September 23, 2024 • 35 mins
Chuck Zodda and Mike Armstrong wonder why voters love policies that economists hate. Why do some economists want to pay a gas tax? Comedian John Mulaney brutally roasts SF techies at Dreamforce conference. BJ's Wholesale Club eyes expansion far beyond New England. We get either a 4% mortgage rate or a stable job market.
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Speaker 1 (00:01):
The Financial Exchange is produced by Money Matters Radio and
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(00:21):
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(00:44):
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(01:06):
by Veterans Development Corporation. This is the Financial Exchange with
Chuck Zatta and Mike Armstrong.
Speaker 2 (01:14):
Chuck, Mike and Tucker with you here, kicking off the
second hour the Financial Exchange. We got stocks kind of
going eh, we don't know where we want to go.
Some of us go up, some of us go down.
Mostly we just kind of flop around and don't do
too much. But the Dow is up forty eight points,
the S and P is up nine, NASDAC up fourteen,
So bet a tenth of a percent, maybe fifteen hundreds
(01:37):
seven percent in the positive. Today. We've got the ten
year US Treasury continuing to see a little bit of
a sell off there, with rates rising now up to
three point seven seventy nine percent, up five bases points today.
Oil up eighteen cents barrel to seventy one eighteen the
(01:57):
triple A national average for gas prices today, though continuing
to see some further declines now at three twenty eight
tenths of a cent, and based on what we are
seeing in gasoline futures, looks like we may be making
a run at a national average of three dollars a
gallon sometime in the next couple weeks, so that is
(02:20):
potentially on tap here as far as what we're seeing,
a number of states already well below that three dollar mark.
The lowest that I've seen was Mississippi at two seventy
a gallon on average. But you've got most of the
Sun Belt in that ballpark, and Wisconsin, Jersey and Rhode
Island all amongst the lowest numbers that we're seeing nationwide
(02:42):
as well. And then we've got gold today, which is
up nine dollars and seventy cents announced to twenty six
fifty five and ninety cents. Gold did hit into all
time high earlier in the day, but has pulled back
not a ton, maybe five six bucks from that all
time high. Great piece today in the Wall Street Journal
(03:04):
that it's titled Voters love the Policies that Economists love
to hate, And basically what they did this is just
fantastic actually, in terms of the work that the Wall
Street Journal did on this. They pulled seven hundred and
fifty registered voters about different economic policies and then they
asked thirty nine economists and said, hey, what do you
(03:26):
think about these policies? And it's fascinating what we ended
up getting here, so they separated that. They called them
ordinary people and economists. I'll note that economists can be
ordinary people too. They're not all extraordinary. Some of us are,
but not all of us. But most of us, you know,
are pretty ordinary people as well. So the ordinary people
(03:48):
category in terms of, Hey, do you think it's a
good idea to eliminate taxes on tips for service workers?
Not a good idea? But are you in favor of
or against? Seventy nine percent in favor, fifteen percent against economists,
eighty seven percent against, ten percent in favor. Polar opposites,
quite honest, Yeah, eliminate taxes on Social Security income, even
(04:10):
if it increases the national debt. This is how they
pose the question, not my additional commentary. Sixty eight percent
in favor, twenty four percent against economist, ninety two percent
against five percent in favor. Impose a tariff of up
to twenty percent on all imported goods. Forty seven percent
in favor, forty percent against for the ordinary people, pretty
(04:31):
fifty to fifty ye for economists, one hundred percent pose.
That's a pretty universal one, pretty universal. Penalized companies that
engage in price gouging for food and groceries seventy two
percent in favor, twenty three percent oppose. That's for ordinary people.
For economists, sixty eight percent of POSE, thirteen percent in favor.
Speaker 3 (04:52):
Does that one surprise you a little bit? I mean,
I think with the economist commentary there is there isn't
price gouge and going on so tough to tough to
Actually I'm not.
Speaker 2 (05:04):
Going there for what what economists thinker don't think of
fair enough? You know, it's no way to do. It's just, hey,
what did they what do they say in the survey?
Speaker 3 (05:11):
Uh?
Speaker 2 (05:12):
Make the twenty seventeen Trump tax cuts that expired twenty
twenty five permanent ordinary people fifty percent in favor, thirty
two percent of POSE economists, eighty five percent of POSE
eight percent in favor. Where did they get some agreement
on this? A few different areas? First, give first time
(05:32):
home buyers twenty five thousand dollars to put towards down payment,
even if it increases the national debt. Thirty eight percent
of ordinary people in favor, fifty nine percent of POSE
economists eighty seven percent of POSE eight percent in favor.
So directionally the same closer there?
Speaker 3 (05:48):
Uh.
Speaker 2 (05:48):
The second one cap out of pockets spending on prescription
drugs to two thousand years for all Americans. Seventy seven
percent of ordinary people in favor, forty six percent of
economists wear sixteen percent of ordinary people opposed. Forty four
percent of economists so more in balance, Yeah, cap insulin
price is thirty five for all Americans. Eighty four percent
(06:08):
of ordinary people and sixty four percent of economists agree.
Only eight percent and twenty three percent of ordinary people
and economists pose.
Speaker 3 (06:16):
Pretty obscure one that I'm sure not many economists study,
but nonetheless.
Speaker 2 (06:20):
They still gave it an opinion. Yep, you know they
did what they did partially reversed Trump's corporate tax cuts
by increasing the rate on corporations to twenty eight percent
from twenty one. Forty eight percent of ordinary people said yeah,
that's good, Forty six percent said no, Fifty nine percent
of economists said yeah, that's good, thirty one percent said no. Finally,
(06:42):
the last one that was pulled here provided a six
thousand dollars tax credit to families with newborns. Sixty seven
percent of ordinary people and seventy four percent of economists
said yes. Twenty eight percent of ordinary people and twenty
three percent of economists said no.
Speaker 3 (06:55):
Interesting that that's the single closest one where economists and
ordinary people agree.
Speaker 2 (07:00):
Here's what when you're trying to figure out what's going
on here, in my opinion, the place where there is agreement,
the places where there is closer agreement, you try to
figure out, Okay, is there anything in common on these
three of them, in my opinion, effectively relate to healthcare.
(07:23):
Capping prescription drug costs, insulin prices, and providing a six
thousand dollars tax credit to families with newborns. More or less,
i'd classify that as healthcare. The other one, again, I
don't even know if there's any agreement on this, give
first time home. I guess there is, because the majority
of people disagree, whether economists or not. I think people
that are like, okay, that's not actually gonna change anything.
(07:45):
The other place where people agree is on increasing the
corporate tax rate, and even there it's kind of narrow.
It's just it's kind of split just on both sides.
The places where there are big disagreements are on trade policy,
trade policy, social security, taxation, tip taxation, price gouging, and
(08:07):
tax cuts. I can't really find a great well. I
think that I meshes.
Speaker 3 (08:15):
There to me. The one that seems to hold true
other than the trade one is forms of stimulus are
immensely popular among voters, although I guess the twenty five
thousand dollars.
