Money Monday with Brian James

Episode Transcript

Speaker 1 (00:00):
Been across my street, locally, statewide, nationally, before all the
happenings across the globe.

Speaker 2 (00:05):
Fifty five krc the talk station.

Speaker 1 (00:12):
Heyoh, five fifty five KRCD Talk Station, A very happy Monday,
see you. Oh he's made extra special because we get
to hear from money. Monday's Brian James. Brian James, Smallworth
financial financial planner. He is, so he's on top of
money matters. Welcome back, Brian James. Hope you had a
wonderful weekend.

Speaker 3 (00:27):
Thank you, and good morning and happy President's Day to you.
I hope your family got you something nice.

Speaker 1 (00:33):
Yeah right, My wife and I don't even get it.
Give it's all right. My wife and I his anniversary
of our our engagement is Valentine's Day, and we don't
even bother getting each other something for Valentine's Day. So
less less likely that something's going to show up on
President's Day. But stranger things have happened in this world.
Do you get a president for President's Day?

Speaker 3 (00:54):
Uh?

Speaker 2 (00:54):
No, I don't.

Speaker 3 (00:55):
I was really hoping that you maybe maybe the Thomas
family had something going so we can steal it and
start it up here.

Speaker 2 (01:00):
But now we're kind of the same way.

Speaker 3 (01:02):
We really just celebrate whatever we bought together last Well,
happy Valentine's.

Speaker 2 (01:06):
Day to us. There you go at that time.

Speaker 1 (01:08):
That works for anniversaries too, just as he puts up
an inflatable William Henry Harrison in his front yard to
celebrate President's Day.

Speaker 2 (01:16):
All right, that's a small fan club, that is, You.

Speaker 1 (01:19):
Got that right, And maybe everybody's now curious to where
wants to know where Joe got that particular inflatable item.

Speaker 2 (01:26):
Anyway.

Speaker 1 (01:27):
Pivoting over to money matters and something a lot of
people economists of different stripes are saying Trump tariffs could
lead to some temporary inflation. I mean, if you just
do the numbers on it, it kind of makes sense,
doesn't If if you increase the price or the tariff
on something by twenty five percent, and it's important into
the United States, that cost is going to be passed

(01:47):
along to the consumer on some level.

Speaker 2 (01:49):
Brian, Yeah, it absolutely is.

Speaker 3 (01:51):
A tariff is literally nothing more than making stuff cost more.

Speaker 2 (01:54):
That's the definition of it.

Speaker 3 (01:56):
Now, we hope, of course, that that will be absorbed
by the manufacturers overseas, but again that's hope, and you
know hope in one hand, and you know what and
the other Literally what happens is is this just gets
passed through to.

Speaker 2 (02:10):
The end consumer.

Speaker 3 (02:11):
That's literally the why we call ourselves consumers. We are
not the ones who get to control anything. We have
to consume whatever is put out at whatever price it
is produced. So yeah, generally speaking, prices will be going up.
We're already seeing it anyway, And you can look at
what happened in twenty sixteen. Not only have we done
this in the past over over the you know, centuries,
we've done it very recently in twenty sixteen. So for example,

(02:36):
the cost of a car went up about three thousand
dollars back then when we increase the cost of steel
and the other components that go in. So it's not
going to be a shock at all. What would be
really surprising to me, honestly, Brian Thomas, is if when
we get the effect that we desire, will we pull
those prices back down or will manufacturers continue to do

(02:57):
what they've done in the past and hope that Americans
don't notice that the tariffs have gone away, and we're
just gonna leave the prices alone and just consider that
as part of our profit market.

Speaker 1 (03:07):
Yeah, and it would really be insightful to know what
the profit margin is. You know, like obviously you point
to grocery stores and you think, oh my god, they're
gouging me. But grocery store profit margins, like restaurant profit margins,
are always in the single digits. You know. They they
got a lot of waste, and they've got a lot
of problems, they have a lot of theft, and price
of groceries just go up, but you know, the margins

(03:28):
really don't go up. But insofar as automobiles are concerned, hell,
you can't find what I would call an inexpensive car anymore.
It just seems to me that they're not manufactured. Even
the cheapest car has gone through the roof a lot
of reasons why they have all of these obligations, you know,
for an install safety feature this, and you know, electronic
that or whatever. But ultimately, what is the margin? And

(03:51):
have the margins for these manufacturers changed over the years,
And if so, let us see it in a chart.

