December 5, 2024 • 38 mins
Chuck Zodda and Mike Armstrong discuss Jerome Powell's comments about the Fed having flexibility on the timing of future rate cuts. Initial jobless claims climb amid holiday volatility. Bitcoin soars past $100,000 on Trump's pro-crypto pick for SEC. DOGE's big ideas include ending remote work and daylight saving changes. France's government collapse does not signal European finicial crisis. Trump tax cuts won't help the economy grow, budget office finds.
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Episode Transcript
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Speaker 1 (00:00):
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(00:43):
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(01:04):
Veterans Development Corporation. This is the Financial Exchange with Chuck
Zaa and Mike Armstrong.
Speaker 2 (01:13):
Chuck, Mike and Tucker with you excuse me?
Speaker 3 (01:16):
Are you okay? No? Was that a duck.
Speaker 4 (01:22):
Man that went down the wrong pipe? Jack, Mike and
Tucker with you here. And as we kick off our
show today, we'll start with a little bit of a
talk on Jay Powell's talk that he gave yesterday at
the New York Times Deal Book Summit. This was uh,
a little bit less explosive than last year when Elon
(01:44):
Musk told advertisers to go f themselves.
Speaker 3 (01:47):
Oh I forgot about that.
Speaker 2 (01:48):
Yeah. This was where that happened, was at the deal
Book Summit.
Speaker 4 (01:53):
So Jay Powell did not tell all Americans, you know,
similar thoughts, but instead the quote that the New York
Times leads with here, we wanted to send a strong
signal in cutting rates in September that we were going
to support the labor market if it continued to weaken.
The economy is strong, and it's stronger than we thought
(02:14):
it was going to be in September.
Speaker 3 (02:17):
Your thoughts, Mike, Well, if that doesn't sum up I
think just about every major market participant and economists since
twenty twenty two. That pretty much well defines it for me, is, hey,
we've been pleasantly surprised by how resilient and strong this
economy is over the last couple of years. So I
(02:38):
guess that lines up with their actions, is Hey, we
thought that this was going to get pretty ugly. We
were relying on things like the Psalm rule, and so
we went with a big rate cut in September. He
goes on further to say that, in so many words,
that the Central Bank can afford to be more cautious
when it considers lowering interest rates going forward. So I
(03:00):
think there's a couple pieces to this one. It still
appears to me that Jerme Powell and the Federal Reserve
is more than willing to cut rates and cut rates
rapidly in the face of economic weakness, but they simply
do not see it right now.
Speaker 4 (03:15):
And it matches up with the economic data that we've
been seeing. The Feds not, you know, sitting there off
in the corner being like, oh, like, here's what we
see and no one else is seeing the same thing.
If you take a look at the Atlanta Fed's GDP
NOW model, which is a now cast, which basically says, hey,
through this part of the quarter, how fast has GDP
been growing? And granted, you know, we haven't gotten a
(03:37):
ton of data yet, we basically have all the October
data is in. We're starting to get some November data.
But remember quarter is how many months?
Speaker 3 (03:45):
Mike three?
Speaker 2 (03:47):
There you go, yeah, And.
Speaker 4 (03:48):
So you know, we're less than a third, We're less
than halfway through all of the data that's been collected.
But the latest update to GDP now which came three
days ago on Monday, has GDP currently clocking in it's
somewhere around three point two percent for the quarter, so
continuing to be pretty robust and in fact accelerating over
(04:09):
the last month of data that we've seen. This matches,
you know, what we've seen since we've been getting this data.
So I think in trying to you know, look at
this and hey, what is the FED going to do,
it seems pretty clear to me, based on the messaging
we've gotten in the last week from other FED members,
they are going to most likely cut at their December
(04:32):
meeting in about two weeks. Beyond that, I think it
is very much an open question as to exactly where
they go and quite honestly, depending on how twenty twenty
five develops. I don't think it's unreasonable to say that
there is the possibility of either cuts or hikes depending
(04:55):
on exactly how things play out tomorrow.
Speaker 3 (04:57):
Chuck. At eight thirty am. We have a jobs report
this morning. We got initial jobless claims which came in
not overly concerning question, few chucks. So expectations according to economists,
according to market Watch, is for two hundred and fourteen
thousand jobs created, unemployment rate ticking up to four point
two percent from the current four point one percent. Yeah,
(05:19):
is there a job creation number that changes the Fed's
mind one hundred k Sorry, I mean towards not cutting
rates at the next meeting.
Speaker 2 (05:29):
Oh, where they wouldn't cut in December? Yeah? Uh yeah,
three hundred and seventy two thousand. Yeah.
Speaker 3 (05:36):
I was at like the four to five hundred thousand
jobs created range, which I think is pretty tough for
us to see at this next report. So you're saying,
if it's one hundred thousand or under, then they are
changing their tune about the strength of this economy.
Speaker 2 (05:50):
I am. And the reason why is the October job's report.
Remember when it came out.
Speaker 4 (05:55):
This was immediately after hurricanes Helene and Milton the southeastern
part of the United States, and the data collection for
this was messy, and hurricanes have this effect just because
again you have to actually collect the data from somewhere.
It's not just that, Hey, we published the report of
like how the job's picture is.
Speaker 2 (06:17):
No, you have to ask people. That's how they go
about doing this.
Speaker 4 (06:20):
And so we said at the time, look, this is
a bad report, but you don't really know what it
is because it's unclear how much of this is due
to the hurricanes, and it's unclear how much of it
is due to actual economic weakness. So we basically said, look,
you give this one a pass.
Speaker 3 (06:37):
By the way, the data on that twelve thousand jobs
created in the month of October was.
Speaker 4 (06:42):
Which is bad, Like if you have twelve thousand jobs
created each month, and remember there are wide ara bans
on this. So just because the government says twelve thousand, hey,
upon you know further revision, it could be minus one
hundred thousand, it could be plus one hundred and ten,
like there's a wide range of where it might actually be.
But twelve thousand, if if we accept that as a baseline,
(07:03):
it is not good.
Speaker 2 (07:04):
It's it's it's not.
Speaker 4 (07:05):
Enough to keep the keep the unemployment rate down. The
unemployment rate would be growing in that case, just because
the labor force is growing faster than that. So the
premise with this report coming in around two hundred thousand is, hey,
we got a bad report in October. The November one
(07:25):
is going to make up for that because it'll correct
for the hurricane plus show the normal job growth. So
you'd expect something probably one seventy five to two fifties
the range I'm guessing if you looked at the actual
distribution of economist projections, it's probably between like one seventy
five and two fifty is where you'd expect this to
come in.
Speaker 2 (07:43):
So I think that if you were to get.
Speaker 4 (07:46):
Something that came in at one hundred thousand, which is
kind of where like job growth has been overall, now
you've got a two month average of you know, fifty k,
which is slow, and that's something that to me says, Okay,
you're going full bore for a cut in December, and
if the data, if the December data is bad, which
will get in early January, you're queuing up another cut
(08:09):
for the end of January pretty quickly as well.
Speaker 3 (08:11):
Yeah, I would agree. There other stuff that was brought
up with drum Powell. He was once again asked and
probably will be asked every single time he speaks between
now in the end of his term, as to whether
the Trump administration will break with norms and chip away
at FED independence, and he has continued to not really
(08:32):
well stand pretty strong on it, I think, is the answer.
He gave an emphatic no, said that the FED was
created by Congress, Congress would need to be the ones
to enact changes to that independence, and pretty emphatically defending
the Federal Reserves independence as significantly different than any government
agency out there. You know, you're talking about new government
(08:52):
appointments for the SEC and things like that, and very
clearly pointing out that this is not that this is
not a government agency, and he won't be, you know,
making any changes in the face of that supposed threat
to his independence. I'm not sure how real it actually is.
