March 20, 2025 • 38 mins
Chuck Zodda and Mike Armstrong discuss the Fed's projections see an economy dramatically reset by Trump's election. The Fed is clueless, too. And that's ok. Trump says the Fed should cut interest rates as tariff push heats up. US energy stocks take the lead as inflation anxiety builds up. Europe comes to life as the US stumbles. Are office buildings starting to fill up again?
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
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):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is the Financial
Exchange with Chuck Zada and Mike Armstrong, your exclusive look
at business and financial news affecting your day, your city,
(00:43):
your world. Stay informed and up to date about economic
and market trends plus breaking business news every day. The
Financial Exchange is a proud partner of the Disabled American
Veterans Department of Massachusetts. Help us support our great American
heroes by visiting dav five Doug Boston and making a
donation today. This is the Financial Exchange with Chuck Zada
(01:06):
and Mike Armstrong.
Speaker 2 (01:10):
Day after the FED meeting, and we are trying to
fully digest exactly what Ja Powell and his Purple Tide
told us yesterday. It's Chuck, Mike and Tucker with you
and Mike, I think, quite honestly, if if you know,
if we were to go back and listen to what
Paul Aline and I were discussing, I think it was
(01:32):
almost exactly what the Federal Reserve showed in their Summary
of Economic Projections, where basically they said, hey, we think
GDP's going to come in a little bit weaker than
we expected one point seven percent versus two point one
percent that they predicted in December. Paul and I said, yeah,
something in the high ones is probably where you'll land unemployment.
(01:54):
We said, yeah, maybe they show it ticking up a
little more. They did up to four point four percent
this year from four to three. He came in at
two seven, core at two eight. And so again, I
I'd like to say that I don't want to our
own horn, but you do.
Speaker 3 (02:08):
I do love to toot my own horn.
Speaker 2 (02:10):
And I, Paul and I freaking nailed what we thought
the Fed would say yesterday about where they think the
economy is going to go They're they're basically telling you, hey,
economic growth, we now think is going to be a
little bit slower this year but not recessionary, and inflation
is going to be a little bit higher this year
but not crazy high. And as a result, unemployment's going
to go up, you know, a marginal amount more nothing
(02:32):
you know, huge, but a touch more. That's what they
told us in their summary of economic projections. Jay Powell
during his press conference, I think pretty much gave us
the same answer over and over again, which is, hey,
we're six weeks into the new administration or eight weeks in, sorry,
and we still have to see how these policies are
going to play out before we decide to make any
moves in either direction.
Speaker 3 (02:53):
Yeah.
Speaker 4 (02:53):
I was gonna ask that did the did the comments
in your mind? And I listened to most of the
Q and A. Did the comments from Jerome Powell in
your mind contradict or further anything from the actual SEP
and the and the release at two pm, because you
did see, you know, equity markets were up for the
day anyway, but starting around two thirty really surged upwards
(03:15):
and you know, brought us into the close a full
percentage point higher than where we started the day. What
about Jerome Powell's press conference, I guess reassured investors in
your mind compared to just the release itself.
Speaker 3 (03:27):
I don't know.
Speaker 2 (03:27):
I don't think Powell said anything particularly notable, quite honestly.
Speaker 3 (03:31):
I mean I always listened to the whole thing, or
as much as I like.
Speaker 2 (03:34):
I generally listen for like forty five minutes, and then
if I see any big moves after I stopped listening,
I'm like, okay, Like, let me see what he said,
just because more often than not, it's him repeating the
same thing twenty times in response to different questions that
he gets yep, things that I wrote down in terms of,
you know, his his quotes here. Very difficult to have
a precise assessment of how much inflation is coming from
(03:56):
tariffs and how much from other sources. Surveys are suggest
seeing the tariffs are driving inflation expectations. The right thing
to do is to wait for clarity on what the
economy is doing, simply because we don't know if the
hard data will catch up to what the soft data
is telling us. Things that we've talked about on this
show as well, we should start our own central bank,
and I don't know how you just go about starting one,
(04:18):
but we should try or something. Let's see the cost
of waiting to do anything are manageable given that the
data we're seeing from the economy is still solid. Again,
this gets it something that we've talked about on the show,
which is, yeah, the data may start to deteriorate, but
to this point you're continuing to get you know, no
major deviations from what you had previously. This trend, by
(04:38):
the way, continued this morning, with initial jobs claims coming
into two hundred and twenty three thousand, a very modest
uptick from two hundred and twenty one thousand last week.
The continuing claims came in at eight one point eight
nine to two million, up a little bit from one
point eight five to nine million last week.
Speaker 3 (04:54):
Existing home sales better than expected.
Speaker 2 (04:57):
Part of this is the seasonal adjustment on this Because
last year was twenty nine days in February this year
was twenty eight. So you came in an annualized rate
of four point twenty six million. You're probably not gonna
be out that next month, just because of how the
seasonal adjustments work on this stuff. But that was better
than expected. Still, and so I think we still have
a situation where as Jay Powell said, you know a
(05:18):
few times, hey, there's no real change in the data
to this point that we're getting. The surveys are suggesting
people are nervous about a worsening, but it has not
yet materialized in the broad based data that we've been getting.
Speaker 4 (05:31):
He was asked specifically about a removal of a sentence
from their step about the equal balance of risks on
inflation and recession, but when asked about it, he said, no,
we still basically see those as equally weighted, but both
of them perhaps are are more severe. That wasn't the
sense I got from the responses during the press conference.
(05:52):
My sense from everything else that he said was that
the chairs of the Federal Reserve, the governors of the
Federal Reserve, are more concerned about recession right now than
they are inflation.
Speaker 5 (06:02):
Was that your takeaway as well?
Speaker 2 (06:06):
I don't know I got this, sen So i'll quote
here because this is one of the things that I
did write down. There can be situations where maximum employment
and price stability are intentions. So basically saying hey, we're
feeling pressure on both sides of that, and we say
that we'll manage, and we have a plan for how
we'll manage based on how far each one is from
its goal. So let's say that unemployment goes up to
(06:28):
ten percent and inflation goes up to four, Fed's gonna
cut his unemployment's the bigger problem, yeap. Likewise, if unemployment
goes up to five and inflation goes up to ten,
Fed's gonna hike his inflation is the bigger problem. And
he said, and how long it takes to get back
to those goals since our tools can only work in
one direction at once. By the way, we do not
have a situation right now where we feel that there
(06:49):
is a conflict between these things. And that to me,
I can't remember which way you thought he was leaning,
but that to me was more, Hey, we're not cutting
right now because we still have a little bit higher
than we want it to be. And even if we
might be worried about where unemployment goes, it's not a
problem today. So we're going to continue to focus on
the inflation side and not cut further, you know, than
(07:12):
we did last fall, when maybe they you know, jump,
I think they probably regret going fifty BIPs. Yeah, in
fifty basis points in September, and wish they had just
gone twenty five, twenty five, twenty five. But when Jeremy
Siegel is yelling for you to do one hundred and
fifty bases points and cuts in a week.
Speaker 4 (07:30):
Pressures on, baby, I get it. How about the word
transitory is back on the table.
Speaker 3 (07:36):
I love it. I love that the word transitory is permanent.
Speaker 5 (07:39):
So Craig Tory, Yeah, that's that's pretty fun.
Speaker 4 (07:43):
Craig Torres from Bloomberg asked the question, and he basically said, look,
you screwed up last time in the use of the
word transitory, yes, and so why are you using it again?
That was the gist of his question. I'm summarizing, and
he was nicer about it, but that was just the question.
And I think if I'm putting myself in Powell's shoes here,
(08:04):
I think his answer is, yes, we are thinking about
this inflation as transitory again, And if he's being really
honest with himself, I think it's probably that. Hey, they
were kind of proven eventually right on the transitory discussion
back from twenty twenty two. They just understated just how
severe it would be in the short term.
Speaker 2 (08:24):
Well, that's a lot to that charity, I think, because
the problem people had with transitory is I think people
thought like, hey, this will be three to six months,
and instead it was two and a half years, right.
Speaker 4 (08:34):
And they also thought it would be like four and
a half percent inflation.
Speaker 3 (08:37):
Instead it was nine.
Speaker 2 (08:39):
So there were some some problems there. I mean, look,
I don't want Jay to start having to make up
new words and everything.
Speaker 3 (08:47):
This is one of those places where I wish he
would just not say anything.
Speaker 2 (08:50):
Agree, And he's pretty good at not saying things like
you know, he could be asked, you know, hey, how
long do you expect this inflation to last? Well, we're
still looking to see, you know, exactly what policies get
put in place and how in what their impacts may be,
and will assess.
Speaker 3 (09:03):
As we go. Like you, you don't need to get
into transitory.
Speaker 5 (09:06):
Would you like the best example of j Powell not
saying anything?
Speaker 3 (09:10):
I know what it is already?
