October 7, 2024 • 35 mins
Chuck Zodda and Mike Armstrong discuss the Florida migration being undone. Third-quarter earnings are upon us. So are worries of slower growth. Carrying a credit-card balance has gotten way more expensive. Americans are spending more time at home. A trend that started well before the pandemic.
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Speaker 1 (00:00):
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(01:04):
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Speaker 2 (01:13):
Chuck, Mike and Tucker with you, kicking off the second
hour of the Financial Exchange. Markets some negative movement today,
nothing huge, but the Dows off one hundred and eighty
six points about half a percent. SP five hundred down
twenty two points, about four tenths of a percent, and
the Nasdaq down ninety two points about half a percent
as well, so retracing some of Friday's gains. But nothing
huge that we're seeing there. Bond's the tenure Treasury up
(01:36):
four basis points to four point oh two percent, back
above four percent for the first time, and I don't
know what he's think about four to six weeks, Yeah,
something like that. We've got oil today continuing on its
upward move, up a dollar sixty five a barrel to
seventy six oh three. Another two percent ump up there,
and triple a the national average four Gas prices starting
(01:57):
to move up just a touch, but it was falling
all through the weekend. We're now now at three seventeen
and four tenths of a cent. That's up one tenth
of a cent over yesterday, still well below a week ago,
where we were about four cents higher. A month ago
we were eleven cents higher, and midsummer we were about
thirty three cents higher. So overall oil prices moving up,
but gas prices not really budging at the moment. And
(02:19):
we've got gold today with no real movement down four
dollars and twenty cents an ounce to twenty six sixty
three and sixty cents an ounce. Piece from the Wall
Street Journal here that I think is going to be
a major story for the next decade, which is the
Florida housing market. It's titled the Great Florida Migration is
(02:43):
Coming undone and specifically talks about look in particular, the
last few years you saw this huge influx of people
down to Florida. And the premise was fairly straightforward on this,
depending on you know who you were and the age
and everything. Cost living in Florida typically lower than in
the northeast or on the West coast. Great weather year round,
(03:06):
it's warm, it's sunny, you've got all kinds of available lands,
so the cost of building housing or buying housing was
relatively affordable. And hey, everyone's doing it, so join in
because it's it's great.
Speaker 3 (03:21):
And for you know, a specific also wealthy group across
the northeast. The tax friendliness of the state played a
compelling role too, right. Sure, you know, if you're worth
half a million dollars, it's not going to make a
big difference. But if your work worth half a billion dollars,
then residing in Florida makes a hell of a difference.
Speaker 2 (03:38):
So you know, in terms of the trend that we saw,
look it was it was very pronounced in like twenty twenty,
twenty twenty one, twenty twenty two. But you're starting to
see some signs of problems here. And there are a
few different issues that you have. The first is the
state's insurance market is completely broken, and that's not an exaggeration.
Speaker 3 (04:02):
So as of August of twenty twenty four, Citizens Insurance,
which is Florida's state run insurance company, had one point
two five million policies in force. In August twenty nineteen,
which was just five years ago, Citizen Insurance only had
four hundred and twenty thousand policies active. The population of
(04:23):
Florida has not tripled in five years, No the number
of insured, the number of homes that are now insured
by the state's insurer of last resort has tripled.
Speaker 2 (04:32):
And if you look at what that means, look the
insurer of last resort, the money has to come from somewhere,
which means, hey, absent any federally funded taxpayer bailout, it
pretty much means that state taxes would have to go
up if that state insurance fund is exhausted. So you've
got two real problems that have now come to the forefront,
(04:55):
which is the insurance pricing is just nutty. In Florida.
You could talk to just about anyone who's been there
for more than five years and they'll tell you that
their insurance premiums on their home have probably somewhere between
doubled and quintupled, depending on the exact person that you're
talking to and where they live. So that's made the
housing market way less affordable just as a result of, Hey,
(05:19):
how much those costs have gone up. On top of it,
you've got this question out there, Okay, if I am
on that state insurance policy, what happens if we get
hit in an area where there are a ton of
claims in the state can't afford to pay them.
Speaker 3 (05:34):
Now, by the way, again, I know we're gonna get there,
But other than Miami area, Miami Dade County, Palm Beach,
Brower County, the hurricane that's bearing down right now is
bearing down in the second most populated area of the
state of Florida, and thereby I mean I'm looking right now.
You can go Google a map of insurance policies that
(05:56):
are on Citizens Insurance company. But unsurprisingly, other than like
I said, Miami Dade County, Palm Beach County, Broward County,
the highest concentration of policies is in Pinellas County, Hillsborough County.
Speaker 2 (06:08):
Which is Saint Pete, and Tampa, which is right in
the path of Hurricane Milton that is going to be
coming through in the next few days. So you're starting
to see this thing where, hey, it's becoming cost prohibitive
to move there. And this is, by the way, without
even factoring what's happened to home prices, which between twenty
seventeen and twenty twenty four, home prices doubled in the
(06:31):
state of Florida, So it's no longer as affordable as
it used to be. You still get hey, there's no
state tax state income tax or anything like that, so
you still have some benefits. I'm not trying to say
like Florida is all bad, but from a financial perspective,
a lot of people who move down there are finding
it tougher to stay down there because the costs have
(06:53):
moved up way faster than in other parts of the country.
Speaker 3 (06:56):
Yeah, I don't know that the math changes a lot
if you're still looking at it from eastern Massachusetts or
the New York City area. Right if you're doing the
math on that move, it's still making a lot of sense,
albeit a lot less sense than it did in twenty seventeen.
But I mean, you're in upstate New York, you know,
you live in Rochester and you're talking about moving to Florida.
(07:18):
You're probably talking about a cost of living increase. You
go from you know, other parts of populated areas, even
across New England, New Hampshire, Florida. It's a bit of
a punt in terms of you know where you are
going to see cost savings. And there's more to this,
how you know Florida housing market that we're not getting into,
not the least of which is the new laws that
(07:39):
have been put into place when it comes to older
condo buildings down there and how those are just falling apart.
If you weren't familiar, I think it's any condo over
the age of thirty years is being required to have
a full engineering review of it, and in many cases,
you know, face improvements in the millions of dollars to
make sure these things don't collapse in the flood or hurricane.
Speaker 2 (08:02):
So all of this is adding up to a Florida
property market that is seeing significant inventory builds. And you know,
now in some parts of the state has higher inventory
levels than it did in twenty eighteen and twenty nineteen.
Speaker 3 (08:15):
Interestingly, not big price drops.
Speaker 2 (08:18):
Which something has to give there, like something's going to
have to break as far as where things go, because
again it's eventually someone who's listed that house for sales says,
I gotta sell the place, I gotta move on. So
we'll see how this progresses. But one of the biggest
trends in the last this is not even just like
(08:38):
a two or three year trend, but this is a
sixty year trend. Basically since air conditioning became affordable ish
and kind of the norm has been this migration towards
the south, specifically the southeast. The southwest came later. You know,
that really started in earnest I feel like mid nineteen nineties,
late nineties, somewhere in that ballpark.
Speaker 3 (08:58):
But this moved to the south.
