Episode Transcript
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Speaker 1 (00:00):
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(01:06):
and Paul.
Speaker 2 (01:07):
Lane, Chuck, Paul and Tucker with you today.
Speaker 3 (01:12):
And obviously the big focus.
Speaker 2 (01:14):
For us is going to be drum Palell out in
Jackson Hall talking about his view on the US economy.
At a little bit after ten am this morning, the
text of his speech that he is going to give
was published, and you know, we've gotten some of the
details that have come out. Again, the FED puts this
(01:37):
up on their website promptly at ten am, even though
he has not yet actually spoken the words. But the
big thing and the thing everyone's focused on is one
key sentence here, which is it's about two paragraphs. I'm
sorry about four paragraphs in we'll quote here. Overall, while
the labor market appears to be in balance, it is
(01:58):
a curious kind of balance that was from a market
slowing in both the supply and demand for workers. Okay,
you acknowledging both sides there. The unusual situation suggests that
downside risks to employment are rising, and if those risks materialize,
they can do so quickly in the form of sharply
(02:18):
higher layoffs and rising unemployment. The market interpreting this saying hey,
all systems go for the FED to begin a cutting cycle.
And so what you have is you've got stocks rallying
strongly on that news, the S and P five hundred
up about seventy five points, about one and a quarter
percent on that news. There you've got bonds rallying on
(02:42):
that news as well, the ten year treasury down five
point five basis points to four point two seven seven percent.
And so basically it looks to be that unless we
get surprised by some inflation numbers to the upside UH
in the next few weeks, or unless we have, you know,
some kind of conclusive shift to the upside in the
(03:04):
jobs numbers, it looks like the Fed is set to
begin a cutting cycle in September, which, as we laid
out tomorrow, is a completely defensible position for the Fed,
one that still has some questions, but the labor market
has enough questions in it as well that you can
defend them starting to begin a cutting cycle in a
(03:25):
few weeks.
Speaker 4 (03:26):
Here, as someone who on yesterday's show made a prediction
with you that in Nvidia's earnings would move the market
more than the Federal Reserve speech a little frustrated by
the market action, But the two words that I really
took away you mentioned some of the coverages. You know,
conditions may warrant an interest rate cut. That is other
(03:49):
verbiage that was used by drum Powell in this speech.
And you take a look at the market action that
we're seeing s and P. Five hundred round in the news.
I did not think that he would be perhaps this telegraphed,
not to say he said there was going to be
a rate cut, but there certainly was a lot of
ammo here that was pushing towards that direction. I had
(04:09):
looked at the CME futures, which do a probability assessment
for rate cuts heading into next month's meeting in the
middle of September, that percentage that probably had come down
quite a bit over the course of the last week
or so, from upwards of eighty five percent down to
seventy percent. As early as this morning, that probability now
sits at seventy five percent, so five percent jump just
(04:32):
within the matter of the last half hour.
Speaker 2 (04:34):
So that hasn't even updated, by the way, is it
more that's running on a delay, So okay, there's a
fifteen minute delay there, so we won't even see.
Speaker 4 (04:43):
That that says at a fifty five Okay, Yeah, so
it's very likely is going to be even higher than that.
And that was just a five percent move there, and
perhaps more than that when that delay gets updated. So
certainly markets are rallying on the news and something that
(05:03):
you might be able to take your victory lab my man.
Speaker 3 (05:06):
Not yet.
Speaker 2 (05:07):
Again, we have yet to see much trading today, so
we'll see how this ends up playing out here. The
funniest possible outcome would be that we end up closing
flat on the day.
Speaker 3 (05:17):
And look, that's a possibility.
Speaker 2 (05:18):
I mean, I could see this market rallying and the
S and PN's up, you know, one hundred and twenty
five points day. I could see ending up flat, just
because you know, people think about this a little more
and say, okay, like what does this actually mean? I
want to read a few more quotes here just that
kind of give the full picture, the power's full speech.
It also gets into their monetary policy framework, and we
(05:38):
can get to some of that, you know, as we go.