Speaker 4 (09:12):
The reporter from the AP asked him, quote, President Trump
fired two members of the Federal Trade Commission, an independent agency,
and this could be a kind of legal fight about
the administration's power to fire independent people. If those firing
stand is that a threat to the Fed's independence could
do the same thing to the FED board. Here's J
Powell's answer. So, I think I did answer the question
in this very room some time ago, and I've no
(09:34):
desire to change that answer and have nothing new for
you on that today. And then, by the way, the
LA basically just shut up, stop asking that question.
Speaker 3 (09:42):
The reporter goes okay, like a Mulligan on the question, and.
Speaker 5 (09:45):
But you don't get no. You have to sit down
after that response.
Speaker 2 (09:48):
First time I've ever seen J. Powell laugh at a
press conference, it was kind of weird. It's kind of
like you know when you're a kid and you see
like your teacher at the grocery store and you're like, oh, know,
you existed outside of the class, right right. It's kind
of like that seeing J Powell laugh. Yeah, you're like, oh,
I didn't know you had that in you, Jay.
Speaker 3 (10:09):
But uh yeah.
Speaker 2 (10:10):
Overall, I don't think that we got much from this meeting,
which is what you would expect. Again, the economic data
has not really changed in the last eight weeks. There
have been some stuff around the edges, but nothing crazy
that we've seen.
Speaker 3 (10:23):
Uh.
Speaker 2 (10:23):
The the stuff that he said about, Hey, the soft
data is bad, but we're gonna, you know, wait to
see how the hard data catches up or you know,
does the soft data catch does the hard data catch down,
or does the soft data catch up? I guess is
how you could phrase it. And from there, you know,
we're gonna have to see how things go. And clearly,
with the summary of economic projections, the FED says, yeah,
(10:44):
we think this is going to result in some lower
growth and higher inflation. But it also feels like it's
kind of a low confidence read and that's fine, like.
Speaker 4 (10:53):
Which they acknowledged, right our confidence is shot because this
is really really difficult to read right now. They they
didn't say my confidence, our confidence is shot. They know
it'd been bad. They just said uncertainty is extremely high,
right now. That's the right acknowledge that to make The.
Speaker 2 (11:09):
Quote that I took from them was it's hard to
say when we'll have a forecast that we can trust.
Speaker 4 (11:14):
Okay, finally, that's that's FED speak for confidences shot.
Speaker 2 (11:17):
Yes, yes, it's basically we're not sure what to do,
so we're just gonna wait and see. And by the way,
that's fine. The FED can just wait. Most of the time,
the FED is better off just waiting and seeing. Occasionally
it's the wrong move, but usually doing nothing's the right
thing when it comes to the FED.
Speaker 4 (11:35):
So conclusion, equity markets up yesterday. FED still thinking about
two rate cuts this year, but much more uncertainty than
where they were in December of last year. They think
the risk of both recession and higher inflation is now
higher than they did just three months ago.
Speaker 3 (11:51):
Let's take a quick break.
Speaker 2 (11:52):
When we come back yesterday or last night, president Trump
saying hey, Jay, I want you to start cutting rates,
we'll talk about why he's saying that and what it
means going forward.
Speaker 1 (12:04):
The latest news on inflation, the fedb economy, and how
the markets are reacting. Every morning right here on the
Financial Exchange Radio Network. If you missed any of today's show,
catch up whenever you want on our YouTube page. Find
daily show segments and full shows. Just go to YouTube
dot com and search for the Financial Exchange. This is
your home for breaking business and financial news. This is
(12:28):
the Financial Exchange Radio Network.
Speaker 6 (12:31):
The Financial Exchange is a proud partner of the Disabled
American Veterans Department of Massachusetts, and you can register right
now for this year's five k at Castle Island. By
visiting dav five k dot Boston. The event will sell
out again. So if you're interested in participating, now's the
time to reserve your spot. Come out and help support
(12:52):
our great American heroes by joining us for the DAV
five k. Visit dav five k dot Boston to register,
sure or to make a donation.
Speaker 3 (13:01):
Today.
Speaker 6 (13:02):
That's dav five k dot Boston.
Speaker 3 (13:06):
Mike.
Speaker 2 (13:06):
So yesterday, I think it was around ten pm or so.
I don't know the exact time, but President Trump, in
a social media post said, quote, the FED would be
much better off cutting rates as US tariffs start to transition,
ease their way into the economy, do the right thing.
April second is Liberation Day in America, So again very
(13:28):
publicly saying yes, I want you to cut interest rates.
And a couple things on this that I think you
that I take away from it. The first is I
think that what I am seeing is like from whether
it's from the three main players in the administration on
the economic side are Trump, Lutnik, and Besson, and it's
(13:50):
pretty clear to me from all of them that they're
almost trying to I know, this sounds kind of weird,
and this again, they're almost trying to job own the economy.
Speaker 5 (14:02):
Slower, which is a weird gars recession.
Speaker 2 (14:06):
I'm kind of And the reason that I say this
is normally, if you ask, like a Treasury secretary, hey,
are you worried about the economy going into recession?
Speaker 3 (14:14):
The answer is no, like, we're not worried about it.
Speaker 2 (14:15):
Now you get, well, we might see one, but we'll
just have to see how it plays out.
Speaker 4 (14:19):
Like, when have you ever heard that from a Treasury Second,
you've talked about that a lot, you have never heard
that ever from a Treasury secretary, like acknowledging publicly or
the president that their policies that they are putting into
place may cause recession.
Speaker 5 (14:33):
And I think I'm trying to get the read on that.
Speaker 4 (14:36):
Maybe it's a thinking that, hey, if it happens early on,
we can still pass this off as the prior administration's
fault and a means to an end, Whereas if it
happens a year from now, it's firmly in our camp.
Speaker 3 (14:47):
I guess I'm not sure, So I.
Speaker 2 (14:49):
Think that the read as far as you know what
they're trying to do, I think I have a pretty
good handle ont In it.
Speaker 3 (14:55):
They want rates down.
Speaker 2 (14:58):
So that basically the the playbook to try to fix
the economy. The way that they're viewing it is, hey,
we want to reduce fiscal spending so that we're not
running seven percent deficits. But if we reduce fiscal spending
and rates are still high, it's a huge drag on
the economy. So we want rates down to potentially stimulate
the economy as we're attempting to cut the deficit, to
(15:21):
hopefully provide enough boosts so that the economy doesn't go
into any kind of meaningful recession. And on top of that,
we can then take the existing debt that we have
out there and try to, you know, either as it
comes due or you know, in some kind of renegotiation,
say hey, we can get lower interest rates and turn
out the debt to longer term to reduce interest expense
(15:44):
and fix things on that side. I think that's very
clearly what they're trying to do is reduce annual outlays
as a percentage of GDP and reduce interest costs, and
also through that reduce interest cost you know, offset what
would other WANs some potential weakness in the economy. And
I said, look, it's Look, it's a really ambitious attempt
(16:06):
to try to restructure the way the US economy is
set up right now, I don't know if it's gonna
work or not. It might and we might be sitting
here three four years now being like, wow, this is crazy,
Like I can't believe they pulled this off, And we
might be sitting here three to four years from now
going well, that didn't really work, Like back to the
drawing board. You know, we'll see what we'll see what
we can do next. So I don't know, but I
(16:28):
think those are the pillars when you when you hear
from those three guys. The other one who I think
is involved, and you can read his white paper on
this very topic. His name is Stephen Mirron, and he
puts something out maybe a year and a half ago,
like on this very topic. He's now running the Council
of Economic Advisors for the President, and it was specifically
(16:49):
talking about TERRORFF implementation and lowering debt costs and all
these things together. I think the playbook is out there
for what they want to do. It's just a question
of is it gonna work or not?
Speaker 3 (16:58):
And I don't know. It may it may not, And
we'll have to see.
Speaker 4 (17:02):
Yeah, I think the playbook, especially on the government spending side,
like you could make a pretty compelling argument that the
only reason we didn't enter into recession in twenty twenty
two or twenty twenty.
Speaker 5 (17:12):
Three was in large part because of government spending.
Speaker 4 (17:15):
And I think there's plenty of people that would argue
that's not a terribly efficient use of taxpayer funds. I'd
rather see the private sector play a bigger role, And
I'm on board with that argument. And so, yeah, if
you reduce deficits, reduce government spending, there is a possibility
of an economic slowdown, and lower interest rates and lower
taxes would help that out. So I'm with you. I
understand that argument. Where the entire thing gets much more muddied,
(17:38):
and where business executives I think are questioning it a
whole lot more is around the tariff side, because there
I don't see the same clear path of what are
we trying to accomplish here, And so that's the piece
that I remain confused on. Is Okay, when it comes
to the strategy of you know, tariffs on China, how
(17:58):
does that differ in terms of what we're trying to
accomplish to those on Canada, Mexico, Europe, et cetera. And
I think that's where that's where you hear the lard
loudest cries coming from the business community to say, Okay.
Speaker 3 (18:11):
We get what you're trying to do. In the government
side of things.
