September 26, 2024 • 36 mins
Chuck Zodda and Mike Armstrong discuss the difficulties finding a new job but dispute the notion that it is harder than ever. Some economists think this might be a bad omen for the economy. Boeing needs to take a cue from UPS and pay its strikers. OpenAI to become for-profit company. Super Micro shares tumble 12% after DOJ reportedly opens a probe into the company. Raising the full retirement age to 69 won't save the program. Are we finally seeing the end of the cheap burger?
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Speaker 1 (00:00):
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(00:42):
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(01:04):
by Veterans Development Corporation. This is the Financial Exchange with
Chuck Zada and Mike Armstrong.
Speaker 2 (01:12):
Kicking off the second hour of the Financial Exchange. And
we've got stocks in the green today with the Dow
Jones up two hundred and eight points, the S and
P five hundred up seventeen points at the moment, and
the Nasdaq up fifty two So about a quarter to
a half percent gain for your major US indices ten
(01:34):
your US Treasury up two basis points to three point
eight percent. Right now, we've got Oil West Texas Intermedia
down a dollar fifty eight a barrel, this on the
back of a report that the Saudi Arabian government is
set to increase production over the next year in order
to try to regate market share. So you've got oil
(01:54):
continuing its recent slide. Gold today up four dollars and
twenty cents nounce to eighty eight and ninety cents. And
talking about gas prices, TRIPAA national average for gas prices
at three twenty two a gallon right on the nose.
That's up seven tenths of a cent from yesterday. Uh,
and still kind of bouncing around that low three twenty
(02:15):
range without any clear direction, like anything else catching your
eye as we get started this hour.
Speaker 3 (02:22):
No, I'm just rather enjoying paying under three bucks a
gallon for gas here and there.
Speaker 4 (02:26):
It is, Uh, it is nice.
Speaker 2 (02:28):
I've been finding a few stations in like the two
eighty five to ninety one range over the last couple
of weeks, and so it's uh, it is a nice
fist d Yeah, I do agree with that.
Speaker 3 (02:41):
Between that he sending my kid to kindergarten, man, I'm
just flush with cash.
Speaker 4 (02:46):
Sounds wonderful, sounds great, very happy for you. Congrats.
Speaker 1 (02:50):
Uh.
Speaker 2 (02:50):
Let's talk a little bit about this piece from Market
wall Watch. Finding a job now is harder than any
time since the pandemic. Is that a bad omen for
the economy? Your thoughts, Michael, It's.
Speaker 5 (03:01):
Not a good open for the economy.
Speaker 3 (03:03):
I don't know that it means it's going to be
a travesty, but it's certainly if you wanted to see
a good job market, which you know generally gives people
a lot of optimism, then this is not the direction
you want to be going. For some context, best way
that I can use to measure this would be the
number of job openings as reported by the Bureau of
(03:25):
Labor Statistics that peaked at an all time high back
in March of twenty twenty two at just over twelve
million job openings out there where.
Speaker 2 (03:34):
Now let's remember, let's remember yep, there was a lot
of talk from people all over the place that that
was too many job openings. It was too tight, too
hot at that point. Yes, okay, so it was too
tight at that point. Ye, twelve million openings.
Speaker 3 (03:49):
Now we're down to seven point seven million job openings, which,
by the way, is still a number that is larger
than any job openings number that we had ever seen
prior to the pandemic. And the answer is that it
is way too cool of a job market. Now, there's
been population growth, the labor market has certainly grown since
twenty eighteen, but the number of job openings is down
(04:14):
again substantially from March of twenty twenty two. But nothing
about it would indicate that we are at levels that
others would have previously described as a tremendously weak labor market.
Speaker 5 (04:24):
Right in.
Speaker 3 (04:27):
When did you graduate college, Chuck, Let's start there May
of two thousand and nine.
Speaker 4 (04:31):
Correct, nailed it right on the nose.
