Money Monday with Brian James

Episode Transcript

Speaker 1 (00:01):
Hear about it, and then yea. The Epstein hopes these
fellows have to be released talking about it. I want
to know the truth. We say same on fifty five
KRC the talk station to Shibato six right now, but
you buy pair CD talk station. I hope you're having
a decent Monday. Always a good time to be listening
to fifty five KERRC Morning Show. Moving away from some

(00:22):
of the more tragic incidents going here in downtown Cincinnati
over the weekend, there's still other things going on in
the world. We still got to worry about money, and
we need to worry about the Federal Reserve hiking interest
rates or lowering interest rates. Welcome back from all Worth
Financial Brian James, do another edition of Money Monday.

Speaker 2 (00:37):
Good morning, mister Thomas, thanks for having you once again.

Speaker 1 (00:40):
All right, all I've heard and I know the Trump
administration wants the Fed to lower the interest rates. There
have been discussions about maybe reducing it by twenty five
bases points. Nobody's really talking about raising it. But there
was an interesting article today and if we haven't seen it,
I'll refer you to it. Don't rule out a rakehike
by William Silver who's written on matters economic and written
books before. He said, someone at the meeting should say

(01:00):
the FED might have to raise its target rate at
some point during the year, noting that unemployment rate remains
pretty dang low, but the rate of inflation is still
somewhat elevated, suggesting, in his words, if anything, the target
interest rates should be higher to push down inflation. No,
I haven't heard anybody talk about that prior to my
reading this article this morning. Was either going to stay

(01:22):
the same or it was going to get lowered. What
do you think, Brian James.

Speaker 2 (01:25):
Well, yeah, I think it's pretty tough for folks to
go against the grain here. You know, you look a
lot of these political voices, and unfortunately, like it or not,
a lot of them are tied to President Trump, and
he's of course advocating for the opposite and has been
doing that very loudly for basically the last decade. So yeah,
it is a little bit surprising to hear it, to
hear anybody come out against, you know, the idea of

(01:45):
lowering rates. Some people still see inflation out there. We've
got we've got some good headlines over the weekend related
to tariffs that we're going to get to here and shortly.
But you know, we haven't beaten the inflation monster yet
completely one hundred percent, but we made a lot of
progress there. So yeah, I would agree with you. I'm
not sure I see the benefit or the risk. I mean,
maybe it's a topic to talk about. That's why there's

(02:06):
only a handful of voices, you know, out that about that.
There are a few people out there, you know, Neil
Kashkari and the Minneapolis Fed. He has hinted that he's
open to leaving the door open for another hike if
we still see price pressures resuming. Cleveland FED Representative Loredamester
said similar. She's just really tight on None of them

(02:26):
are as vocal as this individual is. But you know,
I really only hear it in hints. Otherwise, well it
was noted again. I'm going back to this, mister silber guy.
Congress has to pay the government's bills, right, so it
too likes low interest rates. So this low interest rates
doesn't really bear a political stripe. Low interest rates are
if you ignore the inflationary reality that might exist. I mean, Democrats, Republicans, independence, communists,

(02:52):
everybody enjoys the benefits of lower interest rates, if for
no other reason, it tends to have an impact on
what somebody pays for a home in the mortgage rate. Yeah,
and that of course is where we feel at the most.
That's we've had a lot of home buyers. If you've
bought a home in the last four or five years,
then yes, you are paying probably six to seven percent. Ironically,
I did get an email over the weekend from a

(03:13):
client who was asking if we should borrow against the
home to invest in the market. And first off, that
is the sign of a market, of a market top
and people start thinking that way. But I think he's
not a person who has a mortgage right now. He's
not dealing with he's considering putting one back in place.
And I think he has forgotten, as a lot of
people have, that rates for people who are putting mortgages
in place are in the six to seven percent range.

(03:35):
It's not the three to four space or the two
space that we were in just a few years ago.
So I do think there's a big difference between people
who aren't dealing with mortgages and those who are.

Speaker 1 (03:43):
Well, it's a really important thing to focus on that
very point, because you're going to have to get north
of seven percent ROI in order to cover the no
on what you borrowed to put in the market. So
that's that's not always guaranteed, is it, Brian James.

