happened a couple times.
Speaker 4 (03:50):
Now, you got the funeral parlor to awake?
Speaker 3 (03:52):
You don't have to. You got the captain's chairs on
those things? Does you got the captain's chairs?
Speaker 2 (03:58):
Is the pope wear funny hat?
Speaker 1 (03:59):
Oh?
Speaker 3 (03:59):
Look at captain chair leather? Does a bear poop in
the woods?
Speaker 2 (04:07):
I only have two of these, so stop asking questions.
In terms of big market news today, we did have
Home Depot earnings out this morning. We'll have lows tomorrow.
I believe that TJX is going as well. In terms
of Home Depot. The big news, other than the earnings themselves,
which were fine nothing great, was that they are not
(04:29):
raising prices. This made headlines because Walmart just the other
day said that they would be raising prices in the
face of tariffs. Big differences between Home Depot and Walmart.
Obviously in terms of sourcing of products. Home Depot claims
that next year the United States will be the only
country that accounts for more than ten percent of the
products sold in their stores. The other piece would be
(04:50):
the operating margins, you know. The EBITDA margins for a
Home Depot, for example, are about triple those of Walmart.
So again, not that any company wants to be absorbing
price increases, but they're just a higher margin business than
your Walmart, which partly operates in the grocery business and
therefore has very very low margins. I will be interested
(05:11):
to hear hey does TJX, for example, which almost undoubtedly
sources much more of their material outside of the United States.
Do they talk about price increases. Did they use the
Walmart cover as kind of that cover to be able
to raise prices. We will see when they report earnings
later this week. Our top story of the hour is
from Connor Sen saying that the next great job churn
(05:33):
is already starting.
Speaker 3 (05:35):
And in you know, a.
Speaker 2 (05:37):
Great picture for this piece, this dystopian banner from the
streets of San Francisco Artisans, which is the name of
the company that's promoting the AI tool. Artisans won't complain
about work life balance, and it's this picture of a
presumably woman that's supposed to look like a robot employee,
and it's all about the start of the job and
(06:01):
what types of jobs are starting to be affected by
artificial intelligence. And I just I had a good quote
on this from a random person on x formerly Twitter quote.
The future was supposed to free up our time from
work so we could spend it on higher pursuits. Instead,
we created AI that makes art while we all work,
(06:22):
and that is kind of the weird dystopian moment that
we're in. AIS of today are pretty good at creating
new logos. They're fairly good at making you know, cartoon
artwork for advertisements. They're pretty good at impersonating humans and
you know, writing a poem for you or summarizing an
(06:45):
article for you. They're not great at flipping burgers at
the local McDonald's. They are not too good at driving
your car for you or restocking the shelves at Walmart.
And I just find it interesting that, hey, this is
where the job disruption is going to come there for
is maybe not so much in the low income jobs
(07:11):
that everybody thought were going to be wiped out right.
You know, two decades ago, when everybody was talking about
raising the minimum wage in certain states, the conversation was
all about, well, nobody's gonna be working in McDonald's anymore
because robots are going to do that job instead. It's yeah,
we're not going to need law clerks in legal offices
anymore because I can have an AI tool that just
(07:33):
summarizes fifteen legal cases for me and gives me a
pretty good estimation of it. Or we're not going to
need graphic designers as much as we used to because
I can have an AI tool that will design fifteen
different logos for me, and I can just choose the
one I like best. I don't know. It's just it's
very interesting to me where this is going. But that's
where the churn seems to be coming from.
Speaker 4 (07:55):
But the article makes it. What these researchers did is
kind of I'm skimming the paper here is you talk.
What they ask is how disruptive is generative AI likely
to be here? We seeing any evidence that what happened
in manufacturing in the seventies and eighties, the massive i'll
call it hollowing out. Even though that's a little bit dramatic.
There was a huge shift from manufacturing to services over
(08:16):
the past several decades.
Speaker 2 (08:17):
And you can play part of that in globalization, but
a lot of it on automation.
Speaker 4 (08:20):
You don't really get into that. Yeah, yeah, that's really
the key point technological. Because it happened all over the world,
we tend to lament that we don't make anything here anymore.
Every advanced country would would make a similar it would
have similar complaints. So is generative AI. These researchers ask,
I mean that the connor Cent article was like almost
(08:41):
as long as the research paper, So I just went
to the research paper. Now this is not peer reviewed,
meaning they put it out there. Ye, but no publication
has accepted it yet I don't know. There may be
some big problem. So one of the problems with looking
at something that's not peer reviewed. These people run to
something called Social Science Research Network, where people just host
their work before it gets accepted by a peer reviewed journal.
(09:03):
The peer review journal process is a pain. I get that,
But all the data here could be made up. I'm
not saying that it is, but this could be total
this could be total BS. But it's nevertheless an interesting approach.
They ask, what if the same thing that happen to
manufacturing due to, as you point out, automation and other factors,
(09:24):
happens to white collar jobs that generative AI can gradually replace.
What is that likely to do to unemployment? Say here
in Boston, which they talk about in which this article covers,
where unemployment has gone up from about three and a
half to a little over four percent, is that due
to generative aim? Very hard to tease that out, which
is where I run into some problems with using this
(09:45):
article to make policy or draw conclusions. But nevertheless the
author makes the authors of this particular paper make the
interesting point that a big shift away from the white
collar jobs supporting finance and technology. Other industries could be
underway as generative AI replaces what many entry level type jobs,
(10:08):
people that filled entry level type jobs have done historically.
What are the political implications, What are the demographic implications?
They're not necessarily Well, they're bad probably for us here
in the Northeast.
Speaker 2 (10:18):
Yeah, it's a fascinating theory.
Speaker 5 (10:20):
Right.
Speaker 2 (10:20):
Are the same strengths that made incomes and property values
in areas like San Francisco, areas like Boston shoot through
the roof over the last quarter century. Are those same
factors going to be the one that lead those same
areas into some sort of higher unemployment, lower income scenario.
Speaker 4 (10:40):
On the extreme end of it, is the Boston DC
card are going to become like the rust belt of
the twenty thirties. The authors of this study say that
the downstream effects I'll just read their conclusion very briefly,
downstream effects of generative AI appear more benign than the
downstream adjustments, which is a euphemism for the enormous displacements
(11:04):
that cost people their jobs and livelihoods and cause them
to have to move or something far more benign they
expect than the adjustments due to the manufacturing shock. So no,
no new rust belt, providing we adapt it, make investments
in people, make it easier to switch jobs, and stuff
like that. So there is a role for policy here.
Speaker 2 (11:26):
Yeah, it's been a I guess a story that's been
nagging at me all year is and I'm focused on Boston,
but you can make the same argument of New York
or DC, the whole corridor or parts of the West
Coast as well. But in a market like Boston, which
is so dominated by education, dominated by life sciences finance,
(11:46):
is some combination of government cuts plus artificial intelligence going
to make the Boston job market look fundamentally different than
it did last decade or so. I think it's really
tough to tease out and answer to that, But theoretically
it's easy to kind of stack those bricks for a
for a very different labor market in the Boston area.
(12:07):
Given cuts to government work grants.
Speaker 4 (12:10):
What's solve the housing crisis?
Speaker 2 (12:11):
On the bright side, what's solve the housing crisis? Rather rapidly?
Let's take a quick break when we come back a
little bit trivia here next on the Financial Exchange.
Speaker 1 (12:19):
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Speaker 3 (12:59):
It's time for sure You're in the Financial Exchange And
in the fifty seasons of Saturday Night Live only, cast
members typically stayed with the show for about three.
Speaker 1 (13:09):
Or four seasons.
Speaker 3 (13:10):
These days, cast members have been known to stay in
the show well past ten seasons. Sure of your question today,
who has the longest tenure as a cast member on SNL?