Speaker 3 (04:33):
In May of two thousand and nine, there were two
point five million job openings. By May of twenty ten,
that it increased to just shy of three million job
opening So we are a far cry away from what
I think most would describe as an incredibly weak labor market.
But nonetheless, it has been a pretty dramatic shift from
where we were a couple of years ago, when you
(04:54):
could demand a signing bonus and all sorts of other
benefits by signing on that dotted line.
Speaker 2 (05:00):
I think part of this is also just that we
do compare things to how they were recently. And we've
talked about this with gas prices. Look when gas was
two dollars a gallon and it goes up to three,
You're sitting there and you're like, oh, I can't believe
gas is three a gallon, Like this is awful.
Speaker 4 (05:14):
Wamp wamp womp wamp.
Speaker 2 (05:16):
Gas comes down from four to fifty to three, and
you're like, okay, like not not too shabby. Likewise, in
the job market, hey, if you have a job market
like two thousand and nine twenty ten, and you get
to the point where you have, you know, this level
of job openings or the ratio of openings to unemployed
which right now is similar to twenty seventeen levels. Remember
(05:39):
twenty seventeen, twenty eighteen, we were sitting here saying, hey,
the economy's cranking like things are pretty good right now.
On the other hand, you go from a labor market
that was, you know, so hot in twenty twenty two
that I mean again, this was when Walmart was saying, hey,
come be a truck driver for us. We'll pay you
one hundred and fifty thousand dollars a year. You've got
(06:01):
you know, big tech companies offering huge comp packages for
full remote work.
Speaker 4 (06:06):
Do whatever you want.
Speaker 2 (06:08):
You know, work underwater, you know, work you know, while
you're making ice cream, and hey, don't even work and
we'll still pay like it was nuts. So you're coming
from that, and it feels different when you get back
to the same point. So I think two things make
me nervous. The first is, Okay, we're back to you
know again, what looks like a twenty seventeen twenty eighteen
(06:29):
job market, which is a fine place to be, But
there also were indications that that job market is continuing
to weaken, and you don't want to end up back
in the twenty thirteen twenty fourteen market, right, because things
got pretty loose by that point.
Speaker 3 (06:44):
May I just bring up something from a quote from
this article that is just kind of silly to point
in here, quote, how bad is the jobs market? Even
job recruiters have struggled to keep their own jobs, never
mind fine to work for others.
Speaker 5 (06:57):
Guys.
Speaker 3 (06:57):
The first people that get laid off in a week
job market job recruiters. If you work for a big
tech company that says we are going to slash our
hiring plans over the next few years, where would you
fire people first? The people whose job is to find
new employees.
Speaker 4 (07:12):
Right, why do you need them?
Speaker 5 (07:14):
So this is phrased as some big surprise.
Speaker 3 (07:19):
Every cycle that the labor market weekends, the first people
to lose their jobs are job recruiters. So don't don't
look at this as though it's a shocking news that
job recruiters are having a tough time finding work. Of
course they're having a tough time finding work. We're in
a weakening job market.
Speaker 2 (07:33):
Yeah, that's like, Hey, we're in a recession, and advertisers,
you know, can't you know, sell any ads, No kidding,
because there's no one to buy the stuff, you know,
So yeah, it's Look, we're in a situation where in
the next couple of months we need to see some
stability showing up in terms of job openings numbers, and
(07:54):
the unemployment rate needs to show that last month wasn't
a fluke and that it, you know, isn't gonna rise
much beyond four point two four point three percent. You
start getting into a place where, you know, job openings
are still declining by you know, three to four hundred
thousand a month for the next few months, and the
unemployment rate starts rising to four and a half or
(08:15):
four point six, we've got some problems. Like those are
the mental you know, marks that I have in the sand,
where hey, we get down to you know, under seven
million jobs while you have you know, north of seven
million people unemployed. Okay, that ratio starts to look a
little dodgy and unemployment gets up to four and a
half or four point six. Yeah, we've got the potential
(08:35):
for some ugly stuff there if those happen.
Speaker 4 (08:38):
So those are the numbers that I have in my head.