Speaker 2 (03:58):
Yeah, that's right.

Speaker 3 (03:59):
And I think you can look at the stock market
and figure out the ustory of the stock market and
figure out when those margins widened, when when they narrowed.
Because that's literally the definition of the stock market, the
opinion of shareholders of any level as to how profitable
these companies are, and more importantly, how profitable do we anticipate.

Speaker 2 (04:16):
They're going to be in the very near future.

Speaker 3 (04:18):
If I'm an investor and I feel like things are
moving in the direction of increased profitability, then that's a
good sign for the stock market. But if I'm going
to if I'm concerned that those profit margins are going
to be narrowed, that doesn't mean we're going over the cliff.

Speaker 2 (04:31):
It just means it's going to be harder.

Speaker 3 (04:32):
And the industries that will survive better are the ones
with arguably with wider profit margins. But at the same time,
those are the ones who may have to sacrifice the
most of that profit margin versus the grocery stores, as
you mentioned, which are already razorsin to begin with.

Speaker 1 (04:45):
Well, you know, and the other component. I just have
to raise this because every time I read another article
about how much any particular automobile manufacturer is losing per
vehicle that they produce that are evs and how much
money they're actually making on the say the internal combustion
engine trucks, for example, I guess the salvation of Ford
because Ford trucks move like crazy and their evs and

(05:06):
lose millions and millions of dollars annually, so the price
of the truck goes up to cover the losses for
the evs. Now, Trump may end up saving the autobile
industry by get rid of these ridiculous cafe standards and
eliminating this obligation to become carbon neutral, giving people a
choice and maybe ultimately bringing down the costs ices if
they don't have to manufacture evs.

Speaker 2 (05:27):
Yeah, and I think that that's part of the political argument.
You've got.

Speaker 3 (05:33):
Those kinds of things should be put in place. And
remember that the other weird thing about this that he
has been particularly quiet on is the second in command,
Elon Musk, some say first in command, is obviously directly
connected to this, and he hasn't said a whole lot
at all about the political rhetoric that goes directly after
one of his companies. And I think that's very telling

(05:54):
in terms of what are we really after here?

Speaker 1 (05:56):
Well, and it was observed, I know Rachel I to
argue the other day on her program that somehow Musk
has gotten a four hundred million dollar armored Tesla vehicle
State Department contract that actually went in place during the
Biden administration, so it didn't have anything to do with Trump,
but it didn't go through period. End of story there,

(06:17):
And there are no current plans to issue a request
to Tesla to make these vehicles or any other manufacturer
for that to that end, and then I pivot over
to another one. Tesla is a doge loser article from
the Wall Street Journal which I brought up this morning.
Trump putting a pause on this mandate for electric vehicle
charging stations. That's not going to work to Tesla's benefit

(06:39):
at all, and it certainly would in your to its
benefit if that mandate went through. So anyhow, everybody's beaten
up on Elon Musk for trying to ferre it out fraud, waste,
and abuse. He's doing the job for free, and he
has obviously no vested interest in it other than helping
us out. But speaking of tariffs making prices go up,
it looks as though it result in Nissan moving manufacturing

(07:03):
from Mexico to maybe the United States.

Speaker 3 (07:06):
Now maybe, But I don't know reading through this article
that this is another case of re read the article,
not the head of Top auto maker. Yeah, Top Automaker
could move some production out of Mexico a mid Trump tariff.

Speaker 2 (07:17):
Talks, according to the CEO. But to read to me,
yeah exactly.

Speaker 3 (07:21):
That reads to me if you read that too quickly,
you go, hey, cool, they're going to pull those jobs
back across the border.

Speaker 2 (07:26):
But in reality, some other.

Speaker 3 (07:27):
Sources are indicating that they they they may just reduce production.
So in other words, Nissan is simply making possibly making
a business decision that this isn't the best time for us.
Things are not going as well as they could be.
We're not going to shut things down, but at the
same time, we're just not going to produce as much.
We're gonna kind of wait it out. Nobody has said
that they're building that Nissan is building a new factory

(07:48):
in you know, some farmtown in the middle of nowhere.
That's not on the docket at all. All they've said
is that there's going to be fewer jobs in Mexico.
So if your goal is to poke Mexico in the
eye over the immigration issues, then may maybe this helps.
But on the other hand, this is not at this
point a job creator in the US.

