Richard Rosso - Certified Financial Planner Joins Houston's Morning News

Episode Transcript

Speaker 1 (00:00):
Five fifty two our time here in Houston's Morning News. Yeah,
we've had a high cost of living for years now,
but we have not seen a big spike in the
considerate prices that we're paying. The PPI index came out
and people a little bit surprised by that, at least
according to folks at Breitbart. April's inflation numbers, we're supposed

(00:20):
to show that we're bearing the burden of President Trump's
new tariffs, Well not yet. We're not join us to
talk about it. Richard Rosso, certified financial planner. Of course,
that doesn't mean six months from now we won't be
paying higher prices based on tariffs.

Speaker 2 (00:35):
Well, this is the chapter in the book of TDS
Character Arrangements. Cent. Remember when our inflation was nine percent jume,
we were told, oh yeah, that there's no inflation. Now
we have no inflation, and we're told that inflation is
going higher tariffs. And I've said this on the show before,
we have written, we've written so much about this, that
tariffs do not automatically lead to inflation, especially when there

(00:58):
were deals in the making. What will happen is companies
will absorb those price increases. That is exactly what you
saw in the PPI there was margin compression, and we
saw that many of the companies providing supplies to us
for final goods production, they they've been eating the costs

(01:20):
for it. Now. I don't think they could do that belong,
But you know what happens with squeeze margins. Eventually you
things slow down, right, companies will eat those margins like
what like I think President Trump came out and said
to Walmart, don't you dare you know you eat those
you eat those price increases. I'm not sure Walmart will
do that. I think they'll try their best because the

(01:42):
main reason is the consumer is not going to pay it,
nor do they have the cash flow to pay it anymore.

Speaker 1 (01:47):
Right, Well, I saw their CEO. It sounds like he's
trying to brace the you know, consumers of Walmart for
for eventual price increases. But I think you're right. I
think he's going to put that off as long as
he can.

Speaker 2 (01:59):
He's going to put that up. And the fact is
that what's coming, what's becoming clearer, is that we have
deals in the making. So once we start to see
these deals getting signed off, especially that big one with China,
then a lot of this tariff, talk of inflation drops off,
but for now you don't see it because ultimately the

(02:20):
consumer is going to have a very difficult time to
pay them. Now, that doesn't mean that's good, because that
means someone's got to eat it, and that means if
you're in the stock market, then you've got to be
prepared for margins to thin for publicly traded companies as well.
But for a while they're able to absorb it because frankly,
they don't have the pricing power to do it. This

(02:42):
is what this all comes down to. But this talk
of this direct line of tariffs to inflation has to
be broken. It's just a narrative. There's no proof of that,
and it's no proof of it now actually inflation is
cited lower.

Speaker 1 (02:55):
You're right, there's been nothing but good news as far
as that front goes. Here's my question going forward, though, Richard,
when you get right down to it, I mean, there
are things that are niceties and things that are necessities.
If you are somebody who produces or sells necessities, are
you more inclined to be able to pass those prices

(03:15):
along because people have to buy what it is you
have to sell.

Speaker 2 (03:21):
Well, there is something out there class substitution of goods.
So right, you're talking about fixed expenses, things that you
absolutely need. Most of the inflation that we have seen
is in medical and auto insurance. We know where insurance
rates are right, and those rates are going to continue
to be highed. That's where people feel the pain. But
also as an organization, as a consumer with not as

(03:43):
much cash, you substitute goods or you go without it. Oh,
I really would like those bananas. Now, I don't think
I'm going to eat bananas right now. Or you know,
I was going to buy steak, but I might switch
off the chicken. I mean, you do get this substitution
of goods. You go from brand name to generic. The
consumer does these things. This consumer pick tac toe or
this this hot potato game for a while before they

(04:07):
pay the higher prices because we don't have the cash
to pay it. See, companies know this. So what you
might find is they might raise prices. Walmart can play
this shell game with prices. They could say, well, pool equipment,
I might raise I might raise prices on the pool
equipment because I can't raise prices on tomatoes. In other words,

(04:27):
the goods that you think they might raise prices on
they may not because they understand the consumer will not
pay for it, especially for goods that they need every day,
like food.

Speaker 1 (04:37):
To your point, yeah, makes sense, Richard Rosso. Always makes sense.
Thank you, sir, appreciate it. Certain five financial planner Richard Rosso,
it's five fifty seven