Speaker 2 (08:40):
But again, we'll have to see how it all evolves,
because the economy is always changing, it's never static, it's
never just well, this is what it is now.
Speaker 4 (08:50):
It's always moving.
Speaker 2 (08:51):
I mean two years ago, would you have thought we
would be, you know, having this conversation now, No, because everyone,
like everyone was hiring Willy Nilly. Yeah, I've never even
met WILLI nillion people were hiring him. So things can
change rather quickly, especially in the labor market.
Speaker 3 (09:08):
I try and do my best with these articles, Chuck,
to not just let my inner old man out, because.
Speaker 4 (09:16):
Every article I let him out, Michael let him out.
Speaker 5 (09:19):
It's not that bad of a job market.
Speaker 3 (09:21):
Like, I'm not trying to dissuade you or make you
feel bad if you are having a tough time finding
a job. I get how discouraging it is to sit
there and have a giant, expensive, shiny degree that you
just paid tens, if not hundreds of thousands of dollars
for and are not getting the nibble. But when I
see articles like this, you know, talking about the state
(09:44):
of the labor market and how difficult it is, I
would just implore you to go take some lessons from
those who got laid off in two thousand and eight
through throughwenty ten and needed to completely redefine themselves of
their working career in the decade that followed, and a
lot of people did, Yeah, it can get worse than this,
(10:07):
and we hope it doesn't.
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Speaker 2 (10:40):
Mich Let's talk a little bit about Boeing. Thomas Black,
who's an opinion writer for Bloomberg, has a piece today.
It's titled Boeing needs to take a que from UPS
and pay its strikers, And basically it makes the point Boeing,
you have no leverage in these negotiations. Every month that
you go is going to worsen your bottom and top lines,
(11:02):
and you are not in a position to really demand anything.
So you need to pay your workers and get them
back to making planes. Otherwise you're gonna be in a
whole heap of trouble.
Speaker 3 (11:12):
Yeah, well, I don't disagree with that piece of argument.
I'm not sure about the comparison to make to UPS.
So he does make the contrast here, and UPS did
relent during their thread of a strike. They agreed to
pay their drivers forty nine dollars an hour by the
end of the contract, a really solid health insurance as
(11:33):
well as pension benefits. That comes to about one hundred
and seventy thousand dollars a year in terms of total
driver compensation package. If you make that comparison to FedEx,
for example, drivers of the ground unit there make around
twenty to twenty five dollars an hour and have no benefits.
In fact, I will also just bring up from a
shareholder perspective that FedEx over the last five years has
(11:56):
returned about eighty five percent in price return to shareholders,
whereas UPS has returned twelve. I'm not saying that that
has directly to do with the compensation packages being offered
to one versus the other, but I'm not sure that
UPS is the shining example that Thomas is trying to
convey in terms of, hey, here's the way to turn
(12:18):
around your company.
Speaker 2 (12:20):
I think the big question is, Look, you're trying to
turn around this culture, and every week that your employees
are not working is a week that their skills are
atrophying rather than improving.
Speaker 4 (12:35):
I think that that's a valid point.
Speaker 2 (12:36):
As far as another unique wrinkle that Boeing does have
that takes away some of its leverage in negotiating here, yeah,
one hundred percent.
Speaker 3 (12:45):
I really do feel pretty strongly that Boeing has very
little in the way of leverage to argue this here.
They don't have a new plane that they're rolling out
in the next six months that they get to decide
where to manufacture. They are way behind on orders. They
really have no legitimate I guess threat to those Seattle
(13:11):
area Boeing workers to say, if you don't sign, this
is what we're going to I can't think of anything.
Allow you to strike and not pay you is the
only possible outcome here, and that almost undoubtedly hurts Boeing
more than it hurts I don't meant to minimize the
impact of those workers who aren't getting paid, but hurts
Boeing a heck of a lot. More So, I agree
(13:32):
with the overall conclusion where I diverged was is UPS
really the best shining example to compare to here? Their
drivers certainly do get paid a whole lot more, but
I don't know. In my mind, I'm not sure that
that has led to better delivery service. And when I
think of best in class, where am I going to
send a package? I don't see a huge differentiation between
(13:53):
UPS and FedEx in my view, Micha.