Speaker 2 (08:04):
Well, and I had I listen.

Speaker 1 (08:06):
I know where the source was from because I read
the same thing you had read, which is silent on
the where the plant might move the jobs to issue.
Still some speculation swirling about it. One of my listeners
called this morning and said that it was moving them
to Flint, Michigan. Now I don't know where that source
came from, but I suppose it's a possibility.

Speaker 3 (08:24):
Brian, Yeah, anything is possible at this point. But you
would think if that was the goal, if the goal
was to orchestrate, you know, these tariffs to drive that
exact activity, then that would have been tied to the
initial announcement. Now, of course, we can't force Nissan to
do or any company to do anything. All we can
do is make them uncomfortable in directions that so that

(08:44):
they'll start behaving.

Speaker 2 (08:45):
The way we would like them to.

Speaker 3 (08:47):
But we can't force the absolute outcome. This is where
tariffs can kind of blow up on people. And if
you go back in the you know, throughout history, and
this is this is a flashback from Ferris Bueller. If
you remember ben Stein talking about the Holy Smoot tariffs.
Oh yeah, well he was talking about terrfact.

Speaker 2 (09:03):
Did they work? No, they did not.

Speaker 3 (09:05):
And the United States saying further into the Great Depression,
so they don't always work well.

Speaker 1 (09:11):
It's going to be an interesting economic experiment we're all
going to be living through. Keep your popcorn out. It
may hurt, it may help. We have no idea at
this point but to speculate, including where Nissan might or
might not move its manufacturing facilities from Mexico. Brian Javes,
let's pause for a briefly a little bit early in
this segment because we've got two more topics to go over.

(09:32):
More homes are being pulled from the market, which is
an interesting development in the real estate area. And then
Americans are now finding it harder to pay off debt.
So those two topics coming up. More with Money Monday's
Brian James. Stick around. I'll be right back fifty five
the talk station for more information about contests. Eight seventeen.
Here fifty five KRCD Talk Station. A very happy Monday

(09:55):
to you, Doing Money Monday with Brian James from all
Worth Financial. This is a curious development, Brian, I thought
the real estate market was on fire and your house
was getting buyers lined around the corner, bidding wars going
on all over the place, and I see that this
article says, no, that's not the case anymore. What's going on?

Speaker 3 (10:15):
Yeah, So the Walsters Journal is reporting that seventy three
thousand homes were pulled from sale in December of twenty
twenty four, meaning that some people said seventy three thousand
people said, you know, what, the heck with it?

Speaker 2 (10:25):
I don't want to deal with it.

Speaker 3 (10:26):
We're just either going to stay here or we will
come back and try again. That's a sixty four percent
increase compared to December of twenty three, when there were
only forty some thousand homes that were pulled. So basically
this is this could be the sign of the beginning
of a pullback in the housing market. It does indicate

(10:46):
a lack of buyers, right, if you're not housed in
your home, that means the buyers aren't there. But usually
what it really means there're always buyers there. It's not
about the buyers, it's about the price.

Speaker 2 (10:54):
Huh.

Speaker 3 (10:55):
Buyer's price range has decreased from where it has been
in the past. That could be the sign of a
pullback that we know is inevitably gonna happen. It has
been anticipated for a long time it just hasn't happened yet.
This could be the first shot across the bow.

Speaker 1 (11:07):
Well, that would be actually a good development, more of
a sort of a shaking out or a settling of
these ridiculous prices. I know that the demand was so
high that you could get crazy amounts for your home,
but the whole idea that maybe your expectations in terms
of your home value a little bit too high. So
if you really want to sell your home, you're gonna

(11:28):
have to adjust the price downward. That would be I
think a good development.

Speaker 3 (11:32):
It would be just like anything else, though, it's gonna
be a catalyst that will come along with other stuff,
both good and bad. So you know, some people bought
houses in November December something like that and.

Speaker 2 (11:43):
Paid whatever market that a market rate was at that time.

Speaker 3 (11:45):
Those folks, should they have to move, they're gonna have
a problem because prices will have dropped.

