September 16, 2025 • 38 mins
Mike Armstrong and Paul Lane discuss how the breakeven threshold reveals a more robust labor landscape than stats show. Why shifting away from rigid quarterly filings could free up companies and provide better long-term insights for investors. The inside scoop on Luckin’s bold U.S. expansion strategy and how it's challenging the coffee giant's dominance with aggressive pricing and tech-driven growth. Americans can't stop buying cars they don't need.
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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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(01:06):
and fall.
Speaker 2 (01:07):
Lane, Good morning, Welcome back to the Financial Exchange. It's Mike,
Paul and Tucker with you on a Tuesday before a
Federal Reserve meeting Wednesday. They will be starting there well.
They'll announce their rate decision at two pm, followed by
the press conference at two thirty pm tomorrow in the meantime. Meantime,
(01:28):
we received retail sales data this morning that we'll dive into,
and markets are in slight sell off mode, with the
Nasdaq down a tenth percent, SMP closer to one fifth,
and the Dow off about four tenths of a percent
in early trading here. Paul, anything else catching your eye
in terms of markets or data that I missed this morning.
(01:49):
I think that just about covers it for us. We're
not seeing any massive swings out there that are worth mentioning.
Nothing of the oracle kin that we saw last week,
for example.
Speaker 3 (02:00):
No, no, nothing that stands out. You've hit on all
the major ones there.
Speaker 2 (02:03):
So the job market, sorry, let's go to the retail
sales first. The retail sales numbers that we saw for
August have reconfirmed something that we've been seeing for the
last few months, which is a consumer that's continuing to
chug along and pay their bills and expand their spending. Now, again,
retail sales data does not get adjusted for inflation, and
(02:25):
we are seeing a fair bit of it. In the
month of August, you saw headline inflation that came in
at zero point four percent month over month. We saw
retail sales that came in at how much was it
called six ye? So what does that practically mean. It
means that consumers bought about two tenths a percent of
(02:46):
more stuff. They just paid four tenths more for that
stuff that they bought. And so we do see this
scenario now taking shape and really forming pretty solidly around
higher income consumers handling all the expansion when it comes
to spending in this economy, whereas those I guess I
(03:08):
would say other ninety percent just kind of cobbling it
together to be able to put stuff on the table
and maintain their existing spending. I don't think they're falling apart,
but a number of indicators would point to that direction,
whether it's auto loan delinquencies, trade ins of underwater vehicles,
mortgage delinquencies aren't at a concerning level, but all of
(03:32):
these things have indicated a more stressed consumer and yet
the one that keeps on spending. So this doesn't likely
change the odds of a FED rate cut tomorrow. In
terms of those odds, we'll just check in on them
now from the Chicago Tile Exchange.
Speaker 3 (03:50):
Ninety six percent probability or ninety six percent probability that
we see that quarter basis point cut still four percent.
So you're saying there's a chance.
Speaker 2 (04:00):
Fifty bases point cut. Yeah, I mean this is normal
about the stage. It's pretty tied in that. Yeah, we're
going to get that cut again. Compared to a month
ago before we got this jobs report, you know, there's
only an eighty five percent chance of a cut at
that point in time. But this week jobs report that
we saw last Friday, two fridays ago September is all
(04:21):
blending together two fridays ago, really I think solidified the
Fed is perspective on this economy right now, which is
we're in a bit of a concerning level of job creation,
concerning enough that it'll likely impact the overall unemployment rate,
and so we're going to pay more attention to that
than we are the inflation data. Peace from Bloomberg today
(04:46):
seemingly sorry. Is this the Wall Street Journal? Barons? Neither
of the two peace from Baron Tucker would tell me.
But he's chewing an apple right now? Can you turn
your mic on? We all want to hear that arguing that,
look the weakness that we're seeing in the labor market,
and to point that out, you know several months now
of fewer than one hundred thousand jobs created June, we
(05:11):
actually saw net job loss. The argument that she makes
here is, look, we have to get used to a
new normal in terms of the labor market, and that
new normal is a significant portion of baby boomers retiring
every month and a significantly smaller share of work being
done by illegal immigrants or undocumented immigrants or their related family.
(05:35):
And so therefore you cannot use the same rules of
thumb when measuring this labor market as you once could.
Speaker 3 (05:41):
It was an interesting way to lay it out where
we have been concerned that we've seen a significant reduction
in job creation over March of twenty five through March
of twenty four. The Bureau of Labor statistics that come
out recently with that revision trimming off nine hundred and
eleven thousand positions. But The argument made here in this
piece in Barns is that as we go forward, if
(06:04):
there's going to be a lesser supply of workers, then
you don't need to create as many jobs as you
were previously. And what she uses as a comparison piece
is back in twenty twenty three, when the labor market
was in a very great place and had just come
off the two years of twenty one and twenty two
where we saw a ton of job hopping and an
(06:25):
increased amount of demand in the labor market. The break
even rate, which is basically the amount of jobs that
you need to create on a monthly basis in order
to satisfy the amount of people employed in labor markets,
was one hundred above one hundred and twenty five thousand.
She's now arguing that this year that break even number
is somewhere around sixty thousand because we have way less
(06:47):
in terms of immigration inflows into the United States, only
around five hundred thousand this year compared to three and
a half to four million and twenty twenty three. And
like you mentioned before, Mike, the baby boomer generation is
retiring more significantly in droves as well.
Speaker 2 (07:02):
Yeah, So I mean put very simply whether it's you know,
Kathy bos Jantik, who's the just bost genic Bostaganic. I've
heard her interviewed several times. I want to get her
name right. So the chief econdomis at nationwide or the
Federal Reserve Bank of Saint Louis has estimated another number.
But in either case, the number of jobs you need
(07:24):
to create every month to keep the unemployment at these
current levels of four point three percent is probably somewhere
between thirty and eighty thousand, with approximately half what you
needed back in twenty twenty three. And that's all defined
by a shrinking labor pool to do those same jobs.
And so again, I think people are generally aware of this.
But to me, if we're looking at, you know, hey,
(07:46):
what could possibly cause higher inflation and if we're worried
about it over a prolonged period of time, to me,
it's this more than any of the tariff stuff. Ho So,
so the terrorf related stuff I do will have an
inflationary impact, and I think we're starting to see it,
right if you look at the most recent CPI report
which came in at where we're we year over year
(08:08):
numbers of like two high two s, low threes. Month
of a month number at four tenths, so a pretty
uptick level. What we're really seeing there is, yes, services
inflation has been rising, but that's always kind of been
the case. You always start to see you know, because
wages go up, you see services inflation. But goods inflation
(08:30):
is now kind of matching all of that. My perception
of goods inflation, you're going to see an uptick and
then when you compare it to a year from now,
unless we're in a really prolonged trade war with escalating tariffs,
then it's gonna be a one time adjustment. You're not
gonna have to worry about it for the long term. Okay,
The labor market story is not a quick fix like
(08:52):
anyone out here. If you were an economist and you
identified that, hey, our demand and I don't think we're
there right now, but if demand for labor starts to
outstrip supply, there is no fit quick fix to that solution.
AI might be one of them, but otherwise you have
to increase immigration. That's the only quick fix to a
(09:13):
super tight labor market. And tell me one politician in
the country, Democrat or Republican that genuinely thinks they can
get re elected on that framework. I don't see it.
And so, yes, tariffs are going to have an effect
on prices. If you want to talk about what could
actually drive longer term inflation for a decade, to me,
(09:35):
it's the labor market.