Speaker 2 (03:56):
Oh no, Yeah, we talk about that a lot here
at my little table when we discuss financial plans and
market history and all that. And and I know why,
of course, it's because ever since twenty two the market
has been on an absolute tear. We've had some you know,
very nerve wracking drops in things with the election and
the policies that President Trumps put in place, but all
in all, the market's been up significantly and strongly. We

(04:17):
always get to a point there where people just kind
of lose that last bit of defensiveness in terms of
you know this, this can't go on forever. Well, when
that disappears, we start thinking about things like mortgaging the
house to invest a little more. And that's just and
usually it's people who don't really need that in the
first place. So I got a call to make this afternoon.

Speaker 1 (04:35):
Well, these these folks at the FED, I mean they
don't I mean, they're not tea leaf readers, and they
can't see into the future. They don't know which directions
it's going to go in terms of the economy. They're
just really playing a guessing game, aren't they. Well.

Speaker 2 (04:47):
I mean, there are some of the smartest brains we
have out there on this and they and they do
have to you know, somebody has to actually make decisions
and push buttons and pull levers that will have an
impact good, bad, or indifferent. And there's people are under
a lot of stress. President Trump always has the ability,
He's got the advantage of being able to change his
mind on a dime. And as we've seen, you know

(05:08):
it just in just in this administration, and we saw
it a couple of ministrations ago in his first go round.
He can do whatever he wants from day to day
and everybody else has to deal with it. On the
other hand, those representing the Federal Reserve making those decisions,
they will not be able to raise rates today and
then lower them tomorrow the way tariff Trump is handling
things like Tariff's.

Speaker 1 (05:25):
Right, And they also don't have any obligation to listen
to what Trump wants. I mean, again, I go back
to do the one thing I always stuck in my
mind was the Carter administrations and their epic battle with
who was it the Green Span or Vulcar Vulcan, And
I mean, come on, interest rates were just through the
blanket roof and you know, Carter was screaming, please, dear God,
lower the interest rates. They ignored him.

Speaker 2 (05:47):
Yeah, and his the approach he took, you know that,
that's what they call the Vulcar rule, right, they named
a rule after him. But yeah, he fought inflation so
fiercely and it hurt a lot. That was a significant recession.
But now as we look at it, that's considered a
benchmark of just a bold, aggressive way to conquer inflation,
even though it was unpopular and not very popular, you

(06:08):
know politically. Even so it did cost some lesser politicians
their roles. But Paul Volker has looked at as a
pretty smart dude nowadays for having done that. Well, fought
the fought against the tide of people who don't like that.

Speaker 1 (06:20):
Oh, obviously it worked because it came down eventually, right.

Speaker 2 (06:25):
Yes, And then think about deeper history than that, and
then that launched a period of about twenty years the
eighties and the nineties were really nothing bad happened. I mean,
that's a bit of an overstatement. But my gosh, when
I think of the prior twenty years that we've been
through since the turn of the century, and the eighties
and the nineties, eighties and the nineties were the anomaly, Brian.
We had a long period of time where where there's
a lot of people with money now who that's the

(06:46):
period that they made it in. And those folks conclude
that the anomaly has been the last twenty years where
we've had a whole bunch of crazy. But really, if
you look over the couple hundred quarter millennium of the
history of this country, it's actually the eighties and the
nineties that were probably about the best period we've ever had.

Speaker 1 (07:02):
And do you think and I always have this weird
sort of I don't like mc mansions for a multitude
of reasons. I'm not I listen one man with one opinion,
it doesn't matter. But the size of houses have just
gotten very, very large for the past several decades. Do
you think that it's because of low interest rates that
it had an impact on you know, the size and

(07:23):
the and how much people invested in any given home,
Because if you had to pay, like exam what my
wife and I paid and we got our first home,
you probably wouldn't be looking at large and giant, you'd
be looking at something maybe a little bit more efficient
and affordable.