Speaker 4 (18:13):
We might disagree with the tactics you're using and we
might have issues with that, but we can I think,
read into what's trying to be done there on the
tariff implementation side. I think you have a lot of
CEOs raising their hands and saying do it or don't
do it, but tell us what the end objective is
and give us some sense of where these are going
(18:33):
to be over the next few years, because otherwise we're
just going to put our hands up and do nothing.
Speaker 3 (18:38):
Right if here's the thing.
Speaker 2 (18:40):
If and again like I don't know, we don't know
how any of anything and any of this is going
to play out on the tariff side, But you don't
make long term decisions to relocate production to the US
based on short term tariffs, yep, Like they would need
to be in place for an extended period of time.
And if so, then you can say, Okay, I'm going
(19:02):
to build this factory because I'm going to you know,
have X level of protection and I can expect to
be able to, you know, have it be profitable once
it's completed. If that's not the case, then you wouldn't.
Speaker 3 (19:13):
Necessarily see that.
Speaker 2 (19:14):
So I think there are a lot of balls in
the air right now, and I know it's boring to
hear me just continue to say, Look, we're gonna need
to see how it plays out, but we are like
it's it's gonna take some time to see how this
all unfolds, and we'll see what happens. Let's take a
quick break here. When we return, we've got Wall Street
(19:34):
Watch after this.
Speaker 1 (19:40):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch a complete look and what's moving market so
far today right here on the Financial Exchange Radio Network.
Speaker 6 (20:02):
Well, markets are extending their gains from yesterday's rally at
the moment on the heels of a FED meeting and
the commentary from FED Chairman Jerome Powell. Right now, the
Dow is up by about a half a percent, or
one hundred and ninety five points, s and P five hundred,
up by four tenths of a percent or twenty three points,
and the Nasdaq is up just over half a percent
(20:23):
or ninety seven points. RUSSED two thousand, edging two points higher.
Tenure treasure yield is down by five basis points at
four point two zero percent, and crude oil up about
one percent higher, trading just below sixty eight dollars. A
barrel big news in the sports world this morning, impacting
a local Boston sports team after Bill Chisholm, managing partner
(20:46):
at Symphony Technology Group, has agreed to purchase the Boston
Celtics from the Grousbeck family for evaluation of six point
one billion dollars, marking the largest sale for sports franchise
in North America. Meanwhile, Tesla announced it was recalling more
than forty six thousand cyber trucks due to the potential
(21:07):
for an exterior panel to fall off while driving. Tesla
stock is actually edging a quarter percent higher. Elsewhere, shares
in TMU parent company PDD holdings up by one and
a half percent after the Chinese e commerce company reported
lower than expected earnings in the fourth quarter. The recent
quarter also marked the company's slowest quarterly revenue growth since
(21:30):
twenty twenty two. Darden Restaurants posted mixed quarterly results, beating
on earnings but missing on revenue expectations. The parent company
Do All Garden also saw its comparable restaurant sales increase
less than expected. However, that stocks seeing a nice game
today over of over seven percent. Building products distributor QXO
(21:51):
agreed to buy Beacon roofing supply and a deal worth
about eleven billion dollars including debt. That stock up by
eight percent. Boston Beer Shared up by four percent after
City upgraded the stock to buy from neutral, saying this
year could bring a return to volume growth for the
Twisted Tea and Truly parent company. Kava up by five
(22:11):
percent after the Mediterranean fast casual chain was upgraded by
JP Morgan to overweight from neutral. Online news car retailer
Carvana upgraded by Pip Sandlers, who overweight from neutral, where
the firm said Carvana is insulated from terraff threats and
is now in position to grow. That stock up by
nine percent and after today's closing bell, we'll see a
(22:33):
few noteworthy earnings reports from FedEx, Nike, and Micron Technology
I'm Tucker Silvan, that's Wall Street.
Speaker 3 (22:41):
Watch, Mike.
Speaker 2 (22:42):
We had a piece in Bloomberg talking about what we're
seeing in the energy sector so far this year.
Speaker 3 (22:48):
Man.
Speaker 2 (22:48):
It points out that out of the eleven sectors in
the S and P five hundred, energy stocks are the
strongest performing.
Speaker 1 (22:54):
Now.
Speaker 2 (22:54):
They have some strange bedfellows right now because the top
four sectors at the moment are energy, healthcare, utilities, and materials.
Those are not things that typically go together. Energy materials yep. Sure,
health care and utilities, sure, but not usually the four
of them together. And so one could, you know, ask
the question, what the heck is going on here? And
(23:16):
the answer, if we're being entirely honest, is I don't
really know.
Speaker 5 (23:23):
Yeah.
Speaker 4 (23:23):
Well, especially too, I'll point out that that is on
top of oil prices being down for the year, right, oil.
Speaker 3 (23:29):
Prices have fallen, and yet energy stocks have risen.
Speaker 4 (23:32):
Now not substantially from the beginning of the year, but
you know, oil prices did get as high as eighty
bucks a barrel on West Texas crewed back in January.
They're now sitting below seventy and have been lower than that.
And so it seems to me that there's a bet
being played on you know, they're cozying up to this administration,
which is definitely true. I mean, there was a meeting
(23:52):
just yesterday about you know, drilling and different objectives. But
I think the lesson from the first Trump administration was that, hey,
loosening of policy and restrictions around drilling is not always
great for oil companies.
Speaker 2 (24:06):
No, if you end up with lower oil prices, that
can in fact be very bad for oil companies, even
if it might be very good for us driving around
on a daily basis. Interesting things just when you're looking at,
you know, kind of how different sectors have played out
so far here to date. Worst performing sector here to
date consumer discretionary, followed by technology. So again the stuff
(24:27):
that's kind of worked the last you know, two years
is the stuff that is lagging the most.
Speaker 4 (24:32):
With consumer discretionary include I know it includes Amazon, Does
it also include Costco and Walmart?
Speaker 2 (24:37):
No, So those fall into the staples bucket. If you're
looking at discretionary and what's in there, it's it's Amazon
and Tesla with that basically make up the vast majority
of it inside of there, and so you know, no
surprise on that front. The fascinating thing. And again this
is as of yesterday. So as of yesterday, those two
(24:58):
were the only two sectors of the S and P
five hundred that are down for the year. Every other
S and P five hundred sector all nine of them
positive year to date. Actually, no, I'm sorry, communication services
is also it looks like just off a touch, no,
communication service is up a quarter percent.
Speaker 3 (25:18):
Sorry, I was just eyeballing it.
Speaker 2 (25:20):
So you've got you know, nine out of the eleven
sectors up for the year in the S and P
five hundred, but it's down more than three percent. Because
those two sectors make up such a big chunk of
the overall waiting you might be like, okay, like you know,
how much of the S and P do they actually
make up? The consumer discretionary sector is about ten percent,
(25:45):
so it's not huge, but tech is still thirty one
and so those two sectors combined are forty percent of
the S and P. And when one of them, the
bigger one, is you know, down eight percent, it creates
a lot of drag when a third of the SN
is down almost eight percent for the year, and that's
how you've gotten what you've gotten, you know, so far,
this year with US equity market performance so kind of
(26:08):
interesting that you know, we look at this year and
you're like, hey, the S ANDP is down three and
then you take a look under the hood and you're like, oh,
nine out of the eleven.
Speaker 3 (26:15):
Sectors are up.
Speaker 2 (26:16):
But the big guys are the ones that have been struggling,
and they've just created enough drag that the overall index
is in negative territory.
Speaker 4 (26:23):
Yeah, that MAGS seven group very much struggling this year
in the face of this uncertainty. Let's go back to
the energy sector for a minute, like play out a
best case and worst case scenario for this sector if
I will hear you know, I think on the energy
side of things, you could very much see a friendly
administration to domestic drilling and exports of US produced energy
(26:46):
products such as gnat gas, right Like, I could absolutely
see gnat gas exports working their way into some sort
of trade deal depending on where this all goes. On
the negative side, these oil companies to operate here domestically,
have a lot of exposure to Canada. They have a
lot of exposure to trade generally, and need things like
(27:07):
steel and aluminum to drill more oil and get to
that place. And so there was a meeting yesterday at
the White House with the Trumpet administration and oil executives,
and that was the focus. It was really on, Hey,
what are these terrafts going to look like on Canadian
produced oil, on aluminum and steel, that we need to
build pipelines and sure do what you're asking us to do. Again,
(27:31):
I would tend to think, again, this is a this
is a sector that the Trump administration has looked at favorably,
and so if there were going to be carve outs
for any one sector, I guess I wouldn't be shocked
to see it carved out.
Speaker 3 (27:43):
On the energy side.
Speaker 2 (27:44):
No, the question then still remains. Look, lower oil prices
typically push energy companies to drill less, just because, again
just from a pure you know, dollars and cents perspective,
it makes sense. And so again the question is you've
got these two things where you say we want lower
energy prices but more domestically produced oil. Can you have
(28:07):
both of those at the same time. Historically it hasn't
been the case in the United States. Normally, lower energy
prices means you're importing more from overseas because domestic producers
are higher cost like the US is never going to
be able to produce oil as cheaply as Saudi Arabia.
