December 23, 2025 • 39 mins
Mike Armstrong and Marc Fandetti discuss the GDP report showing a massive increase in GDP in Q3 and the guys try to explain how this came about. The economy avoided a recession in 2025, but many Americans are reeling. Car payments now average more than $750 a month. Ford and GM are running out of time to reinvent themselves. Holiday retail spending rose 4.2% this season.
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Episode Transcript
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Speaker 1 (00:00):
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(00:20):
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(00:43):
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(01:06):
Armstrong and Mark Vandetti.
Speaker 2 (01:11):
Good morning, Happy holidays, Welcome back to the Financial Exchange.
We've got markets slowly moving upwards here, with the Nasdaq
leading the way, up sixty points a quarter of a percent,
SMP up fifteen points, closing in on a quarter as well,
in the Dow lagging a little bit, only up sixty
eight points or a little bit more than one tenth
(01:33):
of one percent. It's Mike, Mark and Tucker with you.
On the Tuesday ahead of Christmas, shortens trading week here,
markets will be closing at one pm tomorrow, one pm
tomorrow and closed all day on Thursday.
Speaker 3 (01:45):
I don't know y.
Speaker 2 (01:46):
I said that like Ron Burgundy, the markets will close
early tomorrow ahead of the Christmas holiday. You know, Safe
travels to everybody that's hitting the road or train or
plane or however you're getting to where you're going this
holiday season. At eight thirty am this morning, we received
a big reading on the growth of the economy, and
(02:10):
grow it did. We had a GDP report at eight
thirty today that indicated in the third quarter, so ending
September thirtieth, the US economy grew at a pace of
four point three percent annualized which a few things on that. One,
A reading of four percent or above is quite rare.
Last time we had one was in twenty twenty three,
(02:33):
twenty one quarter two.
Speaker 3 (02:36):
This reading was substantially.
Speaker 2 (02:38):
Higher than where economists had estimated it to be, over
a percentage point higher than where the median forecast was
from economists on GDP, And so some big questions being
raised here like they were raised on the CPI report
in terms of hey, how accurate is this reading, but
then also bigger questions of Okay, how exactly can we
(03:00):
have in an economy? And granted these are different measurements periods, right,
This inflation that we saw was the November period.
Speaker 3 (03:08):
This report just covers tall than November.
Speaker 2 (03:10):
Yeah, July, two months September, so you know this is
further lagging data, but tough to envision having an economy
that is both growing at four point three percent and
experiencing inflation dropping at a very fast clip.
Speaker 4 (03:22):
Four point three percent. This is annualized and after inflation
absolutely torrid unsustainably, so most researchers think the economy speed limit.
If you prefer to think about the balance between supply
and demand, which ultimately determines inflation We don't have to
get into that at this point, but just take it
as a given that the economy's potential growth rate is
(03:46):
a lot closer to two.
Speaker 3 (03:48):
Maybe why is that below And.
Speaker 4 (03:50):
That is a function of how much the labor force
grows and how much we as workers produce per say,
per hour.
Speaker 2 (03:57):
So to givity, you got GDP for two facts, one
the growth of the population and two how productive.
Speaker 4 (04:02):
That's potential or trend GDP if you're looking out five
or ten years and you've got to do a GDP prediction,
which is of interest maybe to long term investors and
to companies doing capital market plan doing capital market forecasts,
capital expenditure planning, stuff like that. You want to know
how fast the labor force is going to grow, roughly
(04:22):
what productivity is going to be. The latter is far
harder than the format a forecast. That the sum of
those two growth rates, this is how the math works out,
gives you potential or trend GDP. It's right now about
two percent used to be three percent in the last century.
We all know that the economy doesn't grow as fast
as it used to. That's not beat necessarily because anybody
screwed up it's a product of demographics and a little
(04:45):
bit of luck with respect to the productivity part of
that product.
Speaker 2 (04:49):
By the way, the growth rate of the US labor
force is estimated right now to be only around half
a percent.
Speaker 4 (04:55):
Yeah, poultry, compared to you the last century when it
was growing at times as women enter the labor force, Yes,
and immigration was liberalized, grew a lot one to two
percent labor force cori anually typical.
Speaker 1 (05:08):
Yeah.
Speaker 2 (05:09):
So you can see how it's tough to see an
economy grow at four percent.
Speaker 4 (05:13):
Just not possible in the absence of an explosion in
productivity driven by something like AI, which creates a whole
host of problems. By the way, for the FED, which
is easing a monetary policy, so I think stimulate demand.
Speaker 2 (05:28):
The culmination of these last three reports, and the last
three that I'm pointing at our this GDP report, the
inflation report for November and October, as well as the
jobs report for November and October, leaves economists kind of
scratching the mixed messages.
Speaker 4 (05:43):
Is the labor market actually weakening as the unemployment rate suggests?
How do you know these are slightly different periods. This
is through Q three. The labor market data we got
was through November, so it's possible that the labor market
may be picked up by a lot in October November,
and we don't know that GDP, excuse me, is overstated,
(06:05):
or that labor market data will be revised. These two
don't necessarily have to square by the way, GDP measures
spending by government, people and business with an adjustment for
net exports, because you don't want to double count them.
So these two don't really measure the same thing, and
we're talking about slightly different periods, but nevertheless a stark,
a starkly different message from the GDP report, which is
excellent than we've been getting from other granted more frequent,
(06:30):
updated more frequently. That is indicators.
Speaker 2 (06:32):
So a number of things that we got recently indicate
a turning point. The turning point on inflation was like
hitting a brick wall in terms of pricing just died.
GDP accelerated in the third quarter, and all of this
would indicate one of a few things. Either we're having
a tough time actually calculating these things and we have
some errors in the methodology that are throwing things off
(06:54):
a bit, or we are hitting some sort of turning
point in this economy, and I think for all of
those reasons, we have to just see what the data
tells us over the course the next few months.
Speaker 4 (07:03):
It's possible there's some sort of productivity there's some sort
of supply side miracle going on. Productivity is increasing, maybe
due to AI or some combination of luck in AI,
I don't know, and that is allowing us to make.
Speaker 1 (07:17):
More with less.
Speaker 4 (07:18):
That would explain exploding GDP growth because it was a
spectacular quarter coinciding with increasing unemployment, because those two things
are weird. That would also explain the relatively quiescent inflation
in October November. It's just weird that in the past
few months everything has exhibited what would appear to be
(07:39):
a change in trend, breaking sharply with the prior trend.
Speaker 3 (07:44):
And not all for the positive.
Speaker 4 (07:45):
By the way, pay rolls are okay. Unemployment rate was bad.
Speaker 2 (07:49):
Yeah, but I have to point that out, like it's
not as though all the data in the last month
and a half trended and said, oh, everything's.
Speaker 4 (07:57):
Great, nothing sinister here. If there was something, if somebody
it was monkey in with the numbers, we would hear
about it. Some PhD statistician at BLS at the department
one of the government calculation agencies would blow the whistle.
Nothing like that at all. It's just it's just very difficult,
given the government shut down to get the typically accurate
(08:18):
and still under best circumstance, best of circumstances, lacking a
read that we would normally.
Speaker 2 (08:24):
Yet, I think I've been taught enough lessons over the
last five years about firsts in this economy that just
because something looks really strange in the moment, as it
does right now, does not mean that it's impossible. You
take a look at all the first that we've experienced
in this economy over the last five years between yield
curven version wasn't to first, but the sam rule breaking
(08:45):
was a first. It was the miraculous disinflation of the
twenty twenty two's. A lot of these things that happened
that really seemed improbable at the moment. I'm just again,
I'm not willing to dismiss this moment as impossible in
terms of it being positive for the economy, but very
very odd and strange to see all these things happening
(09:08):
at the same time. If they continue.
Speaker 4 (09:09):
Economic data, any data that has to be estimated. You
don't know the true population value. You're getting a little sample.
It's like when you do a political poll, they always
say plus. It's the same concept. They say plus or
minus three point three or four or five points. And
all that means is where ninety or ninety five percent
or ninety nine percent sure that the actual value lies
(09:32):
within the number we gave you plus or minus whatever
they said. The margin of error in appolling context is
economic data is similar and that we're sampling, so there's
always possibility of big errors.
Speaker 3 (09:44):
Let's take a quick break.
Speaker 2 (09:46):
When we come back, the economy very clearly avoided a
recession in twenty twenty.
Speaker 3 (09:50):
Five, many Americans still struggling out there.