But ultimately, the thing that people really care about here
and now is hey, what's you know, the potential impact on.
Speaker 3 (05:46):
The US economy. So another quote here.
Speaker 2 (05:50):
It's also possible, however, that upward pressure on prices from
tariffs could spur a more lasting inflation dynamic, and that
is a risk to be assessed and managed. One possibility
is that workers who see their real incomes declined because
of higher prices, demand to get higher wages from employers,
setting off adverse wage price dynamics. Given that labor get
(06:11):
the labor market is not particularly tight and faced increasing
downside risks, that outcome does not seem likely. So right
here Pal talking about again something I think he listened
to our show earlier this week because he's he's basically no,
I mean, look, he's basically saying the stuff that we said,
but pretty much one of the things we outlined is, look,
(06:33):
is there a possibility that you see a wage price
spiral because of lower supply in the labor market. Maybe,
but he's basically saying, look, I think the labor market's
weak enough that employees and workers don't have enough bargaining
power to get the higher wages that would cause a
wage price spiral. It's a again, it's an open question,
(06:53):
but Powell laying down his mark saying no, I don't
think that's going to be a problem. And finally, this
is where I think it all comes together. Is in
kind of one of his last paragraphs in this section,
putting the pieces together, What are the implications for monetary policy?
(07:13):
Ok he tells us right here, It's like, okay, here
it is in the near term risks to the risks,
risks to inflation are tilted to the upside, and risks
to employment to the downside. A challenging situation. Again, as
we outlined yesterday, thanks for listening to the Showjay. When
our goals are intentioned like this, our framework calls for
us to balance both sides of our dual mandate. Our
(07:35):
policy rate is now one hundred points closer neutral than
it was a year ago. In the stability of the
employment rate and other labor market measures allows us to
proceed carefully as we consider changes to our policy stance. Nonetheless, nonetheless,
and again it's kind of hey when someone says, but
everything before the butt doesn't really matter. Nonetheless, with policy
(07:55):
and restrictive territory, the baseline outlook and the shifting balance
of risks may warrant adjusting our policy stance. Pretty much
saying look, I think we're gonna need to cut rates
now he hedges a little bit with that, may warrant
instead of does warrant. But it seems like this has
a doubvish tilt to it at the moment, because the Fed,
(08:16):
in trying to balance these is saying, hey, we're more
concerned about unemployment going up and staying up than inflation
going up and staying up.
Speaker 3 (08:26):
Whether that proves to be right, I don't know where it's.
Speaker 2 (08:29):
It's gonna, you know, be a year or so before
we know if that's the right decision. Again, this is
not something where like you see this you know tomorrow,
Hey this worked, or hey this didn't.
Speaker 3 (08:39):
But Powell is.
Speaker 2 (08:40):
Clearly laying down a marker saying, yeah, this is what
I think is going to happen here, and I think
that we're gonna need to start cutting rates as a
result of it.
Speaker 4 (08:49):
It's interesting, I believe when they released the Fed Minutes,
the larger concern was inflation that they mentioned there, and
now sort of shifting gears and focusing on the labor market.
Is that we have that accurate.
Speaker 3 (09:01):
It's kind of a head fake.
Speaker 2 (09:02):
It is because a couple a couple of days ago,
it was a more hawkish interpretation that was rolled out
in the Fed Minutes. This more dubbish there so it
was kind of a head fake that we we got
a couple days ago. I don't know that that necessarily
means anything, and I do come back to another thing
that we talked about earlier this week, which is, look,
(09:22):
when when push comes to shove, Powell has tended to
operate in a more dubvish fashion when faced with different
questions out there, and this is right in line with it.
I think it's fully defensible. I don't think it's anything
where you look at it and say, hey, the Fed
is you know, off their rocker on this based on
the information that's out there now. And certainly, look, if
(09:43):
we get to December and there's no rise in unemployment
and inflation's continuing to move up, the Fed's gonna have
to answer some questions then. But let's get to December
and see if that's actually a problem. Before we we
you know, say oh gee, they they blew it on this.
