January 5, 2026 • 38 mins
Chuck Zodda and Mike Armstrong discuss what could be next for the US and Venezuela. How will oil energy markets react? Wall Street expects the market to keep rallying in 2026 despite high valuations. Modest US hiring to cap a sluggish year for the job market. US to extend productivity lead on back of the AI boom. These states raised their minimum wage. Is America falling out of love with pizza?
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Episode Transcript
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Speaker 1 (00:01):
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(01:03):
This is the Financial Exchange with Chuck Zada and Mike Armstrong.
Speaker 2 (01:11):
Hope everyone enjoyed the little cheese of twenty twenty six
trading that we got on Friday. This week we kick
things off in earnest with the first full week of trading,
and we've got a pretty full week on the calendar.
This before we even discuss the Venezuel situation, which you know,
(01:33):
I don't think anyone really was, you know, thinking, Friday morning, Hey,
this is what we're gonna talk about on Monday morning.
But here it's something that we're gonna cover. But before
we get to that, just a preview of what else
is coming this week. First, we've got ism manufacturing that
just came out this morning with reading a forty seven
(01:53):
to nine, that's down from forty eight to two. We'll
dig into that a little bit later and see if
there's anything useful in a report that quite honestly hasn't
been useful in any way, shape or form for the
last five years. Then tomorrow nothing. There's just not anything
interesting unless you are curious about the LMI Logistics Managers Index.
Speaker 3 (02:17):
The Final Services PMI or FED President Tom Barkin.
Speaker 2 (02:22):
Not really interesting. Again, it's nothing. Wednesday, we kick in
high gear, though we've got ADP's employment data. We've got
ism services, and we've got the job openings in Labor
Turnover Survey, the JOLTS report for November. So that is
all on Wednesday. Thursday, we've got weekly jobless claims. Friday,
we've got building permits, housing starts, and the jobs report
(02:46):
for December. We do so busy week, nothing really on
earnings this week. We start to get into some of
the banks next week. So it's pretty quiet on that
front right now. But I think we have to spend
it at least a little bit of time discussing Venezuela
at this point, because look, I spend a little bit
(03:08):
of time, you know, bopping around the old X platform
over the weekend, and I gotta tell you, I had
no idea that there were so many Venezuelan oil industry
experts out there. I mean everyone, Michael knows everything about oil,
(03:29):
and not just oil, but the kind of oil there
is in Venezuela, how to get it out of the ground,
how it tastes, what recipes you can put it in.
Everyone is just a genius when it comes to knowing
everything about Venezuela.
Speaker 3 (03:45):
Now, well, you know, quick quick input into chat GPT
and you can suddenly become an expert in darn near anything.
Speaker 2 (03:52):
So this is a fancy and you know, a little
bit sarcastic way of saying, I'm not an oil expert.
I'm not a Venezuela expert. I do have a good
friend of mine who was from Venezuela originally as it
lived there in fifteen twenty years now, but you know,
I you know, can chat with him at least about
you know, what's going on politically, to have like a
(04:13):
you know, thirty percent understanding of what's actually happening there.
And you know, my understanding of oil is I put
some gas in my car to fill it up this
weekend and it goes and that's good. So here's what
we know at this point. The United States, obviously, unless
you've been living under a rock, has removed Nicholas Maduro
(04:34):
from power. At this point, right now, the VP of
Venezuela is running the country. It is unclear the exact
relationship that she and the US government may or may
not have. There were indication indications from the US government
(04:55):
that they wanted to basically have her in place and
that they had, you know, just discuss things with her
in the run up to this. Her only public speech
to this point has basically been, hey, get Maduro back
in the country, because you took him and he's one
of our citizens. So it's unclear exactly what the posturing
is on either side and what may or may not
(05:16):
have and what's all theater on this. I'm not going
to speculate, because I don't know. There are a million possible,
you know, different ways that you can look at this,
everything from hey, they didn't actually discuss discuss this too.
They did, and she's just pretending they didn't so that
she can have some legitimacy still like that. There's a
ton of different possibilities. What I do know from again
(05:39):
my limited understanding of the Venezuelan political situation is no
matter how you slice it, this right now internally is
not something with a whole lot of stability at this point,
and there are at least several factions within the Venezuelan
government that are likely to be competing for influence power.
(06:00):
There's a power vacuum of Maduro's presence.
Speaker 3 (06:03):
There's a power vacuum, as you've seen in many different
occasions when something along these lines has happened.
Speaker 4 (06:09):
And so who is going to.
Speaker 3 (06:12):
Ultimately lead this country a week, a month, or a
year from now, I think is really anybody's guess.
Speaker 2 (06:19):
It's also unclear exactly how involved the Trump administration wants
to be involved in the oversight and maintenance and actual
you know, governance of Venezuela. I mean, clearly not going
to have the US like take over governance entirely, but
it was suggested a couple times during press conferences this
weekend that hey, you might have the Secretary of State
(06:42):
and Secretary of Defense, you know, kind of running things
in the interim, right, and that's at odds with what
the Venezuelan VP has said to this point. It's also
unclear if there will be any kind of US security
presence on the ground. It's been suggest that there maybe
by the President. It's also been suggested that there's no
(07:04):
appetite for it, and so that's not something that's being
actively considered right now. So again, I don't think that
we know a ton about this, and I don't think
it's worth speculating, because what are we going to do?
Be like, well, I think they're gonna do this, Well,
I think they're going there.
Speaker 4 (07:20):
Will be playing place as you can go.
Speaker 3 (07:22):
If you wish to speculate about what might be happening
in Venezuela right now, just turn on any social media
channel and everyone will tell you what they think is
going to happen.
Speaker 4 (07:31):
We're not going to do that here.
Speaker 2 (07:32):
You can listen to us while you do that, so
you can multitask and get the best of both worlds.
Speaker 3 (07:37):
What do we I think there are some things that
we have a little bit more concrete understanding of, and
one would be this state of Venezuelan oil deposits and
the oil industry itself.
Speaker 2 (07:48):
Yes, So here's the thing about Venezuela. They have a
metric crapload of oil, which is the technical term in
the biz. Three hundred and three billion dollars of proven
reserves for Venezuela. That is the largest level of proven
reserves for any country in the world.
Speaker 3 (08:08):
You showed me a chart this morning, and it again,
US is the largest oil producer in the world. Yes,
getting it out of the ground and selling it into markets,
but it absolutely dwarfs the proven oil reserves in the
United States, for example.
Speaker 2 (08:23):
Yeah, if you look at this, just as an example,
Venezuela has three hundred and three billion barrels of proven
oil reserves. The United States has forty five billions, So
Venezuela has more than six times as much oil in
the United States. When you talk about you know, big
oil producing countries like Saudi Arabia, Saudi Arabia's got two
hundred and sixty seven billion barrels of proven reserves, so
(08:44):
Venezuela is more than ten percent above them. Iran two
hundred and eight billion, Canada one hundred and seventy one billion,
Iraq one hundred and forty five billion, Russia eighty billion. Like,
just to give you a sense of this, there's a
lot of oil in Venice. The issues, as I understand them,
are threefold when it comes to actually getting that oil
(09:08):
out of the ground. Uh. The first is it's the
state of Venezuela and oil production is somewhere between terrible
and really really really terrible. At one point within the
last couple decades, Venezuela was producing three million barrels a day,
which is still less than a quarter of what the
(09:28):
US currently produces. The problem is that, through a combination
of incompetence, corruption, and general malfeasance, that production has fallen
from North of three million barrels a day to seven
hundred thousand. No one really knows what kind of shape
any of these wells are in. No one really has
any idea if any of the equipment is working beyond
(09:50):
you know, kind of what's already producing. And so until
you actually get in there and look at this stuff
in some kind of depth, you don't really know how
much money tie an effort is going to be needed
in order to get things back up to ship shape.