Speaker 2 (13:56):
Let's talk a little bit about open Ai, because it
was around this time last year that we had all
of the Palace intrigue about Hey, we went through four
CEOs in three days, and two of them were the
same person. And now we've got another shake up at
the top. Sam Altman, who is the CEO, still there,
but he has indicated that he wants open Ai to
(14:20):
become a for profit company. They're going through a restructuring
from their current setup, which has been kind of messy
where there's like a nonprofit parent and then a for
profit entity underneath, and this is kind of unwinding that
and flipping it on its head, where hey, you'd have
a for profit entity with a nonprofit that's spun out
from it instead, And we can talk about that and
(14:43):
what that means in a little bit but the more
interesting thing to me is you've got more upper and
upper echelon C suite people that are leaving, including Miramadi
who is again the chief technical officer for them. You've
(15:03):
got a couple other people that have left recently, Ilias Askever,
who was another co founder, John Shulman who was another
co founder, and another co founder, Greg Brockman, took a
leap of absence through the end of the year. So
it's it's pretty much. Oh and by the way, Elon Musk,
who was another co founder and one of the first
investors in the company, is suing open ai as well.
(15:26):
It raises the question, if open ai is really progressing
to such, you know, interesting things, and has such a
big road ahead of it, why are all of the
top people other than Altman leaving.
Speaker 3 (15:44):
I mean, the obvious answer would be moral objections. Hey,
we started this project with a long term goal of
forever being a non for profit. That is what I
was buying into. And now once there's billions of dollars
being dangled in your face, you're changing your tune and
say no, we need to switch over to a for profit.
That's that's the simplest that's the simplest explanation to all
(16:07):
of that.
Speaker 5 (16:09):
The other explanation would be.
Speaker 3 (16:13):
We don't see this going terribly well, and I'm getting
out of here while I can still save my reputation.
Speaker 5 (16:19):
Yeah, I don't know what you want to grab.
Speaker 2 (16:20):
Honestly, it's kind of one of those two because in
addition to Muradi yesterday, by the way, Bob McGrew who's
the chief research officer of the firm, Ann Barrett Zof
who was the vice president of research there, they both
resigned yesterday as well. So you've got again kind of
a talent exodus here. And it's not to say that
(16:42):
the open aye is you know in trouble that this
means bad things for them. We've seen companies that lose
good talent, and the mark of great companies is that
they find replacements for that talent and they continue on.
But it is something whenever you see an exoding of
this magnitude from the C suite and founders in a
(17:03):
short period of time, you do kind of look at
it and one option is, yeah, this company isn't what
we thought it was in terms of the overall moral
mission and what we thought we were building. It's one possibility.
The other one is, hey, the growth, like there's something
wrong in the future that hasn't yet been realized. I
need to get out before it hits the fan. And
(17:25):
again you don't know which one it is until later,
and you might not ever know, I mean they. It
could be that both of these things are problems now
and turn into minor issues down the road, but we'll see.
Speaker 4 (17:39):
So that's kind of where we stand.
Speaker 3 (17:41):
Taking a look at markets still in positive territory across
the board. NASDAK now though only up about one fifth
of one percent, whereas the Dow up closer to half
a percent.
Speaker 1 (18:05):
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Speaker 2 (18:34):
Mike, just a little bit of news being broken today.
Super micro computer you remember them about a month.
Speaker 4 (18:43):
Or so ago.
Speaker 2 (18:45):
A short sellar Hindenberg Research alleges that there were accounting
issues there. Today, the DOJ has reportedly opened a probe
into the company, and so super micro Computer shares down
another twelve nowteen percent today to three ninety seven a share.
Speaker 4 (19:04):
At the moment, this was a company that was worth.
