July 18, 2024 • 35 mins
Mike Armstrong and Marc Fandetti discuss how the conversation surrounding inflation is being expressed of the RNC. JD Vance blames China for the degredation of the US's middle class. Social Security just announced a change for millions of beneficiaries. Car repossesions surge across the country. Bud Light loses more ground, slipping to No. 3 in America. American towns are saying no to new megamansions.
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Financial Exchange with Mike Armstrong and MarkVandetti. Welcome back to the Financial Exchange
as we open the eleven o'clock hour. Here we've got markets in mixed territory,
but fairly flat for the day.The Dow up thirty four points,
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seven one hundreds of a percent,SMP down four points about the same percentage
wise in the other direction, andthe Nasdaq down fifty points about a quarter
of a percent. In early markettrading. We'll let you know how things
close for the day, but yesterdaywas a pretty significant down one for the
Nasdaq as we've continued to see arotation out of some of those large tech
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names, while still seeing robust doubledigit growth out of the Nasdaq so far
this year. At a thirty amthis morning, we received weekly jobless claims
from the Department of Labor and therewas a slight surprise to the upside here.
This is the early filings of unemploymentthat get reported to the Department of
Labor by the states. You foundthat in the week of July thirteenth,
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the seasonally adjusted claims came in attwo hundred and forty three thousand. That
was an increase of twenty thousand fromthe previous week and above expectations at two
forty three. There's really nothing toworry about, but obviously if it's the
beginning of a new trend, youkeep an eye on it for that reason.
And the total number of people continuingon unemployment again little change there,
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so I don't think much to seethere. We have earnings from Taiwan's Semiconductor
that came out this morning, generallybeating on most fronts. Netflix will be
reporting after the bell today, AmericanExpress and Schlumberge reporting tomorrow morning, and
then next week kicking off big techearnings from the likes of Microsoft and Google
Alphabet sorry, among others. Anythingelse catching your eye in mark gets today
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mark no other than the sort oflop sided nature of the influences on the
overall index movements. The big threeAlphabet, Microsoft, and VideA down a
little over one percent today, wherenot for them if you take them out,
the rest of the market's up abouta tenth of a percent. Nothing
to write home about, but continuationyeah of an overall trend. Is these
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big boys that have carried the marketall year this year, are we not
having their moments we knew it wasgoing to happen. They were there,
spectacularly arguably overvalued. Absent the realizationof these heroic earnings growth assumptions that have
been baked in, particularly two inNvidia, they could materialize. Odds are
probably that they won't, So somethinglike this was probably inevitable, and it's
been pretty mild and pretty contained.This week has been the kickoff of the
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Republican National Convention, and for thatreason, you're hearing all sorts of different
you know, continued campaign promises andhighlighting a number of the things that are
front and center for Americans and theirviews on the economy. Mark, what
would you say as being in thehighlights that you've caught or you know,
just in reading about the convention orwatching it itself. What's been the main
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theme? What's been the main Obviously, the goal of the RNC right now
is very purely to criticize and hitat the Biden administration and their four year
record. Here, I've been hearinginflation repeated over and over and what Republicans
are going to do differently for theAmerican worker and things along those lines.
What else have you been hearing?This striking to me is the transformation of
the Republican Party, and this happensevery few generations or more frequently. Parties
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are like businesses. They look atwhat people want and they try to give
it to them. Thirty forty yearsago, free market was in vogue,
yes, right, and by freemarket I mean fewer regulations, both on
domestic businesses and on trade. Soliberalization not in the sense of the word
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that liberal connotes, but liberalization isin relaxing of regulations. Generally, was,
for lack of a better word,popular. It was the trend in
the post war period, and itreached its apex arguably in the late seventies
in the UK under Thatcher, andthen in seventies and eighties of course under
Reagan and Thatcher and others globally,and it seemed to work. Rates of
growth were covered and this continued throughoutthe nineties. Republican Party has done a
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one to eighty. The hostile takeoveras some have called it of Donald Trump
in the populace by the Republican Partyis arguably complete. They're no longer for
free trade, there for tariffs.They're outright hostile. They're no longer for
liberal immigration laws. They want restrictionson immigration laws, even legal immigration.
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This is not unprecedented, but it'snew to the Republican Party. They're no
longer friendly to big business. Teamster'spresident spoke and he bashed business for an
hour. I wasn't sure what conventionI was watching, So it's in jd
Vance's outright hostile toward big business andhe's pro aggressive antitrust. These views are
foreign to kind of complimented Lena CON'sactions a little bit, which was fascinating.
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He's a big fan. So whatdoes that mean? What are higher
tariffs lower labor force growth, whichis what deporting people who are not here
legally. And I'm not saying I'mnot making a political determination. I'm not
evaluating these things on a political economicevaluation. Evaluate the economics of it.
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And this is where I think nuancegets a bit lost because that I was
just going to make three simple points. But why this program is inflationary and
this is not an argument against it. You may say, I'll take the
inflation. I want to handle thisimmigration problem. I want to cut China
off effectively and strangle them economically.And I just think America will be a
better place. I will take lowergrowth and higher inflation, because those are
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the consequences probably of restricting labor supply, of imposing tariffs, which are just
taxes on foreign goods. And whoknows what the long term consequences of shifting
all that production to arguably less efficient, certainly more costly, domestic production would
be. You you might be onit, you're radio at the consequences.
It's more jobs, yes, butwe got to pay for that. And
you may say, well, that'sworth it. Yeah, I don't know.
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I do know the consequences all elseEQL are slower growth on the margin,
but cumulatively over time it could behuge and higher inflation. And what
a less safe world or a moresafe world if we pull out of our
alliances? And what does that meanfor economic stability? And I haven't even
gotten a FED independence yet, whichTrump is apparently questioning, And I would
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mention FED independence unknown impact on inflationbecause it depends what they I'll tell you
what it's going to be. I'mwith you. But the other one would
be tax cuts that's been a bigpiece of this campaign, and you know,
arguably also inflationary. Here's the thing, though, I don't know that
any of that's going to be unsuccessfulas a campaign pledge, because quite honestly,
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we're not great at nuance. Asthe American voter, We're not great
at nuance. We are good atat listening to the big picture. And
the big picture that they are inI think is successfully getting across is look
what inflation has done to American households. Yeah, that was the crux of
jd Vance's of Jdvance's speech is lookat the average Ohio, Ohio resident there,
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I forget the word he used,maybe spending power or inflation adjusted net
worth is down ten percent of thelast few years, and we're going to
fix it. I think the criticalpart of me would say, your solutions
to high inflation may raise wages.If we let the situation in Ohio dictate
national economic policy, we are utterlyscrewed. If you look at Ohio per
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capita GDP, and I'll just pickMassachusetts because it's the heart, arguably economic
heart of New England and we happento reside there. Our per capita GDP,
which is one measure of how welloff we are relative to Ohio,
we were at the same level asthey were in nineteen eighty. Since then,
our per capita GDP, just ameasure of how well off we are,
has soared ahead of Ohio's fifty percent. Massachusetts has the winning formula economically.
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I'm not crediting our politicians. They'rea little too liberal for my taste.
Our taxes are too high, thegovernment metals too much in things for
my taste here in Massachusetts. Butwe seem to have found the right balance
between higher education, biotech, technologycultivating. I know we've got some population
leakage issues, but generally, Mike, we found the winning formula. You
want to be Massachusetts or do youwant to be Ohio? Read Hillbilly Leggy.