Speaker 4 (10:04):
Got it.
Speaker 2 (10:04):
Number two? There's a There are two. It's kind of
a combination of things, but there are two reasons why.
These are the other two parts of the three reasons
why it's kind of hard to get the oil out
of the ground. There most of the oil reserves are
in a part of the country that is really mountainous,
rough terrain that's hard to navigate and get any kind
(10:27):
of heavy equipment and machinery.
Speaker 4 (10:28):
Through mountaous rainforest.
Speaker 2 (10:30):
There's a reason why, despite having six times the amount
of oil that the US has in reserves, they never
produced more than three million barrels a day. It's really
hard to do so because of the terrain and the
type of oil they have can best be compared to
Canada's oil sands, where it is this heavy, thick, messy
(10:55):
stuff that just is not easy to extract, be because
of quite literally like the weight and consistency of it.
It's it's really hard to do that without what I
gather from again my understanding as a novice exploring this,
you basically need to use like a bunch of high
(11:16):
pressure steam to force this stuff to move the way
that you want it to, and in this terrain that
you have, it's kind of hard to you know, get
high pressure steam and quantities into there.
Speaker 3 (11:27):
So I think the important point about all this is
a lot has been made about the ability and efficiency
of US oil companies, the infrastructure that they have in
their capability of going in here and increasing.
Speaker 4 (11:40):
Production, which does exist.
Speaker 3 (11:42):
But I think an important counterpoint it is not merely
poor infrastructure, corruption and incompetence that has led Venezuela to
not produce quite as much oil as they might be able.
Speaker 2 (11:54):
To, which leads us to the question of, Okay, what
is the actual impact on energy markets as a result
of this. We'll talk about that next.
Speaker 1 (12:05):
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Speaker 2 (13:14):
All right. So in the last segment, we talked a
little bit about the state of play in Venezuela and
how Mike and I don't really know what comes next
and we'll just have to see what happens. But the
question that's out there is, hey, with all of this
oil that's sitting in the ground in Venezuela. Gosh, like,
it sure seems like there's going to be something related
(13:37):
to that oil happening at some point, especially since the
Trump administration has come out and in no ONEX firm
said yeah, we want the oil. So it raises the
question of what impact this can have on global energy markets.
And thus far on Monday, you know, January fifth, of
twenty twenty six, the answer is zero, not much. West
(13:59):
Texas in or media is up half a percent thirty
two today. So there's basically no major movement happening in
oil markets. And we talked in the last segment about
you know, the reasons why it might take you know,
it's it's generally hard to extract oil from Venezuela. And
so the question that's out there in my mind is, Okay,
(14:22):
what is the actual investment from other you know, from
from companies going to be to try to get access
to these reserves? And I think there are a whole
bunch of things that need to be sorted out before
you can even get to that point, the first of
which is who am I dealing with? Like, let's say
(14:46):
that I run Chuck oil. Okay, and I've got ten
billion dollars that I'm looking to invest next year. The
first question that I have is, okay, so something happened
in Venezuela. Who do I call to see if I
can even get access?
Speaker 4 (15:05):
Ghostbusters?
Speaker 2 (15:07):
Do I?
Speaker 3 (15:08):
Whenever somebody says, who do you call that I know?
Speaker 2 (15:10):
Do I call the current Venezuelan VP? Sure, I don't
know what staying power she has? Do I call Marco Rubio?
Do I call, you know, a bunch of fark gorillas
from Colombia and say, hey, can you help me get
in there? Like? These are honest questions about just like
(15:32):
what access will I have and who do I talk
to on this? The second question that you have on
this is okay, let's say that I get the right
person to talk to. Well, look, what guarantees do I
have that if I make a ten billion dollar investment
(15:53):
that A you're going to provide protection so that that
investment continues, you know, operating, it isn't sabotaged by other
you know, local groups or whatever. And B what guaranteed
do I have that ten fifteen years from now, some
new Venezuelan government doesn't come in and say, hey, nice,
Well you got there. It's ours now. The cost of
(16:17):
doing development in Venezuela is almost certainly less on a
per barrel basis than the United States, but the expected
profit might not be. Like, I don't even know how
you run that calculation, just because what probability do you
assign to the possibility that, hey, this well might not
(16:39):
be yours by the time it's completed, right, Like, these
are some of the challenges that I think you have
to sort through. So I do suspect that anyone involved
in anything related to this is going to be getting
a whole bunch of calls from you know, energy companies
and interested investors being like, yeah, we like to take
a look at it. As far as actual dollar investment
(17:03):
in the production of Venezuela and oil, everything I have
read has pointed to the fact that there is very
likely no meaningful shift in production for at least several years,
just because even if you started moving in right now,
we would take that long to actually figure out how
to ramp the stuff up. And beyond that, Hey, if
(17:25):
I'm exon mobile and I can do you know, some
drilling in the premium basin and some drilling off the
coast of you know, Louisiana versus this, How do I
weigh how much risk I want to take with my
investor's money in moving it towards venezuel and deposits.
Speaker 3 (17:45):
Yeah, it comes back to a number of themes that
we've talked about at length recently regarding a number of
different subjects. But how willing is US government to backstop this,
because that's likely what many of these producers would need
is some form of garatarantee and backstop by the US
government to say, yes, there will be stability here and
we will back the loans for the development of all
(18:06):
this if it all comes crumbling down. And by the way,
with all this, we haven't even bled into any of
the global geopolitical side of all this, the ties between
Venezuela China. Obviously the China Venezuela ties have weakened over
the last decade, but you know, China over the decades
has lent or invested in Venezuela tens of billions of dollars.
Speaker 4 (18:27):
What sort of you know, message do they take by this?
Speaker 3 (18:32):
There's a whole Taiwan angle that I don't even know
that we want to get into today.
Speaker 2 (18:35):
But there are there's rather there's Iran, Like I think the.
Speaker 3 (18:39):
Point would be, there are other reasons for the US
to have interest in Venezuela beyond its oil very much.
Speaker 4 (18:45):
So.
Speaker 2 (18:45):
Yeah, and so I think in terms of where I
land on this, the economic impact of this in the
short term, I think is pretty likely to be minimble,
unless China decides, not specifically on the time want then
when lest China sides, hey, we're unhappy that you're cutting
off a source of oil for us, and now we're
(19:07):
gonna throw the rarer thing back at you again. But
you know, we'll kind of have to see how this goes.
So I'm not expecting major economic impact from this, and
I think the market is responding that way too. Oil
prices are not moving a ton. You don't have, you know,
huge dislocations and markets happening. Markets are kind of saying, Okay,
(19:28):
we'll take a wait and see approach. That's mine as well.
Let's take a quick break when we come back. It's
Wall Street Watch.
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 at what's moving markets so
far today right here on the Financial Exchange Radio Network.
Speaker 5 (20:01):
Markets beginning the week in positive territory despite the weekend
attack on Venezuela and the capture of its leader. However,
there is no major movement in oil prices to this point.