Speaker 2 (19:07):
North of twelve hundred a share and hit a fifty
two week high of twelve twenty nine a share back
in March of this year. So it's been a very
tough six month period for owners of super micro Computer,
and that pain unfortunately for those shareholders continuing today.
Speaker 3 (19:26):
Yeah, not not great. You'll see where We'll see where
it goes. But I guess the only lesson here is
you can't possibly know what's going on behind closed doors.
And even some of the best run and most hyped
companies out there, and some of the seemingly best high
flyer names out there throughout history have turned out in
(19:49):
very limited cases, but some cases be running firms that
it may be doing things that would be conceived as
untoward or outright illegal. In some cases, raising the full
retirement age to sixty nine on Social Security would apparently
not save the program. Check the Congressional Budget Office ransom
(20:10):
numbers in terms of what they deemed to be a
policy solution that has been out there, and the general
policy solution that they outlined here was gradually increasing the
full retirement age from age sixty seven up to age
sixty nine, delaying the maximum benefit retirement age from seventy
(20:30):
to seventy two, while keeping the early filing age at
age sixty two. And the general conclusion here was that
Social Security is so screwed up at this point and
underfunded that even those dramatic measures would do nothing to
slow down the pace at which this program is going
to run out of money in twenty thirty four.
Speaker 2 (20:49):
Good good, how I was being sarcastic. It's not good
now quite no. So here's the thing. You can't fix
it by pulling just one lever in this magnitude like.
Speaker 5 (21:03):
You might have been able to twenty years ago.
Speaker 2 (21:06):
Sure, but no one actually wants to do anything with this.
And again, it's going to be really interesting in twenty
thirty two the race to lose control of Congress and
the presidency because no one wants to be responsible for
actually what is going to happen. It's gonna be wild
to watch. But the problem is that, look, we need
(21:29):
to do something here, and that something can be very simple.
It doesn't have to be overly complicated. You can pull
a few different levers, and the best way to ensure
that no one gets screwed disproportionately is to pull all
of those levers just a little bit. You change a
little bit as far as the retirement age, not too much.
(21:53):
You change a little bit as far as how you tax,
how you collect funds for Social Security. You don't have
to raise the Social Security tax rate. You can expand
the tax base on which it's collected, which yes, does
raise you know, that tax rate on higher income earners,
but it doesn't affect you know, the bottom eighty to
(22:15):
ninety percent of income earners in the country today. And
then you probably make some kind of adjustment to benefits
as well. And this way everyone gets penalized in some
certain way. And maybe you say, look, we're gonna have
this phase in over a fifteen to twenty year period.
Speaker 4 (22:31):
In that way, no one.
Speaker 2 (22:32):
Above age fifty is impacted since they're closer to retirement
and won't have time to adjust their planning.
Speaker 4 (22:38):
Chuck.
Speaker 3 (22:38):
That is a well thought out and appropriately expressed opinion
on ways to solve social security do you think anything
like that will actually happen.
Speaker 2 (22:46):
No, here's what will happen is in twenty thirty two,
Congress will get together and say, well, we're just gonna
change the law so that Social Security can pay out
one hundred percent of its benefits and we're not going
to figure out how to pay for it, but we're
just gonna re right it that way and will run
larger deficits to cover it.
Speaker 4 (23:02):
And that's probably where we're going.
Speaker 5 (23:04):
Yeah, that sucks.
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Speaker 3 (24:09):
I probably shouldn't just say that sucks. That sucks, because
the solution that, in my view as well, is probably
the most likely, is to just completely ignore the actual
finances of this program that has been not collecting enough
revenue to pay seniors out for quite some time now,
(24:30):
and simply just write a check and mortgage your future
in order to do so. And I agree that's the
dumbest possible outcome. It increases deficits unsustainably. Even further, it's
probably the most likely because what's been proven time and
time again is that people vote for handouts that's what
they vote on. It's why both president candidates right now
(24:53):
are running on that entire premise. It's not that the
Social Security Trust Fund was stolen from. No, politicians have
been stealing from the Trust Fund. And Barack Obama did
impose a payroll tax holiday in twenty eleven and twenty
twelve where people didn't have to pay as much in
Donald Trump did the same in August of twenty twenty
for certain employers. So those have happened, and we can
(25:13):
talk about whether or not that was a good idea
with hindsight. So those things have occurred, But this isn't
you know, Look, is there social security disability abuse going on?
