December 1, 2025 • 38 mins
Chuck Zodda and Mike Armstrong discuss American consumers losing patience with high car prices. Private credit 'hysteria' will get very real next year. People are ordering smaller pizzas with fewer toppings. Does this mean anything? Americans brace for a surge in healthcare costs. Do we need to Uberize the power grid for AI?
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Episode Transcript
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Speaker 1 (00:00):
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(00:20):
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(00:42):
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(01:05):
Zada and Mike Armstrong.
Speaker 2 (01:10):
Chuck Mike Tucker with you here.
Speaker 3 (01:12):
And we've got markets with a very modest sell off
to start the month of December, still trying to get
all that trip to Fan out of their system. But
the sm P five hundred down twenty three points about
a third percent, Dow Jones Industrial Average down two hundred
points about point four two percent, and the nasdak can
(01:32):
Pause down ninety seven points about point four percent, So
again very modest decline to start the month of December.
Here tenure US Treasury up seven point one basis points
to four point h nine percent. That's going to be
putting some pressure on mortgage rates, probably gettinghim back towards
that six point three percent range.
Speaker 2 (01:51):
By the end of the day.
Speaker 3 (01:53):
We've got the US Dollar index down a quarter percent
to ninety nine point one point five. Gold is up
seven to ninety ounce to forty two sixty eighty cents,
and we've got crude oil up a dollar at fifty
nine to fifty five on West Texas Intermediate. Despite that,
I think tomorrow is going to be the day, Michael.
It is Tomorrow's gonna be the day which one triple
(02:16):
a national amatur gas price is at three dollars and
one tenths of a cent right now. I think tomorrow
we might get below that three dollars mark on the
triple A national average. Remains to be seen if we
you know, stay there. You know, oil prices moved back
up here, but at least for tomorrow, I think we're
gonna get there.
Speaker 2 (02:37):
So that's kind of exciting to me. Yeah, I enjoy that.
I like seeing that.
Speaker 3 (02:41):
I'm sure the folks that are listening to us down
in Texas are like, hey, this isn't the best for us,
and I understand that, but as someone who is not
employed in the petroleum industry.
Speaker 2 (02:53):
I'll take it all on board. Let's see.
Speaker 3 (02:55):
And for some reason, I don't know why bitcoin down
seven and a half percent today.
Speaker 2 (03:03):
On did it miss earnings?
Speaker 4 (03:06):
Can we talk about that for a moment, because we've
talked about the correlation between stocks and.
Speaker 2 (03:13):
Bitcoin, and it.
Speaker 4 (03:15):
Has been elevated recently, definitely increased, you know, over the
last few years compared to in the twenty tens, so
that is actually something you can measure. The day to
day price movements on bitcoin more correlated to stock prices
today than it was, say in twenty fifteen, which makes
sense given the growth of the asset class, the fact
that you can invest in it, you know, generally speaking
(03:35):
in a brokerage account today versus in yours past. I'm
just wondering, like, correct me if I'm wrong, but it
seems to me it would be very difficult to see
stocks rise to any significance on a day when bitcoin
is selling off by seven percent.
Speaker 2 (03:53):
It seems tough these days.
Speaker 3 (03:54):
The other thing that is kind of wild is remember
and again I don't have a dog in this fight.
I just am observing Bitcoin's supposed to be this idea
of you know, digital gold. Gold's been freaking ripping the
second half of the year.
Speaker 2 (04:12):
Bitcoin not so much.
Speaker 3 (04:14):
And that's interesting to me just in terms of like
what it might be saying about why people might actually
own it and how they may trade it differently from gold,
silver and other precious metals. I just think it's interesting
to look at. And that's all I have to say
about that. I want to talk about this piece from
the Wall Street Journal American consumers lose patience with high
(04:35):
car prices. I gotta tell you, here's the thing. So
I leased a car back in twenty twenty three. Okay,
a nice lovely Suparoo out back. Yes, boring, dependable, puts
me at least twenty years older than I am when
(04:56):
driving down the street, you know. And again I don't
know that I got like a deal or didn't like
it was.
Speaker 2 (05:03):
It was fine.
Speaker 3 (05:05):
They just super just as an example, unveiled a new
outback this year, and they just put out pricing for
the twenty twenty six models, and the price is all
jumped by anywhere from like five to fifteen percent relative
to last years. And I gotta tell you, like, I
have some sticker shock when I start seeing Supero Outbacks
(05:26):
that are priced north of you know, forty five thousand dollars,
because that is not a premium vehicle. And to me, again,
like we're all anchored to, you know, certain numbers in
our minds based on, you know, what we saw at
a certain age in this and that. But when I
start seeing like super outbacks getting priced close to fifty grand,
(05:48):
I look at it and I'm kind of like, yikes,
like that that's kind of nuts.
Speaker 4 (05:53):
If we buy the premise that American consumers are in
fact losing patients with high power prices.
Speaker 2 (05:58):
Which I don't also yeah, I'm not sure sure I
do which, But but if we did which, which.
Speaker 4 (06:04):
Brands do you think are in the worst positioning for
a shift in consumer car spending? Ford comes to mind,
just because they've completely abandoned the Sedanima.
Speaker 2 (06:14):
I don't think so.
Speaker 3 (06:15):
No, the F one fifty buyer is the F one
fifty buyer. Yeah, you know, if you're buying that, you're
buying that. Like, there is no alternative for the F
one fifty buyer.
Speaker 2 (06:26):
I think. Okay, So if you look.
Speaker 4 (06:28):
At I'm not worried about luxury brands because that's a
different segment and that's not what we're talking about here.
So Audi, Mercedes, Cadillac, all of those. To me, you're
not looking at those going to be fine. I'm worried
about the Nissans, Volkswagon's Toyotas, Honda's GM Chevy. Like, which
one of those are worst positioned for a change in
(06:54):
consumer behavior? One thing, one area that's towards like cheaper vehicles,
I mean, one area that seems to be benefiting. Yeah,
is just cleaning up. I feel like, you know, they
are like every fourth car that I see.
Speaker 3 (07:05):
I think them and Honda are very well positioned I
guess I'm going to kind of back into this, yeah,
somehow pun intended.
Speaker 2 (07:13):
I think Kia and Honda are both very well positioned.
Speaker 3 (07:16):
Like every time I always like to just look around
at cars every month, just because I never like to
actually buy them. But every time I look at, you know, hey,
the pricing on like a CRV or something like that,
I'm like, wow, like this is, you know, a pretty
good deal given what else is out there. I do
think that Nissan is kind of screwed, but I think
they were kind of screwed before this anyways, Like that's
(07:37):
just kind of the nature of Nissan right now. I
think Toyota is well positioned in that they're building the
vehicles that people want, and based on everything I hear
and see from like Toyota dealers, even though their pricing
is a little bit higher than what you get on Honda,
they're so in demand that they have like no back
(07:57):
like they have this huge backlog basically.
Speaker 4 (08:00):
Certainly, what I experienced is, you know, I probably called
thirty dealerships, none of which had the vehicle in stock
that I was looking for. But there it is a
premium price point that people are willing seemingly willing to
pay based on the reputation for reliability, plus the hybrid engines.
Speaker 3 (08:16):
I'm trying to like go through just who else is
out there? Let me, I'm just sorting through. Okay, so
we've gone through fordh Bwick. I don't really know what
they even make anymore. Yeah, I got to be honest.
I just don't understands for nothing, Cadillacs, a premium one Chevy.
I haven't looked at like pricing for what Chevy has
out there these days on like you know, Blazer, Trailblazer,
(08:38):
stuff like that.
Speaker 4 (08:39):
So I just I don't know. So let let's go back.
Why don't I agree with you? I don't buy that
American consumers are losing patients with high car prices.
Speaker 2 (08:47):
I think they like to bemoan it.