Speaker 3 (28:24):
Right, it's different.
Speaker 2 (28:26):
Processes, you know, Like there's some major differences obviously in
terms of what you're doing there. And so I think
that these are the questions that we're trying to sort through,
and quite honestly, like as to answer of how does
it affect energy stocks, I'll be the first to say
I have absolutely no idea. I mean, as Mike said
(28:47):
earlier this year, oil prices were up around eighty dollars
a barrel, and if you look at the S and
P five hundred energy sector, it was basically in the
same place then that it is now with oil prices
being fifteen percent cheaper. So it's not even something where
you have a direct one to one correlation in short
(29:08):
term periods of oil prices to energy stocks. And so
even if you know exactly where oil is going to go,
which I mean lock, first of all, can we talk
because I don't think anyone knows exactly where it's gonna go.
And second, even if you know exactly where it is
gonna go, how do you know how how exactly it's
(29:29):
gonna impact energy stocks in their prices because there's not
always the same relationship. There so a lot of complexity
as as you try to navigate what's going on on
that side of things. Let's take a quick break here.
When we return, let's talk a little bit about Europe.
Everyone's talking about Europe now with you know, the announcement
(29:52):
of potentially some new fiscal stimulus and things like that,
focusing on their defense and infrastructure. Let's talk about factor
fiction when it comes to, you know, the resurgence of
the European economy.
Speaker 1 (30:05):
The Financial Exchange streams live on YouTube. Like our page
and stay up to date on breaking business news all
morning long. This is the Financial Exchange Radio Network. 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
(30:27):
Financial Exchange Radio Network.
Speaker 2 (30:38):
Hold the obituary. Europe comes to life as US stumbles.
Speaker 3 (30:42):
This is the.
Speaker 2 (30:42):
Piece from the Wall Street Journal and Greg ipp I'll
quote here. Europe's economy and markets have underperformed the US
for years now. A newly inaugurated President Trump promised to
sledgehammer Europe with tariff while juicing US growth with lower taxes,
less regulation and cheaper energy. As usual, the Davos consensus
got it wrong. Since then, the moods across the Atlantic
(31:03):
have switched places. European stocks are up nicely while the
American market has had a correction, and on Wednesday, the
Federal Reserve officials revised their outlook for inflation up and
growth down.
Speaker 4 (31:14):
Given chuck that we have that plus the Financial Times
piece asking if this is the start of a European
exceptionalism in markets and then misquoting how markets have performed.
Speaker 3 (31:23):
Later in that piece, it misquoted how markets performed.
Speaker 4 (31:27):
Yeah, so they say the MSCI Europe Index is up
nine percent in the year. It's about right, compared with
the S and P five hundred and nine decline of
nine percent. So yes, the S and P, Yeah exactly,
So yeah, misrepresenting what markets have actually done. That US
equities are down four percent about year to date and
down nine percent from their peak. So yes, misrepresenting it
(31:50):
a bit. But given the fact that we're seeing this
now printed everywhere starts to get me concerned that maybe
it's over overplayed.
Speaker 2 (31:57):
Yeah, it's look, we did this last year with I
think it was last year when the S and P
five hundred lost money in like its first three or
four days or something. I don't remember if it was
last year of twenty twenty three, but one of those.
And either way, like each of the last two years
were fantastic for US equities, but nonetheless you got the
pieces printed. Hey, here's what you know, a bad January
(32:20):
or a bad start to the year means for stocks.
And ultimately I can tell you what it meant for stocks,
which was boop kiss like it.
Speaker 3 (32:26):
Didn't mean anything.
Speaker 2 (32:28):
So I think that you look at this and could
this be a turning point for you know, how capital
performs in the US versus how it performs overseas. Of
course they could, but like that, that could happen anytime
that you see, you know, things moving one way or another,
and I think the sorry, there's also there's also a
(32:48):
chance that this is absolutely nothing, because you know, Europe
has long been plagued by problems of follow through and
getting political cooperation across its members. And you know this
is before you even get to the fact that its
demographics are significantly worse than ours, its regulatory structure is
more difficult to operate, and like that there are a
(33:08):
lot of, you know, reasons why US equity growth has
been stronger than European equity growth over the last you know,
couple of decades, and so yeah, like this this could be,
you know, something in the start of some kind of
new long term trend. But one month does not prove anything.
Like anything in the markets can look good for a month,
(33:30):
whether it's like the Long Island blockchain company or whatever
the heck. You know, like the newest fad is it's
not to poop pooh, what's going on in Europe, but
it is to poop poo what's going on in Europe
because you just don't know anything right now.
Speaker 4 (33:45):
Right the only thing that is seemingly changed in Europe
today compared to a few months ago was a willingness
to spend.
Speaker 5 (33:54):
Like, that's what's changed, right.
Speaker 4 (33:56):
Germany had that vote and they are now looking at
expanding defense as well as infrastruction actual spending.
Speaker 3 (34:00):
That is a meaningful change. But if you think that.
Speaker 4 (34:03):
The majority of the gains that US equities have reached
compared to European stocks over the course of the last
decade is only because the US government has spent more,
then I think you're missing the ball there right. There's
been a different regulatory environment, there's been different innovations that
have played out, and so I would, you know, I
(34:23):
guess temper some of those expectations. It's not to say
that that won't be met with the follow through, but
there's a lot more that needs to happen to make
Europe a much more desirable place for investment.
Speaker 6 (34:34):
If you're looking for the perfect place for your next vacation,
will look no further than the US Virgin Islands. Act
fast and take advantage of a special promotion to Saint Croix.
Experience a vibe like no other, and receive a two
hundred and fifty dollars per person airfare credit and a
free hotel night when you book a five night minimum
stay with any participating hotel before June thirtieth. Saint Croi
(34:57):
is known for its incredible history and spectech architecture, along
with world class cuisine, incredible golf courses, and a wide
variety of watersports. From the moment you arrive, you'll fall
naturally in rhythm with the heartbeat of the islands. There's
no money to exchange, and travel from New England could
not be Easier, voted one of the top twenty twenty
(35:18):
five Caribbean destinations by US News and World Report. America's
Caribbean Paradise is waiting for you. Experience a vibe like
no other on the island of San Croix. Go to
visit USVII dot com and use the code Vibe twenty
twenty five for more information and book your trip today.
That's visit USVII dot com and code Vibe twenty twenty five.
Speaker 2 (35:41):
Mike, we got a piece of the New York Times
Signs of an office market bottom quote the worst is
probably over, Mike. I was told that we were going
to have like catastrophe because of the commercial real estate market.
Speaker 3 (35:58):
And what happened? The world was going down? What what?
What happened?
Speaker 4 (36:05):
Jamie Diamond said he wanted all of his employees back
in the office. So and then so did like you know,
a few other thousand executives.
Speaker 2 (36:13):
So I don't know anything about like the ins and
outs of what's going on in like the New York
real estate market. I'm there's only so many hours in
the day. You can't learn everything about everything. I try,
but you just you can't. So you get these pieces
here that are talking about Oh, quote, you know, sales
of office buildings across the country total sixty four point
(36:34):
three billion dollars last year, up twenty one percent from
twenty twenty three, So you know, there's there's more sales
that are going on. In twenty twenty four, six point
five million more square feet of US office was least
than vacated. That's the highest amount in any years. It's
twenty nineteen. So like you're seeing some signs there. So ultimately,
again I can only tell from what I read. I'm
(36:56):
not an expert on this market. It says you still
have sales prices that are moving down in order to
you know, get these buildings moving.
Speaker 3 (37:04):
But they are.
Speaker 2 (37:05):
All the claims, you know that that we're going around
of hey, this is going to be like this horrible
thing we said at the time, like hey, maybe this
creates some drag over like the next five to seven years,
but it's tough to you know, understand how it becomes
a bigger thing that seems to be what we're seeing here,
and that there is no catastrophe that played out maybe
on a building by building level, there are certainly areas
(37:27):
that you know, are harder hit but as far as
the impact on the US economy, have you not, Like,
have you noticed anything?
Speaker 4 (37:35):
Yeah, I think you go back to one big lesson
when it comes to sensational stories like COVID was at
the time. Whenever somebody tells you it's going to permanently
change the way of life, treat that with the high
degree of skepticism.
Speaker 2 (37:50):
I remember when we were told we were never gonna
hug again, when I just want to give you a
big hug mic that that wasn't that was a hugger.
Speaker 4 (37:59):
That wasn't about COVID, Like you know, that was a
conversation between you and your family way pre COVID.
Speaker 3 (38:05):
I didn't want that to come out.
Speaker 4 (38:08):
But yeah, don't buy into the fact that it's different
to this time.
Speaker 3 (38:13):
It is my lesson from all this quick break.