Speaker 2 (09:00):
The east has been you know, this this multi decade
trend that we've seen, and it's in danger of being
upended by the affordability of Florida specifically just not working
anymore the way that it used to. And I think
the key point that I would make here is that.
Speaker 3 (09:20):
It's already reversed itself pretty considerably, and I think it
could be on the cusp of getting a lot worse
with the state of insurance nets in that state. That's
not a solution, Like, yeah, you could make an argument
that Citizens insurance Company right now is subsidizing the overall
market and is one or two hurricanes away from collapsing
a need into jackup premiums even higher after you know,
(09:44):
you know, you've already seen people down there see insurance
premiums get hyped four hundred percent in some cases.
Speaker 2 (09:52):
It has the potential to be very very bad.
Speaker 1 (09:55):
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Speaker 2 (10:24):
Let's talk a little bit about third quarter earnings because
we're we're on the verge of them kicking off later
this week here. According to data from fact Set Earning Insight,
Q three twenty twenty four is expected to show four
point two percent year over year growth in earnings. So
(10:45):
this is something that would be the fifth straight quarter
of year over year earnings growth, but obviously some some
slowing that we're seeing, at least to this point. The
interesting thing is that fact Set thinks that this is
going to be dare I say, transitory as far as
the slowing earnings growth. Q four is expected to be
fourteen point six percent year over year earnings growth and
(11:06):
calendar year twenty twenty five expected to be fourteen point
nine So to be.
Speaker 3 (11:11):
Clear, why charts or who did you say, fact, that
doesn't make this opinion. They aggregate the opinions of all
the other analysts that are out there. But it does
speak to something, which is the tremendous optimism leading to
very high stock prices is built on the idea that
earnings are going to expand dramatically in twenty twenty five,
(11:33):
and that seems to sort of run in the face
of what we just described in terms of the state
of the labor market. Now, look, I can paint plenty
of paths where we do get that earnings expansion. One
of them might be the massive government spending that both
candidates running for president right now are talking about on
the campaign trail. But in the absence of that, you
(11:54):
do start to wonder, can these multiples justify themselves if
companies come out, for instance, over the next thirty days
and say, you know, we're not so confident that we'll
be able to boost earnings as much as we previously thought.
Speaker 2 (12:09):
Yeah, you try to figure out where these projections come from,
just because it's again you look at it, you say, Okay,
earnings are projected to increase fifteen percent next year, which
is like, that's that's a big, big chunk, and you say, okay,
(12:29):
is that all going to be coming from technety with
you know, in video and Microsoft and whoever it might be.
That's that's in the AI game. You sort of try
to figure out what's going on there, and I just
have a hard time getting there as far as understanding
it at this point, just because the other piece is
(12:51):
if you look at revenue as an example, revenue growth
next year is projected to be five point nine percent,
So if earnings are growing by fifteen in revenue growing
by six that means that your margins are widening significantly
as well, so you're getting more and more profitable. Well,
where does that profitability growth come from. We've seen a
lot of companies say, look, we're having a harder time,
(13:13):
you know, passing costs through to our end buyers, and
so we don't have pricing power. Well, usually when you
stop having pricing power, then you say, how can we
cut costs internally? And it's rare that cutting costs leads
to you know, more top line revenue growth.
Speaker 3 (13:27):
So it's kind of you look at it and.
Speaker 2 (13:29):
It's just it's a bit pie in the sky. It
strikes me as an optimistic picture but I.
Speaker 3 (13:36):
Don't know. I mean, the problem is that you and
I think probably both would have said the same thing
in the fourth quarter of or at least I would
have in the fourth quarter of last.
Speaker 2 (13:44):
Year, which is a really good point. So let's go
back to the end of last year, just as kind
of a reference point here, and let's say, okay, if
we're looking at you know, what we saw for what
do you want to do January or December, like kind
of looking at what project when? What projections were for
this year December? So let me pull those up here,
(14:08):
just give me one second. Well, I carry the three
and divide by x, and then okay, here we go.
The numbers projected and this was at the start of
or this was the end of last year. Twenty twenty
four earnings growth was projected to be eleven point eight percent.
This again according to fact set from January fifth, So
(14:29):
like the very start of this end of December calendar,
your twenty twenty four earnings growth was projected to be
eleven eight revenue growth five to five. We're basically we're
not through three quarters yet, but we'll probably be pretty close.
Speaker 3 (14:43):
Calendar.
Speaker 2 (14:43):
You're twenty twenty four now projected earnings growth eleven eight,
revenue growth five to zero, just pretty dark glose like
it has come through so far this year. So the
initial impulse is, well, they're never going to be able
to do that. How could they do that?
Speaker 3 (15:00):
Well, look, it turns out why you have Microsoft spend
a few billion dollars on chips, they got pretty deep pockets.
It's finally found somewhere to spend that money.
Speaker 2 (15:08):
It's been largely concentrated in tech, where that earnings growth
has been. So it's it's not showing up in you know,
Coca Cola, it's not showing up in Nike, obviously, but hey,
it's still is happening for the broad market as a whole,
at least the broad large cat market. The small cap
markets are a different animal, sure, And so that is
(15:28):
something that I think we do have to note, which is, hey,
just because we say something looks like it's going to
be hard to do, hard to do, doesn't mean impossible
to do?
Speaker 3 (15:37):
Right? Got it this year? And so you have to
ask yourself about though, where does it come from? Could
be continued expansion of semiconductor investment, could be maybe it's
a really robust spring housing season. But some of these
things that we were talking about are starting to shift, right.
The idea that mortgage rates will be in the mid
five next spring a little bit tougher to get there
(16:00):
today than it was a week ago. And so you know,
what are you going to rely on to get that
fifteen percent earnings growth? Or will you just be relying
on people saying, yeah, didn't come in quite where expected,
but I'm willing to pay more for those same stocks anyway.
Speaker 2 (16:16):
So that's what's projected as far as earnings. Again, the
schedule in terms of you know what what's upcoming? JP,
Morgan and Wells Fargo kick things off on Friday. You
get some more banks Tuesday of next week, Bank of America, Goldman, Sachs,
City Group, Charles Schwab, PNC, so you know, kind of
going through that list, and then Wednesday you get Tesla
reporting I didn't realize they were so early in the
(16:37):
cycle of this quarter, but their next Wednesday. Other companies
just you know that are of nope, but not the
same magnitude. Abbott Labs, Morgan Stanley or next Wednesday as well,
Netflix next Thursday, and then pretty quiet on Friday, and
then the following week you get a couple more tech
companies that start to you know, come through with with
(16:58):
their earnings. Afterwards, Tuesday, October twenty second, you got Microsoft
and Alphabet so hey, you got you know again some
some big names there. And on Wednesday of that week,
you've got Meta. On the twenty third, and then on
the twenty fourth you got Apple and Amazon. So it's
it's all stacked up for that week in October. And
(17:20):
to this point, most of those companies have given very
little to be concerned about over the course of this year.
I mean, some of them have just been again continuing
to knock the cover off the ball, and they've been
in the driver's seat as far as where markets have gone.
Speaker 4 (17:46):
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Speaker 3 (18:09):
Last minute announcement for all the stragglers out there. Tomorrow,
this whole crew is heading out to Western Massachusetts the
MGM Springfield for our live broadcast event of The Financial Exchange.