All Street's also rating for an on time jobs report
slated to come out on Friday morning. Right now, the
Dow is up one point four percent, or six hundred
and seventy points. SMP five hundred is up eight tenths
(20:24):
of a percent or fifty five points higher. NASDAC up
about one percent or two hundred and twenty eight points.
Russell two thousand also up one percent. Ten Your Treasury
reeled down two basis points at four point one sixty
seven percent. Crew to Oil up about one percent, trading
a fifty seven dollars and eighty nine cents a barrel.
Chevron among the big energy winners on the day, as
(20:46):
the company is the sole remaining US major oil player
in Venezuela. That stock is up four percent. Other energy stocks,
including Conoco Phillips, x On Mobile, and Halliburton are also
seeing gains on the day. Outside of energy, investors are
awaiting the Consumer Electronics Show to kick off later today
in Las Vegas, where chief executives are both in Vidia
(21:07):
and AMD are slated to speak. Both in Vidia and
AMD are up over half a percent. Meanwhile, Comcast shares
are up over one percent. As regular trading of the
TV network owners Versus spinoff began today, Versus shares by
the way down thirteen percent, and Uber downgraded to sell
from hold and Milius Research, where the firm said the
(21:29):
right hanling company is at risk from increased competition, including
from the likes of Waimo and Tesla.
Speaker 2 (21:35):
Uber down by over.
Speaker 5 (21:37):
One percent at the moment. I'm Tucker Silvan. That is
Wall Street Watch, and remember you can watch the show
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(21:57):
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Speaker 2 (22:02):
Let's see Wall Street expects the market to keep rallying
in twenty twenty six despite lofty valuations. It's a piece
in the Wall Street Journal. It's not really a story
like I don't know, it isn't.
Speaker 3 (22:19):
Yeah, you know, if you would like to guess what's
going to happen markets in markets next.
Speaker 2 (22:25):
Your evaluation is not a good timing mechanism. Best predictor
is probably what happened most recently. So sure Wall Street expects.
Speaker 3 (22:34):
By the way, on an annual basis, stocks go up
what percent of the time, like sixty plus percent, almost
seventy So most of the time stocks do increase in value.
Speaker 2 (22:44):
And even when they've been expensive before, they've increased in value.
Was anyone you know at the start of last year
sitting around Mike, do you remember the conversations we had
in January of last year being like, man, stocks are
so cheap, I can't wait for them to go up
right No, No, they were really expensive.
Speaker 3 (23:01):
And people we're talking about how they were expensive. Yes,
there's not new and they still went up.
Speaker 4 (23:05):
Yeah.
Speaker 2 (23:06):
Now I'm not saying that they will still go up
right now. But what I am saying is something I've
repeated quite often, which is when all you talk not all,
when you talk about lofty valuations is being an impediment
for stocks. It's not lofty valuations. Don't say anything about
how high valuations can continue to move. They do tell
(23:28):
you if something goes wrong, then there's probably further to fall,
but they don't tell you anything about what's going to happen,
like whether stocks will or won't go down, And they're
not a predictor of what's going to happen in the future.
Speaker 3 (23:47):
The only thing that you can say that has any
sort of predictive nature to it when you talk about
lofty valuations has nothing to give.
Speaker 4 (23:56):
As short term returns in stocks.
Speaker 3 (23:58):
You can say something that is fairly convincing to me,
at least when you look at longer term returns on
stocks based on lofty valuations, and the answer is just
plainly they're not great when you get over a certain threshold.
Just you can chart this out, but you can also
take my word for it that the higher the starting
(24:20):
point on valuations, the lower the expected ten year return. Yeah,
it's got a pretty good correlation, and you've got one
hundred plus years worth of data to justify it. And
when you get to lofty valuations, it tells you almost
nothing about what the next year is going to do,
but tells you a little bit of something. When you
look at a ten year record after and it doesn't
(24:41):
mean negative, by the way, it just means below average.
An average let's call, depending on the time series you're
looking at, you to take eight to twelve percent, depending
on what time period you want to look at. So
that's what I'm comfortable saying. And this article doesn't even
mention that important piece, So throw it.
Speaker 2 (25:00):
Out, tosses Okay, let's see modest us hiring to cap
a sluggish year for the job market. Does I agree
with Yeah, it's I think one of the.
Speaker 3 (25:11):
I was asked this morning, like what are the expectations
Sorry interrupted, Jack, but what are the expectations for twenty
twenty six? And and I think this is actually one
of them, which is modest and sluggish job market continues
in through twenty twenty six.
Speaker 2 (25:28):
I think the the question that's out there in the
labor market because there are three ways that we can
go right now, I know there's always three ways that
you can go in the labor market, but in particular,
like when we talk about a sluggish job market, like
let's say that we still want to believe that it's sluggish.
By the way, it's just like, isn't it a great word?
(25:50):
Like you're like a slug you know, just outstanding.
Speaker 3 (25:55):
There aren't many living organisms i'd preferred to be compared
to less.
Speaker 2 (26:01):
Why is it sluggish and not slug, Like, I don't know,
you know, you never call it. You never call someone snakish. Yeah,
you never call someone, you know, elephantish.
Speaker 4 (26:11):
True.
Speaker 2 (26:13):
But anyways, a sluggish job market. Does that mean that
we continue to just be kind of what we've seen
the last few months, hovering around zero net job creation,
because that would be considered sluggish. Do we continue just
kind of this slow, gradual decline in the pace of
hiring that's been going on for almost four years now,
(26:37):
in which case, maybe hiring goes net negative by the
first half of this year, but doesn't really accelerate down.
It's just a continued step down from where we've been.
Speaker 3 (26:47):
I would also consider that sluggish. Anything that doesn't chart
out to look like a spike in the unemployment rate,
to me, is fairly sluggish.
Speaker 2 (26:54):
You think it's to the third possibility for like just bad,
which is, yeah, like you get to a point where
where historically the unemployment rate starts to spike up, and
that's you know, not great.
Speaker 3 (27:04):
That's not sluggish, that's that's ugly.
Speaker 2 (27:06):
The question that I have out there and that I
think is the reasonable one to ask. And there's a
path to this that I'll get to. Hey, what's the
path to improvement in the job market? And it's twofold.
It's Hey, the big beautiful Bill is going to give
people people bigger tax refunds this year and give companies
the ability to increase capex and that's going to drive demand,
(27:27):
which will in turn drive hiring. That's your way for
that's your way that you get to increased hiring this year.
Speaker 3 (27:33):
Is there a second way?
Speaker 2 (27:34):
No? Yeah, because remember, ultimately, hiring is typically a function
of demand. If I am running an ice cream shop
and I don't have enough customers, I say, Jimmy, I
don't I don't fire him. First, I say you can't
come in for you know, two days this week, and
then I fire him. If I'm running the ice cream
(27:55):
shop and I can't keep I've got to line out
the door, and I'm like, I need to be serving
these people faster, I hire someone to help serve them faster.
Demand leads hiring and firing decisions. So the way that
you see increased job growth would be if those bigger
tax refunds and additional capex from the big beautiful Bill
(28:19):
translate into more spending, which in turn requires more hiring too,
you know, actually service the spending. That's how you get there.
And so that's why I continue to think the real weakness,
the window of potential weakness for the labor market for
you know, something really bad to show up. Feels like
(28:40):
it's probably in the next three to five months. Okay,
that's kind of where I land.