I think the Fed's been pretty darn good for the
last couple of years, and I think they've earned the
right to make this decision based on the data that
(10:05):
they're seeing and what's out there in the aggregate right now.
Speaker 4 (10:08):
It is worth noting that I mentioned that the FED
meeting minutes were released that was from about three weeks ago,
and you mentioned the headfake there. The same thing could
happen in the other direction. We have two really important
economic reports that will come out before the September seventeenth meeting.
We're going to get the jobs report for the month
of August on September fifth, and then we're going to
get the inflation report on September eleventh. So those two
(10:31):
will have a tremendous amount of influence on the final decision.
But like we said, all indications at the moment and
based on where the market reacting that perhaps they would cut.
But there's always that chance for a changing course depending
on what we see from those two economic courts. So
I think that's important to mention too.
Speaker 3 (10:49):
Let's take a quick break here.
Speaker 2 (10:51):
When we come back, let's dig in a little bit
more on what Powell speech said and talk a little
bit more about previewing that September meeting.
Speaker 1 (11:02):
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Speaker 3 (11:55):
Paul, what else we.
Speaker 2 (11:56):
Have from Powell's speech that you want to touch on.
I know we've got a September meeting that we'll get
to as well, but anything from the pale speech that
caught your.
Speaker 4 (12:05):
Eye, certainly. He also addressed something that we had previewed
earlier this week on the program about the importance of
FED independence, and I quote, FMOC members are going to
make these decisions, interest rate decisions and other decisions based
solely on their assessment of the data and its implications
for the economic outlook and the balance of risk. We
(12:25):
will never deviate from that approach, something that many punnits
thought would be mentioned as part of his speech. He
didn't specifically address the White House, but certainly sort of
made that resounding claim that the importance of the Fed's
independence is critical for the Federal Reserve. And this is
his last speech, like we've talked about, so making sure
(12:46):
that he did address that particular subject.
Speaker 2 (12:49):
So this brings us to the obvious topic of Okay,
you've got this September meeting, and what are we going
to see there? See me now pricing in a ninety
one point three percent chance that we see a rate
cut at the September meeting, This up from seventy five
percent yesterday, and so it seems to be basically full
(13:11):
steam ahead for hey, when we get to that September meeting,
which is gonna be September seventeenth. So you know, you
go look at the calendar and you say, okay, it's
about four weeks from now a little bit less than that,
but about four weeks from now, and really the questions
are going to be, Okay, what data do we get
in the interim that can matter there, because quite honestly,
(13:31):
like durable goods orders next Tuesday, sure, I like to
see it just to see what's going on, but ultimately
not material to the Fed's decision making process for September.
The ones that are gonna matter piece of E Price
Index comes out next Friday, August twenty ninth, That obviously
is going to be a big one. The following Friday,
(13:53):
September fifth, we have the August Jobs report that is
going to be coming out. That is going to be
a big one. As we go deeper into September, we
get out to September tenth and eleventh, where we've got
producer Price Index and consumer Price Index for the month
(14:14):
of August. Taken together, you can usually get a pretty
good sense of what PCE is going to be for August.
So I think in looking at this, those.
Speaker 3 (14:23):
Are the releases that I have highlighted.
Speaker 2 (14:26):
Obviously, you could also highlight weekly jobless claims, but there's
no one report that matters. It's gonna you know, be hey,
is there a change in trend that happens over the
next three to four weeks. But PCE Jobs, CPIPPI, and
you could throw jobless claims in as well. Those are
the key things to watch over the next three and
(14:48):
a half weeks. Because they're the only ones that have
the chance of changing where FED policy goes at that
September meeting.
Speaker 3 (14:56):
Is that a fair assessment, Paul.
Speaker 4 (14:57):
Fair assessment?
Speaker 3 (14:57):
I agree?
