August 7, 2025 • 38 mins
Chuck Zodda and Mike Armstrong discuss how markets continue to brush aside tariffs and potential tariff impacts, why? The auto industry takes a $12B hit from the trade war. Three Fed officials voice fresh concerns over the US labor market. Are you ready for private assets and crypto in your 401(k)? Youth is losing to experience in this labor market.
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Speaker 1 (00:00):
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(00:42):
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a donation today. This is the Financial Exchange with Chuck
(01:05):
Zada and Mike Armstrong.
Speaker 2 (01:11):
Chuck, Mike and Tucker with you here on a thirday
and quite honestly, weeks over.
Speaker 3 (01:20):
Put it in the bank. You can move on. There's
no more interesting economic data coming out the rest of
the week. There are no more interesting earnings coming out
the rest of the week. We're done here.
Speaker 4 (01:32):
You can get some interesting tariff announcements.
Speaker 3 (01:34):
Whatever, like, honestly, no, you, I'm sorry you can't get
interesting terriff.
Speaker 4 (01:39):
Announcements trying to give people a reason to tune in.
Speaker 3 (01:41):
Non they can tune into us. I'm just saying you
can put this one in the books. At this point,
there's nothing interesting happening in the next thirty six hours
so far as you know, at least that's scheduled to happen. Yeah, obviously,
you know, unscheduled things happen all the time. That's called life.
But is anyone really getting all geared up to see
(02:04):
what Planes All America Pipeline does with their earnings report tomorrow?
I'm not is anyone getting all geared up to be like, Ooh,
I wonder what the Baker Hughes rig Count's gonna be tomorrow.
Speaker 4 (02:19):
I'm not.
Speaker 3 (02:20):
I pay attention to it, but usually like two weeks
after and I'm like, oh, I wonder what happened with that? Ye,
these are not market moving things. No one wakes up
in the morning and says, huh, under Armour reports tomorrow.
Wonder how that's gonna affect the S and P five hundred. Hint,
it won't. Honestly, don't even know if under Armor's in
the S and P five hundred. Don't think it is.
(02:41):
It's only one and a half billion dollar company.
Speaker 4 (02:43):
So dear God, they've fallen.
Speaker 3 (02:45):
They really have it. It's tough for a company that
was once you know, kind of this up and coming
apparel brand that now has kind of come and gone
a little bit. Like that's just kind of where they
are in any case. Top two stories today we are
talking about tariffs. Obviously, today is the date that the
new higher tariff rates kick in that were specified last week.
(03:08):
To this point, market's responding, not even with a shrug,
but basically saying, don't matter. Does it matter to us?
You got the Dow up fifty points, the S and
P's up twenty five, Nasdaq up one hundred and eighty three,
So markets are pretty much saying one of two things. A.
This isn't going to matter. B this isn't going to stick.
Speaker 4 (03:29):
Yeah, anything that was shipped by midnight last night and
arise to US ports before October is apparently subject to
the lower pre today tariff rate, but anything shipped after
today will be subject to those higher rates. What's been
interesting to me about all this, and I think frankly
why we have not We've not seen the big promises
(03:51):
on the right or the left when it came to tariffs,
and the criticisms and applause for them right on the
proponents for tar side, it was going to bring a
bunch of American manufacturing back. It was going to raise
income so much that we you know, we would do
away with deficits, revenue so much, raise revenue so much
(04:14):
rather that we could do away with income taxes and
reduce deficits. And you know, those were always outlandish promises.
But we have not seen those promises to this point.
But to be fair, we also have not seen the
criticisms of these tariffs come to pass at this point. Either.
We have not seen mass unemployment, We have not seen
shortages and stores. We have not seen huge inflation on
(04:39):
really any major products, and I think that by and
large has to do with the implementation of this stuff.
So one, I think it's fair to say, yeah, Mike,
we haven't seen any of those things yet, give it time. Two,
this is I heard it compared to the Swiss cheese
of tariff policy. Right, there are big hole. I've got
(05:01):
Swiss on my sandwich today. By the way, little Turkey
Swiss coming at you in a couple hours. Perfectly planned.
But there are so many gaps in these policies. And
I've you know, we've seen it over and over. Now,
look like, hey, we're going to slap these tariffs on
but when it comes to products that are really necessary
or important to a specific industry or a specific cohort,
(05:24):
we're going to put waivers on them. And so whether
that's iPhones being made in China, whether that is likely
to be European wine that is going to maybe receive
some waivers, whether it's Brazilian orange juice and planes or
Chilean copper. There's been these exemptions put in place to
make sure the pain points are not so great on
(05:44):
the American public. And I don't know, I tend to
think we're going to see more of that yeah.
Speaker 3 (05:50):
I mean if you you know, go through it, and
the Brazil one, I think is you know, kind of
the classic case where okay, Brazilian tariffs are you know,
moving up to fifty percent, and you sit there and say, okay, like,
you know, we import a decent amount from Brazil. They're
one of the twenty largest trading partners in the US.
They're not a China or Mexico or Canada, but it's
(06:11):
still something where I think it's like sixty billion dollars
in imports and you say, okay, like this is you know,
a meaningful relationship here, and then you go through and
you look at the exemptions that end up going into
place on them, and you say, okay, out of the
ten largest imports from Brazil, we've exempted seven of them
(06:33):
from these tariffs. And so it's actually hitting a pretty
narrow subset of those items there. And this messages with
kind of what we've seen all along, and also dovetails
nicely into this piece talking about the semiconductor tariffs, which
President Trump yesterday said he would impose a one hundred
percent tariff on all chips coming into the United States.
Speaker 4 (06:56):
And literally no one has any idea what that means.
Speaker 3 (06:58):
No, we're not sure if this means like within a computer,
So like if you if you you know, if Dell
manufactures a computer in Taiwan and imports it into the US,
is the chip tariff separately or is it only if
Dell is bringing the chips in to make stuff here,
like it's we're not entirely sure. But also you've got
a bunch of exemptions out there already being reported that
(07:20):
Apple's exempt from this, in video is exempt from this,
Samsung is exempt from this, sk Heinex is exempt from this.
Who's left what are we? You know, you kind of
look at this and you say, okay, so what is
the actual implementation? Is it just is it worse for
(07:40):
automakers where hey, we've got hundreds of chips that go
into cars, and if you need to buy them and
bring them into the country, you're paying one hundred percent
tariff on those Because if it is, the estimates that
you've now seen are five ten thousand dollars in additional
cost per vehicle, right, which I would prefer not to
pay obviously, But.
Speaker 4 (07:59):
Every time something like that has been reported, it ends
up being exempted, exempted, And so I think that it's
something where i've I've kind of can can we make
a policy live right now? What kind of policy? Why
don't you go ahead and I'll let you know whether
or not we can do it.
Speaker 3 (08:16):
Okay, you tell me if we can do this or not.
I don't want to do any more reporting on tariffs
until they're actually implemented.
Speaker 4 (08:22):
Yeah. We've said that a few times because because.
Speaker 3 (08:25):
Otherwise, especially when you're like a chicken with our head
cut off and doesn't feel great to me.
Speaker 4 (08:30):
Yeah, and we have said this a number of times
because you get the earlier report, Oh my god, one
hundred percent semiconductor tariffs or fifty copper terraffs, So what
is that going to do? Think about all the downstream impacts,
and then weeks go by, everybody else looks at all
the downstream stream impacts, realizes how big of a catastrophe
(08:52):
it would be, and they completely changed the the UH
rules of the road. So I'm with you that, especially
reporting on day one things is not useful and if
we want to wait until implementation, that's fair. But going
into detail hypotheticals of what do these giant semiconductor or
(09:13):
Brazilian teriffs mean for the American public so far has
not been useful because every time it's looked meaningful and
looked like it would be a pain point, they've been changed,
they've been waved, they've been exempted.
Speaker 3 (09:26):
The other thing that I want to talk about is
it relates to these semiconductor tariffs, and I get at
a little bit of a stick in my craw about
this in your wear? A stick in my craw?
Speaker 4 (09:35):
Got it?
