September 9, 2025 • 38 mins
Paul Lane and Marc Fandetti discuss job growth revised down by 911,000 through March, signaling economy on shakier footing than realized. American workers are losing confidence. US consumer borrowing rises to most in three months. Are lumber prices flashing a warning sign? Big Oil slashes jobs and investments as low crude prices bite. Hasbro will move its headquarters to Boston’s Seaport. It’s a big loss for Pawtucket.
Mark as Played
Transcript
Episode Transcript
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Speaker 1 (00:00):
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(00:43):
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(01:06):
and Mark Fandetti.
Speaker 2 (01:11):
Welcome to this Tuesday edition of The Financial Exchange. Paul Lane,
Mark Vendetti, and Tucker Silva here with you, and we
start our show with some breaking news that was just
released in relation to the job market. So typically on
our program we'll cover every single month the BLS Labor Report,
(01:32):
where we'll get the unemployment rate for the country as
well as how many jobs were added over a period
of time, and so the way that that is calculated
through a monthly survey. But that survey isn't perfect for
many listeners out there. I know I'm very guilty of this.
How often do you take time at all, Mark, to
fill out any kind of surveys that come your way
(01:53):
from whomever. I'm awful at it, And the BLS has
the same sort of difficulty getting the same precise responses.
So what they do is they'll do the monthly collection
and then after a period of time they'll go back
in and make revisions to that data. And so what
we just released this morning within the last five minutes
(02:14):
or so, is from the period of March of twenty
twenty five through March of twenty twenty four, those trailing
twelve months, there was a job growth revision down by
nine hundred and eleven thousand jobs over the period from
March of twenty five to March of twenty twenty four.
So it is important to note that that is a
(02:35):
pretty significant revision. This is somewhat similar to what we
saw last year, where initially it was announced that we
had eight hundred and eighteen thousand jobs that were revised
down from what we saw, and then that number was
amended in a later period in February of twenty twenty
five to be five hundred ninety eight thousand. So it's
(02:56):
constantly a moving target that is being adjusted. What this
number means in terms of context for the labor market
we already covered recently from the jobs report that came
out on Friday, the labor market has been relatively weak
over the last few months, and this just reinforces this
idea that over the period from March of twenty five
and prior to that, that the labor market was perhaps
(03:18):
slowing more than we knew at that point in time,
the average monthly jobs gain during that period was coming
in around one hundred and fifty thousand. You know, with
this revision, the average I don't have the exact finger,
but it would be sitting more at seventy four seventy
five thousand on average a month that we were adding
in jobs during that period of time.
Speaker 3 (03:40):
Yeah, I think Paul, your assessment is absolutely right. We
knew the labor market was softening. Softening is a relative term.
It was remarkably strong and really twenty twenty one, twenty two,
twenty three, coming off the COVID recession too strong. In fact,
the economy was overheating. That was obvious at the time,
obvious in retrospects, so the labor market had to weaken.
(04:02):
That's part of the reason why inflation has come down.
But at four point three percent, and it may be
heading higher. So in retrospect this comment may sound overly
optimistic and a little bit naive. But at four point
three percent, all else equal, unemployment is very low in
historical firms and by all real time measures of GDP,
(04:24):
the economy continues to expand it about its trend rates.
So I would think financial market participants would look past
this number as they are forward looking. This number is
more backward looking than most statistics that we get, which
are already backward looking. So I don't know that it
would make much sense to read much into this beyond
(04:46):
the obvious interpretation.
Speaker 2 (04:47):
Yeah, and even just taking a look around at markets
at the moment, the S and P, DOW, and NASDAK
are all very flat and very little movement going on there.
The US tenure Treasury has held relatively steady here as well.
Nothing is really moving markets significantly from this release, like
you mentioned, because it is so backward looking, and you know,
from a political perspective to you know, this encompasses a
(05:11):
period of time that was, you know, prior to any
of the tarifts, prior to the new administration. So this
only covers two months in office for President Trump. A
lot of this time frame goes back to President Biden.
So really it ranges back from a further period of
time and it is truly information that was in the past.
But in terms of the context for where we go
(05:33):
from here, and we'll talk about it as the program
goes on, the labor market has been earmarked as a
concern for the Federal Reserve, and in the Jackson Hole
summit that J. Powell gave, he did mention that the
labor market was softening, weakening, whatever term you want to use.
And now there is very likely the case that from
(05:53):
what we got on the Friday job support that we
will see it's almost, you know, a certainty that we'll
see a quarter basis point cut coming up in the
meeting next week, a week from today. But now on
the table perhaps the idea of a fifty percent or
a half percent cut next week. But I don't this
doesn't really do anything to move the needle on that.
(06:15):
Like we said, this is all backward looking at now.
It'll probably.
Speaker 3 (06:19):
Put wind in the sales of the chorus to mixed
metaphors a little bit of people who are clamoring for
a rate cut.
Speaker 2 (06:27):
It shouldn't really What they.
Speaker 3 (06:29):
Should be focused on is what the economy is doing
right now and what's reasonable to expect in terms of
the next few months worth of data, which is obviously
subject to a lot of uncertainty, forecast of which are
subject to a lot of uncertainty. Look, the Fed's job
is to stimulate demand when the economy slows if inflation
(06:50):
is under control, and to curb demand when inflation is
running too hot. As a result of the economy exceeding
it's the economy's growth rate exceeding it's potential rated speed
limit if you like. So the FED is constantly trying
to balance the forces that push the economy beyond its
speed limit and thus push inflation up against the forces
(07:13):
that caused the economy to from time to time slow
down and even contract. Getting it right is something the
FED is so rarely done historically that there were really
only one or two instances in the modern era of
prolonged soft landings. Arguably the FED engineered help to engineer
(07:36):
with a lot of luck on its side, a soft
landing during the most recent episode. There was another one,
arguably in the mid nineties.
Speaker 2 (07:43):
But they're pretty rare.
Speaker 3 (07:44):
Normally, the FED titans too much. It's not to say
that they should have known differently, nobody did at the time.
But normally the FED titans too much and causes recessions,
or let's interest rates remain too low for too long
and allows inflation to overheat, which in turn requires that
they overtighten, causing recessions. I guess from my sort of
(08:06):
confused a little description here, you could tell it's really
hard to do.
Speaker 2 (08:12):
As they would say in the office Michael Scott in
the episode Sip Snap Sip Snap, Sip, Snap back and forth,
back and forth tighteningaff There we go.
Speaker 3 (08:20):
Awesome, Yeah, yeah, it's a constant. These two things are
intention and it's very hard to get that tension just right.
Speaker 2 (08:27):
It's a brutal gig. We'll get a further speed limit
reading as Mark was alluded to on the inflation side
of things. That report is going to come out on Thursday,
so we'll have some more CPI data to sort of
go over at that point in time. Let's talk shift
gears slightly a little bit. The BLS. Some people may
be listening, say, geez, these revisions nine hundred and eleven
(08:47):
thousand or the eight hundred plus thousand that we saw
in the priory. You know, why do we see such
significant revisions? And part of it is what I mentioned
earlier in Mark, you probably have more insight than me
on this. But in terms of the survey responses and
all of the data collection that the BLS, you know,
sets out to try and make these these surveys as
(09:10):
accurate as possible from a data collection standpoint, they have
struggled the budget coverage that they have in terms of
funds allocated to their department. I was looking at some
statistics earlier the budget dollars that they're allocated really hasn't
moved much over the course of the last twenty years
or so, and we know all the information that.
Speaker 3 (09:29):
It's totally a question of resources. It's a little like
you could have zero crime in Washington, DC if you
put a guy armed with you know, a law enforcement
official armed with military gear on every corner. Trump figured
this out and he's patting himself on the back. Okay, great.
