Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:20):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is the Financial
Exchange with Chuck Zada and Mike Armstrong, your exclusive look
at business and financial news affecting your day, your city,
(00:42):
your world. Stay informed and up to date about economic
and market trends, plus breaking business news every day. The
Financial Exchange is a proud partner of the Disabled American
Veterans Department of Massachusetts. Help us support our great American
heroes by visiting dav five K dot Boston and making
a donation today. This is the Financial Exchange with Chuck
(01:05):
Zada and Mike Armstrong.
Speaker 2 (01:10):
Kicking off the final week of August here on the
Financial Exchange. That's right, it's almost time to get the
pumpkin spice out and uh head to the apple or chine.
I mean, heck, I gotta start decorating for Christmas.
Speaker 3 (01:24):
In about two weeks, right, I'm surprised you haven't already started, Chuck.
Speaker 2 (01:27):
I've I got the boxes out. I'm kind of eyeing
the situation and seeing, you know, how things look. But
we're still in the planning phase for this year.
Speaker 3 (01:37):
Home depots had twenty foot skeletons out since July fourth.
Speaker 2 (01:40):
So I will say, I was I pop by, you know,
the grocery store yesterday and you walk into Halloween Candi
is just fun center right.
Speaker 4 (01:48):
Now, that's been out for three weeks now, three weeks.
Speaker 2 (01:52):
I guess I just wasn't paying attention before. But I
saw yesterday. I'm like, oh, like yeah, it's I actually
don't think last week in August is that early for it.
Maybe I'm just like skewed by how bad everything's gotten now.
But I kind of sit there and I go, it's
almost September. It's almost one of the year.
Speaker 3 (02:10):
Things where you stop complaining about because we're not going
to change it, right, you know, the the Christmas staff
will be out before Thanksgiving. There is no real Thanksgiving
stuff other than turkeys, and you know, you know, I
guess you can put those out as early as you want,
throw all frozen. But yeah, it's just going to continue
to creep and there's nothing we can do about it.
Speaker 2 (02:28):
I mean, right next to it, right next to the
Halloween stuff, it was you know, Happy Year three thousand
right out there. So we're you know, it's yeah, we're
just we're looking forward to the next millennium. At this point,
it's fine. Let's talk a little bit about the upcoming week.
Last week, for all of the fireworks on Friday, I
do like to point out that the S and P
five hundred right, like it's like, why did we even
(02:50):
get dressed? Like what was the point of all this?
Speaker 1 (02:52):
It was?
Speaker 2 (02:53):
Okay, So we had five days where the market slid down,
and then it recooped all those losses in a single day,
which meant it quite honestly, as I feel, you know,
often about myself, I didn't really need to be there,
you know, like I could have been doing something else,
and it would have been fine. In any case, We're
(03:13):
here this week, and you know, everyone was all hyped
up for Jackson Hole, which is interesting because the Fed
never actually does anything at Jackson Hole. They just talk.
They talk about their policy framework, and so they never
actually go and raise or lower interest rates or change anything.
Speaker 3 (03:28):
Why do we get so hyped up about Jackson Hole
is just because it's pretty.
Speaker 2 (03:33):
They never report on it for weeks ahead of time. No,
because look, it is pretty, but like we don't really
like Davos doesn't get the same excitement, and Davos looks
way nicer than Jackson Hole. It's just the snow on
the trees and everything. You know, Jackson Hole beautiful country.