Speaker 4 (09:10):
So again, we're gonna have to see what the data
shows tomorrow, because I think this is kind of the
the kickoff again for like what the FED can do
going forward, just because look, we said in October, you
have to throw out any of the data from that
month related to employment, and even a lot of the
other stuff we talked about retail sales. How he had
a lot of stuff frontloaded there because people stocking up
(09:31):
for hurricanes and things. So we're starting to get back
to more normalized data, but even the November stuff is
gonna be somewhat skewed in the other direction. So the problem,
as we noted, is one where hey, you you were
approaching a pretty critical juncture for the FED heading into
the fall, and now we've got kind of this two
(09:53):
month gap where the data isn't going to be as
reliable as we'd like it to be because of SEVI,
your weather disruptions in a heavily populated part of the country.
I mean, you talk about that west coast of Florida
and up through North Carolina. Those are some of the
fastest growing areas of the country, and you've got, you know,
a number of big cities that were impacted, and so
(10:15):
we don't have the most reliable data at a time
where we'd like to have it, and so that's it's
not ideal, but hey, this is the job Jay Powell
has chosen and as such, he has to make decisions
when faced with imperfect data, and that's why they give
him the purple tie.
Speaker 2 (10:35):
Oh that's a gift, you know. I don't know.
Speaker 3 (10:39):
It would be very funny thing to pass on from
fed chair to fed chair and awkward for Janet yelling.
Speaker 4 (10:45):
I think would be fantastic. I think would be absolutely fantastic.
Let's take a quick break here. When we come back,
Bitcoin crossing one hundred thousand dollars per coin overnight, we'll
talk about what it means means after this.
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Speaker 4 (11:57):
Mike Big news overnight with bitcoin crossing the one hundred
thousand dollars mark and then some rising to over one
hundred and three thousand dollars early today.
Speaker 2 (12:09):
The catalyst on this appears to.
Speaker 4 (12:11):
Be the fact that the Trump administration or the incoming
Trump administration, has made their selection for who they want
to nominate for the head of the SEC, and it
is Paul Atkins. What can you tell us about mister Atkins?
Speaker 3 (12:27):
So, he was an SEC Commissioner under President George W.
Bush quite some time ago. Over the last several years,
he has been working for a big company in the
financial services industry. Potomac Global Partners is a financial services
consulting firm, and he's been spending the last several years
advising banks, investment firms on all sorts of regulatory and
(12:50):
compliance matters, but more recently on the subject of crypto
and digital assets, and so generally looked at as a
conservative voice on this front in favor of less regulation.
When it comes to a lot of these things and
called by one who do you get called by? This
(13:14):
former SEC lawyer who runs the Healthy Markets Association described
him as quote the godfather of Republican capital markets policy,
which again, I think if you're to look at and
understand the capital Republican capital markets policy, it would be
very clearly lesser regulation, fewer rules, and adequate disclosure, but
(13:38):
not a whole bunch of heavy handed oversight.
Speaker 4 (13:41):
Can we also just talk about kind of what's going
on in the cryptospace in general right now, because it's
been very bubblicious recently in terms of what we've been
seeing and on some of this stuff, like there is
an interesting case on a lot of like the meme
coins and stuff like that, like all the stuff that's
(14:03):
just complete crap with no like no actual business plan
and no plan to figure out how to make money
in any way, shape or form down the road.
Speaker 2 (14:12):
There's an interesting.
Speaker 4 (14:13):
Case actually that the SEC probably shouldn't be touching.
Speaker 2 (14:17):
Some of that stuff. And and here here's where you
get there.
Speaker 4 (14:22):
It's we've talked about this a little bit before in
terms of what's known as the Howie test, and the
premise of the how we test. It stems from a
case with someone by the name of Howie, and it
basically looks at, okay, is something a security or not?
And there's four criteria that needs to meet in order
(14:44):
for it to be a security. It has to be
an investment of money in a common enterprise with an
expectation of profit to be derived from.
Speaker 2 (14:50):
The efforts of others.
Speaker 4 (14:51):
And the interesting case on some of this stuff for
it not being a security, I'm not saying it is
or isn't. But if you look at this, when you
put any money into one of these coins, yes, it's
an investment of money. So it clears the first part
of the how we test correct yep, in a common enterprise.
I think it kind of gets back to like, what
(15:11):
is the definition of the word enterprise? Like does that
mean that it has to actually be doing something or
does it just mean that it's in something together?
Speaker 3 (15:20):
Yeah, I think you could stretch it to say in
something together. At which point at which point a cryptocurrency
meets that test of pretty much anyone of them does?
Speaker 4 (15:28):
Maybe, But if that's the case, then doesn't invest doesn't
like buying baseball cards meet that criteria? And do you
really want the SEC investigating baseball cards.
Speaker 3 (15:36):
No, likely not, probably not.
Speaker 2 (15:38):
Right with the expectation of profits.
Speaker 4 (15:40):
Sure, someone investing in, you know, a cryptocurrency of any
kind probably thinks, in some cases misguidedly, that there's going
to be profits. So it meets that one to be
derived from the efforts of others. And this is the
one where I think there's a real question because some
of these Again, Mike, do you know how bad it's
gotten in the crypto space these days in terms of
(16:02):
like just how unwritten, just just how memi it is
these days.
Speaker 3 (16:09):
No, I try not to follow it too much, so.
Speaker 4 (16:13):
I gotta fill you in because we're seeing just absolutely
wild stuff. So the derogatory term for a lot of
these meme coins is s coins. Where S is you know,
fill in the blank. Yeah, it was either last week
or the week before, someone literally started a cryptocurrency called
s coin, and the premise of it was that he
(16:36):
was going to literally stay on a toilet until it
reached a certain value. And that was pretty dumb. That
was the entire premise of it. So in this case,
when you look at this, you can't reliably say, in
a lot of these cases that any profit on these
could be derived from the effort of others because there
are no efforts.
Speaker 2 (16:55):
That are actually being undertaken in a lot of cases.
Speaker 4 (16:58):
And so when you're talking about something that is just
so useless and whatever, you kind of say, look, are
we going to like, is there a reasonable case that
we should be trying to protect people from this stuff?
Speaker 2 (17:12):
Maybe not.
Speaker 4 (17:13):
It's more the ones where, hey, there's an actual business
that you know someone's trying to run. And I know
this is almost counterintuitive, but if someone's doing something so
dumb that you know it's dumb and you can tell
as opposed to hey, we're gonna try to run a
legitimate enterprise, do you really want if someone is telling
you upfront it's dumb, does the SEC need to be involved?
Speaker 2 (17:34):
I guess is that the case that you can try
to make?
Speaker 3 (17:36):
Yeah, I think that's a fair test there, Chuck. But
I struggle with how you would apply the Howie test
to bitcoin but not some of these other ones, well,
you know, like other than the lack of seriousness attached
to them.
Speaker 4 (17:51):
Well, I think it is the lack of seriousness because
if there's no effort that's being made to actually make
a profit on these other than just trading them, Like
what are you actually investing in? Is the question that
that you would you would get on this, Like Mike,
if if your friend came to you and said, hey,
(18:12):
give me one hundred dollars because I'm gonna go I'm
gonna go look at birds and I want one hundred
dollars while I look at birds, do you call the
SEC when he doesn't give that back?
Speaker 3 (18:22):
No, So, just.
Speaker 4 (18:24):
Because and I'm not saying that this is or isn't,
I'm just trying. I'm just trying to wrap my head
around where the SEC should actually be involved in this.
And there is like a case to be made. Hey,
if something is so dumb that you just know it's
dumb to begin with, is that like an.
Speaker 2 (18:41):
SEC issue or is it more just Hey, there's.
Speaker 4 (18:45):
Like a criminal fraud complaint and it just goes to
local law enforcement. Yeah, I don't have jurisdictional It can
still be illegal. But who has the jurisdiction is what
I'm trying to get around.
Speaker 3 (18:57):
Right, Yeah, it's a fair question.