Speaker 2 (08:28):
Twenty five thousand dollars for buying a home is not. Yeah,
I don't know what to make of this other than look,
the items that we rattled off. Some of them are
from the Trump campaign, some of them are from the
Harris campaign. There are some good ideas, there are some bad,
and there's no real consensus on all of these, but
(08:53):
there's some pretty clear consensus from economists on a number
of these when we talk about, hey, you know, are
these good or bad? And again, this is not to
say that economists are always right, because they're not. But
I'm just kind of laying out where there's disagreement on these.
The one that Mike and I have come back to
quite often, and this is one that's embraced by both
(09:13):
campaigns right now, is the elimination of taxes on tips
for service workers. And hey, why does everyone just classify
everything as a tip? Or why is the person working
in the front of the house get different tax treatment
from the back of the house, like, there's some real
questions on stuff that is polling really well there. On
the other hand, you look at some of this other
stuff that isn't polling well, and we had questions about
(09:35):
it too. The first time home buyers with an extra
twenty five thousand dollars. Well, hey, if you're just giving
everyone an extra twenty five thousand dollars but not increasing
the supply of homes, that's not really something that makes
sense either. And so it's something where as we try
to navigate, you know, what policy is actually going to
(09:56):
come out of this. Where I've always kind of landed
on this is, Look, imagine that the candidate that you
don't like wins an election. Do you want to be
granting them the power to control the things that you're
in favor of granting your candidate to control. And more
often than not, my answer is no, I prefer that
(10:18):
that not happen. And this is kind of how I
get to you know, hey, you don't want to have
the executive branch with too much control over anything. And
even when it comes to Congress, there are certain things
where you're like, hey, maybe you shouldn't even touch this,
this is best less for you know, the different states
to decide and this and that, or the courts. It's
(10:38):
you just don't want to grant anyone too much power.
Speaker 3 (10:41):
Can I bring up a quote that's been misattributed to
a bunch of people over time, and I think is
especially relevant to these types of debates, which one it's
about how a democracy is always temporary in nature. I
think I've seen it attribute to Ben Franklin, but I
think that's a misattribution.
Speaker 2 (10:56):
I've seen everything gets attributed to Ben Franklin.
Speaker 3 (10:58):
Yeah, seventeen hundred Scottish statesman. Quota democracy will continue to
exist up until the time that voters discover that they
can vote themselves generous gifts from the public treasury. From
that moment on, the majority always votes for the candidates
who promised the most benefits from the public treasury, which
with the result that every democracy will finally collapse due
to loose fiscal policy. Again, the attribution that I've seen
(11:23):
most commonly is to Alexander Fraser Tyler, a kind of
obscure Scotsman, just an obscure Scots Scotsman who lived in
the late seventeen hundreds.
Speaker 2 (11:32):
He been golf.
Speaker 3 (11:33):
I don't think so, but I find that quote especially
relevant right now. And I don't know that it's going
to lead to the end of democracy in our lifetimes,
but it does seem to me right now that this
presidential race is mostly about who can promise bigger gifts
to these Every week.
Speaker 2 (11:50):
There's a new one.
Speaker 3 (11:51):
Yeah, every week there's a new one, you know, pretty disheartening.
Speaker 2 (11:56):
Like, hey, now, like in what world you go back,
like fifteen twenty years in what world are we having
a serious conversation about, Hey, should we exempt tipped workers
from being taxed? Yeah? And not anyone else? Like, what
what are we doing here? What are we actually doing here?
(12:16):
It's it's a little bit comical. Hey, you know, grocery
prices are too high. You know, who can you know,
set the right prices for groceries? The government? The government?
What what are we doing here?
Speaker 3 (12:30):
It's strange world we live in right now.
Speaker 2 (12:33):
What's the right level of profit? Michael, imagine you walk
into your econ one on one, Mike, describe the right
level of profit? Okay, Like we've kind of jumped the
shark on this a little bit.
Speaker 1 (12:47):
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Speaker 3 (13:14):
Folks, if you haven't heard, the Financial Exchange is hitting
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(13:35):
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you know, different types of viewpoints we might have on
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average investor out there as well. But again that first event,
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It's right at the hotel which is connected to the casino.
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Speaker 1 (14:56):
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Speaker 2 (15:12):
Peace in Bloomberg opinion titled I want to pay higher
gas taxes and you should too. This is from Javier Bloss,
who is admittedly like a very good energy analyst. But
there's a difference between being a very good energy analyst
and being someone who still has popular positions when it
comes to things like the gas tax. So here's the
(15:33):
argument that Javier mix is. Look, oil prices have come
down significantly. If there's ever a time for governments to
enact higher gas tax prices in order to raise revenue
for improved transportation infrastructure, this is it.
Speaker 3 (15:48):
And he makes some reasonable arguments here. It does direct,
you know, create a direct link between road usage and payment,
although that's declining over time due to evs. They collect
a lot of money simple they're cheap to manage. Tax
Payers have previously largely accepted them, although that would be
debated since they have consistently voted down increasing gas taxes
(16:09):
across the board. And then they're also very difficult to evade.
Not a lot of people are refining oil into gases
gasoline in their basement. So no, all those things are true.
Speaker 2 (16:18):
You don't see much of that.
Speaker 3 (16:19):
You don't see a lot of evasion. The questions that
get raised on this are very simple.
Speaker 2 (16:24):
Okay, if you're instituting this because oil prices are low,
are you going to wave them when oil prices go up?
Speaker 3 (16:29):
And you could?
Speaker 2 (16:30):
And the answers we saw in twenty two is well, yeah,
a lot of states actually did wave their state level
gas taxes in twenty twenty two, so you did see
that as they tried to generate some relief four prices
of the pump.
Speaker 3 (16:43):
But it's unpopular on both the right and left, which
is probably why this is never read to happen. So
it's unpopular on the right, I think for obvious reasons
and not wanting to disincentivize gas vehicles. There's been a
general pushback against evs Oh that's changing a little bit
with Elon Musk's influence on the Trump campaign. I think,
sure on the left, there are regressive tax I mean,
(17:04):
you know, plain and simple. Actually, there's a few different
ways in which it's regressive, but you know, any tax
on consumption is generally considered regressive. If you make a
million dollars, the portion of your income going towards gas
tax is relatively small. And then furthermore, if you're making
a million dollars, you're more likely to drive a newer,
more fuel efficient or even electric vehicle, in which case
(17:25):
you aren't paying much of this tax at all. And
so Democrats hate it from the aggressiveness side, and there's
no real way to fix it on that end. I
think it would be if your goal, by the way,
is to dramatically lower the amount of gasoline consumption in cars,
then the gas tax is the very best way to
go about that. The problem is nobody's on the left.
(17:46):
There's reasons they're not willing to do it. On the right,
that's not their goal.
Speaker 2 (17:49):
Yeah, And the other thing that you have to remember
is it's not set in stone that money you raise
from the gas tax goes to fund transportation infrastructure. Either
in many states and even in level a lot of
it's pulled into other stuff.
Speaker 1 (18:02):
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(18:23):
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Speaker 2 (18:27):
I want to talk a little bit like have you
been to a conference?
Speaker 3 (18:30):
What do you mean?
Speaker 2 (18:31):
Have you ever been to a conference?
Speaker 4 (18:32):
Is a zoom conference?
Speaker 2 (18:33):
Just just a conference?
Speaker 3 (18:34):
I've been to a conference.
Speaker 2 (18:35):
Okay, So Salesforce had their big annual conference last week.