Speaker 4 (08:50):
But the sales members are fine, sales numbers are fine,
and all they're doing is extending out their credit even longer,
which is a terrible idea, but being done without much
of a blink.
Speaker 3 (09:02):
So here's what I will say about I've talked a
lot about how Americans buy cars badly, like they make
bad buying decisions, and I saw an example of this
over the weekend on social media where someone had bought
like one hundred and ten thousand dollars pickup and financed
(09:24):
it for seven years at ten percent financing, so they
ended up it was gonna cost him one hundred and
fifty grand to buy this one hundred and ten thousand
dollars pickup. And here's what I do have to say.
If you always want a new car and want to
get the best bang for your buck, you should not
be buying that car with a seven year.
Speaker 1 (09:45):
Loan.
Speaker 3 (09:47):
If you can't figure out how to make the numbers
work on a three or four year car loan, you
should be leasing. In a lot of cases, you will
end up with cheaper payments. You will end up being
able to get the new vehicle you want every few
years without having to worry about am I underwater on
this or am I not? Because quite honestly, if you're
(10:07):
buying a vehicle with a seven year loan just so
that you can say, look at the end of that
seven years, oh I paid it off, that's not really
good business based on the depreciation of the vehicle and
the interest rates that you need to pay right now.
Speaker 4 (10:20):
If you drive it for another seven years afterwards, sure
I can get on board with that, but you need to.
Speaker 3 (10:26):
But you right, you basically need to, and there aren't
Like the person who's buying the one hundred and ten
thousand dollars pickup truck is probably not buying it for
fourteen years.
Speaker 2 (10:36):
Yeah likely.
Speaker 3 (10:37):
So again I think we have to just do a
better job of figuring out, you know, like this, there's
this fascination with car ownership overleasing. And again I'm not
like leasse least the car I have right now is
the only car I've ever leased. But I did it
specifically because I said, look, I want this car for
a few years to see how it works for me.
(11:00):
You don't want to be locked in long term on it,
and I don't want to be paying longer term, you know,
higher interest rates because remember when you take out a
longer term car loan, the interest rate oftentimes is higher
as well. And so I think people need to be
amenable to hey, like, do I actually want to own
this car for a long time, Because if I'm just
(11:21):
one of those people who might trade it every three
to four years, you're probably better off being in a
leasing cycle than trying to buy a car with a
seven year loan and then having to roll the extra
loan over into your next vehicle.
Speaker 2 (11:34):
Let's take a quick break.
Speaker 3 (11:35):
When we come back, we'll do a little bit of
trivia and then we'll talk about private credit hysteria after this.
Speaker 1 (11:44):
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In nineteen ninety eight, x On announced a seventy three
(13:06):
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the world's largest company at the time. Exon Mobil is
currently the eighth largest company buy revenue. So our trivia
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(13:28):
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Speaker 2 (13:45):
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See complete contest rules at Financial Exchange show dot Com
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Speaker 3 (14:00):
Opinion by Paul Davies, who was a reporter from The
Wall Street Journal and Financial Times quote, private credit hysteria
will get very real next year. We've been talking about
private credit for the last few months. We were talking
about it even a couple months before that.
Speaker 4 (14:17):
Our perspective was probably a little bit different than Paul's.
It was more that there seems to be some smoke
right now, and we need some time to determine if
there's fire. But what I would say about private credit
right now is it seems to me that it needs
to be darn near perfect for the next six months
(14:40):
in order to dispel the rumors of its fiasco. You've
had a few bankruptcies and frauds that have been very public.
And the reason I think it needs to be perfect
is because there seems to be a big cooling off
period by most of the big investors. And so I'm
just wondering who's going to allocate new CA capital to
(15:00):
private credit right now, Like, unless the rates move up substantially,
I don't see why you as an insurance company or
an endowment or a pension fund, or as a registered
investment advisor who have been you know, getting pushed more
of this stuff would be willing to allocate large degrees
(15:21):
of new capital to this asset class that is opaque
and showing warning signs.
Speaker 3 (15:28):
So part of it might be, Hey, you've been doing
it and you just feel like you need to continue
because you have a return that you need to try
to hit. The part that's challenging about this is because
these are you know, private instruments, it's tough to get
data on what we're seeing in terms of flows into them, right.
We just don't We don't even know how much money
(15:49):
is held within that private credit sphere, let alone, Hey
how much is you know, flowing in on a monthly
or weekly basis? So what I can tell you if
that mechanism slows.
Speaker 4 (16:02):
If the mechanism of credit issue, if you do not
have as much funding going into private credit, that in
and of itself, depending on the scale of that slowdown,
has the potential to be something that causes a credit
issue in the next twelve to twenty four months. Let's
(16:23):
let's wind the clock back, Tucker, can you get the
time machine fired up?
Speaker 3 (16:26):
Then? Yes, we just got to get some plutonium for
the reactor.
Speaker 2 (16:30):
Here and we're gonna go back to.
Speaker 3 (16:34):
Oh yeah, it's two thousand and six right now. Wow,
And Steve Jobs hasn't announced the iPhone yet, and we're
all hanging out at you know, a nice summer barbecue,
just you know, chilling.
Speaker 2 (16:48):
But under the.
Speaker 3 (16:49):
Surface, you're starting to see some problems bubbling up in
subprime credit. It's not a real issue yet, like there
hasn't been haven't been any major defaults or anything yet.
But about a year from now, now, in two thousand
and seven, there will be some problems that really come
to the surface and people start to wonder about. And
the problem that happened in the housing market then was, hey,
(17:11):
you had defaults that started to pile up in the
subprime sector, which then meant that investors weren't sure what
the subprime debt they were holding was worth. In turn,
they said, we're not going to allocate as much money
towards this kind of lending, which then made it harder
for people to buy homes, which caused valuations to fall more,
(17:33):
which during a time when a lot of people are
trying to sell because of adjustable rate mortgages adjusting up
meant that they couldn't sell had to take big haircuts
led to bigger credit losses, and we know the story,
but that funding drying up was a key part of
the cycle, and that, hey, the housing bubble doesn't burst
if lending continued at the same rate, because you could
(17:55):
have kept the plate spinning and everything would have been
not okay.
Speaker 2 (17:59):
But ok ish.
Speaker 3 (18:02):
In this case, it's not necessarily the bursting of a
housing bubble that you see, but that mid market business
that depends on a seven hundred million dollar loan from
private credit fund XYZ by Company ABC, if that funding
cannot continue, it becomes problematic because a lot of this
(18:23):
is used for inventory and things along those lines, and
so if you can't buy inventory, then you can't eventually
sell that inventory. You start laying people off, and the
whole thing comes apart. That's the concern that you have,
and why, even though there haven't been a ton of
defaults to this point, if investors get nervous enough about
(18:43):
them that they stop flows into this area, that could
trigger problems that show up in the next year or two.
Speaker 2 (18:49):
In the economy. And guess what.
Speaker 4 (18:50):
This whole economy right now is being built upon the
idea that there's going to be a tremendous amount of
development of AI infrastructure, none of which can happen without debt. No,
none of which can happen without massive amounts of debt
issuance and investors willing to scoop that up.
Speaker 2 (19:07):
So it's kind of, in a roundabout way, the whole
ball game right now.
Speaker 3 (19:11):
Taking a look at markets as we head towards the
bottom of the hour, The Down now off about half
a percent two hundred and thirty three points, SMP down
about a third of a percent twenty five points, and
the NASDAC off about one hundred and ten points a
little less than half a percent, so still in the
red for our major indices. Quick Break, Trivia Answer and
Wall Street Watch are next.
Speaker 1 (19:39):
Bringing the latest financial news straight to your radio. Every day.
It's the Financial Exchange on the Financial Exchange Radio Network.
Time now for Wall Street Watch, a complete look at
what's moving markets so far today right here on the
Financial Exchange Radio Network.