Speaker 3 (09:36):
I just don't know how we get that tight necessarily
on the labor market perspective, we were at three and
a half percent unemployment and maybe you can make the area, well, Paul,
that was almost too strong. It led all this inflation. Yeah,
maybe I'd argue I'm making all these arguments myself was
that that supply chain shocks, that's what led to that,
and the infusion of trillions of dollars in the economy
(09:57):
like that was the reason why I was problematic, Not
the three and a half percent unemployment. It's just it
would be a long way to fall to get back
to those levels, which we would all agree. We're extremely
a tight labor market to the point where they had
the employees had so much leverage that it led to
this inflationary.
Speaker 2 (10:14):
Yeah, and they don't. They very clearly do not have
that leverage today.
Speaker 3 (10:17):
Yeah.
Speaker 2 (10:18):
My only point about this is this is not a trend.
That is just going The labor supply story is not
one that is going to change on a dime. It
is going to be a long term shift in the
supply of labor in this country. And I think the
potential effects could be inflationary, and we just won't really
(10:39):
know how that all works out. If we go into
recession and AI starts replacing a bunch of jobs, then yeah,
nothing to worry about. If instead we're in this new
environment six months from now where taxes are lower and
interest rates are lower, and housing picks up, and suddenly
companies are trying to hire people in a labor market
(10:59):
where there is just not enough people to hire. That
is a scenario that drives wages higher and drives prices
higher and lasts a long time.
Speaker 3 (11:07):
Mike, I've done my part. I've had three kids. I
can't add any more to the potential future labor.
Speaker 2 (11:13):
For Cantor won't, Paul Canter, won't. Let's take a quick
break when we come back, a little bit trivia. Here
is next on the Financial Exchange.
Speaker 1 (11:23):
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Speaker 4 (12:04):
All right, Sam for surevia here in the Financial Exchange.
In a case you missed it, sad news in Hollywood today.
After acting legend Robert Redford passed away at the age
of eighty nine. Redford had a legendary career in front
of the camera, but not many remember that he had
a great career behind the camera as a director. Redford
(12:24):
never won an Academy Award as an actor, but he
did win as a director. So or a trivia question today,
which movie did Robert Redford win Best Director four at
the Academy Awards? Once again, which movie did Robert Redford
win Best Director four at the Academy Awards? Be the
(12:44):
fifth person today to text us at six one seven
three six two thirteen eighty five with the correct answer
in when a Financial Exchange Show t shirt once again,
the fifth correct response to text us to the number
six one seven three six two thirteen eighty five will win.
Speaker 5 (13:00):
That T shirt.
Speaker 4 (13:01):
See complete contest rules at Financial Change Show dot com.
Speaker 2 (13:05):
Paul, I think it was yesterday the President brought back
up the idea of quarterly earnings reports on behalf of
publicly traded companies. It is a requirement today. The President
had made an issue of this back in twenty eighteen.
Barack Obama had done the same in twenty fifteen. Which
side of the argument do you want to take on
this one? You you in favor or you want to
(13:27):
you want to keep getting the quarterlies?
Speaker 3 (13:29):
You know, initially in prepping I would have said that
I was that I was in favor, But I'll go
against and I'll say.
Speaker 5 (13:37):
You need report sports and the reason for the stance.
Speaker 2 (13:41):
There because you need a job. And what else would
we cover on the financial exchange?
Speaker 5 (13:45):
We would definitely lose in our quarterly We were definitely lose.
Speaker 3 (13:47):
In the Financial Exchange quite a bit.
Speaker 5 (13:50):
We would have very busy.
Speaker 3 (13:51):
I guess what would they do at June, in December
or however they do, we'd have some maybe the summer
months will get really, really really dry. But all ultimately
I come back to the more information that we can have,
the more transparency, the better the counter arguments that have
been made to go against my position as well, Paul,
there's all of this juxtpedition that these companies do to
(14:14):
try and beat these earnings analysts out there, these estimates.
They're just trying to be above or beyond the expectations,
and that causes them to think more short term than
long term.
Speaker 2 (14:25):
Here's what really happens is every quarter, companies come out
and revise their earnings expectations. Right, they don't just tell
you how they did, They tell you how they think
they're going to do. And so they play this really
stupid game where they say, ah, you know, great quarter,
but we're only expecting our business to grow by three
percent over the course of the next quarter. And then
they grow by five percent and everybody applauds them. But
(14:48):
they had already been planning to grow by five percent
in the first case, since they just wanted to beat
those revisals.
Speaker 3 (14:53):
Yeah, and that generates the statistic that you'll often find
quoted where S and P five hundred companies, eighty percent
of them are beating earn A earnings expectations on a
given quarter. And I would see that at the beginning
the first time, I would say that, wow, eighty percent
of companies of being your expectations.
Speaker 5 (15:07):
But they're basically they always have as well.
Speaker 3 (15:09):
It's like my four year old, like I'm just trying
to get the bar for him to be able to
jump over at like six inches off the ground, and
I'm constantly moving it so that he beats and jumps
over that bar. And that's the same thing that companies do.
Speaker 2 (15:20):
So my counterpoint to that would be they're just going
to do that every six months instead of every three months.
It's not going to change the incentive structure. The incentive
structure is still going to be to beat expectations on
your earnings and right now you do it every quarter.
In the future, if you did this, you would do
it every six months. I think I can point to
(15:41):
two main issues that I would say would give lend
some credence to this argument. One would be cost yeah.
Two would just be a general longer term focus that
I would like CEOs to have so on the cost
side of things, we don't have enough countains. You need
accountants to report to quarterly earnings. It's costly to find
(16:04):
those accountants and do this. There have been a number
of companies, including TopWare brands, Advance Auto Parts, Lift, and others,
who have specifically cited a lack of accounting staff as
the reason that they could not on time report their
quarterly earnings and do their filings with the SEC. So
I think it's costly. Private companies don't need to do this, sorry,
(16:28):
And we have been seeing a number of companies choose
to stay private for longer this day and age. Part
of that's because of a bigger private equity funding market
where you can get access to capital in private markets.
Part of it's probably the cost and burden of reporting
earnings every quarter. A small part don't, but part.
Speaker 3 (16:44):
Of it I just don't think it's a big enough
expense that that is the reason. I think it's all
the prop The biggest portion of is the private equity
and liquidity that has been outside of their Like, yeah,
I don't make a way that Stripe sits there, open
Ei sits there.
Speaker 5 (16:58):
Geez.
Speaker 3 (16:58):
If only we didn't have to pay accountants with our
five hundred billion dollar valuation to report every quarter. That's
the reason why we're holding off.
Speaker 2 (17:06):
Agreed, there's no company out there that's going to say, oh,
now that I only have to do it twice a year,
I'm going to go public. But everything you can tweak
around the edges I think could make a slight improvement,
and that marginal company might consider it the bigger piece
to me. And I don't know that going to every
twice a year instead of four times a year changes
any of this. But we focus too much on what
(17:28):
CEOs are saying every ninety days. I'm much more interested
in what a CEO can do for their business five
years in the future, sure, rather than thirty days in
the future, because the answer for thirty days in the
future is next to nothing. Right, You can do nothing,
next to nothing to change your business unless the next
thirty days, unless you've already been investing in it for
the last two years. And so anything that you can
(17:50):
do that slightly makes that focus a little bit more
about what is my business going to look like five
years from now rather than what's going to look like
ninety days from now, I think is helpful, but quite honestly,
I don't know that going to twice a year actually
changes that. So my arguments for go to twice a
year are mainly why not, rather than oh, it's going
(18:11):
to be revolutionary. I just don't think we get all
that much other than media sensationalism and you know, more
ads for CNBC and Bloomberg by doing quarter of the
earnings reports. That's the main factor that I think is
the benefit is, Hey, you know, media gets to cover
the quarter of the earnings reports. It's something to talk about,
(18:31):
it's exciting. Analysts all over, you know, are busier during
earning season, and so that's who I think the main
benefactors of all this are, not the investors themselves, not
the companies who are reporting quarterly. I think primarily if
I look at the beneficiaries, it's stock analysts who get
to write reports every quarter. It's TV analysts who get
(18:52):
to cover this, radio anasts like ourselves who get to
cover it every ninety days. And quite honestly, I just
don't think that's a good enough excuse for why you
should have to do it every quarter. I just don't
think we lose anything.