Speaker 2 (09:53):
We're going to be talking about why why affordability seems
to be the topic. Dujure All that next, along with
trivia on the Financial Exchange.
Speaker 1 (10:01):
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Speaker 3 (11:40):
It's our final day.
Speaker 6 (11:41):
Of Christmas movie trivia here on the Financial Exchange, and
one of the great movie debates is if Diehard is
a Christmas movie. Some say it's just an action movie
set at Christmas time, while others believe it is a
Christmas movie because of the party and the music. Bruce
Willis made his thoughts known during his twenty eighteen Comedy
(12:04):
Central Roast. So our trivia question today, does Bruce Willis
think die Hard is a Christmas movie?
Speaker 1 (12:12):
Yes? Or no?
Speaker 6 (12:12):
Once again, does Bruce Willis think die Hard is a
Christmas movie? Yes or no? Be the third person today
to text us at six one seven three six two
thirteen eighty five with the correct answer along with the
keyword trivia, and you'll win a Financial Exchange Show T shirt.
Speaker 3 (12:29):
Once again.
Speaker 6 (12:30):
The third correct response to text us to the number
six one seven three six two thirteen eighty five with
the correct answer along with the keyword trivia will win
that T shirt. See complete contest rules at Financial Exchange
show dot com.
Speaker 3 (12:45):
Hey, it's Mike here and from the Financial Exchange.
Speaker 2 (12:48):
I just want to wish all of our listeners, uh
from Boston, Cape Cod, Worcester, Providence, Springfield, Pittsfield, Manchester, Portsmouth,
New London, Lebanon, Hartford, New Haven, and we didn't forget
about you, Erie Pennsylvania, a very happy, healthy holiday season,
Merry Christmas, a terrific new Year. Just thank you for
being with us all this year, and best to you
(13:11):
and your families come twenty twenty six.
Speaker 3 (13:13):
Mark.
Speaker 2 (13:15):
We were talking a bit about this piece yesterday and
it morphed into a different type of conversation. But obviously
we did not see a recession in twenty twenty five.
We haven't seen one really since twenty twenty and that
was a quite brief one. I would argue that we
haven't seen a real, deep, prolonged recession since. Oh wait,
you know, I don't think that's there's much to argue there.
(13:36):
That was the last time we saw something truly painful
in terms of a long drawn out recession. Yet we
are seeing more and more data that people are just
unhappy with the state of the economy. Affordability is dominating
headlines the Saint Louis, Sorry, Michigan. What's the survey of
consumers that Michigan does. The other surveys that we get
(14:00):
just indicate people stressed about money, unhappy with the state
of the economy. I'm happy with inflation in the state
of the labor market, and I can understand why. I
also wonder just how bad this data gets if we
have an economy where we're sitting at say, seven percent unemployment, right,
does it do you not see that type of you know,
(14:20):
typical downward trend in sentiment, or do you see it
get even lower than where we are now and set
new lows in that event? But I do hear a
lot of you know, what's the right word, like world
ending concern about the state of things today. And whenever
I hear that, I just I think that people just
aren't good students of history when I hear people that
(14:42):
concerned about where we are today, Because there's always a
period of time that you're living in where there are
some existential questions and concerns about the state of the economy, society,
and the future. And we discuss this and you know,
kind of a silly game of would you rather yesterd
on the show? But is there any time period other
(15:03):
than the one that you were born into or today
that you would prefer to be born because in spite
of all the concerns people have, and I hear people
say it all the time, like, oh, I can't imagine
raising children in today's society, Like.
Speaker 4 (15:15):
Was life better in the past at any point in
the past? Is that another way of answer asking your question.
Speaker 2 (15:19):
Yeah, I mean we focused it more yesterday on you know,
was there any points in time where you would have
a better quality of life, you know, economically.
Speaker 6 (15:27):
Once extra said nineteen seventy if you were born in
nineteen seventy.
Speaker 3 (15:31):
Yeah, pretty good time to be born.
Speaker 4 (15:32):
I mean I was born around nineteen sept plus or
minus nineteen seventy two. So yeah, in this okay, So
I think the way I might the way I understand
your question is what generation in recent like recorded history,
with an emphasis on financial metrics, was able to build
(15:54):
enough wealth to live comfortably on average throughout their lives?
Though you can't you count somebody who came into a
lot of money at the end of their life when
stocks boomed or something like that, because there are always
odd ball examples of markets going crazy or the economy
getting really good, but for only a short period. I
(16:16):
think it is undoubtedly the case that baby boomers, anyone
born between say four I'll just use the the demographic
definition and say forty six to sixty four have probably
have enjoyed the fastest growth in incomes and witness the
fastest growth in asset prices, including home prices, if that's
(16:36):
your measure, and I don't necessarily say that it should be,
but look the answer to that question.
Speaker 2 (16:41):
I say, there weren't challenges, right, I mean, yeah, you were,
were World War two, in great depression?
Speaker 4 (16:45):
There were, But for peace sake, the economy grew by
four percent in the sixties, for for change in the fifties.
For now baby boomers, which we only enter the workforce then, obviously,
but was growing at four percent in the nineteen sixties
nineteen seventies. Everybody wrings their hands about, but we still
got three point roughly one percent real GDP growth, roughly
the same as in the nineteen eighties and nineteen nineties.
So never has a generation had a more favorable economic
(17:09):
backdrop than.
Speaker 1 (17:09):
The baby boomers.
Speaker 3 (17:10):
That's that's just a fact.
Speaker 4 (17:11):
Just look at GDP as you're sort of catch all
proxy for that. So I mean, I'm I don't know
how to answer that question because we know how things
turned out.
Speaker 2 (17:23):
Yeah, yeah, I mean, you know, I could make a
pretty compelling argument for people to grow up in my generation.
They missed the real They weren't participating in the labor
force or the housing market to a large degree when
during the twenty ten during the two thousands decade, which
was pretty pretty rough and tumbled, They've built a lot
of their wealth during one of the largest stock market
(17:46):
return periods in history, and so it is always tough
to see until you look back.
Speaker 4 (17:51):
But yes, though I don't want to diminish the accomplishments
due to the grit of any you know, any generation.
Jobs were also harder in the sixties, and so people
using slide rules for God's sake, to do comp engineers
using slide rules to do big multiplication problems.
Speaker 2 (18:10):
As so, your point would be the jobs were easier
to come by, but tougher to do.
Speaker 4 (18:13):
Unemployment was on average lower, growth was on average higher,
but manufacturing was twenty thirty percent of the economy. Those
jobs were hard. My grandfather was in traction half his life.
He built submarines down at eb was a welder for
those of you listening nationally, that's electric boat in Groton, Connecticut.
(18:35):
He had a tough job. These guys had a drink
on the job just to dull the pain. So seriously,
they weren't all alcoholics. It was like the only way
to get through your damn day, I type on a laptop,
I type a blog, or do some research or some
portfolio work in my day job. They would love to
have had that opportunity, so jobs may have been slightly
(18:56):
easier to come by. You could raise five kids, as
both my sets of grandparents did, without a college education
and doing what today would be considered unskilled labor. And
you could have a decent house. Now that house was
a nine hundred square foot ranch. How they raised five
kids in a space that small, I don't know. But
the financial security is probably more attainable. But life in
(19:16):
many ways was tougher. And of course we're not even
talking about quality of healthcare today, which is nothing short
of miraculous.
Speaker 2 (19:22):
It's a fun debate to have. And if you want
a Texas show at six one seven, three six, two,
thirteen eighty five. We always loved the contributions to these
purely hypothetical ones.
Speaker 3 (19:32):
But I'm with you.
Speaker 1 (19:33):
It is.
Speaker 3 (19:33):
It is with the hindsight in place now difficult to.
Speaker 4 (19:37):
Have you ever had to fix your car because it
broke down? Have you ever had to take the starter up?
I've never had to do it, but everybody could. And
of course they all came out of the war with
that skills. Everybody knew how to fix everything. But I mean,
we have a softer life in many respects.
Speaker 2 (19:49):
We do quick break when we come back. Full Market
update is next with Wall Street Watch.
Speaker 1 (20:09):
Bringing the latest financial news straight to your radio. Every day.
It's the Financial Exchange 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 6 (20:29):
Markets are modestly higher as Wall Street reacts to a
solid third quarter GDP reading, which had been delayed due
to the government shutdown. The reading show the economy grew
at a four point three percent annualized rate, above forecasts
of three point three percent.
Speaker 3 (20:45):
Right now, the Dow is up.