I've been out there once actually, and the wild thing
is it actually is a hole. Have you have you
(03:55):
ever been there? No, it's just this, it's this these
mountains that surround it three and a half sides, and
it's just this hole in the ground. The interesting thing
the one time I was out there, I was at
the top of the ski mountain and it's kind of
wild because you see planes landing below you because the
airport's in the valley and I've never seen planes land
below me before that, I'm looking at it and I'm going, oh,
(04:17):
that doesn't look good. You shouldn't do it like that,
like because you've just never seen them from above. But
I digress. This week we've got two market moving events. Actually,
we've got Nvidia earnings on Wednesday, and then we've got
PCE data coming out on Friday. The more likely to
be the market moving event is in Nvidia on Wednesday,
(04:37):
just because it's more unpredictable at this point. Quite honestly,
markets have gotten really good at predicting PCE because of
the pass throughs from CPI and PPI, and so it's
rare to have a PCE surprise, whereas in video. I
think there are a few really interesting questions that are
out there, the number one question being is anyone from
(04:59):
China actually buying your chips now that they are allowed
to do so? And to toot our own horn, which
we do love to do here after the Trump administration
reauthorized the selling of this, I said, the funniest thing
that could happen would be if China says, now we're
not interested, And that's exactly what they're saying.
Speaker 3 (05:16):
Right now, you know, supporting evidence that this would be
the H twenty chips that they are able to say
to call it to H two oh to to China.
And there's been reporting that Nvidia has ordered suppliers to
halt the production of those Age twenty chips from China. Yeah,
after a seeming lack of demand. Now obviously pretty early,
(05:36):
and I don't know how much. I don't know how
much to see always even going to address it because
it is so recent in terms of information that I
think the only thing he can say is we're just
not sure at this stage. But he'll have he'll be
asked most certainly about production production halts on these age twenties,
and will certainly be asked about his outlook on China.
And I'm not sure how investors digest that.
Speaker 2 (05:56):
Yeah, So I think that's going to be an open
question there. Obviously. The other piece that I've been wondering
about is you see all of these what are called
the hyper scalers, the guys who are just buying tens
of thousands of these chips. You've seen them upping their
capex estimates for next year yep. And the assumption that
(06:17):
goes in this is that, hey, that means they're upping
the number of chips that they're buying. What if it's
just getting more expensive to build this stuff is a
thought that went through my head.
Speaker 3 (06:30):
The main thing that's been going through my head, Chuck,
is to this point, when it comes to artificial intelligence
and the ramp up of companies like Nvidia, it's largely
been a cash transfer from the biggest tech companies out
there over to another tech company. I can't look at
(06:52):
all this and say, oh, look at all this wealth
creation and productivity creation that's come from the use of
artificial intelligence and the development of these chips. It's largely
been Microsoft and Facebook, Apple to some extent but not
much had a huge amount of cash. They continue to
create more and more cash, and they finally found something
to spend it on that they think is going to
be productive in the future but hasn't been yet. And
(07:15):
so when does that massive transfer of wealth is not
wealth transfer, but massive transfer of balance sheet cash from
these tech behemoths actually produce something profitable. And plenty of
people would argue with me about this. I think you
can point to Meta, for instance, because they have talked
(07:37):
at length about how much AI is revolutionizing their business.
I just would push back on that a little bit.
I just don't think that we have seen it all
that much yet from any of these folks. And so
that's my main question about all of this is, Yes,
and Video has turned into this first or second largest
company in the world based on which day you measure it,
But have we actually seen anything other than a transfer
(07:59):
from one place to another.
Speaker 2 (08:01):
Here's the thing, there's going to be a ton of
growth in AI spending and it's gonna do some really
cool things. I have no doubt about that. The question is,
given the projected spend on an annual basis in order
to actually build these data centers, at what point does
(08:23):
this start to become problematic for the company's financials? And
I which companies they spending? Companies? The guy's building the
data centers and I went through this last week. There's
a guy by the name is of Harris Kuperman who
published this last week. So that this is not an
original thought of mine, but it it kind of puts
some some firm numbers that are out there which are
look right now, next year in twenty twenty six, you
(08:47):
are going to have four hundred billion dollars of data
centers built by these companies on average, the depreciator for
those's gonna happen over a ten year period. The chips
might be three to five years, the facility might be
twenty average, it's ten years in terms of depreciation, which
(09:08):
means that, look, there's things get obsolete and you have
to replace them, like there's a cost associated with doing so,
is basically what it is. So if you've got four
hundred billion dollars that's being built next year, it means
you've got forty billion dollars in depreciation that you got
to account for. Okay, in order to actually get the
money to cover just the depreciation cost, not to actually
(09:30):
make any money, but just to cover the depreciation cost,
you now need forty billion dollars in margin in order
to do so. Well, look, based on what we see
from these companies, you probably need one hundred and sixty
billion dollars in revenue in order to just cover the
depreciation from next year. What happens when you get the
year after and you've got another you know, forty eight
(09:51):
billion dollars. Now you got like ninety billion dollars in
depreciation that you need to cover, and you need what
like one point five trillion dollars in revenue in order
to to do so, you're not gonna get that from AI,
and so at some point, not immediately, No, Michael ever, Michael,
Michael ever, Michael, one point five trillion dollars. To put
(10:11):
this in perspective, that is more like you do the
math on this, and you say, okay, like show me
the revenue from all of these hyperscalers right now. And again,
I'm just talking revenue. I'm not talking anything crazy here.