Speaker 5 (19:58):
Traders are back from the Thanksgiving allay and turning the
calendar to December, where markets are currently seeing a modest selloff.
Right now, the Dow is down by about a half
a percent, or two hundred and twenty one points. SMP
five hundred is down about a third of a percent,
Nasdak down by four tenths of one percent, Russell two
thousand is down just over eight tenths of one percent.
(20:20):
Tenure treas reeled up seven basis points at four point
zero nine to two percent, and crude oil up over
one percent higher, trading right above fifty nine dollars. A
barrel some in video related news to begin with, where
in Video invested two billion dollars in Synopsis Common stock
is part of a broad strategic partnership. Shares in the
(20:40):
provider of software four chip designers are climbing three percent higher,
while in Vidia stock is rising about one percent. Meanwhile,
several crypto based stocks, including coinbase, are seeing losses after
Bitcoin tubled further to eighty four thousand dollars now. Coinbase
shares a down over five percent on the day. Elsewhere,
(21:00):
Eli Lilly announced it is lowering the cash prices of
its single dose vials of its Blockbuster weight loss drug
zep Bound on its direct to consumer platform. ELI stock
is down about one percent. Barrick Mining stock is up
nearly three percent following reports that the company is exploring
spinning off its North American gold Assets into a listed business,
(21:21):
and wind Resorts is climbing three percent after Goldman Sachs
included Win on its conviction by Lists, saying the company
is a best in class Las Vegas business, while improvement
in China's Macau region can drive transformative upside. I'm Tucker
Silva and that is Wall Street watching. In the previous segment,
we asked you the trivia question. According to Fortune five hundred,
(21:43):
what is the largest company buy revenue? That would be Walmart.
Robert in Saugus masses our winner today taking home my
Financial ex Change Show t shirt and we play trivia
every day here in the Financial Exchange CEE Complete concest
rules At Financial eks Change Show.
Speaker 3 (22:01):
People are ordering smaller pizzas and fewer toppings. What does
that tell us?
Speaker 2 (22:09):
Probably nothing, I would.
Speaker 3 (22:11):
Say probably nothing. I will say pizza price have gone up,
like it's it's been noticeable now, but the price of
everything has gone up and it's been noticeable now.
Speaker 4 (22:24):
Yeah again, you know it. Probably It probably does indicate
the same thing that we are seeing indications of elsewhere,
which is around half of Americans are struggling financially and
are finding ways to cut back and we're seeing it
here with pizza spending. But again, does it indicate anything
(22:46):
about where the larger economy is going to go or
consumer spending is going to go. I I really have
some doubts about that, and I think that largely you
probably discount any of it. I will say, you know,
of food deals. I went to Chili's for the first
time in quite a long time to get some baby
(23:07):
back ribs.
Speaker 2 (23:08):
We had a group of.
Speaker 4 (23:08):
Fourteen people, so we were all brainstort, like, where can
we go with fourteen people including sorry, it was more
than that. There was twenty people, including ten kids. Unke
short notice on short note, no reservation. Yeah, okay, let's
check out Chili's. And wow was it reasonable?
Speaker 2 (23:24):
Yeah.
Speaker 4 (23:25):
The biggest complaint they did away with the awesome blossom
in like two thousand and six, and everyone on the
like a bunch of people. I got to her like, yeah,
I'm pumped about having the awesome blossom. And they asked
the waitress for it, and she had no idea what
we were talking about.
Speaker 2 (23:38):
But because there was the blooming onion.
Speaker 4 (23:41):
Yes, yeah, yeah, yeah, So I was pretty impressed by
my stopping.
Speaker 3 (23:46):
I wonder why they did away with it because like
the way I look at it, I mean, onions are
pardon the pond dirt cheap. Yeah, and it would seem
to be something with pretty high margins and that look,
if you're selling the thing for you know, ten eleven
bucks is anap that onion probably costs you somewhere in
the ballpark of you know, if you're buying in bulk
the way Chilis does, like ten cents to buy, throw
(24:10):
it in a little batter and call it a day.
I mean, it's kind of like the Caesar salad of apps.
Speaker 4 (24:15):
Yeah, folks, want to talk to you about the brand
new guide for the month of December from the Armstrong
Advisory Group. Again, this is just out today. It's our
December guide all about retirement planning for spouses. Now, this
is a new one from us and it covers a
number of different things. But yeah, most of us head
into retirement as a married couple, and depending on your situation,
(24:38):
it can really vary how you do your planning. One
thing that's really important to keep in mind if you
are a married couple sixty five years old, non smokers,
there is about a fifty to fifty chance that you're
gonna make it to age ninety. That is a lot
of planning to be done. That is nearly as much
(24:58):
of an retirement as was your working career in many cases,
and so all sorts of planning considerations to be done here.
They get even more complicated if there's an age gap
of five years or more between the two of you.
All sorts of things like where am I going to
get my health insurance from? What is it going to
cost me? Especially if there are not the enhanced subsidies
(25:19):
on Obamacare. I've seen this all the time, where one
spouse reaches sixty five, they go on Medicare, they retire,
and the other one's still working. And you know, there's
some irritation there. One spouse is able to retire, the
other is not because of medical reasons. But you know,
what do you do with social security and pension planning?
When should you be filing for Social Security? Depending on
(25:42):
that age gap? And who has the larger benefit? If
I have a pension, how do I select my survivor benefit?
Am I better off taking the lump sum rather than
the pension itself? How will my Medicare premiums be determined?
How much income am I allowed to have. We cover
all of this and a heck of a lot more
in our new guide.
Speaker 2 (26:01):
Again.
Speaker 4 (26:02):
It's the free guide from the Armstrong Advisory Group called
Retirement Planning for Spouses. You can get it by calling
eight hundred three nine three for zero zero one. It's
really useful reading. If you guys are within a decade
of that retirement date. You can check it out at
Armstrong Advisory dot com. Request your copy there it's free,
or you can call us at eight hundred three nine
(26:24):
three for zero zero one.
Speaker 1 (26:26):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 3 (26:42):
Piece here from us The Financial Times, Yeah, it's the
Financial Times, a full bown crisis. Americans brace for a
surge in healthcare cost. So basically, we've got twenty two
million Americans that are enrolled in insurance under the Affordable
Care that are going to see the subsidies for those
(27:03):
plans gone next year. Basically unless there's some action very
very quickly.
Speaker 4 (27:08):
That twenty two million number that was the number that
will be impacted by this or is that the total
number of people on.
Speaker 3 (27:14):
That was the number that I that said this was
related to tax credits for the plans.
Speaker 4 (27:18):
I think there's I was actually surprised by the data
that I saw showed forty five million total Americans on
the Affordable Care Act that it probably includes families, so children,
and then yeah, about half of them receive seeing subsidies
that may be disappearing this.
Speaker 2 (27:35):
Yeah.
Speaker 4 (27:35):
They give the example of a sixty four year old
PR consultant who's currently paying four hundred dollars a month
their plan would jump to nearly two thousand dollars a
month should he renew that existing plan and see those
credits disappear. Hence why this is going to be a
hotly debated item in the How many days of Congress
(27:55):
actually do work this month, like six, I don't know,
but basically many.
Speaker 3 (28:00):
Basically there's the deadline to select a plan is December fifteenth,
which quite honestly means that you can't fix this by then, right.
Speaker 4 (28:08):
You're not going to know how much you are going well,
you're going to have a worst case scenario of what
you would pay for your health insurance. Yeah by December fifteenth,
and you might get some help if Congress passes something
on this, But there are you know, the original subsidies
were designed to allow anyone with income of four hundred
percent the poverty level to get the subsidies. That was
(28:29):
dramatically expanded during COVID, and that has since lapsed. So
that is the question is do they do something additional here?