Speaker 5 (25:24):
Certainly?
Speaker 3 (25:24):
Is there social security abuse in different ways going on.
Sure is somebody out there stealing from the trust Fund
over the last few decades in order to make this
all fall apart. No, it was built on a premise
that no longer exists. We don't have a growing population,
and there are so many ways in which you could
sustainably fix the problem. But voters don't seem to care
(25:48):
about deficit reduction and fiscal responsibility in the same ways
that they seemed to at least in the nineties and
two thousands for that too.
Speaker 2 (26:01):
I guess the other thing that you could add as
something that potentially helps to fix the situation if you
want to, you know, throw one more thing on the
puzzle that definitely won't happen. It is figure out a
way to increase legal immigration in the demographics of people
in their twenties and thirties, because that gets you more
people paying in during their working years and then able
(26:23):
to you know, you're able to collect more money without
those payouts happening for a longer period of time.
Speaker 4 (26:30):
The odds we've kind of done that happening.
Speaker 3 (26:32):
We've kind of done that over the last year or
so in terms of issuing somewhere permits with immigration. But yeah,
the odds, not nearly on a large scale basis. You know,
take what's happened over the last few years and put
that on steroids, like, come on, it's.
Speaker 4 (26:46):
Not gonna happen exactly.
Speaker 2 (26:49):
Let's see, do you want to talk about money market
funds or McDonald's.
Speaker 3 (26:52):
Uh, McDonald's sounds far more interesting. Was We're closed in
on noon and Mike gets hungrier and hungrier.
Speaker 2 (26:58):
It's titled the End of the Cheap Burger and it's
basically making the case that look, fast food burger prices,
they're up sixteen percent from five years ago. According to
technomics Ignite Menu. I guess that's the company that studies
these things. The average price of a fast food restaurant
burger is now eight dollars and forty one cents uh.
(27:21):
And even at McDonald's right now, the average price of
a big Mac with no fries, no drink, just the
sandwich five dollars and twenty nine cents. That's a twenty
one percent increase from five years ago as well. And
the case that they are making there is, look, the
price of the cost of raising a cattle herd now
(27:42):
is meaningfully higher than it used to be, and as such,
it's tough to grow that herd to the size that
you need in order to get burger prices down. And
so what's going to change in the near future in
order to get burger prices down. We're not seeing it
from kind of the the ultimate supply and demand side,
which is how many cows are you gonna have out there?
Speaker 5 (28:03):
I'll just throw it out there.
Speaker 3 (28:05):
Five years from now, the idea of a five dollars
burger is going to be that that's an incredibly cheap burger.
We just haven't gotten used to prices yet. And quite honestly,
five dollars is a relatively cheap price.
Speaker 5 (28:15):
For a for a burger.
Speaker 1 (28:17):
Yeah, but no fries.
Speaker 5 (28:18):
Come on, I hear you.
Speaker 3 (28:20):
I thought where the story was going is everyone's paying
for like, you know, five guys and in and out
Burger and these places that have traditionally shakeshack charge a
little bit more. But the fact matter is even McDonald's
has had to raise prices by twenty percent in order
to maintain profits. And so guess what, they're not going
back down and we're going to have to get used
to it.
Speaker 4 (28:39):
Wampamp.
Speaker 1 (28:39):
Yeah.
Speaker 2 (28:40):
Sorry with that, let's take a quick break and when
we come back, we'll do a little bit of stack Roulette.
Speaker 1 (28:47):
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(29:07):
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Speaker 4 (29:13):
All right, Mike, what do you have for me for
Stack Roulette.