You know why we don't do that, though, because it's
disruptive and it's expensive. Like I could, I could make
crime in this country zero tomorrow with enough resources and
(09:51):
if people were willing to sacrifice individual freedom of mobility. Similarly,
I could have I could give you perfect employment data
if we put a government census taker in every place
of employment. That would be expensive, that would be disruptive.
There are trade offs. It may sound like a reach there,
but I think this resources versus accuracy trade off is
(10:14):
worth keeping in mind when you're talking about any government undertaking,
at least in certain domains. So as you say budgets
have been cut, resources are limited, that's going to result
in greater error in estimates from month to month. There's
usual sampling error. We don't know the true population value.
You're trying to approximate it by taking a sample, and
(10:34):
if you do that enough times you get close to
the true value. In this case, more information comes in
from other sources as the year unfolds, so you supplement
the initial initial estimates with this additional information, and you
end up with these revisions. But as we devote fewer
resources to data collection, the data will become more uncertain,
(10:55):
thus less useful, and revisions will be bigger. We won't
know for years, potentially quarters, maybe years in some data
series cases, what the true state of the economy was
at a given point in time.
Speaker 2 (11:07):
Now, the fiscal year two thousand and three budget for
the BLS, the labor of Bureau Statistics was four hundred
ninety two million. In twenty twenty four it was four
hundred and twenty seven million. A clord into a piece.
I read in Bloomber the Star no inflation and there
was no inflation. I'm just going real those, Yes, those
are real. So when you see the nominal difference between
what four hundred ninety two million was worth in two
(11:29):
thousand and three versus what it was in twenty twenty four,
I think we can all know just looking at our
bills and things like that, just how stark of a
difference is. And also when you're looking at the response
rate for the survey that I've been talking about, it
had a ninety percent response rate a decade ago. That
figure now sits at about seventy percent today. So it's
just harder to get a hold of people to get
(11:49):
accurate data. But that's what needs to continue to be
worked on. I think we all want accuracy of data.
So whatever it takes to do that, I'm all for it,
and so hopefully we can get to that point. We're
gonna take a quick break on the Financial Exchange. When
we come back, we're gonna be talking a little bit
more about the labor market as well as US consumer
barring has risen the most in the last three months
(12:09):
on credit cards. We'll be discussing both those topics right
after this break here in the Financial Exchange.
Speaker 1 (12:14):
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Speaker 2 (12:27):
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Speaker 1 (12:29):
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Speaker 4 (12:42):
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Speaker 2 (13:19):
American workers feel less confident about finding a job headline
here from the Wall Street Journal. The Federal Reserve Bank
of New York puts together a confidence survey where it
tries to get the perceived probability that people would have
of finding a new job if they were looking for one.
The Fed started doing the survey from the Bank of
(13:41):
New York back in twenty thirteen. They recently saw a
drop of about six percent on the probability of people
finding a new job. So just echoing the sentiments that
the labor market is weakening and that Americans are a
little bit more pessimistic about their future of potentially finding
new job. You hear new phrasing being thrown around about
(14:03):
job hugging rather than all the job hopping that we
saw back in twenty one and twenty two, a lot
more people just hanging on to the jobs that they
have rather than looking for new opportunities. We had seen
the quits rate, which is a proxy for people leaving
from one job, typically for the most part, to take
a higher paying job, has really plateaued to a point
(14:23):
where we haven't seen anywhere near the growth that we
saw back in twenty one and twenty two. And you
hear it from a lot of executives and CEOs. It
seems like the new push mark on these quarterly earnings
calls is to do more with less, really a focus
on cutting down the amount, and that's always, I mean,
that's always the focus for businesses out there. But if
you look at companies like Bank of America that had
(14:46):
two hundred and eighty five thousand employees back in twenty
ten now they sit with two hundred and thirteen thousand.
I mean, in general, that's what you want. You want
productivity gains. That's how you can increase GDP is by
doing less with doing more with less employees. But from
a job growth standpoint, it certainly doesn't bode well if
(15:07):
you have employers looking to really be extremely cautious about
bringing on new employees into the workforce.
Speaker 3 (15:15):
We have too many friggin measures of the labor market
out there. Okay, there's just too there's just too damn many.
If resources are going back to the point you made
in the last segment, we're spending less now and expecting
on data collection and expecting that data to serve more purposes.
The FED needs it, private forecasters need it. Asset allocators
like us, who as a fiduciary manage money for clients
(15:38):
with generally speaking a long term investment time frame needed
and it's of general interest. We collect measures from employers,
from households, from the various FED regional banks do it.
What we really need to know is how many people
and the unemployment rate gets at this, how many people
are working relative to the pool of labor available. That
(15:59):
is the debt definition of the unemployment rate. Historically, that's
the measure that FED relied on in policy makers relied on,
and economic forecasters and private sect people who do planning
in the private sector like us and a lot of
you listening relied on to answer the question is the
economy good? Is it easy to find a job or not? Normally,
the unemployment rate was the shorthand for that. Now we've
(16:22):
got all these other measures, some of them soft, meaning
they're sentiment based, how do you feel about this or
how do you whatever? Versus the harder data which comes
from employers records and state insurance first time unemployment insurance
claims and stuff like that. It would be really nice
(16:42):
if all these if the resources devoted, And there's no
way to make this happen, so I'm just yelling at
the yelling at the wind here, but it would be
really nice if all these disparate efforts could be combined
into better data collection that goes into the unemployment rate,
and maybe the payrolls number not going to happen because
there's all these little seftoms out there. Public and private
(17:03):
creates a lot of jobs for labor economists and stuff
like that, but what we're really I don't have anything
constructive to add to this discussion other than it is
frustrating because what I really care about, as someone who
does a little bit of forecasting, and what I know
business economists in a similar position to mine and academic
economists and policymakers care about is the rate of unemployment,
(17:23):
and to a lesser degree, payrolls. To an extent, they
help you forecast unemployment. The Jolt's number has been a
good inflation forecaster over the past few years. But maybe
if we did a better job i e. Collected more
data that allowed us to produce a more accurate, in
a statistical sense, unemployment rate or payrolls number, maybe we
(17:44):
wouldn't have to use the jolts in place of the
unemployment rate to forecast inflation. So, of those who use
data in various federal roles, I'll just be general, maybe
aren't doing themselves any favors by reading themselves so thin.
I mean, if the budget is what it is, then
for Pete's sake, do what we do in the private sector,
(18:05):
which is focus on the most important data point.
Speaker 2 (18:07):
Yeah, most ones. Yeah, for Pete's.
Speaker 3 (18:10):
Sake, that's my data rant of the day.
Speaker 2 (18:14):
Gotta do it for Pete's sake. No, it's it's now
I feel guilty about not responding to Servis. You know.
That's we need more of that. We need people.
Speaker 3 (18:22):
But we do here in our day job at Armstrong
Advisory Group, we get surveyed by bls. Lois was just
telling me and she does respond.
Speaker 2 (18:31):
And I'm sure many business are doing our part.
Speaker 3 (18:33):
Yeah, many businesses do, but sometimes, as you say, other
things getting the way.
Speaker 2 (18:38):
US consumer borrowing rises for the most in three months
on credit cards. We saw for the month of July
a sixteen billion increase on the total credit outstanding. This
according to Federal Reserve data. We sit at a point
in time where delinquency rates on consumer debt have increased
to the highest since twenty twenty. Are the levels that
(19:00):
are extremely concerning. No, but we certainly are seeing an
uptick there. Student loan debt delinquency has risen to about
thirteen percent, that's the highest in about twenty one years.