Speaker 3 (19:03):
Yeah, ultimately, no loss, no gain really with this.
Speaker 2 (19:07):
If your business changes mid quarter, there's nothing that would
prevent you from coming out to the general public and saying, hey,
we had a revolutionary new thing and we're going to
tell you about it our cornera earrings report. But just
so you know, we're revising our expectations up or down
on our business and so you don't lose much. I
don't think by going to twice a year. Feel free
to tell me why I'm wrong. But first we're gonna
take a break and go to Wall Street Watch 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 market so far today. Right here on the
Financial Exchange Radio Network.
Speaker 4 (19:58):
Market's pulling back slight lee as the Fed begins its
two day monetary policy meeting today. All Street's also reacting
to better than expected retail sales report for the month
of August, where retail sales increase zero point six percent,
higher the estimates of zero point two percent. Right now,
the Dow is down by four tenths of one percent,
(20:19):
SMP five hundred down nearly two tenths of one percent,
Nasdaq is dipping into negative territory, down about a tenth
of a percent. Russell two thousand is down nearly seven
tenths of one percent, Tenure Treasure reeled up one basis
point now at four point zero four five percent, and
crude oil up one and a half percent higher, trading
(20:40):
right around sixty four dollars a barrel. Oracle up over
one percent after CBS News reported that the cloud Infrastructure
Company is among several firms that would enable TikTok to
continue operations in the US if a framework deal between
the US and China is finalized. Meanwhile, after surpassing three
trillion dollars in market cap for the first time yesterday,
(21:02):
shares in Google parent company Alphabet dipping into negative territory
today Elsewhere, Shares in arcade and restaurant chain David Buster
is sinking almost seventeen percent now after it logged another
quarter of declining same store sales. Novo Nordis said its
experimental once weekly weight loss injection drug help patients reduce
(21:23):
their weight by eleven point eight percent after sixty eight weeks.
That stock is up nearly three percent. Chipotle up over
one percent after the Burrito chain authorized an additional five
hundred million dollars for stock buybacks and more. News this
morning from Tesla after US auto safety regulators open an
(21:44):
investigation into whether some of the company's electrically powered vehicle
doors are defective. This comes after the stock jumped over
three percent yesterday following news that CEO Elon Musk purchased
about one billion dollars worth of Tesla's stock. Tesla up
about two percent today. I'm Tucker Silva and that is
(22:05):
Wall Street Watch. And in the previous segment we asked
you the trivia question, which movie did Robert Redford win
Best Director for at the Academy Awards. That would be
Ordinary People. Ellen from Charles DWN, mass is our winner today,
taking home the Financial Exchange Show T shirt. Congrats to Ellen,
and we play trivia every day here in the Financial Exchange.
(22:26):
See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (22:30):
New York Times has a piece no Longer Young and
now laid Off, Five ways to protect your finances. I've
been thinking about the subject a lot for some reason.
I think probably because of the Massachusetts unemployment scenario that
we were discussing earlier. But I think The New York
Times does a good job of at least accurately identifying
a serious problem for folks in their personal finances, which
(22:51):
is when you lose your job over the age of fifty,
it is critically important to have a plan like one.
Agism is going to play out big there, and you
are going to have a tougher time finding that job
in almost every career path that you can find compared
to somebody in their thirties. And it sucks. It's unfair,
(23:13):
but that is the reality that I think anybody who
has been in that position has faced. Is Yeah, when
you're fifty five years old, you have a whole bunch
of skill sets, but they're oftentimes unique to your previous company,
and if they're no longer willing to employ you, then
everybody else is going to look at you with suspicion,
will they be good at our latest software that we
just rolled out, will they be able to pick up things?
(23:33):
And how much are they going to be looking for
in wages? So that is the scenario that I think
people face when they are looking at a layoff in
that age demographic. What is the Times layout in terms
of strategies here to help protect yourself. Welle.
Speaker 3 (23:45):
Good point that they make is typically with a severance
package that you may get from a former employer, it
may be a lump sum payment that you receive, you know,
typically a certain week, number of weeks of pay depending
on how many years you've been at the company, and
so what they at all, Yeah, what they advise in
that lump sum scenario. Some it's paid gradually over time.
(24:06):
But if you do receive that lump sum, not blowing
at all, as if it's some windfall that you need
to go out and have a you know, two month
vacation or something like that. I mean, if you have
the financial means to do it, by all means, go
for it. But I think it's that combination of managing
that appropriately. If truly you're finding yourself tight and with
(24:26):
limited emergency saving funds, obviously you want to make sure
you use that severance very prudently, just like you were working,
and also avoid money take taking money from your four
one K if you are under the age of fifty
nine and a half. If you take money from your
four on K, not only are you going to pay
income taxes, but you're also going to pay a ten
(24:47):
percent early withdrawal penalty, So looking for other sources that
you can draw from if the severance package isn't enough
to cover you is important. Going to regular investment accounts,
emergency savings funds, or or worst case scenario, if you
have a roth I array, there is some ability to
pull back some of your contributions as long as it's
(25:07):
been open for five years.
Speaker 2 (25:08):
There is, by the way, a special exception there if
you separate from your job and have a four oh
one K, there's a special rule that might allow you
to take distributions at fifty five instead of fifty nine
and a half. So these rules do get pretty complicated.
The four oh one K, you know, honestly like that
that could take a long time to think about all
of the different effects there. Like there's fees that are
(25:30):
oftentimes covered by your employer while you're working there that
might not be covered once you're separated from service. You
could have companies stock in your four oh one K.
What do you do about that? Health insurance though, is
like the very first one that comes to mind for me, Paul,
whenever I talk to somebody pre sixty five who loses
their job, that's the first one that I go to
(25:50):
is Okay, what are we doing here? So you know,
Cobra is the first thing that you get. You do
get usually access to cobra.
Speaker 3 (25:57):
But it's startling how expensive that is for folks because
oftentimes your employer has been covering seventy eighty percent of
that cost. Now you're covering one hundred and twenty percent
of it on your own.
Speaker 5 (26:06):
So it's significant.
Speaker 2 (26:08):
So you know, at that stage looking at other employee
insurance options, maybe you you were covering the insurance and
your spouse wasn't, but hey, what does my spouse's coverage
look like at that stage? Can I get something there?
Can we get can we get covered? Or ultimately do
we need to you know, turn to the health insurance
marketplace Obamacare? Do we need to go get something there
in order to make ends meet here? I'm startled by
(26:31):
how many times I see people just forego it in
their fifties and say, eh, I'll roll the dice on this,
and man, like, you know your one hospital ride there
from being bankrupt at that stage, and be really careful
before you go and make that type of.
Speaker 3 (26:45):
It's just want to revise one hundred two percent of
the toll premium for Cobra not one.
Speaker 2 (26:49):
Twenty yeah uh so. Long story short, Losing your job
at any point in time is complex and emotional and
difficult in the best of times. Having it happen when
you are over the age of fifty makes it that
much more difficult if you're trying to prepare for your
(27:10):
eventual retirement and worried about what I've been discussing. When
it comes to the Boston area labor market, I'd like
to invite you to one of two special events that
we're putting on. This is an event sponsored by the
Financial Exchange and Armstrong Advisory Group. We're hosting two live
broadcasts of this show combined with two seminars from the
(27:31):
Armstrong Advisory Group on two separate dates in October. The
first one is going to be October ninth. It's at
the Margaritaville Resort on Cape cod The second one is
October sixteenth in Chestnut Hill at the Showcase super Lux.