Speaker 6 (20:49):
About a tenth of percent, or fifty five points higher.
SMP five hundred is up two tenths of one percent,
or fifteen points. NASDAK up a quarter percent or sixty
one points higher. Russell two thousand is retreating about a
half a percent. Ten year TREASUREELD is currently at four
point one seven to one percent, mostly flat, and crude
(21:09):
oil edging higher, trading just above fifty eight dollars a barrel.
NOVNORDESK among the bigger winners on the day after the
Danners drug maker said it will begin selling a pill
version of its weight loss medicine we Go Vi in
January after securing approval from US regulator. Shares a rallying
over eight percent. Meanwhile, service Now announced it will acquire
(21:31):
cybersecurity startup Armists and a cash dealer valued at seven
point seventy five billion dollars. The enterprise software company said
the deal will bolster its cybersecurity capabilities in the age
of AI and more than triple its market opportunity for
security and risk solutions. Service Now stock is down about
(21:51):
two percent. Reddit stock is falling about one percent, despite
equities research analysts at need Them and Company adding the
social media platform to its top stock list for twenty
twenty six and as a reminder, markets will close early
tomorrow afternoon at one o'clock. I'm Tucker Silva and that
is Wall Street Watching. In the previous segment, we asked
(22:12):
you the trivia question, does Bruce Willis think Diehard is
a Christmas movie? He said that at a twenty eighteen
Comedy Central Rose His answer, no, No, Diehard is not
a Christmas movie. That according to Bruce Willis, Max from
New Bedford, mass is our winner today taking on the
Financial Exchange Show T shirt. Congrats to Max. We play
(22:34):
trivia every day here in the Financial Exchange See complete
contest rules at Financial Exchange Show dot com.
Speaker 2 (22:40):
Car payments now average more than seven hundred and fifty
dollars a month. Congratulations everybody. We are terrible at buying
cars in this country and continue to prove that to
be the case.
Speaker 3 (22:52):
They make the point that the idea.
Speaker 2 (22:54):
Of a three hundred dollars monthly payment for a new
car is pretty much dead at this stage. And I
do buy that point, because even if you're buying a
thirty thousand dollars car and financing it over six years,
you're still you know, probably looking at four five hundred
dollars per month and a monthly payment, so that the
idea of three hundred dollar payment, especially in today's interestraight environment,
(23:17):
is pretty much behind you. But in this piece they
interview somebody. Where's the uh, where's the quote on the
thirty thousand dollars?
Speaker 1 (23:26):
Oh?
Speaker 3 (23:26):
Yes, Mark, I think.
Speaker 6 (23:28):
It's sound like four or five paragraphs.
Speaker 3 (23:30):
Well, let'm just hold over to find it.
Speaker 2 (23:33):
The average price of a new car broke fifty thousand
dollars this fall, according to Kelly blue Book.
Speaker 3 (23:38):
I got it, okay, hit me, all right, me Tucker.
Speaker 6 (23:41):
So the paragraph reads, one problem is that automakers aren't
making models with the sticker price under thirty thousand dollars, which,
in theory, should present a real opportunity for car for
the car companies, said Heath Bird, CFO of Sonic Automotive,
a publicly traded dealership chain. You've recently told investors and
(24:02):
analysts that until buyers have better options, affordability will become
an even bigger problem.
Speaker 2 (24:08):
So, uh agreed about Like, wait, but you can talk
about that thirty thousand dollars Mark for a minute.
Speaker 3 (24:15):
Mark. I believe that you drive a car that you
purchased and every.
Speaker 4 (24:20):
Other week telling me to upgrade to the same car.
Why anybody would do this, I don't know. And there's
the stickers the same the smell.
Speaker 2 (24:28):
Okay, So I did a quick Gemini search here to
try and figure out is beguiling?
Speaker 3 (24:34):
Hey? Is there any truth to this?
Speaker 2 (24:37):
And I come to the same conclusion we've brought up
every single time, which is there are plenty of cars
that are affordable and reasonable.
Speaker 4 (24:44):
They're small.
Speaker 3 (24:45):
Americans just don't like to buy.
Speaker 4 (24:46):
People laugh at you at stop, like.
Speaker 2 (24:48):
The Nissan Versa, the Kiak Fo, the Honda Civic, Hyundai
Lantra SUPERU, and President Chevy tracks.
Speaker 4 (24:54):
Yeah, the Jed which.
Speaker 2 (24:57):
Car kicks, the Hyundaiona, the Mazda c X thirty, the
Toyota Corolla Crossover. I just listed like ten cars that
are all available for an MSRP of under thirty thousand dollars.
Our problem is not that automakers are squeezing us and
you know, refusing to make affordable cars. Our problem is
that we don't buy them.
Speaker 4 (25:17):
It's a good second car, A compact Sedan is a
good second car. But if you've got two plus kids
who play hockey or something, it would be quite tight.
But it'd be be an okay car for you to
commute to work in, but you know you're driving another
has right, can't you.
Speaker 2 (25:32):
Get something also drive a minivan. They're like the opposite cars.
But that's but, but that's my sense.
Speaker 4 (25:38):
You're buying them for utility, one you commute in and
the other.
Speaker 6 (25:41):
I mean, I'm in this similar camp. Like my wife's
drives cheap Compass and it's a little bit bigger obviously,
but she barely you know, drives it like I do,
where I've a Jetta Sadan, which is like what thirty
miles per gallon mark to get to on the highway
or whatever.
Speaker 2 (25:57):
Maybe so we can continue to go, we can continue
to bemoan the affordability Christ Team Miles when it comes
to cars, but I continue at least with at least with.
Speaker 3 (26:11):
Cars, like with home affordability and other issues.
Speaker 2 (26:15):
I'm willing to say that there's plenty of blame to
go around, but it's still mostly our fault.
Speaker 3 (26:20):
Uh, we like big cars. With cars, it is directly
our fault.
Speaker 4 (26:24):
Americans have always preferred more, more muscle and more space to.
Speaker 3 (26:28):
Less and that's all well and good.
Speaker 4 (26:30):
Like anybody who's been in Europe knows this.
Speaker 3 (26:33):
I happen to be a chiefe with cars and like
to drive junkie.
Speaker 2 (26:37):
You know, uh, not junkie. The Honestif it's a nice car,
it's just your.
Speaker 1 (26:41):
Car is awesome.
Speaker 3 (26:41):
What are you talking about. That's a great car.
Speaker 2 (26:43):
I agree, But you know, I'm not complained about anybody
that doesn't like that car, that wants to drive nicer.
Our problem is that we make terrible financial decisions when
it comes to cars. There's no way that somebody making
seventy thousand dollars a year should be buying us.
Speaker 4 (26:58):
The way the financials are presented to buyers should be illegal.
Most people do not have your level of knowledge of
present value of cash. You've got a little financial calculator
in your head because that's what you do for a living.
Their practices are I'm sorry, but they are. The way
they present monthly payments and so forth is borderline deceptive.
Speaker 3 (27:19):
I don't know.
Speaker 4 (27:20):
I think I understand the math, and I still roll
my eyes when I get to that part of this.
Speaker 3 (27:25):
I don't like that they bury the MSRP. Sorry, I
don't like that they bury the APR. I think that's problematic.
They don't really tell you the interest right up front
they tell you.
Speaker 4 (27:34):
That there is, and I like these guys, they got
to make a living. I get that, but it's not
just borderline deceptive. It's often flat out deceptive the way
they present payments.
Speaker 2 (27:43):
We have a guide this month for December about financial
planning for spouses, and I hesitate to connect this to
car affordability. It's not, but it does remind me of
frequent conversations I have with clients, and specifically you know,
financial planning for spouses, and where we see problems. And
(28:08):
I'll tell you I tend to not see problems from
clients that have a genuine problem with their financial strategy
when both spouses are on the same page, right when
both you know, partners in that team come in and say,
oh yeah, like, I see what you're saying here, we
are spending beyond our capacity and we need to rein
it in and get control over this. That tends to
(28:29):
work pretty well. Where I have seen genuine problems, and
where I've seen financial problems lean to divorce is when
it's hidden, and that seems to be the real problem.