Speaker 2 (14:59):
So how could they end up changing things? Let's let's
talk first, kind of things stay the same. If we
get a jobs report where I don't know, call it
fifty to one hundred thousand jobs created, unemployment stays at
four to two, and the inflation data all you know,
comes in, you know, zero point three percent month over months, still,
(15:21):
you know, like nothing crazy. The FED is probably cutting
in that case, just because that's what we saw this month,
and they, you know, basically committed Powell basically committed them to, yeah,
we're gonna have to start cutting.
Speaker 3 (15:34):
If that's still the case, if we.
Speaker 2 (15:37):
See job growth pick up, Let's say that we go
to one hundred and fifty thousand jobs added. Again, at
the FED doesn't really look at jobs added, They look
at the unemployment rate. But let's say the unemployment rate
drops to four to one and core CPI goes up
to point four. Okay, that that throws a little bit
of a spanner in the works, right, you know, like
(15:59):
that's that's a little bit of a risk there that, Okay,
maybe the FED doesn't cut in that case if if
the unemployment rate moves down and inflation the pace of
it increases. That's the kind of thing where the FED says, no,
we're not doing this. On the other side of the ledger, Hey,
let's say the jobs picture worsens, unemployment moves up to
(16:21):
four three or four four, and course CPI comes in
point two. You might have a fifty basis point cut
on the table there, right, you know, like that that's
the possibility as well. So I think the base case
now is clearly, hey, FED wants to start some kind
of cutting cycle. But as we get more data, even
(16:42):
in the next three weeks, it's going to inform as
to hey, are they really gonna kick it off in
September or do they need to turbo charge it in September.
That that's kind of the open question now.
Speaker 4 (16:51):
Yeah, Basically, to summarize those three scenarios that you laid out,
the only way presumably you would see them not cut rates.
And again we're just you know, a couple of guys
in our chairs, just just chatting away. Is this idea that.
Speaker 3 (17:06):
You're standing up actually in your chairs.
Speaker 4 (17:09):
You're standing up. You're always sitting down when you do
the show.
Speaker 3 (17:12):
I'm just not tall. Okay, God, I'm sitting actually.
Speaker 4 (17:15):
I'm in my chair. I just want to give me
a hard text is that we're gonna have for all
the listeners out there, Chuck is sitting, We're if you
have a tremendous jobs report, really like, that's kind of
the the one that I come back. If they just
blow it out of the water and unemployment decreases, probably
is the only way you know that you'd see potentially
(17:36):
this cut be off the table from what we know today.
Speaker 2 (17:40):
And when we talk about unemployment decreasing, remember there are
two different ways that you can have that happen. The
first is through a significant amount of jobs added. The
second is through the labor force shrinking. One of those
obviously has you know, better implications than the other.
Speaker 3 (17:55):
I mean, look in theory again.
Speaker 2 (17:57):
Here's here's our hypothetical world where we've got a hundred
people living in a country and four of them are unemployed.
If one of those people moves out of the country
or leaves the labor force, or however it happens, and
now you only have three out of ninety nine that
are unemployed, the unemployment rate did go down, Did the
economy materially improve?
Speaker 1 (18:18):
No.
Speaker 2 (18:19):
On the other hand, if we have one hundred people
in the country and four are unemployed and one of
them gets a job and we go from ninety six
to ninety seven people employed, hey, that's a material improvement
in the economy. But these both represent a shift from
basically four percent to three percent unemployment, but with different implications.
And this is another thing that Powell got at here,
(18:40):
which is, look, if the labor supply, if labor force
growth is slowing as a combination of baby boomer retirements
and reduced or even to like shrinking immigration, you know,
negative immigration potentially happens, then you have a case where, yes,
the unemployment rate might not move, but it still might
(19:01):
be bad for the US economy because you don't have
as much labor to do the stuff that you want,
and you don't have as much spending power in order
to buy the things that people normally buy because you
have fewer people working. And as such, Powell I think
is viewing that as a downside risk to the economy,
even if unemployment stays flat. And that's kind of interesting.
(19:25):
Let's take a quick break. When we return, it's Wall
Street Watch.
Speaker 1 (19:41):
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 More.