Speaker 4 (18:59):
If you're steals one hundred dollars from you, you call
the police, not the SEC. And I guess that's kind
of the case. Like if someone. If you give someone
one hundred dollars online and they run off with who
do you call ghostbusters? Really, it's just because there's so
(19:20):
much dumbness going around right.
Speaker 3 (19:22):
Now, and to fund the SEC adequately to control all
of it would be ridiculous.
Speaker 4 (19:28):
So I don't know what the answer is, but I'm
just trying to mentally wrap my head around all this.
Let's take a quick break on this. When we come back,
we got Wall Street Watch.
Speaker 2 (19:42):
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Speaker 1 (19:42):
Facebook and follow us on Twitter at tf 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 Financially Exchange Radio Network.
Speaker 5 (20:01):
Markets are mostly quiet as Wall Street awaits tomorrow's pivotal
jobs report for the month of November. Right now, the
Dow is down by ninety one points, SMP five hundred
is off by only five points, in the Nasdaq down
by three points. Russell two thousand is off by about
a half a percent, or thirteen points. Ten year treasure
(20:22):
eealed up by two basis points at four point two
to one percent, and crude oil up four tenths of
a percent. Just below sixty nine dollars a barrel. Several
crypto stocks are seeing gains after Bitcoin topped one hundred
thousand dollars for the first time. Micro Strategy shares are
up by about half excuse me, by about one percent,
(20:43):
while Coinbase shares are up by two percent. Meanwhile, shares
in Dollar General down by four percent after the dollar
store chain posted mixed third quarter results where it saw
hurricanes disrupt its business and continued to see customers remain
cash strapped. Another discount retailer, and five Below raised its
fiscal twenty twenty four guidance following strong Black Friday sales.
(21:07):
The company also named a new chief executive after a
six month search. Five Blow stock is up by twelve percent.
American Airlines picked City Group as its sole credit card
provider after months of negotiations. Investors hope the deal will
jolt American to catch up with more profitable competitors. American
(21:27):
shares up by eight percent. Elsewhere, Disney lifted its annual
dividend by thirty three percent to one dollar a share.
This comes after the media giant provided a bullish earnings
outlook last month and also saw another huge blockbuster film
in Mwana II during the Thanksgiving opening weekend, Disney shares
(21:47):
are actually down by half a percent, and American Eagle
Outfitters forecast at a larger than expect to drop in
sales for the holiday quarter and trimmed its annual sales outlook,
sending shares an American Eagle down by thirteen percent. I'm
Tucker Silva and that's Wall Street Watch, Mike.
Speaker 4 (22:06):
We got a piece here from the Journal of Wall Street.
It's titled DOJ's Big ideas include ending remote work and
daylight savings change. So this is the Department of Government
Efficiency that is being headed up by Elon Muskin, Vivic
Roberts Swami. They are going to be meeting with House
and Senate Republicans today talking about the efforts to reduce
(22:30):
costs and things like that. What are these six items
outlined in this piece or at least where do you
want to start?
Speaker 3 (22:36):
I want to start on the most confusing one. How
does eliminating daylight savings time save the government any money
at all?
Speaker 2 (22:46):
I don't know.
Speaker 3 (22:48):
I can't think of a single penny that can be
saved by the US government saying no more daylight savings time.
Speaker 4 (22:54):
Let's see okay. So I ducked a go to it
just now.
Speaker 3 (23:03):
I tell you over at duck duck.
Speaker 2 (23:04):
Go okay from Yahoo Finance.
Speaker 4 (23:06):
This is a piece that was published in November of
twenty eighteen. It says it's estimated the day savings time
costs to the US at least four hundred and thirty million
dollars annually. This is according to a two thousand and
eight report by the Independent Institute. Actually No, that's by
Chimurr and Economics and Analytics. The Independent Institute says that
(23:28):
the cost for changing cocks is as high as one
point seven billion, and that says so widest changing cocks
cost money. The study concluded that sending the cocks forward
can lead to an increase in heart heart attacks, workplace
injuries in the mining and construction sectors, and increase cyber
loafing that reduces productivity for people who typically work in offices.
Speaker 3 (23:46):
So, but no does costs.
Speaker 4 (23:47):
It doesn't appear there's any government cost to daylight savings.
Speaker 3 (23:51):
Furthermore, currently this is regulated by the states. Arizona, for instance,
decides that they don't want to participate in daylight savings,
so they don't. Illinois and Indiana have different time zones
depending on which part of the state you are in,
and parts of Northwest Indiana, for example, say hey, we're
gonna be on Chicago time because we want to be
(24:12):
on Chicago time. I don't get that one, but nonetheless
we can do that aside it actually.
Speaker 4 (24:18):
Is, so there might be like states that override it.
But the Uniform Time Act of nineteen sixty six was
signed into law and it doesn't require that states observe
daylight savings time, but individual states may exempt themselves observe
standard time year round by passing a state law that
(24:38):
would override it, which is what those states have done.
Speaker 3 (24:41):
Again, if I were the dose trying to save money
on save government money, I would stop spending time talking
about this one. But nonetheless, other.
Speaker 4 (24:50):
Areas, I know something fascinating about Ara. Okay, this is
actually fascinating in Arizona. I'm looking at it now. So Arizona,
the state of Arizona, does not serve daylight savings time. Indeed,
Right Navajo Nation, which does occupy land throughout the northeastern
corner of the state, does observe daylight savings time. But
(25:13):
the Hopey Reservation, which is entirely enclosed by Navajo Nation
does not.
Speaker 3 (25:18):
Oh so it's a time zone within a time zone
within a time zone.
Speaker 2 (25:23):
Yes, it's inception for time zones.
Speaker 3 (25:26):
So here's one that I think. Actually, you know another
one where you think, why would that save government money
on the surface, but actually would do so? And I
can get behind this one hypothetically, the end remote work
for federal employees. Just say, universally, this is not going
to be allowed without you know, specific exemptions and exceptions.
Why would that help you cut on spending? Well, forget
(25:49):
about you know whether or not people are efficient or
more efficient or less efficient from home. Just get rid
of all that. If you require everyone to come back
to the office five days a week, you'll have a
bunch of government employees that quit.
Speaker 4 (26:00):
So the issue on this one is do you know
which agency has.
Speaker 2 (26:04):
The highest rate of remote work? No v A. It's
it's huge for telehealth benefits yep.
Speaker 4 (26:12):
And so that's where you could potentially run into some
issues just because you would not be able to provide
the level of care to veterans that you want to.
Speaker 3 (26:19):
Yeah, that'd be a problem.
Speaker 4 (26:21):
So in theory, like there are other places where sure
like you could you could potentially end it in you know,
other agencies. But the other question that you have then is, look,
if we have all this extra space that we're not using,
isn't the easier way to cut cost to get rid
of that space in the overhead could be You know,
(26:42):
I'm not saying either one's right or wrong, but it's
often just not as black and white I think there.
Speaker 3 (26:47):
Yeah, I think you know, there are more than just
cost issues when it comes to remote work for federal employees.
I think about cybersecurity, which, as most people know, our
government is not great at protecting. So yeah, there are
issues there. But yeah, to your point, will it definitely
cut overall government spending? Maybe maybe not generally reducing the
(27:09):
federal workforce would certainly do so if you can put
that one off, there's a call to cut regulations. I
suppose as a kind of knock on effect. If yeah,
you cut the total number of regulations, would you need
fewer people to enforce the existing ones?
Speaker 2 (27:27):
Maybe?
Speaker 4 (27:28):
Potentially, yeah, you would. So these are the things that
are gonna be talked about. Well, we'll see what actually
happens when it gets down to brass tax In terms of, hey,
how are you gonna be you know, building the budget.
What are you trying to look for on that side
of things. That's where this is ultimately going to end
up mattering like Elon Muskin, Vivic Robert Swami can't go
in and just be like, we're getting rid of you.
(27:50):
You and you like you don't even work for the government.