Speaker 2 (07:39):
So I'll give you this example. So this is what
happened to me in terms of when I was looking
for my first mortgage about thirty years ago, when we
were first getting settled in the mortgage loan originator and
I was working for a bank at the time, mortgage
loan originator. The discussion was about how much can I afford?
How many square feet can I buy for whatever fits
my budget. It had nothing to do Nobody asked you kids,

(08:00):
you plan on having kids, how many kids, how big
of a house? They said, here's what you can afford
right now, based on interest rates. And of course, remember
who's pulling the strings, who benefits The banks of course
were and this was a period of time where we
had a run up to a financial crisis in two
thousand and eight, based on mortgages. Banks were looking under
every stone for every last opportunity to take advantage of
the fact that people were really excited about low interest rates.

(08:22):
So yes, absolutely, Brian, of course we were encouraged from
a thousand different points about just buy a bigger home
because you can afford it.

Speaker 1 (08:30):
And as a financial planner, there was always like a
figure you shouldn't be spending more on x percent more
than x percent of your annual earnings on home ownership.
Is there a figure that we can think about and
look to it as a good guidance still to this day.

Speaker 2 (08:46):
I mean, it's just gotten a little fuzzier because some
of the numbers that worked thirty years ago don't work anymore,
just because wages have not risen as fast as homes.
So I would go back to what I always say,
and you say this on my behalf as well, well,
have a plan, understand what you can get away with,
Understand what you are responsible for in the first place.
And I would put a very heavy emphasis on your

(09:07):
own retirement. Focus on your own retirement, building that nest egg.
Then figure out what the mortgage payment should be. Don't
focus on the giant house the way we did in
the late nineties and early two thousands, and then worry
about your four oh one K that's gonna work against you.

Speaker 1 (09:20):
Yep. Just remember the bigger than homing, buy the more
furniture you're gonna have your bibe timy Bill doesn't stop
with the interest right now, It sure doesn't. I've been
to a lot of houses with a lot of empty rooms.
Don't go away. We'll continue with Brian James talking about
the tariff deal. Looks like dumps. I gotta win with
European Union or is it China on the on the
plate as well? Plus corporate earnings are coming out this week.

(09:41):
Or with Brian James at eight fifteen right now, I'll
be right back fifty five krc OUR iHeart read Hey,
nineteen fifty five KRCD Talk Station. Another segment here with
Money Monday's Brian James from all Worth Financier. We're gonna
hear from Rabbi Ari jun on the robling Bridge protest.
Still be in studio. Next, What's stuff? These last two
topics in one segment Brian James tariff deal with the EU.

(10:03):
We got a fifteen percent tariff deal, many reviewing it positively.
A promise of six hundred billion dollars in investment for
the European Union in the United States over time, seven
hundred and fifty billion dollars worth of their energy purchases
from the United States over time, and apparently hundreds of
billions of dollars in arms purchases, making the military industrial
complex very happy. We also had him negotiate a deal

(10:25):
with Japan as well, and he's sitting down to talk
with China. I guess beginning maybe today. What's your take
on the tariffs, Brian, Well, this is all.

Speaker 2 (10:34):
Good news in terms of it answers the question. We
all know that the market and the economy really, really
really super hate the unknown. Yes, in futures, as we're
talking about this right now, I think you're doing a
whole bunch of nothing. Yep, that's true. So pretty quiet
on the market and what that looks like. The reason
that's a good thing, obviously is because it means we're
not spooked about things. A question has been answered. So

(10:55):
the headline is the US and the EU are at
a deal now at fifteen percent tariffs on steel and aluminum,
and so that's gonna prevent this larger trade war from happening.
And the threat there was that the original Trump era
tariffs were going to come back twenty five percent on
steal in ten percent aluminum, and so this is going
to replace a twenty twenty one deal that paused the

(11:15):
tariffs and those were going to expire anyway, and so
that this is all everybody wants to make sure we
don't have an overcapacity situation. And so we're just out
of situation where we've answered the question and we can
kind of get to move on a little bit. That
is good news. Not everybody in Europe is happy, of course,
right because you know, some of these countries didn't have

(11:36):
any kind of the tariffs levied against the United States.
So this is we're we're kind of taking the first
shots against them. But the US is just throwing its
weight around and the EU at the moment has acquiesced
and conceded a decent amount of the United States.

Speaker 1 (11:52):
Well, at least it shows we still have some weight. Brian.