Speaker 2 (11:49):
They could be underwater on their mortgages.

Speaker 3 (11:51):
However, I would not start running around worrying that this
is going to be something like two thousand and eight
all over again. Two thousand and eight was far more
about the infrastructure the mortgage business.

Speaker 2 (12:01):
The mortgage lending market.

Speaker 3 (12:03):
Collapsed which prevented basically the entire market from buying houses,
and the way we had done in the past, this
as we're sitting here right now, would appear to be
nothing more than a price adjustment. Basically, the way to
think about it is that there are fewer buyers at
the price range where we are currently asking. However, those
buyers are still out there because we know the economy.
The economy's in pretty solid shape, regardless of your politics.

(12:25):
E comomy has been pretty solid shape for a few years,
and there's not really any reason to think that's going
to fall off the cliff, although there's plenty out there
that have been saying looking for that next leg down
since twenty two. But at the same time, so what
that leads me to believe is that we will find
the buyers. The buyers are just at a range lower
than the sellers right now that will equal out at
some point, because that's how markets work.

Speaker 1 (12:46):
Well, when you pull your house from the market, doesn't
that suggest that you really didn't need to sell it.
I mean, you just maybe wanted to tap into this
over zealous price house market and get that equity out
of there. Y you why you can get it at
this premium rate. But if you pull it off the market,
I guess you're staying put.

Speaker 2 (13:06):
And that could be.

Speaker 3 (13:07):
That could be some people who just sat down at
the dinner table and say, you know what, we've always
talked about moving.

Speaker 2 (13:11):
Maybe this is a little sooner than we anticipate.

Speaker 3 (13:13):
Yeah, so let's go ahead and throw it out there
on the market at a crazy price and just see
if we can get it. Some of them got it
over the past couple of years. Others maybe asked just
a little bit too high and the interest waned. And
of course the if you talk to any realtor, they'll
tell you that a house that sits on the market
for a very long time starts to get a little
bit of a of a stigma to it. Yeah, nobody
wants to touch this. It's been listed for six months.

(13:35):
I don't want to I don't want to even look
at it.

Speaker 2 (13:37):
Let it, let it go.

Speaker 3 (13:38):
And so you do have to kind of pull it down,
let let some time pass, and then and then repost it.

Speaker 1 (13:43):
Well, it seems to me that rather than having an
air of negativity about it, that represents an option or
an opportunity for a buyer to go in and maybe
lowball it a little bit and get a better deal
than they're asking. It never hurts to ask. Brian.

Speaker 3 (13:56):
Absolutely, Yeah, So I think this might just be an
more of an optimst. Then, yes, it's a pullback, but
it's a pullback from an extreme. I think our society
and our economy does just fine as long as we
left the pendulum swing back and forth without too much panic.
They can only swing so far before we have to
anticipate an opposite reaction.

Speaker 1 (14:14):
Well, I can only hope this represents an opportunity for
some of the younger buyers who have been priced out
of the market. I just did the home costs. I've
seen closings on houses and you'd read be like you
got six hundred grand for that thing. It's like how anyway?

Speaker 2 (14:29):
Yeah, I couldn't agree more.

Speaker 3 (14:31):
I talk to my client's children, adult kids all the time,
and it is amazing to me. I put myself back
in their shoes, and I wrote, when I'm their age,
mid twenties or so, this was the next thing.

Speaker 1 (14:40):
I know.

Speaker 2 (14:40):
I'm going to be here.

Speaker 3 (14:40):
I've got my career here in Cincinnati. It's time to
put down roots. That's really not a consideration. They're still renting,
and they anticipate they're going to rent for another seven.

Speaker 2 (14:47):
Or eight years, even though they know they're not leaving town.
It's a scary time for that.

Speaker 1 (14:51):
All right, And double down on that by pivoting over
to the other topic we're talking about this morning before
we part company. Americans finding it harder and harder to
pay off their debt.

Speaker 2 (15:00):
Absolutely, so go figure we owe money.

Speaker 3 (15:02):
So total household debt in the United States rose by
about a half a percent in the fourth quarter of
twenty twenty four. These numbers sound tiny, but they're really not.
That gets us to eighteen trillion dollars. You know, we
say the word trillion a lot more often nowadays. It
used to be the word billion was an attention yetter
billion has become the new million.