I'm just talking like, overall total revenue. Microsoft does two
(10:32):
hundred and eighty one billion dollars in revenue right now.
Meta does one hundred and seventy eight billion dollars in
revenue right now. Even if I toss in Apple and yeah,
you're tossing Google. Even if I toss in Google, and
even if I toss in Amazon, I think those are
(10:52):
the only ones that are playing at the scale. If
you look at the total revenue from all of those companies,
it's like one point seven trillion dollars. So we're not
going to get one point five trillion in revenue from
AI on a short enough timeframe to like, yeah, sure,
like fifteen years fromw Okay, that doesn't really do anyone
any good. So the point that Kupperman makes is not
(11:15):
that AI is going to be useless. He thinks it's
going to be really useful, but that the cost of
this development ultimately is probably not going to be supported
by the revenues that generates quickly enough. And it's just
so reminiscent to the dot com body. And this is
what he brings up is, Look, you had these companies
that were like laying all of the fiber optic cable
(11:35):
and building all of the back end. They went out
of business. Now, Microsoft is not going to go out
of business. We're I'm not suggesting that, but they went
out of business. We're still using the fiber today that
they laid twenty five years ago. And the internet is
hugely productive. We can do all kinds of immense productivity
improving things, including using AI.
Speaker 3 (11:55):
All sorts of companies that couldn't have existed without it. Uber, Amazon,
It's current state. None of these could have existed today
without the advent of that groundwork.
Speaker 2 (12:04):
But who today looks at their global crossing stock and says, ah,
I'm glad that I owned that. None of us because
they went out of business, even though they were laying
all the fiber that we use to do everything. You
couldn't listen to our show right now without the fiber
that Global Crossing laid. Yeah, and so this is the
(12:25):
stuff that I look at, which is, hey, it's not
the Microsoft's gonna go out of business. There's too much
else going on there. But at some point investors are
going to look at this and say, hey, where's the beef?
And you can't come back and be like, eh, beyond me,
Let's take a quick break. When we return, let's talk
(12:47):
a little bit more about what Jerome Powell and the
gang said on Friday.
Speaker 1 (12:52):
Find daily interviews in full shows of The Financial Exchange
on now our YouTube page. Subscribe to our page and
get caught up on anything and everything you might have missed.
This is the Financial Exchange Radio Network.
Speaker 4 (13:08):
The Financial Exchange is a proud partner of the Disabled
American Veterans Department of Massachusetts and now's the perfect time
to register for this year's five K at Castle Island
by visiting dav FIVEK dot Boston. The event will saw again,
so if you're interested in participating, now's the time to
reserve your spot, come out and help support our great
American heroes by joining us for the dav five k.
(13:31):
Visit dav fivek dot Boston to register or to make
a donation today. That's dav fivek dot Boston.
Speaker 2 (13:39):
So Mike on on Friday, Powell clearly took a douvish tack.
I know that. The funny thing, and this has been
pointed out by a few people, if you fed Powell's
speech into large language models, they said he was being hawkish.
But every human was like, no, this is dubvish's as heck,
(13:59):
this is what we're doing here, like just a Bloomberg's
own Yeah, LM spit out like, oh this is hawkish.
