Money Monday with Brian James

Episode Transcript

Speaker 1 (00:00):
Your summer pocket knife of information. It's the only way
to stay informed. It's fifty five darc the Talk Station
eight oh five.

Speaker 2 (00:11):
Here I think about karsd Talk station. It being Monday,
it's that time of week gets to talk money matters.
It's time for money Monday with Brian James from All
with Financial Brian James, Welcome back to the Morning Show.

Speaker 1 (00:21):
Hope you had a great weekend. Good morning mister Thomas.
Happy hot summer to you.

Speaker 2 (00:25):
Yeah, really, I thought we were done with that anyway.
It is August. I guess we'll have to roll with
it until the cooler temperatures come in. That's okay. Uh.
It takes a little while for these tariffs to kind
of settle in. You and I have talked a lot
about Trump's on again, off again tariffs. You know, one
minute there's a fifty percent tariff, next minute it's been
held off. Negotiations begin or not, as the case may be.
The point being, ultimately you hope to sit down with

(00:47):
a country negotiate something that's palatable to both sides, sometimes successful,
sometimes not. But higher tariffs everyone has been saying are
going to result in higher prices, which does make sense.
Apparently that's starting to trickle in in terms of the
numbers that are reported.

Speaker 1 (01:03):
Yep, we're starting to see some you know, we've talked
about this before. We're hitting the point where, you know,
when the day we start talking about tariffs and the
headlines is not the day they start having an impact
on inflation, right, and in that situation for several months,
and the way companies work, and we've talked about this
several times too. Remember there was a spike in economic
activity in Q one. It looked fantastic, which wasn't bad
where the economy is still doing okay as we're sitting

(01:24):
here right now. The spike in Q one had a
lot to do with countries just staying ahead. Our companies
rather staying ahead when these tariffs are going to kick in,
because everybody knew something was on the horizon, we just
didn't yet know what. Therefore, they were front loading their
inventories and things they had to buy just to stay
ahead of the pricing to buy themselves a little time. Well,
clock's taking and we're now those resources are somewhat depleted.

(01:45):
We kind of got to get back to where we were.
So course, CPI, let's switch to today's headlines. Core CPI
is projected to increase by about a three tenths of
a percent in July. That's the largest gain since early
twenty twenty five. I hate when we have headlines like
that that compared to some historic period that is not
that long ago, right, largest gain since six months ago. Wooh, yeah,

(02:06):
it's a point. But it's the trajectory, of course. So
yet we are seeing this because this is coming from
tariff induced price increases, household furnishings, recreational goods, those kinds
of things. Headline CPI of course, Now this is kind
of ironic, Brian headline. CPI may only rise by point
by by about point two percent, and that is helped
by lower gasoline prices. How long has it been since

(02:28):
we looked at gas and oil as something that's keeping
inflation in check?

Speaker 2 (02:31):
Oh? I know, but I mean you can't deny the
reality of it. Gas is a lot cheaper right now,
and we can talk.

Speaker 1 (02:37):
About it all summer, right, we skipped you and I
skipped over the entire vacation period. We didn't talk about
the price of the pump. I don't think I said
those words all summer long.

Speaker 2 (02:44):
No, and it's the first year, I think, and I
mean this is the heavy driving time. Of course it
has been since school let out. So the idea that
gasoline hasn't been up when it traditionally spikes, it's a
great omen are we are we should we anticipate lower
price gasoline into the future.

Speaker 1 (02:57):
Brian, You know that that's always tough to guess. My
crystal balls as broke as everybody else is. However, we
do seem to be in an environment where things are friendly,
Supplies are okay, We've we've got more friendly regulation towards
drilling in this country. Uh, And I think that's what's
what's keeping it down. There's a lot of people not
happy about that, and there's you know, there's downsides to
all this as well, but currently that's what pushes it

(03:19):
down the list of stuff we should be worried about
in terms about the overall economy. Now, I'm not overly
worried that we're gonna be talking about gas prices in
the near future.

Speaker 2 (03:26):
Well, I keep hearing about all these billions of dollars
that the US has taken in as a consequence of
these increased tariffs. Where's where's our slice of that?