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I haven't read it. I've readthe highlights. I've been to Ohio
enough, had lots of clients there, spend a lot of time there.
It's in many ways the land thattime. Do we have any affiliates in
Ohio? No, it's the landthat time forgot in many ways. You
don't want them driving the economic bus. No, you do not. You
just don't know, you don't.I think that was part of his point,
is that things in Ohio have havefailed, and you know, but
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they've worked here. Do you wantto look at what hasn't worked there and
say, well, let's fix let'srearranged the country's economic structure for lack of
a better way to put it,to remedy Ohio's problems. Or do you
want to look to the liberal coaststhat everybody so laments, but are we're
like the thirteenth biggest economy in theworld here California is the fifth or sixth?
Which do you want to be like? Which should we be imitating?
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It's a fair series of points,Mark. I think the other piece of
this, there are going to bedozens of articles written and criticisms made of
the campaign pledges of the Republican Party. Right now. I would agree with
you wholeheartedly that a dramatic change inan immigration policy, if you were to
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just remove all illegal immigrants from thecountry inflationary, so it's eight million workers,
you would raise tariffs on China inflationary. The question is going to all
else equal? I agreed all thesethings. But do you think a trump
fed Trump wants to put himself onthe Federal Open Market Committee? You think
they're going to push back against thoseforces? Again, I think a generally
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bad idea. My point would bethat is a lot of nuance for the
average voter to interpret, and I'mnot sure they're going to if I can,
if I can understand it and communicateit, then I think anybody could.
Yeah, is that I know whatyou're saying. It's a lot of
detail and the eye start to glossover. But I think, and I'm
not saying the Democrats, by theway, in any better position, they're
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they're spending like the proverbial drunken sailors. They have no solution to the alt
to the entitlement crisis, which is, you know, getting closer. I
just openly wonder, as well,how seriously we are actually supposed to take
these promises. That's kind of beenthe the point of some of the stuff
that's coming out of the Trump presidencyand campaign in the past is look,
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I sometimes say these inflammatory things.It does drive my general direction, but
you know, you're not supposed totake all of it word for word.
I would take a bit Jadie Vanceas serious as a heart attack. He's
an intellectual, he's young, he'sdriven, he's determined, and his ideas
are wrong headed. They're a muddledmish mash. You're warmed over failed popularism,
(12:07):
but they are determined to implement Mike. So I think, honestly,
you do have to take politicians atface value with what they say, and
everybody should be evaluating what is thistrade off, you know, the tradeoff
on lower taxes, on immigration,on you know, trade with China and
(12:28):
things along those lines. We doneed to take it at face value,
believe that that's what the direction isthat they want to go. And like
you said, understand the trade offs. That's where it comes down to you.
Right. I'm not saying don't doit. I'm not saying don't vote
for him. I'm just saying,understand the trade offs. Right. There's
no free lunch, higher wages itwould come from this policy. I am
very confident that higher wages for Americanworkers, especially in manufacturing, would probably
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come if you implemented a bunch ofthese policies. The downside would be probably
significantly higher prices, and that's atradeoff. So that's a realistic quality.
We'll I'll be driving Chevy Citations,remember those. Yeah, that's true.
I don't know. The eighty fivewas not a bad model, but it
was largely driving Japanese cars for adecade and a half. For a reason.
Let's take a quick break. Tunein for trivia brought to you by
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a five star review. You're listeningto the Financial Exchange Radio Network. Mark.
We were talking a bit about FEDindependence and when Donald Trump took off
his last he removed then FED PresidentJanet Yellen effectively letter term inspire. Yeah,
letter term expire did not renew andinstead uh put Joon Powell in charge
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of the FED, nominated him forthe post and put him in charge and
regretted it like immediately. So whatdo we talk about when we talk about
independence at the FED? Because youknow, the president does nominate who will
be the next leader of the FED, clearly has the power to remove the
Federal Reserve Chair. What does thisindependence actually mean? Do you want the
(14:22):
government printing money? Explain? Imean, explain what you mean. Okay,
Inflation in the long run is onlypossible if there's more money being printed
than is justified by the level ofeconomic activity. Inflation is We talked about
Melton Friedman last hour. He gaveus the inc He wasn't the first,
but he popularized that inflation is inthe long run. I'm modifying his words
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a little bit, a monetary phenomenon. Simple. The simpler way to say
that is, when you have,as others have said, and you've all
heard this phrase, too much moneychasing not enough goods or too few goods,
prices have to go up. Imagineif somebody doubled the number of dollars
in your bank account, your wallet, whatever, what would you do tomorrow?
You'd go out, You'd spend more, we all would, maybe even
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most of it. Sure if thathappened on a large enough scale, that
would eventually result in inflation, maybeone. Yeah, thank you, Mike.
You know, I'm like, Iknow, this sounds ridiculous. What
kind of idiot would pursue this asan actual policy? Oh yeah, the
president and Congress did. Two presidentsdid, right, good example, Thanks
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Mike. So you don't want governmentelected officials whose time frame is short and
whose interests might be cynical or whatever, just politically motivated to control the supply
of money. When that's happened historically, it's resulted in inflation. Just look
at wartime inflation in this country alone, when the exigency dictated we find ways
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to finance war, both North andSouth, and our Civil war, for
example, South had like nine thousandpercent inflation by the end of the war.
They couldn't raise enough taxes or borrowenough to cover the goods they needed
to buy. The North had likeeighty percent inflation. Similarly, World War
One, World War II in thiscountry sixty or so percent inflation. Those
again are extreme circumstances. You wouldn'twant government relying on money printing as a
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regular source of financing. So gradually, over the last half century, in
an effort to get inflation under control, to make it low and stable,
countries all over the developed world andthe developing world have made their central banks
independent. They've put people in chargewho can't be fired for the most part,
and who are evaluated based on howwell they can control inflation. So
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it is a best practice to understateit to allow your central Bank to make
decisions that politicians might disagree with.And again, I think to your point,
politicians hope you know, in thebest of times, you know,
serve all of us and do what'sin the best in the country. But
I think the cynical view would beserved to get reelected. And what would
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you want to do to get reelectedwould be boost economic activity. You want
to see more people with more dollarsin their hands, and one good way
to do that is to lower interestrates. And that independence is important because
hopefully the person in charge of theFederal Reserve looks past the next election and
says, hey, this is whatis needed in order to create stable prices.
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And there have been instances such asin Turkey where the central bank has
no real independence, and the USis very, very different from Turkey,
but in that case, in theface of high inflation, they lowered interest
rates and what did you get.A hell of a lot more inflation is
what you got. And you know, it was all done really to look
good in front of a in frontof an election, and the results were
(17:42):
predictable and obvious. And that's notwhat we want here in the US.