It's called dream Force and on I don't know if
it was the last day or the exactly when.
Speaker 3 (18:46):
Who goes to I mean, are these larger customers or like.
Speaker 2 (18:51):
Customers, like developmentors, developers, all these employees, like everyone gets
it's huge and and they hired the comedian John mulaney
to do a set one night, and.
Speaker 3 (19:08):
It's a big act.
Speaker 2 (19:09):
I gotta say, like John Nailedy, he went like full
Norm McDonald on this in terms of just absolutely going
at them walks in first thing, he says, let me
get this straight. You're hosting a Future of AI event
in a city that has failed humanity, humanity so miserably.
It's taking place in San Francisco. Then he goes it
(19:32):
says there were audible groans. Then he goes, you look
like a group who looked at the self checkout counters
at CVS and thought this is the future. He continues,
If Ai is truly smarter than us and tells us
that humans should die, then I think we should die
because so many of you feel imminently replaceable. He added,
(19:56):
can Ai sit there in a fleece vest? Can Ai
not go to events and and all day at the bar? Instead?
He just absolutely crushing them on this other things that
he said. What's important here is that we're looking for solutions,
and in looking for solutions, what were really after his
(20:17):
insights which then led to success, and now we can
start prepping the humans for robots. Some of the veguesst
language ever defined has been used here in the last
three days, and the fact that there are forty five
thousand quote trailblazers here couldn't devalue the title anymore. Oh
man like basically just just going right for the gut,
not not even like nice in any way, shape or form. Finally,
(20:39):
he concluded by thanking attendees for quote the world you're
creating for my son where he will never talk to
an actual human again. Instead, a little cartoon Einstein will
pop up and give him some sort of good answer
and probably refer to him as refer him to another chatbot. Ultimately,
me and my son are just two guys hitting whiffleballs
badly and yelling good job at each other. It's kind
(21:01):
of the same energy here at dream Force.
Speaker 3 (21:04):
I long to get to the place in my career
where people will hire me to insult them.
Speaker 2 (21:12):
Isn't that kind of what parts of our show do? No, No,
sometimes we do so, Like we read that piece about
the guy who said that the FED can't stop a
bear market, and we kind of roasted that. Yeah.
Speaker 3 (21:25):
You know, I was at a conference years ago, a
financial advisor conference where Martin Short was there. Oh yeah,
and yeah. I think it was actually more during a
lull in his career where he would do that type
of thing before.
Speaker 2 (21:38):
He got into what's the one that he does now?
Is it only murders?
Speaker 3 (21:42):
Yeah? But his takeaway was basically, you know, thank goodness,
I am so bad with money, because otherwise there is
no way that I would be sitting here talking to
all of you something like it's talking to all losers.
It's just like right out the gate. Just a good
insult did all the financial advisors out there, which was guys.
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Speaker 2 (23:06):
Mike, you want to talk about the expansion from Bjay's
Wholesale Club as they are closing in on two hundred
and fifty stores nationwide.
Speaker 3 (23:14):
Now, yeah, traditionally more of a Northeast player here, but
has been expanding and clearly has their eyes on a
national market. And my my main question here, Chuck, is
there actually room for BJ's and Costco in most markets?
Speaker 1 (23:28):
Look?
Speaker 3 (23:28):
Correct me if I'm wrong. You moved a few years
ago and are now a BJ's wholesale.
Speaker 2 (23:33):
Club number yep, I am.
Speaker 3 (23:36):
My takeaway from my limited experience with Costco is I
don't know that I can put my finger on any
one thing that I feel BJ strongly does better than Costco.
Speaker 2 (23:46):
I don't know if it's necessarily better or worse. But
there's always space for two, you know players in any market. Yeah,
you know, it's in something that is ultimately commoditized, which
is by like obscenely large amounts of dog food. You
can have two companies that both are about as good,
(24:09):
and you know, as an example, one of the things
that I've heard that's a problem with Costco these days
is if you go anytime on the weekend after nine
am or before I'm sorry, yeah, after nine am or
before like five pm, it's basically completely jammed.
Speaker 3 (24:26):
That's an indication that there could be more competition.
Speaker 2 (24:28):
Yeah, yeah, And so someone might just get fed up
with that and say, look, I'm gonna go try something
else that might not be as busy. Are there, you know,
they're their differences in the business models in terms of
who they target as well. Costco, interestingly enough, targets are
more upscale, consumer different. You take a look at their
meat selection, just as an example, and you get an
(24:48):
awful lot of high end stuff that creeps in there.
BJ's doesn't necessarily play in that same ballpark, and there
are some differences you know, around the edges too. So
I think that in looking at it, is it something
where I say, hey, did they do this better than
you know, Costco or a Sam's Club. I don't really know.
I don't think so. I don't think it's worse either,
(25:09):
I just think it's kind of slightly different. Hey, here
are the really big shelves with eight thousand rolls of
paper towels.
Speaker 3 (25:16):
Yeah, but you can bet there are a whole bunch
of markets that are currently served by neither.
Speaker 2 (25:20):
Sure that.
Speaker 3 (25:23):
In this day and age of subscription models and clubs,
seems to be something that might be popular. So we'll
see how the expansion goes. And we've certainly seen other
companies expand too quickly and struggle with it. But Bjay's
hoping to compete a little bit more directly on a
national basis with Costco going forward.
Speaker 2 (25:43):
And the other thing that I will say that maybe
skews towards more demand on this side of things is, Look,
we're dealing with a surgeon prices over the last few
years that has left a lot of people looking for,
you know, ways to cut things like grocery budgets and
things like that. I do my grocery shopping every weekend
at bjsus, especially like, look, I got two little kids
(26:06):
that eat threw a pint of blueberries a meal. I
can't go to freaking Whole Foods to buy blueberries for them.
Speaker 4 (26:14):
We bought four pints yesterday.
Speaker 2 (26:16):
And that's one day. And that's one day. You can
do four more today. The blueberries are too high. It's insane.
Speaker 3 (26:23):
Which of these companies, BJ's or Costco will be the
first one to lump a streaming service into their subscription?
I only half joking here, I would go with Costco.
Speaker 2 (26:35):
Yeah, Costco Netflix tie and feels about right, Yeah it does.
Let's take a quick break here. When we come back,
it's time for a little bit of stack Roulette.
Speaker 1 (26:44):
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Speaker 2 (27:44):
Mike, did you happen to catch the new Mozart single
over the weekend? Now, Tucker? No, what?
Speaker 3 (27:51):
What like the the Mozart?
Speaker 2 (27:54):
The Mozart that's the one. So a bunch of people
were floating around a library in Leipzig, I guess, and
legitimately found a two hundred and sixty year old composition
from Mozart that has never been played before. It's a banger,
(28:15):
and so they played it in Uh. I don't know
exactly where in Germany they ended up playing it over
the weekend, but it was the first new music from
Mozart in a couple hundred years. So, I don't know,
I find that really cool.
Speaker 4 (28:33):
Can we like listen to it or no?
Speaker 3 (28:36):
I don't know, Spotify it probably mix it into the
segment sometime Tucker has some bumper music?
Speaker 2 (28:42):
Yeah, one you maybe we can kick shows off with
its starting. You know, it's Mozart, very good with math,
very good with numbers.