Speaker 2 (38:15):
Our two coming up in just a little bit.
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):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is the Financial
Exchange with Chuck Zada and Mike Armstrong, your exclusive look
at business and financial news affecting your day, your city,
(00:43):
your world. Stay informed and up to date about economic
and market trends plus breaking business news every day. The
Financial Exchange is a proud partner of the Disabled American
Veterans Department of Massachusetts. Help us support our great American
heroes by visiting dav five Doug Boston and making a
donation today. This is the Financial Exchange with Chuck Zada
(01:06):
and Mike Armstrong.
Speaker 2 (01:10):
Day after the FED meeting, and we are trying to
fully digest exactly what Ja Powell and his Purple Tide
told us yesterday. It's Chuck, Mike and Tucker with you
and Mike, I think, quite honestly, if if you know,
if we were to go back and listen to what
Paul Aline and I were discussing, I think it was
(01:32):
almost exactly what the Federal Reserve showed in their Summary
of Economic Projections, where basically they said, hey, we think
GDP's going to come in a little bit weaker than
we expected one point seven percent versus two point one
percent that they predicted in December. Paul and I said, yeah,
something in the high ones is probably where you'll land unemployment.
(01:54):
We said, yeah, maybe they show it ticking up a
little more. They did up to four point four percent
this year from four to three. He came in at
two seven, core at two eight. And so again, I
I'd like to say that I don't want to our
own horn, but you do.
Speaker 3 (02:08):
I do love to toot my own horn.
Speaker 2 (02:10):
And I, Paul and I freaking nailed what we thought
the Fed would say yesterday about where they think the
economy is going to go They're they're basically telling you, hey,
economic growth, we now think is going to be a
little bit slower this year but not recessionary, and inflation
is going to be a little bit higher this year
but not crazy high. And as a result, unemployment's going
to go up, you know, a marginal amount more nothing
(02:32):
you know, huge, but a touch more. That's what they
told us in their summary of economic projections. Jay Powell
during his press conference, I think pretty much gave us
the same answer over and over again, which is, hey,
we're six weeks into the new administration or eight weeks in, sorry,
and we still have to see how these policies are
going to play out before we decide to make any
moves in either direction.
Speaker 3 (02:53):
Yeah.
Speaker 4 (02:53):
I was gonna ask that did the did the comments
in your mind? And I listened to most of the
Q and A. Did the comments from Jerome Powell in
your mind contradict or further anything from the actual SEP
and the and the release at two pm, because you
did see, you know, equity markets were up for the
day anyway, but starting around two thirty really surged upwards
(03:15):
and you know, brought us into the close a full
percentage point higher than where we started the day. What
about Jerome Powell's press conference, I guess reassured investors in
your mind compared to just the release itself.
Speaker 3 (03:27):
I don't know.
Speaker 2 (03:27):
I don't think Powell said anything particularly notable, quite honestly.
Speaker 3 (03:31):
I mean I always listened to the whole thing, or
as much as I like.
Speaker 2 (03:34):
I generally listen for like forty five minutes, and then
if I see any big moves after I stopped listening,
I'm like, okay, Like, let me see what he said,
just because more often than not, it's him repeating the
same thing twenty times in response to different questions that
he gets yep, things that I wrote down in terms of,
you know, his his quotes here. Very difficult to have
a precise assessment of how much inflation is coming from
(03:56):
tariffs and how much from other sources. Surveys are suggest
seeing the tariffs are driving inflation expectations. The right thing
to do is to wait for clarity on what the
economy is doing, simply because we don't know if the
hard data will catch up to what the soft data
is telling us. Things that we've talked about on this
show as well, we should start our own central bank,
and I don't know how you just go about starting one,
(04:18):
but we should try or something. Let's see the cost
of waiting to do anything are manageable given that the
data we're seeing from the economy is still solid. Again,
this gets it something that we've talked about on the show,
which is, yeah, the data may start to deteriorate, but
to this point you're continuing to get you know, no
major deviations from what you had previously. This trend, by
(04:38):
the way, continued this morning, with initial jobs claims coming
into two hundred and twenty three thousand, a very modest
uptick from two hundred and twenty one thousand last week.
The continuing claims came in at eight one point eight
nine to two million, up a little bit from one
point eight five to nine million last week.
Speaker 3 (04:54):
Existing home sales better than expected.
Speaker 2 (04:57):
Part of this is the seasonal adjustment on this Because
last year was twenty nine days in February this year
was twenty eight. So you came in an annualized rate
of four point twenty six million. You're probably not gonna
be out that next month, just because of how the
seasonal adjustments work on this stuff. But that was better
than expected. Still, and so I think we still have
a situation where as Jay Powell said, you know a
(05:18):
few times, hey, there's no real change in the data
to this point that we're getting. The surveys are suggesting
people are nervous about a worsening, but it has not
yet materialized in the broad based data that we've been getting.
Speaker 4 (05:31):
He was asked specifically about a removal of a sentence
from their step about the equal balance of risks on
inflation and recession, but when asked about it, he said, no,
we still basically see those as equally weighted, but both
of them perhaps are are more severe. That wasn't the
sense I got from the responses during the press conference.
(05:52):
My sense from everything else that he said was that
the chairs of the Federal Reserve, the governors of the
Federal Reserve, are more concerned about recession right now than
they are inflation.
Speaker 5 (06:02):
Was that your takeaway as well?
Speaker 2 (06:06):
I don't know I got this, sen So i'll quote
here because this is one of the things that I
did write down. There can be situations where maximum employment
and price stability are intentions. So basically saying hey, we're
feeling pressure on both sides of that, and we say
that we'll manage, and we have a plan for how
we'll manage based on how far each one is from
its goal. So let's say that unemployment goes up to
(06:28):
ten percent and inflation goes up to four, Fed's gonna
cut his unemployment's the bigger problem, yeap. Likewise, if unemployment
goes up to five and inflation goes up to ten,
Fed's gonna hike his inflation is the bigger problem. And
he said, and how long it takes to get back
to those goals since our tools can only work in
one direction at once. By the way, we do not
have a situation right now where we feel that there
(06:49):
is a conflict between these things. And that to me,
I can't remember which way you thought he was leaning,
but that to me was more, Hey, we're not cutting
right now because we still have a little bit higher
than we want it to be. And even if we
might be worried about where unemployment goes, it's not a
problem today. So we're going to continue to focus on
the inflation side and not cut further, you know, than
(07:12):
we did last fall, when maybe they you know, jump,
I think they probably regret going fifty BIPs. Yeah, in
fifty basis points in September, and wish they had just
gone twenty five, twenty five, twenty five. But when Jeremy
Siegel is yelling for you to do one hundred and
fifty bases points and cuts in a week.
Speaker 4 (07:30):
Pressures on, baby, I get it. How about the word
transitory is back on the table.
Speaker 3 (07:36):
I love it. I love that the word transitory is permanent.
Speaker 5 (07:39):
So Craig Tory, Yeah, that's that's pretty fun.
Speaker 4 (07:43):
Craig Torres from Bloomberg asked the question, and he basically said, look,
you screwed up last time in the use of the
word transitory, yes, and so why are you using it again?
That was the gist of his question. I'm summarizing, and
he was nicer about it, but that was just the question.
And I think if I'm putting myself in Powell's shoes here,
(08:04):
I think his answer is, yes, we are thinking about
this inflation as transitory again, And if he's being really
honest with himself, I think it's probably that. Hey, they
were kind of proven eventually right on the transitory discussion
back from twenty twenty two. They just understated just how
severe it would be in the short term.
Speaker 2 (08:24):
Well, that's a lot to that charity, I think, because
the problem people had with transitory is I think people
thought like, hey, this will be three to six months,
and instead it was two and a half years, right.
Speaker 4 (08:34):
And they also thought it would be like four and
a half percent inflation.
Speaker 3 (08:37):
Instead it was nine.
Speaker 2 (08:39):
So there were some some problems there. I mean, look,
I don't want Jay to start having to make up
new words and everything.
Speaker 3 (08:47):
This is one of those places where I wish he
would just not say anything.
Speaker 2 (08:50):
Agree, And he's pretty good at not saying things like
you know, he could be asked, you know, hey, how
long do you expect this inflation to last? Well, we're
still looking to see, you know, exactly what policies get
put in place and how in what their impacts may be,
and will assess.
Speaker 3 (09:03):
As we go. Like you, you don't need to get
into transitory.
Speaker 5 (09:06):
Would you like the best example of j Powell not
saying anything?
Speaker 3 (09:10):
I know what it is already?
Speaker 4 (09:12):
The reporter from the AP asked him, quote, President Trump
fired two members of the Federal Trade Commission, an independent agency,
and this could be a kind of legal fight about
the administration's power to fire independent people. If those firing
stand is that a threat to the Fed's independence could
do the same thing to the FED board. Here's J
Powell's answer. So, I think I did answer the question
in this very room some time ago, and I've no
(09:34):
desire to change that answer and have nothing new for
you on that today. And then, by the way, the
LA basically just shut up, stop asking that question.