Once again, who has the longest tenure as a cast
member on SNL? Be the seventh person today to text
(13:31):
us at six one, seven, three six two thirteen eighty
five with the correct answer, and you win a Financial
Exchange Showed t shirt. Once again. The seventh correct response
to text us at six one, seven, three, six to
two thirteen eighty five will win that T shirt. See
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Speaker 2 (13:50):
Well, anyone hoping for some relief on mortgage rates this
year has been badly disappointed. The thirty year fixed rate mortgage,
according to Mortgage News Daily, is city at six point
nine nine percent. On that jumbo you're up at seven
point one percent, and you're not really even saving much
money for a fifteen year which is sitting at six
point three percent. Tucker, by any chance, do you have
(14:11):
our predictions on interest rates sitting around here? Because I
think we made do we make mortgage predictions this year?
Speaker 3 (14:18):
Yeah? This was back in December? Uh, Paul said the
low fix was five point eight five, high was seven
point one. Chuck had five point two. Is the low
high seven point eight? And you had high now and
low was six and a half. So what was the
high back in December.
Speaker 2 (14:39):
Seven point one?
Speaker 1 (14:41):
Ish?
Speaker 2 (14:42):
Okay, So we haven't gotten back over that. So in
any case, that relief does not appear to be on
the horizon at the moment. What the Federal Reserve does
does not directly affect mortgage rates in any real way.
What they control is primarily the shorter end of the
curve in the US. They're buying and selling a lot
in the way of their existing balance sheet. But recently
(15:06):
Fed officials have been I think, echoing a lot of
the message from Jerome Powell when it comes to interest rates,
which seems to be they're not going anywhere anytime soon.
How would you summarize kind of the direction of FED
policy right now unless they get removed by the press.
Speaker 4 (15:24):
The forces of unemployment and inflate. The way they might
put it is, the forces of unemployment and inflation appear
to be roughly in balance. Maybe there's a slight, slight
bias among Fed policymakers toward warring about higher inflation, a
slight bias in favor of warning about higher inflation relative
(15:44):
to unemployment. I think if you do think so relative
to yeah, I do. I think they're really worried about
the supply, the splice shock, so to.
Speaker 2 (15:52):
Be, because of what happens, because I would say that
was definitely not the case prior to twenty twenty one.
But I think you're right only because of it's an experience, right.
Speaker 4 (16:01):
Feet and screamed, yeah, no, no, the situation was totally
different than twenty twenty. We were generating enough inflation for
the previous twelve years. The Fed adopted a new framework
in twenty twenty because they wanted inflation expectations up anchored,
but up they were far more got it, disinflation. Yeah,
be careful what you wish for guys. So no, no,
(16:25):
the situation could not be more different today, which is
why they're going to revise their so called policy framework
again in an effort to reaffirm their commitment to low
and stable, which they've defined as two percent inflation. Look this,
you made the point that the Fed does not control
They don't really control any interest rate, but they exert heavy,
heavy influence over short term interest rate. The FED controls
(16:45):
the supply of money. Long term interest rates are a
function of expected short term rates in the future. Why
would you ever buy a ten year bond when I
could just buy a one year bond every year and
roll it over when it matures.
Speaker 2 (16:58):
Can you answer that question?
Speaker 1 (16:59):
I knew it.
Speaker 4 (16:59):
Yeah, it's because you expect interest rates to change in
the interim. Maybe you expect them to go down a lot.
You think we're going to return to the twenty tens
when interest rates were very, very low. If so, a
tenure bond with a yield of four point five percent
roughly right now is pretty attractive. Alternatively, maybe you think
tariffs and other factors fiscal recklessness, like we're arguably seeing
(17:24):
from this new tax plan. I like the tax cuts,
but they're not addressing spending. I call that reckless. That's
I'm not just just throwing incendiary terms out there, That's
what I mean. Maybe you think short term interest rates
are going to be higher as high as they are today,
maybe a little lower, maybe a little higher over the
next ten years, in which case I don't know, it's
not really attractive to buy a ten year at four
point five percent. I can almost get that on the
(17:45):
one maybe now and into the future, and I don't
have to assume the risk of rates changing a lot,
a lot more than are expected in the interim. So, Mike,
the relationship between short and long term interest rates is
so complicated that researchers have this this term that they
used to describe the difference. It's a little mysterious. It's
called the term premium. People don't usually talk about it
(18:06):
outside of like a finance class, but it can be
inferred from the difference between long and short term and
then expected short term interest rates. It all gets a
little bit convoluted, but there are there are structured ways
to think about it.
Speaker 2 (18:18):
The Federal reserves current target rate is for four and
a quarter to four and a half percent. On that
FED funds, we got as high as was it a
full percentage point high, five and a quarter was there.
So where you've seen that has been on CD offers,
on money markets that have all come down by about
a percentage point over the course of the last twelve
months or so. But what's more interesting to me is
(18:40):
when we look out over the next few meetings. So
first off, there's a meeting coming up a little bit
less than a month from now, ninety five percent chance
that FED does not move rates at all from their
current levels if we go all the way out to
the end of this year. However, this is where you've
seen big change of the course of this year. There's
the most likely outcome on the CME FED watch tool,
(19:02):
which again is not really a good predictor of where
rates will end, but rather where people are kind of
placing bets about how far rates come down. You've got
a thirty nine percent chance that rates are half a
percentage point lower than where they are right now. You've
got more than fifty percent chance that they're lower in that.
But this has changed quite a bit. You know, there
is a lot of baked in assumptions about rate cuts
(19:24):
coming this year, and they seem to have been wiped
pretty much off the board. We've got to take a
quick break. We'll cover that a little bit more along
with the trivia winner. Next to the Financial.
Speaker 5 (19:32):
Exchange, bringing the latest financial news straight to your radio
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Speaker 3 (20:04):
Trivia question today was who has had the longest tenure
as a cast member on Saturday Night Live. That would
be Keenan Thompson. He's been with Saturday Night Live for
twenty two seasons, still going strong. He beat out Darryl Hammond,
who served for fourteen years on the SNL cast. Nick
(20:26):
from Falmouth is our winner today, taking home a Financial
Exchange Show t shirt. Congrats to Nick and we played
trivia every day here in the Financial Exchamee. See complete
contest rules at Financial Exchange Show dot com.
Speaker 2 (20:39):
The cost of moving freight around the world has increased
a bit over the last week, but not nearly as
much as some of the worst case predictions that we're
out there. There is an index called the Dreary World
Container Index WCI, which hit a COVID peak of nearly
six thousand dollars. This is the US dollars per feet
(21:00):
of container stuff. I think it's Shanghai to La that's
how we describe container stuff.
Speaker 3 (21:07):
Yes, container stuff that hit about.
Speaker 2 (21:09):
Six thousand dollars back during November of twenty twenty four,
and higher during peak COVID times. But as of this week,
it's moved up about eight percent off of those recent
lows that we saw, indicating to me at least that
while there's probably still a lot of stuff moving from
Shanghai and all of China over to the United States,
(21:33):
it's not so much volume that these countries were unprepared
for it, that the United States infrastructure system was not
prepared to deal with the volumes. And I don't know,
it seems unlikely that we're going to get to a
point where it's causing a significant amount of inflation. The
pandemic peak on this index, by the way, was ten
three hundred and seventy seven dollars back in September of
(21:55):
twenty twenty one. So we are sitting about eighty percent
below that even with the most recent increase. So could
this still result in some you know, measure of inflation
that we can discern possible? It's still early. Perhaps, you know,
the manufacturers took a little while to fire up over
in China and actually get this stuff onto boats. But
(22:16):
for the time being at least, and this is Bloomberg's
main point too, that you know, feared tsunami of cargo
coming from China. They phrased, it looks more like a swell.