You like, that's not really how any of this works.
But it's gonna be. We're gonna see where they decide to,
you know, size the potential cuts that they're putting in,
and I think we'll know more over the next couple
months here.
Speaker 2 (28:05):
Yep.
Speaker 4 (28:06):
So that's kind of where things stand on that side
of things. Just take a quick break. When we come back,
we're gonna go across the pod. Well that's more of
a British that. What's did either of you take French
in high school? We what's the word for ocean in French? Donno,
We're gonna go across the dunno after this and talk
(28:29):
about what's going on in France with the French government
and a bit of a pickle at the moment.
Speaker 1 (28:37):
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Speaker 4 (29:07):
Mike, can you give us a French summary of what's
going on in France right now?
Speaker 3 (29:11):
No?
Speaker 2 (29:12):
Okay? So here's the deal.
Speaker 4 (29:15):
Because France has a different governmental setup than we do.
It's a parliamentary system, and so the prime minister lost
a no confidence vote earlier this week. The Prime Minister,
Michael Barnier, is not someone who most of us listening
have heard of. We're much more familiar with Emmanuel Macrone,
who is the president. Those are different roles because against
(29:38):
a parliamentary system and it's different. But basically Parliament voted
this week that there is no confidence in the legislature. Effectively,
McCrone stays in his job pretty much until he like
until the next election, which is not going to happen
until next July, or until he steps down where pressure
is going to grow pretty strongly for him to do so.
(30:00):
Here this is the first successful no confidence vote in
the French legislature in over sixty years.
Speaker 3 (30:09):
So coalition of the far left in the far right
that really led this thing.
Speaker 2 (30:12):
It is interesting.
Speaker 4 (30:13):
Interesting, it is And basically if you're wondering like how
this happened, the premise of it is really simple. The
party that's aligned to the right, which is run by
Marine Le Penn, did not have any power in the
current government. The far left had during the elections that
were happening this summer, had aligned with kind of a
(30:35):
center left block in order to get candidates into office
and form a coalition that could could govern. They felt
kind of screwed, rightfully so by the by McCrone who
went back on you know, a whole bunch of things
that he said he was going to do for them.
And so they said, okay, fine, you're not gonna help us.
We're not gonna help you anymore. We're you know, we're
(30:57):
voting to dissolve the government effectively. So this also again
just this is a wild year politically, Like it's again
just stuff that you haven't really seen a whole lot of.
Speaker 3 (31:09):
Uh.
Speaker 4 (31:09):
The three month old government in France is the shortest
tenured in modern French history. Who so again, what we're
seeing is not something that happens very often, and so
the question now is, look, where does France go on this,
and what does it mean for French politics and the
economy going forward, what does it mean for the euro
(31:30):
and the Eurozone. And I continue to say, look, we
are seeing these not to go back to the spring
of twenty twenty because like quite honestly it sucked.
Speaker 2 (31:42):
But when you're seeing the outbreak of.
Speaker 4 (31:44):
A disease, what you see are these little pockets that
pop up in it. And you see it with anything.
If you have kids at school, Hey, the third grade class,
you know, we've got you know, a cold that's running
through there. And then you get a case that pops
up with the same greaters because they played together at recess,
and a couple more cases there, and then someone in
(32:05):
fourth grade you know, comes down with the case and
a couple there, and then all of a sudden you
reach this critical mass and you just see everyone gets
sick at once. This is kind of what we're seeing
geopolitically at the moment.
Speaker 3 (32:20):
I mean, where I just think about the last week.
You've got the the in South Korea, you had Yun
calling for martial law, which was overturned quickly. You've we
had a great time covering that yesterday we've had massive
turnover of many governing parties across the developed world.
Speaker 4 (32:37):
And look at what's going on in Syria right now, okay,
that the Syrian government is being overrun by again a
coalition that doesn't really get along very well. You basically
have like the remnants of ISIS and al Qaeda fighting
alongside Kurtis rebels to get rid of Asad right now.
Like again, you get all kinds of weird stuff going on.
(32:58):
But to this point, you look at all of this
and none of it has you know, fortunately gone to
large scale you know, international conflict.
Speaker 2 (33:09):
Even when you talk about like Israel.
Speaker 4 (33:10):
And Iran, they've lobbed some stuff back and forth with
each other, but it hasn't been in any kind of
continuous flow. And so you've got these things that are
just popping up here, popping up there. But man, like
I I hope I am wrong, but it feels like
(33:30):
you're seeing these pockets popping up. And the one thing
that you are continuing to see everywhere, the center of gravity,
the center of everything kind of it can't hold. It's
everything is kind of being overrun slowly. And then you
just kind of you're kind of just waiting for that
(33:51):
next shoe to drop here. And I if you've bet
on geopolitical risk being a problem for the last ten
to twenty years, it's it hasn't been a good bet
for you because it largely hasn't paid off. And I'm
worried that we've been lulled into a false sense of
complacency that like the last ten to twenty years is
the norm and some of these things might, you know,
(34:13):
get out of hand.
Speaker 2 (34:14):
And I hope I'm wrong, but it.
Speaker 4 (34:17):
Feels a little bit dodgy with some of the stuff
that we are seeing right now.
Speaker 2 (34:21):
And we'll see where it goes.
Speaker 4 (34:23):
But France is just kind of the latest there in
terms of yeah, like nothing seriously has gone wrong here,
but man, you're seeing some unprecedented stuff and you don't
really know how things are going to go from here.
Speaker 5 (34:34):
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Speaker 4 (35:33):
Mike, do you want to talk China or do you
want to talk tax cuts?
Speaker 3 (35:38):
I think we should talk tax cuts because this kind
of fits into some a trend that we've been discussing
over the last several weeks. But it's a piece. Here
is this from the Times, Yes, basically making the argument
and calculations from the CBO that cutting taxes, or at
least keeping the tax rates where they were after the
Trump the first Trump tax cuts is not likely to
(36:01):
have a significant impact on the growth of the economy.
And I find it interesting and compelling only, Chuck, because
you and I have concluded kind of the same thing.
We've talked about the same thing here, which is the
economy is in such a different place today compared to
where it was in twenty sixteen that if you just
implement the same policies from Trump one point zho in
(36:21):
Trump two point ozho, you should not expect the same
exact results here. Now, I think to go and say,
like this, like this piece does that, Oh you know,
raising taxes also won't have any impact at all. I
find that a little bit tougher to believe. I think
most people would look at it and say, look, yeah,
it's not likely to move the needle significantly to the upside.
(36:42):
But raising them is going to have some impact somewhere.
Is probably also true. But it runs right into our
overall theory, which is, hey, the Trump administration is going
to need to do something if they're going to deliver
on their economic promises, and doing so without a tail
risk of inflation. Is going to be challenging.
Speaker 2 (37:03):
Yeah.
Speaker 4 (37:03):
The other place where this feeds in We talked about
this is touch yesterday. But on the inflation side, the
reason that headline inflation is in the mid twos right
now on CPI is because we've had fallen gas prices.
Gas prices have fallen twelve point two percent as their
contribution to CPI this year, and so that has headline
CPI coming in at two six as opposed to core at.
Speaker 2 (37:24):
Three to three. Well, what happens if you have higher
oil prices next year?
Speaker 4 (37:28):
Like, let's say that again, oil moves from seventy bucks
a barrel to seventy eight, and now you've got this
headwind where okay, core inflation is still at three to three,
but headlines at four. What does the Fed do in
that situation when they've cut interest rates, when they've cut
the Fed funds rate to four two five, right, Like,
is there pressure then for them to start raising rates again?
And how does that impact things from a budgetary perspective?
(37:51):
So there's there's some real tail risk in looking at
the incoming administration saying oh, it's just gonna be the
exact same as it was in the first time around.
Speaker 2 (38:02):
For markets and for the economy.