And again that number right, forty five, that's more than
ten percent of Americans on Affordable Care Act health insurance
of some sort.
Speaker 2 (28:45):
Add that on.
Speaker 4 (28:45):
There's another sixty seven million Americans on Medicare. I don't
know how many are on Medicaid and what the overlap
is there, but that is a I guess it's a
larger portion that I than I realized of Americans who
are not getting their health insurance from their employer. Right like,
between those between those three Medicare, Medicaid and Affordable Care Act,
(29:06):
that's approaching you know, a third to a half of
all Americans who do not get their health insurance from
their employers. And this is I guess, I guess my
point would be it's a bigger issue for more Americans
than I realized. I don't I don't have it. I
don't have a good fix. There's no fix for any
(29:29):
of this. Yeah, it's just the only question is are
we as taxpayers willing to subsidize the cost of this
insurance more?
Speaker 2 (29:38):
There's there's no fix for any of this.
Speaker 4 (29:41):
Health Care in America is very expensive unless you want
to significantly worsen the quality of care.
Speaker 2 (29:47):
There's there's no good fix.
Speaker 3 (29:49):
No, there there And look, you can't fix this for
twenty twenty six right now, Like, I'll be honest, there
is no way to fix this, which like the cost
of overall care or No, there's no way to fix
these subsidies now. People have already made their.
Speaker 2 (30:08):
Purchasing decisions on these. Yeah.
Speaker 3 (30:10):
Like let's say that you're looking at this plan and
you say, okay, it's it's nineteen hundred and sixty.
Speaker 2 (30:16):
Five dollars a month. I can't afford that.
Speaker 3 (30:20):
If Congress passes something this week, you can maybe figure
it out before that twelve fifteen deadline. Mike, is Congress
is gonna pass anything this week? Now, I'm gonna go
with a hard no.
Speaker 2 (30:36):
No, they're not.
Speaker 3 (30:37):
And so you like someone's not going to make a
decision being like, well, maybe I'll be reimbursed for this later.
You don't make that decision with like a fifteen hundred
dollars a month gap that you're trying to fill. You
might make that if there's like a twenty dollars a
month gap that you're trying to fill, But the purchasing
decisions are already made, And so what you're going to
end up with on this is, Hey, you're either going
(31:01):
to have a bunch of people who go without insurance
next year and everything that that entails, or you're going
to have a bunch of people who spend the extra
money on the insurance and then do not have that
money to spend on a monthly basis elsewhere in the economy.
(31:21):
Neither of those is really great. Now, I'm not saying like, hey,
you should blanket, you know, extend this and do this
and that. All I'm saying is this is where you
are heading. And it's because we haven't done anything to
fix this while we've known it's been coming for an
extended period of time.
Speaker 2 (31:38):
Right, So.
Speaker 3 (31:40):
Ultimately we need to get to a point where we
actually take a look and you know, decide what we
can do to try to fix the US healthcare system,
because I think we can all.
Speaker 2 (31:51):
Agree that, like what we're doing right now really sucks.
Like it's does anyone have an option model?
Speaker 4 (32:00):
Though, Like you look around the world, and I don't
know that there is a perfect model for health care delivery.
Speaker 3 (32:07):
So it's not about having a perfect model for like
you're never going to have something that's perfect. But I
mean again, like let's even just look at like the
basic way that you sign up for health care, which
you mentioned, Mike, there is no reason why health insurance
should be tied to your employment. The only reason it is,
by the way, for anyone listening who wants to know,
(32:30):
is because in World War Two, the federal government said, hey,
we're gonna cap wages at a certain level in order to,
you know, try to manage inflation that was raging at
the time. And in response, companies said, okay, you're capping
our wages. Great, We're gonna start offering health insurance as
a perk because we can't pay you more, but we
can cover your health insurance. And basically, US health insurance
(32:53):
has been attached to your job ever since. There's no
reason why your ability to be in sure should be
tied to your employment. Like sure, it could be a
perk that your employer offers if it's better than you know,
whatever else is out there. But there's no reason why
(33:14):
this should be what we like do as default. It's
just what it's been since World War Two because of
you know, kind of what became normalized then. But just
because something's normalized economically doesn't mean yes, like let's let's
continue doing this. And so when people don't have any
incentive to shop around on their insurance, obviously insurance, then
(33:36):
don't really have a ton of incentive to shop around
on things like networks and drug coverage and this and that,
and so you don't have real competition. That happens because
people don't view it as their responsibility to shop around
for insurance. And the best pricing companies try to, but
they try to do it in terms of, hey, how
do I minimize the cost while providing this benefit, not
(33:57):
what's best for my employe. Well, ye's necessarily as far
as the best benefit package.
Speaker 4 (34:03):
Last item of note on this healthcare thing, and then
I know we need to take a break. The Affordable
Care Act is very likely going to be left with
a bunch of very sick people. It already kind of was,
but which is going to be maror pricing even worse.
If you're healthy and your premium surge four hundred percent,
you're just going to go without insurance, and if you're sick,
you're going to pay whatever you need to for the
(34:23):
health insurance, which is going to then, like you said,
make the cost of insurance worse next year.
Speaker 2 (34:27):
Which is why.
Speaker 3 (34:28):
The way insurance works is that in any risk pool,
the people that are not actively experiencing the problem cover
the cost of those who do. I pay my homeowners
insurance each year. It's several thousand dollars. Not because I
get a plaque or something like that that I put
on my wall, but because I know that if something
ever happens to my house where I need that coverage,
(34:52):
everyone else who's not experiencing what I'm experiencing is able to,
like those premiums, pitch in to cover that cost. It's
just how it works. Quick break here when we come
back at stack Roulette.
Speaker 1 (35:03):
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Speaker 5 (35:41):
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Speaker 2 (36:11):
Mike, what do you got for me?
Speaker 4 (36:12):
For stack Roulette opinion piece from Bloomberg. We need to
uberize the power grid for AI.
Speaker 2 (36:20):
What does that mean.
Speaker 4 (36:21):
I don't think it's going to get you the job done,
but I think it has to do with two things.
Speaker 2 (36:25):
One would be surge pricing.
Speaker 4 (36:27):
Two would be better technology in homes to control peak demand.
And they point out one example here where the Mid
Continent Independent Operator System running the second largest US grid.
They report that the total demand has only increased by
one point eight percent over the last eleven years, but
(36:47):
that peak demand did rise by six percent. So that's
what matters for the grid is they have to deal
with the peak demand, not the overall demand. They need to,
you know, because of the way the power generation works,
they have to focus on that peak demand number. And
so if you can employ better technology and homes, offices
and data centers hypothetically to spread out peak demand, rely
(37:10):
more on other technologies than their argument is, you don't
need to invest quite as much in the power grid.
Speaker 2 (37:16):
I'm not sure. My answer is that you should build more. Yeah.
I think build more.
Speaker 3 (37:21):
Generation, build more transmission, and then we don't have to
deal with rationing electricity.
Speaker 4 (37:26):
Yeah, because that's effectively what you're talking about here, yes,
is rationing electricity. And you know, I've, by the way,
tested out the idea of that smart thermostat that when
peak demand is hitting, you know, heats up my home
automatically in extra five degrees. And my answer is that
solution kind of sucks, and you'd have to pay me
a heck of a lot more for me to be
willing to do it again.
Speaker 2 (37:46):
Don't like it.
Speaker 3 (37:47):
Just let's make it easier to build more capacity, and
I think we can get there. Taking a look at
markets right now, trying to rally off the lows of
the day, Dow off two hundred eight points, s ANDP
down sixteen, AASDA down forty nine, so we got a
little bit of a rally happening on the tech side
to try to drive things back into the green. We'll
just have to see if we get there. We're done
(38:08):
for the day. Back at it tomorrow as we continue
through the first week of December,
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
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(00:20):
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(00:42):
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(01:05):
Zada and Mike Armstrong.