You plug this into a bunch of them, It's like,
this is hawkish. But actual humans looked at it and went, hey,
this is really duvish.
Speaker 3 (14:16):
And okay, that's something that say something about our bias
or crappy large language models both.
Speaker 2 (14:22):
Yeah, okay, I don't know exactly what, but it says
something about both. Yeah, certainly in any case, the key
line in the takeaway and this is here's why I
thought J. Powell was duvish. I don't care about the FEDS,
you know, policy framework and everything I do. But not
in so far as hey, what does it mean for
(14:45):
things today? For things today, it's very simple. Nonetheless, with
policy and restrictive territory, the baseline outlook and shifting balance
of risks may warrant adjusting our policy stance hard stop. Yeah,
nothing else. It's Pala saying, look, I think we're a
little bit restrictive now. As such, given the data, we
(15:05):
might need to adjust that full stop. Everything else is noise.
It's I is Tucker is a Game of Thrones where
you know, he makes the line like everything before the
butt is BS.
Speaker 4 (15:20):
Couldn't tell you.
Speaker 2 (15:21):
It's some show or movie where they say that. It's like, look,
if you hear the word button a sentence, everything before
the butt, you can basically get rid of this was Hey,
everything before then? Nonetheless, forget about it. It was Game
of Thrones, thank you.
Speaker 3 (15:35):
So let's let's put this in context once again. Twelve
voting members, yes, two of them have felt this way
for the last couple of meetings. It seems ten of
them have not.
Speaker 2 (15:47):
Jase trying to build consensus, Yeah, Jase trying to build
consensus towards that, and which, by the way, is completely justifiable.
I said, going into Friday. You could look at the
Fed's dual mandate stable prices, maximum employment, and you could
say both sides of those are being threatened right now.
(16:09):
If you want to prioritize one set over the other
because you think one is the more immediate threat, I
think you could be justified in going in either direction.
Quite honestly, it's just I'm pretty much saying, look, this
is a toss up, and you're not going to know
until later whether or not you're right on it.
Speaker 3 (16:25):
Yeah, So that's I guess. My main question is if
clearly J. Powell doesn't think it's a toss up, if
he's making this kind of statement, clearly others on the
federal Reserve also don't think it's a toss up. They
are favoring the employment side based on these comments. Sure,
but if I think it's a toss up.
Speaker 2 (16:41):
I'm doing nothing.
Speaker 3 (16:43):
And they are seemingly concluding something different than what you are,
which is they don't think it's a toss up. J
Powell seems to think, or at least our interpretation and
most investors' interpretations of J. Powell's speech, or that they
are now more worried about the employment side. And again,
(17:03):
to speak to what this contextually means is that J.
Powell is worried more about a recession right now than
he is about the economy heating up to the point
of inflation, which is not capitulating to the President, I
would say, is what you're talking about here? And I
bring that up because another piece wrote about it that way,
(17:23):
which is no. I think they are genuinely concerned about
growth in this economy, the poor job market data that
came out over the course of the spring, and they
are now saying, look, our job is to stabilize that
and maintain the stability, and so we think we might need.
Speaker 2 (17:38):
To cut Look, we've talked a lot about FED independence
here on the show. Anyone who looks at the data
in the aggregate and says, hey, this is the FED
doing what the president wants, I don't think that's an
accurate read. Sure, there is convincing data that the labor
market is slowing meaningfully and could become problematic in the
(18:00):
next three to five months. There's also some convincing data
that inflation is starting to pop up back in some
places that we haven't seen it in a little bit,
and that that could become a problem in three to
five months. The FED is weighing this, and maybe it's
sixty forty or seventy thirty, but they're saying, hey, there's
more concern on the employment side here for us, and
(18:20):
that's something that is bothersome. I think that's a completely
reasonable take for them to have at this point. And
I think it's also reasonable that they didn't necessarily do
anything over the last few months. Yet. The other thing
that I'll point out on this, for all of the
talk about you know, hey, was this speech this, or
that they ain't done anything yet. True. Okay, if the
(18:46):
data comes in really hot the next three weeks we
get a hot job support in hot CPI, they're probably
not cutting in September. If we get a month of
job loss and CPI is muted, they might go fifty
bases points in September. I know, we gotta go to
Wallstreet Watch.