Bringing the latest financial news straight toyour radio every day. It's the Financial
(18:04):
Exchange on the Financial Exchange Radio Network. Find daily interviews and full shows of
the Financial Exchange on our YouTube page. Like us on YouTube and get caught
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Radio Network. Massive changes at SocialSecurity mark big big changes coming to Social
(18:29):
Security. I am, of coursekidding. They are changing how you log
into Social Security, not actually fixingany of the huge problems that the social
funding. That actually could be afix if you just want everybody out,
Hey, SOI Security solve, theneverybody So if anybody's recently logged into the
IRS, they have this service calledid id me that creates multi factor authentication
(18:53):
and makes it a lot more securewhen logging into the government systems, which
is a good thing because you don'treally want, you know, a hacker
logging into so Security and filing onyour behalf, which does happen all the
time. Unfortunately, we are notgetting any closer to solving any of the
massive problems with Social Security, which, just as a reminder, according to
(19:15):
the latest estimates, eight nine yearsfrom now, won't have enough money in
the trust fund to pay benefits,which according to law, means that the
benefits would have to be cut acrossthe board for all beneficiaries to the tune
of about twenty percent. Like thatsounds like a very serious problem the major
political parties must be addressing, mustbe talking about in all of their three
issues. Well, no, ofcourse not, because neither of them who
(19:37):
win the White House will actually bepresident eight or nine years from now.
So why would you say president orpresident? I said president, but I'm
sorry, good slip of the tongue. This leads to an actual financial planning
question mark, which we get allthe time. I literally, I don't
think a week has gone by inthe last five years where somebody has not
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asked me, Hey, I'm worriedabout what happens with Social Security? When
should I be filing because of that? Should I be taking it at sixty
two? Because at least then I'llget a few years before it runs out
of money and goes to zero.So a few things keep in mind.
Even if Congress does absolutely nothing,important to understand that Social Security wouldn't go
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to zero. The trust fund beingempty does not mean that people stop receiving
Social Security entirely. In a worstcase scenario. According to the estimates,
it'd be a twenty percent haircut.A lot of opinions differ on this,
but here's my personal opinion. Ifyou are currently over the age of fifty,
I don't think you are likely tosee a change in your Social Security
benefit at all. Mark shaking hishands, I'm a little bit Trump dance.
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Yeah. Nonetheless, I think inmy opinion that they will solve this
problem through a combination of tax increasesbenefit cuts for younger Americans. And honestly,
if I'm going to play it outmost seriously, Congress probably just spends
the money on Social Security without raisingany revenue from anywhere, because that's the
go to move from Congress is just, h we've got this debtlimit. Don't
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worry about that debtlimit. Let's justspend the money. We'll just borrow it
and pay our SOI Security beneficiary.So like you do have to attack the
problem realistically. But nonetheless, SocialSecurity for a majority of Americans is the
majority of their retirement income, andthere are tricky questions to answer about Social
(21:30):
Security beyond just will the money runout. Let's be honest, nobody knows
the answer that question. Nobody knowswhat Congress's solution to this problem is going
to be and whether or not theywill kick the can all the way down
the road to twenty thirty three.That's my guest, but we will see.
If you are trying to evaluate thesesocial Security questions and feels like you're
(21:51):
doing it with a gun to yourhead because of the potential cuts that are
going to be made over the nextfew years, I would urge you to
pause and speak to an expert whoknows the systems in and out and how
the benefits will work. In regardto your overall retirement strategy, it can
make sense to pull your Social Securitybenefits at sixty two. I am not
(22:12):
somebody that stands here and says thatthat is always a terrible idea. There
are circumstances where it does make sense. I'm also willing to say that the
percentage of people that do declare socialSecurity and take it at sixty two is
so high that it's probably a mistakefor a lot of them. Attacking this
question with a sound financial plan behindit can make a huge impact on your
(22:33):
retirement success. Knowing when it makessense to pull social Security, the impact
on your tax scenario the impact onyour ability to generate work income after you're
doing so. These are all reallyimportant questions that I see a lot of
misinformation out there about. So don'ttake your advice from TikTok. Don't just
fall into the habit of following whatyour neighbor did or what your cousin did
(22:57):
on Social Security. Ure out whatyou should be doing individually for yourself when
it comes to your own personal financesby developing a financial plan. If you'd
like to talk to one of thefolks at Armstrong Advisory Group about how we
strategize with our own clients about whento take Social Security or other pension income,
or when to access different buckets oftheir retirement money, give us a
(23:19):
ring at eight hundred three nine threefour zero zero one. You can also
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That website's Armstrong Advisory dot Com.But the number, once again is eight
hundred three nine three four zero zeroone. The proceeding was paid for by
Armstrong Advisory Group, a registered investmentadvisor. Nothing in the ad or in
(23:40):
any Armstrong guide a specific financial,legal or tax advice. Consult your own
financial tax into state planning advisors beforemaking any investment decisions. Armstrong, make
contact you to offer investment advisory services. I keep running into these non government
data data points mark that I findintriguing and concerning, but I'm unsure of
what to do with them. We'vetalked a little bit about credit card delinquencies,
(24:04):
you know, We've talked a bitabout how that's been growing pretty rapidly.
The credit card delinquency rate now isabove where it was in twenty nineteen.
If I'm not mistaken, I'm goingto pull it up as we speak
here so I can look at it. Delinquency rates on credit cards in the
(24:25):
first quarter of twenty twenty four,yeah, was three point one six percent.
In the first quarter of twenty nineteenit was only a two point five
percent. So we see more peoplegetting later on their credit card bills at
a faster pace than we saw,you know, anytime in the twenty tens
decade. The counterpoint to that Ijust said, three point six percent is
where we were according to the mostrecent data, well throughout the entire twenty
(24:49):
tens decade, sorry, the twothousands decade, the lowest we got was
three point five percent. Before thatwe were hovering in the high fours,
and you know that nineteen nine wasa pretty darn good economy as far as
I recall. The latest one alongthese same lines is apparently car repos have
surged twenty three percent as Americans arefalling behind on payments. And this is
(25:11):
another one where I always say,well, I don't really care about the
year over year numbers. Tell mewhat it was like pre pandemic. And
the answer is that those repossessions onvehicles have now surpassed pre pandemic levels as
well. They're up fourteen percent comparedto the first half of twenty nineteen.
I think anyone conclude that this isprobably not good news for the state of
the average American. But is theremuch else to do with it? Can
(25:36):
we say definitively that this means weare heading for one type of economy or
another Mark No, I don't thinkso, Mike. Maybe there are some
economists who use this particular statistic intheir models and it informs a view that
is in turn form informed by alot of different so called data points on
(25:56):
I'll just call it consumer spending.Yeah, get monthly consumer expenditures in the
form of the personal Consumption Expenditures Index, which goes right into GDP. So
GDP is quarterly and then with alag, so by the time you get
it, it's really rear view mirrorstuff. But we do get components of
it on a more frequent basis,and then we get sprinkles of this type
of stuff in between, some ofit private sectors, some of it public
(26:18):
sectors. So I guess you justsort of file it in your Health of
the consumer. Uh, receptacle,thank you gets a better word than receptacle.
And if you, you know,if everything's pointing in the same direction
as you and Chuck like to say, then it's probably a warning flag.