Speaker 3 (09:37):
Apple? Yesterday, Tim Cook goes to the White House and
pledges an additional one hundred billion dollars of investment in
the United States. This on top of a five hundred
billion dollar commitment that he made earlier this year. Mike,
do you know what Apple's capex worldwide is for the
last four years? Total? Half that forty six billion dollars? Okay,
(10:02):
so not even a tenth of it? Yeah, Where what
does this six hundred billion mean? Does it include things
like stock buybacks? Does include dividend?
Speaker 1 (10:11):
Like?
Speaker 3 (10:11):
What is actually in there? Because the idea that Apple
is going to spend six hundred billion dollars anywhere doesn't
actually make sense.
Speaker 4 (10:25):
So they're going to increase their cap x twelve x
is what this announcement would imply. Is that is that approximately, right.
Speaker 3 (10:37):
Mike, Even if like go through and let me just
I'm looking at the Apple's income statement for the last quarter.
The ninety four billion dollars in operating revenue Okay, okay,
fifty billion dollars cost a good sold, Okay, So obviously,
like that's you know, Apple's biggest expense operating expenses are
(10:57):
in DSGNA depreciation, all that stuff, fifteen billion dollars. Ultimately,
Apple ends up making in net income twenty three billion
dollars for the quarter. You know, they did about one
hundred billion dollars last year in you know profit. Where
are you gonna get six hundred billion dollars from?
Speaker 4 (11:18):
Well, if you spread it out over three decades, you'll
get there.
Speaker 3 (11:21):
This is what I'm like, I'm starting to get a
little bit frustrated with some of this because look, when
it comes to like the Gulf States, you can say, Okay,
the Saudis actually have trillions of dollars that they can
you know, deploy and and this is believable Apple, as
much as you can point to, hey, they've got a
bunch of money that's you know, sitting on their balance sheet. Sure,
(11:43):
I see that they've got, you know, fifty five billion
dollars on their balance sheet. Okay, I buy that, It's
not six hundred billion. And the numbers just don't make
sense as far as how they could possibly do this
over any meaningful timeframe. So like, this is now starting
(12:03):
to feel a little dog and pony showy to me
in terms of this now it was it was the
first time too. By the way, here here's the thing
it worked for Tim Cook. Apple stock before yesterday was
flat for the last two years. It was it one
hundred ninety six in July of twenty three. It was
a two oh one yesterday. It's now after being up
five percent yesterday and another two and a quarter percent today, Hey,
(12:24):
you're up almost you know, eight percent in two days.
It worked, Like, I don't blame Tim Cook for being like, yeah,
I got to do something to help. Maybe maybe I
can get a little bit of help from the administration.
Of course, like makes total sense. But the idea that
Apple's going to invest six hundred billion dollars doesn't make
sense because their total capex worldwide last year was twelve billion,
(12:49):
and they're not suddenly going to say, gee, you know what,
we're going to increase our capex from twelve to one
hundred and fifty billion dollars in order to do this
in the next four years. They don't have the money
to do that. They would actually be unprofitable if they
did that. If there's one thing I know about Tim
Cookie likes profit and apples. Okay, in pairis take a
(13:11):
quick break. When we return, let's talk a little bit
about what's going on with US auto companies.
Speaker 1 (13:17):
After this Tara fever is in high gear. We've got
the latest on what might be next and how long
it might last. Only here on the Financial Exchange Radio Network.
Text does six one seven twenty six to two one
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This is the Financial Exchange Radio Network.
Speaker 3 (13:56):
All right, let's talk a little bit about what's going
on with the auto sector. I don't know if either
of you happened to, uh, take a look at the
Mannheim used Vehicle Value Index. I did, we not, Charlie, Oh,
but what do you do with your life?
Speaker 4 (14:10):
Though? I mean we were paying pretty close attention to
it back in twenty twenty two when there were no cars.
But yes, I haven't looked at it since.
Speaker 3 (14:17):
So the Manheim Used Vehicle Value index for July fell
from a reading of two oh eight point five down
to two oh seven point four, which is interesting. Again
if you're talking about, you know, things that people have,
you know, worried about heading into the summer. It's okay,
you've got these auto tariffs, they might push up prices.
(14:38):
You know, you're gonna see the average car go up,
you know, anywhere from like two thousand to three thousand
dollars is kind of what we've we've.
Speaker 4 (14:45):
Heard and where I mean, can you give me some
context for that index? I know it declined month of
a month, but where were we Do you have context
for a few years ago? Uh?
Speaker 3 (14:54):
Yeah? So, like peak used vehicle value was in December
of twenty one one and January of twenty two, where
it was running at two fifty seven.
Speaker 4 (15:03):
Got it.
Speaker 3 (15:03):
By the end of twenty two it was down to
two nineteen. So prices fell fifteen sixteen percent over the
course of twenty two and then another ten percent and
twenty three and basically we're flat last year.
Speaker 4 (15:14):
Yeah.
Speaker 3 (15:14):
And by the way, normally, like if you look at
used vehicle prices from like twenty ten to twenty eighteen,
they went up about ten percent during that time, so
about one percent of year is typically what you would see,
and used vehicle price movement got it. This year. They're
also basically flat. They haven't really budged. End of last year,
you were a two four point eight, you're a two
(15:36):
o seven four, so you're up about one percent through
the first seven months. It hasn't been anything catastrophic. It's
basically been fine. And a couple things that you can
read into this. First, we did see this index move
up significantly in April. Remember that this was on the
back of a bunch of people trying to buy used
vehicles and new ones before tariffs potentially went into effect,
(15:58):
and so there was a bunch of demand that got
pulled forward. There still is some evidence out there that
demand is a little bit sluggish on the margins, and
so if you have sluggish demand as a dealer, you
might say, Okay, maybe I don't want to spend as
much on used vehicles wholesale because I don't know if
I'm going to be able to sell them for as
much as i'd like to. So it could be some
(16:20):
kind of temporarily weakened demand just because a lot of
people bought cars in February, March, and April and now
don't need them right now. So that's that's part of it.
Speaker 4 (16:31):
Yeah.
Speaker 3 (16:32):
The other thing that we're seeing from automakers is by
and large, they're trying to hold on pricing right now
while eating the cost of tariffs, and it's showing up
in their earnings that way.
Speaker 4 (16:44):
There are some companies where we point to to say, okay,
like look at a tariff impact for producing widgets or
golf balls or whatever it might be, And you say, okay, yeah,
when you add in all the marketing costs and all
the other things, you know, the tariff impact itself isn't
going to be what breaks the camels back. When you
talk about these automakers, I mean General Motors in the
last quarter.
Speaker 3 (17:04):
Twenty nine percent profit reduction because of tariff costs.
Speaker 4 (17:07):
I mean it's huge. It ate up like all of
their profit in the most recent quarter just the tariffs alone.
And so you look around here and you say, okay,
how long are they going to hold the line on that?
How long are investors going to allow them to hold
the line on that? And what does it do? I'm
with you that I don't think American consumers are terribly
(17:28):
excited about seeing car prices go up two three thousand dollars.
But I definitely don't think shareholders of these companies are
excited to see them just sit there and say, yeah,
we'll just take a massive cut to our profit margin,
and that is what it is.
Speaker 3 (17:46):
So I think the hope that automakers have is that
tariffs are lower in the future that they than they are.
Speaker 4 (17:54):
Today, especially for Canada and Mexico.
Speaker 3 (17:57):
Right, And there are a couple different ways they can
get there. First, you have, you know, some agreements with
Canada or Mexico where the auto rates get lowered, similar
to what we saw with Japan and the EU. So that's,
you know, one possibility. The other one is, hey, you've
got the Court of Appeals, the Federal Circuit Court of
Appeals that had the hearing last week on the appeal
(18:17):
of the constitutionality of the tariffs. There's a chance you
could end up with a lot of these tariffs being
struck down. Ye, And I'm sure, look, there's a pretty
good chance. I would assume it ends up getting appealed
to the Supreme Court, but I don't know how they
end up ruling, And so ultimately, if you're an automaker,
part of your calculus right now is some combination of, Hey,
(18:39):
maybe these tariffs can get negotiated lower in the coming months,
or maybe they end up not you know, being able
to go into effect. And two things happen then, By
the way, the first is that great, we don't have
to you know, pay these on future vehicles and parts.