That's tomorrow, which is October eighth, from the MGM Hotel
in Springfield. We'd be doing that live broadcast of this show,
The Financial Exchange, following that free lunch and educational seminar
(18:32):
from the Armstrong Advisory Group. Chuck and myself will be
there among others, discussing the upcoming presidential election, what we
saw from last week's jobs report, what it all might
mean for the future of the economy, taxes, markets, and
most importantly, what it might mean to you and your
financial future. If you'd like to join for any part
of that, give us a call at the Armstrong Advisory
(18:54):
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Will give you a little bit more information, but again,
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You can get more information also by going to Armstrong
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(19:15):
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Speaker 1 (19:21):
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Speaker 2 (19:37):
Mike, there is a piece in the Wall Street Journal
today talking a little bit about some changes that are
happening for folks who carry credit card balances. And here's
the basic premise of it. I'll outline it here, I'll
quote from them. Actually, the average credit card interest rate
was twenty one and a half percent in May, hovering
around its highest level in FED data going back to
(19:58):
nineteen ninety four. And the average balance that balance carriers
carried was about sixty three hundred dollars in the second quarter,
up thirty one percent from the same period in twenty
twenty one, not great. Earlier this year, the CFPB, the
Consumer Financial Protection Bureau, finalized an eight percent cap on
eight dollar cap eight dollar cap yep, that's a dollar sign,
(20:19):
not a percentage sign, and an eight dollar cap on
late fees. And right now, you know, up until then,
the agency said, look, late fees can be as high
as you know, forty one dollars even when a payment's
only a couple of hours late. So the question is, okay,
how is this potentially going to impact things? And just
(20:42):
as an example, what you had from you know, different companies,
Bread Financial, whose customers skew more lower income, got rid
of a soft cap of twenty nine point nine to
nine percent interest ahead of the new rule. So they
basically said, look, you're going to cap what we can
get in late fees. Okay, we got to get the
somewhere else. We'll just charge higher interest rates or at
least give ourselves the ability.
Speaker 3 (21:03):
Does anyone think that these credit card companies are just
going to say, yeah, sure, we'll just take a lower
profit margin.
Speaker 2 (21:10):
Synchrony said that they raised the interest rates on one
of their store cards to his highest thirty four point
nine nine percent, and putting a dollar ninety nine fee
for paper statements for some of their programs. So look,
no one likes being nickeled and dimed in terms of oh,
like you know, I'm late by a couple hours and
I got hit with this fee and it costs X,
(21:31):
Y and z. But when you look at how financial
institutions make money, it's rarely just oh, we charge this
one you know, this one charge and that's the only
way that we make it. And so it's a game
of whack a mole. Okay, great. Remember back in I
don't know when it was, it was in the last
(21:51):
decade or so, when you had all of these stuff about, hey,
you know, banks are charging too much on overdraft and
stuff like that, and you know, banks said, okay, fine,
we'll charge less on overdraft. What would they do, well,
they stop paying interest, you know, like they figure out
how to get their numbers where they want to get
them to.
Speaker 3 (22:11):
You could come up with a policy that says, okay,
we're you know, in fact, Donald Trump campaign has come
up with a policy that is specifically designed to do this, saying, yeah,
we're going to cap things like credit card interest rates
and late fees. Do you know what will happen in that.
Speaker 2 (22:26):
Case, Yes, it's it's called a complete collapse of the
free market, and no one ends up with credit because
banks just say, fine, you're not gonna let us make
any money on this.
Speaker 3 (22:36):
We're not going to offer those products again. You know,
if a company is accused of misleading practices, if they
don't tell you that you're going to face a late
fee or interest on the credit card that you are
contractually signing up for. That's a problem and they should
be gone after. That's why this consumer Financial Protection Bureau
should exist. Correct If it gets to a point where
(22:58):
there is only one credit card issuer who determines all
the interest rates for the entire market and there's no competition,
that is another problem. You could make a compelling argument
to me that that's what we have in the actual
transaction marketplace, right Visa has I think fifty percent market
share there and there's just not a lot of competition
(23:20):
in that space you could go after, Like you could
convince me, hey, that's an important area for us to
go after to lower costs and increase competition because low
competition is leading to Visa charging outrageous rates to vendors.
That's probably true when you have a competitive market like
the issuance of credit cards. This is just the cost
of thing, and there is.
Speaker 2 (23:41):
No right to cheap credit like that's not a thing.
And also there's no right amount of either interest to
charge or late fees like it's it's not something. I'll
give you an example. Let's say that you had a
company that said, fine, we're gonna have no late fees
on credit card bills, They're probably gonna have either tougher
(24:02):
underwriting standards or higher interest rates because they like they
need to figure out how to make money and attract
capital in order to do so. If you have a
credit card that says, no, you know what, we're gonna
have no interest, but we're gonna charge you. We're gonna
charge you one thousand dollars if you make your payment late. Okay,
(24:23):
they'll probably have like again, a whole bunch of people
that are you know, really high credit scores because they're like, yeah,
like great, well we can do this. But they're still
gonna get like you, they'll find ways to make the money,
is the point I'm making.
Speaker 3 (24:38):
And I really don't find anything going on in the
credit card space.
Speaker 2 (24:43):
There's nothing like here, here's something that's predatory when you
have you know, you show up your first week on
a college campus and there's eight credit card companies offering you. Oh,
like here's how you start for a credit card. Yeah,
that stuff bothers me. I'm still not sure it warrants
like crazy government intervention though, Like okay, like the credit
(25:03):
limit on that cards like two hundred and fifty dollars.
Speaker 3 (25:06):
Here's the only government intervenition on that front that I'm
that I like. States like New Hampshire have now required
financial education as part of the high school graduate degree.
If you want a high school graduate degree in state
of New Hampshire, you must take a personal finance course.
I'm good with that. But you know, each sixteen year
olds how credit works. That's great. Other than that, get
(25:30):
out of here, Like the.
Speaker 2 (25:31):
Late fees are what's the what's the right level of
late fees? How do we determine its eight dollars? Why
is it not nine?
Speaker 3 (25:37):
I don't know ten? Why not seven?
Speaker 2 (25:39):
Why that's six?
Speaker 3 (25:40):
Definition of why not three? Big government? You know how
much money did we spend on the study to determine
it was eight? What should the late feed cap be
for fast food workers in California? That's where we're going
with since you know it's it's just.
Speaker 2 (26:00):
It's arbitrary, and all you're gonna do is again you
get credit card companies that say, fine, we can't make
it there, We're gonna make it somewhere else.
Speaker 3 (26:06):
It does lead me to, you know one other thing
that I've just been getting closer and closer to Dave
Ramsey on which is most people probably shouldn't have credit
cards also, or at least use them regularly. Most people shouldn't.
They get tempted by the rewards benefits. There's a psychological
effect of having that very high spending limit. And most
(26:29):
people out there, it's not a huge majority, but you know,
about half Americans probably shouldn't be using credit cards on
a day to day basis. What percentage of Americans do
I'd be willing to bet of adults two thirds have
a credit card, three quarters.