Speaker 2 (01:10):
Chuck Mike Tucker with you here.
Speaker 3 (01:12):
And we've got markets with a very modest sell off
to start the month of December, still trying to get
all that trip to Fan out of their system. But
the sm P five hundred down twenty three points about
a third percent, Dow Jones Industrial Average down two hundred
points about point four two percent, and the nasdak can
(01:32):
Pause down ninety seven points about point four percent, So
again very modest decline to start the month of December.
Here tenure US Treasury up seven point one basis points
to four point h nine percent. That's going to be
putting some pressure on mortgage rates, probably gettinghim back towards
that six point three percent range.
Speaker 2 (01:51):
By the end of the day.
Speaker 3 (01:53):
We've got the US Dollar index down a quarter percent
to ninety nine point one point five. Gold is up
seven to ninety ounce to forty two sixty eighty cents,
and we've got crude oil up a dollar at fifty
nine to fifty five on West Texas Intermediate. Despite that,
I think tomorrow is going to be the day, Michael.
It is Tomorrow's gonna be the day which one triple
(02:16):
a national amatur gas price is at three dollars and
one tenths of a cent right now. I think tomorrow
we might get below that three dollars mark on the
triple A national average. Remains to be seen if we
you know, stay there. You know, oil prices moved back
up here, but at least for tomorrow, I think we're
gonna get there.
Speaker 2 (02:37):
So that's kind of exciting to me. Yeah, I enjoy that.
I like seeing that.
Speaker 3 (02:41):
I'm sure the folks that are listening to us down
in Texas are like, hey, this isn't the best for us,
and I understand that, but as someone who is not
employed in the petroleum industry.
Speaker 2 (02:53):
I'll take it all on board. Let's see.
Speaker 3 (02:55):
And for some reason, I don't know why bitcoin down
seven and a half percent today.
Speaker 2 (03:03):
On did it miss earnings?
Speaker 4 (03:06):
Can we talk about that for a moment, because we've
talked about the correlation between stocks and.
Speaker 2 (03:13):
Bitcoin, and it.
Speaker 4 (03:15):
Has been elevated recently, definitely increased, you know, over the
last few years compared to in the twenty tens, so
that is actually something you can measure. The day to
day price movements on bitcoin more correlated to stock prices
today than it was, say in twenty fifteen, which makes
sense given the growth of the asset class, the fact
that you can invest in it, you know, generally speaking
(03:35):
in a brokerage account today versus in yours past. I'm
just wondering, like, correct me if I'm wrong, but it
seems to me it would be very difficult to see
stocks rise to any significance on a day when bitcoin
is selling off by seven percent.
Speaker 2 (03:53):
It seems tough these days.
Speaker 3 (03:54):
The other thing that is kind of wild is remember
and again I don't have a dog in this fight.
I just am observing Bitcoin's supposed to be this idea
of you know, digital gold. Gold's been freaking ripping the
second half of the year.
Speaker 2 (04:12):
Bitcoin not so much.
Speaker 3 (04:14):
And that's interesting to me just in terms of like
what it might be saying about why people might actually
own it and how they may trade it differently from gold,
silver and other precious metals. I just think it's interesting
to look at. And that's all I have to say
about that. I want to talk about this piece from
the Wall Street Journal American consumers lose patience with high
(04:35):
car prices. I gotta tell you, here's the thing. So
I leased a car back in twenty twenty three. Okay,
a nice lovely Suparoo out back. Yes, boring, dependable, puts
me at least twenty years older than I am when
(04:56):
driving down the street, you know. And again I don't
know that I got like a deal or didn't like
it was.
Speaker 2 (05:03):
It was fine.
Speaker 3 (05:05):
They just super just as an example, unveiled a new
outback this year, and they just put out pricing for
the twenty twenty six models, and the price is all
jumped by anywhere from like five to fifteen percent relative
to last years. And I gotta tell you, like, I
have some sticker shock when I start seeing Supero Outbacks
(05:26):
that are priced north of you know, forty five thousand dollars,
because that is not a premium vehicle. And to me, again,
like we're all anchored to, you know, certain numbers in
our minds based on, you know, what we saw at
a certain age in this and that. But when I
start seeing like super outbacks getting priced close to fifty grand,
(05:48):
I look at it and I'm kind of like, yikes,
like that that's kind of nuts.
Speaker 4 (05:53):
If we buy the premise that American consumers are in
fact losing patients with high power prices.
Speaker 2 (05:58):
Which I don't also yeah, I'm not sure sure I
do which, But but if we did which, which.
Speaker 4 (06:04):
Brands do you think are in the worst positioning for
a shift in consumer car spending? Ford comes to mind,
just because they've completely abandoned the Sedanima.
Speaker 2 (06:14):
I don't think so.
Speaker 3 (06:15):
No, the F one fifty buyer is the F one
fifty buyer. Yeah, you know, if you're buying that, you're
buying that. Like, there is no alternative for the F
one fifty buyer.
Speaker 2 (06:26):
I think. Okay, So if you look.
Speaker 4 (06:28):
At I'm not worried about luxury brands because that's a
different segment and that's not what we're talking about here.
So Audi, Mercedes, Cadillac, all of those. To me, you're
not looking at those going to be fine. I'm worried
about the Nissans, Volkswagon's Toyotas, Honda's GM Chevy. Like, which
one of those are worst positioned for a change in
(06:54):
consumer behavior? One thing, one area that's towards like cheaper vehicles,
I mean, one area that seems to be benefiting. Yeah,
is just cleaning up. I feel like, you know, they
are like every fourth car that I see.
Speaker 3 (07:05):
I think them and Honda are very well positioned I
guess I'm going to kind of back into this, yeah,
somehow pun intended.
Speaker 2 (07:13):
I think Kia and Honda are both very well positioned.
Speaker 3 (07:16):
Like every time I always like to just look around
at cars every month, just because I never like to
actually buy them. But every time I look at, you know, hey,
the pricing on like a CRV or something like that,
I'm like, wow, like this is, you know, a pretty
good deal given what else is out there. I do
think that Nissan is kind of screwed, but I think
they were kind of screwed before this anyways, Like that's
(07:37):
just kind of the nature of Nissan right now. I
think Toyota is well positioned in that they're building the
vehicles that people want, and based on everything I hear
and see from like Toyota dealers, even though their pricing
is a little bit higher than what you get on Honda,
they're so in demand that they have like no back
(07:57):
like they have this huge backlog basically.
Speaker 4 (08:00):
Certainly, what I experienced is, you know, I probably called
thirty dealerships, none of which had the vehicle in stock
that I was looking for. But there it is a
premium price point that people are willing seemingly willing to
pay based on the reputation for reliability, plus the hybrid engines.
Speaker 3 (08:16):
I'm trying to like go through just who else is
out there? Let me, I'm just sorting through. Okay, so
we've gone through fordh Bwick. I don't really know what
they even make anymore. Yeah, I got to be honest.
I just don't understands for nothing, Cadillacs, a premium one Chevy.
I haven't looked at like pricing for what Chevy has
out there these days on like you know, Blazer, Trailblazer,
(08:38):
stuff like that.
Speaker 4 (08:39):
So I just I don't know. So let let's go back.
Why don't I agree with you? I don't buy that
American consumers are losing patients with high car prices.
Speaker 2 (08:47):
I think they like to bemoan it.
Speaker 4 (08:50):
But the sales members are fine, sales numbers are fine,
and all they're doing is extending out their credit even longer,
which is a terrible idea, but being done without much
of a blink.
Speaker 3 (09:02):
So here's what I will say about I've talked a
lot about how Americans buy cars badly, like they make
bad buying decisions, and I saw an example of this
over the weekend on social media where someone had bought
like one hundred and ten thousand dollars pickup and financed
(09:24):
it for seven years at ten percent financing, so they
ended up it was gonna cost him one hundred and
fifty grand to buy this one hundred and ten thousand
dollars pickup. And here's what I do have to say.