And then we also have a pretty significant amount of
increase of just spending for that month of July. That's
probably why we saw a pretty significant uptick on the
(19:21):
debt side of things. There. We're going to take a
quick break here on the Finished Exchange. When we come back,
a little bit of Wall Street Watch and much much
more right after this break.
Speaker 5 (19:30):
Stick with us, Like us on Facebook and follow us
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Speaker 1 (19:45):
Breaking business news is always first right here 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 Network.
Speaker 4 (20:00):
Well one day after the Nasdaq notch to fresh record high,
Marcus today are flat as investors sift through the annual
job to revision from the Bureau of Labor Statistics. According
to those revisions, the US added nine hundred and eleven
fewer jobs over the twelve months that ended in March.
Wall Street's also writing for two inflation readings this week. Tomorrow.
(20:22):
We have the Producer Price Index, followed by the Consumer
Price Index on Thursday. Right now, the Dow is down
merely sixty one points, about a tenth of a percent.
SMP five hundred is down a tenth of a percenter
six points, NASDAK down a tenth of a percent as well.
Russell two thousands down just over half a percent. Ten
(20:42):
year treas reeled up three basis points at four point
zero eight percent. In crude oil up over one and
a half percent higher, trading right above sixty three dollars
a barrel. Big news in the commodity space this morning
after Anglo American agreed to merge with tech Resource, a
deal that will create one of the largest copper producers.
(21:04):
Anglo shares are up nine percent, while tech stock is
soaring nearly fourteen percent. Meanwhile, Apple shares are down over
half a percent ahead of its anticipated annual product event
at one o'clock Eastern this afternoon, where the tech giant
will unveil its new line of iPhone seventeens, among other
device updates. Elsewhere, Fox down by six percent if the
(21:28):
media giant announced the Murdoch family resolved its succession battle,
with Lachlan Murdoch winning control of the company. Casey's General
Stores share Casey's General Stores b quarterly earnings and revenue estimates,
boosted by strong same store sales growth. However, that stock
is down by over one percent. Dick's Sporting Group Goods
(21:51):
upgraded by City Group to buy from neutral, saying the
sports retailer will be a powerful force in athletic retail
following its acquisition of foot Locker. However, shares they're down
over half a percent, and after today's closing bell, we'll
see quarterly results from GameStop and Oracle. I'm Tucker Sulvan.
(22:11):
That is Wallstree Watch.
Speaker 2 (22:13):
You don't hear a lot of people named Lachlan often.
I guess there are some out here, Lachlan Murdock. I
was trying to see where that name comes from, Land
of the Lakes. It's kind of a kind of a
strange name that they have put together there. But anyway,
I digress, I never heard of it, so yeah, yeah, Succession.
(22:34):
It says a Scottish aer of Irish Gaelic origin. It's
a masculine name. The name comes from Lochland, which historically
referred to Scandinavia or as Norse. People are Scottish, so
it comes from the Vikings. Yeah. Thanks for Google AI
making my job easy to find that there. I want
to talk a little bit about commodities, wood and oil.
(22:56):
In the news headlines here, lumber prices are flashing a
warning for the US economy. A piece here from the
Wall Street Journal. Obviously, lumber prices were all over the
news during the pandemic where we saw a three year
a significant high that was reached during the pandemic, where
the lumber price is tripled. I believe over a period
(23:19):
of time we now have a recent twenty four percent
drop in lumber futures. We had hit a previous three
year high at the beginning of August, and then Monday
we ended down twenty four percent in terms of the
per thousand board feet price of lumber. Not going to
attest to be a lumber expert by any means, but
(23:40):
particularly what's at the heart of this issue here is
there was a tremendous amount of concern with the tariffs,
and you had a lot of lumber producers trying to
focus on the impact of teriffs and as a result,
stockplying a tremendous amount of lumber to try and negate
most of the tariff impact as they could. But what
they didn't account for was the softening demand for lumber.
(24:04):
That is a direct impact of what's been a very
slow housing market over the course of this year. We
saw residential building permits drop in July to a seasonal
adjusted rate of one point four million units that was
the fewest since twenty twenty so over the last five
years or so, building permits really slow relative to where
they have been. As a result, you're having more of
(24:26):
a glut of lumber. So you have a lot of
the larger lumber producers in North America cutting back their
output to try and address what is a glut of
supply here on the inventory side of things here, Mark.
Speaker 3 (24:38):
So it's not so much that people who buy lumber
futures are souring on the economic outlook's supply demand supply
specific Well, I guess demand sword and then swooned. Yes,
so prices went What was the how much did they
go up on the other side of this thing? Does
(24:58):
it say in this But.
Speaker 2 (25:00):
They'd hit a three they'd hit a three year high.
Speaker 3 (25:03):
Okay, and so a lot of price pressure in one
direction followed by a collapse in demand. So this is
something specific to the peculiarities, if you will, of this market,
not indicative of fears because you're not I was looking
at other commodities quickly. You don't see this elsewhere. So
(25:25):
it sounds like it's very market specific.
Speaker 2 (25:27):
Big oil slashes jobs and investments as low crew prices. Bye,
you have a lot of the big oil producers out here,
including Chevron and Conico Phillips cutting jobs. Chevrons started cutting
eight thousand jobs beginning in February and they've been working
to cut those down through the year, and Conico Phillips
has mentioned that they could cut as many as thirty
(25:49):
two hundred employees by Christmas. Just in general, capital spending
on global oil and gas production is forecasts to drop
about four percent this year, and this is a direct
impact of what we've seen very low oil prices relative
to what they were over the course of the last
couple of years or so. We now sit at West
(26:10):
Texas Intermediate at around sixty three dollars a barrel. That
figure was as high as it really peaked out around
some of the Russian Ukraine crisis, but over the course
of the last twelve months or so, eighty dollars a
barrel is the highest that we've hit, far lower than
the crazy highs that we saw back in twenty twenty two,
(26:31):
where West Texas Intermediate was well over one hundred dollars
a barrow. And this is typically how oil works. It's
boom and bus cycle, and a lot of these major
oil producers have been a lot more disciplined from a
capital spending side of things and not trying to overinvest
in times that are strong. And on the same thing here,
when you're seeing OPEC plus increasing some of their output,
(26:55):
some of these big oil producers kind of scaling back
their investment mark.
Speaker 3 (26:58):
Right, So shale oil to be profitable, that is oil
that is obtained through i'll just call it modern even
though they're like thirty years old drilling techniques, fracking and
horizontal drilling and other practices. Shale oil is about two
thirds of our oil production on a daily basis, and
(27:19):
those guys needs sixty calling according to today's article in the
Financial Times, and this sounds about right, sixty five dollars
per barrel to break even. We're below that.
Speaker 2 (27:27):
Now.
Speaker 3 (27:28):
The consequence of this is US production is going to
fall dramatically, and that's why the Saudis are doing this.
They want to put US shale oil out of business.
So you can't have both low prices and be energy
independent if you're the US. Because oil is harder to
get here than it is in same places like get
(27:49):
at here, i should say, than it is in places
like the Middle East. It's the paradox for the US
anyway of low prices, consumers like them, producers don't will
be less energy independent at the end of the day.
Speaker 2 (28:00):
As a result of this, US shale production has really
boomed over the course of the last several years or so,
and OPEK has taken this stance previously of not increasing
their output and continuing to keep things pretty moderate, but
as Mark mentioned, a strategic shift recently where they are
boosting output to try and come after some of those
American shale producers, to put them under tremendous pressure in
(28:24):
order to regain They've.