Speaker 2 (26:46):
Maybe I'm just here we go. So from Forbes Advisor,
let's see, okay, credit cards, Tucker, can you can you
get me the music again? Yeah?
Speaker 5 (26:58):
I mean I am seeing eighty two percent.
Speaker 3 (27:03):
So they actually slice it by income level. This is okay.
Speaker 2 (27:06):
This is fascinating for families with incomes of one hundred
thousand dollars or more. This is according to the Federal
Reserve Survey of Household Economics, ninety eight percent of families
with incomes of one hundred thousand or more have credit
cards and use them. If you go down to families
with less than twenty five thousand income, it's fifty seven percent.
Speaker 3 (27:26):
Not likely to be issued in the first place.
Speaker 2 (27:28):
From an educational standpoint, ninety six percent of families with
a bachelor degree or more have them. If you have
less than a high school degree, only fifty two percent
of that demographic uses them. And then they also break
it down along racial lines, where the group with the
racial group with the highest percentage of credit card users.
(27:51):
If you are Asian, ninety two percent of Asian households
have a credit card, eighty seven percent of white households,
seventy three percent of Hispanic, and seventy one percent of
Black households, So not as much dispersion there. And yeah,
eighty two percent of Americans have a credit card and
seventy three percent of them have them by age twenty five.
Speaker 3 (28:15):
Yeah, I'm not really surprised by much of that.
Speaker 2 (28:18):
Here's the counterpoint to you know, Americans shouldn't use credit
cards from a fraud perspective. It's the safest way to
buy anything, whereas a debit card has all kinds of
risks to the end user.
Speaker 3 (28:29):
I don't disagree with any of it, but to me,
the fact that the average balance is sitting at sixty
three hundred dollars, and I think something like half of
Americans carried a balance sometime in the last twelve months.
Outweighs the fraud benefits, which I applaud and are great.
And I use a credit card for almost everything, so
I recognize that there are exceptions to this. But the
(28:51):
more and more I look at the data, the more
and more I become convinced that it's not the right
thing for most people.
Speaker 2 (28:55):
Baby Boomers have the most credit cards on average, with
the average boomer having four point six different credit cards,
while gen Z has two point one, Millennials three point four,
gen X four point four, in the Silent Generation three
point four.
Speaker 1 (29:10):
Just interesting.
Speaker 2 (29:10):
Yeah, forty eight percent of all users carry a balance,
like I said, And yeah, that's what we have going
on there.
Speaker 3 (29:18):
Quick break here, we got a little bit of stack Roulette.
Speaker 1 (29:20):
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Speaker 3 (30:32):
Mike, What do you have for me?
Speaker 2 (30:33):
For stack Roulettes?
Speaker 3 (30:34):
An interesting piece here from The New York Times taking
a look at the portion of time Americans spend at
home and unsurprisingly massive surge in twenty twenty that has
not gotten back to normal levels. But what I found
really interesting about this was more that the trend well
(30:55):
before the pandemic was for Americans to be spending a
lot more time at home, nearly doubled, actually more than
doubled from two thousand and four to twenty nineteen in
terms of the minutes spent at home per day. And
I don't know what this all is caused by. If
(31:16):
it's you know, a you know, the Internet contributing, if
it's larger and larger homes that are contributing, But it
does speak to me, as you know, we've talked at
length about how there's been an increase in what people
defind as loneliness in a lot of surveys that have
been taken about the Americans over the last few decades,
and this would seem to be a contributing factor.
Speaker 2 (31:38):
I would think, why do you think we spend more
time at home?
Speaker 3 (31:42):
I mean, outside of the pandemic. You really have to
separate that piece for a moment here. I do think
the Internet likely has something to do with it. You know,
the vast quantities of in home entertainment today compared to
decades past, are significant, whether it's gaming, whether it's vast
increases in content that you can view at home. You know,
(32:05):
there was a time when if you wanted to see
the latest and greatest you know thing coming from Hollywood.
What did you have to do? You had to get
off the couch and go to the movie theater. Just
not the case these days, right, It's definitely different these days.
And you know, is there a group of people who
maybe in previous decades would have gone bowling or you know,
(32:26):
some other activity that are now gaming instead? Probably would
be my guest. But outside that, I have a tough
time explaining it.
Speaker 2 (32:34):
And look, I'm someone who grow grew up with the Internet,
so I look, I spent plenty of time talking probably
in the same like how much time did you spend
playing video games as a kid? Like, oh, I was
locked up in the basement for hours right by the
time I was like thirteen or fourteen. And again, I
know this doesn't sound like kind of gross to some people.
I was probably playing video games like two to four
(32:56):
hours a day on average. And I don't think that's
a crazy exaggeration. Now most of it was from like
the hours of ten pm to two am. Sure, but like,
I don't think we can just look at I feel
like every generation like, well, it's got to be the
video games. Video games have been around a long time,
and if it were video games. We would have seen
it before now is kind of what I'm getting at.
Speaker 3 (33:19):
I don't know. I mean this is data going back
to two thousand and five, right, I mean that that
is when the biggest push of a lot of the
Internet as we know it today really came to life.
Speaker 2 (33:31):
Yes, which part of the Internet as we know it?
Speaker 3 (33:33):
It rhymes with rocial media. Yeah, social media.
Speaker 2 (33:37):
Come back to social media.
Speaker 3 (33:39):
And it's the death of all anxiety. Well here's the thing.
Speaker 2 (33:42):
So they're really positive things that come from social media,
like being able to access people who you wouldn't normally
be able to talk to and meet new communities. So like,
there's parts of it that I absolutely love, but by golly,
I think in the aggregate it might just be like
the suckiest part of tech technology from the last million years.
Speaker 3 (34:04):
It's it's really bad. Yeah, and the aggregate, the the
effect that it seems to have is first it has
this the.
Speaker 2 (34:10):
Most damaging effect, in my opinion, is that everything becomes performative.
And even if you don't think that you're performing on
social media, you are because you tailor the way that
you respond a certain way, because you're keeping up you know,
whatever image it is like no one's had a single
authentic conversation on social media ever, is kind of where
(34:31):
like even if someone's like, oh, I'm having a bad
day and you say, oh, it'll get better tomorrow, no,
like you're you're If you're really having a bad day,
don't post it on social media. And this is why
we're so lonely, I think is because we're using this
as a substitute for actual human connection and it's just
not so.
Speaker 3 (34:50):
It's the Internet in general. I think social media. You
go on social media, I like, I think it is
and I don't think it's like this thing that's gonna
be a album forever because humans evolved to figure out
all kinds of stuff.
Speaker 2 (35:03):
It's the problem that we're dealing with now. For the
first time in human history, we have too much information
instead of too little. Like that's the problem today is
there's too much information and we don't know what to
do with it, and we suck at interpreting which one
Whereas for the last like eight thousand years, it's been Hey,
I wonder why it rained today? Is it raining somewhere else?
I don't know? Is someone coming to invade my crops?
(35:28):
And now we'll let me go ask my neighbor. You know,
all this other stuff, quick break for the rest of
the day. We'll see it tomorrow and hopefully answer those
questions on the Financial Exchange and Springfield
The Financial Exchange is produced by Money Matters Radio and
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(01:04):
Veterans Development Corporation. This is the Financial Exchange with Chuck
Zada and Mike Armstrong.