Speaker 3 (28:50):
Gotta be in the public domain by now. I mean
you gotta be able to sample that for free. I
think you know new.
Speaker 2 (28:56):
It's a good question if if it's not new, Well,
here's the thing, very very old. Actually it might be old,
but the recording of it is new. We're gonna have
to get some law people on this and see what happened, Mike,
what do you got for me?
Speaker 3 (29:13):
Connor sent I think you don't even need to go
further than the title here. But I actually like the
point that he makes. We get either four percent mortgage
rates or a stable job market. You don't get both
anytime in the near future. I think is the point
that Connor is trying to make. And so here's what
he means. Tenure treasury yield has come down. Mortgage rates
(29:33):
are largely based on the tenure treasury yield. While the
Fed may choose to cut rates further, it is unlikely
that you get mortgage rates anywhere near four percent unless
we go through a really ugly recession, which means a
bunch of job loss. And I think that point might
be lost on some people. It's a fairly simple one,
and listeners of our show probably aren't lost on that one.
(29:54):
But those two things are pretty mutually exclusive, and you
may see ra come down. You could see them in
the high fives. But outside of a situation where unemployment
is ticking up over five percent, really tough to envision
a scenario where we get four percent of mortgage rates.
Speaker 2 (30:10):
Yeah, and the reason why is if you look at
what is priced into markets at the moment, by the
October FED meeting of next year, you've got an additional
two four six, you get an additional eight rate cuts
being priced in now you know, down to FED funds
rate of two hundred and seventy five to three hundred
(30:31):
basis points. So look in recessions, oftentimes you need to
see about four percentage points and cuts, so that could
take you down to like one seventy five to two.
But ultimately, the only way that you get there is
if you have a meaningful recession that requires like an
additional three and a half percent of rate cuts from here.
If not, then you start getting into scenarios where you say, okay,
(30:55):
if things are just slowing, maybe they can cut rates
and not necessarily have to bump them. You know, you
can still have another you know, two to two and
a half percent rate cuts. Okay, that's possible. But there's
also a scenario in which, hey, if the US economy
rebounds and inflation turns out to be bottoming around two
and a half to three percent instead of stabilizing around
two and a half percent. Gee, Now, now you've got
(31:18):
a question as to what happens to long term rates,
and they probably start to rise, and your six percent
mortgage is turned into seven or seven and a half
pretty easily in the event that inflation makes any kind
of even headfake upwards at some point next year. So
there's some real questions on that to watch for peace
(31:40):
In CNBC today, up to four hundred dollars to change
a light bulb appliance repair costs are no joke. Now,
they're not talking about someone charging you four hundred dollars
to come in and replace a light bulb in you know,
a lamp or the ceiling or something like that. Instead,
(32:01):
this was a case I'll quote here. I bought a
General Electric microwave oven in twenty twenty for three hundred
and fifty five dollars. Recently, I noticed the interior lighter
was out I told my husband and he took a
look go in and when it wasn't gonna be an
easy fix, so they had to call a technician. They
said that the labor costs could be up to four
hundred dollars and that didn't even include the cost of
the light bulb.
Speaker 3 (32:20):
That's just was it a ge microwave? Oh yes, yeah, yes, yeah.
Speaker 2 (32:25):
So in any case, this is not, you know, the
norm that we're talking about.
Speaker 3 (32:30):
But is that honestly the business model? Hey, we need
to make these products so that they fail or require
some service within a few years, because otherwise, if we
make a great microwave, well then who's going.
Speaker 2 (32:43):
To buy a new one?
Speaker 4 (32:45):
I mean, you hear people all the time saying their
appliance is crap. The bed after ten years, right, will
replace it.
Speaker 2 (32:52):
Look, if you get ten years out of anything, I
view that as a win.
Speaker 3 (32:56):
I recognize that. But like, how many grandmas still of
the you know, nineteen seventies teal refrigerator that's just been
running strong since then.
Speaker 4 (33:05):
Yeah, we have a old, old refrigerator in the basement
and it's the coldest beer you ever have. Okay, but
the one we had to replace in the kitchen it
was fifteen years old and we had to replace them.
Speaker 3 (33:16):
Fifteen years Yeah, I'd be happy with that.
Speaker 2 (33:18):
The thing is, people don't want to pay for quality. Yeah,
you know, like you will get how much a refrigerator
or a TV or something costs these days.
Speaker 3 (33:28):
And compared to what it was inflation adjusted, and the right.
Speaker 2 (33:31):
It is if you inflation adjust the cost of appliances
from back then, people generally don't want to pay for
that quality. Yeah, And so you get into this cycle
where you're buying these things frequently. And the problem is
also that remember with any product, there's a wide distribution
of how long they end up lasting. The average might
be eight years on a washer dryer, but there are
(33:53):
some that get stuck with the one that break after
two and there are others that can get through twenty
five years no problem. Yeah, and neither of those are right.
It's just okay, you got lucky with however it worked
out well. You had the situation with the vacuum cleaner. Right,
here's the This is the one that I always come
back to where I just don't understand how this is
a business for vacuum cleaner repair. You can go out
on Amazon now and buy a new Shark vacuum for
(34:16):
one hundred and twenty dollars. Why are you ever going
to repair it? Because even if you you will get
a repair a vacuum cleaner repair person. Okay, what do
they want to be making? Well, look, you can get
a job at Amazon paying twenty dollars an hour now,
so you're not gonna charge just that. You gotta be
probably at least thirty to forty plus parts plus just
(34:37):
your overall overhead. I'm probably paying one hundred and twenty
dollars just to fix the thing, and I could get
a brand new one like that.
Speaker 3 (34:44):
Yeah.
Speaker 2 (34:44):
So there's other places where the prices have come down
so much that it's almost you look at it, you go,
why would I try to repair this? It's gonna cost
me more because they're so cheap. In some cases now
I generally still try.
Speaker 3 (34:57):
Ma, you've got a passion for vacuum repair. Chuck could go, what's.
Speaker 2 (35:02):
The name of the place in the Breaking Bad Universe?
I was just about to say that, Yeah, you were
going that way. Yep, Yeah, change your identity exactly. Yeah.
In any case, we got markets slightly up. The Dow
was now up forty seven points. The s and p's
up nineteen, NASDAC up sixty five, so a little bit
of continued up. We're drift here. We'll see if we
(35:23):
get new all time high today again at the close,
all done for the day, Back at it tomorrow on
the Financial Exchange. We'll see you then
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
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(01:06):
by Veterans Development Corporation. This is the Financial Exchange with
Chuck Zatta and Mike Armstrong.
Speaker 2 (01:14):
Chuck, Mike and Tucker with you here, kicking off the
second hour the Financial Exchange. We got stocks kind of
going eh, we don't know where we want to go.
Some of us go up, some of us go down.
Mostly we just kind of flop around and don't do
too much. But the Dow is up forty eight points,
the S and P is up nine, NASDAC up fourteen,
So bet a tenth of a percent, maybe fifteen hundreds
(01:37):
seven percent in the positive. Today. We've got the ten
year US Treasury continuing to see a little bit of
a sell off there, with rates rising now up to
three point seven seventy nine percent, up five bases points today.