Speaker 3 (09:42):
The reporter goes okay, like a Mulligan on the question, and.
Speaker 5 (09:45):
But you don't get no. You have to sit down
after that response.
Speaker 2 (09:48):
First time I've ever seen J. Powell laugh at a
press conference, it was kind of weird. It's kind of
like you know when you're a kid and you see
like your teacher at the grocery store and you're like, oh, know,
you existed outside of the class, right right. It's kind
of like that seeing J Powell laugh. Yeah, you're like, oh,
I didn't know you had that in you, Jay.
Speaker 3 (10:09):
But uh yeah.
Speaker 2 (10:10):
Overall, I don't think that we got much from this meeting,
which is what you would expect. Again, the economic data
has not really changed in the last eight weeks. There
have been some stuff around the edges, but nothing crazy
that we've seen.
Speaker 3 (10:23):
Uh.
Speaker 2 (10:23):
The the stuff that he said about, Hey, the soft
data is bad, but we're gonna, you know, wait to
see how the hard data catches up or you know,
does the soft data catch does the hard data catch down,
or does the soft data catch up? I guess is
how you could phrase it. And from there, you know,
we're gonna have to see how things go. And clearly,
with the summary of economic projections, the FED says, yeah,
(10:44):
we think this is going to result in some lower
growth and higher inflation. But it also feels like it's
kind of a low confidence read and that's fine, like.
Speaker 4 (10:53):
Which they acknowledged, right our confidence is shot because this
is really really difficult to read right now. They they
didn't say my confidence, our confidence is shot. They know
it'd been bad. They just said uncertainty is extremely high,
right now. That's the right acknowledge that to make The.
Speaker 2 (11:09):
Quote that I took from them was it's hard to
say when we'll have a forecast that we can trust.
Speaker 4 (11:14):
Okay, finally, that's that's FED speak for confidences shot.
Speaker 2 (11:17):
Yes, yes, it's basically we're not sure what to do,
so we're just gonna wait and see. And by the way,
that's fine. The FED can just wait. Most of the time,
the FED is better off just waiting and seeing. Occasionally
it's the wrong move, but usually doing nothing's the right
thing when it comes to the FED.
Speaker 4 (11:35):
So conclusion, equity markets up yesterday. FED still thinking about
two rate cuts this year, but much more uncertainty than
where they were in December of last year. They think
the risk of both recession and higher inflation is now
higher than they did just three months ago.
Speaker 3 (11:51):
Let's take a quick break.
Speaker 2 (11:52):
When we come back yesterday or last night, president Trump
saying hey, Jay, I want you to start cutting rates,
we'll talk about why he's saying that and what it
means going forward.
Speaker 1 (12:04):
The latest news on inflation, the fedb economy, and how
the markets are reacting. Every morning right here on the
Financial Exchange Radio Network. If you missed any of today's show,
catch up whenever you want on our YouTube page. Find
daily show segments and full shows. Just go to YouTube
dot com and search for the Financial Exchange. This is
your home for breaking business and financial news. This is
(12:28):
the Financial Exchange Radio Network.
Speaker 6 (12:31):
The Financial Exchange is a proud partner of the Disabled
American Veterans Department of Massachusetts, and you can register right
now for this year's five k at Castle Island. By
visiting dav five k dot Boston. The event will sell
out again. So if you're interested in participating, now's the
time to reserve your spot. Come out and help support
(12:52):
our great American heroes by joining us for the DAV
five k. Visit dav five k dot Boston to register,
sure or to make a donation.
Speaker 3 (13:01):
Today.
Speaker 6 (13:02):
That's dav five k dot Boston.
Speaker 3 (13:06):
Mike.
Speaker 2 (13:06):
So yesterday, I think it was around ten pm or so.
I don't know the exact time, but President Trump, in
a social media post said, quote, the FED would be
much better off cutting rates as US tariffs start to transition,
ease their way into the economy, do the right thing.
April second is Liberation Day in America, So again very
(13:28):
publicly saying yes, I want you to cut interest rates.
And a couple things on this that I think you
that I take away from it. The first is I
think that what I am seeing is like from whether
it's from the three main players in the administration on
the economic side are Trump, Lutnik, and Besson, and it's
(13:50):
pretty clear to me from all of them that they're
almost trying to I know, this sounds kind of weird,
and this again, they're almost trying to job own the economy.
Speaker 5 (14:02):
Slower, which is a weird gars recession.
Speaker 2 (14:06):
I'm kind of And the reason that I say this
is normally, if you ask, like a Treasury secretary, hey,
are you worried about the economy going into recession?
Speaker 3 (14:14):
The answer is no, like, we're not worried about it.
Speaker 2 (14:15):
Now you get, well, we might see one, but we'll
just have to see how it plays out.
Speaker 4 (14:19):
Like, when have you ever heard that from a Treasury Second,
you've talked about that a lot, you have never heard
that ever from a Treasury secretary, like acknowledging publicly or
the president that their policies that they are putting into
place may cause recession.
Speaker 5 (14:33):
And I think I'm trying to get the read on that.
Speaker 4 (14:36):
Maybe it's a thinking that, hey, if it happens early on,
we can still pass this off as the prior administration's
fault and a means to an end, Whereas if it
happens a year from now, it's firmly in our camp.
Speaker 3 (14:47):
I guess I'm not sure, So I.
Speaker 2 (14:49):
Think that the read as far as you know what
they're trying to do, I think I have a pretty
good handle ont In it.
Speaker 3 (14:55):
They want rates down.
Speaker 2 (14:58):
So that basically the the playbook to try to fix
the economy. The way that they're viewing it is, hey,
we want to reduce fiscal spending so that we're not
running seven percent deficits. But if we reduce fiscal spending
and rates are still high, it's a huge drag on
the economy. So we want rates down to potentially stimulate
the economy as we're attempting to cut the deficit, to
(15:21):
hopefully provide enough boosts so that the economy doesn't go
into any kind of meaningful recession. And on top of that,
we can then take the existing debt that we have
out there and try to, you know, either as it
comes due or you know, in some kind of renegotiation,
say hey, we can get lower interest rates and turn
out the debt to longer term to reduce interest expense
(15:44):
and fix things on that side. I think that's very
clearly what they're trying to do is reduce annual outlays
as a percentage of GDP and reduce interest costs, and
also through that reduce interest cost you know, offset what
would other WANs some potential weakness in the economy. And
I said, look, it's Look, it's a really ambitious attempt
(16:06):
to try to restructure the way the US economy is
set up right now, I don't know if it's gonna
work or not. It might and we might be sitting
here three four years now being like, wow, this is crazy,
Like I can't believe they pulled this off, And we
might be sitting here three to four years from now
going well, that didn't really work, Like back to the
drawing board. You know, we'll see what we'll see what
we can do next. So I don't know, but I
(16:28):
think those are the pillars when you when you hear
from those three guys. The other one who I think
is involved, and you can read his white paper on
this very topic. His name is Stephen Mirron, and he
puts something out maybe a year and a half ago,
like on this very topic. He's now running the Council
of Economic Advisors for the President, and it was specifically
(16:49):
talking about TERRORFF implementation and lowering debt costs and all
these things together. I think the playbook is out there
for what they want to do. It's just a question
of is it gonna work or not?
Speaker 3 (16:58):
And I don't know. It may it may not, And
we'll have to see.
Speaker 4 (17:02):
Yeah, I think the playbook, especially on the government spending side,
like you could make a pretty compelling argument that the
only reason we didn't enter into recession in twenty twenty
two or twenty twenty.
Speaker 5 (17:12):
Three was in large part because of government spending.
Speaker 4 (17:15):
And I think there's plenty of people that would argue
that's not a terribly efficient use of taxpayer funds. I'd
rather see the private sector play a bigger role, And
I'm on board with that argument. And so, yeah, if
you reduce deficits, reduce government spending, there is a possibility
of an economic slowdown, and lower interest rates and lower
taxes would help that out. So I'm with you. I
understand that argument. Where the entire thing gets much more muddied,
(17:38):
and where business executives I think are questioning it a
whole lot more is around the tariff side, because there
I don't see the same clear path of what are
we trying to accomplish here, And so that's the piece
that I remain confused on. Is Okay, when it comes
to the strategy of you know, tariffs on China, how
(17:58):
does that differ in terms of what we're trying to
accomplish to those on Canada, Mexico, Europe, et cetera. And
I think that's where that's where you hear the lard
loudest cries coming from the business community to say, Okay.
Speaker 3 (18:11):
We get what you're trying to do. In the government
side of things.
Speaker 4 (18:13):
We might disagree with the tactics you're using and we
might have issues with that, but we can I think,
read into what's trying to be done there on the
tariff implementation side. I think you have a lot of
CEOs raising their hands and saying do it or don't
do it, but tell us what the end objective is
and give us some sense of where these are going
(18:33):
to be over the next few years, because otherwise we're
just going to put our hands up and do nothing.