If you always want a new car and want to
get the best bang for your buck, you should not
be buying that car with a seven year.
Speaker 1 (09:45):
Loan.
Speaker 3 (09:47):
If you can't figure out how to make the numbers
work on a three or four year car loan, you
should be leasing. In a lot of cases, you will
end up with cheaper payments. You will end up being
able to get the new vehicle you want every few
years without having to worry about am I underwater on
this or am I not? Because quite honestly, if you're
(10:07):
buying a vehicle with a seven year loan just so
that you can say, look at the end of that
seven years, oh I paid it off, that's not really
good business based on the depreciation of the vehicle and
the interest rates that you need to pay right now.
Speaker 4 (10:20):
If you drive it for another seven years afterwards, sure
I can get on board with that, but you need to.
Speaker 3 (10:26):
But you right, you basically need to, and there aren't
Like the person who's buying the one hundred and ten
thousand dollars pickup truck is probably not buying it for
fourteen years.
Speaker 2 (10:36):
Yeah likely.
Speaker 3 (10:37):
So again I think we have to just do a
better job of figuring out, you know, like this, there's
this fascination with car ownership overleasing. And again I'm not
like leasse least the car I have right now is
the only car I've ever leased. But I did it
specifically because I said, look, I want this car for
a few years to see how it works for me.
(11:00):
You don't want to be locked in long term on it,
and I don't want to be paying longer term, you know,
higher interest rates because remember when you take out a
longer term car loan, the interest rate oftentimes is higher
as well. And so I think people need to be
amenable to hey, like, do I actually want to own
this car for a long time, Because if I'm just
(11:21):
one of those people who might trade it every three
to four years, you're probably better off being in a
leasing cycle than trying to buy a car with a
seven year loan and then having to roll the extra
loan over into your next vehicle.
Speaker 2 (11:34):
Let's take a quick break.
Speaker 3 (11:35):
When we come back, we'll do a little bit of
trivia and then we'll talk about private credit hysteria after this.
Speaker 1 (11:44):
Here the Financial Exchange every day from eleven to noon
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(13:06):
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(13:28):
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Speaker 2 (13:45):
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from Bloomberg.
Speaker 3 (14:00):
Opinion by Paul Davies, who was a reporter from The
Wall Street Journal and Financial Times quote, private credit hysteria
will get very real next year. We've been talking about
private credit for the last few months. We were talking
about it even a couple months before that.
Speaker 4 (14:17):
Our perspective was probably a little bit different than Paul's.
It was more that there seems to be some smoke
right now, and we need some time to determine if
there's fire. But what I would say about private credit
right now is it seems to me that it needs
to be darn near perfect for the next six months
(14:40):
in order to dispel the rumors of its fiasco. You've
had a few bankruptcies and frauds that have been very public.
And the reason I think it needs to be perfect
is because there seems to be a big cooling off
period by most of the big investors. And so I'm
just wondering who's going to allocate new CA capital to
(15:00):
private credit right now, Like, unless the rates move up substantially,
I don't see why you as an insurance company or
an endowment or a pension fund, or as a registered
investment advisor who have been you know, getting pushed more
of this stuff would be willing to allocate large degrees
(15:21):
of new capital to this asset class that is opaque
and showing warning signs.
Speaker 3 (15:28):
So part of it might be, Hey, you've been doing
it and you just feel like you need to continue
because you have a return that you need to try
to hit. The part that's challenging about this is because
these are you know, private instruments, it's tough to get
data on what we're seeing in terms of flows into them, right.
We just don't We don't even know how much money
(15:49):
is held within that private credit sphere, let alone, Hey
how much is you know, flowing in on a monthly
or weekly basis? So what I can tell you if
that mechanism slows.
Speaker 4 (16:02):
If the mechanism of credit issue, if you do not
have as much funding going into private credit, that in
and of itself, depending on the scale of that slowdown,
has the potential to be something that causes a credit
issue in the next twelve to twenty four months. Let's
(16:23):
let's wind the clock back, Tucker, can you get the
time machine fired up?
Speaker 3 (16:26):
Then? Yes, we just got to get some plutonium for
the reactor.
Speaker 2 (16:30):
Here and we're gonna go back to.
Speaker 3 (16:34):
Oh yeah, it's two thousand and six right now. Wow,
And Steve Jobs hasn't announced the iPhone yet, and we're
all hanging out at you know, a nice summer barbecue,
just you know, chilling.
Speaker 2 (16:48):
But under the.
Speaker 3 (16:49):
Surface, you're starting to see some problems bubbling up in
subprime credit. It's not a real issue yet, like there
hasn't been haven't been any major defaults or anything yet.
But about a year from now, now, in two thousand
and seven, there will be some problems that really come
to the surface and people start to wonder about. And
the problem that happened in the housing market then was, hey,
(17:11):
you had defaults that started to pile up in the
subprime sector, which then meant that investors weren't sure what
the subprime debt they were holding was worth. In turn,
they said, we're not going to allocate as much money
towards this kind of lending, which then made it harder
for people to buy homes, which caused valuations to fall more,
(17:33):
which during a time when a lot of people are
trying to sell because of adjustable rate mortgages adjusting up
meant that they couldn't sell had to take big haircuts
led to bigger credit losses, and we know the story,
but that funding drying up was a key part of
the cycle, and that, hey, the housing bubble doesn't burst
if lending continued at the same rate, because you could
(17:55):
have kept the plate spinning and everything would have been
not okay.
Speaker 2 (17:59):
But ok ish.
Speaker 3 (18:02):
In this case, it's not necessarily the bursting of a
housing bubble that you see, but that mid market business
that depends on a seven hundred million dollar loan from
private credit fund XYZ by Company ABC, if that funding
cannot continue, it becomes problematic because a lot of this
(18:23):
is used for inventory and things along those lines, and
so if you can't buy inventory, then you can't eventually
sell that inventory. You start laying people off, and the
whole thing comes apart. That's the concern that you have,
and why, even though there haven't been a ton of
defaults to this point, if investors get nervous enough about
(18:43):
them that they stop flows into this area, that could
trigger problems that show up in the next year or two.
Speaker 2 (18:49):
In the economy. And guess what.
Speaker 4 (18:50):
This whole economy right now is being built upon the
idea that there's going to be a tremendous amount of
development of AI infrastructure, none of which can happen without debt. No,
none of which can happen without massive amounts of debt
issuance and investors willing to scoop that up.
Speaker 2 (19:07):
So it's kind of, in a roundabout way, the whole
ball game right now.
Speaker 3 (19:11):
Taking a look at markets as we head towards the
bottom of the hour, The Down now off about half
a percent two hundred and thirty three points, SMP down
about a third of a percent twenty five points, and
the NASDAC off about one hundred and ten points a
little less than half a percent, so still in the
red for our major indices. Quick Break, Trivia Answer and
Wall Street Watch are next.
Speaker 1 (19:39):
Bringing the latest financial news straight to your radio. Every day.
It's the Financial Exchange on the Financial Exchange Radio Network.
Time now for Wall Street Watch, a complete look at
what's moving markets so far today right here on the
Financial Exchange Radio Network.
Speaker 5 (19:58):
Traders are back from the Thanksgiving allay and turning the
calendar to December, where markets are currently seeing a modest selloff.
Right now, the Dow is down by about a half
a percent, or two hundred and twenty one points. SMP
five hundred is down about a third of a percent,
Nasdak down by four tenths of one percent, Russell two
thousand is down just over eight tenths of one percent.