And I think we are all guilty of this to
a degree, myself included, Right, Like I had this conversation
with my own wife recently that you know, I had
(28:50):
just kind of taken a hold of everything, was doing
it all myself, and she wasn't really fully in on
the status of our of our personal finances. And this
guide is not an attempt to provide you marriage counseling,
but it is an attempt to provide a framework for
how you need to be making decisions as a married
couple as you approach retirement. There are a number of,
(29:12):
you know, items that you look at and say, okay,
if there's a significant age gap. I was meeting with
somebody who you know, married couple more than a decade
in age difference, that's a big threshold where you have
to do some extra planning. If you have kids from
separate marriages, if if it's a second marriage, there's all
these added complexities, and this guid attempts to put a
framework around how you should be thinking about it. It's
(29:34):
our guide for December. It's going to get busy in
your household, as I'm sure it already has. If you
want to get your copy, call now at eight hundred
three nine three for zero zero one again all about
retirement and financial planning.
Speaker 3 (29:48):
For spouses. The number once again is eight hundred three
nine three for zero zero one.
Speaker 1 (29:54):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armst wrong guide to specific financial, legal or tax advice.
Consult your own financial, tax into state planning advisors before
making any investment decisions. Armstrong make contact you to offer
investment advisory services.
Speaker 2 (30:10):
All right, so we've already covered that there are in
fact affordable cars out there, people just don't like buying them.
Twenty twenty five was at least in part defined by
a pretty big pivot on the part of automakers. Specifically,
Ford made a massive pivot on its EV plans, and
there's a couple of pieces about it today, you know,
one of them saying that Ford and GM are running
out of time to reinvent themselves. I didn't really know
(30:32):
there was a timing you're going, or anyone asking them
to reinvent themselves. I guess I'm kind of confused on
the premise, right. I think these car companies attempted to
reinvent themselves over the course of the last five years
by pivoting towards electric vehicles. They realized it failed, and
now they're falling back on their traditional profit makers, which
(30:52):
are giant trucks.
Speaker 4 (30:53):
Well, they did make some pretty dramatic lineup changes. They
said we're going to go yeah they failed, were eventually
going to go all well, yeah, eventually we're going to
go all electric. Right, that was the theme past few
years as Ford stopped making passenger cars. It's very hard
to find a Chevy passenger car you can find. So
we did this exercise months ago on the area you
find them in theory but not in fact. And now
(31:15):
the political winds have changed and they're shifting their business
strategy again. You've got to pity them to some extent.
Speaker 2 (31:21):
I mean, there's so I suppose the one area that
I do worry about these companies is whether or not
they can just make a profit in the US car market,
because quite honestly, Ford and Chevy are having a very
difficult time selling their cars anywhere other than the United States.
Speaker 3 (31:36):
And so it's it's virtually always been the.
Speaker 2 (31:38):
Case, and if China continues to make the inroads into
these other markets, then that is a real question, like, hey,
can Ford actually make a profit by just selling cars
in the United States. I think the answer is yes,
and we have enough protection around these car companies that
they are probably too big to fail.
Speaker 4 (31:54):
Well, there's nothing wrong with buying Sedan's from abroad and
buying F one to fifty's and civil Dorados and so
forth that are produced domestically. There's nothing wrong with that.
We're not Ford and GM weren't particularly good. And I
say this as someone who drove two Forwards and several
GM cars. They weren't particularly good at making cars all
kinds of issues. Appearance was not their problem. Generally good
(32:16):
looking cars, yeah, fit and finish, mechanical. You know, after
a year the paint starts peeling off. Stuff like that.
They just couldn't go. Now, that was actually a truck unfair.
That's to be fair anyway. They just couldn't get that right.
So specialize in what they do beautifully yep F one
fifties and Silverados and Dodge I don't want to leave
out Dodge Rams.
Speaker 3 (32:33):
Quick break when we come back. Stack Roulette is next.
Speaker 1 (32:37):
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Speaker 6 (33:10):
This segment of The Financial Exchange is brought to you
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Speaker 3 (33:50):
Hey, it's Mike here on the Financial Exchange.
Speaker 2 (33:52):
I want to wish all of our listeners on Serious
XM a very happy and healthy holiday season, Merry Christmas
and a terrific New Year time.
Speaker 3 (34:00):
Thank you for being with us this year.
Speaker 2 (34:02):
All the best in twenty twenty six, and Mark, what
do you have for us for Stackordlet Today.
Speaker 4 (34:07):
We've been talking about inflation. Apparently, according to government estimates,
came to a screeching halt in October and November. There
are problems with those estimates, sure, but well, taking at
face value, we've been talking this morning about GDP, A
scorching fourth quarter, a third quarter excuse me, GDP number
that's an estimate of how much the economy grew. Jason
(34:30):
Furman writes in The New York Times today. He's a
professor of economics at Harvard, and he was head of
the Council of Economic Advisors Real Don for president. Yeah,
he gives some good advice when it comes to how
how do you evaluate a number that suggest we government
economic data, specifically that suggests the trend may have changed dramatically.
(34:52):
Furman advises as follows when interpreting the macroeconomy, he writes,
it's always best to look across a broad range of
indicator over long periods of time. When a single volatile
data release suggests that the economy is suddenly turned sharply
for better or worse, it's usually wrong. Reality tends to
be smoother, furmin rights, and more moderate. Great advice for
(35:15):
digesting economic data in any environment. The economy doesn't make
big leaps. Typically you should be suspicious of anything that
suggests that it has made a big leap.
Speaker 2 (35:25):
So maybe an off chance that we're at a real
pivot point. More likely we screwed up the measurements.
Speaker 3 (35:32):
More Sorry, these are just estimates. They're going to be wrong.
Speaker 2 (35:35):
Ye been getting asked a lot about what we think
the holiday retail spending pattern looks like. I had the
distinct pleasure of going to the south Shore southshirep Plaza
south Shore Plaza in Braintree, Massachusetts, yesterday, which was a disaster.
Speaker 3 (35:56):
It was like four o'clock and.
Speaker 2 (36:00):
Honestly like a little bit nostalgic walking around to shopping
mall two days before Christmas, So it was it was
a nice visit to a very nice mall and it
was packed. Visa is out with their estimates for holiday shopping,
and when asked this question, I continue to say, guess
what holiday shopping is probably going to bump up somewhere
(36:21):
in the range of two to five percent, one to
four percent, whichever whichever range you want to give, but
you know.
Speaker 3 (36:27):
Mid single digits.
Speaker 2 (36:28):
Visa estimating that US holiday retail spending increased four point
two percent year over year. That is not adjusted for inflation.
So subtracting nearly three percent from that number if you
want to, if you want to estimate how much additional
stuff we got e commerce spending, their estimate jumped by
seven point eight percent. But surprisingly to me, still physical
(36:50):
stores are still capturing nearly three quarters of all holiday
shopping spending according to Visa. So few private companies have
a better read on this type of thing than Visa
does given their business. Electronics in particular, saw a five
point eight percent surge compared to last year, so spending
on electronics don't I don't follow the iPhone cycles, so
(37:14):
maybe that was enough to drive that one up here.
But at the same time as our holiday spending is increasing,
according to Visa, private credit firms are making the decision
to pile into consumer debt.
Speaker 4 (37:31):
They're not coincidentally, right, not.
Speaker 2 (37:33):
Coincidentally, I mean they have a bunch of money that
they're fueling that they need to spend. And yeah, they
are in part contributing reampanies. That's what they're doing, is
they're buying receivables from credit card companies. This big transaction
was in Europe and so might not heavily impact US consumers,
but yeah, they are making borrowing easier for American consumers,
(37:57):
which is nice this time a year for the holiday
shopping season, but is a you know, kind of fun
and dramatic game of musical chairs for whoever it gets
left holding that holding that bag once the music.
Speaker 4 (38:09):
So this is why it's important to pay attention to
what's happened. I know you and Chuck talk about it
a lot, but what's happening in private credit has implications
for spending, and what's happening in private credit is related
to what's happening in equity markets. Buoyant, exuberant markets generally
those make it easier to spend.
Speaker 2 (38:25):
That's all the time we have for today's show. Markets
are in the positive again as we head towards the
Christmas holiday. NASDAC leading the way up four tenths of
a percent, SMP up three tenths of a percent and the
Dow Jones Industrial Average up a little bit more than
one tenth of a percent. Have a great rest of
your day, Merry Christmas, and we will catch you soon
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
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(00:20):
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Speaker 2 (01:11):
Good morning, Happy holidays, Welcome back to the Financial Exchange.
We've got markets slowly moving upwards here, with the Nasdaq
leading the way, up sixty points a quarter of a percent,
SMP up fifteen points, closing in on a quarter as well,
in the Dow lagging a little bit, only up sixty
eight points or a little bit more than one tenth
(01:33):
of one percent. It's Mike, Mark and Tucker with you.