Oil up eighteen cents barrel to seventy one eighteen the
(01:57):
triple A national average for gas prices today, though continuing
to see some further declines now at three twenty eight
tenths of a cent, and based on what we are
seeing in gasoline futures, looks like we may be making
a run at a national average of three dollars a
gallon sometime in the next couple weeks, so that is
(02:20):
potentially on tap here as far as what we're seeing,
a number of states already well below that three dollar mark.
The lowest that I've seen was Mississippi at two seventy
a gallon on average. But you've got most of the
Sun Belt in that ballpark, and Wisconsin, Jersey and Rhode
Island all amongst the lowest numbers that we're seeing nationwide
(02:42):
as well. And then we've got gold today, which is
up nine dollars and seventy cents announced to twenty six
fifty five and ninety cents. Gold did hit into all
time high earlier in the day, but has pulled back
not a ton, maybe five six bucks from that all
time high. Great piece today in the Wall Street Journal
(03:04):
that it's titled Voters love the Policies that Economists love
to hate, And basically what they did this is just
fantastic actually, in terms of the work that the Wall
Street Journal did on this. They pulled seven hundred and
fifty registered voters about different economic policies and then they
asked thirty nine economists and said, hey, what do you
(03:26):
think about these policies? And it's fascinating what we ended
up getting here, so they separated that. They called them
ordinary people and economists. I'll note that economists can be
ordinary people too. They're not all extraordinary. Some of us are,
but not all of us. But most of us, you know,
are pretty ordinary people as well. So the ordinary people
(03:48):
category in terms of, Hey, do you think it's a
good idea to eliminate taxes on tips for service workers?
Not a good idea? But are you in favor of
or against? Seventy nine percent in favor, fifteen percent against economists,
eighty seven percent against, ten percent in favor. Polar opposites,
quite honest, Yeah, eliminate taxes on Social Security income, even
(04:10):
if it increases the national debt. This is how they
pose the question, not my additional commentary. Sixty eight percent
in favor, twenty four percent against economist, ninety two percent
against five percent in favor. Impose a tariff of up
to twenty percent on all imported goods. Forty seven percent
in favor, forty percent against for the ordinary people, pretty
(04:31):
fifty to fifty ye for economists, one hundred percent pose.
That's a pretty universal one, pretty universal. Penalized companies that
engage in price gouging for food and groceries seventy two
percent in favor, twenty three percent oppose. That's for ordinary people.
For economists, sixty eight percent of POSE, thirteen percent in favor.
Speaker 3 (04:52):
Does that one surprise you a little bit? I mean,
I think with the economist commentary there is there isn't
price gouge and going on so tough to tough to
Actually I'm not.
Speaker 2 (05:04):
Going there for what what economists thinker don't think of
fair enough? You know, it's no way to do. It's just, hey,
what did they what do they say in the survey?
Speaker 3 (05:11):
Uh?
Speaker 2 (05:12):
Make the twenty seventeen Trump tax cuts that expired twenty
twenty five permanent ordinary people fifty percent in favor, thirty
two percent of POSE economists, eighty five percent of POSE
eight percent in favor. Where did they get some agreement
on this? A few different areas? First, give first time
(05:32):
home buyers twenty five thousand dollars to put towards down payment,
even if it increases the national debt. Thirty eight percent
of ordinary people in favor, fifty nine percent of POSE
economists eighty seven percent of POSE eight percent in favor.
So directionally the same closer there?
Speaker 3 (05:48):
Uh.
Speaker 2 (05:48):
The second one cap out of pockets spending on prescription
drugs to two thousand years for all Americans. Seventy seven
percent of ordinary people in favor, forty six percent of
economists wear sixteen percent of ordinary people opposed. Forty four
percent of economists so more in balance, Yeah, cap insulin
price is thirty five for all Americans. Eighty four percent
(06:08):
of ordinary people and sixty four percent of economists agree.
Only eight percent and twenty three percent of ordinary people
and economists pose.
Speaker 3 (06:16):
Pretty obscure one that I'm sure not many economists study,
but nonetheless.
Speaker 2 (06:20):
They still gave it an opinion. Yep, you know they
did what they did partially reversed Trump's corporate tax cuts
by increasing the rate on corporations to twenty eight percent
from twenty one. Forty eight percent of ordinary people said yeah,
that's good, Forty six percent said no, Fifty nine percent
of economists said yeah, that's good, thirty one percent said no. Finally,
(06:42):
the last one that was pulled here provided a six
thousand dollars tax credit to families with newborns. Sixty seven
percent of ordinary people and seventy four percent of economists
said yes. Twenty eight percent of ordinary people and twenty
three percent of economists said no.
Speaker 3 (06:55):
Interesting that that's the single closest one where economists and
ordinary people agree.
Speaker 2 (07:00):
Here's what when you're trying to figure out what's going
on here, in my opinion, the place where there is agreement,
the places where there is closer agreement, you try to
figure out, Okay, is there anything in common on these
three of them, in my opinion, effectively relate to healthcare.
(07:23):
Capping prescription drug costs, insulin prices, and providing a six
thousand dollars tax credit to families with newborns. More or less,
i'd classify that as healthcare. The other one, again, I
don't even know if there's any agreement on this, give
first time home. I guess there is, because the majority
of people disagree, whether economists or not. I think people
that are like, okay, that's not actually gonna change anything.
(07:45):
The other place where people agree is on increasing the
corporate tax rate, and even there it's kind of narrow.
It's just it's kind of split just on both sides.
The places where there are big disagreements are on trade policy,
trade policy, social security, taxation, tip taxation, price gouging, and
(08:07):
tax cuts. I can't really find a great well. I
think that I meshes.
Speaker 3 (08:15):
There to me. The one that seems to hold true
other than the trade one is forms of stimulus are
immensely popular among voters, although I guess the twenty five
thousand dollars.
Speaker 2 (08:28):
Twenty five thousand dollars for buying a home is not. Yeah,
I don't know what to make of this other than look,
the items that we rattled off. Some of them are
from the Trump campaign, some of them are from the
Harris campaign. There are some good ideas, there are some bad,
and there's no real consensus on all of these, but
(08:53):
there's some pretty clear consensus from economists on a number
of these when we talk about, hey, you know, are
these good or bad? And again, this is not to
say that economists are always right, because they're not. But
I'm just kind of laying out where there's disagreement on these.
The one that Mike and I have come back to
quite often, and this is one that's embraced by both
(09:13):
campaigns right now, is the elimination of taxes on tips
for service workers. And hey, why does everyone just classify
everything as a tip? Or why is the person working
in the front of the house get different tax treatment
from the back of the house, like, there's some real
questions on stuff that is polling really well there. On
the other hand, you look at some of this other
stuff that isn't polling well, and we had questions about
(09:35):
it too. The first time home buyers with an extra
twenty five thousand dollars. Well, hey, if you're just giving
everyone an extra twenty five thousand dollars but not increasing
the supply of homes, that's not really something that makes
sense either. And so it's something where as we try
to navigate, you know, what policy is actually going to
(09:56):
come out of this. Where I've always kind of landed
on this is, Look, imagine that the candidate that you
don't like wins an election. Do you want to be
granting them the power to control the things that you're
in favor of granting your candidate to control. And more
often than not, my answer is no, I prefer that
(10:18):
that not happen. And this is kind of how I
get to you know, hey, you don't want to have
the executive branch with too much control over anything. And
even when it comes to Congress, there are certain things
where you're like, hey, maybe you shouldn't even touch this,
this is best less for you know, the different states
to decide and this and that, or the courts. It's
(10:38):
you just don't want to grant anyone too much power.