(20:20):
Tenure treas reeled up seven basis points at four point
zero nine to two percent, and crude oil up over
one percent higher, trading right above fifty nine dollars. A
barrel some in video related news to begin with, where
in Video invested two billion dollars in Synopsis Common stock
is part of a broad strategic partnership. Shares in the
(20:40):
provider of software four chip designers are climbing three percent higher,
while in Vidia stock is rising about one percent. Meanwhile,
several crypto based stocks, including coinbase, are seeing losses after
Bitcoin tubled further to eighty four thousand dollars now. Coinbase
shares a down over five percent on the day. Elsewhere,
(21:00):
Eli Lilly announced it is lowering the cash prices of
its single dose vials of its Blockbuster weight loss drug
zep Bound on its direct to consumer platform. ELI stock
is down about one percent. Barrick Mining stock is up
nearly three percent following reports that the company is exploring
spinning off its North American gold Assets into a listed business,
(21:21):
and wind Resorts is climbing three percent after Goldman Sachs
included Win on its conviction by Lists, saying the company
is a best in class Las Vegas business, while improvement
in China's Macau region can drive transformative upside. I'm Tucker
Silva and that is Wall Street watching. In the previous segment,
we asked you the trivia question. According to Fortune five hundred,
(21:43):
what is the largest company buy revenue? That would be Walmart.
Robert in Saugus masses our winner today taking home my
Financial ex Change Show t shirt and we play trivia
every day here in the Financial Exchange CEE Complete concest
rules At Financial eks Change Show.
Speaker 3 (22:01):
People are ordering smaller pizzas and fewer toppings. What does
that tell us?
Speaker 2 (22:09):
Probably nothing, I would.
Speaker 3 (22:11):
Say probably nothing. I will say pizza price have gone up,
like it's it's been noticeable now, but the price of
everything has gone up and it's been noticeable now.
Speaker 4 (22:24):
Yeah again, you know it. Probably It probably does indicate
the same thing that we are seeing indications of elsewhere,
which is around half of Americans are struggling financially and
are finding ways to cut back and we're seeing it
here with pizza spending. But again, does it indicate anything
(22:46):
about where the larger economy is going to go or
consumer spending is going to go. I I really have
some doubts about that, and I think that largely you
probably discount any of it. I will say, you know,
of food deals. I went to Chili's for the first
time in quite a long time to get some baby
(23:07):
back ribs.
Speaker 2 (23:08):
We had a group of.
Speaker 4 (23:08):
Fourteen people, so we were all brainstort, like, where can
we go with fourteen people including sorry, it was more
than that. There was twenty people, including ten kids. Unke
short notice on short note, no reservation. Yeah, okay, let's
check out Chili's. And wow was it reasonable?
Speaker 2 (23:24):
Yeah.
Speaker 4 (23:25):
The biggest complaint they did away with the awesome blossom
in like two thousand and six, and everyone on the
like a bunch of people. I got to her like, yeah,
I'm pumped about having the awesome blossom. And they asked
the waitress for it, and she had no idea what
we were talking about.
Speaker 2 (23:38):
But because there was the blooming onion.
Speaker 4 (23:41):
Yes, yeah, yeah, yeah, So I was pretty impressed by
my stopping.
Speaker 3 (23:46):
I wonder why they did away with it because like
the way I look at it, I mean, onions are
pardon the pond dirt cheap. Yeah, and it would seem
to be something with pretty high margins and that look,
if you're selling the thing for you know, ten eleven
bucks is anap that onion probably costs you somewhere in
the ballpark of you know, if you're buying in bulk
the way Chilis does, like ten cents to buy, throw
(24:10):
it in a little batter and call it a day.
I mean, it's kind of like the Caesar salad of apps.
Speaker 4 (24:15):
Yeah, folks, want to talk to you about the brand
new guide for the month of December from the Armstrong
Advisory Group. Again, this is just out today. It's our
December guide all about retirement planning for spouses. Now, this
is a new one from us and it covers a
number of different things. But yeah, most of us head
into retirement as a married couple, and depending on your situation,
(24:38):
it can really vary how you do your planning. One
thing that's really important to keep in mind if you
are a married couple sixty five years old, non smokers,
there is about a fifty to fifty chance that you're
gonna make it to age ninety. That is a lot
of planning to be done. That is nearly as much
(24:58):
of an retirement as was your working career in many cases,
and so all sorts of planning considerations to be done here.
They get even more complicated if there's an age gap
of five years or more between the two of you.
All sorts of things like where am I going to
get my health insurance from? What is it going to
cost me? Especially if there are not the enhanced subsidies
(25:19):
on Obamacare. I've seen this all the time, where one
spouse reaches sixty five, they go on Medicare, they retire,
and the other one's still working. And you know, there's
some irritation there. One spouse is able to retire, the
other is not because of medical reasons. But you know,
what do you do with social security and pension planning?
When should you be filing for Social Security? Depending on
(25:42):
that age gap? And who has the larger benefit? If
I have a pension, how do I select my survivor benefit?
Am I better off taking the lump sum rather than
the pension itself? How will my Medicare premiums be determined?
How much income am I allowed to have. We cover
all of this and a heck of a lot more
in our new guide.
Speaker 2 (26:01):
Again.
Speaker 4 (26:02):
It's the free guide from the Armstrong Advisory Group called
Retirement Planning for Spouses. You can get it by calling
eight hundred three nine three for zero zero one. It's
really useful reading. If you guys are within a decade
of that retirement date. You can check it out at
Armstrong Advisory dot com. Request your copy there it's free,
or you can call us at eight hundred three nine
(26:24):
three for zero zero one.
Speaker 1 (26:26):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 3 (26:42):
Piece here from us The Financial Times, Yeah, it's the
Financial Times, a full bown crisis. Americans brace for a
surge in healthcare cost. So basically, we've got twenty two
million Americans that are enrolled in insurance under the Affordable
Care that are going to see the subsidies for those
(27:03):
plans gone next year. Basically unless there's some action very
very quickly.
Speaker 4 (27:08):
That twenty two million number that was the number that
will be impacted by this or is that the total
number of people on.
Speaker 3 (27:14):
That was the number that I that said this was
related to tax credits for the plans.
Speaker 4 (27:18):
I think there's I was actually surprised by the data
that I saw showed forty five million total Americans on
the Affordable Care Act that it probably includes families, so children,
and then yeah, about half of them receive seeing subsidies
that may be disappearing this.
Speaker 2 (27:35):
Yeah.
Speaker 4 (27:35):
They give the example of a sixty four year old
PR consultant who's currently paying four hundred dollars a month
their plan would jump to nearly two thousand dollars a
month should he renew that existing plan and see those
credits disappear. Hence why this is going to be a
hotly debated item in the How many days of Congress
(27:55):
actually do work this month, like six, I don't know,
but basically many.
Speaker 3 (28:00):
Basically there's the deadline to select a plan is December fifteenth,
which quite honestly means that you can't fix this by then, right.
Speaker 4 (28:08):
You're not going to know how much you are going well,
you're going to have a worst case scenario of what
you would pay for your health insurance. Yeah by December fifteenth,
and you might get some help if Congress passes something
on this, But there are you know, the original subsidies
were designed to allow anyone with income of four hundred
percent the poverty level to get the subsidies. That was
(28:29):
dramatically expanded during COVID, and that has since lapsed. So
that is the question is do they do something additional here?
And again that number right, forty five, that's more than
ten percent of Americans on Affordable Care Act health insurance
of some sort.
Speaker 2 (28:45):
Add that on.
Speaker 4 (28:45):
There's another sixty seven million Americans on Medicare. I don't
know how many are on Medicaid and what the overlap
is there, but that is a I guess it's a
larger portion that I than I realized of Americans who
are not getting their health insurance from their employer. Right like,
between those between those three Medicare, Medicaid and Affordable Care Act,
(29:06):
that's approaching you know, a third to a half of
all Americans who do not get their health insurance from
their employers. And this is I guess, I guess my
point would be it's a bigger issue for more Americans
than I realized. I don't I don't have it. I
don't have a good fix. There's no fix for any
(29:29):
of this. Yeah, it's just the only question is are
we as taxpayers willing to subsidize the cost of this
insurance more?