Speaker 3 (28:25):
Been doing this since two thousand and eight, two thousand
and nine, when was actually after the Great Recession when
this practice of undermining US shale producers became a sort
of dance between the Saudis and other participants in the
in the oil market. But again, the implication is we're
going to be making less oil here. So the implications
(28:45):
for energy independence are bad. The implications for consumer prices
in the short term are good.
Speaker 2 (28:50):
Good for the short term. Longer term when you need
the supply, that's where it becomes more problematic, and.
Speaker 3 (28:55):
We're taking alternative sources for now. Anyway, off the table,
stop wind. Look, whatever you think of this we're alternative
energy is an avenue to energy independence. If that's the
goal to become less dependent on the insane geopolitical situation
that characterizes the Middle East, we're heading in the exact
(29:17):
wrong direction right now.
Speaker 2 (29:19):
We're going to take a quick break here on the
financial stage. When we come back a little bit on
Hasbro moving its headquarters to the seaport, and much more.
Right after this break, here in the Financial Exchange.
Speaker 1 (29:30):
Text US six one seven twenty six to two one
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(29:51):
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Speaker 2 (30:01):
Hasboro is moving its headquarters to Boston Seaport. This here
from Rhode Island Business. The big loss here for Pawtucket,
Rhode Island, that has been the home to Hasboro for
over a for the past century. Here now, Hasboro will
be moving its headquarters to the seaport, specifically to a
(30:24):
six hundred and thirty thousand square foot sixteen story laboratory
buildings seven stories of the building. Hasborough will sublease out
to other tenants. The move is slated to be completed
by the end of twenty twenty six. They'll move in phases,
so seven hundred full time employees from Hasborough will be
coming to Boston. Patucket and Rhode Island as a state
(30:46):
in general had done a lot to try and keep
Hasborough there within the state, offering a lot of different incentives.
But ultimately they are going to make the move to
Boston Seaport, and they are going to receive from Boston
teen million in tax credits to move their headquarters here.
Hasboro makes about forty percent of their toys in China,
(31:06):
so they're trying to undergo a pretty big strategic shift
to get that down to about twenty percent. With all
of the tear pressure in place, but a big Lossford
Island your your home state.
Speaker 3 (31:17):
Yeah it is, and my whole life. They've contorted themselves
into all kinds of positions to try to be appealing
to businesses. They did it with Fidelity famously remade a
large part of Well anyway.
Speaker 2 (31:33):
They have a huge campus down there. Yeah they think
they do. It's successful.
Speaker 3 (31:37):
Yeah, that's that's an example I guess I would call
this industrial policy changing the rules to suit one potential
employer my lament as a free market fanatic, and I
would apply this to what the Trump administration is doing nationally,
taking shares in this or that company, telling companies to
change or not change their logo, just get the hell
out of the way, create a set of rules friendly
(31:59):
to business, but fail to consumers at the same time,
and enforce those rules objectively. Rhode Island and I'm not
gonna I'm not in a position to criticize Rhode Island
economic policy, nor Massachusetts for that matter, but it always
annoyed me when politicians fawned over one potential business when
you've got hundreds, maybe thousands of small businesses that already
(32:19):
operate there need help. They just need a less onerous,
say regulatory or tax regime, and they want government to
get the heck out of the way these high profile things.
And again, Trump's doing the same thing nationally, So I'm
not just criticizing a Democrat regime in Rhode Island. They're
far less successful over time. Anybody who's ever looked at
(32:42):
this has determined, on any level here or elsewhere, far
less successful than just creating clear rules of the game
and enforcing them objectively. So it's always sort of sad
to see this, whether or not it is successful in
this case an unsuccessful attempt to woo a business, but
for Massachusetts is successful. It's it's it is successful. Excuse me,
(33:04):
but it always strikes me as sort of misspent energy.
Speaker 2 (33:08):
I was trying to think of other companies that have
their UH that are headquartered out of Roland. Fidelity was
the only one that came to my.
Speaker 3 (33:16):
Well, they just said, yeah, have.
Speaker 2 (33:17):
CBS has a big presence, but I don't know where
they're headquartered in Okay. Yeah, so that they're in there
as well, So yeah, certainly it's big significant.
Speaker 3 (33:26):
You don't have to be a hub. Don't try to
compete with Boston. That's not your I've never understood why
they wanted to compete to be the location where big
companies cited their headquarters. That's not their appeal for whatever reason,
historical reasons. So rather compete based on your skilled workforce
with great work ethic and other historical or cultural legacy.
(33:53):
If if if you like advantages that you may have, again,
just set the rules up, build it and they will
come build a business friendly environment, businesses will follow. You
don't have to fall all over them. You don't have
to beg them. You don't have to give them tax
advantages over the guy that's been running a small business
right down the street for his whole life and doesn't
get the same advantages. Just set the rules and enforce
(34:14):
them objectively. Politicians, I guess understandably, would rather go for
the big headlines.
Speaker 4 (34:20):
Build the field of Rhode Island dreams. Did you see
the where the location is in the seaport though it's.
Speaker 2 (34:27):
On Summer Street, right, They said, where's that? Where are
some of the landmarks nearby?
Speaker 4 (34:31):
I think it's I don't. I couldn't tell you the
landmarks in the seaport now because when I was going
to the seaport, you know, the whiskey priests of the
world like that, that was my landmark. Everything has just
blown up and developed massively in the seaport over the
past five years.
Speaker 2 (34:48):
Even Oh yeah, Vertex, they've got a couple huge and
this was Foundation Medicine previously. The building that they're taking.
Speaker 4 (34:54):
Over, Yeah, it's an existing building, and it's like I think,
if my memory serves me correct, it's down over the bridge.
It's on the right side. It's actually gonna look really nice.
Speaker 2 (35:03):
They're definitely not gonna save money making this move, that's
for sure, but much nicer offices.
Speaker 3 (35:08):
Yes, yeah, yeah, whatever, what go ahead. It's the stuff
that RhoD Island could be good at, might not be
the glamorous. Don't try to compete with Boston to be
the headquarters of a global company. I'm gonna pick the
seaport every time, no offense. Play to your strengths.
Speaker 4 (35:25):
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Speaker 1 (36:24):
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Speaker 2 (36:35):
In twenty twenty two, Massachusetts became the thirty sixth state
to legalize sports betting, and now, in a classic way
that the American public sort of plays out, something gets
legalized when because everyone wants it, and then there's a
bunch of lawsuits and complaints after something is legalized, some
frustration building up regarding the legalization of sports betting and
(36:57):
perhaps the impact it's having on those younger people in
the younger demographic eighteen to twenty five who were initially
very optimistic and happy to see sports gambling legalize and
then guess what they lost, Like everybody does when you gamble,
and all of a sudden, a year or two later,
it's not as sexy as a proposition anymore. I mean,
(37:20):
ultimately my view in this. I know that Chuck gets
a little bit more upset with with you know, the
prevalence of gambling. I do think that some of the
advertisements need to be rained in a little bit. But
I'm a proponent that you should be able to, you know,
do what you want. There's plenty of vices out there.
This is one of them, just like alcohol or others,
and you have to practice moderation and you know, gamble
(37:42):
responsibly at these things. But ultimately they're now trying to
get some legislation back in place to kind of push
it back in the other direction. To me, it's just
sort of let the market forces stick to you know,
focus on trying to reign it in as best you can.
I know gambling can be problematic, but they're going to
get access to it regardless. There's always been a demand
for it.
Speaker 3 (38:02):
Yeah, I don't know what the solution is here. Public
opinion is a pendulum on this. We'll swing in the
more moralistic direction for a while, I guess, and put
restrictions on it.