But in isolation, I don't reallyknow what to make of it. Did
people who were otherwise not good creditsand by that I mean they're not,
(26:41):
you know, not credit worthy,low score, not not reliable, maybe
through no fault of their own.Were they able to get credit after COVID
stimulus checks built up their savings andincomes a component of that too. I'll
just leave that to the side.Did they did they get in over their
heads because COVID savings and stimulus allowedthem to take been they could otherwise have
afforded a lot of people looked alot healthier. That's what I That's why
(27:03):
I should have said, a lotof people's credits looked a lot here in
twenty twenty one, twenty twenty twothan they probably did pre COVID, and
so were they given loans that theywouldn't have otherwise gotten. Obviously that's the
answer, because the delink with thisis it's self evident because there were people
who couldn't afford the dad who tookit. These payments, by the way,
are absolutely absolutely wild, because theaverage interest rate now for a new
(27:26):
car is sitting at seven point threepercent and used cars eleven and a half
percent. That means the monthly billsfor car payments for a new car are
sitting at seven hundred and forty bucksa month, and a used car again
on average for used in new carprices sitting at five point fifty a month
for a used car on average withthose interest rates, which is just wild
to think about it, and completelyunaffordable for the average person. Quick break
(27:49):
a little bit of stack roulette nextwhen we come back. Miss any of
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com. Sounds like Tucker needs avacation. Yeah, You'll think if anyone
(28:59):
was unaware bud Light had a littlebit of a marketing mishap last year,
that are they serving that at thethe probably not impact of their sales a
wee bit. Honestly, if theygave him a big enough discount, I
would honestly guess yes, But Idon't believe they are in this case.
At the time of that little marketingmishap, bud Light made up over ten
(29:21):
percent of beer sales in US retailstories, which is kind of wild to
me given the degree of choice that'sout there for when it comes to beer.
By mid twenty twenty three, theyhad fallen too, market share below
seven percent, and they'd been kindof hovering around there. Big story then
was Midello had taken their place backin like spring of twenty twenty three was
when Medello outpaced bud Light in termsof sales. It now turns out that
(29:45):
bud Light has continued to lose theirmarket dominance in spite of all the attempts
to repair it, with michelob Ultranow taking the place of that number two
spot in beer sales. Interesting pieceto me here is that bud Light and
cores Light have lost market share reallyafter that big marketing fiasco on the part
(30:07):
of bud Light, and so Iwonder if there's more at play here.
Michelobultra, by the way, isalso owned by Anheuser Busch, so they're
doing just fine with that, andthere's a few other other categories that are
doing well. But I just dofind it interesting that two years out,
a year and a half out almost, and you're still seeing a pretty consistent
drawdown in bud Light's market share whenit comes to beer sales in the US.
(30:33):
I'm not talking about compared to othertypes of alcohol, right, we're
just looking at other beer varieties.They are continuing to lose market share,
as is cores Light, whereas Michelobultraand Medelo picking up a little ground there.
Bush Light picked up some ground too. But yeah, a little inflation
impact there maybe absolutely, Yeah,Yeah, I don't know. It's just
dangerous to focus on anything other thanmaking profits. I'll quote Milton Friedman one
(30:56):
last time today. Make it atrifecta. Wow, So or if that's
the right way to think about it, it's a trifecta, a trio try
whatever trifecta. We said. Hepointed out that expectations matter. We said
that. He pointed out that inthe long run, inflation is monetary comes
from government printing too much money.Always lessons good to keep close to your
heart. And he also said corporationsshould just focus on making money for their
(31:18):
shareholders full stop. Most people today, especially younger folks, are horrified by
that idea. Oh, they shouldbe good corporate citizens. Blob they should
send people out to habitat for humanity, blah blah blah. You do this
type of stuff, though, yourun the risk of alienating somebody. Thirty
percent drop in in market share ishuge, by the way, I think
that their marketing attempt and their theiryou know, complete screw up, but
(31:41):
light hat. I do think hewas genuinely in an attempt to make money.
I think that they just were completelymisguided and not not really that's living
in their own two Yeah, itwasn't just political correctness run among right.
They thought they saw a market open. I thought they saw a market opening.
I thought they could appeal to acertain demographic and ended up turning on
all the majority a large portion inall PCs. Anyway, what do you
(32:01):
have for us? The Wall StreetJournal has an article titled American towns are
rebelling against mega mansions. There's here'san interesting stat from the article. US
house sizes I'm quoting directly exploded onehundred and fifty percent between nineteen eighty and
twenty eighteen. I had the sensethat they've gotten bigger on average, but
one point five times. So atwo thousand square foot house, if that
(32:23):
was typical, say when I wasgrowing up in the nineteen eighties, now
three thousand is typical by the medianmeasure anyway, using government data. So
many and we've all seen these homesspring up on very small lots. They
tear something down, it's much moreprofitable. Yeah, yeah, yeah,
we see it here in New England. But go to Texas and you know,
(32:44):
go to other parts of the countrywhere there's more room to develop,
and it's far more prevalent than megamansions that are out so it's not as
much of a blight visually as itis here where lots are small, easy
to do. A tear down ifyou're going to build two thousand square feet
doesn't cost much more. I don'tthink take much more time to build three
or thirty five hundred, because everythingthe foundation's there, just a matter of
(33:05):
scaling up or back a little bit. I guess so is that I mean
that seems to me that that's thewhole story, is profit you're a builder,
what do you want to do?You want to maximize square footage because
that's how people look at The protonsare a lot bigger price per square foot
and so if it's not that muchmore expensive for me to, you know,
shrink the yard and build the houseup bigger, then I don't think
it's a margin. I pull thatout of thin air. But my guess
(33:28):
is a builder would say, no, no, it's not linear. It's
actually it actually gets much cheaper asyou get bigger foundation, all other things,
the big the big expense is equal. I would think so too.
So towns are I guess in theinterest of limiting the visual blight that can
you know, you're in your niceat one time spacious sort of two story
colonial, and then next door goesup this contemporary or other. There goes
(33:52):
your view of the open sky.I've seen that happen a couple of times
to folks. So yeah, municipalitiesin some cases are putting square footage limits
on New con Chusetts. I not, yeah, I have, although quite
honestly, the intricacies of town bytown zoning zoning requirements, who the hell
knows, I bet they are inall those meeting minutes, like you know
(34:15):
between all the setback provisions and youknow how much you must be away from
your neighbor. And yeah, I'msure that there are ways that they are
doing this similar to a square footagelimit that still hit it the same thing.
Especially I mean Needham, Massachusetts isa great example of this. Go
drive around here and you will seeexactly what Mark Fanday's talking about, which
(34:36):
is ten thousand square foot lot,seven thousand square foot home, and you're
just scratching your head, like,how do you even fit it on that
postage stamp lot. It's it's verycommon around here, and I'm sure there
has been pushback in terms of zoninggoing forward. That's a good point,
though there are other parameters you canmanipulate, other variables you can change to
effectively limit the home size without puttinga limit. Is some jurisdictions are doing
(34:59):
your court to this article without actuallycapping square footage. Yeah, yeah,
there are. But I'll once againsay, more limitations you're putting in in
terms of restrictions on building, whatdoes that probably do? Probably drives prices
higher, would be my guess.If you're limiting the ability to construct new
homes. Then all of this netnet probably higher prices than the long term.