Speaker 1 (03:35):
Action. Brian. You know, that's a great question, and I
really wish somebody could get past Carolyn Lovett with that
and just force the president to answer to say, where
are all these dollars going? Great, we're generating all this money,
you know, from these tariffs, where does it actually land?
Is it getting distributed? Uh, you know, to to the
you know, to the people who voted all this into place.
My guess is going to be no. Otherwise we'd be

(03:55):
talking about that because it would start to sell votes
for the midterms. So my guess is it's simply going
in to fill the holes that were that are being
created with some of the tax cuts on corporations. And
since we focused more on cutting taxes and really haven't
done much in the way of spending, dose seems to
have kind of gone away very very quietly, I might add.
I you know, when you read all this on paper,

(04:16):
when it became clear what the platform was going to be,
it sounded like there was going to be a body
that was going to cut costs, and then there was
going to be a body that was going to figure
out how to lower taxes in response. So at least
we keep things whatever balanced means anymore. But that does
not seem to have happened. I haven't whatever happened to
that wall of receipts from dose. I don't know. That's
a long winded answer to say, I don't know, but

(04:36):
I sure am curious just like you.

Speaker 2 (04:38):
No, I mean, it's a legit why I asked it
out a lot, it's a legitimate question. But I suppose
if you're looking at all the numbers, Let's say at
the end of the year, we've taken in X billions
of dollars. That's money that we got that we otherwise
wouldn't have received. So the numbers, at least in terms
of like deficit spending will be less, right, all things
being equal, just by virtue of the tariffs coming in.

Speaker 1 (05:00):
Yeah, and that that is again on paper. I want
to see this work mechanically, so let's talk about the
mechanics of it. So when we collect tariffs, they're collected
by the customs and border patrols, sent directly to the treasury.
They're not ear marked specifically for anything unless that's unless
that's legislatively done, which that's not something we do anymore apparently.
But usually it just goes into the kind of overall

(05:21):
general government spending, reducing the federal deficit, and sometimes there
are specific earmarks for subsidies like we mentioned, but that
is in the past, that's what we've done in the past.
Now we are very not exactly transparent about where it's going.
So we're collecting about fifty billion dollars annually, and the
average tariff as we're sitting here right now is about
seventeen percent on imported goods. That's the highest it's been

(05:44):
since about the nineteen thirties, Brian, So somebody is going
to have to explain where all these dollars are going,
since we're bringing in more than we have in a century. Yep,
no doubt.

Speaker 2 (05:54):
And one of the things I saw I noted in
the article in terms of price hikes, they say firms
are having a difficult time hiking prices in spite of
the fact that they're now facing these teriffs they have
to deal with because real disposable income growth has not
been very good for the household, so the tail in
people who are buying goods and services don't have any
more money to deal with a price increase, which is

(06:14):
causing firms and maybe hold off on increasing prices which
means their profits are lower, which means their quarterly earning
statements are going to be lower.

Speaker 1 (06:23):
Yeah. So the narrative that that happened during the during
the campaign and has continued is that other countries are
going to pay for this, other countries will pay Well,
that's not really the case. What we're doing is we're
increasing the cost of doing businesses for domestic company companies
who have to bring in these resources to create and
sell their products, they have to pass those through so

(06:44):
and eventually the consumer has pricing power. We live pretty
high on the hog in this country, so yes, when
we have to, that's a good thing. But when we
have to, we can and do tighten our belts. That's
what we're starting to see. We're starting to see the
end consumer saying you know what, I really don't need this.
I can find another solution for this problem. I don't
need to spend this much. And that means those costs
are not being passed through. They are being born, however,

(07:05):
by the companies that produce those products and services, not
the countries that sell us the resources.

Speaker 2 (07:09):
All right, and the whole hope I believe, but the
Trump administrations that over time that will re shore. A
lot of the things that we're buying from these higher
tariff countries, now you'll choose to build the products here
in the United States. But you know, there's still this long,
long standing reality that the reason these things got off
short in the first place, manufacturing, et cetera. If it's
going to a hell of a lot cheaper to do

(07:30):
it in those other countries. Question whether the tariff makes
that historic challenge, you know, to compete with United States,
which has all these ocean rules and these environmental rules,
and it has all these labor rules, and instead of
making the price of building something here more expensive, does
that balance that to create a better environment here to
the extent that it's going to negate the tariff So

(07:52):
far it.

Speaker 1 (07:53):
Would seem to on paper, yes, we are. We are
seeing headlines of companies that are bringing manufacturing back on sure.
So Apple has committed to six hundred billion dollars over
four years. Right then there's a huge plant going in
down in Harrisburg, Kentucky. That's gonna be that's a corning
plant that they make gorilla gleyes all the glass and iPhones.
So there are things happening. Taiwan Semiconductors is committing a

(08:14):
lot in the United States, Nvidia, Hyundai, Ford. There are
a lot of plans to get these factories up and running, however,
but like you mentioned, what does it cost to pay
a factory worker here in the United States versus somewhere else.
There are so many moving parts to this, Brian. You've
got countries that we've relied on for I don't know,
maybe a notch or two above slave labor because they
earn nothing but they work in the factories here. You

(08:35):
can't do that because we do want to maintain a
certain standard of living for our citizens. However, that makes
everything more expensive. So what I have not yet seen
is what falls out. What's the cost of an iPhone
is that is manufactured completely in the United States. How
much does it go up so that we can have
that stamp on it. I don't know what's good or
bad about it, but that's a question has been answered
yet for me.