Speaker 2 (01:13):
Chuck, Mike and Tucker with you, kicking off the second
hour of the Financial Exchange. Markets some negative movement today,
nothing huge, but the Dows off one hundred and eighty
six points about half a percent. SP five hundred down
twenty two points, about four tenths of a percent, and
the Nasdaq down ninety two points about half a percent
as well, so retracing some of Friday's gains. But nothing
huge that we're seeing there. Bond's the tenure Treasury up
(01:36):
four basis points to four point oh two percent, back
above four percent for the first time, and I don't
know what he's think about four to six weeks, Yeah,
something like that. We've got oil today continuing on its
upward move, up a dollar sixty five a barrel to
seventy six oh three. Another two percent ump up there,
and triple a the national average four Gas prices starting
(01:57):
to move up just a touch, but it was falling
all through the weekend. We're now now at three seventeen
and four tenths of a cent. That's up one tenth
of a cent over yesterday, still well below a week ago,
where we were about four cents higher. A month ago
we were eleven cents higher, and midsummer we were about
thirty three cents higher. So overall oil prices moving up,
but gas prices not really budging at the moment. And
(02:19):
we've got gold today with no real movement down four
dollars and twenty cents an ounce to twenty six sixty
three and sixty cents an ounce. Piece from the Wall
Street Journal here that I think is going to be
a major story for the next decade, which is the
Florida housing market. It's titled the Great Florida Migration is
(02:43):
Coming undone and specifically talks about look in particular, the
last few years you saw this huge influx of people
down to Florida. And the premise was fairly straightforward on this,
depending on you know who you were and the age
and everything. Cost living in Florida typically lower than in
the northeast or on the West coast. Great weather year round,
(03:06):
it's warm, it's sunny, you've got all kinds of available lands,
so the cost of building housing or buying housing was
relatively affordable. And hey, everyone's doing it, so join in
because it's it's great.
Speaker 3 (03:21):
And for you know, a specific also wealthy group across
the northeast. The tax friendliness of the state played a
compelling role too, right. Sure, you know, if you're worth
half a million dollars, it's not going to make a
big difference. But if your work worth half a billion dollars,
then residing in Florida makes a hell of a difference.
Speaker 2 (03:38):
So you know, in terms of the trend that we saw,
look it was it was very pronounced in like twenty twenty,
twenty twenty one, twenty twenty two. But you're starting to
see some signs of problems here. And there are a
few different issues that you have. The first is the
state's insurance market is completely broken, and that's not an exaggeration.
Speaker 3 (04:02):
So as of August of twenty twenty four, Citizens Insurance,
which is Florida's state run insurance company, had one point
two five million policies in force. In August twenty nineteen,
which was just five years ago, Citizen Insurance only had
four hundred and twenty thousand policies active. The population of
(04:23):
Florida has not tripled in five years, No the number
of insured, the number of homes that are now insured
by the state's insurer of last resort has tripled.
Speaker 2 (04:32):
And if you look at what that means, look the
insurer of last resort, the money has to come from somewhere,
which means, hey, absent any federally funded taxpayer bailout, it
pretty much means that state taxes would have to go
up if that state insurance fund is exhausted. So you've
got two real problems that have now come to the forefront,
(04:55):
which is the insurance pricing is just nutty. In Florida.
You could talk to just about anyone who's been there
for more than five years and they'll tell you that
their insurance premiums on their home have probably somewhere between
doubled and quintupled, depending on the exact person that you're
talking to and where they live. So that's made the
housing market way less affordable just as a result of, Hey,
(05:19):
how much those costs have gone up. On top of it,
you've got this question out there, Okay, if I am
on that state insurance policy, what happens if we get
hit in an area where there are a ton of
claims in the state can't afford to pay them.
Speaker 3 (05:34):
Now, by the way, again, I know we're gonna get there,
But other than Miami area, Miami Dade County, Palm Beach,
Brower County, the hurricane that's bearing down right now is
bearing down in the second most populated area of the
state of Florida, and thereby I mean I'm looking right now.
You can go Google a map of insurance policies that
(05:56):
are on Citizens Insurance company. But unsurprisingly, other than like
I said, Miami Dade County, Palm Beach County, Broward County,
the highest concentration of policies is in Pinellas County, Hillsborough County.
Speaker 2 (06:08):
Which is Saint Pete, and Tampa, which is right in
the path of Hurricane Milton that is going to be
coming through in the next few days. So you're starting
to see this thing where, hey, it's becoming cost prohibitive
to move there. And this is, by the way, without
even factoring what's happened to home prices, which between twenty
seventeen and twenty twenty four, home prices doubled in the
(06:31):
state of Florida, So it's no longer as affordable as
it used to be. You still get hey, there's no
state tax state income tax or anything like that, so
you still have some benefits. I'm not trying to say
like Florida is all bad, but from a financial perspective,
a lot of people who move down there are finding
it tougher to stay down there because the costs have
(06:53):
moved up way faster than in other parts of the country.
Speaker 3 (06:56):
Yeah, I don't know that the math changes a lot
if you're still looking at it from eastern Massachusetts or
the New York City area. Right if you're doing the
math on that move, it's still making a lot of sense,
albeit a lot less sense than it did in twenty seventeen.
But I mean, you're in upstate New York, you know,
you live in Rochester and you're talking about moving to Florida.
(07:18):
You're probably talking about a cost of living increase. You
go from you know, other parts of populated areas, even
across New England, New Hampshire, Florida. It's a bit of
a punt in terms of you know where you are
going to see cost savings. And there's more to this,
how you know Florida housing market that we're not getting into,
not the least of which is the new laws that
(07:39):
have been put into place when it comes to older
condo buildings down there and how those are just falling apart.
If you weren't familiar, I think it's any condo over
the age of thirty years is being required to have
a full engineering review of it, and in many cases,
you know, face improvements in the millions of dollars to
make sure these things don't collapse in the flood or hurricane.
Speaker 2 (08:02):
So all of this is adding up to a Florida
property market that is seeing significant inventory builds. And you know,
now in some parts of the state has higher inventory
levels than it did in twenty eighteen and twenty nineteen.
Speaker 3 (08:15):
Interestingly, not big price drops.
Speaker 2 (08:18):
Which something has to give there, like something's going to
have to break as far as where things go, because
again it's eventually someone who's listed that house for sales says,
I gotta sell the place, I gotta move on. So
we'll see how this progresses. But one of the biggest
trends in the last this is not even just like
(08:38):
a two or three year trend, but this is a
sixty year trend. Basically since air conditioning became affordable ish
and kind of the norm has been this migration towards
the south, specifically the southeast. The southwest came later. You know,
that really started in earnest I feel like mid nineteen nineties,
late nineties, somewhere in that ballpark.
Speaker 3 (08:58):
But this moved to the south.
Speaker 2 (09:00):
The east has been you know, this this multi decade
trend that we've seen, and it's in danger of being
upended by the affordability of Florida specifically just not working
anymore the way that it used to. And I think
the key point that I would make here is that.