(35:20):
It's all the time we have.Markets remain open, but strongly a
negative territory down with the NASZAC leadingthe way down, off nearly two hundred
points for more than one percent losses. We close out the show, we'll
be back at it tomorrow to closeout the week. Have a great rest
of your day, every buddy,
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The DAV five K Boston is presentedby Veterans Development corporation. Face is the
Financial Exchange with Mike Armstrong and MarkVandetti. Welcome back to the Financial Exchange
as we open the eleven o'clock hour. Here we've got markets in mixed territory,
but fairly flat for the day.The Dow up thirty four points,
(01:25):
seven one hundreds of a percent,SMP down four points about the same percentage
wise in the other direction, andthe Nasdaq down fifty points about a quarter
of a percent. In early markettrading. We'll let you know how things
close for the day, but yesterdaywas a pretty significant down one for the
Nasdaq as we've continued to see arotation out of some of those large tech
(01:47):
names, while still seeing robust doubledigit growth out of the Nasdaq so far
this year. At a thirty amthis morning, we received weekly jobless claims
from the Department of Labor and therewas a slight surprise to the upside here.
This is the early filings of unemploymentthat get reported to the Department of
Labor by the states. You foundthat in the week of July thirteenth,
(02:09):
the seasonally adjusted claims came in attwo hundred and forty three thousand. That
was an increase of twenty thousand fromthe previous week and above expectations at two
forty three. There's really nothing toworry about, but obviously if it's the
beginning of a new trend, youkeep an eye on it for that reason.
And the total number of people continuingon unemployment again little change there,
(02:35):
so I don't think much to seethere. We have earnings from Taiwan's Semiconductor
that came out this morning, generallybeating on most fronts. Netflix will be
reporting after the bell today, AmericanExpress and Schlumberge reporting tomorrow morning, and
then next week kicking off big techearnings from the likes of Microsoft and Google
Alphabet sorry, among others. Anythingelse catching your eye in mark gets today
(03:00):
mark no other than the sort oflop sided nature of the influences on the
overall index movements. The big threeAlphabet, Microsoft, and VideA down a
little over one percent today, wherenot for them if you take them out,
the rest of the market's up abouta tenth of a percent. Nothing
to write home about, but continuationyeah of an overall trend. Is these
(03:21):
big boys that have carried the marketall year this year, are we not
having their moments we knew it wasgoing to happen. They were there,
spectacularly arguably overvalued. Absent the realizationof these heroic earnings growth assumptions that have
been baked in, particularly two inNvidia, they could materialize. Odds are
probably that they won't, So somethinglike this was probably inevitable, and it's
been pretty mild and pretty contained.This week has been the kickoff of the
(03:45):
Republican National Convention, and for thatreason, you're hearing all sorts of different
you know, continued campaign promises andhighlighting a number of the things that are
front and center for Americans and theirviews on the economy. Mark, what
would you say as being in thehighlights that you've caught or you know,
just in reading about the convention orwatching it itself. What's been the main
(04:10):
theme? What's been the main Obviously, the goal of the RNC right now
is very purely to criticize and hitat the Biden administration and their four year
record. Here, I've been hearinginflation repeated over and over and what Republicans
are going to do differently for theAmerican worker and things along those lines.
What else have you been hearing?This striking to me is the transformation of
the Republican Party, and this happensevery few generations or more frequently. Parties
(04:34):
are like businesses. They look atwhat people want and they try to give
it to them. Thirty forty yearsago, free market was in vogue,
yes, right, and by freemarket I mean fewer regulations, both on
domestic businesses and on trade. Soliberalization not in the sense of the word
(04:56):
that liberal connotes, but liberalization isin relaxing of regulations. Generally, was,
for lack of a better word,popular. It was the trend in
the post war period, and itreached its apex arguably in the late seventies
in the UK under Thatcher, andthen in seventies and eighties of course under
Reagan and Thatcher and others globally,and it seemed to work. Rates of
growth were covered and this continued throughoutthe nineties. Republican Party has done a
(05:20):
one to eighty. The hostile takeoveras some have called it of Donald Trump
in the populace by the Republican Partyis arguably complete. They're no longer for
free trade, there for tariffs.They're outright hostile. They're no longer for
liberal immigration laws. They want restrictionson immigration laws, even legal immigration.
(05:40):
This is not unprecedented, but it'snew to the Republican Party. They're no
longer friendly to big business. Teamster'spresident spoke and he bashed business for an
hour. I wasn't sure what conventionI was watching, So it's in jd
Vance's outright hostile toward big business andhe's pro aggressive antitrust. These views are
foreign to kind of complimented Lena CON'sactions a little bit, which was fascinating.
(06:02):
He's a big fan. So whatdoes that mean? What are higher
tariffs lower labor force growth, whichis what deporting people who are not here
legally. And I'm not saying I'mnot making a political determination. I'm not
evaluating these things on a political economicevaluation. Evaluate the economics of it.
(06:23):
And this is where I think nuancegets a bit lost because that I was
just going to make three simple points. But why this program is inflationary and
this is not an argument against it. You may say, I'll take the
inflation. I want to handle thisimmigration problem. I want to cut China
off effectively and strangle them economically.And I just think America will be a
better place. I will take lowergrowth and higher inflation, because those are
(06:46):
the consequences probably of restricting labor supply, of imposing tariffs, which are just
taxes on foreign goods. And whoknows what the long term consequences of shifting
all that production to arguably less efficient, certainly more costly, domestic production would
be. You you might be onit, you're radio at the consequences.
It's more jobs, yes, butwe got to pay for that. And
you may say, well, that'sworth it. Yeah, I don't know.
(07:06):
I do know the consequences all elseEQL are slower growth on the margin,
but cumulatively over time it could behuge and higher inflation. And what
a less safe world or a moresafe world if we pull out of our
alliances? And what does that meanfor economic stability? And I haven't even
gotten a FED independence yet, whichTrump is apparently questioning, And I would
(07:26):
mention FED independence unknown impact on inflationbecause it depends what they I'll tell you
what it's going to be. I'mwith you. But the other one would
be tax cuts that's been a bigpiece of this campaign, and you know,
arguably also inflationary. Here's the thing, though, I don't know that
any of that's going to be unsuccessfulas a campaign pledge, because quite honestly,
(07:50):
we're not great at nuance. Asthe American voter, We're not great
at nuance. We are good atat listening to the big picture. And
the big picture that they are inI think is successfully getting across is look
what inflation has done to American households. Yeah, that was the crux of
jd Vance's of Jdvance's speech is lookat the average Ohio, Ohio resident there,
(08:18):
I forget the word he used,maybe spending power or inflation adjusted net
worth is down ten percent of thelast few years, and we're going to
fix it. I think the criticalpart of me would say, your solutions
to high inflation may raise wages.If we let the situation in Ohio dictate
national economic policy, we are utterlyscrewed. If you look at Ohio per
(08:41):
capita GDP, and I'll just pickMassachusetts because it's the heart, arguably economic
heart of New England and we happento reside there. Our per capita GDP,
which is one measure of how welloff we are relative to Ohio,
we were at the same level asthey were in nineteen eighty. Since then,
our per capita GDP, just ameasure of how well off we are,
has soared ahead of Ohio's fifty percent. Massachusetts has the winning formula economically.
(09:05):
I'm not crediting our politicians. They'rea little too liberal for my taste.
Our taxes are too high, thegovernment metals too much in things for
my taste here in Massachusetts. Butwe seem to have found the right balance
between higher education, biotech, technologycultivating. I know we've got some population
leakage issues, but generally, Mike, we found the winning formula. You
want to be Massachusetts or do youwant to be Ohio? Read Hillbilly Leggy.
(09:30):
I haven't read it. I've readthe highlights. I've been to Ohio
enough, had lots of clients there, spend a lot of time there.