Speaker 3 (29:15):
I want to talk a little bit about childcare. There's
a plan from the Harris campaign which does not seem
fully thought out yet. But she's made a statement that quote,
no working family should pay more than seven percent of
their income. It says in childcare. I'm guessing she meant
(29:37):
on childcare. And I say, this is not terribly well
thought out. I mean, it's more than we've gotten from
anybody else on the ideas of what we should do
with childcare. But I just don't really understand what that's
intended to mean, why it's seven percent.
Speaker 5 (29:55):
And what you would do with that information.
Speaker 3 (29:58):
I suppose one of the logical if you were going
to say, yeah, it's law that you aren't you know,
if you spend more than seven percent of your income
on childcare, then I suppose you could be issued a
tax credit or refundable tax credit if you put those
items on your tax return. But effectively, what we're saying
here if you go that route, is that, hey, we
(30:20):
want childcare to be an income based solution, kind of
the way that we deal with other things like I
guess college education and FAFSA and things.
Speaker 5 (30:31):
Along those lines.
Speaker 3 (30:32):
Although this would be a little bit more direct and
just brings up a host of other questions such as, Okay, well,
what if I forego working in order to raise my
own kids at home and not pay for, you know,
three thousand dollars a month in childcare? What is the
solution for that person? And I mean more generally, I
(30:52):
think the question is do we as society think that, yeah,
people who make a bunch more money should be forced
by the government to pay more for childcare, whereas people
that make less money don't pay as much for childcare.
That seems to be what's on the table here. Like
I said, I don't think it's a really hashed out
policy statement in terms of what they would actually do.
(31:14):
But if you're going to say, hey, it's capped at
seven percent, then the logical answer to me seems to be, Okay,
no matter how many kids you have, no matter this, that,
or the other, you'll be issued a tax credit for
against your adjusted gross income for any childcare expenses that
are over seven percent.
Speaker 2 (31:33):
We really have not come up with, and again this
has been a problem for when we talk about childcare
and the cost of it. Remember, there are really only
like two or three generations that have ever had to
deal with this, Like in nineteen ten, you had like
a four year old and it was okay, like put
them out in the field and they're working at that
point on your farm, Like, this is kind of a
(31:55):
new thing that we're dealing with. And so so it
is clear that unlike other parts of the economy where
you've been able to, you know, have costs rise more slowly,
mostly on the good side, but even some stuff on
the services side of things, this is an area where
(32:17):
costs have gone up much more quickly than these other,
you know, parts of the economy for two reasons. The
first is generally you don't have any efficiencies that you
can get to because you need.
Speaker 4 (32:27):
A certain amount of labor.
Speaker 2 (32:28):
And part of it, we've been increasing the amount of
labor needed at a state level in many states because
you know, we've realized, hey, it's not great to have
you know, fifteen two year olds with one supervisor. That's
probably not a great recipe for success. So you've actually
seen some decreases in efficiency on that side of things.
(32:49):
And then coupled with the fact that hey, you've got
increase insurance cost increase operating costs like that, those areas
have driven up the cost too, So it's getting to
the point where where it's untenable for a lot of
families to be able to afford to do this. But
it's also untenable for families to say, hey, one of us,
you know, one spouse is going to drop out of
(33:11):
the workforce and not work in order to raise our
kids because they need that second income in order to survive.
So it's a it's a problem that doesn't have a
great top down solution, I think, quite honestly, I'm not.
Speaker 3 (33:27):
The market based solution is for higher and higher prices
because you don't have a you don't have a situation
where you can make it more efficient. You don't have
a situation where you can outsource any part of the
product to a area of the country or the world
with less costly labor. Artificial intelligence doesn't get you anywhere
on childcare, and so you are left in a position
(33:49):
where the market based solution is for very expensive childcare.
And I guess the question, the only real question to
that is that is that a outcome that the American
public is comfortable with or is it something that they
want the government to subsidize. Those are really the only
two policy outcomes that I can think of.