Speaker 2 (29:38):
There's there's no fix for any of this.
Speaker 4 (29:41):
Health Care in America is very expensive unless you want
to significantly worsen the quality of care.
Speaker 2 (29:47):
There's there's no good fix.
Speaker 3 (29:49):
No, there there And look, you can't fix this for
twenty twenty six right now, Like, I'll be honest, there
is no way to fix this, which like the cost
of overall care or No, there's no way to fix
these subsidies now. People have already made their.
Speaker 2 (30:08):
Purchasing decisions on these. Yeah.
Speaker 3 (30:10):
Like let's say that you're looking at this plan and
you say, okay, it's it's nineteen hundred and sixty.
Speaker 2 (30:16):
Five dollars a month. I can't afford that.
Speaker 3 (30:20):
If Congress passes something this week, you can maybe figure
it out before that twelve fifteen deadline. Mike, is Congress
is gonna pass anything this week? Now, I'm gonna go
with a hard no.
Speaker 2 (30:36):
No, they're not.
Speaker 3 (30:37):
And so you like someone's not going to make a
decision being like, well, maybe I'll be reimbursed for this later.
You don't make that decision with like a fifteen hundred
dollars a month gap that you're trying to fill. You
might make that if there's like a twenty dollars a
month gap that you're trying to fill, But the purchasing
decisions are already made, And so what you're going to
end up with on this is, Hey, you're either going
(31:01):
to have a bunch of people who go without insurance
next year and everything that that entails, or you're going
to have a bunch of people who spend the extra
money on the insurance and then do not have that
money to spend on a monthly basis elsewhere in the economy.
(31:21):
Neither of those is really great. Now, I'm not saying like, hey,
you should blanket, you know, extend this and do this
and that. All I'm saying is this is where you
are heading. And it's because we haven't done anything to
fix this while we've known it's been coming for an
extended period of time.
Speaker 2 (31:38):
Right, So.
Speaker 3 (31:40):
Ultimately we need to get to a point where we
actually take a look and you know, decide what we
can do to try to fix the US healthcare system,
because I think we can all.
Speaker 2 (31:51):
Agree that, like what we're doing right now really sucks.
Like it's does anyone have an option model?
Speaker 4 (32:00):
Though, Like you look around the world, and I don't
know that there is a perfect model for health care delivery.
Speaker 3 (32:07):
So it's not about having a perfect model for like
you're never going to have something that's perfect. But I
mean again, like let's even just look at like the
basic way that you sign up for health care, which
you mentioned, Mike, there is no reason why health insurance
should be tied to your employment. The only reason it is,
by the way, for anyone listening who wants to know,
(32:30):
is because in World War Two, the federal government said, hey,
we're gonna cap wages at a certain level in order to,
you know, try to manage inflation that was raging at
the time. And in response, companies said, okay, you're capping
our wages. Great, We're gonna start offering health insurance as
a perk because we can't pay you more, but we
can cover your health insurance. And basically, US health insurance
(32:53):
has been attached to your job ever since. There's no
reason why your ability to be in sure should be
tied to your employment. Like sure, it could be a
perk that your employer offers if it's better than you know,
whatever else is out there. But there's no reason why
(33:14):
this should be what we like do as default. It's
just what it's been since World War Two because of
you know, kind of what became normalized then. But just
because something's normalized economically doesn't mean yes, like let's let's
continue doing this. And so when people don't have any
incentive to shop around on their insurance, obviously insurance, then
(33:36):
don't really have a ton of incentive to shop around
on things like networks and drug coverage and this and that,
and so you don't have real competition. That happens because
people don't view it as their responsibility to shop around
for insurance. And the best pricing companies try to, but
they try to do it in terms of, hey, how
do I minimize the cost while providing this benefit, not
(33:57):
what's best for my employe. Well, ye's necessarily as far
as the best benefit package.
Speaker 4 (34:03):
Last item of note on this healthcare thing, and then
I know we need to take a break. The Affordable
Care Act is very likely going to be left with
a bunch of very sick people. It already kind of was,
but which is going to be maror pricing even worse.
If you're healthy and your premium surge four hundred percent,
you're just going to go without insurance, and if you're sick,
you're going to pay whatever you need to for the
(34:23):
health insurance, which is going to then, like you said,
make the cost of insurance worse next year.
Speaker 2 (34:27):
Which is why.
Speaker 3 (34:28):
The way insurance works is that in any risk pool,
the people that are not actively experiencing the problem cover
the cost of those who do. I pay my homeowners
insurance each year. It's several thousand dollars. Not because I
get a plaque or something like that that I put
on my wall, but because I know that if something
ever happens to my house where I need that coverage,
(34:52):
everyone else who's not experiencing what I'm experiencing is able to,
like those premiums, pitch in to cover that cost. It's
just how it works. Quick break here when we come
back at stack Roulette.
Speaker 1 (35:03):
Find daily interviews and full shows of the financial exchange
on our YouTube page. Subscribe to our page and get
caught up on anything and everything you might have missed.
This is the Financial Exchange Radio Network. The Financial Exchange
is life on Series XM's Business radio channel one thirty
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(35:24):
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This is the Financial Exchange Radio Network.
Speaker 5 (35:41):
The Financial Exchange is incredibly proud to be a partner
of the Disabled American Veterans Department of Massachusetts. If you
didn't have a chance to participate in this year's race,
BO would still like to support our great American heroes.
Please visit dav five k dot Boston. Your gifts help
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(36:03):
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Speaker 2 (36:11):
Mike, what do you got for me?
Speaker 4 (36:12):
For stack Roulette opinion piece from Bloomberg. We need to
uberize the power grid for AI.
Speaker 2 (36:20):
What does that mean.
Speaker 4 (36:21):
I don't think it's going to get you the job done,
but I think it has to do with two things.
Speaker 2 (36:25):
One would be surge pricing.
Speaker 4 (36:27):
Two would be better technology in homes to control peak demand.
And they point out one example here where the Mid
Continent Independent Operator System running the second largest US grid.
They report that the total demand has only increased by
one point eight percent over the last eleven years, but
(36:47):
that peak demand did rise by six percent. So that's
what matters for the grid is they have to deal
with the peak demand, not the overall demand. They need to,
you know, because of the way the power generation works,
they have to focus on that peak demand number. And
so if you can employ better technology and homes, offices
and data centers hypothetically to spread out peak demand, rely
(37:10):
more on other technologies than their argument is, you don't
need to invest quite as much in the power grid.
Speaker 2 (37:16):
I'm not sure. My answer is that you should build more. Yeah.
I think build more.
Speaker 3 (37:21):
Generation, build more transmission, and then we don't have to
deal with rationing electricity.
Speaker 4 (37:26):
Yeah, because that's effectively what you're talking about here, yes,
is rationing electricity. And you know, I've, by the way,
tested out the idea of that smart thermostat that when
peak demand is hitting, you know, heats up my home
automatically in extra five degrees. And my answer is that
solution kind of sucks, and you'd have to pay me
a heck of a lot more for me to be
willing to do it again.
Speaker 2 (37:46):
Don't like it.
Speaker 3 (37:47):
Just let's make it easier to build more capacity, and
I think we can get there. Taking a look at
markets right now, trying to rally off the lows of
the day, Dow off two hundred eight points, s ANDP
down sixteen, AASDA down forty nine, so we got a
little bit of a rally happening on the tech side
to try to drive things back into the green. We'll
just have to see if we get there. We're done
(38:08):
for the day. Back at it tomorrow as we continue
through the first week of December,
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