Speaker 3 (09:20):
It's already reversed itself pretty considerably, and I think it
could be on the cusp of getting a lot worse
with the state of insurance nets in that state. That's
not a solution, Like, yeah, you could make an argument
that Citizens insurance Company right now is subsidizing the overall
market and is one or two hurricanes away from collapsing
a need into jackup premiums even higher after you know,
(09:44):
you know, you've already seen people down there see insurance
premiums get hyped four hundred percent in some cases.
Speaker 2 (09:52):
It has the potential to be very very bad.
Speaker 1 (09:55):
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Speaker 2 (10:24):
Let's talk a little bit about third quarter earnings because
we're we're on the verge of them kicking off later
this week here. According to data from fact Set Earning Insight,
Q three twenty twenty four is expected to show four
point two percent year over year growth in earnings. So
(10:45):
this is something that would be the fifth straight quarter
of year over year earnings growth, but obviously some some
slowing that we're seeing, at least to this point. The
interesting thing is that fact Set thinks that this is
going to be dare I say, transitory as far as
the slowing earnings growth. Q four is expected to be
fourteen point six percent year over year earnings growth and
(11:06):
calendar year twenty twenty five expected to be fourteen point
nine So to be.
Speaker 3 (11:11):
Clear, why charts or who did you say, fact, that
doesn't make this opinion. They aggregate the opinions of all
the other analysts that are out there. But it does
speak to something, which is the tremendous optimism leading to
very high stock prices is built on the idea that
earnings are going to expand dramatically in twenty twenty five,
(11:33):
and that seems to sort of run in the face
of what we just described in terms of the state
of the labor market. Now, look, I can paint plenty
of paths where we do get that earnings expansion. One
of them might be the massive government spending that both
candidates running for president right now are talking about on
the campaign trail. But in the absence of that, you
(11:54):
do start to wonder, can these multiples justify themselves if
companies come out, for instance, over the next thirty days
and say, you know, we're not so confident that we'll
be able to boost earnings as much as we previously thought.
Speaker 2 (12:09):
Yeah, you try to figure out where these projections come from,
just because it's again you look at it, you say, Okay,
earnings are projected to increase fifteen percent next year, which
is like, that's that's a big, big chunk, and you say, okay,
(12:29):
is that all going to be coming from technety with
you know, in video and Microsoft and whoever it might be.
That's that's in the AI game. You sort of try
to figure out what's going on there, and I just
have a hard time getting there as far as understanding
it at this point, just because the other piece is
(12:51):
if you look at revenue as an example, revenue growth
next year is projected to be five point nine percent,
So if earnings are growing by fifteen in revenue growing
by six that means that your margins are widening significantly
as well, so you're getting more and more profitable. Well,
where does that profitability growth come from. We've seen a
lot of companies say, look, we're having a harder time,
(13:13):
you know, passing costs through to our end buyers, and
so we don't have pricing power. Well, usually when you
stop having pricing power, then you say, how can we
cut costs internally? And it's rare that cutting costs leads
to you know, more top line revenue growth.
Speaker 3 (13:27):
So it's kind of you look at it and.
Speaker 2 (13:29):
It's just it's a bit pie in the sky. It
strikes me as an optimistic picture but I.
Speaker 3 (13:36):
Don't know. I mean, the problem is that you and
I think probably both would have said the same thing
in the fourth quarter of or at least I would
have in the fourth quarter of last.
Speaker 2 (13:44):
Year, which is a really good point. So let's go
back to the end of last year, just as kind
of a reference point here, and let's say, okay, if
we're looking at you know, what we saw for what
do you want to do January or December, like kind
of looking at what project when? What projections were for
this year December? So let me pull those up here,
(14:08):
just give me one second. Well, I carry the three
and divide by x, and then okay, here we go.
The numbers projected and this was at the start of
or this was the end of last year. Twenty twenty
four earnings growth was projected to be eleven point eight percent.
This again according to fact set from January fifth, So
(14:29):
like the very start of this end of December calendar,
your twenty twenty four earnings growth was projected to be
eleven eight revenue growth five to five. We're basically we're
not through three quarters yet, but we'll probably be pretty close.
Speaker 3 (14:43):
Calendar.
Speaker 2 (14:43):
You're twenty twenty four now projected earnings growth eleven eight,
revenue growth five to zero, just pretty dark glose like
it has come through so far this year. So the
initial impulse is, well, they're never going to be able
to do that. How could they do that?
Speaker 3 (15:00):
Well, look, it turns out why you have Microsoft spend
a few billion dollars on chips, they got pretty deep pockets.
It's finally found somewhere to spend that money.
Speaker 2 (15:08):
It's been largely concentrated in tech, where that earnings growth
has been. So it's it's not showing up in you know,
Coca Cola, it's not showing up in Nike, obviously, but hey,
it's still is happening for the broad market as a whole,
at least the broad large cat market. The small cap
markets are a different animal, sure, And so that is
(15:28):
something that I think we do have to note, which is, hey,
just because we say something looks like it's going to
be hard to do, hard to do, doesn't mean impossible
to do?
Speaker 3 (15:37):
Right? Got it this year? And so you have to
ask yourself about though, where does it come from? Could
be continued expansion of semiconductor investment, could be maybe it's
a really robust spring housing season. But some of these
things that we were talking about are starting to shift, right.
The idea that mortgage rates will be in the mid
five next spring a little bit tougher to get there
(16:00):
today than it was a week ago. And so you know,
what are you going to rely on to get that
fifteen percent earnings growth? Or will you just be relying
on people saying, yeah, didn't come in quite where expected,
but I'm willing to pay more for those same stocks anyway.
Speaker 2 (16:16):
So that's what's projected as far as earnings. Again, the
schedule in terms of you know what what's upcoming? JP,
Morgan and Wells Fargo kick things off on Friday. You
get some more banks Tuesday of next week, Bank of America, Goldman, Sachs,
City Group, Charles Schwab, PNC, so you know, kind of
going through that list, and then Wednesday you get Tesla
reporting I didn't realize they were so early in the
(16:37):
cycle of this quarter, but their next Wednesday. Other companies
just you know that are of nope, but not the
same magnitude. Abbott Labs, Morgan Stanley or next Wednesday as well,
Netflix next Thursday, and then pretty quiet on Friday, and
then the following week you get a couple more tech
companies that start to you know, come through with with
(16:58):
their earnings. Afterwards, Tuesday, October twenty second, you got Microsoft
and Alphabet so hey, you got you know again some
some big names there. And on Wednesday of that week,
you've got Meta. On the twenty third, and then on
the twenty fourth you got Apple and Amazon. So it's
it's all stacked up for that week in October. And
(17:20):
to this point, most of those companies have given very
little to be concerned about over the course of this year.
I mean, some of them have just been again continuing
to knock the cover off the ball, and they've been
in the driver's seat as far as where markets have gone.
Speaker 4 (17:46):
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Speaker 1 (18:00):
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Speaker 3 (18:09):
Last minute announcement for all the stragglers out there. Tomorrow,
this whole crew is heading out to Western Massachusetts the
MGM Springfield for our live broadcast event of The Financial Exchange.