Speaker 3 (10:41):
Can I bring up a quote that's been misattributed to
a bunch of people over time, and I think is
especially relevant to these types of debates, which one it's
about how a democracy is always temporary in nature. I
think I've seen it attribute to Ben Franklin, but I
think that's a misattribution.
Speaker 2 (10:56):
I've seen everything gets attributed to Ben Franklin.
Speaker 3 (10:58):
Yeah, seventeen hundred Scottish statesman. Quota democracy will continue to
exist up until the time that voters discover that they
can vote themselves generous gifts from the public treasury. From
that moment on, the majority always votes for the candidates
who promised the most benefits from the public treasury, which
with the result that every democracy will finally collapse due
to loose fiscal policy. Again, the attribution that I've seen
(11:23):
most commonly is to Alexander Fraser Tyler, a kind of
obscure Scotsman, just an obscure Scots Scotsman who lived in
the late seventeen hundreds.
Speaker 2 (11:32):
He been golf.
Speaker 3 (11:33):
I don't think so, but I find that quote especially
relevant right now. And I don't know that it's going
to lead to the end of democracy in our lifetimes,
but it does seem to me right now that this
presidential race is mostly about who can promise bigger gifts
to these Every week.
Speaker 2 (11:50):
There's a new one.
Speaker 3 (11:51):
Yeah, every week there's a new one, you know, pretty disheartening.
Speaker 2 (11:56):
Like, hey, now, like in what world you go back,
like fifteen twenty years in what world are we having
a serious conversation about, Hey, should we exempt tipped workers
from being taxed? Yeah? And not anyone else? Like, what
what are we doing here? What are we actually doing here?
(12:16):
It's it's a little bit comical. Hey, you know, grocery
prices are too high. You know, who can you know,
set the right prices for groceries? The government? The government?
What what are we doing here?
Speaker 3 (12:30):
It's strange world we live in right now.
Speaker 2 (12:33):
What's the right level of profit? Michael, imagine you walk
into your econ one on one, Mike, describe the right
level of profit? Okay, Like we've kind of jumped the
shark on this a little bit.
Speaker 1 (12:47):
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(13:07):
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Speaker 3 (13:14):
Folks, if you haven't heard, the Financial Exchange is hitting
the road and we want you to join us. We're
going to the MGM Springfield on October eighth and the
Margaritaville Hotel and Resort on Hyghena's on October twenty fourth, again,
two live broadcasts of the Financial Exchange, one out in Springfield,
one out in High Aennas. I'll give a bit more
details in a moment, but we have done these in
(13:35):
the past, but it's usually a pretty fun event. We're
going to do a live broadcast starting at ten am
from those locations. People are welcome to sit in and
we'll talk to folks in between breaks during the show,
and then subsequently after the broadcast, we'll be doing a
live lunch and seminar with the Armstrong Advisory Groups. An
educational lunch with us from the AG. We'll be talking
(13:57):
about the upcoming presidential election policy that both candidates have proposed,
you know, different types of viewpoints we might have on
where that leads markets and what it means for the
average investor out there as well. But again that first event,
it's going to be at the MGM Springfield on October eighth.
It's right at the hotel which is connected to the casino.
(14:19):
You can get a bunch more details by going to
Armstrong Advisory dot com slash events. By the way, the
Marguerite Deville Hotel and Resorts in finanis that one's gonna
be on October twenty fourth at Lambert's actually gonna be
joining us there the host of the xtt XTK Morning Show.
But again these two live events on October eighth and
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(14:40):
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Speaker 1 (14:56):
The proceeding was paid for by Armstrong Advisory Group, a
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Armstrong guide a specific financial, legal, or tax advice. Consult
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Speaker 2 (15:12):
Peace in Bloomberg opinion titled I want to pay higher
gas taxes and you should too. This is from Javier Bloss,
who is admittedly like a very good energy analyst. But
there's a difference between being a very good energy analyst
and being someone who still has popular positions when it
comes to things like the gas tax. So here's the
(15:33):
argument that Javier mix is. Look, oil prices have come
down significantly. If there's ever a time for governments to
enact higher gas tax prices in order to raise revenue
for improved transportation infrastructure, this is it.
Speaker 3 (15:48):
And he makes some reasonable arguments here. It does direct,
you know, create a direct link between road usage and payment,
although that's declining over time due to evs. They collect
a lot of money simple they're cheap to manage. Tax
Payers have previously largely accepted them, although that would be
debated since they have consistently voted down increasing gas taxes
(16:09):
across the board. And then they're also very difficult to evade.
Not a lot of people are refining oil into gases
gasoline in their basement. So no, all those things are true.
Speaker 2 (16:18):
You don't see much of that.
Speaker 3 (16:19):
You don't see a lot of evasion. The questions that
get raised on this are very simple.
Speaker 2 (16:24):
Okay, if you're instituting this because oil prices are low,
are you going to wave them when oil prices go up?
Speaker 3 (16:29):
And you could?
Speaker 2 (16:30):
And the answers we saw in twenty two is well, yeah,
a lot of states actually did wave their state level
gas taxes in twenty twenty two, so you did see
that as they tried to generate some relief four prices
of the pump.
Speaker 3 (16:43):
But it's unpopular on both the right and left, which
is probably why this is never read to happen. So
it's unpopular on the right, I think for obvious reasons
and not wanting to disincentivize gas vehicles. There's been a
general pushback against evs Oh that's changing a little bit
with Elon Musk's influence on the Trump campaign. I think,
sure on the left, there are regressive tax I mean,
(17:04):
you know, plain and simple. Actually, there's a few different
ways in which it's regressive, but you know, any tax
on consumption is generally considered regressive. If you make a
million dollars, the portion of your income going towards gas
tax is relatively small. And then furthermore, if you're making
a million dollars, you're more likely to drive a newer,
more fuel efficient or even electric vehicle, in which case
(17:25):
you aren't paying much of this tax at all. And
so Democrats hate it from the aggressiveness side, and there's
no real way to fix it on that end. I
think it would be if your goal, by the way,
is to dramatically lower the amount of gasoline consumption in cars,
then the gas tax is the very best way to
go about that. The problem is nobody's on the left.
(17:46):
There's reasons they're not willing to do it. On the right,
that's not their goal.
Speaker 2 (17:49):
Yeah, And the other thing that you have to remember
is it's not set in stone that money you raise
from the gas tax goes to fund transportation infrastructure. Either
in many states and even in level a lot of
it's pulled into other stuff.
Speaker 1 (18:02):
Anyways, bringing the latest financial news straight to your radio
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(18:23):
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Speaker 2 (18:27):
I want to talk a little bit like have you
been to a conference?
Speaker 3 (18:30):
What do you mean?
Speaker 2 (18:31):
Have you ever been to a conference?
Speaker 4 (18:32):
Is a zoom conference?
Speaker 2 (18:33):
Just just a conference?
Speaker 3 (18:34):
I've been to a conference.
Speaker 2 (18:35):
Okay, So Salesforce had their big annual conference last week.