Speaker 3 (19:04):
I do want to continue this conversation because I want
to get into how they might be wrong quick Break
Wallstreet Watches next.
Speaker 1 (19:20):
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 4 (19:39):
After a fed fuel rally on Friday, markets beginning of
the week in mixed territory is Wall Street awaits pivotal
and video earnings on Wednesday after the bill, in addition
to an inflation reading on Friday, when the core PC
index is unveiled at the moment that Dow is off
by four tenths of one percent, one hundred and eighty
(20:01):
seven points lower, SMP five hundred is down nearly two
tenths of one percent, Nasdaq edging eleven points higher, Russell
two thousands off by a quarter of a percent, tenyure
treas reeled up three basis points now at four point
two nine three percent, and crude oil up one and
a half percent higher, trading at sixty four dollars and
fifty nine cents A barrel. Big acquisition news in the
(20:24):
beverage space this morning after Currig Doctor Pepper agreed to
purchase the owner of Pete's Coffee JdE Pets for eighteen
billion dollars. Once the acquisition completes, the combined company is
set to separate into two independent US listed Coffee and
beverage firms Cured Doctor Pepper shares dropping seven percent, while
(20:46):
JdE Pete stock is jumping eighteen percent. Meanwhile, Intel stock
is up over one percent on the heels of confirmation
that the US government has taken a ten percent stake
in this struggling chip maker. Elsewhere, furniture stocks taking a
hit following comments from President Trump that his administration would
launch an investigation into imported units. Williams Sonoma down by
(21:09):
over two percent, Wayfair tumbling seven percent, and Our eight
shares are falling by six percent. According to Bloomberg, Tom
of Bravo nearing a deal to acquire call center software
maker Varn Systems, which would value Verarent at about two
billion dollars including debt and shares in American Eagle Outfitters
pulling back three percent after Bank of America downgraded the
(21:30):
stock to underperform. The analyst noted that while the retailer's
Sidney Sweeney ad campaign me boost sales in the near term,
the momentum will be sapped by tariffs. I'm Tucker Silva
and that is Wall Street Watch.
Speaker 2 (21:45):
Mike. You mentioned that you wanted to talk about the
FED and kind of what they what Ja Powell said
on Friday, in the context of was it how will
we know if they're wrong or what could make what
could make them wrong? Yeah, So I want to start with.
Speaker 3 (22:01):
The job market data in the spring turned out to
be really weak and no contact needed.
Speaker 2 (22:09):
It was really quite bad and.
Speaker 3 (22:11):
In any normal environment would probably indicate if it continued
a recession, right. I mean, we had basically no job
creation for three months. That ap April May June timeframe
is when we had like the twenty five thousand, was
it May June July? Either way, we were splitting hairs
would continue The FED I think is right to take
(22:32):
a look at that and say, wow, that that is
an indication of something really not that great. On the
other hand, I know that they are well aware of this.
May June July, May June July. Okay, I thought it
was April May June. It was May June July. The
other side of the context of all this would be
we are currently seeing and have been for a while,
(22:53):
but currently seeing a massive number of baby boomers retire
every single month, combined with one of the largest changes
and net migration in a short time period, actually probably
the largest change in net migration to this country that
we have ever seen, and so at least in the
negative sense, right, Well, I mean from where we started
in twenty twenty three to where we are now. Yeah, well, kids,
(23:15):
I guess where I'm going is like twenty three was
a huge acceleration over where it was previously. This is,
this is probably the biggest deceleration, yes, in migration on
on a net basis, at any point in time for
some estimates of this, just so everybody understands how severe
this is. During the twenty tens decade, we averaged about
nine hundred and seventeen thousand people entering the country on
(23:36):
average annually. In twenty twenty three that was three point
three million, and in twenty twenty four and estimated two
point seven million. YEP for twenty twenty five were estimated
to see net out migration of two hundred five thousand.