That's tomorrow, which is October eighth, from the MGM Hotel
in Springfield. We'd be doing that live broadcast of this show,
The Financial Exchange, following that free lunch and educational seminar
(18:32):
from the Armstrong Advisory Group. Chuck and myself will be
there among others, discussing the upcoming presidential election, what we
saw from last week's jobs report, what it all might
mean for the future of the economy, taxes, markets, and
most importantly, what it might mean to you and your
financial future. If you'd like to join for any part
of that, give us a call at the Armstrong Advisory
(18:54):
Group at eight hundred three nine three four zero zero one.
Will give you a little bit more information, but again,
this event is tomorrow at the MGM Springfield. The MGM
Hotel in Springfield will be doing the live broadcast the
show from ten to twelve, followed by a free educational lunch.
You can get more information also by going to Armstrong
Advisory dot com slash events, but it's pretty last minute here,
(19:15):
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Speaker 1 (19:21):
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Speaker 2 (19:37):
Mike, there is a piece in the Wall Street Journal
today talking a little bit about some changes that are
happening for folks who carry credit card balances. And here's
the basic premise of it. I'll outline it here, I'll
quote from them. Actually, the average credit card interest rate
was twenty one and a half percent in May, hovering
around its highest level in FED data going back to
(19:58):
nineteen ninety four. And the average balance that balance carriers
carried was about sixty three hundred dollars in the second quarter,
up thirty one percent from the same period in twenty
twenty one, not great. Earlier this year, the CFPB, the
Consumer Financial Protection Bureau, finalized an eight percent cap on
eight dollar cap eight dollar cap yep, that's a dollar sign,
(20:19):
not a percentage sign, and an eight dollar cap on
late fees. And right now, you know, up until then,
the agency said, look, late fees can be as high
as you know, forty one dollars even when a payment's
only a couple of hours late. So the question is, okay,
how is this potentially going to impact things? And just
(20:42):
as an example, what you had from you know, different companies,
Bread Financial, whose customers skew more lower income, got rid
of a soft cap of twenty nine point nine to
nine percent interest ahead of the new rule. So they
basically said, look, you're going to cap what we can
get in late fees. Okay, we got to get the
somewhere else. We'll just charge higher interest rates or at
least give ourselves the ability.
Speaker 3 (21:03):
Does anyone think that these credit card companies are just
going to say, yeah, sure, we'll just take a lower
profit margin.
Speaker 2 (21:10):
Synchrony said that they raised the interest rates on one
of their store cards to his highest thirty four point
nine nine percent, and putting a dollar ninety nine fee
for paper statements for some of their programs. So look,
no one likes being nickeled and dimed in terms of oh,
like you know, I'm late by a couple hours and
I got hit with this fee and it costs X,
(21:31):
Y and z. But when you look at how financial
institutions make money, it's rarely just oh, we charge this
one you know, this one charge and that's the only
way that we make it. And so it's a game
of whack a mole. Okay, great. Remember back in I
don't know when it was, it was in the last
(21:51):
decade or so, when you had all of these stuff about, hey,
you know, banks are charging too much on overdraft and
stuff like that, and you know, banks said, okay, fine,
we'll charge less on overdraft. What would they do, well,
they stop paying interest, you know, like they figure out
how to get their numbers where they want to get
them to.
Speaker 3 (22:11):
You could come up with a policy that says, okay,
we're you know, in fact, Donald Trump campaign has come
up with a policy that is specifically designed to do this, saying, yeah,
we're going to cap things like credit card interest rates
and late fees. Do you know what will happen in that.
Speaker 2 (22:26):
Case, Yes, it's it's called a complete collapse of the
free market, and no one ends up with credit because
banks just say, fine, you're not gonna let us make
any money on this.
Speaker 3 (22:36):
We're not going to offer those products again. You know,
if a company is accused of misleading practices, if they
don't tell you that you're going to face a late
fee or interest on the credit card that you are
contractually signing up for. That's a problem and they should
be gone after. That's why this consumer Financial Protection Bureau
should exist. Correct If it gets to a point where
(22:58):
there is only one credit card issuer who determines all
the interest rates for the entire market and there's no competition,
that is another problem. You could make a compelling argument
to me that that's what we have in the actual
transaction marketplace, right Visa has I think fifty percent market
share there and there's just not a lot of competition
(23:20):
in that space you could go after, Like you could
convince me, hey, that's an important area for us to
go after to lower costs and increase competition because low
competition is leading to Visa charging outrageous rates to vendors.
That's probably true when you have a competitive market like
the issuance of credit cards. This is just the cost
of thing, and there is.
Speaker 2 (23:41):
No right to cheap credit like that's not a thing.
And also there's no right amount of either interest to
charge or late fees like it's it's not something. I'll
give you an example. Let's say that you had a
company that said, fine, we're gonna have no late fees
on credit card bills, They're probably gonna have either tougher
(24:02):
underwriting standards or higher interest rates because they like they
need to figure out how to make money and attract
capital in order to do so. If you have a
credit card that says, no, you know what, we're gonna
have no interest, but we're gonna charge you. We're gonna
charge you one thousand dollars if you make your payment late. Okay,
(24:23):
they'll probably have like again, a whole bunch of people
that are you know, really high credit scores because they're like, yeah,
like great, well we can do this. But they're still
gonna get like you, they'll find ways to make the money,
is the point I'm making.
Speaker 3 (24:38):
And I really don't find anything going on in the
credit card space.
Speaker 2 (24:43):
There's nothing like here, here's something that's predatory when you
have you know, you show up your first week on
a college campus and there's eight credit card companies offering you. Oh,
like here's how you start for a credit card. Yeah,
that stuff bothers me. I'm still not sure it warrants
like crazy government intervention though, Like okay, like the credit
(25:03):
limit on that cards like two hundred and fifty dollars.
Speaker 3 (25:06):
Here's the only government intervenition on that front that I'm
that I like. States like New Hampshire have now required
financial education as part of the high school graduate degree.
If you want a high school graduate degree in state
of New Hampshire, you must take a personal finance course.
I'm good with that. But you know, each sixteen year
olds how credit works. That's great. Other than that, get
(25:30):
out of here, Like the.
Speaker 2 (25:31):
Late fees are what's the what's the right level of
late fees? How do we determine its eight dollars? Why
is it not nine?
Speaker 3 (25:37):
I don't know ten? Why not seven?
Speaker 2 (25:39):
Why that's six?
Speaker 3 (25:40):
Definition of why not three? Big government? You know how
much money did we spend on the study to determine
it was eight? What should the late feed cap be
for fast food workers in California? That's where we're going
with since you know it's it's just.
Speaker 2 (26:00):
It's arbitrary, and all you're gonna do is again you
get credit card companies that say, fine, we can't make
it there, We're gonna make it somewhere else.
Speaker 3 (26:06):
It does lead me to, you know one other thing
that I've just been getting closer and closer to Dave
Ramsey on which is most people probably shouldn't have credit
cards also, or at least use them regularly. Most people shouldn't.
They get tempted by the rewards benefits. There's a psychological
effect of having that very high spending limit. And most
(26:29):
people out there, it's not a huge majority, but you know,
about half Americans probably shouldn't be using credit cards on
a day to day basis. What percentage of Americans do
I'd be willing to bet of adults two thirds have
a credit card, three quarters.