Speaker 3 (18:38):
Right if here's the thing.
Speaker 2 (18:40):
If and again like I don't know, we don't know
how any of anything and any of this is going
to play out on the tariff side, But you don't
make long term decisions to relocate production to the US
based on short term tariffs, yep, Like they would need
to be in place for an extended period of time.
And if so, then you can say, Okay, I'm going
(19:02):
to build this factory because I'm going to you know,
have X level of protection and I can expect to
be able to, you know, have it be profitable once
it's completed. If that's not the case, then you wouldn't.
Speaker 3 (19:13):
Necessarily see that.
Speaker 2 (19:14):
So I think there are a lot of balls in
the air right now, and I know it's boring to
hear me just continue to say, Look, we're gonna need
to see how it plays out, but we are like
it's it's gonna take some time to see how this
all unfolds, and we'll see what happens. Let's take a
quick break here. When we return, we've got Wall Street
(19:34):
Watch after this.
Speaker 1 (19:40):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch a complete look and what's moving market so
far today right here on the Financial Exchange Radio Network.
Speaker 6 (20:02):
Well, markets are extending their gains from yesterday's rally at
the moment on the heels of a FED meeting and
the commentary from FED Chairman Jerome Powell. Right now, the
Dow is up by about a half a percent, or
one hundred and ninety five points, s and P five hundred,
up by four tenths of a percent or twenty three points,
and the Nasdaq is up just over half a percent
(20:23):
or ninety seven points. RUSSED two thousand, edging two points higher.
Tenure treasure yield is down by five basis points at
four point two zero percent, and crude oil up about
one percent higher, trading just below sixty eight dollars. A
barrel big news in the sports world this morning, impacting
a local Boston sports team after Bill Chisholm, managing partner
(20:46):
at Symphony Technology Group, has agreed to purchase the Boston
Celtics from the Grousbeck family for evaluation of six point
one billion dollars, marking the largest sale for sports franchise
in North America. Meanwhile, Tesla announced it was recalling more
than forty six thousand cyber trucks due to the potential
(21:07):
for an exterior panel to fall off while driving. Tesla
stock is actually edging a quarter percent higher. Elsewhere, shares
in TMU parent company PDD holdings up by one and
a half percent after the Chinese e commerce company reported
lower than expected earnings in the fourth quarter. The recent
quarter also marked the company's slowest quarterly revenue growth since
(21:30):
twenty twenty two. Darden Restaurants posted mixed quarterly results, beating
on earnings but missing on revenue expectations. The parent company
Do All Garden also saw its comparable restaurant sales increase
less than expected. However, that stocks seeing a nice game
today over of over seven percent. Building products distributor QXO
(21:51):
agreed to buy Beacon roofing supply and a deal worth
about eleven billion dollars including debt. That stock up by
eight percent. Boston Beer Shared up by four percent after
City upgraded the stock to buy from neutral, saying this
year could bring a return to volume growth for the
Twisted Tea and Truly parent company. Kava up by five
(22:11):
percent after the Mediterranean fast casual chain was upgraded by
JP Morgan to overweight from neutral. Online news car retailer
Carvana upgraded by Pip Sandlers, who overweight from neutral, where
the firm said Carvana is insulated from terraff threats and
is now in position to grow. That stock up by
nine percent and after today's closing bell, we'll see a
(22:33):
few noteworthy earnings reports from FedEx, Nike, and Micron Technology
I'm Tucker Silvan, that's Wall Street.
Speaker 3 (22:41):
Watch, Mike.
Speaker 2 (22:42):
We had a piece in Bloomberg talking about what we're
seeing in the energy sector so far this year.
Speaker 3 (22:48):
Man.
Speaker 2 (22:48):
It points out that out of the eleven sectors in
the S and P five hundred, energy stocks are the
strongest performing.
Speaker 1 (22:54):
Now.
Speaker 2 (22:54):
They have some strange bedfellows right now because the top
four sectors at the moment are energy, healthcare, utilities, and materials.
Those are not things that typically go together. Energy materials yep. Sure,
health care and utilities, sure, but not usually the four
of them together. And so one could, you know, ask
the question, what the heck is going on here? And
(23:16):
the answer, if we're being entirely honest, is I don't
really know.
Speaker 5 (23:23):
Yeah.
Speaker 4 (23:23):
Well, especially too, I'll point out that that is on
top of oil prices being down for the year, right, oil.
Speaker 3 (23:29):
Prices have fallen, and yet energy stocks have risen.
Speaker 4 (23:32):
Now not substantially from the beginning of the year, but
you know, oil prices did get as high as eighty
bucks a barrel on West Texas crewed back in January.
They're now sitting below seventy and have been lower than that.
And so it seems to me that there's a bet
being played on you know, they're cozying up to this administration,
which is definitely true. I mean, there was a meeting
(23:52):
just yesterday about you know, drilling and different objectives. But
I think the lesson from the first Trump administration was that, hey,
loosening of policy and restrictions around drilling is not always
great for oil companies.
Speaker 2 (24:06):
No, if you end up with lower oil prices, that
can in fact be very bad for oil companies, even
if it might be very good for us driving around
on a daily basis. Interesting things just when you're looking at,
you know, kind of how different sectors have played out
so far here to date. Worst performing sector here to
date consumer discretionary, followed by technology. So again the stuff
(24:27):
that's kind of worked the last you know, two years
is the stuff that is lagging the most.
Speaker 4 (24:32):
With consumer discretionary include I know it includes Amazon, Does
it also include Costco and Walmart?
Speaker 2 (24:37):
No, So those fall into the staples bucket. If you're
looking at discretionary and what's in there, it's it's Amazon
and Tesla with that basically make up the vast majority
of it inside of there, and so you know, no
surprise on that front. The fascinating thing. And again this
is as of yesterday. So as of yesterday, those two
(24:58):
were the only two sectors of the S and P
five hundred that are down for the year. Every other
S and P five hundred sector all nine of them
positive year to date. Actually, no, I'm sorry, communication services
is also it looks like just off a touch, no,
communication service is up a quarter percent.
Speaker 3 (25:18):
Sorry, I was just eyeballing it.
Speaker 2 (25:20):
So you've got you know, nine out of the eleven
sectors up for the year in the S and P
five hundred, but it's down more than three percent. Because
those two sectors make up such a big chunk of
the overall waiting you might be like, okay, like you know,
how much of the S and P do they actually
make up? The consumer discretionary sector is about ten percent,
(25:45):
so it's not huge, but tech is still thirty one
and so those two sectors combined are forty percent of
the S and P. And when one of them, the
bigger one, is you know, down eight percent, it creates
a lot of drag when a third of the SN
is down almost eight percent for the year, and that's
how you've gotten what you've gotten, you know, so far,
this year with US equity market performance so kind of
(26:08):
interesting that you know, we look at this year and
you're like, hey, the S ANDP is down three and
then you take a look under the hood and you're like, oh,
nine out of the eleven.
Speaker 3 (26:15):
Sectors are up.
Speaker 2 (26:16):
But the big guys are the ones that have been struggling,
and they've just created enough drag that the overall index
is in negative territory.
Speaker 4 (26:23):
Yeah, that MAGS seven group very much struggling this year
in the face of this uncertainty. Let's go back to
the energy sector for a minute, like play out a
best case and worst case scenario for this sector if
I will hear you know, I think on the energy
side of things, you could very much see a friendly
administration to domestic drilling and exports of US produced energy
(26:46):
products such as gnat gas, right Like, I could absolutely
see gnat gas exports working their way into some sort
of trade deal depending on where this all goes. On
the negative side, these oil companies to operate here domestically,
have a lot of exposure to Canada. They have a
lot of exposure to trade generally, and need things like
(27:07):
steel and aluminum to drill more oil and get to
that place. And so there was a meeting yesterday at
the White House with the Trumpet administration and oil executives,
and that was the focus. It was really on, Hey,
what are these terrafts going to look like on Canadian
produced oil, on aluminum and steel, that we need to
build pipelines and sure do what you're asking us to do. Again,
(27:31):
I would tend to think, again, this is a this
is a sector that the Trump administration has looked at favorably,
and so if there were going to be carve outs
for any one sector, I guess I wouldn't be shocked
to see it carved out.
Speaker 3 (27:43):
On the energy side.
Speaker 2 (27:44):
No, the question then still remains. Look, lower oil prices
typically push energy companies to drill less, just because, again
just from a pure you know, dollars and cents perspective,
it makes sense. And so again the question is you've
got these two things where you say we want lower
energy prices but more domestically produced oil. Can you have
(28:07):
both of those at the same time. Historically it hasn't
been the case in the United States. Normally, lower energy
prices means you're importing more from overseas because domestic producers
are higher cost like the US is never going to
be able to produce oil as cheaply as Saudi Arabia.
Speaker 3 (28:24):
Right, it's different.