Speaker 4 (38:05):
It's a fundamentally different situation they're entering into, and I
think you need to expect them to behave differently as well,
given the overall situation that we're in right now.
Speaker 2 (38:16):
Let's take a quick break.
Speaker 4 (38:17):
We got hour two coming up in just a little bit.
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Speaker 2 (01:13):
Chuck, Mike and Tucker with you excuse me?
Speaker 3 (01:16):
Are you okay? No? Was that a duck.
Speaker 4 (01:22):
Man that went down the wrong pipe? Jack, Mike and
Tucker with you here. And as we kick off our
show today, we'll start with a little bit of a
talk on Jay Powell's talk that he gave yesterday at
the New York Times Deal Book Summit. This was uh,
a little bit less explosive than last year when Elon
(01:44):
Musk told advertisers to go f themselves.
Speaker 3 (01:47):
Oh I forgot about that.
Speaker 2 (01:48):
Yeah. This was where that happened, was at the deal
Book Summit.
Speaker 4 (01:53):
So Jay Powell did not tell all Americans, you know,
similar thoughts, but instead the quote that the New York
Times leads with here, we wanted to send a strong
signal in cutting rates in September that we were going
to support the labor market if it continued to weaken.
The economy is strong, and it's stronger than we thought
(02:14):
it was going to be in September.
Speaker 3 (02:17):
Your thoughts, Mike, Well, if that doesn't sum up I
think just about every major market participant and economists since
twenty twenty two. That pretty much well defines it for me, is, hey,
we've been pleasantly surprised by how resilient and strong this
economy is over the last couple of years. So I
(02:38):
guess that lines up with their actions, is Hey, we
thought that this was going to get pretty ugly. We
were relying on things like the Psalm rule, and so
we went with a big rate cut in September. He
goes on further to say that, in so many words,
that the Central Bank can afford to be more cautious
when it considers lowering interest rates going forward. So I
(03:00):
think there's a couple pieces to this one. It still
appears to me that Jerme Powell and the Federal Reserve
is more than willing to cut rates and cut rates
rapidly in the face of economic weakness, but they simply
do not see it right now.
Speaker 4 (03:15):
And it matches up with the economic data that we've
been seeing. The Feds not, you know, sitting there off
in the corner being like, oh, like, here's what we
see and no one else is seeing the same thing.
If you take a look at the Atlanta Fed's GDP
NOW model, which is a now cast, which basically says, hey,
through this part of the quarter, how fast has GDP
been growing? And granted, you know, we haven't gotten a
(03:37):
ton of data yet, we basically have all the October
data is in. We're starting to get some November data.
But remember quarter is how many months?
Speaker 3 (03:45):
Mike three?
Speaker 2 (03:47):
There you go, yeah, And.
Speaker 4 (03:48):
So you know, we're less than a third, We're less
than halfway through all of the data that's been collected.
But the latest update to GDP now which came three
days ago on Monday, has GDP currently clocking in it's
somewhere around three point two percent for the quarter, so
continuing to be pretty robust and in fact accelerating over
(04:09):
the last month of data that we've seen. This matches,
you know, what we've seen since we've been getting this data.
So I think in trying to you know, look at
this and hey, what is the FED going to do,
it seems pretty clear to me, based on the messaging
we've gotten in the last week from other FED members,
they are going to most likely cut at their December
(04:32):
meeting in about two weeks. Beyond that, I think it
is very much an open question as to exactly where
they go and quite honestly, depending on how twenty twenty
five develops. I don't think it's unreasonable to say that
there is the possibility of either cuts or hikes depending
(04:55):
on exactly how things play out tomorrow.
Speaker 3 (04:57):
Chuck. At eight thirty am. We have a jobs report
this morning. We got initial jobless claims which came in
not overly concerning question, few chucks. So expectations according to economists,
according to market Watch, is for two hundred and fourteen
thousand jobs created, unemployment rate ticking up to four point
two percent from the current four point one percent. Yeah,
(05:19):
is there a job creation number that changes the Fed's
mind one hundred k Sorry, I mean towards not cutting
rates at the next meeting.
Speaker 2 (05:29):
Oh, where they wouldn't cut in December? Yeah? Uh yeah,
three hundred and seventy two thousand. Yeah.
Speaker 3 (05:36):
I was at like the four to five hundred thousand
jobs created range, which I think is pretty tough for
us to see at this next report. So you're saying,
if it's one hundred thousand or under, then they are
changing their tune about the strength of this economy.
Speaker 2 (05:50):
I am. And the reason why is the October job's report.
Remember when it came out.
Speaker 4 (05:55):
This was immediately after hurricanes Helene and Milton the southeastern
part of the United States, and the data collection for
this was messy, and hurricanes have this effect just because
again you have to actually collect the data from somewhere.
It's not just that, Hey, we published the report of
like how the job's picture is.
Speaker 2 (06:17):
No, you have to ask people. That's how they go
about doing this.
Speaker 4 (06:20):
And so we said at the time, look, this is
a bad report, but you don't really know what it
is because it's unclear how much of this is due
to the hurricanes, and it's unclear how much of it
is due to actual economic weakness. So we basically said, look,
you give this one a pass.
Speaker 3 (06:37):
By the way, the data on that twelve thousand jobs
created in the month of October was.
Speaker 4 (06:42):
Which is bad, Like if you have twelve thousand jobs
created each month, and remember there are wide ara bans
on this. So just because the government says twelve thousand, hey,
upon you know further revision, it could be minus one
hundred thousand, it could be plus one hundred and ten,
like there's a wide range of where it might actually be.
But twelve thousand, if if we accept that as a baseline,
(07:03):
it is not good.
Speaker 2 (07:04):
It's it's it's not.
Speaker 4 (07:05):
Enough to keep the keep the unemployment rate down. The
unemployment rate would be growing in that case, just because
the labor force is growing faster than that. So the
premise with this report coming in around two hundred thousand is, hey,
we got a bad report in October. The November one
(07:25):
is going to make up for that because it'll correct
for the hurricane plus show the normal job growth. So
you'd expect something probably one seventy five to two fifties
the range I'm guessing if you looked at the actual
distribution of economist projections, it's probably between like one seventy
five and two fifty is where you'd expect this to
come in.
Speaker 2 (07:43):
So I think that if you were to get.
Speaker 4 (07:46):
Something that came in at one hundred thousand, which is
kind of where like job growth has been overall, now
you've got a two month average of you know, fifty k,
which is slow, and that's something that to me says, Okay,
you're going full bore for a cut in December, and
if the data, if the December data is bad, which
will get in early January, you're queuing up another cut
(08:09):
for the end of January pretty quickly as well.
Speaker 3 (08:11):
Yeah, I would agree. There other stuff that was brought
up with drum Powell. He was once again asked and
probably will be asked every single time he speaks between
now in the end of his term, as to whether
the Trump administration will break with norms and chip away
at FED independence, and he has continued to not really
(08:32):
well stand pretty strong on it, I think, is the answer.
He gave an emphatic no, said that the FED was
created by Congress, Congress would need to be the ones
to enact changes to that independence, and pretty emphatically defending
the Federal Reserves independence as significantly different than any government
agency out there. You know, you're talking about new government
(08:52):
appointments for the SEC and things like that, and very
clearly pointing out that this is not that this is
not a government agency, and he won't be, you know,
making any changes in the face of that supposed threat
to his independence. I'm not sure how real it actually is.
Speaker 4 (09:10):
So again, we're gonna have to see what the data
shows tomorrow, because I think this is kind of the
the kickoff again for like what the FED can do
going forward, just because look, we said in October, you
have to throw out any of the data from that
month related to employment, and even a lot of the
other stuff we talked about retail sales. How he had
a lot of stuff frontloaded there because people stocking up
(09:31):
for hurricanes and things. So we're starting to get back
to more normalized data, but even the November stuff is
gonna be somewhat skewed in the other direction. So the problem,
as we noted, is one where hey, you you were
approaching a pretty critical juncture for the FED heading into
the fall, and now we've got kind of this two
(09:53):
month gap where the data isn't going to be as
reliable as we'd like it to be because of SEVI,
your weather disruptions in a heavily populated part of the country.