The second part, well, the previous tariffs have to be refunded, right,
and that means all that it comes back over to us,
(19:01):
and great, we actually we did the right thing by
not moving pricing. I don't know where this is going
to end up, but that could be. How they're thinking
about it, at least for now, is hey, let's just
buy some time, see what things look like at the
end of the year, and then we can assess from there.
Speaker 4 (19:14):
Yeah, but I don't know. I mean, it's an absence
of change. I would expect production cuts quite honestly, because
I don't think demand is there for higher price cars.
Speaker 3 (19:25):
We'll see, we'll see. Let's take a quick break, and
when we return, it's Wall Street.
Speaker 1 (19:31):
Watch Like us on Facebook and follow us on Twitter
at TFE show. Breaking business news is always first on
the Financial Exchange radio network. Time now for Wall Street.
(19:54):
Watch a complete look at what's moving market so far
today right here on the Financial Exchange. Inge radio network.
Speaker 5 (20:01):
Markets in mixed territory after reciprocal tariffs and several countries
went into effect at midnight. The tech sector also seeing
a boost from chip makers after President Trump unveiled a
one hundred percent tariff on imported chips, but not for
companies building in the US. Right now, the Dow is
off by nearly three tenths of one percent, or one
hundred and twenty points. SMP five hundred is up by
(20:25):
nearly two tenths of one percent or eleven points. Nasdaq
is up by over six tenths of one percent, or
one hundred and thirty eight points. Russell two thousand is
edging about a tenth of a percent higher. Ten year
treasure real is flat at four point two two seven percent,
and crude oil off about a quarter percent today, trading
(20:45):
just above sixty four dollars a barrel. President Trump took
to truth social this morning, calling for Intel CEO Lip
Boot Tan to resign immediately. Tan was named Intel CEO
back in March. Intel shares are down by three percent. Meanwhile,
Apple adding to its gains from yesterday and is up
another two percent today after the tech chine announced to
(21:07):
extra one hundred billion dollars in US manufacturing commitment. Sticking
with Apple related news, where Corning shares are up over
one percent after Apple said it would expand its partnership
with the Precision glass maker as part of its US push.
Another Apple partner in Rare Earth Minor MP Materials, also
seeing gains of over five percent. Elsewhere, Eli Lilly sharer
(21:30):
sinking fourteen percent after the drug maker said its experimental
weight loss pill help people lose up to twelve percent
of body weight, a bit less than Wall Street expected,
Door Dash shares arising over one percent after the food
delivery app swung to a profit and posted better than
expected quarterly revenue lift posted revenue and disappointment trips or
(21:53):
Disappointing Trips data. However, that stock is climbing over two
percent higher. And Airbnb logged high earnings and sales in
the previous quarter, but said it expects pressure on margins
in the coming quarters due to investments in new businesses.
Airbnb shares are down by seven percent. I'm Tucker Silvan
(22:13):
that is Wallstree.
Speaker 3 (22:14):
Watch, Mike, I've got some breaking personal news. Actually hit me.
I got a text from Linda Jackson, a recruiter at Amazon,
just now. Oh no, Yeah, my resume has been recommended
by several online recruitment agencies. Uh huh, and after an
initial review, they've decided to interview me for the information
(22:37):
system's manager position.
Speaker 4 (22:39):
Wow, it's probably completely remote.
Speaker 3 (22:41):
I can work only twenty to sixty minutes daily and
still earn two hundred to five hundred dollars a day,
and I also get fifteen to twenty days of paid
annual leave. I don't know if that has to be
taken in twenty minute increments because I only work twenty
minutes a day. Send me that link, bro, But I
can reach out to them via WhatsApp as long as
I'm twenty five years or older, which they should know
(23:02):
if they've actually read my resume that I'm twenty one right.
So this is just a nice little reminder that, hey,
if you get text messages from corporalzig at gurblgurble dot whatever,
it's not actually the Amazon recruiter, and don't respond to them,
even if you want to tell them to, you know,
(23:23):
take their ball and go home. Yeah, it's uh, because
then you'll just get ten more of those people coming through.
Speaker 4 (23:29):
So I did make that mistake earlier this year. I
think I talked about it on air where I couldn't
help myself and just led them along for ten minutes,
and then my phone did not stop ringing every three
minutes for a month and a half.
Speaker 3 (23:44):
Yeah, So in any case, beware, just a little reminder.
Lots of scams out there, and the Amazon recruiter won't
ask if you're twenty five and over though, but to
be clear you took the job, well, yeah, I can
do it during breaks of the show. I mean it's
like we're good there. Piece in the Bloomberg talking about
(24:04):
the labor market, specifically as it relates to the FED.
Three Federal Reserve policymakers voice concerns about the US labor
market on Wednesday that pointed towards a potential interest rate
cut in September. So this is on the back of
the weaker than expected jobs report that came out last Friday.
I also want to discuss in this context the jobbles
(24:25):
claims numbers from this morning. Initial jobs claims up very
modestly from two hundred nineteenenty two twenty six not much
of a story. They's nothing there again until initial jobbles
claims get over two hundred and sixty thousand for three weeks.
Don't even talk to me about, you know, anything in
initial jobbles claims. It's just not a problem. Continuing jobles claims, though,
bumped up a little bit more than expected, back to
(24:46):
one point nine seven four million. This represents a five
point two percent year over year increase, which is a reacceleration.
And this is something that we had watched in late
May and early June as it was rising, and then
it kind of fell the last few weeks, and we say, okay,
this is there's nothing to see here, but this is
a new cycle high for continuing jobbles claims, and it's
(25:07):
one week, so let's not overreact to it. But now
it's kind of okay, let's monitor this over the next
few and see how it develops through August, because this
number is something that does matter in the context of
the broader unemployment rate, and we need to pay attention
to it to see if anything's happening.
Speaker 4 (25:25):
Here, and you know, feeds right into the narrative that
we've been talking about when it comes to the jobs market,
which is not a lot of layoffs, not a lot
of hires, really tough to find a job if you're not.
Speaker 3 (25:36):
Working, it is, it's just kind of sagnant. It's it's
so what do you do as a FED official here?
Speaker 2 (25:43):
Right?
Speaker 4 (25:43):
I mean, you have this story where three new feti fish. Already,
you've had Waller and Bowman calling for a cut. This week,
you've got Mary Daily, Lisa Cook, and Neil Cashcari voicing
concerns about the labor market. So you're developing more of
a uh, maybe not, but more of a quorum here
broadening out the idea that the FED should be cutting.
(26:03):
And I certainly don't think there's anybody there that is
on the opposite side of that. There's nobody there saying
that they should hike rates. But I think J. Powell
has been pretty firmly in the camp of I'm not
sure about this job weakness data, and we need to
pay attention to that unemployment rate, which to be clear,
hasn't been moving.
Speaker 3 (26:24):
No, it hasn't been moving because of demographic shifts in
the labor market coupled with shifts in the immigration environment
to lower immigration at this point, So I think you
try to walk through this, and this is not how
the FED would do it, but I'm going to just
like walk through if I were sitting on the FED, yep,
(26:48):
where am I going to have the least regret from
a policy perspective? And again, to be clear, this is
not how the FED would do it, nor really how
they should do it, but it's how I would, which
is why I'm not on the FED. Other than that,
I'm other than being unqualified, I'm you know, fine, if
I cut rates and inflation goes to the moon, not
(27:13):
to nine percent, but let's say I cut rates and
inflation goes back up to five or six. How much
you got four from here? Honestly, headlines got a decent
chance of getting into the high threes anyways, So like
you might be there. If I cut rates and inflation
goes to five or six, but I save the labor market.
(27:34):
How does that compare with me not cutting rates and
inflation stays under four but unemployment goes to six? Which
one of those scenarios do I prefer? It's really like,
if I'm being one hundred percent honest, if you asked
(27:54):
me five years ago, I would say cut rates.
Speaker 4 (27:58):
Yep.