It's called dream Force and on I don't know if
it was the last day or the exactly when.
Speaker 3 (18:46):
Who goes to I mean, are these larger customers or like.
Speaker 2 (18:51):
Customers, like developmentors, developers, all these employees, like everyone gets
it's huge and and they hired the comedian John mulaney
to do a set one night, and.
Speaker 3 (19:08):
It's a big act.
Speaker 2 (19:09):
I gotta say, like John Nailedy, he went like full
Norm McDonald on this in terms of just absolutely going
at them walks in first thing, he says, let me
get this straight. You're hosting a Future of AI event
in a city that has failed humanity, humanity so miserably.
It's taking place in San Francisco. Then he goes it
(19:32):
says there were audible groans. Then he goes, you look
like a group who looked at the self checkout counters
at CVS and thought this is the future. He continues,
If Ai is truly smarter than us and tells us
that humans should die, then I think we should die
because so many of you feel imminently replaceable. He added,
(19:56):
can Ai sit there in a fleece vest? Can Ai
not go to events and and all day at the bar? Instead?
He just absolutely crushing them on this other things that
he said. What's important here is that we're looking for solutions,
and in looking for solutions, what were really after his
(20:17):
insights which then led to success, and now we can
start prepping the humans for robots. Some of the veguesst
language ever defined has been used here in the last
three days, and the fact that there are forty five
thousand quote trailblazers here couldn't devalue the title anymore. Oh
man like basically just just going right for the gut,
not not even like nice in any way, shape or form. Finally,
(20:39):
he concluded by thanking attendees for quote the world you're
creating for my son where he will never talk to
an actual human again. Instead, a little cartoon Einstein will
pop up and give him some sort of good answer
and probably refer to him as refer him to another chatbot. Ultimately,
me and my son are just two guys hitting whiffleballs
badly and yelling good job at each other. It's kind
(21:01):
of the same energy here at dream Force.
Speaker 3 (21:04):
I long to get to the place in my career
where people will hire me to insult them.
Speaker 2 (21:12):
Isn't that kind of what parts of our show do? No, No,
sometimes we do so, Like we read that piece about
the guy who said that the FED can't stop a
bear market, and we kind of roasted that. Yeah.
Speaker 3 (21:25):
You know, I was at a conference years ago, a
financial advisor conference where Martin Short was there. Oh yeah,
and yeah. I think it was actually more during a
lull in his career where he would do that type
of thing before.
Speaker 2 (21:38):
He got into what's the one that he does now?
Is it only murders?
Speaker 3 (21:42):
Yeah? But his takeaway was basically, you know, thank goodness,
I am so bad with money, because otherwise there is
no way that I would be sitting here talking to
all of you something like it's talking to all losers.
It's just like right out the gate. Just a good
insult did all the financial advisors out there, which was guys.
Speaker 4 (22:02):
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Speaker 2 (23:06):
Mike, you want to talk about the expansion from Bjay's
Wholesale Club as they are closing in on two hundred
and fifty stores nationwide.
Speaker 3 (23:14):
Now, yeah, traditionally more of a Northeast player here, but
has been expanding and clearly has their eyes on a
national market. And my my main question here, Chuck, is
there actually room for BJ's and Costco in most markets?
Speaker 1 (23:28):
Look?
Speaker 3 (23:28):
Correct me if I'm wrong. You moved a few years
ago and are now a BJ's wholesale.
Speaker 2 (23:33):
Club number yep, I am.
Speaker 3 (23:36):
My takeaway from my limited experience with Costco is I
don't know that I can put my finger on any
one thing that I feel BJ strongly does better than Costco.
Speaker 2 (23:46):
I don't know if it's necessarily better or worse. But
there's always space for two, you know players in any market. Yeah,
you know, it's in something that is ultimately commoditized, which
is by like obscenely large amounts of dog food. You
can have two companies that both are about as good,
(24:09):
and you know, as an example, one of the things
that I've heard that's a problem with Costco these days
is if you go anytime on the weekend after nine
am or before I'm sorry, yeah, after nine am or
before like five pm, it's basically completely jammed.
Speaker 3 (24:26):
That's an indication that there could be more competition.
Speaker 2 (24:28):
Yeah, yeah, And so someone might just get fed up
with that and say, look, I'm gonna go try something
else that might not be as busy. Are there, you know,
they're their differences in the business models in terms of
who they target as well. Costco, interestingly enough, targets are
more upscale, consumer different. You take a look at their
meat selection, just as an example, and you get an
(24:48):
awful lot of high end stuff that creeps in there.
BJ's doesn't necessarily play in that same ballpark, and there
are some differences you know, around the edges too. So
I think that in looking at it, is it something
where I say, hey, did they do this better than
you know, Costco or a Sam's Club. I don't really know.
I don't think so. I don't think it's worse either,
(25:09):
I just think it's kind of slightly different. Hey, here
are the really big shelves with eight thousand rolls of
paper towels.
Speaker 3 (25:16):
Yeah, but you can bet there are a whole bunch
of markets that are currently served by neither.
Speaker 2 (25:20):
Sure that.
Speaker 3 (25:23):
In this day and age of subscription models and clubs,
seems to be something that might be popular. So we'll
see how the expansion goes. And we've certainly seen other
companies expand too quickly and struggle with it. But Bjay's
hoping to compete a little bit more directly on a
national basis with Costco going forward.
Speaker 2 (25:43):
And the other thing that I will say that maybe
skews towards more demand on this side of things is, Look,
we're dealing with a surgeon prices over the last few
years that has left a lot of people looking for,
you know, ways to cut things like grocery budgets and
things like that. I do my grocery shopping every weekend
at bjsus, especially like, look, I got two little kids
(26:06):
that eat threw a pint of blueberries a meal. I
can't go to freaking Whole Foods to buy blueberries for them.
Speaker 4 (26:14):
We bought four pints yesterday.
Speaker 2 (26:16):
And that's one day. And that's one day. You can
do four more today. The blueberries are too high. It's insane.
Speaker 3 (26:23):
Which of these companies, BJ's or Costco will be the
first one to lump a streaming service into their subscription?
I only half joking here, I would go with Costco.
Speaker 2 (26:35):
Yeah, Costco Netflix tie and feels about right, Yeah it does.
Let's take a quick break here. When we come back,
it's time for a little bit of stack Roulette.
Speaker 1 (26:44):
The Financial Exchange streams live on YouTube. Like our page
and stay up to date on breaking business news all
morning Long. Base is the Financial Exchange Radio network business
and financial news affecting the markets and your wallet. We've
got it straight from Wall Street right here on the
Financial Exchange Radio Network.
Speaker 4 (27:08):
The Financial Exchange is built an incredible partnership with the
Disabled American Veterans Department of Massachusetts. We can't wait to
take part in this year's DAV five K, set for
Saturday November ninth at Fort Independence on Castle Island, and
registrations now open. You can help our great American heroes
by walking, running, or simply making a donation. Your gifts
will support services such as the Veteran Advancement Program, which
(27:31):
offers permanent and affordable housing opportunities for veterans and their dependents.
Learn more at DAV FIVEK dot Boston. The DVA five
K Boston is presented by Veterans Development Corporation.
Speaker 2 (27:44):
Mike, did you happen to catch the new Mozart single
over the weekend? Now, Tucker? No, what?