On the Tuesday ahead of Christmas, shortens trading week here,
markets will be closing at one pm tomorrow, one pm
tomorrow and closed all day on Thursday.
Speaker 3 (01:45):
I don't know y.
Speaker 2 (01:46):
I said that like Ron Burgundy, the markets will close
early tomorrow ahead of the Christmas holiday. You know, Safe
travels to everybody that's hitting the road or train or
plane or however you're getting to where you're going this
holiday season. At eight thirty am this morning, we received
a big reading on the growth of the economy, and
(02:10):
grow it did. We had a GDP report at eight
thirty today that indicated in the third quarter, so ending
September thirtieth, the US economy grew at a pace of
four point three percent annualized which a few things on that. One,
A reading of four percent or above is quite rare.
Last time we had one was in twenty twenty three,
(02:33):
twenty one quarter two.
Speaker 3 (02:36):
This reading was substantially.
Speaker 2 (02:38):
Higher than where economists had estimated it to be, over
a percentage point higher than where the median forecast was
from economists on GDP, And so some big questions being
raised here like they were raised on the CPI report
in terms of hey, how accurate is this reading, but
then also bigger questions of Okay, how exactly can we
(03:00):
have in an economy? And granted these are different measurements periods, right,
This inflation that we saw was the November period.
Speaker 3 (03:08):
This report just covers tall than November.
Speaker 2 (03:10):
Yeah, July, two months September, so you know this is
further lagging data, but tough to envision having an economy
that is both growing at four point three percent and
experiencing inflation dropping at a very fast clip.
Speaker 4 (03:22):
Four point three percent. This is annualized and after inflation
absolutely torrid unsustainably, so most researchers think the economy speed limit.
If you prefer to think about the balance between supply
and demand, which ultimately determines inflation We don't have to
get into that at this point, but just take it
as a given that the economy's potential growth rate is
(03:46):
a lot closer to two.
Speaker 3 (03:48):
Maybe why is that below And.
Speaker 4 (03:50):
That is a function of how much the labor force
grows and how much we as workers produce per say,
per hour.
Speaker 2 (03:57):
So to givity, you got GDP for two facts, one
the growth of the population and two how productive.
Speaker 4 (04:02):
That's potential or trend GDP if you're looking out five
or ten years and you've got to do a GDP prediction,
which is of interest maybe to long term investors and
to companies doing capital market plan doing capital market forecasts,
capital expenditure planning, stuff like that. You want to know
how fast the labor force is going to grow, roughly
(04:22):
what productivity is going to be. The latter is far
harder than the format a forecast. That the sum of
those two growth rates, this is how the math works out,
gives you potential or trend GDP. It's right now about
two percent used to be three percent in the last century.
We all know that the economy doesn't grow as fast
as it used to. That's not beat necessarily because anybody
screwed up it's a product of demographics and a little
(04:45):
bit of luck with respect to the productivity part of
that product.
Speaker 2 (04:49):
By the way, the growth rate of the US labor
force is estimated right now to be only around half
a percent.
Speaker 4 (04:55):
Yeah, poultry, compared to you the last century when it
was growing at times as women enter the labor force, Yes,
and immigration was liberalized, grew a lot one to two
percent labor force cori anually typical.
Speaker 1 (05:08):
Yeah.
Speaker 2 (05:09):
So you can see how it's tough to see an
economy grow at four percent.
Speaker 4 (05:13):
Just not possible in the absence of an explosion in
productivity driven by something like AI, which creates a whole
host of problems. By the way, for the FED, which
is easing a monetary policy, so I think stimulate demand.
Speaker 2 (05:28):
The culmination of these last three reports, and the last
three that I'm pointing at our this GDP report, the
inflation report for November and October, as well as the
jobs report for November and October, leaves economists kind of
scratching the mixed messages.
Speaker 4 (05:43):
Is the labor market actually weakening as the unemployment rate suggests?
How do you know these are slightly different periods. This
is through Q three. The labor market data we got
was through November, so it's possible that the labor market
may be picked up by a lot in October November,
and we don't know that GDP, excuse me, is overstated,
(06:05):
or that labor market data will be revised. These two
don't necessarily have to square by the way, GDP measures
spending by government, people and business with an adjustment for
net exports, because you don't want to double count them.
So these two don't really measure the same thing, and
we're talking about slightly different periods, but nevertheless a stark,
a starkly different message from the GDP report, which is
excellent than we've been getting from other granted more frequent,
(06:30):
updated more frequently. That is indicators.
Speaker 2 (06:32):
So a number of things that we got recently indicate
a turning point. The turning point on inflation was like
hitting a brick wall in terms of pricing just died.
GDP accelerated in the third quarter, and all of this
would indicate one of a few things. Either we're having
a tough time actually calculating these things and we have
some errors in the methodology that are throwing things off
(06:54):
a bit, or we are hitting some sort of turning
point in this economy, and I think for all of
those reasons, we have to just see what the data
tells us over the course the next few months.
Speaker 4 (07:03):
It's possible there's some sort of productivity there's some sort
of supply side miracle going on. Productivity is increasing, maybe
due to AI or some combination of luck in AI,
I don't know, and that is allowing us to make.
Speaker 1 (07:17):
More with less.
Speaker 4 (07:18):
That would explain exploding GDP growth because it was a
spectacular quarter coinciding with increasing unemployment, because those two things
are weird. That would also explain the relatively quiescent inflation
in October November. It's just weird that in the past
few months everything has exhibited what would appear to be
(07:39):
a change in trend, breaking sharply with the prior trend.
Speaker 3 (07:44):
And not all for the positive.
Speaker 4 (07:45):
By the way, pay rolls are okay. Unemployment rate was bad.
Speaker 2 (07:49):
Yeah, but I have to point that out, like it's
not as though all the data in the last month
and a half trended and said, oh, everything's.
Speaker 4 (07:57):
Great, nothing sinister here. If there was something, if somebody
it was monkey in with the numbers, we would hear
about it. Some PhD statistician at BLS at the department
one of the government calculation agencies would blow the whistle.
Nothing like that at all. It's just it's just very difficult,
given the government shut down to get the typically accurate
(08:18):
and still under best circumstance, best of circumstances, lacking a
read that we would normally.
Speaker 2 (08:24):
Yet, I think I've been taught enough lessons over the
last five years about firsts in this economy that just
because something looks really strange in the moment, as it
does right now, does not mean that it's impossible. You
take a look at all the first that we've experienced
in this economy over the last five years between yield
curven version wasn't to first, but the sam rule breaking
(08:45):
was a first. It was the miraculous disinflation of the
twenty twenty two's. A lot of these things that happened
that really seemed improbable at the moment. I'm just again,
I'm not willing to dismiss this moment as impossible in
terms of it being positive for the economy, but very
very odd and strange to see all these things happening
(09:08):
at the same time. If they continue.
Speaker 4 (09:09):
Economic data, any data that has to be estimated. You
don't know the true population value. You're getting a little sample.
It's like when you do a political poll, they always
say plus. It's the same concept. They say plus or
minus three point three or four or five points. And
all that means is where ninety or ninety five percent
or ninety nine percent sure that the actual value lies
(09:32):
within the number we gave you plus or minus whatever
they said. The margin of error in appolling context is
economic data is similar and that we're sampling, so there's
always possibility of big errors.
Speaker 3 (09:44):
Let's take a quick break.
Speaker 2 (09:46):
When we come back, the economy very clearly avoided a
recession in twenty twenty.
Speaker 3 (09:50):
Five, many Americans still struggling out there.
Speaker 2 (09:53):
We're going to be talking about why why affordability seems
to be the topic. Dujure All that next, along with
trivia on the Financial Exchange.
Speaker 1 (10:01):
Thanks to us six one, seven, three, six, two thirteen
eighty five with your comments and questions about today's show,
and let us know what you think about the stories
we are covering. This is the Financial Exchange Radio Network.
Speaker 5 (10:14):
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Go to dav fivek dot Boston and make your donation today.
That's dav five k dot Boston.
Speaker 3 (11:40):
It's our final day.
Speaker 6 (11:41):
Of Christmas movie trivia here on the Financial Exchange, and
one of the great movie debates is if Diehard is
a Christmas movie. Some say it's just an action movie
set at Christmas time, while others believe it is a
Christmas movie because of the party and the music. Bruce
Willis made his thoughts known during his twenty eighteen Comedy
(12:04):
Central Roast. So our trivia question today, does Bruce Willis
think die Hard is a Christmas movie?