Speaker 2 (38:12):
That's all the time that we have for the first
hour of the program here. But we have much much
more to cover in the second hour. Sick with us
here on the finishing exchange. Right back over the break,
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
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(01:06):
and Mark Fandetti.
Speaker 2 (01:11):
Welcome to this Tuesday edition of The Financial Exchange. Paul Lane,
Mark Vendetti, and Tucker Silva here with you, and we
start our show with some breaking news that was just
released in relation to the job market. So typically on
our program we'll cover every single month the BLS Labor Report,
(01:32):
where we'll get the unemployment rate for the country as
well as how many jobs were added over a period
of time, and so the way that that is calculated
through a monthly survey. But that survey isn't perfect for
many listeners out there. I know I'm very guilty of this.
How often do you take time at all, Mark, to
fill out any kind of surveys that come your way
(01:53):
from whomever. I'm awful at it, And the BLS has
the same sort of difficulty getting the same precise responses.
So what they do is they'll do the monthly collection
and then after a period of time they'll go back
in and make revisions to that data. And so what
we just released this morning within the last five minutes
(02:14):
or so, is from the period of March of twenty
twenty five through March of twenty twenty four, those trailing
twelve months, there was a job growth revision down by
nine hundred and eleven thousand jobs over the period from
March of twenty five to March of twenty twenty four.
So it is important to note that that is a
(02:35):
pretty significant revision. This is somewhat similar to what we
saw last year, where initially it was announced that we
had eight hundred and eighteen thousand jobs that were revised
down from what we saw, and then that number was
amended in a later period in February of twenty twenty
five to be five hundred ninety eight thousand. So it's
(02:56):
constantly a moving target that is being adjusted. What this
number means in terms of context for the labor market
we already covered recently from the jobs report that came
out on Friday, the labor market has been relatively weak
over the last few months, and this just reinforces this
idea that over the period from March of twenty five
and prior to that, that the labor market was perhaps
(03:18):
slowing more than we knew at that point in time,
the average monthly jobs gain during that period was coming
in around one hundred and fifty thousand. You know, with
this revision, the average I don't have the exact finger,
but it would be sitting more at seventy four seventy
five thousand on average a month that we were adding
in jobs during that period of time.
Speaker 3 (03:40):
Yeah, I think Paul, your assessment is absolutely right. We
knew the labor market was softening. Softening is a relative term.
It was remarkably strong and really twenty twenty one, twenty two,
twenty three, coming off the COVID recession too strong. In fact,
the economy was overheating. That was obvious at the time,
obvious in retrospects, so the labor market had to weaken.
(04:02):
That's part of the reason why inflation has come down.
But at four point three percent, and it may be
heading higher. So in retrospect this comment may sound overly
optimistic and a little bit naive. But at four point
three percent, all else equal, unemployment is very low in
historical firms and by all real time measures of GDP,
(04:24):
the economy continues to expand it about its trend rates.
So I would think financial market participants would look past
this number as they are forward looking. This number is
more backward looking than most statistics that we get, which
are already backward looking. So I don't know that it
would make much sense to read much into this beyond
(04:46):
the obvious interpretation.
Speaker 2 (04:47):
Yeah, and even just taking a look around at markets
at the moment, the S and P, DOW, and NASDAK
are all very flat and very little movement going on there.
The US tenure Treasury has held relatively steady here as well.
Nothing is really moving markets significantly from this release, like
you mentioned, because it is so backward looking, and you know,
from a political perspective to you know, this encompasses a
(05:11):
period of time that was, you know, prior to any
of the tarifts, prior to the new administration. So this
only covers two months in office for President Trump. A
lot of this time frame goes back to President Biden.
So really it ranges back from a further period of
time and it is truly information that was in the past.
But in terms of the context for where we go
(05:33):
from here, and we'll talk about it as the program
goes on, the labor market has been earmarked as a
concern for the Federal Reserve, and in the Jackson Hole
summit that J. Powell gave, he did mention that the
labor market was softening, weakening, whatever term you want to use.
And now there is very likely the case that from
(05:53):
what we got on the Friday job support that we
will see it's almost, you know, a certainty that we'll
see a quarter basis point cut coming up in the
meeting next week, a week from today. But now on
the table perhaps the idea of a fifty percent or
a half percent cut next week. But I don't this
doesn't really do anything to move the needle on that.
(06:15):
Like we said, this is all backward looking at now.
It'll probably.
Speaker 3 (06:19):
Put wind in the sales of the chorus to mixed
metaphors a little bit of people who are clamoring for
a rate cut.
Speaker 2 (06:27):
It shouldn't really What they.
Speaker 3 (06:29):
Should be focused on is what the economy is doing
right now and what's reasonable to expect in terms of
the next few months worth of data, which is obviously
subject to a lot of uncertainty, forecast of which are
subject to a lot of uncertainty. Look, the Fed's job
is to stimulate demand when the economy slows if inflation
(06:50):
is under control, and to curb demand when inflation is
running too hot. As a result of the economy exceeding
it's the economy's growth rate exceeding it's potential rated speed
limit if you like. So the FED is constantly trying
to balance the forces that push the economy beyond its
speed limit and thus push inflation up against the forces
(07:13):
that caused the economy to from time to time slow
down and even contract. Getting it right is something the
FED is so rarely done historically that there were really
only one or two instances in the modern era of
prolonged soft landings. Arguably the FED engineered help to engineer
(07:36):
with a lot of luck on its side, a soft
landing during the most recent episode. There was another one,
arguably in the mid nineties.
Speaker 2 (07:43):
But they're pretty rare.
Speaker 3 (07:44):
Normally, the FED titans too much. It's not to say
that they should have known differently, nobody did at the time.
But normally the FED titans too much and causes recessions,
or let's interest rates remain too low for too long
and allows inflation to overheat, which in turn requires that
they overtighten, causing recessions. I guess from my sort of
(08:06):
confused a little description here, you could tell it's really
hard to do.
Speaker 2 (08:12):
As they would say in the office Michael Scott in
the episode Sip Snap Sip Snap, Sip, Snap back and forth,
back and forth tighteningaff There we go.
Speaker 3 (08:20):
Awesome, Yeah, yeah, it's a constant. These two things are
intention and it's very hard to get that tension just right.
Speaker 2 (08:27):
It's a brutal gig. We'll get a further speed limit
reading as Mark was alluded to on the inflation side
of things. That report is going to come out on Thursday,
so we'll have some more CPI data to sort of
go over at that point in time. Let's talk shift
gears slightly a little bit. The BLS. Some people may
be listening, say, geez, these revisions nine hundred and eleven
(08:47):
thousand or the eight hundred plus thousand that we saw
in the priory. You know, why do we see such
significant revisions? And part of it is what I mentioned
earlier in Mark, you probably have more insight than me
on this. But in terms of the survey responses and
all of the data collection that the BLS, you know,
sets out to try and make these these surveys as
(09:10):
accurate as possible from a data collection standpoint, they have
struggled the budget coverage that they have in terms of
funds allocated to their department. I was looking at some
statistics earlier the budget dollars that they're allocated really hasn't
moved much over the course of the last twenty years
or so, and we know all the information that.
Speaker 3 (09:29):
It's totally a question of resources. It's a little like
you could have zero crime in Washington, DC if you
put a guy armed with you know, a law enforcement
official armed with military gear on every corner. Trump figured
this out and he's patting himself on the back. Okay, great.
You know why we don't do that, though, because it's
disruptive and it's expensive. Like I could, I could make
crime in this country zero tomorrow with enough resources and
(09:51):
if people were willing to sacrifice individual freedom of mobility. Similarly,
I could have I could give you perfect employment data
if we put a government census taker in every place
of employment. That would be expensive, that would be disruptive.