And some of the data that's behind all this is
seemingly back at backing that up at least for the moment.
Speaker 4 (22:32):
Yeah, the inflation danger I think comes from the tariffs themselves. Yeah,
prices getting past.
Speaker 2 (22:37):
But this was a question mark. You know, we had
raised this question as well, like, hey, is it you know,
such a demand for goods coming into the US that
you're going to snarl up supply chains again, and that's
a contributing factor. I wasn't sure. I thought that was
a possibility, and you should never be sure. It doesn't
seem to be at the moment, which raises other questions,
(22:58):
right like our are suppliers buying as much as we
thought they would, or are they just saying, hey, buy
what we need for the next couple months, let's not
worry about the holiday shopping season because we think the
tariffs potentially could be even lower. Or is this just
a very well oiled supply chain that knows how to
deal with this stuff post COVID better than they did.
Speaker 4 (23:18):
I mean the big risk here. I know we talked
about the FED in the last segment, but the big
risk to the economy, The big challenge for the FED
is that inflation expectations, particularly by the Michigan Survey but
by others as well, have gone up. Michigan Survey, they've
gone up through the roof high since nineteen eighty one.
Inflation expectations feed into actual inflation. They sort of become
(23:39):
self fulfilling. The FED. Even if they wanted to ease
in response to say the negative GDP report we got
in the first quarter and this slight rise in unemployment
over the past few months, they probably can't because inflation expectations.
Some researchers would argue have become unanchored again like they
were during COVID.
Speaker 2 (23:59):
This was the most recent Michigan sentiments. I want to.
Speaker 4 (24:03):
Say six six and change and again or something.
Speaker 2 (24:06):
To explain what that means of the people that this
survey spoke to, which has been in place for what
eighty years they've been doing these surveys. The average or
I don't know if it's average or media expectations over
your inflation is now in the mid sixes.
Speaker 4 (24:23):
And it's that is squarely due to that is clearly
unequivocally due to tariffs. So I'm actually impressed that people
are internalizing, so to speak, that if this were not
my little area, I'm not sure I know what to
make of it. It's like when I hear that, as
the FDA announced today they're changing their guidance on COVID vaccines,
I don't know if I should be mad, happy, or
(24:45):
indifferent about that just not my area. But this is
a case where I didn't think it's so abstract. I'm
not sure. I wasn't sure people would get what tariffs are,
and the politicians are obfuscating, Oh they're not you know,
they're not taxes, or they are or so you get
a lot of noise in there. Yeah they get it.
Speaker 2 (25:01):
Yeah they seem to.
Speaker 3 (25:02):
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Speaker 2 (26:06):
The last time I personally bought a car was before
this week, was twenty twenty two. When anybody who bought
a car back in twenty twenty two remembers how miserable
it was. I had to pay like a surcharge just
to get the Honda Civic that I wanted above the MSRP.
(26:26):
I couldn't find one. It was quite difficult. The market
is not quite where it was back then, but we're
seeing signs of it. In the used car market. There
is less inventory. Prices have not ticked back up month
of a month according to the most recent CPI report.
But I continue to hear stories about this, and you know,
to share a bit about my recent buying experience, which
(26:48):
is unique because I don't think there's a lot of
minivans out there. But when looking for a new Toyota minivan,
I called approximately fifteen dealers in the Massachusetts area who
told me that they had none in supply and that
they could put me on a waiting list for one
that was going to be available in July the sixteenth
(27:10):
did have one, and I was able to find one.
When I went to go buy it, I was seeing
some of the similar things that I saw during the
COVID days. You know, they came in with the manufacturing
price and they said, you know, normally we would charge
you a twenty five hundred dollars market value assessment surcharge
on this car because they're so hard to find. But
if you make this deal happen today, we're willing to
(27:31):
waive that, we'll give it to you for MSRP. And
I think you're starting to see signs of that elsewhere
in the auto market here and there.
Speaker 4 (27:38):
Plus, they knew you had a funeral this week and
you needed the.
Speaker 2 (27:41):
I need the black vehicle exactly. Yeah, I had to
go attend one of those. But in any case, you
are starting to see this in areas of the market.
Maybe I'm just a bad negotiator, but here was the answer.
I needed a new car, and I called fifteen dealerships
and only one of them had the car that I wanted.
So I didn't feel like I was a approaching with
a really strong negotiating position. But on average, what you're
(28:05):
seeing here, according to a piece from Bark and Watch,
use car buyers being charged and average six hundred and
forty dollars in surprise fees, and seemingly it's the same
thing we're seeing from other sellers of goods, which is
the tariffs are kind of giving cover for dealerships to
tack on fees. Some might call it a bait and switch,
some might call it supply and demand. I guess it
(28:26):
depends on your perspective. But you know, everything from vin
etching wheel locks in other cases just you know, charging
higher than standard etching.
Speaker 4 (28:35):
Can you opt out of that?
Speaker 2 (28:36):
Yeah?
Speaker 4 (28:37):
Actually, I really don't want to vent on this.
Speaker 2 (28:40):
Okay, Reconditioning fees are going for an average of sixteen
hundred dollars unused cars. So I mean, these are all
the add ons that you get talked into and in
you know, in Massachusetts, they actually have to record those
conversations in the business office. Have you ever did you
notice that when you bought your car a couple of
years ago.
Speaker 4 (29:00):
There was absolutely no recording device in that office. Really,
at least I wasn't informed they'd have to disclose.
Speaker 2 (29:05):
Now, in the office that I went to, there's a
giant sign that says recording in progress if you enter
this room. Because from what I understand, in Massachusetts, maybe
all or at least some of the business offices have
to be recorded because they were kind of so badly
abused over the last few years. Interested huh, But in their.
Speaker 4 (29:25):
Own protection, somebody asserts that you did or said you
misrepresented something. I bet on balance that benefits dealers.
Speaker 2 (29:32):
Maybe, but I bet it's also a legal requirement. I
doubt that it was the dealers that said, Hey, we're
going to voluntarily record all the conversations of our business
managers trying to upsell customers on all sorts of protection
plans that they may or may not need. But you
are seeing this stuff, and it is showing up a
little bit more, according to the experts, than it did
(29:53):
just a year ago. And again I think that's all
supply and demand. There's been a lot of people.
Speaker 4 (30:00):
Why do they itemize those things? Guys? The price is
the price. I assume you're going to clean the car.
I assume it's going to have a v in on it.
Speaker 2 (30:06):
Why assume that, Yeah, I mean.
Speaker 4 (30:09):
The itemize it. Is there something psychological about that? Are
you more willing to pay it if it's itemized?
Speaker 2 (30:14):
No, but you're more willing to show up at the
dealership for the price on the website. That doesn't reflect all.
Speaker 4 (30:19):
Those extra That was a naive question on.
Speaker 2 (30:21):
Mine, right, I mean, that's the answer is once they've
got you in there, they think they can make that
sale and add on all those extras after the fact,
just like.
Speaker 3 (30:29):
Hey, well I got you in here. Uh what do
you think about this playcast?
Speaker 2 (30:32):
I mean, guys, this is no different other than the
dollar amounts than buying tickets from ticket Master or airline
tickets on you know, on Kayak or whatever tool you use.
They advertise the lowest price they can possibly advertise, and
then just tack on the baggage fees and the seat
choice fees and the recliner fees on top of all
of these things in order to get a higher price.
(30:55):
Let's take a quick break. When we come back. Stack
Roulette is next.
Speaker 1 (31:00):
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Speaker 3 (31:25):
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Speaker 2 (32:02):
Tucker's hoping to finish in a pr under two hours
this year, so it's going to be particularly exciting race.