Speaker 4 (28:47):
Thanks for one to put a timeframe on it. I
like that.
Speaker 2 (28:49):
You know, if if it doesn't show up, then I
don't really think it shows up. In the second half
of the year is kind of where I'm I'm act
to use the bad English that I love to.
Speaker 3 (28:58):
Yeah, we don't usually save our tax refunds and then
spend them six months ly.
Speaker 2 (29:02):
Hey hey, I just got one thousand dollars from the irs.
What are you gonna do?
Speaker 3 (29:06):
Put it in a CD for six months and then
see what's up?
Speaker 4 (29:08):
No, it's not.
Speaker 2 (29:09):
It works, you know, it's more often than not, it's
either it's one of two things. Well, it's gonna go
pay off the Christmas vacation that we took, or it's
gonna go pay for the fourth of July vacation.
Speaker 3 (29:18):
We're going to take Yeah, I was gonna say, I've
already spent it is what happened.
Speaker 2 (29:22):
Usually yes, more often than not. Let's take a quick break.
When we return, we're gonna talk a little bit about
productivity in the United States.
Speaker 1 (29:30):
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Speaker 4 (29:38):
All morning.
Speaker 1 (29:38):
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Speaker 2 (30:06):
You've got a piece of Financial Times today. US to
extend productivity lead on the back of AI boom, say economists.
More than three quarters of US economists expect the US
to maintain or widen its productivity lead over the rest
of the world because of artificial intelligence, deep capital markets,
and relatively low energy cost of Financial Times survey has
found your thoughts, Michael.
Speaker 3 (30:27):
Well, I do find it fascinating that the US. One
thing we do know is that the US has expanded
its productivity gain over pretty much everywhere else in the.
Speaker 4 (30:36):
World over the last five six years.
Speaker 3 (30:39):
Now, really since twenty nineteen in through COVID, And at
the same time, we have really the foremost experts on
AI saying that there's been no meaningful, visible shift and
benefit to companies from their use of artificial intelligence. And
so I'm not sure that I'm prepared to say that
AI is going to continue some productivity boom. We clearly
(31:01):
got a productivity boom in COVID for a number of
different factors that were calculable and displayable. But does that yeah,
I guess does that continue? And I mean, look, this
is the entire promise of artificial intelligence, of really any
new technology, but especially with something like AI where it
(31:23):
is so intended to be human like, the ideas entirely
that you should be able to be more productive on it.
And I would argue we might not have seen the
gains from that yet. I don't know if we will
get them or not, but that is definitely the promise
of this technology.
Speaker 5 (31:37):
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Speaker 2 (33:02):
These nineteen states just raised their minimum wages. And again
you've got a bunch of these that are moving up
this year, in particular for those of our listeners in
the New England region, We've got Rhode Island moving up
a dollar an hour from fifteen to sixteen an hour.
It's also got another one dollar an hour increase scheduled
(33:25):
next year. Maine is moving up by forty five cents
an hour to fifteen to ten, Vermont up forty one
cents an hour to fourteen forty two an hour, in
Connecticut by fifty nine cents an hour to sixteen ninety four.
Those all from inflation adjustments that are built in there,
and the other two New England states, New Hampshire and
(33:45):
Massachusetts not seeing any changes to their minimum wage laws
for the year.
Speaker 3 (33:51):
Quickly on Maine, just because I was speaking to somebody
from one of the other radio stations and how it
actually works there. So you have the main minimum wage
which increased to what.
Speaker 2 (34:01):
Was it, fifteen to ten.
Speaker 3 (34:02):
In Portland, however, the minimum wage increased to sixteen thirty. Now,
Portland's a very small geographical area, and so his point was,
if you work in South Portland, you have a different
minimum wage than Portland, Portland. I wonder if you actually
do in practice, right, I mean, I would think that
(34:25):
you have no choice but to match the Portland minimum
wage in a circumstance like that. But it is more
than a dollar what did you say, fifteen fifteen ten? Yeah,
so more than a dollar additional if you are working
in Portland compared to South Portland, which is a little
bit fascinating to me. Nationally, outside of New England, you
saw Arizona increase all the way to fifteen dollars and
(34:47):
fifteen cents increased in California to sixteen ninety Colorado.
Speaker 2 (34:52):
What about the California sixteen? What about fast?
Speaker 3 (34:54):
Yes, depends on what industry you work in, right, I
mean that's probably one hundred dollars an hour now for now,
for all I know. No, in Connecticut you're up to
sixteen ninety four, as you mentioned, Hawaii up to sixteen bucks,
Michigan up to thirteen seventy three, Minnesota eleven forty one,
Missouri surprisingly fifteen bucks an hour in Missouri, Montana up
to ten eighty five, Nebraska to fifteen dollars, New Jersey
(35:17):
to fifteen ninety two. New York has different ones for
like every area that you possibly work in, so I'm
not going to go there. The remainder of the state
is sixteen. But if you are in New York City,
Long Island, or Westchester, you're at seventeen bucks an hour
in New York, Ohio to eleven. South Dakota to eleven
eighty five, Vermont to fourteen forty two, Virginia to twelve
(35:38):
seventy seven in Washington to seventy thirteen. I guess just
one comment I'll make about this. This is not purely
a red or blue state thing anymore, right. I mean,
you take a look at politics in South Dakota and
Montana and things like that, pretty you know, stay out
of my business as politics there, And yet you know,
(36:02):
increasing minimum wages and pretty substantial minimum wages in some
of those states.
Speaker 2 (36:07):
So California, I did look it up. The fast food
minimum wage is twenty dollars an hour.
Speaker 4 (36:13):
Okay.
Speaker 2 (36:14):
What's interesting is that the minimum wage for everyone else
went up by forty cents this year, but the fast
food one is unchanged, right, which raises the question what
are we actually doing here, which is one that we've
raised quite a bit. On the fast food minimum wage
in California because effectively, like, it just doesn't make sense
if we're gonna be honest about it. And again if okay,
(36:39):
so you say that you want this higher fast food
minimum wage, but it's clearly you're not worried about the
difference between regular minimum wage and the fast food one.
Otherwise you would have raised the fast food one this
year also, which they can do, I think because it's
a committee that votes on it. It's not a public
measure that you know, is you know, voted on at
this point. So I kind of look at it and I'm like,
(37:01):
what are you actually trying to do here? Which is
an answer that I've been wondering about for several years
now and still continue to. So that's what's going on
with minimum wage. On a related notes, America is falling
out of love with pizza.
Speaker 4 (37:17):
Speaking of restaurants, I disagree.
Speaker 3 (37:20):
Does this fall in line with the sushi story that
we covered the other day where young kids are becoming
infatuated with expensive sushi and devouring very expensive fish.
Speaker 2 (37:32):
I'm gonna go with no, Okay, what I'm going to
go with is historically there's a reason why pizza and
Chinese food were the only two delivery options, and it's
because they travel well. The pizza gets to your house,
it's still pizza. The fried rice gets to your house,
it's still fried rice. There's a reason why you don't do,
you know, steaks and pasta and stuff like that, because
(37:53):
it generally turns into kind of crap by the time
it gets to you. However, we're not deterred by that.
Indorsh now has all kinds of stuff on there. Pizza
places have more competition now, and I think that is
why they are facing this, uh, this problem. I say,
this is a proud Friday Pizza Club member though, and
(38:16):
anything else. Oh yeah, if you're not pizzaing on Friday night,
what are you doing? Not living? Let's take a quick break.