It's in many ways the land thattime. Do we have any affiliates in
Ohio? No, it's the landthat time forgot in many ways. You
don't want them driving the economic bus. No, you do not. You
just don't know, you don't.I think that was part of his point,
is that things in Ohio have havefailed, and you know, but
(09:54):
they've worked here. Do you wantto look at what hasn't worked there and
say, well, let's fix let'srearranged the country's economic structure for lack of
a better way to put it,to remedy Ohio's problems. Or do you
want to look to the liberal coaststhat everybody so laments, but are we're
like the thirteenth biggest economy in theworld here California is the fifth or sixth?
Which do you want to be like? Which should we be imitating?
(10:18):
It's a fair series of points,Mark. I think the other piece of
this, there are going to bedozens of articles written and criticisms made of
the campaign pledges of the Republican Party. Right now. I would agree with
you wholeheartedly that a dramatic change inan immigration policy, if you were to
(10:39):
just remove all illegal immigrants from thecountry inflationary, so it's eight million workers,
you would raise tariffs on China inflationary. The question is going to all
else equal? I agreed all thesethings. But do you think a trump
fed Trump wants to put himself onthe Federal Open Market Committee? You think
they're going to push back against thoseforces? Again, I think a generally
(11:00):
bad idea. My point would bethat is a lot of nuance for the
average voter to interpret, and I'mnot sure they're going to if I can,
if I can understand it and communicateit, then I think anybody could.
Yeah, is that I know whatyou're saying. It's a lot of
detail and the eye start to glossover. But I think, and I'm
not saying the Democrats, by theway, in any better position, they're
(11:22):
they're spending like the proverbial drunken sailors. They have no solution to the alt
to the entitlement crisis, which is, you know, getting closer. I
just openly wonder, as well,how seriously we are actually supposed to take
these promises. That's kind of beenthe the point of some of the stuff
that's coming out of the Trump presidencyand campaign in the past is look,
(11:46):
I sometimes say these inflammatory things.It does drive my general direction, but
you know, you're not supposed totake all of it word for word.
I would take a bit Jadie Vanceas serious as a heart attack. He's
an intellectual, he's young, he'sdriven, he's determined, and his ideas
are wrong headed. They're a muddledmish mash. You're warmed over failed popularism,
(12:07):
but they are determined to implement Mike. So I think, honestly,
you do have to take politicians atface value with what they say, and
everybody should be evaluating what is thistrade off, you know, the tradeoff
on lower taxes, on immigration,on you know, trade with China and
(12:28):
things along those lines. We doneed to take it at face value,
believe that that's what the direction isthat they want to go. And like
you said, understand the trade offs. That's where it comes down to you.
Right. I'm not saying don't doit. I'm not saying don't vote
for him. I'm just saying,understand the trade offs. Right. There's
no free lunch, higher wages itwould come from this policy. I am
very confident that higher wages for Americanworkers, especially in manufacturing, would probably
(12:52):
come if you implemented a bunch ofthese policies. The downside would be probably
significantly higher prices, and that's atradeoff. So that's a realistic quality.
We'll I'll be driving Chevy Citations,remember those. Yeah, that's true.
I don't know. The eighty fivewas not a bad model, but it
was largely driving Japanese cars for adecade and a half. For a reason.
Let's take a quick break. Tunein for trivia brought to you by
(13:15):
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a five star review. You're listeningto the Financial Exchange Radio Network. Mark.
We were talking a bit about FEDindependence and when Donald Trump took off
his last he removed then FED PresidentJanet Yellen effectively letter term inspire. Yeah,
letter term expire did not renew andinstead uh put Joon Powell in charge
(14:01):
of the FED, nominated him forthe post and put him in charge and
regretted it like immediately. So whatdo we talk about when we talk about
independence at the FED? Because youknow, the president does nominate who will
be the next leader of the FED, clearly has the power to remove the
Federal Reserve Chair. What does thisindependence actually mean? Do you want the
(14:22):
government printing money? Explain? Imean, explain what you mean. Okay,
Inflation in the long run is onlypossible if there's more money being printed
than is justified by the level ofeconomic activity. Inflation is We talked about
Melton Friedman last hour. He gaveus the inc He wasn't the first,
but he popularized that inflation is inthe long run. I'm modifying his words
(14:45):
a little bit, a monetary phenomenon. Simple. The simpler way to say
that is, when you have,as others have said, and you've all
heard this phrase, too much moneychasing not enough goods or too few goods,
prices have to go up. Imagineif somebody doubled the number of dollars
in your bank account, your wallet, whatever, what would you do tomorrow?
You'd go out, You'd spend more, we all would, maybe even
(15:09):
most of it. Sure if thathappened on a large enough scale, that
would eventually result in inflation, maybeone. Yeah, thank you, Mike.
You know, I'm like, Iknow, this sounds ridiculous. What
kind of idiot would pursue this asan actual policy? Oh yeah, the
president and Congress did. Two presidentsdid, right, good example, Thanks
(15:30):
Mike. So you don't want governmentelected officials whose time frame is short and
whose interests might be cynical or whatever, just politically motivated to control the supply
of money. When that's happened historically, it's resulted in inflation. Just look
at wartime inflation in this country alone, when the exigency dictated we find ways
(15:50):
to finance war, both North andSouth, and our Civil war, for
example, South had like nine thousandpercent inflation by the end of the war.
They couldn't raise enough taxes or borrowenough to cover the goods they needed
to buy. The North had likeeighty percent inflation. Similarly, World War
One, World War II in thiscountry sixty or so percent inflation. Those
again are extreme circumstances. You wouldn'twant government relying on money printing as a
(16:11):
regular source of financing. So gradually, over the last half century, in
an effort to get inflation under control, to make it low and stable,
countries all over the developed world andthe developing world have made their central banks
independent. They've put people in chargewho can't be fired for the most part,
and who are evaluated based on howwell they can control inflation. So
(16:33):
it is a best practice to understateit to allow your central Bank to make
decisions that politicians might disagree with.And again, I think to your point,
politicians hope you know, in thebest of times, you know,
serve all of us and do what'sin the best in the country. But
I think the cynical view would beserved to get reelected. And what would
(16:56):
you want to do to get reelectedwould be boost economic activity. You want
to see more people with more dollarsin their hands, and one good way
to do that is to lower interestrates. And that independence is important because
hopefully the person in charge of theFederal Reserve looks past the next election and
says, hey, this is whatis needed in order to create stable prices.
(17:21):
And there have been instances such asin Turkey where the central bank has
no real independence, and the USis very, very different from Turkey,
but in that case, in theface of high inflation, they lowered interest
rates and what did you get.A hell of a lot more inflation is
what you got. And you know, it was all done really to look
good in front of a in frontof an election, and the results were
(17:42):
predictable and obvious. And that's notwhat we want here in the US.