Speaker 2 (08:56):
Maybe there's that component or element that, well, Americans be
more willing to pay a little bit more for something
made here. I know there's still some measure of patriotism
when it comes to choosing where goods and services are
created and.

Speaker 1 (09:06):
Manage absolutely, that still results in inflation somehow, some way.
So it does you know, political support purposes. But money
is money.

Speaker 2 (09:13):
Money is money. Let's come up on eight fifty fifty
five KRCD talk station. Do you want crypto in your
four oh one K and some new benefits companies are
offering those two more subjects'll get in the next segment
with Brian James. I'll be right back fifty five krc
dot Com eight nineteen fifty five kr CD talk station
doing that money Monday thing with all the financials Brian

(09:34):
James A. Brian, we've talked about this before. Private equity
as one of the things that they're opening up to
include in four to one K program investments along with
maybe cryptocurrencies in a state of FLUXI appear to be
I guess quick question up front, why can't we invest
our four oh one K dollars in these things? Or
haven't been able to deal with these things already? What's

(09:55):
what's wrong with them as an investment vehicle?

Speaker 1 (09:57):
Well, in the past, I would say the Department of
Labor has rules in place. By the way the Department
of Labor governs four oh one k's retirement plans, not
directly the SEC. The SEC plays a role, But you
can own a mutual fund inside your four oh one K,
that is that the DL has an opinion on. You
can own the exact same tick or symbol mutual fund
outside in just a plain old broker's account, and the

(10:19):
DL has nothing to do with it. So Department of
Labor historically has weighed in on retirement assets and basically
decided that the companies who provide them, your employers and
my employer has a fiduciary obligation to some extent to
make sure that people don't you know, effectively have enough
rope to hang themselves. And so that's why over the
years you've probably seen the reduction in options in your

(10:41):
four one K. I would see people early in my career.
They would bring in the list of choices they have
for all their mutual funds, and there'd be like fifty
of them on there. The result of that is people
would do nothing, and they would leave it sit in
the money market for ten fifteen years, and then we
would have to kind of explain exactly how much money
had been left on the table because they didn't sit
down and figure out how that works. Now and the
pendulum kind of swung the other direction. Then we saw

(11:03):
a lot of reduction to the choices you have and simplification.
That's when target date funds came in. You know you're
gonna retire in twenty fifty five. Here's here's a catch
all fund. Throw it all in there and be done
with it. And you saw now nowadays there are funds
out there or four to one k's that have very
few options. Pendulum is now swinging back the other way.
We're throwing the door open. So President Trump signed an
order on the on August seventh, just the other day

(11:24):
called Democratizing Access to Alternative Assets for four oh one K.
I tried to figure out the acronym for that. There
isn't one. I was looking for qt C I. I
was disappointed. But anyway, this order directs that the d L,
the SEC, and the Treasury to update their regulations to
enable alternative assets. And this is the kind of stuff
such as private equity, real estate, cryptocurrency, private debt, private equity,

(11:46):
private debt. By the way, what those are. Those are
direct arrangements between you, you, one human being, and some business.
There's no exchange, there's no stock market, bond market behind it.
It's just an exchange between you and you know, whoever
is the borrowing entity or taking your capital for their investment.
Technology these days allows that to happen en mass, which
means it can look to the sort of like a

(12:06):
mutual fund, but there are just a lot more or
a lot fewer guardrails, if you will. So the reason
they're doing this though, Brian, twelve trillion dollars is out
there in four to one case that currently is limited
to mostly stock and bond and mutual fund type investments.
Obviously there's a lot of people out there who want
to get their pause on those dollars to push capital endeavors.

Speaker 2 (12:25):
Okay, which you know crypto you know, it's like peace
of God to me, Brian James. There's so many different
crypto forms out there, I can't keep track of even
the names. They seem to come out almost on a
daily basis. Of course, Bitcoin's the most widely known among them.
And man, the price of bitcoin has gone through the roof,
But I mean, are are they really more valuable than
anything but ether?

Speaker 1 (12:45):
Brian? You know I have said this before on these airwaves,
and I'll say it again and I'll say it to
my clients. Crypto has a role. It plays a role
somehow in our financial world, but to me, not yet.
It's just a medium of speculation, that's all it is,
not being We don't even call it currency anymore. We
just call crypto. Used to be cryptocurrency. Now it's just crypto.