Speaker 5 (20:00):
Markets are reacting favorably to fit Chairman Jerome Poll's speech
from Jackson a Hole about half an hour ago, where
Powell left the door open four rate cut next month,
citing the rising risks for the labor market. Right now,
the Dow everything is actually rallying right now at the moment,
DOO is up one point seven percent er seven hundred
and seventy two points higher, SMP five hundred is up
(20:22):
nearly one and a half percenter ninety three points higher.
Tech heavy Nasdaq up one point seven percent or three
hundred and sixty seven points, Rustle two thousand up three percent,
Ten year treas reeled down five basis points at four
point two seven to seven percent, and crude oil mostly
flat today. Let's see here. According to report from the
(20:45):
Information and Vidia told suppliers to halt some production of
its eight twenty chips after Chinese authorities push companies to
avoid the product. Furthermore, in Video is also reportedly having
conversations with the US government about shipping a more advance
chip to China, and Video shares are up nearly one percent,
with their earnings on tap for next week. Meanwhile, tax
(21:07):
preparation software company into It said it expects sales growth
between fourteen and fifteen percent in its current quarter, below
growth forecasts expected by Wall Street analysts. Into Its stock
tumbling six percent on that news. Elsewhere shares and Ross
Stores up one percent after the discount department store chain
(21:27):
reported a rebound in sales in July. Ross also said
terror related costs hadn't pinched profits as much as it expected.
Workday following four percent after the human resources software company
said revenue climb thirteen percent, just above street expectations, and
Zoom Communications raised its full year outlook following the strong
(21:50):
second quarter, sending shares in the video conferencing platform up
by nine percent. I'm Tucker Silva, and that is Wall Street.
Speaker 2 (21:58):
Watch else that you want to add, that's federlated. I
know we spent the first couple of segments today discussing
Powell's Jackson a whole speech and the ramifications here, anything
else you want to add on that.
Speaker 4 (22:11):
The last thing in this was pretty much going this
was well known probably going into this, is that he
did a sort of mia culpa on their previous policy
stance where they were going to let inflation run past
their two percent target, reversing course on that, just saying
that having that framework in place from what we saw
in twenty twenty one makes, you know, makes no sense
(22:34):
from a framework perspective.
Speaker 2 (22:36):
So talk about this piece from the Wall Street Journal. Then,
the biggest retailers are thriving in the teriff economy, And
basically what it's talking about is that companies like Walmart
and Amazon and TJX, because of their scale and relationships
with suppliers and things like that, they are trying to
offer deals to consumers in ways that smaller companies might
(22:57):
not be able to because they don't have the financial
or so just to go resources to be able to
pull it off. And so there's a lot of data
nowt pointing to these companies scooping up market share from
smaller retailers. Uh, and not great news for smaller retailers,
but for these guys, a way to continue consolidating market
share under their umbrellas.
Speaker 4 (23:16):
I do worry about that, Chuck. Obviously, the intention behind
some of these tariffs in place is this idea of
bringing back manufacturing to the United States and certainly more
of a focus on bolstering the US businesses. But what's
probably lost is that the size and scale of Walmart
and Amazon and TJ Max and these types of retailers,
(23:37):
they have that flexibility that you're talking about from a
supplier side that a local mid size or small business
doesn't have. And I just worry that the unintended consequence
of some of these tariffs is just to creating more
value to these big behemoths that have the ability to
withstand increased in their prices versus the local mom and
pop shop that's a clothing retailer, for example, or others
(23:59):
out there. So it's certainly something to follow. And for
the stock market perspective, yeah, it's nice that Walmart and
Amazon and TG max are doing well, but for just
that middle America mid market, it's something that we need
to follow as hopefully not an untended consequence of all this.
Speaker 2 (24:18):
I want to move down to talk about what I
think is a big story, and there have been a
few of these in the last week or so, and
I just I'm starting to get a little bit edgy
again when it comes to AI here. So, this one
from Bloomberg was originally reported by The Information, who I
looked into trying to get the the report directly from
(24:39):
the Information and apparently you need to pay like seven
hundred dollars a year to subscribe. So I said, no,
I'm not gonna do that. Instead, I'll just read the
Bloomberg report of the report from the Information, and Vidia
Corporation has instructed component suppliers, including Samsung Electronics and Amcore
Technology to stop production related to the H twenty AI chip.