Speaker 2 (23:50):
Correct. And so, so how do you judge a labor market?
That is? And this is the tough thing in these.
Speaker 3 (23:55):
Things, right, I don't know how anyone, no matter how
well you are, no matter how much great data you
think you have, can contextualize what that does to a
labor market when you see that.
Speaker 2 (24:07):
Degree of change in migration. And here's how you have
to think about this in terms of what it means
for the labor market. That there are a couple things
that I think we need to work through on this
because economics is hard, yo, is what I come back to.
Here's the first piece. The first thing that I always
like to kind of reset is when we talk about
(24:30):
the number of jobs added each month, you're better off
not looking at the number of jobs and better off
looking at and you're better off not looking at the
number of jobs added and better off looking at the
total number. It makes It makes things cleaner. If you're saying, hey,
on average, there's revisions of seventy thousand jobs each month,
and you normally see like one hundred and forty thousand
(24:53):
jobs added, You're like, well, there's a fifty percent error
on that. The fact is, what the DL is trying
to measure through the BLS is not how many jobs
are at it each month, but just the total number
of people that are working. So that's a great they're
pretty close. So a seventy thousand person ERA one hundred
and fifty million jobs, it's actually pretty darn close. Number one.
The second piece is there's a reason why, like for
(25:16):
all of the talk about like oh, like the jobs
are visioning this and that, there's a reason why the
FED doesn't focus on the number of jobs created. And
the reason why is because the FED cannot create people.
J Powell.
Speaker 3 (25:31):
Well, J Powell can have kids, but you cannot create
enough people to make it statistically. That is, that is
separate from his duties at the FED. Hell, even Elon
Musk can't create enough kids.
Speaker 2 (25:41):
Correct. Okay, that is separate from J. Powell's duties at
the FED as to whether or not he has one, three, five,
or one hundred million kids. Okay, completely separate. What I
mean by this is let's say. Let's say that you
have a labor market that has one hundred people in
it and ninety six of them have jobs. You got
(26:02):
a four percent unemployment rate, and the FED says, hey,
this is great, unemployment's low. If one of the unemployed
people leaves the country just is gone, and now you
have ninety six people working out of ninety nine, did
the labor market get better or worse? Hold that thought,
(26:23):
I don't want an answer yet. Now let's say that
one of the employed people left and now you have
ninety five people employed out of ninety nine because you
lost one job, does that mean the labor market got worse? Well, no,
you still have anunemployment rate of four percent. You just
have one fewer person. Maybe that person died or whatever
(26:43):
other side of the equation. Let's say that you add
a person and they get a job, So now you
get ninety seven people employed out of one hundred and one.
Does the FED need to hike because you added one
job that month or is it just the unemployment rate
is stable? And this is why the FED target's unemployment
is because they can't affect migrations or berths or the
(27:07):
labor force. The FED cannot do that. They just can't,
and so the FED focuses on the unemployment rate, which
does make it interesting that they're talking about cutting here,
because if there's one thing that the unemployment rate has
done this.
Speaker 3 (27:20):
Year, it's nothing. Right, It's been very stable. The unemployed
train four to one, and actually between four one and
a half and.
Speaker 2 (27:26):
Four two and a half. Basically, the unemployment rate right
now is at four point two percent. The unemployment rate
a year ago was at four point two percent and
hasn't gotten over four to three. I think correct. Now.
The interesting thing is that if the labor force participation
rate were the same as it was earlier in this year,
(27:47):
the unemployment rate would be four to nine, would have
gone up by over half a percent. So there are
a couple of ways you can look at this number. One,
maybe the FED thinks that that is not a long
term shift and that the labor force participation rate is
going to go back to where it was, in which
case the unemployment rate's going to a rise just by
(28:08):
virtue of that, and they want to get ahead of that. Yep.