Speaker 3 (27:51):
What like the the Mozart?
Speaker 2 (27:54):
The Mozart that's the one. So a bunch of people
were floating around a library in Leipzig, I guess, and
legitimately found a two hundred and sixty year old composition
from Mozart that has never been played before. It's a banger,
(28:15):
and so they played it in Uh. I don't know
exactly where in Germany they ended up playing it over
the weekend, but it was the first new music from
Mozart in a couple hundred years. So, I don't know,
I find that really cool.
Speaker 4 (28:33):
Can we like listen to it or no?
Speaker 3 (28:36):
I don't know, Spotify it probably mix it into the
segment sometime Tucker has some bumper music?
Speaker 2 (28:42):
Yeah, one you maybe we can kick shows off with
its starting. You know, it's Mozart, very good with math,
very good with numbers.
Speaker 3 (28:50):
Gotta be in the public domain by now. I mean
you gotta be able to sample that for free. I
think you know new.
Speaker 2 (28:56):
It's a good question if if it's not new, Well,
here's the thing, very very old. Actually it might be old,
but the recording of it is new. We're gonna have
to get some law people on this and see what happened, Mike,
what do you got for me?
Speaker 3 (29:13):
Connor sent I think you don't even need to go
further than the title here. But I actually like the
point that he makes. We get either four percent mortgage
rates or a stable job market. You don't get both
anytime in the near future. I think is the point
that Connor is trying to make. And so here's what
he means. Tenure treasury yield has come down. Mortgage rates
(29:33):
are largely based on the tenure treasury yield. While the
Fed may choose to cut rates further, it is unlikely
that you get mortgage rates anywhere near four percent unless
we go through a really ugly recession, which means a
bunch of job loss. And I think that point might
be lost on some people. It's a fairly simple one,
and listeners of our show probably aren't lost on that one.
(29:54):
But those two things are pretty mutually exclusive, and you
may see ra come down. You could see them in
the high fives. But outside of a situation where unemployment
is ticking up over five percent, really tough to envision
a scenario where we get four percent of mortgage rates.
Speaker 2 (30:10):
Yeah, and the reason why is if you look at
what is priced into markets at the moment, by the
October FED meeting of next year, you've got an additional
two four six, you get an additional eight rate cuts
being priced in now you know, down to FED funds
rate of two hundred and seventy five to three hundred
(30:31):
basis points. So look in recessions, oftentimes you need to
see about four percentage points and cuts, so that could
take you down to like one seventy five to two.
But ultimately, the only way that you get there is
if you have a meaningful recession that requires like an
additional three and a half percent of rate cuts from here.
If not, then you start getting into scenarios where you say, okay,
(30:55):
if things are just slowing, maybe they can cut rates
and not necessarily have to bump them. You know, you
can still have another you know, two to two and
a half percent rate cuts. Okay, that's possible. But there's
also a scenario in which, hey, if the US economy
rebounds and inflation turns out to be bottoming around two
and a half to three percent instead of stabilizing around
two and a half percent. Gee, Now, now you've got
(31:18):
a question as to what happens to long term rates,
and they probably start to rise, and your six percent
mortgage is turned into seven or seven and a half
pretty easily in the event that inflation makes any kind
of even headfake upwards at some point next year. So
there's some real questions on that to watch for peace
(31:40):
In CNBC today, up to four hundred dollars to change
a light bulb appliance repair costs are no joke. Now,
they're not talking about someone charging you four hundred dollars
to come in and replace a light bulb in you know,
a lamp or the ceiling or something like that. Instead,
(32:01):
this was a case I'll quote here. I bought a
General Electric microwave oven in twenty twenty for three hundred
and fifty five dollars. Recently, I noticed the interior lighter
was out I told my husband and he took a
look go in and when it wasn't gonna be an
easy fix, so they had to call a technician. They
said that the labor costs could be up to four
hundred dollars and that didn't even include the cost of
the light bulb.
Speaker 3 (32:20):
That's just was it a ge microwave? Oh yes, yeah, yes, yeah.
Speaker 2 (32:25):
So in any case, this is not, you know, the
norm that we're talking about.
Speaker 3 (32:30):
But is that honestly the business model? Hey, we need
to make these products so that they fail or require
some service within a few years, because otherwise, if we
make a great microwave, well then who's going.
Speaker 2 (32:43):
To buy a new one?
Speaker 4 (32:45):
I mean, you hear people all the time saying their
appliance is crap. The bed after ten years, right, will
replace it.
Speaker 2 (32:52):
Look, if you get ten years out of anything, I
view that as a win.
Speaker 3 (32:56):
I recognize that. But like, how many grandmas still of
the you know, nineteen seventies teal refrigerator that's just been
running strong since then.
Speaker 4 (33:05):
Yeah, we have a old, old refrigerator in the basement
and it's the coldest beer you ever have. Okay, but
the one we had to replace in the kitchen it
was fifteen years old and we had to replace them.
Speaker 3 (33:16):
Fifteen years Yeah, I'd be happy with that.
Speaker 2 (33:18):
The thing is, people don't want to pay for quality. Yeah,
you know, like you will get how much a refrigerator
or a TV or something costs these days.
Speaker 3 (33:28):
And compared to what it was inflation adjusted, and the right.
Speaker 2 (33:31):
It is if you inflation adjust the cost of appliances
from back then, people generally don't want to pay for
that quality. Yeah, And so you get into this cycle
where you're buying these things frequently. And the problem is
also that remember with any product, there's a wide distribution
of how long they end up lasting. The average might
be eight years on a washer dryer, but there are
(33:53):
some that get stuck with the one that break after
two and there are others that can get through twenty
five years no problem. Yeah, and neither of those are right.
It's just okay, you got lucky with however it worked
out well. You had the situation with the vacuum cleaner. Right,
here's the This is the one that I always come
back to where I just don't understand how this is
a business for vacuum cleaner repair. You can go out
on Amazon now and buy a new Shark vacuum for
(34:16):
one hundred and twenty dollars. Why are you ever going
to repair it? Because even if you you will get
a repair a vacuum cleaner repair person. Okay, what do
they want to be making? Well, look, you can get
a job at Amazon paying twenty dollars an hour now,
so you're not gonna charge just that. You gotta be
probably at least thirty to forty plus parts plus just
(34:37):
your overall overhead. I'm probably paying one hundred and twenty
dollars just to fix the thing, and I could get
a brand new one like that.
Speaker 3 (34:44):
Yeah.
Speaker 2 (34:44):
So there's other places where the prices have come down
so much that it's almost you look at it, you go,
why would I try to repair this? It's gonna cost
me more because they're so cheap. In some cases now
I generally still try.
Speaker 3 (34:57):
Ma, you've got a passion for vacuum repair. Chuck could go, what's.
Speaker 2 (35:02):
The name of the place in the Breaking Bad Universe?
I was just about to say that, Yeah, you were
going that way. Yep, Yeah, change your identity exactly. Yeah.
In any case, we got markets slightly up. The Dow
was now up forty seven points. The s and p's
up nineteen, NASDAC up sixty five, so a little bit
of continued up. We're drift here. We'll see if we
(35:23):
get new all time high today again at the close,
all done for the day, Back at it tomorrow on
the Financial Exchange. We'll see you then
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