Speaker 3 (28:00):
In the context of the experience we went through in
twenty twenty I'm sorry twenty twenty two that made it
really clear to me that we really hate inflation around here,
and even if it saves jobs, we're not really comfortable
with inflation as the mechanism in order to do so,
(28:21):
I land on okay, all else being equal in that scenario,
I don't cut now. The thing that we are seeing
is some labor market weakness that suggests it's more imminently
worsening to a problematic level than where inflation could be going. Inflation. Look,
you could have a case where inflation gets into the
three and a half to four range, and yes it's problematic,
(28:45):
but as long as it's not going to five or six, okay,
maybe you can squeak by. When you get unemployment moving up,
you say okay, like yeah, once it gets moving, it
usually keeps moving. And so this is why I've said,
since I don't know, since we saw that weakness in
continuing claims called it late May early June, like yeah,
(29:07):
like the FED could be justified in cutting here, and
I don't think anyone would blame them, is it, you know,
the perfect move? No, there's no perfect move. When you
have inflation rebounding a little bit, yeah, and labor market weakness.
But ultimately, given what they've talked about, I think they
probably err on the side of cutting, and I think
there's a compelling case that they should be cutting at
(29:29):
the next meeting.
Speaker 4 (29:30):
I was going to say, unless the unemployment rate goes
down in the what's that this September, the August August numbers, Yeah,
that'd be the only contact I think where the Fed
stays where they are. If the unemployment rate stays at
four to two or goes up, I think they're cutting,
and markets seem to think so. The Chicago mercotalks change
pricing in a ninety three percent likelihood of a rate
(29:51):
cut in September.
Speaker 3 (29:52):
Here's just another like tough scenario just to consider it.
And again this is just talking about kind of an
extension of what the Fed's facing. Let's say we have
a month, Mike, where there are one hundred thousand jobs
that are lost. I'm not saying we will or won't,
but let's say that we have one. I mean, it
wouldn't be shocking.
Speaker 4 (30:07):
We've had twenty five thousand created for the last couple
of months.
Speaker 3 (30:10):
Like that's thirty five thousand. Okay, let's say that there's
a month where there's one hundred thousand jobs lost. But
let's say that because more people are retiring and there
are fewer non US citizens in the United States, what
if the unemployment rate drops from four to two to
four to one at the same time that you lose jobs.
Speaker 4 (30:30):
What happens is what do year zoo?
Speaker 3 (30:32):
You're screwed, right, Like this is the very like this
is a real challenge here because on the thing the
FED looks at is the unemployment rate. The Fed. Here's
the other reason why this whole kurf fluffle about like
job revisions is kind of just a red herring. The
FED doesn't look at non farm payrolls. They do not
(30:54):
look at that, partly because it gets revised on a
regular basis, whereas the unemployment rate does not. Right, and
so the FED looks at the unemployment rate. If you
have an economy where the unemployment rate is going down,
even if employment is falling because a fewer people that
could be in the workforce, I don't know what the
FED does there, and I don't know that anything they
(31:15):
could do would be useful. Agreed, that's stagflation, Like, I
don't know what to do in that scenario.
Speaker 4 (31:22):
Yeah, because well, let's hope you don't get there. It'd
be really bad, it would be quite dodgy. So we'll
just have to see what we get.
Speaker 3 (31:30):
But we're at this demographic event horizon right now where
there are more boomers retiring each day than there are
gen zers coming into the workforce, and so it's something
that you just have to have in the back of
your mind. Like you could see a month with negative
job growth but the unemployment rate falls, and I don't
know what you do there. I don't know what you do.
(31:53):
Let's take a quick break when we come back a
little bit more on the labor market, specifically the youth.
What are we gonna do with all the youth youth unemployment.
It's a major problem in the United States right now.
We'll fill you in on that when we return.
Speaker 1 (32:09):
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Speaker 5 (32:34):
That was a great time to register for the DAV
five K, taking place Saturday, November eighth at Fort Independence
on Castle Island. The race has sold out each of
the past four years, and slots are continuing to fill
up quickly, so don't delay visit DAV five k dot Boston,
reserve your spot, or join our team here at the
Financial Exchange by registering under Team TFE. That's Saturday November
(32:57):
eighth for this year's DAV five K. Sign up now
at five k dot Boston, Peace and Bloomberg.
Speaker 3 (33:03):
President Trump to sign order easing path for private assets
in four to one K I'll quote here. President Donald
Trump will sign executive order Thursday. The aims to allow
private equity, real estate, cryptocurrency, and other alternative assets, and
four to one k's major victory for industries looking to
tap some of the roughly twelve point five trillion held
in those retirement accounts. The order will direct the Labor
(33:23):
Department to reevaluate guidance around alternative asset investments in retirement
plans subject to the ARISA Act of nineteen seventy four.
Speaker 4 (33:31):
So I know we in America are always on the
more is better train, and you know, as excited as
I am to have forty different jellies to choose from
when I go to the grocery store, I'm just not
sure it applies to four oh one K plans. In fact,
I would argue that one of the best retirement plans
out there the Thrift Savings Plan, which has like nine
(33:54):
different options to choose from. If if that is pretty
darn strong. But in either case, it does appear that
four to one ks are going to get opened up
to a whole bunch of new possible investments, from variable
annuities to crypto potential investments. Private equity might be in
there in the future. It's not going to happen overnight,
(34:17):
but I would just urge everyone to proceed with a
lot of caution when it comes to these new choices
because they are very unlikely to behave a lot like
the other investments in your four oh one K. And
I can't tell you how many times I hear people
primarily making a decision about what to invest in their
four oh one K based purely on what it did
(34:38):
last year, and that can lead to some bad decisions
when you are investing in something that could have as
much volatility as some of these types of investments that
they're talking putting in there. And so it goes back
to a very core fundamental understand how you are investing,
be able to explain it to a sixth grader, and
that's going to become more challenging with your four one.
(35:00):
If you have questions about how these changes could affect you,
please call the folks at Armstrong Advisory Group. We spend
a lot of time with clients and their workplace retirement plans,
understanding them, evaluating them, and just making them part of
the overall plan. The numbers eight hundred three nine three
for zero zero one for the Armstrong Advisory Group again,
(35:22):
you can reach us at eight hundred three nine three
four zero zero one.
Speaker 1 (35:27):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial, tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 3 (35:42):
Peace from Bloomberg. Opinion by Connor sen Youth is losing
two experience in the job market. And what this really
gets at is that look, with how companies are evaluating
their hiring right now, you can you to see challenges
for new college grads and by the way, new high
(36:05):
school grads getting into the labor market successfully right now.
And so ultimately I think that this is something where
it's different from prior tech cycles simply because look, during
the tech bubble, one of the big things that we
saw was a huge increase in hiring. Companies were hiring
left and right during the tech bubble, and we cover
(36:28):
the story last week or maybe the week before about
how a lot of even startups now are finding that
they're trying to run even leaner with lower headcount because
they find that that makes them more attractive to VC
because they're saying that they can do stuff with AI
instead of with headcount.
Speaker 4 (36:44):
Heck, even publicly trade companies are getting rewarded correctly.
Speaker 3 (36:48):
And so I think that when we look at this,
it's something that again, whether it's AI, whether it's overall
you know hiring trends, whether it's demographics, that there are
a few different things working now against you know, folks
in their twenties trying to get jobs that some of
them are likely cyclical and they're going to a bait
over the next year or so. Some of them might
(37:10):
be a more secular trend that goes on for, you know,
an extended period of time. But I gotta tell you,
having talked with an awful lot of people that either
are in their twenties or that interact with people in
that demo a lot. Think you know, professors, hiring managers,
things like that, there's a real fear of people from
(37:31):
people in their twenties, that this is how they like
their labor market's going to be. And the one thing
I would caution them on is part of that could
be just because look, when you're twenty three and you've
been in the labor market for a year, it's all
you know. But ultimately a year is a really short
period of time and things rarely stay that way forever.
So but might it.
Speaker 4 (37:51):
Require some reinvention on one sales part? Yeah, yeah, yeah,
I might.