Again live broadcast of this show, and then we're talking
about this market, this economy, and the seemingly changing position
(27:53):
we are facing when it comes to this. We'll be
taking questions from the audience excuse me live during the
show as well as after during that seminar. So join
us for lunch, join us for the broadcast, and just
join us for an interesting and enjoyable time. We've done
a few of these in the past. They're always great events,
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Speaker 1 (28:31):
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Speaker 2 (28:48):
The newest face of long term unemployment is now the
college educated. We've talked about this trend line for a
while now, especially newer grads, we are seeing that unemployment
rate tick up. They are having a tougher time finding
new work than previous grads at least over the course
of the last ten to fifteen years. It is one
of the weaker hiring markets for college grads that we've
(29:08):
seen since the Great Recession. And I just kind of
want to hypothetically play this out for a moment. So
we seem to have a growing population of unemployed or underemployed.
And by underemployed, I say, you know, people that have
jobs but want to be working more hours or want
(29:28):
to be working in a different area of the economy.
Yet the wealthiest ten percent continue to expand spending there.
We saw that this morning in the retail sales report.
Spending isn't dropping off. AI development is continuing at a
breakneck pace because Google and Microsoft and others have boatloads
of cash that they're working on spending on innovation and
(29:49):
research and development. It spells a really confusing economy. I
guess is where I'm landing, Like, I don't know what
the stock market does in that scenario. I don't know
what the real estate market does in those scenarios, right, Like,
all of that would logically mean higher unemployment rate. But
if all of the assets, all the stocks are owned
by that top ten percent or a significant portion of
(30:11):
them are. I don't know that it actually spells a
terrible stock market scenario. It might just spell a really
uncomfortable economy. It's really really tough to navigate all of
this and try and come up with, Okay, what does
this all mean for me a twenty five year old,
You an investor at forty five, and you the CEO
(30:32):
of a publicly traded company two years from now? It's
could you see a scenario where we hit five percent
unemployment and yet the stock market's reaching all time highs?
I would say maybe I would not said.
Speaker 3 (30:44):
That before, but with all the data on spending and
just the concentration of spending power in the higher income
death siles, I'd be more open to the possibility than
I would have been two or three years ago. Where
it's just.
Speaker 2 (30:58):
Five percent is probably extreme because at that level, like
you do have eventually spending pulling back. But you know,
it's just a strange position to be in right now
where growth is slowing in every area. But AI, however,
that AI span is so big that it could float
(31:18):
this thing forward for a few more quarters years or
more quick break when we come back. Stack roulette is next.
Speaker 1 (31:26):
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Speaker 4 (32:07):
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Speaker 2 (32:42):
Time for a bit of stacker Let What do you
have for us, Paul, I'm.
Speaker 3 (32:45):
Going off script a little bit, Mike. Here, this is
Lucking Coffee is now taking on Starbucks. Lucking Coffee. You
guys might remember listeners out there. It's the largest coffee
chain out of China, and they became all right infamous
during the pandemic where they had all sorts of accounting
Was it accounting issues?
Speaker 2 (33:06):
Mike? Yeah, it involves the company defrauding investors by fabricating
over three hundred million dollars in sales, that's what it was,
then inflating expenses to appear more profitable and grow faster.
So yeah, oops, not supposed to do that, it turns out.
Speaker 3 (33:21):
Now, as of mid September, Luckin has opened five coffee
locations in New York City. They operate their stores without
cashiers and customers must place orders on their mobile app.
They're not priced that much price different than what Starbucks is,
but basically they do flood their customers with coupons in
(33:43):
the app from anywhere of thirty to fifty percent off.
Perhaps what got them in trouble before on the sales
numbers is all the coupons that they offer. But they're
really trying to make a inroads in the United States,
all sorts of shoes. They went public on the Nasdaq
in twenty nineteen, and then they fell from grace after
(34:05):
that a crowning fraud schine listing twenty two, they were
delisted yeap, but they're back baby, Yeah.
Speaker 2 (34:13):
I want to have the coffee taste.
Speaker 3 (34:14):
I was just wearing the same thing myself.
Speaker 2 (34:16):
I'm trying to think this through. Like I guess I
would feel more comfortable downloading a Chinese based app for
buying coffee than I would with having TikTok on my phone.
But neither of them give me the warming cozies. No,
I'm sure I have to share my location. You're gonna
have my bank account information. Why do I need to
(34:38):
give you my address and Social Security number to buy
a cup of coffee? This seems a little weird, but
nonetheless time I'm sure it'll be fine.
Speaker 5 (34:44):
Hey, Starbucks is weep They're week They're ripe for the teake.
Speaker 2 (34:46):
Yeah yeah, okay, star Wars, this is what happens when
you blow through leaders like it's wildfire, and then I
can't get tracked together. So we will. We will see
if they can do so, and put up a put
up a wall against Luck and Offee coming into their territory.
I don't see any of them trying to replace Duncan.
Speaker 3 (35:04):
I just I was just thinking that I don't think
the Massachusetts contingency will will switch over there.
Speaker 2 (35:11):
They don't have a good read on us Bostonians and
how much we love a Duncan, So good luck next time,
I guess is the answer on that front. To make
America affordable, we need to start with cars. That's that's
a piece by Henrietta Moore and Arthur k And I
don't think that they are saying that we should have
(35:31):
a policy of making cars cheaper. I don't think that.
I think they're just accurately identifying just how crazy expensive
cars are and how bad we are as Americans at
evaluating that financial decision, rather than when I first read,
I was like, so are you saying we need to
elect public officials that are going to make cars cheaper?
Because that's not really how capitalism works generally. But here's
(35:56):
what they do point out is that a new car
on average cost nearly forty nine thousand dollars. We then
go and finance those cars over seven years at interest
rates higher than six percent and so we're left with
an affordability issue in this country when it comes to
transportation that is getting a bit ludicrous. And I would
(36:20):
once again say here that we have no one to
blame but ourselves, no one to blame about ourselves on this.
I am fascinated by Americans car buying fascination why we
need basically a robot on wheels these days and how
expensive that is to afford, and then ensure is just
(36:41):
nuts to me. But it's not General Motors in Tesla
that is forcing all of us to go buy these vehicles.
You can buy a really cheap Kia for a lot
less than forty nine thousand dollars, or frankly, you can
buy a Honda that's really cheap for a lot less
than forty nine thousand dollars. But guess what, we don't
do that. So, yeah, it would be great if we
(37:06):
could make cars cheaper, but again, when companies try and
roll them out and sell them, nobody wants to buy them.
Honda rolled out the Fit a number of years ago,
an outrageously cheap car, and nobody bought it. They discontinued it.
In the United States, Toyota rolled out the Yaris back
in the like two thousands, it was this tiny, really
(37:27):
cheap car that probably would have done very poorly in
the snow. But again they discontinued in the US because
nobody buys these small cheap cars. Instead, we want giant SUVs,
and you know, that's fine likes. That's what we want
to buy, and that's what the car makers make a
ton of money on, and that all works. But this
is a problem of our own doing it.
Speaker 3 (37:49):
Of all the problems, the housing market is probably the
first place to start, but I get what they're going
for on the headline thing. You know, the cars is
the next place to go. The good argument ours is
that they're gonna it's a depreciating asset too. That's the
other thing to mention. You're borrowing money for something that's
gonna be worth less down the road. So I get
that point for sure. It doesn't make a whole lot
of sense.
Speaker 2 (38:08):
Markets are slightly down for the day. We've got a
FED meeting tomorrow, so tune in, have a great rest
of your day, folks, and we will catch you on
the financial exchange. Then
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(01:06):
and fall.
Speaker 2 (01:07):
Lane, Good morning, Welcome back to the Financial Exchange. It's Mike,
Paul and Tucker with you on a Tuesday before a
Federal Reserve meeting Wednesday. They will be starting there well.