Kind of a reasonable case. But in the context of
a bunch of boomers retiring, not enough gen z is
coming into the workforce to replace them, and a net
outflow potentially of immigration, I don't know how how plausible
that is. So that's the I think this is what
(28:29):
you were getting at in terms of the potential wrong
path for the FED is Hey, maybe they're trying to
view something is transitory that isn't and they think the
labor market's weaker than it is because of that. Yeah,
it's not transitory inflation that they're thinking. It's they're thinking, Hey,
the shift in the labor force is transitory and we
(28:50):
want to get ahead of that, and maybe that the
problem is if they're wrong and we have lower labor supply,
then businesses, even with less demand, still have to compete
for that lower labor supply, and that drives wages up.
Speaker 3 (29:03):
Yeah, my concern would be that the weakness that we
saw in May, June, July was primarily caused by policy
uncertainty from the White House, which there was plenty of
go rill the tape and were maybe about as that
whole Internet conversation we had earlier. We may be on
(29:23):
the cusp of a hiring boom that we just aren't
seeing yet, and it could be occurring into a supply
of labor that is diminishing.
Speaker 2 (29:33):
The counterpoint to this, and again this is why, like,
I think it's totally reasonable to have any view at
this point as to like what you think the Fed
should be doing. The counterpoint to this is that in
the last four weeks, weekly unemployment claims have gone from
two hundred and seventeen thousand two thirty five and are
starting to show signs of ratcheting back up. Yep, And
so maybe the FED should be cutting yep. I don't
(29:56):
think it's unreasonable to either say the FED should be cutting,
doing nothing or hiking at this point right now. Ultimately
whether your good FED or bad FED is gonna depend
on you getting that right. And I don't know enough
looking at the data to be right. Like that's that's
how it is. Yeah, I think there's a reasonable case
(30:17):
for all three. If you told me end of this year,
unemployment's going to be four to seven and inflation is
going to be two five reasonable view. If you told
me unemployment's going to be three to nine and inflation's
going to be three eight reasonable view. If you told
me somewhere in the middle, Hey, unemployment's still four to two,
in inflation's three to three. Yeah, that's reasonable too. I
(30:39):
don't think any of these are off the table, and
that's what makes this point in time so hard and
also why I think the FED is perfectly justified in
doing what they're doing if they have information that they believe. Hey,
labor is you know the bigger threat right now? Take
a quick break here. When we come back, should we
talk about businesses bringing back recession specials? Yeah? Oh, can't
(31:01):
wait to do that right after this business.
Speaker 1 (31:04):
And financial news affecting the markets and your wallet We've
got it all straight from Wall Street right here on
the Financial Exchange Radio Network.
Speaker 2 (31:25):
Piece in CNBC today, businesses are bringing back recession specials.
Apparently this is popping up ball through Google search now,
And I don't know that this actually means anything. Yeah,
why are we so.
Speaker 3 (31:45):
Obsessed with the word because we don't know that what
it actually means.
Speaker 2 (31:51):
Yeah, here's the thing about recessions. When you actually go
through one, they suck. You don't have specials during them.
You see business closures, you see firings, you see stuff
like that. Not hey, the New York coffee shop Clever
Blend having a six dollars gelato and espresso recession special.
(32:15):
You don't make jokes about recession when you're actually in one.
I think is where I would land, right, because they
suck and your friends get laid off and your family,
you know, gets nervous about how are we going to
pay the bills? And I know this is stuff that
a lot of Americans have been feeling for the last
few years anyways, but it's it's different in recession. And
(32:37):
I think that when you actually enter recession, this stuff
goes away because people are too busy trying to figure
out how to survive.
Speaker 3 (32:46):
Not the deals, just the obsession with the idea of
the deals. Yes, like, yeah, when recession happens, yes, certainly,
all sorts of things go on sale and businesses have
to run promotions and cut into their profit markets. They're
too busy to be fun and it's just not terribly
humorous at the time. It's it's kind of funny like
ten years after it sometimes not for the person that
(33:08):
lost their job, but you know, like some of the
things that you look at back then, like oh, Mike
buying his first home in twenty eleven for like two
nickels and a paper clip like that. Yeah, that part
is a little bit funny in context, but not the
guy who lost his job and lost his home back
in twenty eleven.