Speaker 2 (15:19):
Now we talk about trillions when we're worried about it.

Speaker 3 (15:21):
So this has covered all loan categories, mortgages, auto loans,
credit cards, homewke, we lands of credits. Everything saw increases.
Credit card balances themselves are at one point two trillion dollars.
That's a seven percent increase over the previous year. That's
how much less people are able to pay their bills
with their normal cash flow. We're rotating these balances on
a much more frequent rate.

Speaker 2 (15:42):
Than we used to.

Speaker 1 (15:45):
So the solution, Brian, your financial planning advice to deal
with this type of thing or prevent this type of
thing from happening. These credit card interest rates are just
sick crazy.

Speaker 2 (15:55):
They are. They are.

Speaker 3 (15:56):
So there was a bill, there has been and this
was something that Trump talked about on the campaign trail
and he has still talked about to this day. There's
a bill that has been introduced. It's going to cap
credit card interest rates at ten percent. Now, again, it's
just a bill. So guess who is out there fighting
against it? The banks and the lenders really are. They
love their twenty seven percent credit card rates, So there's
going to be lobbyists. There's going to be pushed back

(16:18):
against all this. What I find interesting though, is that
this is this one came from some strange bedfellows. So
this came from Bernie Sanders and Josh Holly. These are
not guys who go out and have a beer together.
To my knowledge, normally don't see eye to eye on
a whole lot of things. But the bill that they
introduced would cap credit cards at ten percent, and which
matches something that Trump talked about during the campaign trail

(16:38):
as far back as September. So whether we can get
it across the finish line, who knows. But what I
tell my clients if you were in this situation. Matter
of fact, I had this conversation last week. If you're
in this situation, you've got a credit card balance that
you have kind of forgotten about. It's probably charging you
twenty plus percent. That's what their credit card companies want.
A lot of times these come from an initial offer

(16:59):
of zero percent or three percent or something that feels
like nothing. The banks don't make a dime until.

Speaker 2 (17:05):
You forget about it.

Speaker 3 (17:05):
They're waiting for you to push it into the seventh
month of a six month bonus.

Speaker 2 (17:10):
So as soon as that happens, you're gonna start paying
high interest rates. It is okay in that situation.

Speaker 3 (17:15):
If you've got good credit scores, go get one of
those zero percent balanced transfer offers. If those are showing
up to your mailbox, take advantage of it. That will
buy you some more time. But don't forget about it again.

Speaker 1 (17:25):
Now does that impact your credit score by doing that?
Transferring to it will?

Speaker 3 (17:29):
So yeah, yeah, if you're going to apply for a
new line of credit. Yes, there will be a hit that.
That's of course a hard credit pool. You're literally proactively
voluntarily asking for credit.

Speaker 2 (17:38):
But at the same time, what it will do assuming
you get approved. You gotta have a good credit score
for this to work.

Speaker 3 (17:43):
But assuming you get approved, there will be an opposite
reaction because now you will have extra credit available to
you that will drive your score up.

Speaker 2 (17:52):
It's a little coumenraterintuitive, isn't it.

Speaker 1 (17:54):
It's so counterintuitive. It's just like the it's like alchemy,
you know. I just don't understand how they really say that.
You go ahead and get more up, more opportunity to
get more line of credit available, and that will make
your score grow up.

Speaker 2 (18:08):
I just I don't know.

Speaker 1 (18:10):
Just see that as a risky proposition. But whatever do
they if they.

Speaker 2 (18:14):
Ever recourse it does one plus one equals potatoes. That's
exactly how the credit card.

Speaker 1 (18:19):
Issuest Yeah, Phase three profit Brian James. Appreciate your insights
on these topics every Monday. We'll do it again next Monday.
And thanks again to all Worth for loaning you out.
We'll talk. Have a great week, my friend.

Speaker 2 (18:32):
All right, you two, we'll talk to you next Monday.

Speaker 1 (18:34):
Enjoy that President's week yees, stay warm too, eight twenty
six Right now if you have KS the talk station
joking over the phone lines, we have a little time
to talk between now and my next guest eight forty
with Susie Kahn, local author of the book. Like Swan's
really interesting subject out of that book, and I love
having the local authors on the program, so we'll do
that at eight forty. Otherwise, local stories coming up next

(18:54):
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