There are trade offs. It may sound like a reach there,
but I think this resources versus accuracy trade off is
(10:14):
worth keeping in mind when you're talking about any government undertaking,
at least in certain domains. So as you say budgets
have been cut, resources are limited, that's going to result
in greater error in estimates from month to month. There's
usual sampling error. We don't know the true population value.
You're trying to approximate it by taking a sample, and
(10:34):
if you do that enough times you get close to
the true value. In this case, more information comes in
from other sources as the year unfolds, so you supplement
the initial initial estimates with this additional information, and you
end up with these revisions. But as we devote fewer
resources to data collection, the data will become more uncertain,
(10:55):
thus less useful, and revisions will be bigger. We won't
know for years, potentially quarters, maybe years in some data
series cases, what the true state of the economy was
at a given point in time.
Speaker 2 (11:07):
Now, the fiscal year two thousand and three budget for
the BLS, the labor of Bureau Statistics was four hundred
ninety two million. In twenty twenty four it was four
hundred and twenty seven million. A clord into a piece.
I read in Bloomber the Star no inflation and there
was no inflation. I'm just going real those, Yes, those
are real. So when you see the nominal difference between
what four hundred ninety two million was worth in two
(11:29):
thousand and three versus what it was in twenty twenty four,
I think we can all know just looking at our
bills and things like that, just how stark of a
difference is. And also when you're looking at the response
rate for the survey that I've been talking about, it
had a ninety percent response rate a decade ago. That
figure now sits at about seventy percent today. So it's
just harder to get a hold of people to get
(11:49):
accurate data. But that's what needs to continue to be
worked on. I think we all want accuracy of data.
So whatever it takes to do that, I'm all for it,
and so hopefully we can get to that point. We're
gonna take a quick break on the Financial Exchange. When
we come back, we're gonna be talking a little bit
more about the labor market as well as US consumer
barring has risen the most in the last three months
(12:09):
on credit cards. We'll be discussing both those topics right
after this break here in the Financial Exchange.
Speaker 1 (12:14):
Find daily interviews and full shows of the Financial Exchange
on our YouTube page. Like us on YouTube and get
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This is the Financial Exchange Radio Network.
Speaker 2 (12:27):
This is your home for the.
Speaker 1 (12:29):
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Speaker 4 (12:42):
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Speaker 2 (13:19):
American workers feel less confident about finding a job headline
here from the Wall Street Journal. The Federal Reserve Bank
of New York puts together a confidence survey where it
tries to get the perceived probability that people would have
of finding a new job if they were looking for one.
The Fed started doing the survey from the Bank of
(13:41):
New York back in twenty thirteen. They recently saw a
drop of about six percent on the probability of people
finding a new job. So just echoing the sentiments that
the labor market is weakening and that Americans are a
little bit more pessimistic about their future of potentially finding
new job. You hear new phrasing being thrown around about
(14:03):
job hugging rather than all the job hopping that we
saw back in twenty one and twenty two, a lot
more people just hanging on to the jobs that they
have rather than looking for new opportunities. We had seen
the quits rate, which is a proxy for people leaving
from one job, typically for the most part, to take
a higher paying job, has really plateaued to a point
(14:23):
where we haven't seen anywhere near the growth that we
saw back in twenty one and twenty two. And you
hear it from a lot of executives and CEOs. It
seems like the new push mark on these quarterly earnings
calls is to do more with less, really a focus
on cutting down the amount, and that's always, I mean,
that's always the focus for businesses out there. But if
you look at companies like Bank of America that had
(14:46):
two hundred and eighty five thousand employees back in twenty
ten now they sit with two hundred and thirteen thousand.
I mean, in general, that's what you want. You want
productivity gains. That's how you can increase GDP is by
doing less with doing more with less employees. But from
a job growth standpoint, it certainly doesn't bode well if
(15:07):
you have employers looking to really be extremely cautious about
bringing on new employees into the workforce.
Speaker 3 (15:15):
We have too many friggin measures of the labor market
out there. Okay, there's just too there's just too damn many.
If resources are going back to the point you made
in the last segment, we're spending less now and expecting
on data collection and expecting that data to serve more purposes.
The FED needs it, private forecasters need it. Asset allocators
like us, who as a fiduciary manage money for clients
(15:38):
with generally speaking a long term investment time frame needed
and it's of general interest. We collect measures from employers,
from households, from the various FED regional banks do it.
What we really need to know is how many people
and the unemployment rate gets at this, how many people
are working relative to the pool of labor available. That
(15:59):
is the debt definition of the unemployment rate. Historically, that's
the measure that FED relied on in policy makers relied on,
and economic forecasters and private sect people who do planning
in the private sector like us and a lot of
you listening relied on to answer the question is the
economy good? Is it easy to find a job or not? Normally,
the unemployment rate was the shorthand for that. Now we've
(16:22):
got all these other measures, some of them soft, meaning
they're sentiment based, how do you feel about this or
how do you whatever? Versus the harder data which comes
from employers records and state insurance first time unemployment insurance
claims and stuff like that. It would be really nice
(16:42):
if all these if the resources devoted, And there's no
way to make this happen, so I'm just yelling at
the yelling at the wind here, but it would be
really nice if all these disparate efforts could be combined
into better data collection that goes into the unemployment rate,
and maybe the payrolls number not going to happen because
there's all these little seftoms out there. Public and private
(17:03):
creates a lot of jobs for labor economists and stuff
like that, but what we're really I don't have anything
constructive to add to this discussion other than it is
frustrating because what I really care about, as someone who
does a little bit of forecasting, and what I know
business economists in a similar position to mine and academic
economists and policymakers care about is the rate of unemployment,
(17:23):
and to a lesser degree, payrolls. To an extent, they
help you forecast unemployment. The Jolt's number has been a
good inflation forecaster over the past few years. But maybe
if we did a better job i e. Collected more
data that allowed us to produce a more accurate, in
a statistical sense, unemployment rate or payrolls number, maybe we
(17:44):
wouldn't have to use the jolts in place of the
unemployment rate to forecast inflation. So, of those who use
data in various federal roles, I'll just be general, maybe
aren't doing themselves any favors by reading themselves so thin.
I mean, if the budget is what it is, then
for Pete's sake, do what we do in the private sector,
(18:05):
which is focus on the most important data point.
Speaker 2 (18:07):
Yeah, most ones. Yeah, for Pete's.
Speaker 3 (18:10):
Sake, that's my data rant of the day.
Speaker 2 (18:14):
Gotta do it for Pete's sake. No, it's it's now
I feel guilty about not responding to Servis. You know.
That's we need more of that. We need people.
Speaker 3 (18:22):
But we do here in our day job at Armstrong
Advisory Group, we get surveyed by bls. Lois was just
telling me and she does respond.
Speaker 2 (18:31):
And I'm sure many business are doing our part.
Speaker 3 (18:33):
Yeah, many businesses do, but sometimes, as you say, other
things getting the way.
Speaker 2 (18:38):
US consumer borrowing rises for the most in three months
on credit cards. We saw for the month of July
a sixteen billion increase on the total credit outstanding. This
according to Federal Reserve data. We sit at a point
in time where delinquency rates on consumer debt have increased
to the highest since twenty twenty. Are the levels that
(19:00):
are extremely concerning. No, but we certainly are seeing an
uptick there. Student loan debt delinquency has risen to about
thirteen percent, that's the highest in about twenty one years.
And then we also have a pretty significant amount of
increase of just spending for that month of July. That's
probably why we saw a pretty significant uptick on the
(19:21):
debt side of things. There. We're going to take a
quick break here on the Finished Exchange. When we come back,
a little bit of Wall Street Watch and much much
more right after this break.