Speaker 3 (37:55):
I could. It could take a quick break here, and
when we return the good news, we still got a
lot more to get to. And so you're stuck with
us for another hour here on the financial exchange
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
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:20):
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(00:42):
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(01:05):
Zada and Mike Armstrong.
Speaker 2 (01:11):
Chuck, Mike and Tucker with you here on a thirday
and quite honestly, weeks over.
Speaker 3 (01:20):
Put it in the bank. You can move on. There's
no more interesting economic data coming out the rest of
the week. There are no more interesting earnings coming out
the rest of the week. We're done here.
Speaker 4 (01:32):
You can get some interesting tariff announcements.
Speaker 3 (01:34):
Whatever, like, honestly, no, you, I'm sorry you can't get
interesting terriff.
Speaker 4 (01:39):
Announcements trying to give people a reason to tune in.
Speaker 3 (01:41):
Non they can tune into us. I'm just saying you
can put this one in the books. At this point,
there's nothing interesting happening in the next thirty six hours
so far as you know, at least that's scheduled to happen. Yeah, obviously,
you know, unscheduled things happen all the time. That's called life.
But is anyone really getting all geared up to see
(02:04):
what Planes All America Pipeline does with their earnings report tomorrow?
I'm not is anyone getting all geared up to be like, Ooh,
I wonder what the Baker Hughes rig Count's gonna be tomorrow.
Speaker 4 (02:19):
I'm not.
Speaker 3 (02:20):
I pay attention to it, but usually like two weeks
after and I'm like, oh, I wonder what happened with that? Ye,
these are not market moving things. No one wakes up
in the morning and says, huh, under Armour reports tomorrow.
Wonder how that's gonna affect the S and P five hundred. Hint,
it won't. Honestly, don't even know if under Armor's in
the S and P five hundred. Don't think it is.
(02:41):
It's only one and a half billion dollar company.
Speaker 4 (02:43):
So dear God, they've fallen.
Speaker 3 (02:45):
They really have it. It's tough for a company that
was once you know, kind of this up and coming
apparel brand that now has kind of come and gone
a little bit. Like that's just kind of where they
are in any case. Top two stories today we are
talking about tariffs. Obviously, today is the date that the
new higher tariff rates kick in that were specified last week.
(03:08):
To this point, market's responding, not even with a shrug,
but basically saying, don't matter. Does it matter to us?
You got the Dow up fifty points, the S and
P's up twenty five, Nasdaq up one hundred and eighty three,
So markets are pretty much saying one of two things. A.
This isn't going to matter. B this isn't going to stick.
Speaker 4 (03:29):
Yeah, anything that was shipped by midnight last night and
arise to US ports before October is apparently subject to
the lower pre today tariff rate, but anything shipped after
today will be subject to those higher rates. What's been
interesting to me about all this, and I think frankly
why we have not We've not seen the big promises
(03:51):
on the right or the left when it came to tariffs,
and the criticisms and applause for them right on the
proponents for tar side, it was going to bring a
bunch of American manufacturing back. It was going to raise
income so much that we you know, we would do
away with deficits, revenue so much, raise revenue so much
(04:14):
rather that we could do away with income taxes and
reduce deficits. And you know, those were always outlandish promises.
But we have not seen those promises to this point.
But to be fair, we also have not seen the
criticisms of these tariffs come to pass at this point. Either.
We have not seen mass unemployment, We have not seen
shortages and stores. We have not seen huge inflation on
(04:39):
really any major products, and I think that by and
large has to do with the implementation of this stuff.
So one, I think it's fair to say, yeah, Mike,
we haven't seen any of those things yet, give it time. Two,
this is I heard it compared to the Swiss cheese
of tariff policy. Right, there are big hole. I've got
(05:01):
Swiss on my sandwich today. By the way, little Turkey
Swiss coming at you in a couple hours. Perfectly planned.
But there are so many gaps in these policies. And
I've you know, we've seen it over and over. Now,
look like, hey, we're going to slap these tariffs on
but when it comes to products that are really necessary
or important to a specific industry or a specific cohort,
(05:24):
we're going to put waivers on them. And so whether
that's iPhones being made in China, whether that is likely
to be European wine that is going to maybe receive
some waivers, whether it's Brazilian orange juice and planes or
Chilean copper. There's been these exemptions put in place to
make sure the pain points are not so great on
(05:44):
the American public. And I don't know, I tend to
think we're going to see more of that yeah.
Speaker 3 (05:50):
I mean if you you know, go through it, and
the Brazil one, I think is you know, kind of
the classic case where okay, Brazilian tariffs are you know,
moving up to fifty percent, and you sit there and say, okay, like,
you know, we import a decent amount from Brazil. They're
one of the twenty largest trading partners in the US.
They're not a China or Mexico or Canada, but it's
(06:11):
still something where I think it's like sixty billion dollars
in imports and you say, okay, like this is you know,
a meaningful relationship here, and then you go through and
you look at the exemptions that end up going into
place on them, and you say, okay, out of the
ten largest imports from Brazil, we've exempted seven of them
(06:33):
from these tariffs. And so it's actually hitting a pretty
narrow subset of those items there. And this messages with
kind of what we've seen all along, and also dovetails
nicely into this piece talking about the semiconductor tariffs, which
President Trump yesterday said he would impose a one hundred
percent tariff on all chips coming into the United States.
Speaker 4 (06:56):
And literally no one has any idea what that means.
Speaker 3 (06:58):
No, we're not sure if this means like within a computer,
So like if you if you you know, if Dell
manufactures a computer in Taiwan and imports it into the US,
is the chip tariff separately or is it only if
Dell is bringing the chips in to make stuff here,
like it's we're not entirely sure. But also you've got
a bunch of exemptions out there already being reported that
(07:20):
Apple's exempt from this, in video is exempt from this,
Samsung is exempt from this, sk Heinex is exempt from this.
Who's left what are we? You know, you kind of
look at this and you say, okay, so what is
the actual implementation? Is it just is it worse for
(07:40):
automakers where hey, we've got hundreds of chips that go
into cars, and if you need to buy them and
bring them into the country, you're paying one hundred percent
tariff on those Because if it is, the estimates that
you've now seen are five ten thousand dollars in additional
cost per vehicle, right, which I would prefer not to
pay obviously, But.
Speaker 4 (07:59):
Every time something like that has been reported, it ends
up being exempted, exempted, And so I think that it's
something where i've I've kind of can can we make
a policy live right now? What kind of policy? Why
don't you go ahead and I'll let you know whether
or not we can do it.
Speaker 3 (08:16):
Okay, you tell me if we can do this or not.
I don't want to do any more reporting on tariffs
until they're actually implemented.
Speaker 4 (08:22):
Yeah. We've said that a few times because because.
Speaker 3 (08:25):
Otherwise, especially when you're like a chicken with our head
cut off and doesn't feel great to me.
Speaker 4 (08:30):
Yeah, and we have said this a number of times
because you get the earlier report, Oh my god, one
hundred percent semiconductor tariffs or fifty copper terraffs, So what
is that going to do? Think about all the downstream impacts,
and then weeks go by, everybody else looks at all
the downstream stream impacts, realizes how big of a catastrophe
(08:52):
it would be, and they completely changed the the UH
rules of the road. So I'm with you that, especially
reporting on day one things is not useful and if
we want to wait until implementation, that's fair. But going
into detail hypotheticals of what do these giant semiconductor or
(09:13):
Brazilian teriffs mean for the American public so far has
not been useful because every time it's looked meaningful and
looked like it would be a pain point, they've been changed,
they've been waved, they've been exempted.
Speaker 3 (09:26):
The other thing that I want to talk about is
it relates to these semiconductor tariffs, and I get at
a little bit of a stick in my craw about
this in your wear? A stick in my craw?
Speaker 4 (09:35):
Got it?
Speaker 3 (09:37):
Apple? Yesterday, Tim Cook goes to the White House and
pledges an additional one hundred billion dollars of investment in
the United States. This on top of a five hundred
billion dollar commitment that he made earlier this year. Mike,
do you know what Apple's capex worldwide is for the
last four years? Total? Half that forty six billion dollars? Okay,
(10:02):
so not even a tenth of it? Yeah, Where what
does this six hundred billion mean? Does it include things
like stock buybacks? Does include dividend?