The Information report, it's saying, unidentify, I'd swored sources.
Speaker 3 (25:01):
Now.
Speaker 2 (25:01):
The H twenty chip is the one that in Vidia
specifically builds for China. It was also the one that
back in the spring, the Trump administration said, no, you
can't send that to China.
Speaker 3 (25:12):
Actually we're not going to allow.
Speaker 2 (25:13):
It, and then reversed course several months later in July
when they did, I mentioned, and Tucker can pull we
don't use tape anymore. Whatever it is that we use.
The ones and zero's the hard drive. However it works
you can pull the tape. And I said at the time,
wouldn't the really interesting thing be if China said, hey,
thanks for allowing those shipments, but we don't want them anymore.
(25:37):
And lo and behold, that's actually what China is doing now.
And so it's clear to me that in Vidia is
underwater on these chips that they're producing, because the Chinese
government is pretty much told domestic companies, hey, don't buy
any of these H twenty chips if you can avoid it.
And so in Vidia is now trying to spool down
production on those and this in conjunction with again just
(26:01):
a bad quarter for semiconductor earnings in general. I mean,
you go down the list, and whether it's applied materials,
whether I mean like you can go through like the
whole Semiconductor Index, applied materials, whether it is ASML, broad Com, AMD, Micron,
Texas instruments, like, you go down the listen it was
(26:23):
generally every other day it was oh, semiconductor company XES
down ten percent. And yeah, the chat GPT five release
maybe a week or week and a half ago. Now
that's been panned fairly universally by lots of different people
and lots of different groups, and I wonder if we're
(26:45):
reaching an inflection point on this. But the counter to
that is, hey, there have been times where we've thought
that before and it hasn't mattered at all. But this
is kind of a clustering of data points where I
look at and go, oh, this is kind of interesting.
I wonder, you know what this looks like three to
fo more months from now.
Speaker 4 (27:01):
We'll get in Vidia's arnings report next Thursday. It is
worth noting that they did take a five and a
half billion dollar right down when it was initially announced
that these Age twenties were not going to be able
to be shipped back in the spring. The stock probably
did rally a bit. I can't remember the performance offhand
when the announcement came out that they would resume shipping
those Age twenties. So ultimately it'll be interesting to see
(27:23):
if Nvidia has any commentary in terms of what they anticipate.
There was initially some hope that they would claw back
some of that five and a half billion that they
had ridden down from the sale of these Age twenty chips.
It also now seems like they're trying to pivot to
utilizing a different chip to replace this age twenty to
be sold to China. But it is incredible of any
(27:46):
nation out there that is one in particular with China,
that can stop on a dime and really make a
significant influence to shutting off orders in quick you know,
quick fashion.
Speaker 3 (27:58):
Yeah.
Speaker 2 (27:58):
I mean, look, when you're in authoritarian regime, you can
basically do whatever lot different that you want as long
as you have you know, the capability there. The question
to me is what does China want in order to
buy these chips? Because it's clear that they obviously want
to be able to import them, otherwise they wouldn't have
been to this point. The question that's out there is
(28:21):
what does China want from the United States in order
to reauthorize, you know, the buying buy Chinese companies of
these chips. And I don't know the answer to that,
but it's not one that fills me with a great
deal of you know, happiness in my heart. It's probably
not something that the US would want to give up.
And so I sit there and I say, I hope
(28:41):
that you know, the Trump administration is not trying to
you know, just benefit in Vidia to you know, push
the stock price higher. And I hope that there's you
know something that they're willing to say. Hey, no, we're
not going to do this just so that Nvidia can
sell these chips into China. We're gonna have to see
what it looks like.
Speaker 4 (28:59):
And then the government take fifteen percent cut of those chips.
Speaker 3 (29:01):
That's where they do they do.
Speaker 2 (29:04):
Let's take a quick break here and when we return,
how long can the stock market prosper?