Our two is coming up in a bit
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(01:03):
This is the Financial Exchange with Chuck Zada and Mike Armstrong.
Speaker 2 (01:11):
Hope everyone enjoyed the little cheese of twenty twenty six
trading that we got on Friday. This week we kick
things off in earnest with the first full week of trading,
and we've got a pretty full week on the calendar.
This before we even discuss the Venezuel situation, which you know,
(01:33):
I don't think anyone really was, you know, thinking, Friday morning, Hey,
this is what we're gonna talk about on Monday morning.
But here it's something that we're gonna cover. But before
we get to that, just a preview of what else
is coming this week. First, we've got ism manufacturing that
just came out this morning with reading a forty seven
(01:53):
to nine, that's down from forty eight to two. We'll
dig into that a little bit later and see if
there's anything useful in a report that quite honestly hasn't
been useful in any way, shape or form for the
last five years. Then tomorrow nothing. There's just not anything
interesting unless you are curious about the LMI Logistics Managers Index.
Speaker 3 (02:17):
The Final Services PMI or FED President Tom Barkin.
Speaker 2 (02:22):
Not really interesting. Again, it's nothing. Wednesday, we kick in
high gear, though we've got ADP's employment data. We've got
ism services, and we've got the job openings in Labor
Turnover Survey, the JOLTS report for November. So that is
all on Wednesday. Thursday, we've got weekly jobless claims. Friday,
we've got building permits, housing starts, and the jobs report
(02:46):
for December. We do so busy week, nothing really on
earnings this week. We start to get into some of
the banks next week. So it's pretty quiet on that
front right now. But I think we have to spend
it at least a little bit of time discussing Venezuela
at this point, because look, I spend a little bit
(03:08):
of time, you know, bopping around the old X platform
over the weekend, and I gotta tell you, I had
no idea that there were so many Venezuelan oil industry
experts out there. I mean everyone, Michael knows everything about oil,
(03:29):
and not just oil, but the kind of oil there
is in Venezuela, how to get it out of the ground,
how it tastes, what recipes you can put it in.
Everyone is just a genius when it comes to knowing
everything about Venezuela.
Speaker 3 (03:45):
Now, well, you know, quick quick input into chat GPT
and you can suddenly become an expert in darn near anything.
Speaker 2 (03:52):
So this is a fancy and you know, a little
bit sarcastic way of saying, I'm not an oil expert.
I'm not a Venezuela expert. I do have a good
friend of mine who was from Venezuela originally as it
lived there in fifteen twenty years now, but you know,
I you know, can chat with him at least about
you know, what's going on politically, to have like a
(04:13):
you know, thirty percent understanding of what's actually happening there.
And you know, my understanding of oil is I put
some gas in my car to fill it up this
weekend and it goes and that's good. So here's what
we know at this point. The United States, obviously, unless
you've been living under a rock, has removed Nicholas Maduro
(04:34):
from power. At this point, right now, the VP of
Venezuela is running the country. It is unclear the exact
relationship that she and the US government may or may
not have. There were indication indications from the US government
(04:55):
that they wanted to basically have her in place and
that they had, you know, just discuss things with her
in the run up to this. Her only public speech
to this point has basically been, hey, get Maduro back
in the country, because you took him and he's one
of our citizens. So it's unclear exactly what the posturing
is on either side and what may or may not
(05:16):
have and what's all theater on this. I'm not going
to speculate, because I don't know. There are a million possible,
you know, different ways that you can look at this,
everything from hey, they didn't actually discuss discuss this too.
They did, and she's just pretending they didn't so that
she can have some legitimacy still like that. There's a
ton of different possibilities. What I do know from again
(05:39):
my limited understanding of the Venezuelan political situation is no
matter how you slice it, this right now internally is
not something with a whole lot of stability at this point,
and there are at least several factions within the Venezuelan
government that are likely to be competing for influence power.
(06:00):
There's a power vacuum of Maduro's presence.
Speaker 3 (06:03):
There's a power vacuum, as you've seen in many different
occasions when something along these lines has happened.
Speaker 4 (06:09):
And so who is going to.
Speaker 3 (06:12):
Ultimately lead this country a week, a month, or a
year from now, I think is really anybody's guess.
Speaker 2 (06:19):
It's also unclear exactly how involved the Trump administration wants
to be involved in the oversight and maintenance and actual
you know, governance of Venezuela. I mean, clearly not going
to have the US like take over governance entirely, but
it was suggested a couple times during press conferences this
weekend that hey, you might have the Secretary of State
(06:42):
and Secretary of Defense, you know, kind of running things
in the interim, right, and that's at odds with what
the Venezuelan VP has said to this point. It's also
unclear if there will be any kind of US security
presence on the ground. It's been suggest that there maybe
by the President. It's also been suggested that there's no
(07:04):
appetite for it, and so that's not something that's being
actively considered right now. So again, I don't think that
we know a ton about this, and I don't think
it's worth speculating, because what are we going to do?
Be like, well, I think they're gonna do this, Well,
I think they're going there.
Speaker 4 (07:20):
Will be playing place as you can go.
Speaker 3 (07:22):
If you wish to speculate about what might be happening
in Venezuela right now, just turn on any social media
channel and everyone will tell you what they think is
going to happen.
Speaker 4 (07:31):
We're not going to do that here.
Speaker 2 (07:32):
You can listen to us while you do that, so
you can multitask and get the best of both worlds.
Speaker 3 (07:37):
What do we I think there are some things that
we have a little bit more concrete understanding of, and
one would be this state of Venezuelan oil deposits and
the oil industry itself.
Speaker 2 (07:48):
Yes, So here's the thing about Venezuela. They have a
metric crapload of oil, which is the technical term in
the biz. Three hundred and three billion dollars of proven
reserves for Venezuela. That is the largest level of proven
reserves for any country in the world.
Speaker 3 (08:08):
You showed me a chart this morning, and it again,
US is the largest oil producer in the world. Yes,
getting it out of the ground and selling it into markets,
but it absolutely dwarfs the proven oil reserves in the
United States, for example.
Speaker 2 (08:23):
Yeah, if you look at this, just as an example,
Venezuela has three hundred and three billion barrels of proven
oil reserves. The United States has forty five billions, So
Venezuela has more than six times as much oil in
the United States. When you talk about you know, big
oil producing countries like Saudi Arabia, Saudi Arabia's got two
hundred and sixty seven billion barrels of proven reserves, so
(08:44):
Venezuela is more than ten percent above them. Iran two
hundred and eight billion, Canada one hundred and seventy one billion,
Iraq one hundred and forty five billion, Russia eighty billion. Like,
just to give you a sense of this, there's a
lot of oil in Venice. The issues, as I understand them,
are threefold when it comes to actually getting that oil
(09:08):
out of the ground. Uh. The first is it's the
state of Venezuela and oil production is somewhere between terrible
and really really really terrible. At one point within the
last couple decades, Venezuela was producing three million barrels a day,
which is still less than a quarter of what the
(09:28):
US currently produces. The problem is that, through a combination
of incompetence, corruption, and general malfeasance, that production has fallen
from North of three million barrels a day to seven
hundred thousand. No one really knows what kind of shape
any of these wells are in. No one really has
any idea if any of the equipment is working beyond
(09:50):
you know, kind of what's already producing. And so until
you actually get in there and look at this stuff
in some kind of depth, you don't really know how
much money tie an effort is going to be needed
in order to get things back up to ship shape.