Speaker 1 (10:11):
Like?
Speaker 3 (10:11):
What is actually in there? Because the idea that Apple
is going to spend six hundred billion dollars anywhere doesn't
actually make sense.
Speaker 4 (10:25):
So they're going to increase their cap x twelve x
is what this announcement would imply. Is that is that approximately, right.
Speaker 3 (10:37):
Mike, Even if like go through and let me just
I'm looking at the Apple's income statement for the last quarter.
The ninety four billion dollars in operating revenue Okay, okay,
fifty billion dollars cost a good sold, Okay, So obviously,
like that's you know, Apple's biggest expense operating expenses are
(10:57):
in DSGNA depreciation, all that stuff, fifteen billion dollars. Ultimately,
Apple ends up making in net income twenty three billion
dollars for the quarter. You know, they did about one
hundred billion dollars last year in you know profit. Where
are you gonna get six hundred billion dollars from?
Speaker 4 (11:18):
Well, if you spread it out over three decades, you'll
get there.
Speaker 3 (11:21):
This is what I'm like, I'm starting to get a
little bit frustrated with some of this because look, when
it comes to like the Gulf States, you can say, Okay,
the Saudis actually have trillions of dollars that they can
you know, deploy and and this is believable Apple, as
much as you can point to, hey, they've got a
bunch of money that's you know, sitting on their balance sheet. Sure,
(11:43):
I see that they've got, you know, fifty five billion
dollars on their balance sheet. Okay, I buy that, It's
not six hundred billion. And the numbers just don't make
sense as far as how they could possibly do this
over any meaningful timeframe. So like, this is now starting
(12:03):
to feel a little dog and pony showy to me
in terms of this now it was it was the
first time too. By the way, here here's the thing
it worked for Tim Cook. Apple stock before yesterday was
flat for the last two years. It was it one
hundred ninety six in July of twenty three. It was
a two oh one yesterday. It's now after being up
five percent yesterday and another two and a quarter percent today, Hey,
(12:24):
you're up almost you know, eight percent in two days.
It worked, Like, I don't blame Tim Cook for being like, yeah,
I got to do something to help. Maybe maybe I
can get a little bit of help from the administration.
Of course, like makes total sense. But the idea that
Apple's going to invest six hundred billion dollars doesn't make
sense because their total capex worldwide last year was twelve billion,
(12:49):
and they're not suddenly going to say, gee, you know what,
we're going to increase our capex from twelve to one
hundred and fifty billion dollars in order to do this
in the next four years. They don't have the money
to do that. They would actually be unprofitable if they
did that. If there's one thing I know about Tim
Cookie likes profit and apples. Okay, in pairis take a
(13:11):
quick break. When we return, let's talk a little bit
about what's going on with US auto companies.
Speaker 1 (13:17):
After this Tara fever is in high gear. We've got
the latest on what might be next and how long
it might last. Only here on the Financial Exchange Radio Network.
Text does six one seven twenty six to two one
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This is the Financial Exchange Radio Network.
Speaker 3 (13:56):
All right, let's talk a little bit about what's going
on with the auto sector. I don't know if either
of you happened to, uh, take a look at the
Mannheim used Vehicle Value Index. I did, we not, Charlie, Oh,
but what do you do with your life?
Speaker 4 (14:10):
Though? I mean we were paying pretty close attention to
it back in twenty twenty two when there were no cars.
But yes, I haven't looked at it since.
Speaker 3 (14:17):
So the Manheim Used Vehicle Value index for July fell
from a reading of two oh eight point five down
to two oh seven point four, which is interesting. Again
if you're talking about, you know, things that people have,
you know, worried about heading into the summer. It's okay,
you've got these auto tariffs, they might push up prices.
(14:38):
You know, you're gonna see the average car go up,
you know, anywhere from like two thousand to three thousand
dollars is kind of what we've we've.
Speaker 4 (14:45):
Heard and where I mean, can you give me some
context for that index? I know it declined month of
a month, but where were we Do you have context
for a few years ago? Uh?
Speaker 3 (14:54):
Yeah? So, like peak used vehicle value was in December
of twenty one one and January of twenty two, where
it was running at two fifty seven.
Speaker 4 (15:03):
Got it.
Speaker 3 (15:03):
By the end of twenty two it was down to
two nineteen. So prices fell fifteen sixteen percent over the
course of twenty two and then another ten percent and
twenty three and basically we're flat last year.
Speaker 4 (15:14):
Yeah.
Speaker 3 (15:14):
And by the way, normally, like if you look at
used vehicle prices from like twenty ten to twenty eighteen,
they went up about ten percent during that time, so
about one percent of year is typically what you would see,
and used vehicle price movement got it. This year. They're
also basically flat. They haven't really budged. End of last year,
you were a two four point eight, you're a two
(15:36):
o seven four, so you're up about one percent through
the first seven months. It hasn't been anything catastrophic. It's
basically been fine. And a couple things that you can
read into this. First, we did see this index move
up significantly in April. Remember that this was on the
back of a bunch of people trying to buy used
vehicles and new ones before tariffs potentially went into effect,
(15:58):
and so there was a bunch of demand that got
pulled forward. There still is some evidence out there that
demand is a little bit sluggish on the margins, and
so if you have sluggish demand as a dealer, you
might say, Okay, maybe I don't want to spend as
much on used vehicles wholesale because I don't know if
I'm going to be able to sell them for as
much as i'd like to. So it could be some
(16:20):
kind of temporarily weakened demand just because a lot of
people bought cars in February, March, and April and now
don't need them right now. So that's that's part of it.
Speaker 4 (16:31):
Yeah.
Speaker 3 (16:32):
The other thing that we're seeing from automakers is by
and large, they're trying to hold on pricing right now
while eating the cost of tariffs, and it's showing up
in their earnings that way.
Speaker 4 (16:44):
There are some companies where we point to to say, okay,
like look at a tariff impact for producing widgets or
golf balls or whatever it might be, And you say, okay, yeah,
when you add in all the marketing costs and all
the other things, you know, the tariff impact itself isn't
going to be what breaks the camels back. When you
talk about these automakers, I mean General Motors in the
last quarter.
Speaker 3 (17:04):
Twenty nine percent profit reduction because of tariff costs.
Speaker 4 (17:07):
I mean it's huge. It ate up like all of
their profit in the most recent quarter just the tariffs alone.
And so you look around here and you say, okay,
how long are they going to hold the line on that?
How long are investors going to allow them to hold
the line on that? And what does it do? I'm
with you that I don't think American consumers are terribly
(17:28):
excited about seeing car prices go up two three thousand dollars.
But I definitely don't think shareholders of these companies are
excited to see them just sit there and say, yeah,
we'll just take a massive cut to our profit margin,
and that is what it is.
Speaker 3 (17:46):
So I think the hope that automakers have is that
tariffs are lower in the future that they than they are.
Speaker 4 (17:54):
Today, especially for Canada and Mexico.
Speaker 3 (17:57):
Right, And there are a couple different ways they can
get there. First, you have, you know, some agreements with
Canada or Mexico where the auto rates get lowered, similar
to what we saw with Japan and the EU. So that's,
you know, one possibility. The other one is, hey, you've
got the Court of Appeals, the Federal Circuit Court of
Appeals that had the hearing last week on the appeal
(18:17):
of the constitutionality of the tariffs. There's a chance you
could end up with a lot of these tariffs being
struck down. Ye, And I'm sure, look, there's a pretty
good chance. I would assume it ends up getting appealed
to the Supreme Court, but I don't know how they
end up ruling, And so ultimately, if you're an automaker,
part of your calculus right now is some combination of, Hey,
(18:39):
maybe these tariffs can get negotiated lower in the coming months,
or maybe they end up not you know, being able
to go into effect. And two things happen then, By
the way, the first is that great, we don't have
to you know, pay these on future vehicles and parts.
The second part, well, the previous tariffs have to be refunded, right,
and that means all that it comes back over to us,
(19:01):
and great, we actually we did the right thing by
not moving pricing. I don't know where this is going
to end up, but that could be. How they're thinking
about it, at least for now, is hey, let's just
buy some time, see what things look like at the
end of the year, and then we can assess from there.