Speaker 2 (33:24):
I'm a big believer that comedians often have some of
the best insights on this stuff. And I keep going
back on this story too. I think it was Chris
Rock's first CD okay and he goes, how much of
this can you actually say on air? Go ahead? Probably
this is it. He goes, Look, if a homeless person
has a funny sign, he hasn't been homeless too long,
you know, long term homeless people are too hungry to
(33:46):
be funny, is the point that he makes. It's kind
of the same thing with these recession deals. Yeah, if
your business is really struggling, you don't write recession deal.
You're just marking stuff down and laying people off because
you got to survive. And so yeah, I think that's
kind of the situation here.
Speaker 4 (34:07):
A trust isn't just a document. It's a powerful tool
that can help protect your assets from the nursing home
and even reduce or eliminate estate taxes. Cushing and Dolan
our leaders in elder law is state planning and asset protection,
and this month they're offering a free guide called Demystifying
the Top seven Estate Planning Trusts. This guide breaks down
(34:28):
the most common types of trusts, explains the pros and
cons of each, and helps you understand which might be
right for you and your family. Trust come with different rules, benefits,
and tax treatment, and choosing the wrong one could cost you.
Learning the differences now can help you make smarter decisions
for your future and for your loved ones. Trusts are
(34:50):
a critical part of any well designed estate plan, but
they can be complex. Don't guess your way through it.
Get the facts first by calling Cushing and Dolan at
eight six six eight four eight five six nine nine.
That's eight six six eight four eight five six nine nine,
or you can request it from their website legal exchange
(35:12):
show dot com.
Speaker 1 (35:14):
The proceeding was paid for and the views expressed are
solely those of Cushing and Dolan. Cushing and Dolan and
or Armstrong Advisory may contact you offering legal or investment services.
Cushing and Armstrong did not endorse each other and are
not affiliated.
Speaker 2 (35:24):
BJ's Wholesale Club reported earnings, and this was on Friday.
Their shares fell about eight percent on the news. Big
thing is that their same store sales climbed by two
point three percent excluding gas sales, but that was below
the three point two percent increase that was expected, and
so ultimately they ended up reaffirming their guidance for the
(35:46):
rest of the year. But just not enough there. This
is a company. Look, I'm a member myself. I buy
basically all my groceries there because my daughters eat through
more fruit than is humanly possible. But ultimately, you can
only buy so many raspberries in a week. And you
know my question part.
Speaker 3 (36:04):
My question for you, Chuck Bjay's problem or consumer problem.
You've shopped at both Costco and bjays, do you notice
a demographic difference between the two. I'm just wondering, Like,
these are two very comparable companies that do business in
each other's backyards.
Speaker 2 (36:21):
Costco tends to target a higher income consumer a little bit,
so maybe there's something there on that front.
Speaker 3 (36:28):
But I just you know, the temptation is always with Like,
for instance, if you looked at Target and Walmart ten
years ago, you would look at the two of them
and say, okay, both are pretty good indicators of what
the consumer economy is doing. Twenty twenty five, you're looking
at him saying, okay, Walmart has executed perfectly on most things.
Target has executed horrendously on most things, and so not
(36:51):
exactly a good read. And that's kind of my question
is are we faced with a BJ's wholesale club that
is not executing in the same way as it's competitors,
or is an indication that hey, consumers are struggling and
pulling back.
Speaker 2 (37:04):
I don't have an answer. It's hard to tell. Costco
typically targets a little bit more up market, but like
the pricing and selection is pretty comparable across them. So
I look at it and I go, I don't really
know what to make of this. I get the biggest thing,
BJ is a lot smaller, like they don't have the
economy or scale that the costco can get to, and
so they might have some levers that they can't pull
(37:25):
just because they're not available to them. Let's take a
quick break here, but we got our two coming up
in just a little bit.