And when is it November?
Speaker 3 (32:10):
What did I say? November eighth?
Speaker 2 (32:12):
Yeah? Yeah, I think it's my third or fourth year.
Speaker 3 (32:15):
Eight Saturday November.
Speaker 2 (32:16):
Are you gonna run one of these ones? Tucker? Saturday
is a.
Speaker 3 (32:19):
Tough for me, but I'll see if I can make
it work fair enough.
Speaker 2 (32:23):
In the latest story of why social media sucks, two
Provident school students and a staff member were brought to
the hospital after what's called the chrome book challenge incident,
which is where you just stick objects into chrome books,
which are little tablets, in order to see if you
can destroy them by you know, making them smoke and
(32:44):
short circuit and just destroy themselves, which can obviously be
a hazard to the chromebook and all those around you.
And my point about why social media sucks is that obviously,
if you tell a bunch of middle school students that
they can stick a staple into a own book and
light the thing on fire, then they're gonna do it.
(33:04):
And my point with all of this is.
Speaker 4 (33:06):
Yeah, I'm tempted right now.
Speaker 2 (33:08):
Yeah, Mark is just Itchen did go do this? Kids
are not any smarter or dumber than they were thirty
years ago in middle school. When I was in Midfield
Middle school, a kid poured a gallon of gasoline. Maybe
not in a gallon, he poured a significant quantity of
gasoline into the bathroom toilet and lit it on fire
(33:31):
just because he thought it would be funny. And it's
kind of funny. It wasn't funny because you know, it
caroused probably thousands of dollars worth of damage. But he
also wasn't able to create the light your middle school
toilet on fire challenge and encourage a bunch of other, uh,
you know, twelve year olds to go and light their
toilets on fire. And this is why social media just sucks.
Speaker 4 (33:55):
Whether it was a middle school kid warning him that
we may not be insured for the hazards.
Speaker 2 (34:02):
Just got my calculator and my protector and they're like, oh,
this isn't a good idea.
Speaker 1 (34:09):
School.
Speaker 2 (34:11):
She's a fair bit higher dude.
Speaker 4 (34:14):
But yeah, company taxes could go up as a result
of youless actions.
Speaker 2 (34:18):
This is exactly the argument that I was trying to make.
And believe it or not, he lit the toilet on
fire anyway, So yeah, this is the problem with social
media is that whether it's this, whether it's the tide
pod challenge, there are a lot of dumb, dangerous things
that middle schoolers do, but up until recently, they didn't
have the ability to inform the entire world about them
and encourage others to follow them in kind.
Speaker 3 (34:42):
So yeah, I mean social medias have flagged this stuff.
It's as simple as that, and they don't. Yeah, well
it's as simple as that.
Speaker 2 (34:48):
That costs money. That costs money, Mark, what do you
have for us for a sacroulette?
Speaker 4 (34:52):
Elon Musk was speaking to the cutter. That's qat a
R the country. I'm always confused how to pronounced, but
I thought you're talking about there's any right, there's there's
an economic forum in Cutter. Musk was there and he announced,
probably wisely into his great credit, that he'll be stepping
back from his more visible political role. I assume that
(35:15):
means no formal role going forward with this or any
other administration, as well as curtailing political contributions. He feels
like he's done enough. He wants to focus on Tesla.
He's committed for the next five years as CEO at least,
and chaerholders like it. Stocks up five percent, so probably
a good move.
Speaker 2 (35:33):
He's got some work to do. I mean, granted, I
live here in Massachusetts, which is not exactly a conservative
area of the country, but I would say that more
often than not, when I see a Tesla on the road,
there is some form of anti elon bumper sticker attached
to it. Again, it's Massachusetts. I'm not surprised by any
(35:55):
of this. But why that matters is because states like
Massachusetts are rare. He was selling all of his Tesla's
and so if that is more than just a Massachusetts trend,
and you know they are not able to recoup that
marginal buyer on the Tesla vehicle or create a new
market for them. I'm open to that idea that conservatives
are suddenly going to start buying Tesla's, but the proof's
(36:18):
not out there, and the infrastructure is not even close
to there, because you know, there's not a whole lot
of Tesla superchargers in Iowa, for example. So we will
we will see where this one goes. I think he's
got his work cut out for him on the turnaround
story when it comes to Tesla, but he's done it before,
so I'm not going to say it.
Speaker 4 (36:34):
And he found how difficult it is to make meaningful
changes to government spending him he didn't have the legislative
power behind him to do it, obviously, that lies with Congress,
and I.
Speaker 2 (36:45):
Think he spoke to that specifically.
Speaker 4 (36:46):
It's like, yeah, it's going to be frustrating for a
guy like him who's used to being king of the
joint and rightfully so, he more or less built the
company up from nothing.
Speaker 2 (36:55):
Speaking of Tesla, you know, and autonomous car, he's generally
there's a new study out about social sensitivity and how
cars need to be trained on behaving more like humans,
which or the drivers of those cars which are robots
behaving more like humans, which is confusing to me because
I thought that was the entire point of developing autonomous vehicles,
(37:18):
was that we all sucked at driving, we crashed too much,
and so we wanted robots to drive the cars instead.
But this study says, no, we need to behave more
like humans with these cars. And now I'm just left
wondering what the point of all this is, because the promise,
at least in terms of my opinion, was, Hey, autonomous
driving is going to make driving for everyone safer because
(37:38):
there's going to be better reaction time. A robot can't
get distracted by its phone, and therefore we're all going
to become better drivers. Insurance costs come down, and it'll
be nice because you can go do something else with
the cars driving. This study seems to point to that
in the other direction, but maybe they're.
Speaker 4 (37:56):
They're giving them little middle fingers now.
Speaker 2 (38:00):
On the horn. The autonomous car is just honking at
you as soon as it turns green. Markets remain in
negative territory now off one hundred points or a quarter
of percent, NASDAK off seventy one points thirty percent, and
S and P similarly off a thirty percent. We'll be
back at it tomorrow. Folks, have a great rest of
your day. We'll talk to you then
The Financial Exchange is produced by Money Matters Radio and
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(01:06):
and Mark Vandetti.
Speaker 2 (01:10):
Good morning, Welcome back to the Financial Exchange. It's Mike,
Mark and Tucker with you on a Tuesday. Stocks in
negative territory here been bumping around the negative one tenth
to half a percent range all morning. We've got the
Dow currently off one hundred and sixteen points one quarter
of one percent, the S and P five hundred off
twenty points one third of a percent, in the Nasdaq
(01:31):
off ninety one points or about one half of one percent.
The Rust two thousands actually flat for the day. In
the bond market, we did see the thirty year treasury
bond hit that five percent yield briefly before trending back down.
Yields not moving too much today. As of the moment,
the yield on the ten yure Treasury sitting at four
(01:52):
point four eight three percent. Oil prices down a bit,
down to about half percent at the moment, sixty two
dollars thirty eight cents per barrel on the West Texas crude,
and the national average for a gallon of gas sitting
at three dollars and eighteen cents. Speaking of ghastly, I
had to buy a new minivan recently. Our our ten
(02:13):
year old one actually accidentally got totaled in a car accident,
so everyone was safe, which was most important. But we
were in the market for a new minivan. It's a
new Toyota Siena. I've talked about my lame infatuation with
minivans at length on this program. Would either of you
like to guess, so it's a hybrid engine all we'll drive,
Would you like to guess how much range we get
(02:33):
out of this new car. It's a hybrid, it's not
a plug in, it's just a regular old hybrid.
Speaker 3 (02:37):
Yeah, okay, so if it's a hybrid, then you're probably
in the high thirties for a minivan.