They'll announce their rate decision at two pm, followed by
the press conference at two thirty pm tomorrow in the meantime. Meantime,
(01:28):
we received retail sales data this morning that we'll dive into,
and markets are in slight sell off mode, with the
Nasdaq down a tenth percent, SMP closer to one fifth,
and the Dow off about four tenths of a percent
in early trading here. Paul, anything else catching your eye
in terms of markets or data that I missed this morning.
(01:49):
I think that just about covers it for us. We're
not seeing any massive swings out there that are worth mentioning.
Nothing of the oracle kin that we saw last week,
for example.
Speaker 3 (02:00):
No, no, nothing that stands out. You've hit on all
the major ones there.
Speaker 2 (02:03):
So the job market, sorry, let's go to the retail
sales first. The retail sales numbers that we saw for
August have reconfirmed something that we've been seeing for the
last few months, which is a consumer that's continuing to
chug along and pay their bills and expand their spending. Now, again,
retail sales data does not get adjusted for inflation, and
(02:25):
we are seeing a fair bit of it. In the
month of August, you saw headline inflation that came in
at zero point four percent month over month. We saw
retail sales that came in at how much was it
called six ye? So what does that practically mean. It
means that consumers bought about two tenths a percent of
(02:46):
more stuff. They just paid four tenths more for that
stuff that they bought. And so we do see this
scenario now taking shape and really forming pretty solidly around
higher income consumers handling all the expansion when it comes
to spending in this economy, whereas those I guess I
(03:08):
would say other ninety percent just kind of cobbling it
together to be able to put stuff on the table
and maintain their existing spending. I don't think they're falling apart,
but a number of indicators would point to that direction,
whether it's auto loan delinquencies, trade ins of underwater vehicles,
mortgage delinquencies aren't at a concerning level, but all of
(03:32):
these things have indicated a more stressed consumer and yet
the one that keeps on spending. So this doesn't likely
change the odds of a FED rate cut tomorrow. In
terms of those odds, we'll just check in on them
now from the Chicago Tile Exchange.
Speaker 3 (03:50):
Ninety six percent probability or ninety six percent probability that
we see that quarter basis point cut still four percent.
So you're saying there's a chance.
Speaker 2 (04:00):
Fifty bases point cut. Yeah, I mean this is normal
about the stage. It's pretty tied in that. Yeah, we're
going to get that cut again. Compared to a month
ago before we got this jobs report, you know, there's
only an eighty five percent chance of a cut at
that point in time. But this week jobs report that
we saw last Friday, two fridays ago September is all
(04:21):
blending together two fridays ago, really I think solidified the
Fed is perspective on this economy right now, which is
we're in a bit of a concerning level of job creation,
concerning enough that it'll likely impact the overall unemployment rate,
and so we're going to pay more attention to that
than we are the inflation data. Peace from Bloomberg today
(04:46):
seemingly sorry. Is this the Wall Street Journal? Barons? Neither
of the two peace from Baron Tucker would tell me.
But he's chewing an apple right now? Can you turn
your mic on? We all want to hear that arguing that,
look the weakness that we're seeing in the labor market,
and to point that out, you know several months now
of fewer than one hundred thousand jobs created June, we
(05:11):
actually saw net job loss. The argument that she makes
here is, look, we have to get used to a
new normal in terms of the labor market, and that
new normal is a significant portion of baby boomers retiring
every month and a significantly smaller share of work being
done by illegal immigrants or undocumented immigrants or their related family.
(05:35):
And so therefore you cannot use the same rules of
thumb when measuring this labor market as you once could.
Speaker 3 (05:41):
It was an interesting way to lay it out where
we have been concerned that we've seen a significant reduction
in job creation over March of twenty five through March
of twenty four. The Bureau of Labor statistics that come
out recently with that revision trimming off nine hundred and
eleven thousand positions. But The argument made here in this
piece in Barns is that as we go forward, if
(06:04):
there's going to be a lesser supply of workers, then
you don't need to create as many jobs as you
were previously. And what she uses as a comparison piece
is back in twenty twenty three, when the labor market
was in a very great place and had just come
off the two years of twenty one and twenty two
where we saw a ton of job hopping and an
(06:25):
increased amount of demand in the labor market. The break
even rate, which is basically the amount of jobs that
you need to create on a monthly basis in order
to satisfy the amount of people employed in labor markets,
was one hundred above one hundred and twenty five thousand.
She's now arguing that this year that break even number
is somewhere around sixty thousand because we have way less
(06:47):
in terms of immigration inflows into the United States, only
around five hundred thousand this year compared to three and
a half to four million and twenty twenty three. And
like you mentioned before, Mike, the baby boomer generation is
retiring more significantly in droves as well.
Speaker 2 (07:02):
Yeah, So I mean put very simply whether it's you know,
Kathy bos Jantik, who's the just bost genic Bostaganic. I've
heard her interviewed several times. I want to get her
name right. So the chief econdomis at nationwide or the
Federal Reserve Bank of Saint Louis has estimated another number.
But in either case, the number of jobs you need
(07:24):
to create every month to keep the unemployment at these
current levels of four point three percent is probably somewhere
between thirty and eighty thousand, with approximately half what you
needed back in twenty twenty three. And that's all defined
by a shrinking labor pool to do those same jobs.
And so again, I think people are generally aware of this.
But to me, if we're looking at, you know, hey,
(07:46):
what could possibly cause higher inflation and if we're worried
about it over a prolonged period of time, to me,
it's this more than any of the tariff stuff. Ho So,
so the terrorf related stuff I do will have an
inflationary impact, and I think we're starting to see it,
right if you look at the most recent CPI report
which came in at where we're we year over year
(08:08):
numbers of like two high two s, low threes. Month
of a month number at four tenths, so a pretty
uptick level. What we're really seeing there is, yes, services
inflation has been rising, but that's always kind of been
the case. You always start to see you know, because
wages go up, you see services inflation. But goods inflation
(08:30):
is now kind of matching all of that. My perception
of goods inflation, you're going to see an uptick and
then when you compare it to a year from now,
unless we're in a really prolonged trade war with escalating tariffs,
then it's gonna be a one time adjustment. You're not
gonna have to worry about it for the long term. Okay,
The labor market story is not a quick fix like
(08:52):
anyone out here. If you were an economist and you
identified that, hey, our demand and I don't think we're
there right now, but if demand for labor starts to
outstrip supply, there is no fit quick fix to that solution.
AI might be one of them, but otherwise you have
to increase immigration. That's the only quick fix to a
(09:13):
super tight labor market. And tell me one politician in
the country, Democrat or Republican that genuinely thinks they can
get re elected on that framework. I don't see it.
And so, yes, tariffs are going to have an effect
on prices. If you want to talk about what could
actually drive longer term inflation for a decade, to me,
(09:35):
it's the labor market.
Speaker 3 (09:36):
I just don't know how we get that tight necessarily
on the labor market perspective, we were at three and
a half percent unemployment and maybe you can make the area, well, Paul,
that was almost too strong. It led all this inflation. Yeah,
maybe I'd argue I'm making all these arguments myself was
that that supply chain shocks, that's what led to that,
and the infusion of trillions of dollars in the economy
(09:57):
like that was the reason why I was problematic, Not
the three and a half percent unemployment. It's just it
would be a long way to fall to get back
to those levels, which we would all agree. We're extremely
a tight labor market to the point where they had
the employees had so much leverage that it led to
this inflationary.
Speaker 2 (10:14):
Yeah, and they don't. They very clearly do not have
that leverage today.
Speaker 3 (10:17):
Yeah.
Speaker 2 (10:18):
My only point about this is this is not a trend.