I mean, you talk about that west coast of Florida
and up through North Carolina. Those are some of the
fastest growing areas of the country, and you've got, you know,
a number of big cities that were impacted, and so
(10:15):
we don't have the most reliable data at a time
where we'd like to have it, and so that's it's
not ideal, but hey, this is the job Jay Powell
has chosen and as such, he has to make decisions
when faced with imperfect data, and that's why they give
him the purple tie.
Speaker 2 (10:35):
Oh that's a gift, you know. I don't know.
Speaker 3 (10:39):
It would be very funny thing to pass on from
fed chair to fed chair and awkward for Janet yelling.
Speaker 4 (10:45):
I think would be fantastic. I think would be absolutely fantastic.
Let's take a quick break here. When we come back,
Bitcoin crossing one hundred thousand dollars per coin overnight, we'll
talk about what it means means after this.
Speaker 1 (11:02):
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Speaker 4 (11:57):
Mike Big news overnight with bitcoin crossing the one hundred
thousand dollars mark and then some rising to over one
hundred and three thousand dollars early today.
Speaker 2 (12:09):
The catalyst on this appears to.
Speaker 4 (12:11):
Be the fact that the Trump administration or the incoming
Trump administration, has made their selection for who they want
to nominate for the head of the SEC, and it
is Paul Atkins. What can you tell us about mister Atkins?
Speaker 3 (12:27):
So, he was an SEC Commissioner under President George W.
Bush quite some time ago. Over the last several years,
he has been working for a big company in the
financial services industry. Potomac Global Partners is a financial services
consulting firm, and he's been spending the last several years
advising banks, investment firms on all sorts of regulatory and
(12:50):
compliance matters, but more recently on the subject of crypto
and digital assets, and so generally looked at as a
conservative voice on this front in favor of less regulation.
When it comes to a lot of these things and
called by one who do you get called by? This
(13:14):
former SEC lawyer who runs the Healthy Markets Association described
him as quote the godfather of Republican capital markets policy,
which again, I think if you're to look at and
understand the capital Republican capital markets policy, it would be
very clearly lesser regulation, fewer rules, and adequate disclosure, but
(13:38):
not a whole bunch of heavy handed oversight.
Speaker 4 (13:41):
Can we also just talk about kind of what's going
on in the cryptospace in general right now, because it's
been very bubblicious recently in terms of what we've been
seeing and on some of this stuff, like there is
an interesting case on a lot of like the meme
coins and stuff like that, like all the stuff that's
(14:03):
just complete crap with no like no actual business plan
and no plan to figure out how to make money
in any way, shape or form down the road.
Speaker 2 (14:12):
There's an interesting.
Speaker 4 (14:13):
Case actually that the SEC probably shouldn't be touching.
Speaker 2 (14:17):
Some of that stuff. And and here here's where you
get there.
Speaker 4 (14:22):
It's we've talked about this a little bit before in
terms of what's known as the Howie test, and the
premise of the how we test. It stems from a
case with someone by the name of Howie, and it
basically looks at, okay, is something a security or not?
And there's four criteria that needs to meet in order
(14:44):
for it to be a security. It has to be
an investment of money in a common enterprise with an
expectation of profit to be derived from.
Speaker 2 (14:50):
The efforts of others.
Speaker 4 (14:51):
And the interesting case on some of this stuff for
it not being a security, I'm not saying it is
or isn't. But if you look at this, when you
put any money into one of these coins, yes, it's
an investment of money. So it clears the first part
of the how we test correct yep, in a common enterprise.
I think it kind of gets back to like, what
(15:11):
is the definition of the word enterprise? Like does that
mean that it has to actually be doing something or
does it just mean that it's in something together?
Speaker 3 (15:20):
Yeah, I think you could stretch it to say in
something together. At which point at which point a cryptocurrency
meets that test of pretty much anyone of them does?
Speaker 4 (15:28):
Maybe, But if that's the case, then doesn't invest doesn't
like buying baseball cards meet that criteria? And do you
really want the SEC investigating baseball cards.
Speaker 3 (15:36):
No, likely not, probably not.
Speaker 2 (15:38):
Right with the expectation of profits.
Speaker 4 (15:40):
Sure, someone investing in, you know, a cryptocurrency of any
kind probably thinks, in some cases misguidedly, that there's going
to be profits. So it meets that one to be
derived from the efforts of others. And this is the
one where I think there's a real question because some
of these Again, Mike, do you know how bad it's
gotten in the crypto space these days in terms of
(16:02):
like just how unwritten, just just how memi it is
these days.
Speaker 3 (16:09):
No, I try not to follow it too much, so.
Speaker 4 (16:13):
I gotta fill you in because we're seeing just absolutely
wild stuff. So the derogatory term for a lot of
these meme coins is s coins. Where S is you know,
fill in the blank. Yeah, it was either last week
or the week before, someone literally started a cryptocurrency called
s coin, and the premise of it was that he
(16:36):
was going to literally stay on a toilet until it
reached a certain value. And that was pretty dumb. That
was the entire premise of it. So in this case,
when you look at this, you can't reliably say, in
a lot of these cases that any profit on these
could be derived from the effort of others because there
are no efforts.
Speaker 2 (16:55):
That are actually being undertaken in a lot of cases.
Speaker 4 (16:58):
And so when you're talking about something that is just
so useless and whatever, you kind of say, look, are
we going to like, is there a reasonable case that
we should be trying to protect people from this stuff?
Speaker 2 (17:12):
Maybe not.
Speaker 4 (17:13):
It's more the ones where, hey, there's an actual business
that you know someone's trying to run. And I know
this is almost counterintuitive, but if someone's doing something so
dumb that you know it's dumb and you can tell
as opposed to hey, we're gonna try to run a
legitimate enterprise, do you really want if someone is telling
you upfront it's dumb, does the SEC need to be involved?
Speaker 2 (17:34):
I guess is that the case that you can try
to make?
Speaker 3 (17:36):
Yeah, I think that's a fair test there, Chuck. But
I struggle with how you would apply the Howie test
to bitcoin but not some of these other ones, well,
you know, like other than the lack of seriousness attached
to them.
Speaker 4 (17:51):
Well, I think it is the lack of seriousness because
if there's no effort that's being made to actually make
a profit on these other than just trading them, Like
what are you actually investing in? Is the question that
that you would you would get on this, Like Mike,
if if your friend came to you and said, hey,
(18:12):
give me one hundred dollars because I'm gonna go I'm
gonna go look at birds and I want one hundred
dollars while I look at birds, do you call the
SEC when he doesn't give that back?
Speaker 3 (18:22):
No, So, just.
Speaker 4 (18:24):
Because and I'm not saying that this is or isn't,
I'm just trying. I'm just trying to wrap my head
around where the SEC should actually be involved in this.
And there is like a case to be made. Hey,
if something is so dumb that you just know it's
dumb to begin with, is that like an.
Speaker 2 (18:41):
SEC issue or is it more just Hey, there's.
Speaker 4 (18:45):
Like a criminal fraud complaint and it just goes to
local law enforcement. Yeah, I don't have jurisdictional It can
still be illegal. But who has the jurisdiction is what
I'm trying to get around.
Speaker 3 (18:57):
Right, Yeah, it's a fair question.
Speaker 4 (18:59):
If you're steals one hundred dollars from you, you call
the police, not the SEC. And I guess that's kind
of the case. Like if someone. If you give someone
one hundred dollars online and they run off with who
do you call ghostbusters? Really, it's just because there's so
(19:20):
much dumbness going around right.
Speaker 3 (19:22):
Now, and to fund the SEC adequately to control all
of it would be ridiculous.