Speaker 3 (29:12):
Who knows? Let's not do that. Do we want to
talk about roth iras?
Speaker 2 (29:18):
Yeah, I think roth iras could be a fun thing
to talk about, So let's do that when we return
on the Financial Exchange.
Speaker 1 (29:25):
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(29:45):
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Speaker 3 (30:03):
Paul, we got a piece here in Bloomberg Today.
Speaker 2 (30:06):
It's titled how to maximize your roth ira and retire
Rich Well does maximizing your wroth IRA mean that you're
going to retire rich Paul.
Speaker 4 (30:16):
Not necessarily, but certainly it can provide some tax advantages
in the future. Ultimately, the major benefit with a roth
IRA is it gets the same tax deferred treatment that
an IRA or four on K would, but when you
withdraw those earnings and those proceeds later in life, after
fifty nine and a half, they come out tax free,
(30:36):
which is a real fantastic benefit that they have. Basically,
you pay the taxes upfront to contribute to these roth
iray vehicles, but after they grow for however many years
you've been invested for, then you get to withdraw the
gains tax free. So they certainly have tremendous advantages if
you're able to set them up appropriately.
Speaker 2 (30:57):
Check what kind of limitations are there in terms of
who can contribute, how much you can contribute.
Speaker 3 (31:03):
Things along those lines.
Speaker 4 (31:04):
Yeah, so there is an income cap on contributions. So
for those who are single filers, the income ceiling is
one hundred and sixty five thousand. For a married couple
it's two hundred and forty six thousand. So if you
exceed those thresholds, you are unable to do roth IRA contributions. However,
many retirement plans out there for employers do offer a
(31:26):
WROTH for OH one K, which is not subject to
those income limitations. And if you want to go really
down into the weeds, you can also facilitate a backdoor
roth IRA contribution. That is, when you do a non
deductible IRA contribution and then immediately take those funds and
can convert them over to ROTH. You do want to
(31:48):
make sure that you're talking with a tax advisor when
you go with those approaches, because you don't want to
have an existing IRA in place before you're trying to
do that roth IRA back door there.
Speaker 2 (31:59):
Yeah, I think you can get pretty complicated there, so
it's always something where you want to chat with a
licensed accountant before going in that direction. Quite honestly, before
making any retirement account contributions, you probably want to speak
with an accountant just to make sure you understand whether
you're contributing to the right type of account, whether you
should be upping your contributions, contributing to different types of accounts.
(32:22):
There's a lot, you know, that can go on there,
But ultimately, I think when we talk about this in
the context of financial planning, Paul, I'm a big believer
in having, you know, kind of a balance of different
types of accounts so that depending on your needs and
the time when you need the money, you have the
ability to tap different sources. Having funds that are across
WROTH I array traditional and even after tax brokerage gives
(32:44):
you some flexibility to pull from different account types depending
on your tax situation in any given year.
Speaker 4 (32:50):
It's great to have that three stooled approach, like you're
talking about tax defer, just regular investment accounts and the
WROTH bucket to pull from for any listeners that they're
One of my bigger regrets from just my early career
is not knowing about roths earlier for those you know,
grandkids that you have out there for your kids, particularly
when you get that first job out of college, you're
not making a lot of money oftentimes, and the utilization
(33:14):
of a ROTH four u K where you're paying the
taxes up front when you're not earning a lot and
then allowing for that tax free growth over time is
something that I look back on that I wish I
knew more before when I was younger starting my career.
Speaker 2 (33:26):
Folks, if you've got questions about roth I rays or
other types of retirement accounts. Armstrong Advisory Group is available
to assist with those questions. Phone number to call is
eight hundred three nine three four zero zero one. We've
got offices all through the New England region to sit
down and explore what types of retirement accounts can make
sense for you and your specific financial situation. Because again
(33:50):
everyone's different, there's no one size fits all approach to this.
That number again to schedule a consultation is eight hundred
three nine three four zero zero one. Again, that is
eight hundred three nine three for zero zero one.