Speaker 1 (12:12):
Yes? Or no?
Speaker 6 (12:12):
Once again, does Bruce Willis think die Hard is a
Christmas movie? Yes or no? Be the third person today
to text us at six one seven three six two
thirteen eighty five with the correct answer along with the
keyword trivia, and you'll win a Financial Exchange Show T shirt.
Speaker 3 (12:29):
Once again.
Speaker 6 (12:30):
The third correct response to text us to the number
six one seven three six two thirteen eighty five with
the correct answer along with the keyword trivia will win
that T shirt. See complete contest rules at Financial Exchange
show dot com.
Speaker 3 (12:45):
Hey, it's Mike here and from the Financial Exchange.
Speaker 2 (12:48):
I just want to wish all of our listeners, uh
from Boston, Cape Cod, Worcester, Providence, Springfield, Pittsfield, Manchester, Portsmouth,
New London, Lebanon, Hartford, New Haven, and we didn't forget
about you, Erie Pennsylvania, a very happy, healthy holiday season,
Merry Christmas, a terrific new Year. Just thank you for
being with us all this year, and best to you
(13:11):
and your families come twenty twenty six.
Speaker 3 (13:13):
Mark.
Speaker 2 (13:15):
We were talking a bit about this piece yesterday and
it morphed into a different type of conversation. But obviously
we did not see a recession in twenty twenty five.
We haven't seen one really since twenty twenty and that
was a quite brief one. I would argue that we
haven't seen a real, deep, prolonged recession since. Oh wait,
you know, I don't think that's there's much to argue there.
(13:36):
That was the last time we saw something truly painful
in terms of a long drawn out recession. Yet we
are seeing more and more data that people are just
unhappy with the state of the economy. Affordability is dominating
headlines the Saint Louis, Sorry, Michigan. What's the survey of
consumers that Michigan does. The other surveys that we get
(14:00):
just indicate people stressed about money, unhappy with the state
of the economy. I'm happy with inflation in the state
of the labor market, and I can understand why. I
also wonder just how bad this data gets if we
have an economy where we're sitting at say, seven percent unemployment, right,
does it do you not see that type of you know,
(14:20):
typical downward trend in sentiment, or do you see it
get even lower than where we are now and set
new lows in that event? But I do hear a
lot of you know, what's the right word, like world
ending concern about the state of things today. And whenever
I hear that, I just I think that people just
aren't good students of history when I hear people that
(14:42):
concerned about where we are today, Because there's always a
period of time that you're living in where there are
some existential questions and concerns about the state of the economy, society,
and the future. And we discuss this and you know,
kind of a silly game of would you rather yesterd
on the show? But is there any time period other
(15:03):
than the one that you were born into or today
that you would prefer to be born because in spite
of all the concerns people have, and I hear people
say it all the time, like, oh, I can't imagine
raising children in today's society, Like.
Speaker 4 (15:15):
Was life better in the past at any point in
the past? Is that another way of answer asking your question.
Speaker 2 (15:19):
Yeah, I mean we focused it more yesterday on you know,
was there any points in time where you would have
a better quality of life, you know, economically.
Speaker 6 (15:27):
Once extra said nineteen seventy if you were born in
nineteen seventy.
Speaker 3 (15:31):
Yeah, pretty good time to be born.
Speaker 4 (15:32):
I mean I was born around nineteen sept plus or
minus nineteen seventy two. So yeah, in this okay, So
I think the way I might the way I understand
your question is what generation in recent like recorded history,
with an emphasis on financial metrics, was able to build
(15:54):
enough wealth to live comfortably on average throughout their lives?
Though you can't you count somebody who came into a
lot of money at the end of their life when
stocks boomed or something like that, because there are always
odd ball examples of markets going crazy or the economy
getting really good, but for only a short period. I
(16:16):
think it is undoubtedly the case that baby boomers, anyone
born between say four I'll just use the the demographic
definition and say forty six to sixty four have probably
have enjoyed the fastest growth in incomes and witness the
fastest growth in asset prices, including home prices, if that's
(16:36):
your measure, and I don't necessarily say that it should be,
but look the answer to that question.
Speaker 2 (16:41):
I say, there weren't challenges, right, I mean, yeah, you were,
were World War two, in great depression?
Speaker 4 (16:45):
There were, But for peace sake, the economy grew by
four percent in the sixties, for for change in the fifties.
For now baby boomers, which we only enter the workforce then, obviously,
but was growing at four percent in the nineteen sixties
nineteen seventies. Everybody wrings their hands about, but we still
got three point roughly one percent real GDP growth, roughly
the same as in the nineteen eighties and nineteen nineties.
So never has a generation had a more favorable economic
(17:09):
backdrop than.
Speaker 1 (17:09):
The baby boomers.
Speaker 3 (17:10):
That's that's just a fact.
Speaker 4 (17:11):
Just look at GDP as you're sort of catch all
proxy for that. So I mean, I'm I don't know
how to answer that question because we know how things
turned out.
Speaker 2 (17:23):
Yeah, yeah, I mean, you know, I could make a
pretty compelling argument for people to grow up in my generation.
They missed the real They weren't participating in the labor
force or the housing market to a large degree when
during the twenty ten during the two thousands decade, which
was pretty pretty rough and tumbled, They've built a lot
of their wealth during one of the largest stock market
(17:46):
return periods in history, and so it is always tough
to see until you look back.
Speaker 4 (17:51):
But yes, though I don't want to diminish the accomplishments
due to the grit of any you know, any generation.
Jobs were also harder in the sixties, and so people
using slide rules for God's sake, to do comp engineers
using slide rules to do big multiplication problems.
Speaker 2 (18:10):
As so, your point would be the jobs were easier
to come by, but tougher to do.
Speaker 4 (18:13):
Unemployment was on average lower, growth was on average higher,
but manufacturing was twenty thirty percent of the economy. Those
jobs were hard. My grandfather was in traction half his life.
He built submarines down at eb was a welder for
those of you listening nationally, that's electric boat in Groton, Connecticut.
(18:35):
He had a tough job. These guys had a drink
on the job just to dull the pain. So seriously,
they weren't all alcoholics. It was like the only way
to get through your damn day, I type on a laptop,
I type a blog, or do some research or some
portfolio work in my day job. They would love to
have had that opportunity, so jobs may have been slightly
(18:56):
easier to come by. You could raise five kids, as
both my sets of grandparents did, without a college education
and doing what today would be considered unskilled labor. And
you could have a decent house. Now that house was
a nine hundred square foot ranch. How they raised five
kids in a space that small, I don't know. But
the financial security is probably more attainable. But life in
(19:16):
many ways was tougher. And of course we're not even
talking about quality of healthcare today, which is nothing short
of miraculous.
Speaker 2 (19:22):
It's a fun debate to have. And if you want
a Texas show at six one seven, three six, two,
thirteen eighty five. We always loved the contributions to these
purely hypothetical ones.
Speaker 3 (19:32):
But I'm with you.
Speaker 1 (19:33):
It is.
Speaker 3 (19:33):
It is with the hindsight in place now difficult to.
Speaker 4 (19:37):
Have you ever had to fix your car because it
broke down? Have you ever had to take the starter up?
I've never had to do it, but everybody could. And
of course they all came out of the war with
that skills. Everybody knew how to fix everything. But I mean,
we have a softer life in many respects.
Speaker 2 (19:49):
We do quick break when we come back. Full Market
update is next with Wall Street Watch.
Speaker 1 (20:09):
Bringing the latest financial news straight to your radio. Every day.
It's the Financial Exchange 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 6 (20:29):
Markets are modestly higher as Wall Street reacts to a
solid third quarter GDP reading, which had been delayed due
to the government shutdown. The reading show the economy grew
at a four point three percent annualized rate, above forecasts
of three point three percent.
Speaker 3 (20:45):
Right now, the Dow is up.
Speaker 6 (20:49):
About a tenth of percent, or fifty five points higher.
SMP five hundred is up two tenths of one percent,
or fifteen points. NASDAK up a quarter percent or sixty
one points higher. Russell two thousand is retreating about a
half a percent. Ten year TREASUREELD is currently at four
point one seven to one percent, mostly flat, and crude
(21:09):
oil edging higher, trading just above fifty eight dollars a barrel.