Speaker 4 (19:14):
Yeah, but I don't know. I mean, it's an absence
of change. I would expect production cuts quite honestly, because
I don't think demand is there for higher price cars.
Speaker 3 (19:25):
We'll see, we'll see. Let's take a quick break, and
when we return, it's Wall Street.
Speaker 1 (19:31):
Watch Like us on Facebook and follow us on Twitter
at TFE show. Breaking business news is always first on
the Financial Exchange radio network. Time now for Wall Street.
(19:54):
Watch a complete look at what's moving market so far
today right here on the Financial Exchange. Inge radio network.
Speaker 5 (20:01):
Markets in mixed territory after reciprocal tariffs and several countries
went into effect at midnight. The tech sector also seeing
a boost from chip makers after President Trump unveiled a
one hundred percent tariff on imported chips, but not for
companies building in the US. Right now, the Dow is
off by nearly three tenths of one percent, or one
hundred and twenty points. SMP five hundred is up by
(20:25):
nearly two tenths of one percent or eleven points. Nasdaq
is up by over six tenths of one percent, or
one hundred and thirty eight points. Russell two thousand is
edging about a tenth of a percent higher. Ten year
treasure real is flat at four point two two seven percent,
and crude oil off about a quarter percent today, trading
(20:45):
just above sixty four dollars a barrel. President Trump took
to truth social this morning, calling for Intel CEO Lip
Boot Tan to resign immediately. Tan was named Intel CEO
back in March. Intel shares are down by three percent. Meanwhile,
Apple adding to its gains from yesterday and is up
another two percent today after the tech chine announced to
(21:07):
extra one hundred billion dollars in US manufacturing commitment. Sticking
with Apple related news, where Corning shares are up over
one percent after Apple said it would expand its partnership
with the Precision glass maker as part of its US push.
Another Apple partner in Rare Earth Minor MP Materials, also
seeing gains of over five percent. Elsewhere, Eli Lilly sharer
(21:30):
sinking fourteen percent after the drug maker said its experimental
weight loss pill help people lose up to twelve percent
of body weight, a bit less than Wall Street expected,
Door Dash shares arising over one percent after the food
delivery app swung to a profit and posted better than
expected quarterly revenue lift posted revenue and disappointment trips or
(21:53):
Disappointing Trips data. However, that stock is climbing over two
percent higher. And Airbnb logged high earnings and sales in
the previous quarter, but said it expects pressure on margins
in the coming quarters due to investments in new businesses.
Airbnb shares are down by seven percent. I'm Tucker Silvan
(22:13):
that is Wallstree.
Speaker 3 (22:14):
Watch, Mike, I've got some breaking personal news. Actually hit me.
I got a text from Linda Jackson, a recruiter at Amazon,
just now. Oh no, Yeah, my resume has been recommended
by several online recruitment agencies. Uh huh, and after an
initial review, they've decided to interview me for the information
(22:37):
system's manager position.
Speaker 4 (22:39):
Wow, it's probably completely remote.
Speaker 3 (22:41):
I can work only twenty to sixty minutes daily and
still earn two hundred to five hundred dollars a day,
and I also get fifteen to twenty days of paid
annual leave. I don't know if that has to be
taken in twenty minute increments because I only work twenty
minutes a day. Send me that link, bro, But I
can reach out to them via WhatsApp as long as
I'm twenty five years or older, which they should know
(23:02):
if they've actually read my resume that I'm twenty one right.
So this is just a nice little reminder that, hey,
if you get text messages from corporalzig at gurblgurble dot whatever,
it's not actually the Amazon recruiter, and don't respond to them,
even if you want to tell them to, you know,
(23:23):
take their ball and go home. Yeah, it's uh, because
then you'll just get ten more of those people coming through.
Speaker 4 (23:29):
So I did make that mistake earlier this year. I
think I talked about it on air where I couldn't
help myself and just led them along for ten minutes,
and then my phone did not stop ringing every three
minutes for a month and a half.
Speaker 3 (23:44):
Yeah, So in any case, beware, just a little reminder.
Lots of scams out there, and the Amazon recruiter won't
ask if you're twenty five and over though, but to
be clear you took the job, well, yeah, I can
do it during breaks of the show. I mean it's
like we're good there. Piece in the Bloomberg talking about
(24:04):
the labor market, specifically as it relates to the FED.
Three Federal Reserve policymakers voice concerns about the US labor
market on Wednesday that pointed towards a potential interest rate
cut in September. So this is on the back of
the weaker than expected jobs report that came out last Friday.
I also want to discuss in this context the jobbles
(24:25):
claims numbers from this morning. Initial jobs claims up very
modestly from two hundred nineteenenty two twenty six not much
of a story. They's nothing there again until initial jobbles
claims get over two hundred and sixty thousand for three weeks.
Don't even talk to me about, you know, anything in
initial jobbles claims. It's just not a problem. Continuing jobles claims, though,
bumped up a little bit more than expected, back to
(24:46):
one point nine seven four million. This represents a five
point two percent year over year increase, which is a reacceleration.
And this is something that we had watched in late
May and early June as it was rising, and then
it kind of fell the last few weeks, and we say, okay,
this is there's nothing to see here, but this is
a new cycle high for continuing jobbles claims, and it's
(25:07):
one week, so let's not overreact to it. But now
it's kind of okay, let's monitor this over the next
few and see how it develops through August, because this
number is something that does matter in the context of
the broader unemployment rate, and we need to pay attention
to it to see if anything's happening.
Speaker 4 (25:25):
Here, and you know, feeds right into the narrative that
we've been talking about when it comes to the jobs market,
which is not a lot of layoffs, not a lot
of hires, really tough to find a job if you're not.
Speaker 3 (25:36):
Working, it is, it's just kind of sagnant. It's it's
so what do you do as a FED official here?
Speaker 2 (25:43):
Right?
Speaker 4 (25:43):
I mean, you have this story where three new feti fish. Already,
you've had Waller and Bowman calling for a cut. This week,
you've got Mary Daily, Lisa Cook, and Neil Cashcari voicing
concerns about the labor market. So you're developing more of
a uh, maybe not, but more of a quorum here
broadening out the idea that the FED should be cutting.
(26:03):
And I certainly don't think there's anybody there that is
on the opposite side of that. There's nobody there saying
that they should hike rates. But I think J. Powell
has been pretty firmly in the camp of I'm not
sure about this job weakness data, and we need to
pay attention to that unemployment rate, which to be clear,
hasn't been moving.
Speaker 3 (26:24):
No, it hasn't been moving because of demographic shifts in
the labor market coupled with shifts in the immigration environment
to lower immigration at this point, So I think you
try to walk through this, and this is not how
the FED would do it, but I'm going to just
like walk through if I were sitting on the FED, yep,
(26:48):
where am I going to have the least regret from
a policy perspective? And again, to be clear, this is
not how the FED would do it, nor really how
they should do it, but it's how I would, which
is why I'm not on the FED. Other than that,
I'm other than being unqualified, I'm you know, fine, if
I cut rates and inflation goes to the moon, not
(27:13):
to nine percent, but let's say I cut rates and
inflation goes back up to five or six. How much
you got four from here? Honestly, headlines got a decent
chance of getting into the high threes anyways, So like
you might be there. If I cut rates and inflation
goes to five or six, but I save the labor market.
(27:34):
How does that compare with me not cutting rates and
inflation stays under four but unemployment goes to six? Which
one of those scenarios do I prefer? It's really like,
if I'm being one hundred percent honest, if you asked
(27:54):
me five years ago, I would say cut rates.
Speaker 4 (27:58):
Yep.