Bringing the latest financial news straight toyour radio every day. It's the Financial
(18:04):
Exchange on the Financial Exchange Radio Network. Find daily interviews and full shows of
the Financial Exchange on our YouTube page. Like us on YouTube and get caught
up on anything and everything you mighthave missed. This is the Financial Exchange
Radio Network. Massive changes at SocialSecurity mark big big changes coming to Social
(18:29):
Security. I am, of coursekidding. They are changing how you log
into Social Security, not actually fixingany of the huge problems that the social
funding. That actually could be afix if you just want everybody out,
Hey, SOI Security solve, theneverybody So if anybody's recently logged into the
IRS, they have this service calledid id me that creates multi factor authentication
(18:53):
and makes it a lot more securewhen logging into the government systems, which
is a good thing because you don'treally want, you know, a hacker
logging into so Security and filing onyour behalf, which does happen all the
time. Unfortunately, we are notgetting any closer to solving any of the
massive problems with Social Security, which, just as a reminder, according to
(19:15):
the latest estimates, eight nine yearsfrom now, won't have enough money in
the trust fund to pay benefits,which according to law, means that the
benefits would have to be cut acrossthe board for all beneficiaries to the tune
of about twenty percent. Like thatsounds like a very serious problem the major
political parties must be addressing, mustbe talking about in all of their three
issues. Well, no, ofcourse not, because neither of them who
(19:37):
win the White House will actually bepresident eight or nine years from now.
So why would you say president orpresident? I said president, but I'm
sorry, good slip of the tongue. This leads to an actual financial planning
question mark, which we get allthe time. I literally, I don't
think a week has gone by inthe last five years where somebody has not
(19:57):
asked me, Hey, I'm worriedabout what happens with Social Security? When
should I be filing because of that? Should I be taking it at sixty
two? Because at least then I'llget a few years before it runs out
of money and goes to zero.So a few things keep in mind.
Even if Congress does absolutely nothing,important to understand that Social Security wouldn't go
(20:19):
to zero. The trust fund beingempty does not mean that people stop receiving
Social Security entirely. In a worstcase scenario. According to the estimates,
it'd be a twenty percent haircut.A lot of opinions differ on this,
but here's my personal opinion. Ifyou are currently over the age of fifty,
I don't think you are likely tosee a change in your Social Security
benefit at all. Mark shaking hishands, I'm a little bit Trump dance.
(20:45):
Yeah. Nonetheless, I think inmy opinion that they will solve this
problem through a combination of tax increasesbenefit cuts for younger Americans. And honestly,
if I'm going to play it outmost seriously, Congress probably just spends
the money on Social Security without raisingany revenue from anywhere, because that's the
go to move from Congress is just, h we've got this debtlimit. Don't
(21:08):
worry about that debtlimit. Let's justspend the money. We'll just borrow it
and pay our SOI Security beneficiary.So like you do have to attack the
problem realistically. But nonetheless, SocialSecurity for a majority of Americans is the
majority of their retirement income, andthere are tricky questions to answer about Social
(21:30):
Security beyond just will the money runout. Let's be honest, nobody knows
the answer that question. Nobody knowswhat Congress's solution to this problem is going
to be and whether or not theywill kick the can all the way down
the road to twenty thirty three.That's my guest, but we will see.
If you are trying to evaluate thesesocial Security questions and feels like you're
(21:51):
doing it with a gun to yourhead because of the potential cuts that are
going to be made over the nextfew years, I would urge you to
pause and speak to an expert whoknows the systems in and out and how
the benefits will work. In regardto your overall retirement strategy, it can
make sense to pull your Social Securitybenefits at sixty two. I am not
(22:12):
somebody that stands here and says thatthat is always a terrible idea. There
are circumstances where it does make sense. I'm also willing to say that the
percentage of people that do declare socialSecurity and take it at sixty two is
so high that it's probably a mistakefor a lot of them. Attacking this
question with a sound financial plan behindit can make a huge impact on your
(22:33):
retirement success. Knowing when it makessense to pull social Security, the impact
on your tax scenario the impact onyour ability to generate work income after you're
doing so. These are all reallyimportant questions that I see a lot of
misinformation out there about. So don'ttake your advice from TikTok. Don't just
fall into the habit of following whatyour neighbor did or what your cousin did
(22:57):
on Social Security. Ure out whatyou should be doing individually for yourself when
it comes to your own personal financesby developing a financial plan. If you'd
like to talk to one of thefolks at Armstrong Advisory Group about how we
strategize with our own clients about whento take Social Security or other pension income,
or when to access different buckets oftheir retirement money, give us a
(23:19):
ring at eight hundred three nine threefour zero zero one. You can also
go to our website and book atime for us to call you back.
That website's Armstrong Advisory dot Com.But the number, once again is eight
hundred three nine three four zero zeroone. The proceeding was paid for by
Armstrong Advisory Group, a registered investmentadvisor. Nothing in the ad or in
(23:40):
any Armstrong guide a specific financial,legal or tax advice. Consult your own
financial tax into state planning advisors beforemaking any investment decisions. Armstrong, make
contact you to offer investment advisory services. I keep running into these non government
data data points mark that I findintriguing and concerning, but I'm unsure of
what to do with them. We'vetalked a little bit about credit card delinquencies,
(24:04):
you know, We've talked a bitabout how that's been growing pretty rapidly.
The credit card delinquency rate now isabove where it was in twenty nineteen.
If I'm not mistaken, I'm goingto pull it up as we speak
here so I can look at it. Delinquency rates on credit cards in the
(24:25):
first quarter of twenty twenty four,yeah, was three point one six percent.
In the first quarter of twenty nineteenit was only a two point five
percent. So we see more peoplegetting later on their credit card bills at
a faster pace than we saw,you know, anytime in the twenty tens
decade. The counterpoint to that Ijust said, three point six percent is
where we were according to the mostrecent data, well throughout the entire twenty
(24:49):
tens decade, sorry, the twothousands decade, the lowest we got was
three point five percent. Before thatwe were hovering in the high fours,
and you know that nineteen nine wasa pretty darn good economy as far as
I recall. The latest one alongthese same lines is apparently car repos have
surged twenty three percent as Americans arefalling behind on payments. And this is
(25:11):
another one where I always say,well, I don't really care about the
year over year numbers. Tell mewhat it was like pre pandemic. And
the answer is that those repossessions onvehicles have now surpassed pre pandemic levels as
well. They're up fourteen percent comparedto the first half of twenty nineteen.
I think anyone conclude that this isprobably not good news for the state of
the average American. But is theremuch else to do with it? Can
(25:36):
we say definitively that this means weare heading for one type of economy or
another Mark No, I don't thinkso, Mike. Maybe there are some
economists who use this particular statistic intheir models and it informs a view that
is in turn form informed by alot of different so called data points on
(25:56):
I'll just call it consumer spending.Yeah, get monthly consumer expenditures in the
form of the personal Consumption Expenditures Index, which goes right into GDP. So
GDP is quarterly and then with alag, so by the time you get
it, it's really rear view mirrorstuff. But we do get components of
it on a more frequent basis,and then we get sprinkles of this type
of stuff in between, some ofit private sectors, some of it public
(26:18):
sectors. So I guess you justsort of file it in your Health of
the consumer. Uh, receptacle,thank you gets a better word than receptacle.
And if you, you know,if everything's pointing in the same direction
as you and Chuck like to say, then it's probably a warning flag.