Speaker 2 (11:55):
Yeah, And that's a little bit of a relief, isn't it.
It is you know, it started to feel briefly there
like we may have overshot and maybe we were a
little overly confident in how much the rest of the
world has to rely on the United States. Well, this
is a couple of check marks in the good column.

Speaker 1 (12:11):
Well, I know, did some more think, okay, fine, fifteen
percent a lot better than fifty And I know VW.
Has been hit really hard, as has some others BMW,
Mercedes and other German carmakers at twenty seven and a
half percent U of tariff, so they get a little
relief from that. But what about the concept of zero
for zero?

Speaker 2 (12:30):
Well, I think that what do we just say though
that doesn't throw the United States weight around?

Speaker 1 (12:35):
Right?

Speaker 2 (12:35):
We want to impose our will on the rest of
the world, you know, good, bad or in different Not
everybody agrees that this is the right approach, but that's
what we elected in November. And remember where we all
where this all started. One of the very first topics
that came up was all countries are going to start
to pay what they committed to in terms of supporting
NATO and support supporting those military alliances. This is just

(12:56):
the next phase of the same thing. The United States
was able to force those countries. Those were things that
they had all agreed to and simply not held up
on what they had signed off on years ago. In
the United States picked up the tab because we deemed
it more important to have that in place, and the
other countries just relied on the fact that we would
step in and they were right. So this, I think
is the tit for tat. To me, this is the
zero for zero. We forced other countries to pay their share,

(13:19):
and this is how we're getting back.

Speaker 1 (13:20):
On the other end, the earnings report, it's earning season.
Is supposed to be some earnings report coming out this week.
According to the Reuters headline, it's AI good, Artificial intelligence
good everything else. Yeah, not so much, Brian.

Speaker 2 (13:31):
So yeah, we had to have good runs. So the
markets up as we're sitting here about eight percent. As
we know, all that really matters. All we care about
is not what our earnings. It's whether the analysts were right.
So we always look at what the analyst said versus
what's happening. So through last Friday, one hundred and sixty
eight of our five hundred favored companies in the S
and B five hundred have reported eighty two percent of
them have beaten their profit in estimates. And we're about

(13:55):
four and a half percent over second quarter last year.
So that is all those are all good things were
on a good run. A lot of it, yes, is
being driven by AI, not only the companies that produce it,
but companies that are taking advantage of it and using
to using it to find new markets. Create new products
and make things more efficient.

Speaker 1 (14:13):
Well well, well, Brian James, question for you. Everybody talking
about AI AI AI AI. You know, data centers being built,
billions of dollars being spent, et cetera, et cetera. This
sounds to me like the potential for a future bubble burst.
Any comment on my thoughts along those lines.

Speaker 2 (14:28):
Absolutely, You know, I like to talk about catalysts all
the time, right. The catalyst in the in the late
nineties was the web itself, Yahoo and all those other
names that we've all since forgotten about. Then after that
it became real estate. After that it became the cloud.
Remember we talked talked about the cloud fifteen years now,
some we use every day. It was mobile devices and
all that. This is just the latest thing that The

(14:49):
best example I can give of that is COVID. Remember
when Covid was going to kill us all and was
going to end the world. Well, no, it turned into
a boon for companies like zoom In, companies like Dell
who had to create enough so that all Worth and
all the companies that were sending employees home could replicate
desktops in the home environment. Everything that happens good, bad,
and different winds up becoming a catalyst for someone to

(15:10):
make a profit, and AI is no different.

Speaker 1 (15:12):
The entrepreneurial spirits live and well. It's just working on
the landscape that's been working, playing the hand that's been
dealt and dealing with and coming up with new ways
to do it. That's innovation right there. Brian James, always
a pleasure to having you. I appreciate it all worth
loaning you out every Monday for this segment. I hope
you have a wonderful week, my friend. I will talk
to you in seven days A twenty five fifty five
K see the talk station. The rechar of Rabbi ri
June is gonna be talking about the Robling Bridge protests

(15:35):
which was in support of i' mom Amon Solomon, whom
ice detained and then we had sort of a situation
breakdown with people taking over the bridge resulting in police activity.
Rabbi John on that subject and maybe even get him
to comment on the situation unfolding between Israel and Gaza
right now. Stick around for the Rabbi. He'll be on

(15:55):
next fifty five car the talk station