Speaker 1 (34:06):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial, tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 3 (34:22):
Paul, when's the last time you've been to a chili's? Who?
Speaker 4 (34:24):
I'd say, probably six or seven years ago was the
last time.
Speaker 2 (34:29):
I gotta say it's been longer than I can't even
think of the last time that I went to a
chili's and It's not because I have like any hard
feelings about like Chili's or anything like that. It's just
not something that you know, kind of has has clicked
for me in recent years. And so it was surprising
to me earlier this year when I saw that Chilis
was seeing, you know, same store sales growth of north
(34:51):
of thirty percent in Q one and just like Monster numbers.
Speaker 3 (34:56):
I mean even like there.
Speaker 2 (34:58):
When you look at their parent company, Brink International, their
net income for the full fiscal year more than doubled
from the prior year. And we've talked to Lent about
how restaurants in general are having a tough time right now,
and Brinker is largely cranking because of Chili's. And so
what Chili's is gonna be doing here, they are going
(35:19):
to be paying out bonuses at two hundred percent of
their corporate workers' target rates because the profits are so
good and they want to pay out bonuses to those
corporate workers. I'm sure, you know, maybe when it comes
to store managers and things like that, you might see
some things as well there, but Chili's just absolutely cranking
(35:42):
right now. And I gotta be honest, that's not something
that I thought I would be saying in twenty twenty five.
Speaker 4 (35:47):
I can't reiterate how rare that it is chuck on
when we cover these types of companies in the fast
casual sort of space, like Darden restaurants or other there like,
to have this type of sales growth that they've seen
is just out of this world. It's something that I
never could have envisioned that something has established as Chili's
could have its highest sales and most profit for a
(36:07):
fiscal year since nineteen eighty four. I do hope that
it does trickle down to the store managers and the
waitress and waiters staff at some of these Chilis here.
I hope these bonuses aren't just tethered to the corporate workers,
because ultimately a lot of this is done kind of
in the trenches at the ground four level two. So
hopefully they get some pass through. Because these numbers are
(36:29):
just so out of this world. You got to take
care of the people who are really doing the work
on the front line for you there too.
Speaker 3 (36:35):
Yeah.
Speaker 2 (36:36):
Absolutely also found a little bit of interesting data from
the Bureau of Labor Statistics. Nothing that is like earth
shattering or that's going to impact the economy in any way,
shape or form. But they conduct on an annual basis
their Current Employment Statistics Survey. Actually it might be every
(36:57):
six months. I don't know, to be honest, but one
of the questions that they ask people is, hey, how
frequently do you receive a paycheck? And I thought this
was just kind of interesting just to see the distribution
of when people get paid. Paul, what do you think
is the most common pay period?
Speaker 4 (37:16):
You gotta go with the every two weeks. It seems
like that's the most common.
Speaker 3 (37:19):
Bi weekly is correct?
Speaker 2 (37:20):
Forty three percent of workers get paid on a bi
weekly basis. What do you think is the next most
common weekly?
Speaker 3 (37:28):
Correct?
Speaker 2 (37:28):
Again, twenty seven percent of workers. Paul, you're up to
seventy percent. Now, what is the next most common way
that people get paid?
Speaker 4 (37:35):
Monthly?
Speaker 3 (37:36):
No?
Speaker 2 (37:37):
Incorrect, Paul, I'm sorry, Yes, semi monthly, Tucker, thank you
for scooping that one up at nineteen point eight percent.
And finally, monthly is ten point three percent of workers.
I realize this adds to one hundred point one percent,
but that's obviously because of some rounding that they do here.
But I found this interesting just to finally see, like, hey,
how often do people get paid. The monthly number I
(38:01):
thought was actually higher than I thought. I mean, quite honestly,
I can't imagine going a full month between paychecks like that.
That just seems kind of like a lot, like no
thank you, I need something along the way just to
make sure I feel okay. But yeah, about ten percent
of workers get paid on a monthly basis. We're gonna
take a quick break now, but a whole lot more
(38:22):
coming up on the Financial Exchange