Speaker 2 (02:42):
So yeah, miles per down. But like with the gas
plus the electric motor, we are getting a six hundred
and thirty mile range on this thing. Our previous one
was like three hundred. I don't know. I'm just impressed
by that because I only drive really old cars.
Speaker 3 (02:54):
Where you're asking miles per gallon, yeah, yeah.
Speaker 2 (02:55):
The miles per gallon is like thirties. But the range
on one of these vehicles, I said range, not miles
per ballon, Tucker, don't get all frustrated when you give
the wrong answer.
Speaker 3 (03:04):
I give the right answer. Go ahead, I don't know.
Speaker 2 (03:07):
I've just impressed that I'm gonna be able to drive
for six hundred plus miles on one tank of gas
and not have to refill. I'm very happy with that income.
Speaker 3 (03:14):
In a minivan.
Speaker 4 (03:16):
Look good for you, Michael.
Speaker 2 (03:17):
It's cool, all right, Get over yourselves. The minivans are hip,
they are back in fashion, and I look cool in
my all black minivan. Now, okay? Uh anything else catching
your eyes? In markets this morning?
Speaker 4 (03:31):
If you put your flashers on, do people think there's
a funeral? Mind?
Speaker 2 (03:34):
They do? Yeah? Yeah, it does look a bit like
it does look a bit like a hearse. I'm aware
of that, so I try not to put the flashers on.
But yeah, if driving really slowly, sometimes a copple blast
by on his motorcycle and try and clear traffic for me.
So it's happened a couple times.
Speaker 4 (03:50):
Now, you got the funeral parlor to awake?
Speaker 3 (03:52):
You don't have to. You got the captain's chairs on
those things? Does you got the captain's chairs?
Speaker 2 (03:58):
Is the pope wear funny hat?
Speaker 1 (03:59):
Oh?
Speaker 3 (03:59):
Look at captain chair leather? Does a bear poop in
the woods?
Speaker 2 (04:07):
I only have two of these, so stop asking questions.
In terms of big market news today, we did have
Home Depot earnings out this morning. We'll have lows tomorrow.
I believe that TJX is going as well. In terms
of Home Depot. The big news, other than the earnings themselves,
which were fine nothing great, was that they are not
(04:29):
raising prices. This made headlines because Walmart just the other
day said that they would be raising prices in the
face of tariffs. Big differences between Home Depot and Walmart.
Obviously in terms of sourcing of products. Home Depot claims
that next year the United States will be the only
country that accounts for more than ten percent of the
products sold in their stores. The other piece would be
(04:50):
the operating margins, you know. The EBITDA margins for a
Home Depot, for example, are about triple those of Walmart.
So again, not that any company wants to be absorbing
price increases, but they're just a higher margin business than
your Walmart, which partly operates in the grocery business and
therefore has very very low margins. I will be interested
(05:11):
to hear hey does TJX, for example, which almost undoubtedly
sources much more of their material outside of the United States.
Do they talk about price increases. Did they use the
Walmart cover as kind of that cover to be able
to raise prices. We will see when they report earnings
later this week. Our top story of the hour is
from Connor Sen saying that the next great job churn
(05:33):
is already starting.
Speaker 3 (05:35):
And in you know, a.
Speaker 2 (05:37):
Great picture for this piece, this dystopian banner from the
streets of San Francisco Artisans, which is the name of
the company that's promoting the AI tool. Artisans won't complain
about work life balance, and it's this picture of a
presumably woman that's supposed to look like a robot employee,
and it's all about the start of the job and
(06:01):
what types of jobs are starting to be affected by
artificial intelligence. And I just I had a good quote
on this from a random person on x formerly Twitter quote.
The future was supposed to free up our time from
work so we could spend it on higher pursuits. Instead,
we created AI that makes art while we all work,
(06:22):
and that is kind of the weird dystopian moment that
we're in. AIS of today are pretty good at creating
new logos. They're fairly good at making you know, cartoon
artwork for advertisements. They're pretty good at impersonating humans and
you know, writing a poem for you or summarizing an
(06:45):
article for you. They're not great at flipping burgers at
the local McDonald's. They are not too good at driving
your car for you or restocking the shelves at Walmart.
And I just find it interesting that, hey, this is
where the job disruption is going to come there for
is maybe not so much in the low income jobs
(07:11):
that everybody thought were going to be wiped out right.
You know, two decades ago, when everybody was talking about
raising the minimum wage in certain states, the conversation was
all about, well, nobody's gonna be working in McDonald's anymore
because robots are going to do that job instead. It's yeah,
we're not going to need law clerks in legal offices
anymore because I can have an AI tool that just
(07:33):
summarizes fifteen legal cases for me and gives me a
pretty good estimation of it. Or we're not going to
need graphic designers as much as we used to because
I can have an AI tool that will design fifteen
different logos for me, and I can just choose the
one I like best. I don't know. It's just it's
very interesting to me where this is going. But that's
where the churn seems to be coming from.
Speaker 4 (07:55):
But the article makes it. What these researchers did is
kind of I'm skimming the paper here is you talk.
What they ask is how disruptive is generative AI likely
to be here? We seeing any evidence that what happened
in manufacturing in the seventies and eighties, the massive i'll
call it hollowing out. Even though that's a little bit dramatic.
There was a huge shift from manufacturing to services over
(08:16):
the past several decades.
Speaker 2 (08:17):
And you can play part of that in globalization, but
a lot of it on automation.
Speaker 4 (08:20):
You don't really get into that. Yeah, yeah, that's really
the key point technological. Because it happened all over the world,
we tend to lament that we don't make anything here anymore.
Every advanced country would would make a similar it would
have similar complaints. So is generative AI. These researchers ask,
I mean that the connor Cent article was like almost
(08:41):
as long as the research paper, So I just went
to the research paper. Now this is not peer reviewed,
meaning they put it out there. Ye, but no publication
has accepted it yet I don't know. There may be
some big problem. So one of the problems with looking
at something that's not peer reviewed. These people run to
something called Social Science Research Network, where people just host
their work before it gets accepted by a peer reviewed journal.
(09:03):
The peer review journal process is a pain. I get that,
But all the data here could be made up. I'm
not saying that it is, but this could be total
this could be total BS. But it's nevertheless an interesting approach.
They ask, what if the same thing that happen to
manufacturing due to, as you point out, automation and other factors,
(09:24):
happens to white collar jobs that generative AI can gradually replace.
What is that likely to do to unemployment? Say here
in Boston, which they talk about in which this article covers,
where unemployment has gone up from about three and a
half to a little over four percent, is that due
to generative aim? Very hard to tease that out, which
is where I run into some problems with using this
(09:45):
article to make policy or draw conclusions. But nevertheless the
author makes the authors of this particular paper make the
interesting point that a big shift away from the white
collar jobs supporting finance and technology. Other industries could be
underway as generative AI replaces what many entry level type jobs,
(10:08):
people that filled entry level type jobs have done historically.
What are the political implications, What are the demographic implications?
They're not necessarily Well, they're bad probably for us here
in the Northeast.
Speaker 2 (10:18):
Yeah, it's a fascinating theory.
Speaker 5 (10:20):
Right.
Speaker 2 (10:20):
Are the same strengths that made incomes and property values
in areas like San Francisco, areas like Boston shoot through
the roof over the last quarter century. Are those same
factors going to be the one that lead those same
areas into some sort of higher unemployment, lower income scenario.
Speaker 4 (10:40):
On the extreme end of it, is the Boston DC
card are going to become like the rust belt of
the twenty thirties. The authors of this study say that
the downstream effects I'll just read their conclusion very briefly,
downstream effects of generative AI appear more benign than the
downstream adjustments, which is a euphemism for the enormous displacements
(11:04):
that cost people their jobs and livelihoods and cause them
to have to move or something far more benign they
expect than the adjustments due to the manufacturing shock. So no,
no new rust belt, providing we adapt it, make investments
in people, make it easier to switch jobs, and stuff
like that. So there is a role for policy here.