Speaker 2 (28:26):
Processes, you know, Like there's some major differences obviously in
terms of what you're doing there. And so I think
that these are the questions that we're trying to sort through,
and quite honestly, like as to answer of how does
it affect energy stocks, I'll be the first to say
I have absolutely no idea. I mean, as Mike said
(28:47):
earlier this year, oil prices were up around eighty dollars
a barrel, and if you look at the S and
P five hundred energy sector, it was basically in the
same place then that it is now with oil prices
being fifteen percent cheaper. So it's not even something where
you have a direct one to one correlation in short
(29:08):
term periods of oil prices to energy stocks. And so
even if you know exactly where oil is going to go,
which I mean lock, first of all, can we talk
because I don't think anyone knows exactly where it's gonna go.
And second, even if you know exactly where it is
gonna go, how do you know how how exactly it's
(29:29):
gonna impact energy stocks in their prices because there's not
always the same relationship. There so a lot of complexity
as as you try to navigate what's going on on
that side of things. Let's take a quick break here.
When we return, let's talk a little bit about Europe.
Everyone's talking about Europe now with you know, the announcement
(29:52):
of potentially some new fiscal stimulus and things like that,
focusing on their defense and infrastructure. Let's talk about factor
fiction when it comes to, you know, the resurgence of
the European economy.
Speaker 1 (30:05):
The Financial Exchange streams live on YouTube. Like our page
and stay up to date on breaking business news all
morning long. This is the Financial Exchange Radio Network. 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
(30:27):
Financial Exchange Radio Network.
Speaker 2 (30:38):
Hold the obituary. Europe comes to life as US stumbles.
Speaker 3 (30:42):
This is the.
Speaker 2 (30:42):
Piece from the Wall Street Journal and Greg ipp I'll
quote here. Europe's economy and markets have underperformed the US
for years now. A newly inaugurated President Trump promised to
sledgehammer Europe with tariff while juicing US growth with lower taxes,
less regulation and cheaper energy. As usual, the Davos consensus
got it wrong. Since then, the moods across the Atlantic
(31:03):
have switched places. European stocks are up nicely while the
American market has had a correction, and on Wednesday, the
Federal Reserve officials revised their outlook for inflation up and
growth down.
Speaker 4 (31:14):
Given chuck that we have that plus the Financial Times
piece asking if this is the start of a European
exceptionalism in markets and then misquoting how markets have performed.
Speaker 3 (31:23):
Later in that piece, it misquoted how markets performed.
Speaker 4 (31:27):
Yeah, so they say the MSCI Europe Index is up
nine percent in the year. It's about right, compared with
the S and P five hundred and nine decline of
nine percent. So yes, the S and P, Yeah exactly,
So yeah, misrepresenting what markets have actually done. That US
equities are down four percent about year to date and
down nine percent from their peak. So yes, misrepresenting it
(31:50):
a bit. But given the fact that we're seeing this
now printed everywhere starts to get me concerned that maybe
it's over overplayed.
Speaker 2 (31:57):
Yeah, it's look, we did this last year with I
think it was last year when the S and P
five hundred lost money in like its first three or
four days or something. I don't remember if it was
last year of twenty twenty three, but one of those.
And either way, like each of the last two years
were fantastic for US equities, but nonetheless you got the
pieces printed. Hey, here's what you know, a bad January
(32:20):
or a bad start to the year means for stocks.
And ultimately I can tell you what it meant for stocks,
which was boop kiss like it.
Speaker 3 (32:26):
Didn't mean anything.
Speaker 2 (32:28):
So I think that you look at this and could
this be a turning point for you know, how capital
performs in the US versus how it performs overseas. Of
course they could, but like that, that could happen anytime
that you see, you know, things moving one way or another,
and I think the sorry, there's also there's also a
(32:48):
chance that this is absolutely nothing, because you know, Europe
has long been plagued by problems of follow through and
getting political cooperation across its members. And you know this
is before you even get to the fact that its
demographics are significantly worse than ours, its regulatory structure is
more difficult to operate, and like that there are a
(33:08):
lot of, you know, reasons why US equity growth has
been stronger than European equity growth over the last you know,
couple of decades, and so yeah, like this this could be,
you know, something in the start of some kind of
new long term trend. But one month does not prove anything.
Like anything in the markets can look good for a month,
(33:30):
whether it's like the Long Island blockchain company or whatever
the heck. You know, like the newest fad is it's
not to poop pooh, what's going on in Europe, but
it is to poop poo what's going on in Europe
because you just don't know anything right now.
Speaker 4 (33:45):
Right the only thing that is seemingly changed in Europe
today compared to a few months ago was a willingness
to spend.
Speaker 5 (33:54):
Like, that's what's changed, right.
Speaker 4 (33:56):
Germany had that vote and they are now looking at
expanding defense as well as infrastruction actual spending.
Speaker 3 (34:00):
That is a meaningful change. But if you think that.
Speaker 4 (34:03):
The majority of the gains that US equities have reached
compared to European stocks over the course of the last
decade is only because the US government has spent more,
then I think you're missing the ball there right. There's
been a different regulatory environment, there's been different innovations that
have played out, and so I would, you know, I
(34:23):
guess temper some of those expectations. It's not to say
that that won't be met with the follow through, but
there's a lot more that needs to happen to make
Europe a much more desirable place for investment.
Speaker 6 (34:34):
If you're looking for the perfect place for your next vacation,
will look no further than the US Virgin Islands. Act
fast and take advantage of a special promotion to Saint Croix.
Experience a vibe like no other, and receive a two
hundred and fifty dollars per person airfare credit and a
free hotel night when you book a five night minimum
stay with any participating hotel before June thirtieth. Saint Croi
(34:57):
is known for its incredible history and spectech architecture, along
with world class cuisine, incredible golf courses, and a wide
variety of watersports. From the moment you arrive, you'll fall
naturally in rhythm with the heartbeat of the islands. There's
no money to exchange, and travel from New England could
not be Easier, voted one of the top twenty twenty
(35:18):
five Caribbean destinations by US News and World Report. America's
Caribbean Paradise is waiting for you. Experience a vibe like
no other on the island of San Croix. Go to
visit USVII dot com and use the code Vibe twenty
twenty five for more information and book your trip today.
That's visit USVII dot com and code Vibe twenty twenty five.
Speaker 2 (35:41):
Mike, we got a piece of the New York Times
Signs of an office market bottom quote the worst is
probably over, Mike. I was told that we were going
to have like catastrophe because of the commercial real estate market.
Speaker 3 (35:58):
And what happened? The world was going down? What what?
What happened?
Speaker 4 (36:05):
Jamie Diamond said he wanted all of his employees back
in the office. So and then so did like you know,
a few other thousand executives.
Speaker 2 (36:13):
So I don't know anything about like the ins and
outs of what's going on in like the New York
real estate market. I'm there's only so many hours in
the day. You can't learn everything about everything. I try,
but you just you can't. So you get these pieces
here that are talking about Oh, quote, you know, sales
of office buildings across the country total sixty four point
(36:34):
three billion dollars last year, up twenty one percent from
twenty twenty three, So you know, there's there's more sales
that are going on. In twenty twenty four, six point
five million more square feet of US office was least
than vacated. That's the highest amount in any years. It's
twenty nineteen. So like you're seeing some signs there. So ultimately,
again I can only tell from what I read. I'm
(36:56):
not an expert on this market. It says you still
have sales prices that are moving down in order to
you know, get these buildings moving.
Speaker 3 (37:04):
But they are.
Speaker 2 (37:05):
All the claims, you know that that we're going around
of hey, this is going to be like this horrible
thing we said at the time, like hey, maybe this
creates some drag over like the next five to seven years,
but it's tough to you know, understand how it becomes
a bigger thing that seems to be what we're seeing here,
and that there is no catastrophe that played out maybe
on a building by building level, there are certainly areas
(37:27):
that you know, are harder hit but as far as
the impact on the US economy, have you not, Like,
have you noticed anything?
Speaker 4 (37:35):
Yeah, I think you go back to one big lesson
when it comes to sensational stories like COVID was at
the time. Whenever somebody tells you it's going to permanently
change the way of life, treat that with the high
degree of skepticism.
Speaker 2 (37:50):
I remember when we were told we were never gonna
hug again, when I just want to give you a
big hug mic that that wasn't that was a hugger.
Speaker 4 (37:59):
That wasn't about COVID, Like you know, that was a
conversation between you and your family way pre COVID.
Speaker 3 (38:05):
I didn't want that to come out.
Speaker 4 (38:08):
But yeah, don't buy into the fact that it's different
to this time.
Speaker 3 (38:13):
It is my lesson from all this quick break.
Speaker 2 (38:15):
Our two coming up in just a little bit.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Special Summer Offer: Exclusively on Apple Podcasts, try our Dateline Premium subscription completely free for one month! With Dateline Premium, you get every episode ad-free plus exclusive bonus content.
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!