Speaker 4 (19:28):
So I don't know what the answer is, but I'm
just trying to mentally wrap my head around all this.
Let's take a quick break on this. When we come back,
we got Wall Street Watch.
Speaker 2 (19:42):
Like us on.
Speaker 1 (19:42):
Facebook and follow us on Twitter at tf 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 Financially Exchange Radio Network.
Speaker 5 (20:01):
Markets are mostly quiet as Wall Street awaits tomorrow's pivotal
jobs report for the month of November. Right now, the
Dow is down by ninety one points, SMP five hundred
is off by only five points, in the Nasdaq down
by three points. Russell two thousand is off by about
a half a percent, or thirteen points. Ten year treasure
(20:22):
eealed up by two basis points at four point two
to one percent, and crude oil up four tenths of
a percent. Just below sixty nine dollars a barrel. Several
crypto stocks are seeing gains after Bitcoin topped one hundred
thousand dollars for the first time. Micro Strategy shares are
up by about half excuse me, by about one percent,
(20:43):
while Coinbase shares are up by two percent. Meanwhile, shares
in Dollar General down by four percent after the dollar
store chain posted mixed third quarter results where it saw
hurricanes disrupt its business and continued to see customers remain
cash strapped. Another discount retailer, and five Below raised its
fiscal twenty twenty four guidance following strong Black Friday sales.
(21:07):
The company also named a new chief executive after a
six month search. Five Blow stock is up by twelve percent.
American Airlines picked City Group as its sole credit card
provider after months of negotiations. Investors hope the deal will
jolt American to catch up with more profitable competitors. American
(21:27):
shares up by eight percent. Elsewhere, Disney lifted its annual
dividend by thirty three percent to one dollar a share.
This comes after the media giant provided a bullish earnings
outlook last month and also saw another huge blockbuster film
in Mwana II during the Thanksgiving opening weekend, Disney shares
(21:47):
are actually down by half a percent, and American Eagle
Outfitters forecast at a larger than expect to drop in
sales for the holiday quarter and trimmed its annual sales outlook,
sending shares an American Eagle down by thirteen percent. I'm
Tucker Silva and that's Wall Street Watch, Mike.
Speaker 4 (22:06):
We got a piece here from the Journal of Wall Street.
It's titled DOJ's Big ideas include ending remote work and
daylight savings change. So this is the Department of Government
Efficiency that is being headed up by Elon Muskin, Vivic
Roberts Swami. They are going to be meeting with House
and Senate Republicans today talking about the efforts to reduce
(22:30):
costs and things like that. What are these six items
outlined in this piece or at least where do you
want to start?
Speaker 3 (22:36):
I want to start on the most confusing one. How
does eliminating daylight savings time save the government any money
at all?
Speaker 2 (22:46):
I don't know.
Speaker 3 (22:48):
I can't think of a single penny that can be
saved by the US government saying no more daylight savings time.
Speaker 4 (22:54):
Let's see okay. So I ducked a go to it
just now.
Speaker 3 (23:03):
I tell you over at duck duck.
Speaker 2 (23:04):
Go okay from Yahoo Finance.
Speaker 4 (23:06):
This is a piece that was published in November of
twenty eighteen. It says it's estimated the day savings time
costs to the US at least four hundred and thirty million
dollars annually. This is according to a two thousand and
eight report by the Independent Institute. Actually No, that's by
Chimurr and Economics and Analytics. The Independent Institute says that
(23:28):
the cost for changing cocks is as high as one
point seven billion, and that says so widest changing cocks
cost money. The study concluded that sending the cocks forward
can lead to an increase in heart heart attacks, workplace
injuries in the mining and construction sectors, and increase cyber
loafing that reduces productivity for people who typically work in offices.
Speaker 3 (23:46):
So, but no does costs.
Speaker 4 (23:47):
It doesn't appear there's any government cost to daylight savings.
Speaker 3 (23:51):
Furthermore, currently this is regulated by the states. Arizona, for instance,
decides that they don't want to participate in daylight savings,
so they don't. Illinois and Indiana have different time zones
depending on which part of the state you are in,
and parts of Northwest Indiana, for example, say hey, we're
gonna be on Chicago time because we want to be
(24:12):
on Chicago time. I don't get that one, but nonetheless
we can do that aside it actually.
Speaker 4 (24:18):
Is, so there might be like states that override it.
But the Uniform Time Act of nineteen sixty six was
signed into law and it doesn't require that states observe
daylight savings time, but individual states may exempt themselves observe
standard time year round by passing a state law that
(24:38):
would override it, which is what those states have done.
Speaker 3 (24:41):
Again, if I were the dose trying to save money
on save government money, I would stop spending time talking
about this one. But nonetheless, other.
Speaker 4 (24:50):
Areas, I know something fascinating about Ara. Okay, this is
actually fascinating in Arizona. I'm looking at it now. So Arizona,
the state of Arizona, does not serve daylight savings time. Indeed,
Right Navajo Nation, which does occupy land throughout the northeastern
corner of the state, does observe daylight savings time. But
(25:13):
the Hopey Reservation, which is entirely enclosed by Navajo Nation
does not.
Speaker 3 (25:18):
Oh so it's a time zone within a time zone
within a time zone.
Speaker 2 (25:23):
Yes, it's inception for time zones.
Speaker 3 (25:26):
So here's one that I think. Actually, you know another
one where you think, why would that save government money
on the surface, but actually would do so? And I
can get behind this one hypothetically, the end remote work
for federal employees. Just say, universally, this is not going
to be allowed without you know, specific exemptions and exceptions.
Why would that help you cut on spending? Well, forget
(25:49):
about you know whether or not people are efficient or
more efficient or less efficient from home. Just get rid
of all that. If you require everyone to come back
to the office five days a week, you'll have a
bunch of government employees that quit.
Speaker 4 (26:00):
So the issue on this one is do you know
which agency has.
Speaker 2 (26:04):
The highest rate of remote work? No v A. It's
it's huge for telehealth benefits yep.
Speaker 4 (26:12):
And so that's where you could potentially run into some
issues just because you would not be able to provide
the level of care to veterans that you want to.
Speaker 3 (26:19):
Yeah, that'd be a problem.
Speaker 4 (26:21):
So in theory, like there are other places where sure
like you could you could potentially end it in you know,
other agencies. But the other question that you have then is, look,
if we have all this extra space that we're not using,
isn't the easier way to cut cost to get rid
of that space in the overhead could be You know,
(26:42):
I'm not saying either one's right or wrong, but it's
often just not as black and white I think there.
Speaker 3 (26:47):
Yeah, I think you know, there are more than just
cost issues when it comes to remote work for federal employees.
I think about cybersecurity, which, as most people know, our
government is not great at protecting. So yeah, there are
issues there. But yeah, to your point, will it definitely
cut overall government spending? Maybe maybe not generally reducing the
(27:09):
federal workforce would certainly do so if you can put
that one off, there's a call to cut regulations. I
suppose as a kind of knock on effect. If yeah,
you cut the total number of regulations, would you need
fewer people to enforce the existing ones?
Speaker 2 (27:27):
Maybe?
Speaker 4 (27:28):
Potentially, yeah, you would. So these are the things that
are gonna be talked about. Well, we'll see what actually
happens when it gets down to brass tax In terms of, hey,
how are you gonna be you know, building the budget.
What are you trying to look for on that side
of things. That's where this is ultimately going to end
up mattering like Elon Muskin, Vivic Robert Swami can't go
in and just be like, we're getting rid of you.
(27:50):
You and you like you don't even work for the government.
You like, that's not really how any of this works.
But it's gonna be. We're gonna see where they decide to,
you know, size the potential cuts that they're putting in,
and I think we'll know more over the next couple
months here.
Speaker 2 (28:05):
Yep.