Speaker 2 (11:26):
Yeah, it's been a I guess a story that's been
nagging at me all year is and I'm focused on Boston,
but you can make the same argument of New York
or DC, the whole corridor or parts of the West
Coast as well. But in a market like Boston, which
is so dominated by education, dominated by life sciences finance,
(11:46):
is some combination of government cuts plus artificial intelligence going
to make the Boston job market look fundamentally different than
it did last decade or so. I think it's really
tough to tease out and answer to that, But theoretically
it's easy to kind of stack those bricks for a
for a very different labor market in the Boston area.
(12:07):
Given cuts to government work grants.
Speaker 4 (12:10):
What's solve the housing crisis?
Speaker 2 (12:11):
On the bright side, what's solve the housing crisis? Rather rapidly?
Let's take a quick break when we come back a
little bit trivia here next on the Financial Exchange.
Speaker 1 (12:19):
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Speaker 3 (12:59):
It's time for sure You're in the Financial Exchange And
in the fifty seasons of Saturday Night Live only, cast
members typically stayed with the show for about three.
Speaker 1 (13:09):
Or four seasons.
Speaker 3 (13:10):
These days, cast members have been known to stay in
the show well past ten seasons. Sure of your question today,
who has the longest tenure as a cast member on SNL?
Once again, who has the longest tenure as a cast
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(13:31):
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Speaker 2 (13:50):
Well, anyone hoping for some relief on mortgage rates this
year has been badly disappointed. The thirty year fixed rate mortgage,
according to Mortgage News Daily, is city at six point
nine nine percent. On that jumbo you're up at seven
point one percent, and you're not really even saving much
money for a fifteen year which is sitting at six
point three percent. Tucker, by any chance, do you have
(14:11):
our predictions on interest rates sitting around here? Because I
think we made do we make mortgage predictions this year?
Speaker 3 (14:18):
Yeah? This was back in December? Uh, Paul said the
low fix was five point eight five, high was seven
point one. Chuck had five point two. Is the low
high seven point eight? And you had high now and
low was six and a half. So what was the
high back in December.
Speaker 2 (14:39):
Seven point one?
Speaker 1 (14:41):
Ish?
Speaker 2 (14:42):
Okay, So we haven't gotten back over that. So in
any case, that relief does not appear to be on
the horizon at the moment. What the Federal Reserve does
does not directly affect mortgage rates in any real way.
What they control is primarily the shorter end of the
curve in the US. They're buying and selling a lot
in the way of their existing balance sheet. But recently
(15:06):
Fed officials have been I think, echoing a lot of
the message from Jerome Powell when it comes to interest rates,
which seems to be they're not going anywhere anytime soon.
How would you summarize kind of the direction of FED
policy right now unless they get removed by the press.
Speaker 4 (15:24):
The forces of unemployment and inflate. The way they might
put it is, the forces of unemployment and inflation appear
to be roughly in balance. Maybe there's a slight, slight
bias among Fed policymakers toward warring about higher inflation, a
slight bias in favor of warning about higher inflation relative
(15:44):
to unemployment. I think if you do think so relative
to yeah, I do. I think they're really worried about
the supply, the splice shock, so to.
Speaker 2 (15:52):
Be, because of what happens, because I would say that
was definitely not the case prior to twenty twenty one.
But I think you're right only because of it's an experience, right.
Speaker 4 (16:01):
Feet and screamed, yeah, no, no, the situation was totally
different than twenty twenty. We were generating enough inflation for
the previous twelve years. The Fed adopted a new framework
in twenty twenty because they wanted inflation expectations up anchored,
but up they were far more got it, disinflation. Yeah,
be careful what you wish for guys. So no, no,
(16:25):
the situation could not be more different today, which is
why they're going to revise their so called policy framework
again in an effort to reaffirm their commitment to low
and stable, which they've defined as two percent inflation. Look this,
you made the point that the Fed does not control
They don't really control any interest rate, but they exert heavy,
heavy influence over short term interest rate. The FED controls
(16:45):
the supply of money. Long term interest rates are a
function of expected short term rates in the future. Why
would you ever buy a ten year bond when I
could just buy a one year bond every year and
roll it over when it matures.
Speaker 2 (16:58):
Can you answer that question?
Speaker 1 (16:59):
I knew it.
Speaker 4 (16:59):
Yeah, it's because you expect interest rates to change in
the interim. Maybe you expect them to go down a lot.
You think we're going to return to the twenty tens
when interest rates were very, very low. If so, a
tenure bond with a yield of four point five percent
roughly right now is pretty attractive. Alternatively, maybe you think
tariffs and other factors fiscal recklessness, like we're arguably seeing
(17:24):
from this new tax plan. I like the tax cuts,
but they're not addressing spending. I call that reckless. That's
I'm not just just throwing incendiary terms out there, That's
what I mean. Maybe you think short term interest rates
are going to be higher as high as they are today,
maybe a little lower, maybe a little higher over the
next ten years, in which case I don't know, it's
not really attractive to buy a ten year at four
point five percent. I can almost get that on the
(17:45):
one maybe now and into the future, and I don't
have to assume the risk of rates changing a lot,
a lot more than are expected in the interim. So, Mike,
the relationship between short and long term interest rates is
so complicated that researchers have this this term that they
used to describe the difference. It's a little mysterious. It's
called the term premium. People don't usually talk about it
(18:06):
outside of like a finance class, but it can be
inferred from the difference between long and short term and
then expected short term interest rates. It all gets a
little bit convoluted, but there are there are structured ways
to think about it.
Speaker 2 (18:18):
The Federal reserves current target rate is for four and
a quarter to four and a half percent. On that
FED funds, we got as high as was it a
full percentage point high, five and a quarter was there.
So where you've seen that has been on CD offers,
on money markets that have all come down by about
a percentage point over the course of the last twelve
months or so. But what's more interesting to me is
(18:40):
when we look out over the next few meetings. So
first off, there's a meeting coming up a little bit
less than a month from now, ninety five percent chance
that FED does not move rates at all from their
current levels if we go all the way out to
the end of this year. However, this is where you've
seen big change of the course of this year. There's
the most likely outcome on the CME FED watch tool,
(19:02):
which again is not really a good predictor of where
rates will end, but rather where people are kind of
placing bets about how far rates come down. You've got
a thirty nine percent chance that rates are half a
percentage point lower than where they are right now. You've
got more than fifty percent chance that they're lower in that.
But this has changed quite a bit. You know, there
is a lot of baked in assumptions about rate cuts
(19:24):
coming this year, and they seem to have been wiped
pretty much off the board. We've got to take a
quick break. We'll cover that a little bit more along
with the trivia winner. Next to the Financial.
Speaker 5 (19:32):
Exchange, bringing the latest financial news straight to your radio
every day. It's the Financial Exchange on the Financial Exchange
Radio Network. Find daily interviews and full shows of the
(19:52):
Financial Exchange on how are YouTube page? Get cut up
on anything and everything you might have missed. This is
the Financial Exchange Radio Network.
Speaker 3 (20:04):
Trivia question today was who has had the longest tenure
as a cast member on Saturday Night Live. That would
be Keenan Thompson. He's been with Saturday Night Live for
twenty two seasons, still going strong. He beat out Darryl Hammond,
who served for fourteen years on the SNL cast. Nick
(20:26):
from Falmouth is our winner today, taking home a Financial
Exchange Show t shirt. Congrats to Nick and we played
trivia every day here in the Financial Exchamee. See complete
contest rules at Financial Exchange Show dot com.