That is just going The labor supply story is not
one that is going to change on a dime. It
is going to be a long term shift in the
supply of labor in this country. And I think the
potential effects could be inflationary, and we just won't really
(10:39):
know how that all works out. If we go into
recession and AI starts replacing a bunch of jobs, then yeah,
nothing to worry about. If instead we're in this new
environment six months from now where taxes are lower and
interest rates are lower, and housing picks up, and suddenly
companies are trying to hire people in a labor market
(10:59):
where there is just not enough people to hire. That
is a scenario that drives wages higher and drives prices
higher and lasts a long time.
Speaker 3 (11:07):
Mike, I've done my part. I've had three kids. I
can't add any more to the potential future labor.
Speaker 2 (11:13):
For Cantor won't, Paul Canter, won't. Let's take a quick
break when we come back, a little bit trivia. Here
is next on the Financial Exchange.
Speaker 1 (11:23):
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Speaker 4 (12:04):
All right, Sam for surevia here in the Financial Exchange.
In a case you missed it, sad news in Hollywood today.
After acting legend Robert Redford passed away at the age
of eighty nine. Redford had a legendary career in front
of the camera, but not many remember that he had
a great career behind the camera as a director. Redford
(12:24):
never won an Academy Award as an actor, but he
did win as a director. So or a trivia question today,
which movie did Robert Redford win Best Director four at
the Academy Awards? Once again, which movie did Robert Redford
win Best Director four at the Academy Awards? Be the
(12:44):
fifth person today to text us at six one seven
three six two thirteen eighty five with the correct answer
in when a Financial Exchange Show t shirt once again,
the fifth correct response to text us to the number
six one seven three six two thirteen eighty five will win.
Speaker 5 (13:00):
That T shirt.
Speaker 4 (13:01):
See complete contest rules at Financial Change Show dot com.
Speaker 2 (13:05):
Paul, I think it was yesterday the President brought back
up the idea of quarterly earnings reports on behalf of
publicly traded companies. It is a requirement today. The President
had made an issue of this back in twenty eighteen.
Barack Obama had done the same in twenty fifteen. Which
side of the argument do you want to take on
this one? You you in favor or you want to
(13:27):
you want to keep getting the quarterlies?
Speaker 3 (13:29):
You know, initially in prepping I would have said that
I was that I was in favor, But I'll go
against and I'll say.
Speaker 5 (13:37):
You need report sports and the reason for the stance.
Speaker 2 (13:41):
There because you need a job. And what else would
we cover on the financial exchange?
Speaker 5 (13:45):
We would definitely lose in our quarterly We were definitely lose.
Speaker 3 (13:47):
In the Financial Exchange quite a bit.
Speaker 5 (13:50):
We would have very busy.
Speaker 3 (13:51):
I guess what would they do at June, in December
or however they do, we'd have some maybe the summer
months will get really, really really dry. But all ultimately
I come back to the more information that we can have,
the more transparency, the better the counter arguments that have
been made to go against my position as well, Paul,
there's all of this juxtpedition that these companies do to
(14:14):
try and beat these earnings analysts out there, these estimates.
They're just trying to be above or beyond the expectations,
and that causes them to think more short term than
long term.
Speaker 2 (14:25):
Here's what really happens is every quarter, companies come out
and revise their earnings expectations. Right, they don't just tell
you how they did, They tell you how they think
they're going to do. And so they play this really
stupid game where they say, ah, you know, great quarter,
but we're only expecting our business to grow by three
percent over the course of the next quarter. And then
they grow by five percent and everybody applauds them. But
(14:48):
they had already been planning to grow by five percent
in the first case, since they just wanted to beat
those revisals.
Speaker 3 (14:53):
Yeah, and that generates the statistic that you'll often find
quoted where S and P five hundred companies, eighty percent
of them are beating earn A earnings expectations on a
given quarter. And I would see that at the beginning
the first time, I would say that, wow, eighty percent
of companies of being your expectations.
Speaker 5 (15:07):
But they're basically they always have as well.
Speaker 3 (15:09):
It's like my four year old, like I'm just trying
to get the bar for him to be able to
jump over at like six inches off the ground, and
I'm constantly moving it so that he beats and jumps
over that bar. And that's the same thing that companies do.
Speaker 2 (15:20):
So my counterpoint to that would be they're just going
to do that every six months instead of every three months.
It's not going to change the incentive structure. The incentive
structure is still going to be to beat expectations on
your earnings and right now you do it every quarter.
In the future, if you did this, you would do
it every six months. I think I can point to
(15:41):
two main issues that I would say would give lend
some credence to this argument. One would be cost yeah.
Two would just be a general longer term focus that
I would like CEOs to have so on the cost
side of things, we don't have enough countains. You need
accountants to report to quarterly earnings. It's costly to find
(16:04):
those accountants and do this. There have been a number
of companies, including TopWare brands, Advance Auto Parts, Lift, and others,
who have specifically cited a lack of accounting staff as
the reason that they could not on time report their
quarterly earnings and do their filings with the SEC. So
I think it's costly. Private companies don't need to do this, sorry,
(16:28):
And we have been seeing a number of companies choose
to stay private for longer this day and age. Part
of that's because of a bigger private equity funding market
where you can get access to capital in private markets.
Part of it's probably the cost and burden of reporting
earnings every quarter. A small part don't, but part.
Speaker 3 (16:44):
Of it I just don't think it's a big enough
expense that that is the reason. I think it's all
the prop The biggest portion of is the private equity
and liquidity that has been outside of their Like, yeah,
I don't make a way that Stripe sits there, open
Ei sits there.
Speaker 5 (16:58):
Geez.
Speaker 3 (16:58):
If only we didn't have to pay accountants with our
five hundred billion dollar valuation to report every quarter. That's
the reason why we're holding off.
Speaker 2 (17:06):
Agreed, there's no company out there that's going to say, oh,
now that I only have to do it twice a year,
I'm going to go public. But everything you can tweak
around the edges I think could make a slight improvement,
and that marginal company might consider it the bigger piece
to me. And I don't know that going to every
twice a year instead of four times a year changes
any of this. But we focus too much on what
(17:28):
CEOs are saying every ninety days. I'm much more interested
in what a CEO can do for their business five
years in the future, sure, rather than thirty days in
the future, because the answer for thirty days in the
future is next to nothing. Right, You can do nothing,
next to nothing to change your business unless the next
thirty days, unless you've already been investing in it for
the last two years. And so anything that you can
(17:50):
do that slightly makes that focus a little bit more
about what is my business going to look like five
years from now rather than what's going to look like
ninety days from now, I think is helpful, but quite honestly,
I don't know that going to twice a year actually
changes that. So my arguments for go to twice a
year are mainly why not, rather than oh, it's going
(18:11):
to be revolutionary. I just don't think we get all
that much other than media sensationalism and you know, more
ads for CNBC and Bloomberg by doing quarter of the
earnings reports. That's the main factor that I think is
the benefit is, Hey, you know, media gets to cover
the quarter of the earnings reports. It's something to talk about,
(18:31):
it's exciting. Analysts all over, you know, are busier during
earning season, and so that's who I think the main
benefactors of all this are, not the investors themselves, not
the companies who are reporting quarterly. I think primarily if
I look at the beneficiaries, it's stock analysts who get
to write reports every quarter. It's TV analysts who get
(18:52):
to cover this, radio anasts like ourselves who get to
cover it every ninety days. And quite honestly, I just
don't think that's a good enough excuse for why you
should have to do it every quarter. I just don't
think we lose anything.
Speaker 3 (19:03):
Yeah, ultimately, no loss, no gain really with this.
Speaker 2 (19:07):
If your business changes mid quarter, there's nothing that would
prevent you from coming out to the general public and saying, hey,
we had a revolutionary new thing and we're going to
tell you about it our cornera earrings report. But just
so you know, we're revising our expectations up or down
on our business and so you don't lose much. I
don't think by going to twice a year. Feel free
to tell me why I'm wrong. But first we're gonna
take a break and go to Wall Street Watch 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 market so far today. Right here on the
Financial Exchange Radio Network.