Speaker 4 (10:04):
Got it.
Speaker 2 (10:04):
Number two? There's a There are two. It's kind of
a combination of things, but there are two reasons why.
These are the other two parts of the three reasons
why it's kind of hard to get the oil out
of the ground. There most of the oil reserves are
in a part of the country that is really mountainous,
rough terrain that's hard to navigate and get any kind
(10:27):
of heavy equipment and machinery.
Speaker 4 (10:28):
Through mountaous rainforest.
Speaker 2 (10:30):
There's a reason why, despite having six times the amount
of oil that the US has in reserves, they never
produced more than three million barrels a day. It's really
hard to do so because of the terrain and the
type of oil they have can best be compared to
Canada's oil sands, where it is this heavy, thick, messy
(10:55):
stuff that just is not easy to extract, be because
of quite literally like the weight and consistency of it.
It's it's really hard to do that without what I
gather from again my understanding as a novice exploring this,
you basically need to use like a bunch of high
(11:16):
pressure steam to force this stuff to move the way
that you want it to, and in this terrain that
you have, it's kind of hard to you know, get
high pressure steam and quantities into there.
Speaker 3 (11:27):
So I think the important point about all this is
a lot has been made about the ability and efficiency
of US oil companies, the infrastructure that they have in
their capability of going in here and increasing.
Speaker 4 (11:40):
Production, which does exist.
Speaker 3 (11:42):
But I think an important counterpoint it is not merely
poor infrastructure, corruption and incompetence that has led Venezuela to
not produce quite as much oil as they might be able.
Speaker 2 (11:54):
To, which leads us to the question of, Okay, what
is the actual impact on energy markets as a result
of this. We'll talk about that next.
Speaker 1 (12:05):
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Speaker 2 (13:14):
All right. So in the last segment, we talked a
little bit about the state of play in Venezuela and
how Mike and I don't really know what comes next
and we'll just have to see what happens. But the
question that's out there is, hey, with all of this
oil that's sitting in the ground in Venezuela. Gosh, like,
it sure seems like there's going to be something related
(13:37):
to that oil happening at some point, especially since the
Trump administration has come out and in no ONEX firm
said yeah, we want the oil. So it raises the
question of what impact this can have on global energy markets.
And thus far on Monday, you know, January fifth, of
twenty twenty six, the answer is zero, not much. West
(13:59):
Texas in or media is up half a percent thirty
two today. So there's basically no major movement happening in
oil markets. And we talked in the last segment about
you know, the reasons why it might take you know,
it's it's generally hard to extract oil from Venezuela. And
so the question that's out there in my mind is, Okay,
(14:22):
what is the actual investment from other you know, from
from companies going to be to try to get access
to these reserves? And I think there are a whole
bunch of things that need to be sorted out before
you can even get to that point, the first of
which is who am I dealing with? Like, let's say
(14:46):
that I run Chuck oil. Okay, and I've got ten
billion dollars that I'm looking to invest next year. The
first question that I have is, okay, so something happened
in Venezuela. Who do I call to see if I
can even get access?
Speaker 4 (15:05):
Ghostbusters?
Speaker 2 (15:07):
Do I?
Speaker 3 (15:08):
Whenever somebody says, who do you call that I know?
Speaker 2 (15:10):
Do I call the current Venezuelan VP? Sure, I don't
know what staying power she has? Do I call Marco Rubio?
Do I call, you know, a bunch of fark gorillas
from Colombia and say, hey, can you help me get
in there? Like? These are honest questions about just like
(15:32):
what access will I have and who do I talk
to on this? The second question that you have on
this is okay, let's say that I get the right
person to talk to. Well, look, what guarantees do I
have that if I make a ten billion dollar investment
(15:53):
that A you're going to provide protection so that that
investment continues, you know, operating, it isn't sabotaged by other
you know, local groups or whatever. And B what guaranteed
do I have that ten fifteen years from now, some
new Venezuelan government doesn't come in and say, hey, nice,
Well you got there. It's ours now. The cost of
(16:17):
doing development in Venezuela is almost certainly less on a
per barrel basis than the United States, but the expected
profit might not be. Like, I don't even know how
you run that calculation, just because what probability do you
assign to the possibility that, hey, this well might not
(16:39):
be yours by the time it's completed, right, Like, these
are some of the challenges that I think you have
to sort through. So I do suspect that anyone involved
in anything related to this is going to be getting
a whole bunch of calls from you know, energy companies
and interested investors being like, yeah, we like to take
a look at it. As far as actual dollar investment
(17:03):
in the production of Venezuela and oil, everything I have
read has pointed to the fact that there is very
likely no meaningful shift in production for at least several years,
just because even if you started moving in right now,
we would take that long to actually figure out how
to ramp the stuff up. And beyond that, Hey, if
(17:25):
I'm exon mobile and I can do you know, some
drilling in the premium basin and some drilling off the
coast of you know, Louisiana versus this, How do I
weigh how much risk I want to take with my
investor's money in moving it towards venezuel and deposits.
Speaker 3 (17:45):
Yeah, it comes back to a number of themes that
we've talked about at length recently regarding a number of
different subjects. But how willing is US government to backstop this,
because that's likely what many of these producers would need
is some form of garatarantee and backstop by the US
government to say, yes, there will be stability here and
we will back the loans for the development of all
(18:06):
this if it all comes crumbling down. And by the way,
with all this, we haven't even bled into any of
the global geopolitical side of all this, the ties between
Venezuela China. Obviously the China Venezuela ties have weakened over
the last decade, but you know, China over the decades
has lent or invested in Venezuela tens of billions of dollars.
Speaker 4 (18:27):
What sort of you know, message do they take by this?
Speaker 3 (18:32):
There's a whole Taiwan angle that I don't even know
that we want to get into today.
Speaker 2 (18:35):
But there are there's rather there's Iran, Like I think the.
Speaker 3 (18:39):
Point would be, there are other reasons for the US
to have interest in Venezuela beyond its oil very much.
Speaker 4 (18:45):
So.
Speaker 2 (18:45):
Yeah, and so I think in terms of where I
land on this, the economic impact of this in the
short term, I think is pretty likely to be minimble,
unless China decides, not specifically on the time want then
when lest China sides, hey, we're unhappy that you're cutting
off a source of oil for us, and now we're
(19:07):
gonna throw the rarer thing back at you again. But
you know, we'll kind of have to see how this goes.
So I'm not expecting major economic impact from this, and
I think the market is responding that way too. Oil
prices are not moving a ton. You don't have, you know,
huge dislocations and markets happening. Markets are kind of saying, Okay,
(19:28):
we'll take a wait and see approach. That's mine as well.
Let's take a quick break when we come back. It's
Wall Street Watch.
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 at what's moving markets so
far today right here on the Financial Exchange Radio Network.
Speaker 5 (20:01):
Markets beginning the week in positive territory despite the weekend
attack on Venezuela and the capture of its leader. However,
there is no major movement in oil prices to this point.
All Street's also rating for an on time jobs report
slated to come out on Friday morning. Right now, the
Dow is up one point four percent, or six hundred
and seventy points. SMP five hundred is up eight tenths
(20:24):
of a percent or fifty five points higher. NASDAC up
about one percent or two hundred and twenty eight points.