Speaker 3 (28:00):
In the context of the experience we went through in
twenty twenty I'm sorry twenty twenty two that made it
really clear to me that we really hate inflation around here,
and even if it saves jobs, we're not really comfortable
with inflation as the mechanism in order to do so,
(28:21):
I land on okay, all else being equal in that scenario,
I don't cut now. The thing that we are seeing
is some labor market weakness that suggests it's more imminently
worsening to a problematic level than where inflation could be going. Inflation. Look,
you could have a case where inflation gets into the
three and a half to four range, and yes it's problematic,
(28:45):
but as long as it's not going to five or six, okay,
maybe you can squeak by. When you get unemployment moving up,
you say okay, like yeah, once it gets moving, it
usually keeps moving. And so this is why I've said,
since I don't know, since we saw that weakness in
continuing claims called it late May early June, like yeah,
(29:07):
like the FED could be justified in cutting here, and
I don't think anyone would blame them, is it, you know,
the perfect move? No, there's no perfect move. When you
have inflation rebounding a little bit, yeah, and labor market weakness.
But ultimately, given what they've talked about, I think they
probably err on the side of cutting, and I think
there's a compelling case that they should be cutting at
(29:29):
the next meeting.
Speaker 4 (29:30):
I was going to say, unless the unemployment rate goes
down in the what's that this September, the August August numbers, Yeah,
that'd be the only contact I think where the Fed
stays where they are. If the unemployment rate stays at
four to two or goes up, I think they're cutting,
and markets seem to think so. The Chicago mercotalks change
pricing in a ninety three percent likelihood of a rate
(29:51):
cut in September.
Speaker 3 (29:52):
Here's just another like tough scenario just to consider it.
And again this is just talking about kind of an
extension of what the Fed's facing. Let's say we have
a month, Mike, where there are one hundred thousand jobs
that are lost. I'm not saying we will or won't,
but let's say that we have one. I mean, it
wouldn't be shocking.
Speaker 4 (30:07):
We've had twenty five thousand created for the last couple
of months.
Speaker 3 (30:10):
Like that's thirty five thousand. Okay, let's say that there's
a month where there's one hundred thousand jobs lost. But
let's say that because more people are retiring and there
are fewer non US citizens in the United States, what
if the unemployment rate drops from four to two to
four to one at the same time that you lose jobs.
Speaker 4 (30:30):
What happens is what do year zoo?
Speaker 3 (30:32):
You're screwed, right, Like this is the very like this
is a real challenge here because on the thing the
FED looks at is the unemployment rate. The Fed. Here's
the other reason why this whole kurf fluffle about like
job revisions is kind of just a red herring. The
FED doesn't look at non farm payrolls. They do not
(30:54):
look at that, partly because it gets revised on a
regular basis, whereas the unemployment rate does not. Right, and
so the FED looks at the unemployment rate. If you
have an economy where the unemployment rate is going down,
even if employment is falling because a fewer people that
could be in the workforce, I don't know what the
FED does there, and I don't know that anything they
(31:15):
could do would be useful. Agreed, that's stagflation, Like, I
don't know what to do in that scenario.
Speaker 4 (31:22):
Yeah, because well, let's hope you don't get there. It'd
be really bad, it would be quite dodgy. So we'll
just have to see what we get.
Speaker 3 (31:30):
But we're at this demographic event horizon right now where
there are more boomers retiring each day than there are
gen zers coming into the workforce, and so it's something
that you just have to have in the back of
your mind. Like you could see a month with negative
job growth but the unemployment rate falls, and I don't
know what you do there. I don't know what you do.
(31:53):
Let's take a quick break when we come back a
little bit more on the labor market, specifically the youth.
What are we gonna do with all the youth youth unemployment.
It's a major problem in the United States right now.
We'll fill you in on that when we return.
Speaker 1 (32:09):
Miss any of the show. The Financial Exchange Show podcast
is available on Apple, Spotify, and iHeartRadio. Hit the subscribe
button and leave us a five star review. This is
the Financial Exchange Radio Network. This is your home for
the most comprehensive coverage of the economy and the trends
on Wall Street. This is the Financial Exchange radio network.
Speaker 5 (32:34):
That was a great time to register for the DAV
five K, taking place Saturday, November eighth at Fort Independence
on Castle Island. The race has sold out each of
the past four years, and slots are continuing to fill
up quickly, so don't delay visit DAV five k dot Boston,
reserve your spot, or join our team here at the
Financial Exchange by registering under Team TFE. That's Saturday November
(32:57):
eighth for this year's DAV five K. Sign up now
at five k dot Boston, Peace and Bloomberg.
Speaker 3 (33:03):
President Trump to sign order easing path for private assets
in four to one K I'll quote here. President Donald
Trump will sign executive order Thursday. The aims to allow
private equity, real estate, cryptocurrency, and other alternative assets, and
four to one k's major victory for industries looking to
tap some of the roughly twelve point five trillion held
in those retirement accounts. The order will direct the Labor
(33:23):
Department to reevaluate guidance around alternative asset investments in retirement
plans subject to the ARISA Act of nineteen seventy four.
Speaker 4 (33:31):
So I know we in America are always on the
more is better train, and you know, as excited as
I am to have forty different jellies to choose from
when I go to the grocery store, I'm just not
sure it applies to four oh one K plans. In fact,
I would argue that one of the best retirement plans
out there the Thrift Savings Plan, which has like nine
(33:54):
different options to choose from. If if that is pretty
darn strong. But in either case, it does appear that
four to one ks are going to get opened up
to a whole bunch of new possible investments, from variable
annuities to crypto potential investments. Private equity might be in
there in the future. It's not going to happen overnight,
(34:17):
but I would just urge everyone to proceed with a
lot of caution when it comes to these new choices
because they are very unlikely to behave a lot like
the other investments in your four oh one K. And
I can't tell you how many times I hear people
primarily making a decision about what to invest in their
four oh one K based purely on what it did
(34:38):
last year, and that can lead to some bad decisions
when you are investing in something that could have as
much volatility as some of these types of investments that
they're talking putting in there. And so it goes back
to a very core fundamental understand how you are investing,
be able to explain it to a sixth grader, and
that's going to become more challenging with your four one.
(35:00):
If you have questions about how these changes could affect you,
please call the folks at Armstrong Advisory Group. We spend
a lot of time with clients and their workplace retirement plans,
understanding them, evaluating them, and just making them part of
the overall plan. The numbers eight hundred three nine three
for zero zero one for the Armstrong Advisory Group again,
(35:22):
you can reach us at eight hundred three nine three
four zero zero one.
Speaker 1 (35:27):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial, tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 3 (35:42):
Peace from Bloomberg. Opinion by Connor sen Youth is losing
two experience in the job market. And what this really
gets at is that look, with how companies are evaluating
their hiring right now, you can you to see challenges
for new college grads and by the way, new high
(36:05):
school grads getting into the labor market successfully right now.
And so ultimately I think that this is something where
it's different from prior tech cycles simply because look, during
the tech bubble, one of the big things that we
saw was a huge increase in hiring. Companies were hiring
left and right during the tech bubble, and we cover
(36:28):
the story last week or maybe the week before about
how a lot of even startups now are finding that
they're trying to run even leaner with lower headcount because
they find that that makes them more attractive to VC
because they're saying that they can do stuff with AI
instead of with headcount.
Speaker 4 (36:44):
Heck, even publicly trade companies are getting rewarded correctly.
Speaker 3 (36:48):
And so I think that when we look at this,
it's something that again, whether it's AI, whether it's overall
you know hiring trends, whether it's demographics, that there are
a few different things working now against you know, folks
in their twenties trying to get jobs that some of
them are likely cyclical and they're going to a bait
over the next year or so. Some of them might
(37:10):
be a more secular trend that goes on for, you know,
an extended period of time. But I gotta tell you,
having talked with an awful lot of people that either
are in their twenties or that interact with people in
that demo a lot. Think you know, professors, hiring managers,
things like that, there's a real fear of people from
(37:31):
people in their twenties, that this is how they like
their labor market's going to be. And the one thing
I would caution them on is part of that could
be just because look, when you're twenty three and you've
been in the labor market for a year, it's all
you know. But ultimately a year is a really short
period of time and things rarely stay that way forever.
So but might it.
Speaker 4 (37:51):
Require some reinvention on one sales part? Yeah, yeah, yeah,
I might.
Speaker 3 (37:55):
I could. It could take a quick break here, and
when we return the good news, we still got a
lot more to get to. And so you're stuck with
us for another hour here on the financial exchange
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