But in isolation, I don't reallyknow what to make of it. Did
people who were otherwise not good creditsand by that I mean they're not,
(26:41):
you know, not credit worthy,low score, not not reliable, maybe
through no fault of their own.Were they able to get credit after COVID
stimulus checks built up their savings andincomes a component of that too. I'll
just leave that to the side.Did they did they get in over their
heads because COVID savings and stimulus allowedthem to take been they could otherwise have
afforded a lot of people looked alot healthier. That's what I That's why
(27:03):
I should have said, a lotof people's credits looked a lot here in
twenty twenty one, twenty twenty twothan they probably did pre COVID, and
so were they given loans that theywouldn't have otherwise gotten. Obviously that's the
answer, because the delink with thisis it's self evident because there were people
who couldn't afford the dad who tookit. These payments, by the way,
are absolutely absolutely wild, because theaverage interest rate now for a new
(27:26):
car is sitting at seven point threepercent and used cars eleven and a half
percent. That means the monthly billsfor car payments for a new car are
sitting at seven hundred and forty bucksa month, and a used car again
on average for used in new carprices sitting at five point fifty a month
for a used car on average withthose interest rates, which is just wild
to think about it, and completelyunaffordable for the average person. Quick break
(27:49):
a little bit of stack roulette nextwhen we come back. Miss any of
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(28:11):
Missed one of our shows. Catchup anytime by asking your alexis smart speaker
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(28:34):
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com. Sounds like Tucker needs avacation. Yeah, You'll think if anyone
(28:59):
was unaware bud Light had a littlebit of a marketing mishap last year,
that are they serving that at thethe probably not impact of their sales a
wee bit. Honestly, if theygave him a big enough discount, I
would honestly guess yes, But Idon't believe they are in this case.
At the time of that little marketingmishap, bud Light made up over ten
(29:21):
percent of beer sales in US retailstories, which is kind of wild to
me given the degree of choice that'sout there for when it comes to beer.
By mid twenty twenty three, theyhad fallen too, market share below
seven percent, and they'd been kindof hovering around there. Big story then
was Midello had taken their place backin like spring of twenty twenty three was
when Medello outpaced bud Light in termsof sales. It now turns out that
(29:45):
bud Light has continued to lose theirmarket dominance in spite of all the attempts
to repair it, with michelob Ultranow taking the place of that number two
spot in beer sales. Interesting pieceto me here is that bud Light and
cores Light have lost market share reallyafter that big marketing fiasco on the part
(30:07):
of bud Light, and so Iwonder if there's more at play here.
Michelobultra, by the way, isalso owned by Anheuser Busch, so they're
doing just fine with that, andthere's a few other other categories that are
doing well. But I just dofind it interesting that two years out,
a year and a half out almost, and you're still seeing a pretty consistent
drawdown in bud Light's market share whenit comes to beer sales in the US.
(30:33):
I'm not talking about compared to othertypes of alcohol, right, we're
just looking at other beer varieties.They are continuing to lose market share,
as is cores Light, whereas Michelobultraand Medelo picking up a little ground there.
Bush Light picked up some ground too. But yeah, a little inflation
impact there maybe absolutely, Yeah,Yeah, I don't know. It's just
dangerous to focus on anything other thanmaking profits. I'll quote Milton Friedman one
(30:56):
last time today. Make it atrifecta. Wow, So or if that's
the right way to think about it, it's a trifecta, a trio try
whatever trifecta. We said. Hepointed out that expectations matter. We said
that. He pointed out that inthe long run, inflation is monetary comes
from government printing too much money.Always lessons good to keep close to your
heart. And he also said corporationsshould just focus on making money for their
(31:18):
shareholders full stop. Most people today, especially younger folks, are horrified by
that idea. Oh, they shouldbe good corporate citizens. Blob they should
send people out to habitat for humanity, blah blah blah. You do this
type of stuff, though, yourun the risk of alienating somebody. Thirty
percent drop in in market share ishuge, by the way, I think
that their marketing attempt and their theiryou know, complete screw up, but
(31:41):
light hat. I do think hewas genuinely in an attempt to make money.
I think that they just were completelymisguided and not not really that's living
in their own two Yeah, itwasn't just political correctness run among right.
They thought they saw a market open. I thought they saw a market opening.
I thought they could appeal to acertain demographic and ended up turning on
all the majority a large portion inall PCs. Anyway, what do you
(32:01):
have for us? The Wall StreetJournal has an article titled American towns are
rebelling against mega mansions. There's here'san interesting stat from the article. US
house sizes I'm quoting directly exploded onehundred and fifty percent between nineteen eighty and
twenty eighteen. I had the sensethat they've gotten bigger on average, but
one point five times. So atwo thousand square foot house, if that
(32:23):
was typical, say when I wasgrowing up in the nineteen eighties, now
three thousand is typical by the medianmeasure anyway, using government data. So
many and we've all seen these homesspring up on very small lots. They
tear something down, it's much moreprofitable. Yeah, yeah, yeah,
we see it here in New England. But go to Texas and you know,
(32:44):
go to other parts of the countrywhere there's more room to develop,
and it's far more prevalent than megamansions that are out so it's not as
much of a blight visually as itis here where lots are small, easy
to do. A tear down ifyou're going to build two thousand square feet
doesn't cost much more. I don'tthink take much more time to build three
or thirty five hundred, because everythingthe foundation's there, just a matter of
(33:05):
scaling up or back a little bit. I guess so is that I mean
that seems to me that that's thewhole story, is profit you're a builder,
what do you want to do?You want to maximize square footage because
that's how people look at The protonsare a lot bigger price per square foot
and so if it's not that muchmore expensive for me to, you know,
shrink the yard and build the houseup bigger, then I don't think
it's a margin. I pull thatout of thin air. But my guess
(33:28):
is a builder would say, no, no, it's not linear. It's
actually it actually gets much cheaper asyou get bigger foundation, all other things,
the big the big expense is equal. I would think so too.
So towns are I guess in theinterest of limiting the visual blight that can
you know, you're in your niceat one time spacious sort of two story
colonial, and then next door goesup this contemporary or other. There goes
(33:52):
your view of the open sky.I've seen that happen a couple of times
to folks. So yeah, municipalitiesin some cases are putting square footage limits
on New con Chusetts. I not, yeah, I have, although quite
honestly, the intricacies of town bytown zoning zoning requirements, who the hell
knows, I bet they are inall those meeting minutes, like you know
(34:15):
between all the setback provisions and youknow how much you must be away from
your neighbor. And yeah, I'msure that there are ways that they are
doing this similar to a square footagelimit that still hit it the same thing.
Especially I mean Needham, Massachusetts isa great example of this. Go
drive around here and you will seeexactly what Mark Fanday's talking about, which
(34:36):
is ten thousand square foot lot,seven thousand square foot home, and you're
just scratching your head, like,how do you even fit it on that
postage stamp lot. It's it's verycommon around here, and I'm sure there
has been pushback in terms of zoninggoing forward. That's a good point,
though there are other parameters you canmanipulate, other variables you can change to
effectively limit the home size without puttinga limit. Is some jurisdictions are doing
(34:59):
your court to this article without actuallycapping square footage. Yeah, yeah,
there are. But I'll once againsay, more limitations you're putting in in
terms of restrictions on building, whatdoes that probably do? Probably drives prices
higher, would be my guess.If you're limiting the ability to construct new
homes. Then all of this netnet probably higher prices than the long term.
(35:20):
It's all the time we have.Markets remain open, but strongly a
negative territory down with the NASZAC leadingthe way down, off nearly two hundred
points for more than one percent losses. We close out the show, we'll
be back at it tomorrow to closeout the week. Have a great rest
of your day, every buddy,
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