Speaker 5 (19:30):
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Speaker 1 (19:45):
Breaking business news is always first right here 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 Network.
Speaker 4 (20:00):
Well one day after the Nasdaq notch to fresh record high,
Marcus today are flat as investors sift through the annual
job to revision from the Bureau of Labor Statistics. According
to those revisions, the US added nine hundred and eleven
fewer jobs over the twelve months that ended in March.
Wall Street's also writing for two inflation readings this week. Tomorrow.
(20:22):
We have the Producer Price Index, followed by the Consumer
Price Index on Thursday. Right now, the Dow is down
merely sixty one points, about a tenth of a percent.
SMP five hundred is down a tenth of a percenter
six points, NASDAK down a tenth of a percent as well.
Russell two thousands down just over half a percent. Ten
(20:42):
year treas reeled up three basis points at four point
zero eight percent. In crude oil up over one and
a half percent higher, trading right above sixty three dollars
a barrel. Big news in the commodity space this morning
after Anglo American agreed to merge with tech Resource, a
deal that will create one of the largest copper producers.
(21:04):
Anglo shares are up nine percent, while tech stock is
soaring nearly fourteen percent. Meanwhile, Apple shares are down over
half a percent ahead of its anticipated annual product event
at one o'clock Eastern this afternoon, where the tech giant
will unveil its new line of iPhone seventeens, among other
device updates. Elsewhere, Fox down by six percent if the
(21:28):
media giant announced the Murdoch family resolved its succession battle,
with Lachlan Murdoch winning control of the company. Casey's General
Stores share Casey's General Stores b quarterly earnings and revenue estimates,
boosted by strong same store sales growth. However, that stock
is down by over one percent. Dick's Sporting Group Goods
(21:51):
upgraded by City Group to buy from neutral, saying the
sports retailer will be a powerful force in athletic retail
following its acquisition of foot Locker. However, shares they're down
over half a percent, and after today's closing bell, we'll
see quarterly results from GameStop and Oracle. I'm Tucker Sulvan.
(22:11):
That is Wallstree Watch.
Speaker 2 (22:13):
You don't hear a lot of people named Lachlan often.
I guess there are some out here, Lachlan Murdock. I
was trying to see where that name comes from, Land
of the Lakes. It's kind of a kind of a
strange name that they have put together there. But anyway,
I digress, I never heard of it, so yeah, yeah, Succession.
(22:34):
It says a Scottish aer of Irish Gaelic origin. It's
a masculine name. The name comes from Lochland, which historically
referred to Scandinavia or as Norse. People are Scottish, so
it comes from the Vikings. Yeah. Thanks for Google AI
making my job easy to find that there. I want
to talk a little bit about commodities, wood and oil.
(22:56):
In the news headlines here, lumber prices are flashing a
warning for the US economy. A piece here from the
Wall Street Journal. Obviously, lumber prices were all over the
news during the pandemic where we saw a three year
a significant high that was reached during the pandemic, where
the lumber price is tripled. I believe over a period
(23:19):
of time we now have a recent twenty four percent
drop in lumber futures. We had hit a previous three
year high at the beginning of August, and then Monday
we ended down twenty four percent in terms of the
per thousand board feet price of lumber. Not going to
attest to be a lumber expert by any means, but
(23:40):
particularly what's at the heart of this issue here is
there was a tremendous amount of concern with the tariffs,
and you had a lot of lumber producers trying to
focus on the impact of teriffs and as a result,
stockplying a tremendous amount of lumber to try and negate
most of the tariff impact as they could. But what
they didn't account for was the softening demand for lumber.
(24:04):
That is a direct impact of what's been a very
slow housing market over the course of this year. We
saw residential building permits drop in July to a seasonal
adjusted rate of one point four million units that was
the fewest since twenty twenty so over the last five
years or so, building permits really slow relative to where
they have been. As a result, you're having more of
(24:26):
a glut of lumber. So you have a lot of
the larger lumber producers in North America cutting back their
output to try and address what is a glut of
supply here on the inventory side of things here, Mark.
Speaker 3 (24:38):
So it's not so much that people who buy lumber
futures are souring on the economic outlook's supply demand supply
specific Well, I guess demand sword and then swooned. Yes,
so prices went What was the how much did they
go up on the other side of this thing? Does
(24:58):
it say in this But.
Speaker 2 (25:00):
They'd hit a three they'd hit a three year high.
Speaker 3 (25:03):
Okay, and so a lot of price pressure in one
direction followed by a collapse in demand. So this is
something specific to the peculiarities, if you will, of this market,
not indicative of fears because you're not I was looking
at other commodities quickly. You don't see this elsewhere. So
(25:25):
it sounds like it's very market specific.
Speaker 2 (25:27):
Big oil slashes jobs and investments as low crew prices. Bye,
you have a lot of the big oil producers out here,
including Chevron and Conico Phillips cutting jobs. Chevrons started cutting
eight thousand jobs beginning in February and they've been working
to cut those down through the year, and Conico Phillips
has mentioned that they could cut as many as thirty
(25:49):
two hundred employees by Christmas. Just in general, capital spending
on global oil and gas production is forecasts to drop
about four percent this year, and this is a direct
impact of what we've seen very low oil prices relative
to what they were over the course of the last
couple of years or so. We now sit at West
(26:10):
Texas Intermediate at around sixty three dollars a barrel. That
figure was as high as it really peaked out around
some of the Russian Ukraine crisis, but over the course
of the last twelve months or so, eighty dollars a
barrel is the highest that we've hit, far lower than
the crazy highs that we saw back in twenty twenty two,
(26:31):
where West Texas Intermediate was well over one hundred dollars
a barrow. And this is typically how oil works. It's
boom and bus cycle, and a lot of these major
oil producers have been a lot more disciplined from a
capital spending side of things and not trying to overinvest
in times that are strong. And on the same thing here,
when you're seeing OPEC plus increasing some of their output,
(26:55):
some of these big oil producers kind of scaling back
their investment mark.
Speaker 3 (26:58):
Right, So shale oil to be profitable, that is oil
that is obtained through i'll just call it modern even
though they're like thirty years old drilling techniques, fracking and
horizontal drilling and other practices. Shale oil is about two
thirds of our oil production on a daily basis, and
(27:19):
those guys needs sixty calling according to today's article in the
Financial Times, and this sounds about right, sixty five dollars
per barrel to break even. We're below that.
Speaker 2 (27:27):
Now.
Speaker 3 (27:28):
The consequence of this is US production is going to
fall dramatically, and that's why the Saudis are doing this.
They want to put US shale oil out of business.
So you can't have both low prices and be energy
independent if you're the US. Because oil is harder to
get here than it is in same places like get
(27:49):
at here, i should say, than it is in places
like the Middle East. It's the paradox for the US
anyway of low prices, consumers like them, producers don't will
be less energy independent at the end of the day.
Speaker 2 (28:00):
As a result of this, US shale production has really
boomed over the course of the last several years or so,
and OPEK has taken this stance previously of not increasing
their output and continuing to keep things pretty moderate, but
as Mark mentioned, a strategic shift recently where they are
boosting output to try and come after some of those
American shale producers, to put them under tremendous pressure in
(28:24):
order to regain They've.
Speaker 3 (28:25):
Been doing this since two thousand and eight, two thousand
and nine, when was actually after the Great Recession when
this practice of undermining US shale producers became a sort
of dance between the Saudis and other participants in the
in the oil market. But again, the implication is we're
going to be making less oil here. So the implications
(28:45):
for energy independence are bad. The implications for consumer prices
in the short term are good.