Speaker 4 (28:06):
So that's kind of where things stand on that side
of things. Just take a quick break. When we come back,
we're gonna go across the pod. Well that's more of
a British that. What's did either of you take French
in high school? We what's the word for ocean in French? Donno,
We're gonna go across the dunno after this and talk
(28:29):
about what's going on in France with the French government
and a bit of a pickle at the moment.
Speaker 1 (28:37):
The Financial Exchange streams live on YouTube. Like our page
and stay up to date on breaking business news all
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(28:58):
Financial Exchange Rate Network.
Speaker 4 (29:07):
Mike, can you give us a French summary of what's
going on in France right now?
Speaker 3 (29:11):
No?
Speaker 2 (29:12):
Okay? So here's the deal.
Speaker 4 (29:15):
Because France has a different governmental setup than we do.
It's a parliamentary system, and so the prime minister lost
a no confidence vote earlier this week. The Prime Minister,
Michael Barnier, is not someone who most of us listening
have heard of. We're much more familiar with Emmanuel Macrone,
who is the president. Those are different roles because against
(29:38):
a parliamentary system and it's different. But basically Parliament voted
this week that there is no confidence in the legislature. Effectively,
McCrone stays in his job pretty much until he like
until the next election, which is not going to happen
until next July, or until he steps down where pressure
is going to grow pretty strongly for him to do so.
(30:00):
Here this is the first successful no confidence vote in
the French legislature in over sixty years.
Speaker 3 (30:09):
So coalition of the far left in the far right
that really led this thing.
Speaker 2 (30:12):
It is interesting.
Speaker 4 (30:13):
Interesting, it is And basically if you're wondering like how
this happened, the premise of it is really simple. The
party that's aligned to the right, which is run by
Marine Le Penn, did not have any power in the
current government. The far left had during the elections that
were happening this summer, had aligned with kind of a
(30:35):
center left block in order to get candidates into office
and form a coalition that could could govern. They felt
kind of screwed, rightfully so by the by McCrone who
went back on you know, a whole bunch of things
that he said he was going to do for them.
And so they said, okay, fine, you're not gonna help us.
We're not gonna help you anymore. We're you know, we're
(30:57):
voting to dissolve the government effectively. So this also again
just this is a wild year politically, Like it's again
just stuff that you haven't really seen a whole lot of.
Speaker 3 (31:09):
Uh.
Speaker 4 (31:09):
The three month old government in France is the shortest
tenured in modern French history. Who so again, what we're
seeing is not something that happens very often, and so
the question now is, look, where does France go on this,
and what does it mean for French politics and the
economy going forward, what does it mean for the euro
(31:30):
and the Eurozone. And I continue to say, look, we
are seeing these not to go back to the spring
of twenty twenty because like quite honestly it sucked.
Speaker 2 (31:42):
But when you're seeing the outbreak of.
Speaker 4 (31:44):
A disease, what you see are these little pockets that
pop up in it. And you see it with anything.
If you have kids at school, Hey, the third grade class,
you know, we've got you know, a cold that's running
through there. And then you get a case that pops
up with the same greaters because they played together at recess,
and a couple more cases there, and then someone in
(32:05):
fourth grade you know, comes down with the case and
a couple there, and then all of a sudden you
reach this critical mass and you just see everyone gets
sick at once. This is kind of what we're seeing
geopolitically at the moment.
Speaker 3 (32:20):
I mean, where I just think about the last week.
You've got the the in South Korea, you had Yun
calling for martial law, which was overturned quickly. You've we
had a great time covering that yesterday we've had massive
turnover of many governing parties across the developed world.
Speaker 4 (32:37):
And look at what's going on in Syria right now, okay,
that the Syrian government is being overrun by again a
coalition that doesn't really get along very well. You basically
have like the remnants of ISIS and al Qaeda fighting
alongside Kurtis rebels to get rid of Asad right now.
Like again, you get all kinds of weird stuff going on.
(32:58):
But to this point, you look at all of this
and none of it has you know, fortunately gone to
large scale you know, international conflict.
Speaker 2 (33:09):
Even when you talk about like Israel.
Speaker 4 (33:10):
And Iran, they've lobbed some stuff back and forth with
each other, but it hasn't been in any kind of
continuous flow. And so you've got these things that are
just popping up here, popping up there. But man, like
I I hope I am wrong, but it feels like
(33:30):
you're seeing these pockets popping up. And the one thing
that you are continuing to see everywhere, the center of gravity,
the center of everything kind of it can't hold. It's
everything is kind of being overrun slowly. And then you
just kind of you're kind of just waiting for that
(33:51):
next shoe to drop here. And I if you've bet
on geopolitical risk being a problem for the last ten
to twenty years, it's it hasn't been a good bet
for you because it largely hasn't paid off. And I'm
worried that we've been lulled into a false sense of
complacency that like the last ten to twenty years is
the norm and some of these things might, you know,
(34:13):
get out of hand.
Speaker 2 (34:14):
And I hope I'm wrong, but it.
Speaker 4 (34:17):
Feels a little bit dodgy with some of the stuff
that we are seeing right now.
Speaker 2 (34:21):
And we'll see where it goes.
Speaker 4 (34:23):
But France is just kind of the latest there in
terms of yeah, like nothing seriously has gone wrong here,
but man, you're seeing some unprecedented stuff and you don't
really know how things are going to go from here.
Speaker 5 (34:34):
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Speaker 4 (35:33):
Mike, do you want to talk China or do you
want to talk tax cuts?
Speaker 3 (35:38):
I think we should talk tax cuts because this kind
of fits into some a trend that we've been discussing
over the last several weeks. But it's a piece. Here
is this from the Times, Yes, basically making the argument
and calculations from the CBO that cutting taxes, or at
least keeping the tax rates where they were after the
Trump the first Trump tax cuts is not likely to
(36:01):
have a significant impact on the growth of the economy.
And I find it interesting and compelling only, Chuck, because
you and I have concluded kind of the same thing.
We've talked about the same thing here, which is the
economy is in such a different place today compared to
where it was in twenty sixteen that if you just
implement the same policies from Trump one point zho in
(36:21):
Trump two point ozho, you should not expect the same
exact results here. Now, I think to go and say,
like this, like this piece does that, Oh you know,
raising taxes also won't have any impact at all. I
find that a little bit tougher to believe. I think
most people would look at it and say, look, yeah,
it's not likely to move the needle significantly to the upside.
(36:42):
But raising them is going to have some impact somewhere.
Is probably also true. But it runs right into our
overall theory, which is, hey, the Trump administration is going
to need to do something if they're going to deliver
on their economic promises, and doing so without a tail
risk of inflation. Is going to be challenging.
Speaker 2 (37:03):
Yeah.
Speaker 4 (37:03):
The other place where this feeds in We talked about
this is touch yesterday. But on the inflation side, the
reason that headline inflation is in the mid twos right
now on CPI is because we've had fallen gas prices.
Gas prices have fallen twelve point two percent as their
contribution to CPI this year, and so that has headline
CPI coming in at two six as opposed to core at.
Speaker 2 (37:24):
Three to three. Well, what happens if you have higher
oil prices next year?
Speaker 4 (37:28):
Like, let's say that again, oil moves from seventy bucks
a barrel to seventy eight, and now you've got this
headwind where okay, core inflation is still at three to three,
but headlines at four. What does the Fed do in
that situation when they've cut interest rates, when they've cut
the Fed funds rate to four two five, right, Like,
is there pressure then for them to start raising rates again?
And how does that impact things from a budgetary perspective?
(37:51):
So there's there's some real tail risk in looking at
the incoming administration saying oh, it's just gonna be the
exact same as it was in the first time around.
Speaker 2 (38:02):
For markets and for the economy.
Speaker 4 (38:05):
It's a fundamentally different situation they're entering into, and I
think you need to expect them to behave differently as well,
given the overall situation that we're in right now.
Speaker 2 (38:16):
Let's take a quick break.
Speaker 4 (38:17):
We got hour two coming up in just a little bit.
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