(13:07):
A currency is something that gets exchanged for other things.
This is just something we own and we hope the
price goes up. That's not how it was touted to
begin with. I believe eventually it will take its role
there somewhere, because there are a lot of efficiencies and
things to be gained by doing business on the blockchain, frankly,
but whether it's bitcoin or dogecoin or trump coin or
all of that, that's the speculative side of things. So

(13:28):
I'm a little concerned. I'm not a little I'm significantly
concerned about people again having way too much access to this.
So think about it this way. If I'm somebody who
has never invested, and now I can in my four
to one K, but I never had the opportunity, so
I didn't bother to learn. If I just go check
a box that, yeah, I want twenty five percent or
fifty or worse in my four to one k and
whatever the new crypto fund is, then I'm going to

(13:48):
about to learn a hard lesson about life.

Speaker 2 (13:50):
Well, and it sounds to me like a bubble that's
ripe to burst. Brian, Yeah, it's tough to say.

Speaker 1 (13:55):
That's not the only thing to hold me back on
that is that the demand is obviously still there, I drew.
It's a little different from the other you know, manias
that we've had in the past, because there does seem
to be some utility to it at some point. However,
we are not yet using it that way, and really
our leaders aren't talking about it that way.

Speaker 2 (14:12):
Yeah, you can't go to Kroger and pay your bill
with crypto, right.

Speaker 1 (14:15):
They don't want it either, because they don't want their
unserceivable to bounce, you know.

Speaker 2 (14:19):
And the widely fluctuating value of any cryptocurrency in terms
of its market value, like thirty thousand dollars per coin
on bitcoin, and that could change tomorrow, it could be
worth fifteen thousand. How do you judge the value of
any given transaction with an ever fluctuating, widely fluctuating market.

Speaker 1 (14:34):
It's all again, all any investment is is the product
of an auction. That's all the stock market is. What
does everybody think it's worth right now? Today? Your house
isn't an auction. Somebody will pay something for it. What
is the something? Cryptocurrency changes twenty four hours, seven days
a week. The other thing i'll throw out here for
those of you who might be excited thinking about this,
remember if you're dipping your toe in the water, dip
your small toe, because even if this goes the wrong

(14:56):
way on you, you will not get to deduct the
loss because it's tax sheltered all ready inside your four
oh one ky ooh.

Speaker 2 (15:02):
Valuable point from Brian James real quick here we won't
have time to dive on really deeply. But is the
market that competitive for employers out there hiring people that
they have to offer all these different extra options beyond
just four one K match and some some medical insurance apparently.

Speaker 1 (15:16):
So we've got some companies out there offering some pretty
pretty crazy things out there. So there's there's the typical, right.
So Amazon will cover ninety five percent of tuition for
in demand career training, Starbucks does similar, Walmart target They're
they're all helping people get higher educations that's not too crazy.
That's been out there for a while, but we're now
starting to see things such as surrogacy, adoption and fertility

(15:37):
support out there. This isn't a bad thing, it's just
it's an interesting a step that we're taking. Morgan Stanley
into a Deloitte or some of the names on that list.
Here's a crazy one. Some of the fintech providers out there,
these these are the these are the sort of West
Coast kind of out there technology companies mortgage as a benefit,
so on buying education, interest rate discounts. So in other words,
what they're doing is what is scaring the pants off

(15:58):
of people, and then let's try to offer that as
some kind some kind of a benefit to work here.
And of course this is happening in well, California, because
that's where people are most scared of them.

Speaker 2 (16:08):
Yeah, no doubt. Who can afford a home in California.
And of course something Joe Strecker gets paid vacations with
a stipend company, retreats music festivals there, you go add
it to the list. Well, if competition's out there, and
you're gonna have to step up to the plate to
compete in the market, that's what they're doing. Brian James
Allworth Financial, appreciate your company for loaning you out every

(16:29):
Monday for a few segments, and as like today, look
forward another edition of the segment next Monday. I hope
you have a wonderful week, my friend, you too. Go
Reds game and a half out, Go Reds eight twenty six,
and go cincinnti Va. We're gonna hear from the actually
every Federal Credit Union golf outing. We're gonna hear the
details from Todd Kine on that next, followed by the Cincinntiva,
the return of Todd Sledge. We'll get a recap of

(16:51):
the Voa Country Music Festival, and then the August twenty
third Veteran Appreciation Day coming up. We've heard a little
bit about that. We'll get a little bit more in
the eight to forty segment. I hope you can stick
around for that.

Speaker 1 (17:01):
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