Speaker 2 (20:39):
The cost of moving freight around the world has increased
a bit over the last week, but not nearly as
much as some of the worst case predictions that we're
out there. There is an index called the Dreary World
Container Index WCI, which hit a COVID peak of nearly
six thousand dollars. This is the US dollars per feet
(21:00):
of container stuff. I think it's Shanghai to La that's
how we describe container stuff.
Speaker 3 (21:07):
Yes, container stuff that hit about.
Speaker 2 (21:09):
Six thousand dollars back during November of twenty twenty four,
and higher during peak COVID times. But as of this week,
it's moved up about eight percent off of those recent
lows that we saw, indicating to me at least that
while there's probably still a lot of stuff moving from
Shanghai and all of China over to the United States,
(21:33):
it's not so much volume that these countries were unprepared
for it, that the United States infrastructure system was not
prepared to deal with the volumes. And I don't know,
it seems unlikely that we're going to get to a
point where it's causing a significant amount of inflation. The
pandemic peak on this index, by the way, was ten
three hundred and seventy seven dollars back in September of
(21:55):
twenty twenty one. So we are sitting about eighty percent
below that even with the most recent increase. So could
this still result in some you know, measure of inflation
that we can discern possible? It's still early. Perhaps, you know,
the manufacturers took a little while to fire up over
in China and actually get this stuff onto boats. But
(22:16):
for the time being at least, and this is Bloomberg's
main point too, that you know, feared tsunami of cargo
coming from China. They phrased, it looks more like a swell.
And some of the data that's behind all this is
seemingly back at backing that up at least for the moment.
Speaker 4 (22:32):
Yeah, the inflation danger I think comes from the tariffs themselves. Yeah,
prices getting past.
Speaker 2 (22:37):
But this was a question mark. You know, we had
raised this question as well, like, hey, is it you know,
such a demand for goods coming into the US that
you're going to snarl up supply chains again, and that's
a contributing factor. I wasn't sure. I thought that was
a possibility, and you should never be sure. It doesn't
seem to be at the moment, which raises other questions,
(22:58):
right like our are suppliers buying as much as we
thought they would, or are they just saying, hey, buy
what we need for the next couple months, let's not
worry about the holiday shopping season because we think the
tariffs potentially could be even lower. Or is this just
a very well oiled supply chain that knows how to
deal with this stuff post COVID better than they did.
Speaker 4 (23:18):
I mean the big risk here. I know we talked
about the FED in the last segment, but the big
risk to the economy, The big challenge for the FED
is that inflation expectations, particularly by the Michigan Survey but
by others as well, have gone up. Michigan Survey, they've
gone up through the roof high since nineteen eighty one.
Inflation expectations feed into actual inflation. They sort of become
(23:39):
self fulfilling. The FED. Even if they wanted to ease
in response to say the negative GDP report we got
in the first quarter and this slight rise in unemployment
over the past few months, they probably can't because inflation expectations.
Some researchers would argue have become unanchored again like they
were during COVID.
Speaker 2 (23:59):
This was the most recent Michigan sentiments. I want to.
Speaker 4 (24:03):
Say six six and change and again or something.
Speaker 2 (24:06):
To explain what that means of the people that this
survey spoke to, which has been in place for what
eighty years they've been doing these surveys. The average or
I don't know if it's average or media expectations over
your inflation is now in the mid sixes.
Speaker 4 (24:23):
And it's that is squarely due to that is clearly
unequivocally due to tariffs. So I'm actually impressed that people
are internalizing, so to speak, that if this were not
my little area, I'm not sure I know what to
make of it. It's like when I hear that, as
the FDA announced today they're changing their guidance on COVID vaccines,
I don't know if I should be mad, happy, or
(24:45):
indifferent about that just not my area. But this is
a case where I didn't think it's so abstract. I'm
not sure. I wasn't sure people would get what tariffs are,
and the politicians are obfuscating, Oh they're not you know,
they're not taxes, or they are or so you get
a lot of noise in there. Yeah they get it.
Speaker 2 (25:01):
Yeah they seem to.
Speaker 3 (25:02):
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Speaker 2 (26:06):
The last time I personally bought a car was before
this week, was twenty twenty two. When anybody who bought
a car back in twenty twenty two remembers how miserable
it was. I had to pay like a surcharge just
to get the Honda Civic that I wanted above the MSRP.
(26:26):
I couldn't find one. It was quite difficult. The market
is not quite where it was back then, but we're
seeing signs of it. In the used car market. There
is less inventory. Prices have not ticked back up month
of a month according to the most recent CPI report.
But I continue to hear stories about this, and you know,
to share a bit about my recent buying experience, which
(26:48):
is unique because I don't think there's a lot of
minivans out there. But when looking for a new Toyota minivan,
I called approximately fifteen dealers in the Massachusetts area who
told me that they had none in supply and that
they could put me on a waiting list for one
that was going to be available in July the sixteenth
(27:10):
did have one, and I was able to find one.
When I went to go buy it, I was seeing
some of the similar things that I saw during the
COVID days. You know, they came in with the manufacturing
price and they said, you know, normally we would charge
you a twenty five hundred dollars market value assessment surcharge
on this car because they're so hard to find. But
if you make this deal happen today, we're willing to
(27:31):
waive that, we'll give it to you for MSRP. And
I think you're starting to see signs of that elsewhere
in the auto market here and there.
Speaker 4 (27:38):
Plus, they knew you had a funeral this week and
you needed the.
Speaker 2 (27:41):
I need the black vehicle exactly. Yeah, I had to
go attend one of those. But in any case, you
are starting to see this in areas of the market.
Maybe I'm just a bad negotiator, but here was the answer.
I needed a new car, and I called fifteen dealerships
and only one of them had the car that I wanted.
So I didn't feel like I was a approaching with
a really strong negotiating position. But on average, what you're
(28:05):
seeing here, according to a piece from Bark and Watch,
use car buyers being charged and average six hundred and
forty dollars in surprise fees, and seemingly it's the same
thing we're seeing from other sellers of goods, which is
the tariffs are kind of giving cover for dealerships to
tack on fees. Some might call it a bait and switch,
some might call it supply and demand. I guess it
(28:26):
depends on your perspective. But you know, everything from vin
etching wheel locks in other cases just you know, charging
higher than standard etching.
Speaker 4 (28:35):
Can you opt out of that?
Speaker 2 (28:36):
Yeah?
Speaker 4 (28:37):
Actually, I really don't want to vent on this.
Speaker 2 (28:40):
Okay, Reconditioning fees are going for an average of sixteen
hundred dollars unused cars. So I mean, these are all
the add ons that you get talked into and in
you know, in Massachusetts, they actually have to record those
conversations in the business office. Have you ever did you
notice that when you bought your car a couple of
years ago.
Speaker 4 (29:00):
There was absolutely no recording device in that office. Really,
at least I wasn't informed they'd have to disclose.
Speaker 2 (29:05):
Now, in the office that I went to, there's a
giant sign that says recording in progress if you enter
this room. Because from what I understand, in Massachusetts, maybe
all or at least some of the business offices have
to be recorded because they were kind of so badly
abused over the last few years. Interested huh, But in their.
Speaker 4 (29:25):
Own protection, somebody asserts that you did or said you
misrepresented something. I bet on balance that benefits dealers.
Speaker 2 (29:32):
Maybe, but I bet it's also a legal requirement. I
doubt that it was the dealers that said, Hey, we're
going to voluntarily record all the conversations of our business
managers trying to upsell customers on all sorts of protection
plans that they may or may not need. But you
are seeing this stuff, and it is showing up a
little bit more, according to the experts, than it did
(29:53):
just a year ago. And again I think that's all
supply and demand. There's been a lot of people.