NOVNORDESK among the bigger winners on the day after the
Danners drug maker said it will begin selling a pill
version of its weight loss medicine we Go Vi in
January after securing approval from US regulator. Shares a rallying
over eight percent. Meanwhile, service Now announced it will acquire
(21:31):
cybersecurity startup Armists and a cash dealer valued at seven
point seventy five billion dollars. The enterprise software company said
the deal will bolster its cybersecurity capabilities in the age
of AI and more than triple its market opportunity for
security and risk solutions. Service Now stock is down about
(21:51):
two percent. Reddit stock is falling about one percent, despite
equities research analysts at need Them and Company adding the
social media platform to its top stock list for twenty
twenty six and as a reminder, markets will close early
tomorrow afternoon at one o'clock. I'm Tucker Silva and that
is Wall Street Watching. In the previous segment, we asked
(22:12):
you the trivia question, does Bruce Willis think Diehard is
a Christmas movie? He said that at a twenty eighteen
Comedy Central Rose His answer, no, No, Diehard is not
a Christmas movie. That according to Bruce Willis, Max from
New Bedford, mass is our winner today taking on the
Financial Exchange Show T shirt. Congrats to Max. We play
(22:34):
trivia every day here in the Financial Exchange See complete
contest rules at Financial Exchange Show dot com.
Speaker 2 (22:40):
Car payments now average more than seven hundred and fifty
dollars a month. Congratulations everybody. We are terrible at buying
cars in this country and continue to prove that to
be the case.
Speaker 3 (22:52):
They make the point that the idea.
Speaker 2 (22:54):
Of a three hundred dollars monthly payment for a new
car is pretty much dead at this stage. And I
do buy that point, because even if you're buying a
thirty thousand dollars car and financing it over six years,
you're still you know, probably looking at four five hundred
dollars per month and a monthly payment, so that the
idea of three hundred dollar payment, especially in today's interestraight environment,
(23:17):
is pretty much behind you. But in this piece they
interview somebody. Where's the uh, where's the quote on the
thirty thousand dollars?
Speaker 1 (23:26):
Oh?
Speaker 3 (23:26):
Yes, Mark, I think.
Speaker 6 (23:28):
It's sound like four or five paragraphs.
Speaker 3 (23:30):
Well, let'm just hold over to find it.
Speaker 2 (23:33):
The average price of a new car broke fifty thousand
dollars this fall, according to Kelly blue Book.
Speaker 3 (23:38):
I got it, okay, hit me, all right, me Tucker.
Speaker 6 (23:41):
So the paragraph reads, one problem is that automakers aren't
making models with the sticker price under thirty thousand dollars, which,
in theory, should present a real opportunity for car for
the car companies, said Heath Bird, CFO of Sonic Automotive,
a publicly traded dealership chain. You've recently told investors and
(24:02):
analysts that until buyers have better options, affordability will become
an even bigger problem.
Speaker 2 (24:08):
So, uh agreed about Like, wait, but you can talk
about that thirty thousand dollars Mark for a minute.
Speaker 3 (24:15):
Mark. I believe that you drive a car that you
purchased and every.
Speaker 4 (24:20):
Other week telling me to upgrade to the same car.
Why anybody would do this, I don't know. And there's
the stickers the same the smell.
Speaker 2 (24:28):
Okay, So I did a quick Gemini search here to
try and figure out is beguiling?
Speaker 3 (24:34):
Hey? Is there any truth to this?
Speaker 2 (24:37):
And I come to the same conclusion we've brought up
every single time, which is there are plenty of cars
that are affordable and reasonable.
Speaker 4 (24:44):
They're small.
Speaker 3 (24:45):
Americans just don't like to buy.
Speaker 4 (24:46):
People laugh at you at stop, like.
Speaker 2 (24:48):
The Nissan Versa, the Kiak Fo, the Honda Civic, Hyundai
Lantra SUPERU, and President Chevy tracks.
Speaker 4 (24:54):
Yeah, the Jed which.
Speaker 2 (24:57):
Car kicks, the Hyundaiona, the Mazda c X thirty, the
Toyota Corolla Crossover. I just listed like ten cars that
are all available for an MSRP of under thirty thousand dollars.
Our problem is not that automakers are squeezing us and
you know, refusing to make affordable cars. Our problem is
that we don't buy them.
Speaker 4 (25:17):
It's a good second car, A compact Sedan is a
good second car. But if you've got two plus kids
who play hockey or something, it would be quite tight.
But it'd be be an okay car for you to
commute to work in, but you know you're driving another
has right, can't you.
Speaker 2 (25:32):
Get something also drive a minivan. They're like the opposite cars.
But that's but, but that's my sense.
Speaker 4 (25:38):
You're buying them for utility, one you commute in and
the other.
Speaker 6 (25:41):
I mean, I'm in this similar camp. Like my wife's
drives cheap Compass and it's a little bit bigger obviously,
but she barely you know, drives it like I do,
where I've a Jetta Sadan, which is like what thirty
miles per gallon mark to get to on the highway
or whatever.
Speaker 2 (25:57):
Maybe so we can continue to go, we can continue
to bemoan the affordability Christ Team Miles when it comes
to cars, but I continue at least with at least with.
Speaker 3 (26:11):
Cars, like with home affordability and other issues.
Speaker 2 (26:15):
I'm willing to say that there's plenty of blame to
go around, but it's still mostly our fault.
Speaker 3 (26:20):
Uh, we like big cars. With cars, it is directly
our fault.
Speaker 4 (26:24):
Americans have always preferred more, more muscle and more space to.
Speaker 3 (26:28):
Less and that's all well and good.
Speaker 4 (26:30):
Like anybody who's been in Europe knows this.
Speaker 3 (26:33):
I happen to be a chiefe with cars and like
to drive junkie.
Speaker 2 (26:37):
You know, uh, not junkie. The Honestif it's a nice car,
it's just your.
Speaker 1 (26:41):
Car is awesome.
Speaker 3 (26:41):
What are you talking about. That's a great car.
Speaker 2 (26:43):
I agree, But you know, I'm not complained about anybody
that doesn't like that car, that wants to drive nicer.
Our problem is that we make terrible financial decisions when
it comes to cars. There's no way that somebody making
seventy thousand dollars a year should be buying us.
Speaker 4 (26:58):
The way the financials are presented to buyers should be illegal.
Most people do not have your level of knowledge of
present value of cash. You've got a little financial calculator
in your head because that's what you do for a living.
Their practices are I'm sorry, but they are. The way
they present monthly payments and so forth is borderline deceptive.
Speaker 3 (27:19):
I don't know.
Speaker 4 (27:20):
I think I understand the math, and I still roll
my eyes when I get to that part of this.
Speaker 3 (27:25):
I don't like that they bury the MSRP. Sorry, I
don't like that they bury the APR. I think that's problematic.
They don't really tell you the interest right up front
they tell you.
Speaker 4 (27:34):
That there is, and I like these guys, they got
to make a living. I get that, but it's not
just borderline deceptive. It's often flat out deceptive the way
they present payments.
Speaker 2 (27:43):
We have a guide this month for December about financial
planning for spouses, and I hesitate to connect this to
car affordability. It's not, but it does remind me of
frequent conversations I have with clients, and specifically you know,
financial planning for spouses, and where we see problems. And
(28:08):
I'll tell you I tend to not see problems from
clients that have a genuine problem with their financial strategy
when both spouses are on the same page, right when
both you know, partners in that team come in and say,
oh yeah, like, I see what you're saying here, we
are spending beyond our capacity and we need to rein
it in and get control over this. That tends to
(28:29):
work pretty well. Where I have seen genuine problems, and
where I've seen financial problems lean to divorce is when
it's hidden, and that seems to be the real problem.
And I think we are all guilty of this to
a degree, myself included, Right, Like I had this conversation
with my own wife recently that you know, I had
(28:50):
just kind of taken a hold of everything, was doing
it all myself, and she wasn't really fully in on
the status of our of our personal finances. And this
guide is not an attempt to provide you marriage counseling,
but it is an attempt to provide a framework for
how you need to be making decisions as a married
couple as you approach retirement. There are a number of,
(29:12):
you know, items that you look at and say, okay,
if there's a significant age gap. I was meeting with
somebody who you know, married couple more than a decade
in age difference, that's a big threshold where you have
to do some extra planning. If you have kids from
separate marriages, if if it's a second marriage, there's all
these added complexities, and this guid attempts to put a
framework around how you should be thinking about it. It's
(29:34):
our guide for December. It's going to get busy in
your household, as I'm sure it already has. If you
want to get your copy, call now at eight hundred
three nine three for zero zero one again all about
retirement and financial planning.