Speaker 4 (19:58):
Market's pulling back slight lee as the Fed begins its
two day monetary policy meeting today. All Street's also reacting
to better than expected retail sales report for the month
of August, where retail sales increase zero point six percent,
higher the estimates of zero point two percent. Right now,
the Dow is down by four tenths of one percent,
(20:19):
SMP five hundred down nearly two tenths of one percent,
Nasdaq is dipping into negative territory, down about a tenth
of a percent. Russell two thousand is down nearly seven
tenths of one percent, Tenure Treasure reeled up one basis
point now at four point zero four five percent, and
crude oil up one and a half percent higher, trading
(20:40):
right around sixty four dollars a barrel. Oracle up over
one percent after CBS News reported that the cloud Infrastructure
Company is among several firms that would enable TikTok to
continue operations in the US if a framework deal between
the US and China is finalized. Meanwhile, after surpassing three
trillion dollars in market cap for the first time yesterday,
(21:02):
shares in Google parent company Alphabet dipping into negative territory
today Elsewhere, Shares in arcade and restaurant chain David Buster
is sinking almost seventeen percent now after it logged another
quarter of declining same store sales. Novo Nordis said its
experimental once weekly weight loss injection drug help patients reduce
(21:23):
their weight by eleven point eight percent after sixty eight weeks.
That stock is up nearly three percent. Chipotle up over
one percent after the Burrito chain authorized an additional five
hundred million dollars for stock buybacks and more. News this
morning from Tesla after US auto safety regulators open an
(21:44):
investigation into whether some of the company's electrically powered vehicle
doors are defective. This comes after the stock jumped over
three percent yesterday following news that CEO Elon Musk purchased
about one billion dollars worth of Tesla's stock. Tesla up
about two percent today. I'm Tucker Silva and that is
(22:05):
Wall Street Watch. And in the previous segment we asked
you the trivia question, which movie did Robert Redford win
Best Director for at the Academy Awards. That would be
Ordinary People. Ellen from Charles DWN, mass is our winner today,
taking home the Financial Exchange Show T shirt. Congrats to Ellen,
and we play trivia every day here in the Financial Exchange.
(22:26):
See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (22:30):
New York Times has a piece no Longer Young and
now laid Off, Five ways to protect your finances. I've
been thinking about the subject a lot for some reason.
I think probably because of the Massachusetts unemployment scenario that
we were discussing earlier. But I think The New York
Times does a good job of at least accurately identifying
a serious problem for folks in their personal finances, which
(22:51):
is when you lose your job over the age of fifty,
it is critically important to have a plan like one.
Agism is going to play out big there, and you
are going to have a tougher time finding that job
in almost every career path that you can find compared
to somebody in their thirties. And it sucks. It's unfair,
(23:13):
but that is the reality that I think anybody who
has been in that position has faced. Is Yeah, when
you're fifty five years old, you have a whole bunch
of skill sets, but they're oftentimes unique to your previous company,
and if they're no longer willing to employ you, then
everybody else is going to look at you with suspicion,
will they be good at our latest software that we
just rolled out, will they be able to pick up things?
(23:33):
And how much are they going to be looking for
in wages? So that is the scenario that I think
people face when they are looking at a layoff in
that age demographic. What is the Times layout in terms
of strategies here to help protect yourself. Welle.
Speaker 3 (23:45):
Good point that they make is typically with a severance
package that you may get from a former employer, it
may be a lump sum payment that you receive, you know,
typically a certain week, number of weeks of pay depending
on how many years you've been at the company, and
so what they at all, Yeah, what they advise in
that lump sum scenario. Some it's paid gradually over time.
(24:06):
But if you do receive that lump sum, not blowing
at all, as if it's some windfall that you need
to go out and have a you know, two month
vacation or something like that. I mean, if you have
the financial means to do it, by all means, go
for it. But I think it's that combination of managing
that appropriately. If truly you're finding yourself tight and with
(24:26):
limited emergency saving funds, obviously you want to make sure
you use that severance very prudently, just like you were working,
and also avoid money take taking money from your four
one K if you are under the age of fifty
nine and a half. If you take money from your
four on K, not only are you going to pay
income taxes, but you're also going to pay a ten
(24:47):
percent early withdrawal penalty, So looking for other sources that
you can draw from if the severance package isn't enough
to cover you is important. Going to regular investment accounts,
emergency savings funds, or or worst case scenario, if you
have a roth I array, there is some ability to
pull back some of your contributions as long as it's
(25:07):
been open for five years.
Speaker 2 (25:08):
There is, by the way, a special exception there if
you separate from your job and have a four oh
one K, there's a special rule that might allow you
to take distributions at fifty five instead of fifty nine
and a half. So these rules do get pretty complicated.
The four oh one K, you know, honestly like that
that could take a long time to think about all
of the different effects there. Like there's fees that are
(25:30):
oftentimes covered by your employer while you're working there that
might not be covered once you're separated from service. You
could have companies stock in your four oh one K.
What do you do about that? Health insurance though, is
like the very first one that comes to mind for me, Paul,
whenever I talk to somebody pre sixty five who loses
their job, that's the first one that I go to
(25:50):
is Okay, what are we doing here? So you know,
Cobra is the first thing that you get. You do
get usually access to cobra.
Speaker 3 (25:57):
But it's startling how expensive that is for folks because
oftentimes your employer has been covering seventy eighty percent of
that cost. Now you're covering one hundred and twenty percent
of it on your own.
Speaker 5 (26:06):
So it's significant.
Speaker 2 (26:08):
So you know, at that stage looking at other employee
insurance options, maybe you you were covering the insurance and
your spouse wasn't, but hey, what does my spouse's coverage
look like at that stage? Can I get something there?
Can we get can we get covered? Or ultimately do
we need to you know, turn to the health insurance
marketplace Obamacare? Do we need to go get something there
in order to make ends meet here? I'm startled by
(26:31):
how many times I see people just forego it in
their fifties and say, eh, I'll roll the dice on this,
and man, like, you know your one hospital ride there
from being bankrupt at that stage, and be really careful
before you go and make that type of.
Speaker 3 (26:45):
It's just want to revise one hundred two percent of
the toll premium for Cobra not one.
Speaker 2 (26:49):
Twenty yeah uh so. Long story short, Losing your job
at any point in time is complex and emotional and
difficult in the best of times. Having it happen when
you are over the age of fifty makes it that
much more difficult if you're trying to prepare for your
(27:10):
eventual retirement and worried about what I've been discussing. When
it comes to the Boston area labor market, I'd like
to invite you to one of two special events that
we're putting on. This is an event sponsored by the
Financial Exchange and Armstrong Advisory Group. We're hosting two live
broadcasts of this show combined with two seminars from the
(27:31):
Armstrong Advisory Group on two separate dates in October. The
first one is going to be October ninth. It's at
the Margaritaville Resort on Cape cod The second one is
October sixteenth in Chestnut Hill at the Showcase super Lux.
Again live broadcast of this show, and then we're talking
about this market, this economy, and the seemingly changing position
(27:53):
we are facing when it comes to this. We'll be
taking questions from the audience excuse me live during the
show as well as after during that seminar. So join
us for lunch, join us for the broadcast, and just
join us for an interesting and enjoyable time. We've done
a few of these in the past. They're always great events,
but they do sell out. If you would like to
reserve your spot, please call now at eight hundred three
(28:15):
to nine three for zero zero one. The whole event
is free to attend again that number eight hundred three
nine three for zero zero one, or you can get
a whole bunch of more information right on our website.
It's right on the front front page there at Armstrong
Advisory dot com.