Speaker 2 (26:46):
Maybe I'm just here we go. So from Forbes Advisor,
let's see, okay, credit cards, Tucker, can you can you
get me the music again? Yeah?
Speaker 5 (26:58):
I mean I am seeing eighty two percent.
Speaker 3 (27:03):
So they actually slice it by income level. This is okay.
Speaker 2 (27:06):
This is fascinating for families with incomes of one hundred
thousand dollars or more. This is according to the Federal
Reserve Survey of Household Economics, ninety eight percent of families
with incomes of one hundred thousand or more have credit
cards and use them. If you go down to families
with less than twenty five thousand income, it's fifty seven percent.
Speaker 3 (27:26):
Not likely to be issued in the first place.
Speaker 2 (27:28):
From an educational standpoint, ninety six percent of families with
a bachelor degree or more have them. If you have
less than a high school degree, only fifty two percent
of that demographic uses them. And then they also break
it down along racial lines, where the group with the
racial group with the highest percentage of credit card users.
(27:51):
If you are Asian, ninety two percent of Asian households
have a credit card, eighty seven percent of white households,
seventy three percent of Hispanic, and seventy one percent of
Black households, So not as much dispersion there. And yeah,
eighty two percent of Americans have a credit card and
seventy three percent of them have them by age twenty five.
Speaker 3 (28:15):
Yeah, I'm not really surprised by much of that.
Speaker 2 (28:18):
Here's the counterpoint to you know, Americans shouldn't use credit
cards from a fraud perspective. It's the safest way to
buy anything, whereas a debit card has all kinds of
risks to the end user.
Speaker 3 (28:29):
I don't disagree with any of it, but to me,
the fact that the average balance is sitting at sixty
three hundred dollars, and I think something like half of
Americans carried a balance sometime in the last twelve months.
Outweighs the fraud benefits, which I applaud and are great.
And I use a credit card for almost everything, so
I recognize that there are exceptions to this. But the
(28:51):
more and more I look at the data, the more
and more I become convinced that it's not the right
thing for most people.
Speaker 2 (28:55):
Baby Boomers have the most credit cards on average, with
the average boomer having four point six different credit cards,
while gen Z has two point one, Millennials three point four,
gen X four point four, in the Silent Generation three
point four.
Speaker 1 (29:10):
Just interesting.
Speaker 2 (29:10):
Yeah, forty eight percent of all users carry a balance,
like I said, And yeah, that's what we have going
on there.
Speaker 3 (29:18):
Quick break here, we got a little bit of stack Roulette.
Speaker 1 (29:20):
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(29:42):
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Speaker 3 (30:32):
Mike, What do you have for me?
Speaker 2 (30:33):
For stack Roulettes?
Speaker 3 (30:34):
An interesting piece here from The New York Times taking
a look at the portion of time Americans spend at
home and unsurprisingly massive surge in twenty twenty that has
not gotten back to normal levels. But what I found
really interesting about this was more that the trend well
(30:55):
before the pandemic was for Americans to be spending a
lot more time at home, nearly doubled, actually more than
doubled from two thousand and four to twenty nineteen in
terms of the minutes spent at home per day. And
I don't know what this all is caused by. If
(31:16):
it's you know, a you know, the Internet contributing, if
it's larger and larger homes that are contributing, But it
does speak to me, as you know, we've talked at
length about how there's been an increase in what people
defind as loneliness in a lot of surveys that have
been taken about the Americans over the last few decades,
and this would seem to be a contributing factor.
Speaker 2 (31:38):
I would think, why do you think we spend more
time at home?
Speaker 3 (31:42):
I mean, outside of the pandemic. You really have to
separate that piece for a moment here. I do think
the Internet likely has something to do with it. You know,
the vast quantities of in home entertainment today compared to
decades past, are significant, whether it's gaming, whether it's vast
increases in content that you can view at home. You know,
(32:05):
there was a time when if you wanted to see
the latest and greatest you know thing coming from Hollywood.
What did you have to do? You had to get
off the couch and go to the movie theater. Just
not the case these days, right, It's definitely different these days.
And you know, is there a group of people who
maybe in previous decades would have gone bowling or you know,
(32:26):
some other activity that are now gaming instead? Probably would
be my guest. But outside that, I have a tough
time explaining it.
Speaker 2 (32:34):
And look, I'm someone who grow grew up with the Internet,
so I look, I spent plenty of time talking probably
in the same like how much time did you spend
playing video games as a kid? Like, oh, I was
locked up in the basement for hours right by the
time I was like thirteen or fourteen. And again, I
know this doesn't sound like kind of gross to some people.
I was probably playing video games like two to four
(32:56):
hours a day on average. And I don't think that's
a crazy exaggeration. Now most of it was from like
the hours of ten pm to two am. Sure, but like,
I don't think we can just look at I feel
like every generation like, well, it's got to be the
video games. Video games have been around a long time,
and if it were video games. We would have seen
it before now is kind of what I'm getting at.
Speaker 3 (33:19):
I don't know. I mean this is data going back
to two thousand and five, right, I mean that that
is when the biggest push of a lot of the
Internet as we know it today really came to life.
Speaker 2 (33:31):
Yes, which part of the Internet as we know it?
Speaker 3 (33:33):
It rhymes with rocial media. Yeah, social media.
Speaker 2 (33:37):
Come back to social media.
Speaker 3 (33:39):
And it's the death of all anxiety. Well here's the thing.
Speaker 2 (33:42):
So they're really positive things that come from social media,
like being able to access people who you wouldn't normally
be able to talk to and meet new communities. So like,
there's parts of it that I absolutely love, but by golly,
I think in the aggregate it might just be like
the suckiest part of tech technology from the last million years.
Speaker 3 (34:04):
It's it's really bad. Yeah, and the aggregate, the the
effect that it seems to have is first it has
this the.
Speaker 2 (34:10):
Most damaging effect, in my opinion, is that everything becomes performative.
And even if you don't think that you're performing on
social media, you are because you tailor the way that
you respond a certain way, because you're keeping up you know,
whatever image it is like no one's had a single
authentic conversation on social media ever, is kind of where
(34:31):
like even if someone's like, oh, I'm having a bad
day and you say, oh, it'll get better tomorrow, no,
like you're you're If you're really having a bad day,
don't post it on social media. And this is why
we're so lonely, I think is because we're using this
as a substitute for actual human connection and it's just
not so.
Speaker 3 (34:50):
It's the Internet in general. I think social media. You
go on social media, I like, I think it is
and I don't think it's like this thing that's gonna
be a album forever because humans evolved to figure out
all kinds of stuff.
Speaker 2 (35:03):
It's the problem that we're dealing with now. For the
first time in human history, we have too much information
instead of too little. Like that's the problem today is
there's too much information and we don't know what to
do with it, and we suck at interpreting which one
Whereas for the last like eight thousand years, it's been Hey,
I wonder why it rained today? Is it raining somewhere else?
I don't know? Is someone coming to invade my crops?
(35:28):
And now we'll let me go ask my neighbor. You know,
all this other stuff, quick break for the rest of
the day. We'll see it tomorrow and hopefully answer those
questions on the Financial Exchange and Springfield
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