Speaker 4 (30:00):
Why do they itemize those things? Guys? The price is
the price. I assume you're going to clean the car.
I assume it's going to have a v in on it.
Speaker 2 (30:06):
Why assume that, Yeah, I mean.
Speaker 4 (30:09):
The itemize it. Is there something psychological about that? Are
you more willing to pay it if it's itemized?
Speaker 2 (30:14):
No, but you're more willing to show up at the
dealership for the price on the website. That doesn't reflect all.
Speaker 4 (30:19):
Those extra That was a naive question on.
Speaker 2 (30:21):
Mine, right, I mean, that's the answer is once they've
got you in there, they think they can make that
sale and add on all those extras after the fact,
just like.
Speaker 3 (30:29):
Hey, well I got you in here. Uh what do
you think about this playcast?
Speaker 2 (30:32):
I mean, guys, this is no different other than the
dollar amounts than buying tickets from ticket Master or airline
tickets on you know, on Kayak or whatever tool you use.
They advertise the lowest price they can possibly advertise, and
then just tack on the baggage fees and the seat
choice fees and the recliner fees on top of all
of these things in order to get a higher price.
(30:55):
Let's take a quick break. When we come back. Stack
Roulette is next.
Speaker 1 (31:00):
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
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on breaking business news All morning Loan. This is the
Financial Exchange Radio Network.
Speaker 3 (31:25):
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American Veterans Department of Massachusetts. And as we get set
to honor our veterans on Memorial Day, now's the perfect
time to register for this year's five k at Castle
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Speaker 2 (32:02):
Tucker's hoping to finish in a pr under two hours
this year, so it's going to be particularly exciting race.
And when is it November?
Speaker 3 (32:10):
What did I say? November eighth?
Speaker 2 (32:12):
Yeah? Yeah, I think it's my third or fourth year.
Speaker 3 (32:15):
Eight Saturday November.
Speaker 2 (32:16):
Are you gonna run one of these ones? Tucker? Saturday
is a.
Speaker 3 (32:19):
Tough for me, but I'll see if I can make
it work fair enough.
Speaker 2 (32:23):
In the latest story of why social media sucks, two
Provident school students and a staff member were brought to
the hospital after what's called the chrome book challenge incident,
which is where you just stick objects into chrome books,
which are little tablets, in order to see if you
can destroy them by you know, making them smoke and
(32:44):
short circuit and just destroy themselves, which can obviously be
a hazard to the chromebook and all those around you.
And my point about why social media sucks is that obviously,
if you tell a bunch of middle school students that
they can stick a staple into a own book and
light the thing on fire, then they're gonna do it.
(33:04):
And my point with all of this is.
Speaker 4 (33:06):
Yeah, I'm tempted right now.
Speaker 2 (33:08):
Yeah, Mark is just Itchen did go do this? Kids
are not any smarter or dumber than they were thirty
years ago in middle school. When I was in Midfield
Middle school, a kid poured a gallon of gasoline. Maybe
not in a gallon, he poured a significant quantity of
gasoline into the bathroom toilet and lit it on fire
(33:31):
just because he thought it would be funny. And it's
kind of funny. It wasn't funny because you know, it
caroused probably thousands of dollars worth of damage. But he
also wasn't able to create the light your middle school
toilet on fire challenge and encourage a bunch of other, uh,
you know, twelve year olds to go and light their
toilets on fire. And this is why social media just sucks.
Speaker 4 (33:55):
Whether it was a middle school kid warning him that
we may not be insured for the hazards.
Speaker 2 (34:02):
Just got my calculator and my protector and they're like, oh,
this isn't a good idea.
Speaker 1 (34:09):
School.
Speaker 2 (34:11):
She's a fair bit higher dude.
Speaker 4 (34:14):
But yeah, company taxes could go up as a result
of youless actions.
Speaker 2 (34:18):
This is exactly the argument that I was trying to make.
And believe it or not, he lit the toilet on
fire anyway, So yeah, this is the problem with social
media is that whether it's this, whether it's the tide
pod challenge, there are a lot of dumb, dangerous things
that middle schoolers do, but up until recently, they didn't
have the ability to inform the entire world about them
and encourage others to follow them in kind.
Speaker 3 (34:42):
So yeah, I mean social medias have flagged this stuff.
It's as simple as that, and they don't. Yeah, well
it's as simple as that.
Speaker 2 (34:48):
That costs money. That costs money, Mark, what do you
have for us for a sacroulette?
Speaker 4 (34:52):
Elon Musk was speaking to the cutter. That's qat a
R the country. I'm always confused how to pronounced, but
I thought you're talking about there's any right, there's there's
an economic forum in Cutter. Musk was there and he announced,
probably wisely into his great credit, that he'll be stepping
back from his more visible political role. I assume that
(35:15):
means no formal role going forward with this or any
other administration, as well as curtailing political contributions. He feels
like he's done enough. He wants to focus on Tesla.
He's committed for the next five years as CEO at least,
and chaerholders like it. Stocks up five percent, so probably
a good move.
Speaker 2 (35:33):
He's got some work to do. I mean, granted, I
live here in Massachusetts, which is not exactly a conservative
area of the country, but I would say that more
often than not, when I see a Tesla on the road,
there is some form of anti elon bumper sticker attached
to it. Again, it's Massachusetts. I'm not surprised by any
(35:55):
of this. But why that matters is because states like
Massachusetts are rare. He was selling all of his Tesla's
and so if that is more than just a Massachusetts trend,
and you know they are not able to recoup that
marginal buyer on the Tesla vehicle or create a new
market for them. I'm open to that idea that conservatives
are suddenly going to start buying Tesla's, but the proof's
(36:18):
not out there, and the infrastructure is not even close
to there, because you know, there's not a whole lot
of Tesla superchargers in Iowa, for example. So we will
we will see where this one goes. I think he's
got his work cut out for him on the turnaround
story when it comes to Tesla, but he's done it before,
so I'm not going to say it.
Speaker 4 (36:34):
And he found how difficult it is to make meaningful
changes to government spending him he didn't have the legislative
power behind him to do it, obviously, that lies with Congress,
and I.
Speaker 2 (36:45):
Think he spoke to that specifically.
Speaker 4 (36:46):
It's like, yeah, it's going to be frustrating for a
guy like him who's used to being king of the
joint and rightfully so, he more or less built the
company up from nothing.
Speaker 2 (36:55):
Speaking of Tesla, you know, and autonomous car, he's generally
there's a new study out about social sensitivity and how
cars need to be trained on behaving more like humans,
which or the drivers of those cars which are robots
behaving more like humans, which is confusing to me because
I thought that was the entire point of developing autonomous vehicles,
(37:18):
was that we all sucked at driving, we crashed too much,
and so we wanted robots to drive the cars instead.
But this study says, no, we need to behave more
like humans with these cars. And now I'm just left
wondering what the point of all this is, because the promise,
at least in terms of my opinion, was, Hey, autonomous
driving is going to make driving for everyone safer because
(37:38):
there's going to be better reaction time. A robot can't
get distracted by its phone, and therefore we're all going
to become better drivers. Insurance costs come down, and it'll
be nice because you can go do something else with
the cars driving. This study seems to point to that
in the other direction, but maybe they're.
Speaker 4 (37:56):
They're giving them little middle fingers now.
Speaker 2 (38:00):
On the horn. The autonomous car is just honking at
you as soon as it turns green. Markets remain in
negative territory now off one hundred points or a quarter
of percent, NASDAK off seventy one points thirty percent, and
S and P similarly off a thirty percent. We'll be
back at it tomorrow. Folks, have a great rest of
your day. We'll talk to you then
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