Speaker 1 (28:31):
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 make contact you to offer investment
advisory services.
Speaker 2 (28:48):
The newest face of long term unemployment is now the
college educated. We've talked about this trend line for a
while now, especially newer grads, we are seeing that unemployment
rate tick up. They are having a tougher time finding
new work than previous grads at least over the course
of the last ten to fifteen years. It is one
of the weaker hiring markets for college grads that we've
(29:08):
seen since the Great Recession. And I just kind of
want to hypothetically play this out for a moment. So
we seem to have a growing population of unemployed or underemployed.
And by underemployed, I say, you know, people that have
jobs but want to be working more hours or want
(29:28):
to be working in a different area of the economy.
Yet the wealthiest ten percent continue to expand spending there.
We saw that this morning in the retail sales report.
Spending isn't dropping off. AI development is continuing at a
breakneck pace because Google and Microsoft and others have boatloads
of cash that they're working on spending on innovation and
(29:49):
research and development. It spells a really confusing economy. I
guess is where I'm landing, Like, I don't know what
the stock market does in that scenario. I don't know
what the real estate market does in those scenarios, right, Like,
all of that would logically mean higher unemployment rate. But
if all of the assets, all the stocks are owned
by that top ten percent or a significant portion of
(30:11):
them are. I don't know that it actually spells a
terrible stock market scenario. It might just spell a really
uncomfortable economy. It's really really tough to navigate all of
this and try and come up with, Okay, what does
this all mean for me a twenty five year old,
You an investor at forty five, and you the CEO
(30:32):
of a publicly traded company two years from now? It's
could you see a scenario where we hit five percent
unemployment and yet the stock market's reaching all time highs?
I would say maybe I would not said.
Speaker 3 (30:44):
That before, but with all the data on spending and
just the concentration of spending power in the higher income
death siles, I'd be more open to the possibility than
I would have been two or three years ago. Where
it's just.
Speaker 2 (30:58):
Five percent is probably extreme because at that level, like
you do have eventually spending pulling back. But you know,
it's just a strange position to be in right now
where growth is slowing in every area. But AI, however,
that AI span is so big that it could float
(31:18):
this thing forward for a few more quarters years or
more quick break when we come back. Stack roulette is next.
Speaker 1 (31:26):
The Financial Exchange is now available every day from eleven
to noon non Serious XMS Business Radio Channel one thirty two.
Stay informed about the latest from Wall Street, fiscal policy,
and breaking business news. Every day. The Financial Exchange is
live on Serious XM's Business Radio Channel one thirty two.
This is the Financial Exchange Radio Network. The Financial Exchange
(31:49):
streams live on YouTube. Subscribe to our page and stay
up to date on breaking business news all morning. Long
Face is the Financial Exchange Radio Network.
Speaker 4 (32:07):
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Speaker 2 (32:42):
Time for a bit of stacker Let What do you
have for us, Paul, I'm.
Speaker 3 (32:45):
Going off script a little bit, Mike. Here, this is
Lucking Coffee is now taking on Starbucks. Lucking Coffee. You
guys might remember listeners out there. It's the largest coffee
chain out of China, and they became all right infamous
during the pandemic where they had all sorts of accounting
Was it accounting issues?
Speaker 2 (33:06):
Mike? Yeah, it involves the company defrauding investors by fabricating
over three hundred million dollars in sales, that's what it was,
then inflating expenses to appear more profitable and grow faster.
So yeah, oops, not supposed to do that, it turns out.
Speaker 3 (33:21):
Now, as of mid September, Luckin has opened five coffee
locations in New York City. They operate their stores without
cashiers and customers must place orders on their mobile app.
They're not priced that much price different than what Starbucks is,
but basically they do flood their customers with coupons in
(33:43):
the app from anywhere of thirty to fifty percent off.
Perhaps what got them in trouble before on the sales
numbers is all the coupons that they offer. But they're
really trying to make a inroads in the United States,
all sorts of shoes. They went public on the Nasdaq
in twenty nineteen, and then they fell from grace after
(34:05):
that a crowning fraud schine listing twenty two, they were
delisted yeap, but they're back baby, Yeah.
Speaker 2 (34:13):
I want to have the coffee taste.
Speaker 3 (34:14):
I was just wearing the same thing myself.
Speaker 2 (34:16):
I'm trying to think this through. Like I guess I
would feel more comfortable downloading a Chinese based app for
buying coffee than I would with having TikTok on my phone.
But neither of them give me the warming cozies. No,
I'm sure I have to share my location. You're gonna
have my bank account information. Why do I need to
(34:38):
give you my address and Social Security number to buy
a cup of coffee? This seems a little weird, but
nonetheless time I'm sure it'll be fine.
Speaker 5 (34:44):
Hey, Starbucks is weep They're week They're ripe for the teake.
Speaker 2 (34:46):
Yeah yeah, okay, star Wars, this is what happens when
you blow through leaders like it's wildfire, and then I
can't get tracked together. So we will. We will see
if they can do so, and put up a put
up a wall against Luck and Offee coming into their territory.
I don't see any of them trying to replace Duncan.
Speaker 3 (35:04):
I just I was just thinking that I don't think
the Massachusetts contingency will will switch over there.
Speaker 2 (35:11):
They don't have a good read on us Bostonians and
how much we love a Duncan, So good luck next time,
I guess is the answer on that front. To make
America affordable, we need to start with cars. That's that's
a piece by Henrietta Moore and Arthur k And I
don't think that they are saying that we should have
(35:31):
a policy of making cars cheaper. I don't think that.
I think they're just accurately identifying just how crazy expensive
cars are and how bad we are as Americans at
evaluating that financial decision, rather than when I first read,
I was like, so are you saying we need to
elect public officials that are going to make cars cheaper?
Because that's not really how capitalism works generally. But here's
(35:56):
what they do point out is that a new car
on average cost nearly forty nine thousand dollars. We then
go and finance those cars over seven years at interest
rates higher than six percent and so we're left with
an affordability issue in this country when it comes to
transportation that is getting a bit ludicrous. And I would
(36:20):
once again say here that we have no one to
blame but ourselves, no one to blame about ourselves on this.
I am fascinated by Americans car buying fascination why we
need basically a robot on wheels these days and how
expensive that is to afford, and then ensure is just
(36:41):
nuts to me. But it's not General Motors in Tesla
that is forcing all of us to go buy these vehicles.
You can buy a really cheap Kia for a lot
less than forty nine thousand dollars, or frankly, you can
buy a Honda that's really cheap for a lot less
than forty nine thousand dollars. But guess what, we don't
do that. So, yeah, it would be great if we
(37:06):
could make cars cheaper, but again, when companies try and
roll them out and sell them, nobody wants to buy them.
Honda rolled out the Fit a number of years ago,
an outrageously cheap car, and nobody bought it. They discontinued it.
In the United States, Toyota rolled out the Yaris back
in the like two thousands, it was this tiny, really
(37:27):
cheap car that probably would have done very poorly in
the snow. But again they discontinued in the US because
nobody buys these small cheap cars. Instead, we want giant SUVs,
and you know, that's fine likes. That's what we want
to buy, and that's what the car makers make a
ton of money on, and that all works. But this
is a problem of our own doing it.
Speaker 3 (37:49):
Of all the problems, the housing market is probably the
first place to start, but I get what they're going
for on the headline thing. You know, the cars is
the next place to go. The good argument ours is
that they're gonna it's a depreciating asset too. That's the
other thing to mention. You're borrowing money for something that's
gonna be worth less down the road. So I get
that point for sure. It doesn't make a whole lot
of sense.
Speaker 2 (38:08):
Markets are slightly down for the day. We've got a
FED meeting tomorrow, so tune in, have a great rest
of your day, folks, and we will catch you on
the financial exchange. Then
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