Speaker 3 (29:48):
For spouses. The number once again is eight hundred three
nine three for zero zero one.
Speaker 1 (29:54):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armst wrong guide to specific financial, legal or tax advice.
Consult your own financial, tax into state planning advisors before
making any investment decisions. Armstrong make contact you to offer
investment advisory services.
Speaker 2 (30:10):
All right, so we've already covered that there are in
fact affordable cars out there, people just don't like buying them.
Twenty twenty five was at least in part defined by
a pretty big pivot on the part of automakers. Specifically,
Ford made a massive pivot on its EV plans, and
there's a couple of pieces about it today, you know,
one of them saying that Ford and GM are running
out of time to reinvent themselves. I didn't really know
(30:32):
there was a timing you're going, or anyone asking them
to reinvent themselves. I guess I'm kind of confused on
the premise, right. I think these car companies attempted to
reinvent themselves over the course of the last five years
by pivoting towards electric vehicles. They realized it failed, and
now they're falling back on their traditional profit makers, which
(30:52):
are giant trucks.
Speaker 4 (30:53):
Well, they did make some pretty dramatic lineup changes. They
said we're going to go yeah they failed, were eventually
going to go all well, yeah, eventually we're going to
go all electric. Right, that was the theme past few
years as Ford stopped making passenger cars. It's very hard
to find a Chevy passenger car you can find. So
we did this exercise months ago on the area you
find them in theory but not in fact. And now
(31:15):
the political winds have changed and they're shifting their business
strategy again. You've got to pity them to some extent.
Speaker 2 (31:21):
I mean, there's so I suppose the one area that
I do worry about these companies is whether or not
they can just make a profit in the US car market,
because quite honestly, Ford and Chevy are having a very
difficult time selling their cars anywhere other than the United States.
Speaker 3 (31:36):
And so it's it's virtually always been the.
Speaker 2 (31:38):
Case, and if China continues to make the inroads into
these other markets, then that is a real question, like, hey,
can Ford actually make a profit by just selling cars
in the United States. I think the answer is yes,
and we have enough protection around these car companies that
they are probably too big to fail.
Speaker 4 (31:54):
Well, there's nothing wrong with buying Sedan's from abroad and
buying F one to fifty's and civil Dorados and so
forth that are produced domestically. There's nothing wrong with that.
We're not Ford and GM weren't particularly good. And I
say this as someone who drove two Forwards and several
GM cars. They weren't particularly good at making cars all
kinds of issues. Appearance was not their problem. Generally good
(32:16):
looking cars, yeah, fit and finish, mechanical. You know, after
a year the paint starts peeling off. Stuff like that.
They just couldn't go. Now, that was actually a truck unfair.
That's to be fair anyway. They just couldn't get that right.
So specialize in what they do beautifully yep F one
fifties and Silverados and Dodge I don't want to leave
out Dodge Rams.
Speaker 3 (32:33):
Quick break when we come back. Stack Roulette is next.
Speaker 1 (32:37):
Here The Financial Exchange every day from eleven to noon,
Non serious XM's Business Radio Channel one thirty two. Keep
it here for the latest business and financial news and
the trends on Wall Street. The Financial Exchange is now
live on Serious XM's business radio channel one thirty two.
Face He's the Financial Exchange Radio Network. The Financial Exchange
(32:59):
streams live on YouTube. Subscribe to our page and stay
up to date on breaking business news all morning long.
Face He's the Financial Exchange Radio Network.
Speaker 6 (33:10):
This segment of The Financial Exchange is brought to you
by the US Virgin Islands Department of Tourism. This still
time to book your holiday vacation to Saint Croix, Saint Thomas,
or Saint John. Enjoy one or all three and if
you act fast, you could be in Saint Croix to
experience their cruciing Christmas Festival taking place this December through
early January. We discover the magic of this long standing
(33:31):
tradition with incredible food, music and entertainment. Or just go
soak up the sun, stroll on white sand beaches and
feel the rhythm of the heartbeat of the Islands. The
USVII is America's Caribbean paradise. Plan your winter escape now
at visit USVII dot com. That's visit USVII dot com.
Speaker 3 (33:50):
Hey, it's Mike here on the Financial Exchange.
Speaker 2 (33:52):
I want to wish all of our listeners on Serious
XM a very happy and healthy holiday season, Merry Christmas
and a terrific New Year time.
Speaker 3 (34:00):
Thank you for being with us this year.
Speaker 2 (34:02):
All the best in twenty twenty six, and Mark, what
do you have for us for Stackordlet Today.
Speaker 4 (34:07):
We've been talking about inflation. Apparently, according to government estimates,
came to a screeching halt in October and November. There
are problems with those estimates, sure, but well, taking at
face value, we've been talking this morning about GDP, A
scorching fourth quarter, a third quarter excuse me, GDP number
that's an estimate of how much the economy grew. Jason
(34:30):
Furman writes in The New York Times today. He's a
professor of economics at Harvard, and he was head of
the Council of Economic Advisors Real Don for president. Yeah,
he gives some good advice when it comes to how
how do you evaluate a number that suggest we government
economic data, specifically that suggests the trend may have changed dramatically.
(34:52):
Furman advises as follows when interpreting the macroeconomy, he writes,
it's always best to look across a broad range of
indicator over long periods of time. When a single volatile
data release suggests that the economy is suddenly turned sharply
for better or worse, it's usually wrong. Reality tends to
be smoother, furmin rights, and more moderate. Great advice for
(35:15):
digesting economic data in any environment. The economy doesn't make
big leaps. Typically you should be suspicious of anything that
suggests that it has made a big leap.
Speaker 2 (35:25):
So maybe an off chance that we're at a real
pivot point. More likely we screwed up the measurements.
Speaker 3 (35:32):
More Sorry, these are just estimates. They're going to be wrong.
Speaker 2 (35:35):
Ye been getting asked a lot about what we think
the holiday retail spending pattern looks like. I had the
distinct pleasure of going to the south Shore southshirep Plaza
south Shore Plaza in Braintree, Massachusetts, yesterday, which was a disaster.
Speaker 3 (35:56):
It was like four o'clock and.
Speaker 2 (36:00):
Honestly like a little bit nostalgic walking around to shopping
mall two days before Christmas, So it was it was
a nice visit to a very nice mall and it
was packed. Visa is out with their estimates for holiday shopping,
and when asked this question, I continue to say, guess
what holiday shopping is probably going to bump up somewhere
(36:21):
in the range of two to five percent, one to
four percent, whichever whichever range you want to give, but
you know.
Speaker 3 (36:27):
Mid single digits.
Speaker 2 (36:28):
Visa estimating that US holiday retail spending increased four point
two percent year over year. That is not adjusted for inflation.
So subtracting nearly three percent from that number if you
want to, if you want to estimate how much additional
stuff we got e commerce spending, their estimate jumped by
seven point eight percent. But surprisingly to me, still physical
(36:50):
stores are still capturing nearly three quarters of all holiday
shopping spending according to Visa. So few private companies have
a better read on this type of thing than Visa
does given their business. Electronics in particular, saw a five
point eight percent surge compared to last year, so spending
on electronics don't I don't follow the iPhone cycles, so
(37:14):
maybe that was enough to drive that one up here.
But at the same time as our holiday spending is increasing,
according to Visa, private credit firms are making the decision
to pile into consumer debt.
Speaker 4 (37:31):
They're not coincidentally, right, not.
Speaker 2 (37:33):
Coincidentally, I mean they have a bunch of money that
they're fueling that they need to spend. And yeah, they
are in part contributing reampanies. That's what they're doing, is
they're buying receivables from credit card companies. This big transaction
was in Europe and so might not heavily impact US consumers,
but yeah, they are making borrowing easier for American consumers,
(37:57):
which is nice this time a year for the holiday
shopping season, but is a you know, kind of fun
and dramatic game of musical chairs for whoever it gets
left holding that holding that bag once the music.
Speaker 4 (38:09):
So this is why it's important to pay attention to
what's happened. I know you and Chuck talk about it
a lot, but what's happening in private credit has implications
for spending, and what's happening in private credit is related
to what's happening in equity markets. Buoyant, exuberant markets generally
those make it easier to spend.
Speaker 2 (38:25):
That's all the time we have for today's show. Markets
are in the positive again as we head towards the
Christmas holiday. NASDAC leading the way up four tenths of
a percent, SMP up three tenths of a percent and the
Dow Jones Industrial Average up a little bit more than
one tenth of a percent. Have a great rest of
your day, Merry Christmas, and we will catch you soon
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