Russell two thousand also up one percent. Ten Your Treasury
reeled down two basis points at four point one sixty
seven percent. Crew to Oil up about one percent, trading
a fifty seven dollars and eighty nine cents a barrel.
Chevron among the big energy winners on the day, as
(20:46):
the company is the sole remaining US major oil player
in Venezuela. That stock is up four percent. Other energy stocks,
including Conoco Phillips, x On Mobile, and Halliburton are also
seeing gains on the day. Outside of energy, investors are
awaiting the Consumer Electronics Show to kick off later today
in Las Vegas, where chief executives are both in Vidia
(21:07):
and AMD are slated to speak. Both in Vidia and
AMD are up over half a percent. Meanwhile, Comcast shares
are up over one percent. As regular trading of the
TV network owners Versus spinoff began today, Versus shares by
the way down thirteen percent, and Uber downgraded to sell
from hold and Milius Research, where the firm said the
(21:29):
right hanling company is at risk from increased competition, including
from the likes of Waimo and Tesla.
Speaker 2 (21:35):
Uber down by over.
Speaker 5 (21:37):
One percent at the moment. I'm Tucker Silvan. That is
Wall Street Watch, and remember you can watch the show
live every day on our YouTube page well at Breaking
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(21:57):
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Speaker 2 (22:02):
Let's see Wall Street expects the market to keep rallying
in twenty twenty six despite lofty valuations. It's a piece
in the Wall Street Journal. It's not really a story
like I don't know, it isn't.
Speaker 3 (22:19):
Yeah, you know, if you would like to guess what's
going to happen markets in markets next.
Speaker 2 (22:25):
Your evaluation is not a good timing mechanism. Best predictor
is probably what happened most recently. So sure Wall Street expects.
Speaker 3 (22:34):
By the way, on an annual basis, stocks go up
what percent of the time, like sixty plus percent, almost
seventy So most of the time stocks do increase in value.
Speaker 2 (22:44):
And even when they've been expensive before, they've increased in value.
Was anyone you know at the start of last year
sitting around Mike, do you remember the conversations we had
in January of last year being like, man, stocks are
so cheap, I can't wait for them to go up
right No, No, they were really expensive.
Speaker 3 (23:01):
And people we're talking about how they were expensive. Yes,
there's not new and they still went up.
Speaker 4 (23:05):
Yeah.
Speaker 2 (23:06):
Now I'm not saying that they will still go up
right now. But what I am saying is something I've
repeated quite often, which is when all you talk not all,
when you talk about lofty valuations is being an impediment
for stocks. It's not lofty valuations. Don't say anything about
how high valuations can continue to move. They do tell
(23:28):
you if something goes wrong, then there's probably further to fall,
but they don't tell you anything about what's going to happen,
like whether stocks will or won't go down, And they're
not a predictor of what's going to happen in the future.
Speaker 3 (23:47):
The only thing that you can say that has any
sort of predictive nature to it when you talk about
lofty valuations has nothing to give.
Speaker 4 (23:56):
As short term returns in stocks.
Speaker 3 (23:58):
You can say something that is fairly convincing to me,
at least when you look at longer term returns on
stocks based on lofty valuations, and the answer is just
plainly they're not great when you get over a certain threshold.
Just you can chart this out, but you can also
take my word for it that the higher the starting
(24:20):
point on valuations, the lower the expected ten year return. Yeah,
it's got a pretty good correlation, and you've got one
hundred plus years worth of data to justify it. And
when you get to lofty valuations, it tells you almost
nothing about what the next year is going to do,
but tells you a little bit of something. When you
look at a ten year record after and it doesn't
(24:41):
mean negative, by the way, it just means below average.
An average let's call, depending on the time series you're
looking at, you to take eight to twelve percent, depending
on what time period you want to look at. So
that's what I'm comfortable saying. And this article doesn't even
mention that important piece, So throw it.
Speaker 2 (25:00):
Out, tosses Okay, let's see modest us hiring to cap
a sluggish year for the job market. Does I agree
with Yeah, it's I think one of the.
Speaker 3 (25:11):
I was asked this morning, like what are the expectations
Sorry interrupted, Jack, but what are the expectations for twenty
twenty six? And and I think this is actually one
of them, which is modest and sluggish job market continues
in through twenty twenty six.
Speaker 2 (25:28):
I think the the question that's out there in the
labor market because there are three ways that we can
go right now, I know there's always three ways that
you can go in the labor market, but in particular,
like when we talk about a sluggish job market, like
let's say that we still want to believe that it's sluggish.
By the way, it's just like, isn't it a great word?
(25:50):
Like you're like a slug you know, just outstanding.
Speaker 3 (25:55):
There aren't many living organisms i'd preferred to be compared
to less.
Speaker 2 (26:01):
Why is it sluggish and not slug, Like, I don't know,
you know, you never call it. You never call someone snakish. Yeah,
you never call someone, you know, elephantish.
Speaker 4 (26:11):
True.
Speaker 2 (26:13):
But anyways, a sluggish job market. Does that mean that
we continue to just be kind of what we've seen
the last few months, hovering around zero net job creation,
because that would be considered sluggish. Do we continue just
kind of this slow, gradual decline in the pace of
hiring that's been going on for almost four years now,
(26:37):
in which case, maybe hiring goes net negative by the
first half of this year, but doesn't really accelerate down.
It's just a continued step down from where we've been.
Speaker 3 (26:47):
I would also consider that sluggish. Anything that doesn't chart
out to look like a spike in the unemployment rate,
to me, is fairly sluggish.
Speaker 2 (26:54):
You think it's to the third possibility for like just bad,
which is, yeah, like you get to a point where
where historically the unemployment rate starts to spike up, and
that's you know, not great.
Speaker 3 (27:04):
That's not sluggish, that's that's ugly.
Speaker 2 (27:06):
The question that I have out there and that I
think is the reasonable one to ask. And there's a
path to this that I'll get to. Hey, what's the
path to improvement in the job market? And it's twofold.
It's Hey, the big beautiful Bill is going to give
people people bigger tax refunds this year and give companies
the ability to increase capex and that's going to drive demand,
(27:27):
which will in turn drive hiring. That's your way for
that's your way that you get to increased hiring this year.
Speaker 3 (27:33):
Is there a second way?
Speaker 2 (27:34):
No? Yeah, because remember, ultimately, hiring is typically a function
of demand. If I am running an ice cream shop
and I don't have enough customers, I say, Jimmy, I
don't I don't fire him. First, I say you can't
come in for you know, two days this week, and
then I fire him. If I'm running the ice cream
(27:55):
shop and I can't keep I've got to line out
the door, and I'm like, I need to be serving
these people faster, I hire someone to help serve them faster.
Demand leads hiring and firing decisions. So the way that
you see increased job growth would be if those bigger
tax refunds and additional capex from the big beautiful Bill
(28:19):
translate into more spending, which in turn requires more hiring too,
you know, actually service the spending. That's how you get there.
And so that's why I continue to think the real weakness,
the window of potential weakness for the labor market for
you know, something really bad to show up. Feels like
(28:40):
it's probably in the next three to five months. Okay,
that's kind of where I land.
Speaker 4 (28:47):
Thanks for one to put a timeframe on it. I
like that.
Speaker 2 (28:49):
You know, if if it doesn't show up, then I
don't really think it shows up. In the second half
of the year is kind of where I'm I'm act
to use the bad English that I love to.
Speaker 3 (28:58):
Yeah, we don't usually save our tax refunds and then
spend them six months ly.