Speaker 2 (28:50):
Good for the short term. Longer term when you need
the supply, that's where it becomes more problematic, and.
Speaker 3 (28:55):
We're taking alternative sources for now. Anyway, off the table,
stop wind. Look, whatever you think of this we're alternative
energy is an avenue to energy independence. If that's the
goal to become less dependent on the insane geopolitical situation
that characterizes the Middle East, we're heading in the exact
(29:17):
wrong direction right now.
Speaker 2 (29:19):
We're going to take a quick break here on the
financial stage. When we come back a little bit on
Hasbro moving its headquarters to the seaport, and much more.
Right after this break, here in the Financial Exchange.
Speaker 1 (29:30):
Text US six one seven twenty six to two one
three eight five with your comments and questions about today's show.
This is the Financial Exchange Radio Network. Find daily interviews
and full shows of the Financial Exchange on our YouTube page.
Subscribe to our page and get caught up on anything
and everything you might have missed. This is the Financial
(29:51):
Exchange Radio Network.
Speaker 2 (30:01):
Hasboro is moving its headquarters to Boston Seaport. This here
from Rhode Island Business. The big loss here for Pawtucket,
Rhode Island, that has been the home to Hasboro for
over a for the past century. Here now, Hasboro will
be moving its headquarters to the seaport, specifically to a
(30:24):
six hundred and thirty thousand square foot sixteen story laboratory
buildings seven stories of the building. Hasborough will sublease out
to other tenants. The move is slated to be completed
by the end of twenty twenty six. They'll move in phases,
so seven hundred full time employees from Hasborough will be
coming to Boston. Patucket and Rhode Island as a state
(30:46):
in general had done a lot to try and keep
Hasborough there within the state, offering a lot of different incentives.
But ultimately they are going to make the move to
Boston Seaport, and they are going to receive from Boston
teen million in tax credits to move their headquarters here.
Hasboro makes about forty percent of their toys in China,
(31:06):
so they're trying to undergo a pretty big strategic shift
to get that down to about twenty percent. With all
of the tear pressure in place, but a big Lossford
Island your your home state.
Speaker 3 (31:17):
Yeah it is, and my whole life. They've contorted themselves
into all kinds of positions to try to be appealing
to businesses. They did it with Fidelity famously remade a
large part of Well anyway.
Speaker 2 (31:33):
They have a huge campus down there. Yeah they think
they do. It's successful.
Speaker 3 (31:37):
Yeah, that's that's an example I guess I would call
this industrial policy changing the rules to suit one potential
employer my lament as a free market fanatic, and I
would apply this to what the Trump administration is doing nationally,
taking shares in this or that company, telling companies to
change or not change their logo, just get the hell
out of the way, create a set of rules friendly
(31:59):
to business, but fail to consumers at the same time,
and enforce those rules objectively. Rhode Island and I'm not
gonna I'm not in a position to criticize Rhode Island
economic policy, nor Massachusetts for that matter, but it always
annoyed me when politicians fawned over one potential business when
you've got hundreds, maybe thousands of small businesses that already
(32:19):
operate there need help. They just need a less onerous,
say regulatory or tax regime, and they want government to
get the heck out of the way these high profile things.
And again, Trump's doing the same thing nationally, So I'm
not just criticizing a Democrat regime in Rhode Island. They're
far less successful over time. Anybody who's ever looked at
(32:42):
this has determined, on any level here or elsewhere, far
less successful than just creating clear rules of the game
and enforcing them objectively. So it's always sort of sad
to see this, whether or not it is successful in
this case an unsuccessful attempt to woo a business, but
for Massachusetts is successful. It's it's it is successful. Excuse me,
(33:04):
but it always strikes me as sort of misspent energy.
Speaker 2 (33:08):
I was trying to think of other companies that have
their UH that are headquartered out of Roland. Fidelity was
the only one that came to my.
Speaker 3 (33:16):
Well, they just said, yeah, have.
Speaker 2 (33:17):
CBS has a big presence, but I don't know where
they're headquartered in Okay. Yeah, so that they're in there
as well, So yeah, certainly it's big significant.
Speaker 3 (33:26):
You don't have to be a hub. Don't try to
compete with Boston. That's not your I've never understood why
they wanted to compete to be the location where big
companies cited their headquarters. That's not their appeal for whatever reason,
historical reasons. So rather compete based on your skilled workforce
with great work ethic and other historical or cultural legacy.
(33:53):
If if if you like advantages that you may have, again,
just set the rules up, build it and they will
come build a business friendly environment, businesses will follow. You
don't have to fall all over them. You don't have
to beg them. You don't have to give them tax
advantages over the guy that's been running a small business
right down the street for his whole life and doesn't
get the same advantages. Just set the rules and enforce
(34:14):
them objectively. Politicians, I guess understandably, would rather go for
the big headlines.
Speaker 4 (34:20):
Build the field of Rhode Island dreams. Did you see
the where the location is in the seaport though it's.
Speaker 2 (34:27):
On Summer Street, right, They said, where's that? Where are
some of the landmarks nearby?
Speaker 4 (34:31):
I think it's I don't. I couldn't tell you the
landmarks in the seaport now because when I was going
to the seaport, you know, the whiskey priests of the
world like that, that was my landmark. Everything has just
blown up and developed massively in the seaport over the
past five years.
Speaker 2 (34:48):
Even Oh yeah, Vertex, they've got a couple huge and
this was Foundation Medicine previously. The building that they're taking.
Speaker 4 (34:54):
Over, Yeah, it's an existing building, and it's like I think,
if my memory serves me correct, it's down over the bridge.
It's on the right side. It's actually gonna look really nice.
Speaker 2 (35:03):
They're definitely not gonna save money making this move, that's
for sure, but much nicer offices.
Speaker 3 (35:08):
Yes, yeah, yeah, whatever, what go ahead. It's the stuff
that RhoD Island could be good at, might not be
the glamorous. Don't try to compete with Boston to be
the headquarters of a global company. I'm gonna pick the
seaport every time, no offense. Play to your strengths.
Speaker 4 (35:25):
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Speaker 2 (36:35):
In twenty twenty two, Massachusetts became the thirty sixth state
to legalize sports betting, and now, in a classic way
that the American public sort of plays out, something gets
legalized when because everyone wants it, and then there's a
bunch of lawsuits and complaints after something is legalized, some
frustration building up regarding the legalization of sports betting and
(36:57):
perhaps the impact it's having on those younger people in
the younger demographic eighteen to twenty five who were initially
very optimistic and happy to see sports gambling legalize and
then guess what they lost, Like everybody does when you gamble,
and all of a sudden, a year or two later,
it's not as sexy as a proposition anymore. I mean,
(37:20):
ultimately my view in this. I know that Chuck gets
a little bit more upset with with you know, the
prevalence of gambling. I do think that some of the
advertisements need to be rained in a little bit. But
I'm a proponent that you should be able to, you know,
do what you want. There's plenty of vices out there.
This is one of them, just like alcohol or others,
and you have to practice moderation and you know, gamble
(37:42):
responsibly at these things. But ultimately they're now trying to
get some legislation back in place to kind of push
it back in the other direction. To me, it's just
sort of let the market forces stick to you know,
focus on trying to reign it in as best you can.
I know gambling can be problematic, but they're going to
get access to it regardless. There's always been a demand
for it.
Speaker 3 (38:02):
Yeah, I don't know what the solution is here. Public
opinion is a pendulum on this. We'll swing in the
more moralistic direction for a while, I guess, and put
restrictions on it.
Speaker 2 (38:12):
That's all the time that we have for the first
hour of the program here. But we have much much
more to cover in the second hour. Sick with us
here on the finishing exchange. Right back over the break,
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