Speaker 2 (29:02):
Hey hey, I just got one thousand dollars from the irs.
What are you gonna do?
Speaker 3 (29:06):
Put it in a CD for six months and then
see what's up?
Speaker 4 (29:08):
No, it's not.
Speaker 2 (29:09):
It works, you know, it's more often than not, it's
either it's one of two things. Well, it's gonna go
pay off the Christmas vacation that we took, or it's
gonna go pay for the fourth of July vacation.
Speaker 3 (29:18):
We're going to take Yeah, I was gonna say, I've
already spent it is what happened.
Speaker 2 (29:22):
Usually yes, more often than not. Let's take a quick break.
When we return, we're gonna talk a little bit about
productivity in the United States.
Speaker 1 (29:30):
Right after this, The Financial Exchange streams live on YouTube.
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Speaker 4 (29:38):
All morning.
Speaker 1 (29:38):
Long Face is the Financial Exchange Radio Network Business and
financial news affecting the markets and your wallet. We've got
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Financial Exchange Radio Network.
Speaker 2 (30:06):
You've got a piece of Financial Times today. US to
extend productivity lead on the back of AI boom, say economists.
More than three quarters of US economists expect the US
to maintain or widen its productivity lead over the rest
of the world because of artificial intelligence, deep capital markets,
and relatively low energy cost of Financial Times survey has
found your thoughts, Michael.
Speaker 3 (30:27):
Well, I do find it fascinating that the US. One
thing we do know is that the US has expanded
its productivity gain over pretty much everywhere else in the.
Speaker 4 (30:36):
World over the last five six years.
Speaker 3 (30:39):
Now, really since twenty nineteen in through COVID, And at
the same time, we have really the foremost experts on
AI saying that there's been no meaningful, visible shift and
benefit to companies from their use of artificial intelligence. And
so I'm not sure that I'm prepared to say that
AI is going to continue some productivity boom. We clearly
(31:01):
got a productivity boom in COVID for a number of
different factors that were calculable and displayable. But does that yeah,
I guess does that continue? And I mean, look, this
is the entire promise of artificial intelligence, of really any
new technology, but especially with something like AI where it
(31:23):
is so intended to be human like, the ideas entirely
that you should be able to be more productive on it.
And I would argue we might not have seen the
gains from that yet. I don't know if we will
get them or not, but that is definitely the promise
of this technology.
Speaker 5 (31:37):
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Speaker 1 (32:52):
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Speaker 2 (33:02):
These nineteen states just raised their minimum wages. And again
you've got a bunch of these that are moving up
this year, in particular for those of our listeners in
the New England region, We've got Rhode Island moving up
a dollar an hour from fifteen to sixteen an hour.
It's also got another one dollar an hour increase scheduled
(33:25):
next year. Maine is moving up by forty five cents
an hour to fifteen to ten, Vermont up forty one
cents an hour to fourteen forty two an hour, in
Connecticut by fifty nine cents an hour to sixteen ninety four.
Those all from inflation adjustments that are built in there,
and the other two New England states, New Hampshire and
(33:45):
Massachusetts not seeing any changes to their minimum wage laws
for the year.
Speaker 3 (33:51):
Quickly on Maine, just because I was speaking to somebody
from one of the other radio stations and how it
actually works there. So you have the main minimum wage
which increased to what.
Speaker 2 (34:01):
Was it, fifteen to ten.
Speaker 3 (34:02):
In Portland, however, the minimum wage increased to sixteen thirty. Now,
Portland's a very small geographical area, and so his point was,
if you work in South Portland, you have a different
minimum wage than Portland, Portland. I wonder if you actually
do in practice, right, I mean, I would think that
(34:25):
you have no choice but to match the Portland minimum
wage in a circumstance like that. But it is more
than a dollar what did you say, fifteen fifteen ten? Yeah,
so more than a dollar additional if you are working
in Portland compared to South Portland, which is a little
bit fascinating to me. Nationally, outside of New England, you
saw Arizona increase all the way to fifteen dollars and
(34:47):
fifteen cents increased in California to sixteen ninety Colorado.
Speaker 2 (34:52):
What about the California sixteen? What about fast?
Speaker 3 (34:54):
Yes, depends on what industry you work in, right, I
mean that's probably one hundred dollars an hour now for now,
for all I know. No, in Connecticut you're up to
sixteen ninety four, as you mentioned, Hawaii up to sixteen bucks,
Michigan up to thirteen seventy three, Minnesota eleven forty one,
Missouri surprisingly fifteen bucks an hour in Missouri, Montana up
to ten eighty five, Nebraska to fifteen dollars, New Jersey
(35:17):
to fifteen ninety two. New York has different ones for
like every area that you possibly work in, so I'm
not going to go there. The remainder of the state
is sixteen. But if you are in New York City,
Long Island, or Westchester, you're at seventeen bucks an hour
in New York, Ohio to eleven. South Dakota to eleven
eighty five, Vermont to fourteen forty two, Virginia to twelve
(35:38):
seventy seven in Washington to seventy thirteen. I guess just
one comment I'll make about this. This is not purely
a red or blue state thing anymore, right. I mean,
you take a look at politics in South Dakota and
Montana and things like that, pretty you know, stay out
of my business as politics there, And yet you know,
(36:02):
increasing minimum wages and pretty substantial minimum wages in some
of those states.
Speaker 2 (36:07):
So California, I did look it up. The fast food
minimum wage is twenty dollars an hour.
Speaker 4 (36:13):
Okay.
Speaker 2 (36:14):
What's interesting is that the minimum wage for everyone else
went up by forty cents this year, but the fast
food one is unchanged, right, which raises the question what
are we actually doing here, which is one that we've
raised quite a bit. On the fast food minimum wage
in California because effectively, like, it just doesn't make sense
if we're gonna be honest about it. And again if okay,
(36:39):
so you say that you want this higher fast food
minimum wage, but it's clearly you're not worried about the
difference between regular minimum wage and the fast food one.
Otherwise you would have raised the fast food one this
year also, which they can do, I think because it's
a committee that votes on it. It's not a public
measure that you know, is you know, voted on at
this point. So I kind of look at it and I'm like,
(37:01):
what are you actually trying to do here? Which is
an answer that I've been wondering about for several years
now and still continue to. So that's what's going on
with minimum wage. On a related notes, America is falling
out of love with pizza.
Speaker 4 (37:17):
Speaking of restaurants, I disagree.
Speaker 3 (37:20):
Does this fall in line with the sushi story that
we covered the other day where young kids are becoming
infatuated with expensive sushi and devouring very expensive fish.
Speaker 2 (37:32):
I'm gonna go with no, Okay, what I'm going to
go with is historically there's a reason why pizza and
Chinese food were the only two delivery options, and it's
because they travel well. The pizza gets to your house,
it's still pizza. The fried rice gets to your house,
it's still fried rice. There's a reason why you don't do,
you know, steaks and pasta and stuff like that, because
(37:53):
it generally turns into kind of crap by the time
it gets to you. However, we're not deterred by that.
Indorsh now has all kinds of stuff on there. Pizza
places have more competition now, and I think that is
why they are facing this, uh, this problem. I say,
this is a proud Friday Pizza Club member though, and
(38:16):
anything else. Oh yeah, if you're not pizzaing on Friday night,
what are you doing? Not living? Let's take a quick break.
Our two is coming up in a bit
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