Speaker 2 (34:10):
I don't know that subsidizing ends up necessarily being the
ant like it's.
Speaker 4 (34:16):
I don't have a good answer.
Speaker 5 (34:18):
There is one.
Speaker 3 (34:19):
If you want to make childcare cheaper, it has to
get subsidized because the market will not make it cheaper. Yeah,
I can't think of any again, I mean, yes, are
there ways you can make the market cheaper? Sure, allow
childcare facilities to care for, you know, five six month
olds instead of the current three regulation. You have one
(34:42):
or two infant deaths, and that's going to go in
the other direction pretty quickly. So that's what I mean
by the market solution is not going to result in
anything other than continued high prices.
Speaker 2 (34:52):
Can we talk about something a little bit more uplifting
to end on?
Speaker 4 (34:55):
Yeah?
Speaker 5 (34:56):
Please?
Speaker 2 (34:56):
Got I want to talk about the Bridgerton Ball, which
an event that was supposed to be happening in Michigan
and it is really good, going off similar vibes to
the Willy Walkee experience that was like all AI generated
and turned out to be like one very sad umpa
lumpa with like a chocolate bar back.
Speaker 4 (35:17):
Into the spring.
Speaker 2 (35:18):
And this apparently they rescheduled the original dates that they
were going to be having this, and it turned out
it was because they wouldn't pay the original.
Speaker 4 (35:28):
Venue the full amount that they owed them. That came
out later.
Speaker 2 (35:32):
And then when people did show up, they had like
a single violin person there. They had no weight staff
to clear tables or anything. And they promised, you know,
a bunch of dancers that they were going to have
there to help you know, people dance, and they had
hired one stripper.
Speaker 4 (35:48):
Not great. We're done for the day on the Financial Exchange.
Speaker 2 (35:51):
We will see you tomorrow to wrap up the week.
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
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(00:20):
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(01:04):
by Veterans Development Corporation. This is the Financial Exchange with
Chuck Zada and Mike Armstrong.
Speaker 2 (01:12):
Kicking off the second hour of the Financial Exchange. And
we've got stocks in the green today with the Dow
Jones up two hundred and eight points, the S and
P five hundred up seventeen points at the moment, and
the Nasdaq up fifty two So about a quarter to
a half percent gain for your major US indices ten
(01:34):
your US Treasury up two basis points to three point
eight percent. Right now, we've got Oil West Texas Intermedia
down a dollar fifty eight a barrel, this on the
back of a report that the Saudi Arabian government is
set to increase production over the next year in order
to try to regate market share. So you've got oil
(01:54):
continuing its recent slide. Gold today up four dollars and
twenty cents nounce to eighty eight and ninety cents. And
talking about gas prices, TRIPAA national average for gas prices
at three twenty two a gallon right on the nose.
That's up seven tenths of a cent from yesterday. Uh,
and still kind of bouncing around that low three twenty
(02:15):
range without any clear direction, like anything else catching your
eye as we get started this hour.
Speaker 3 (02:22):
No, I'm just rather enjoying paying under three bucks a
gallon for gas here and there.
Speaker 4 (02:26):
It is, Uh, it is nice.
Speaker 2 (02:28):
I've been finding a few stations in like the two
eighty five to ninety one range over the last couple
of weeks, and so it's uh, it is a nice
fist d Yeah, I do agree with that.
Speaker 3 (02:41):
Between that he sending my kid to kindergarten, man, I'm
just flush with cash.
Speaker 4 (02:46):
Sounds wonderful, sounds great, very happy for you. Congrats.
Speaker 1 (02:50):
Uh.
Speaker 2 (02:50):
Let's talk a little bit about this piece from Market
wall Watch. Finding a job now is harder than any
time since the pandemic. Is that a bad omen for
the economy? Your thoughts, Michael, It's.
Speaker 5 (03:01):
Not a good open for the economy.
Speaker 3 (03:03):
I don't know that it means it's going to be
a travesty, but it's certainly if you wanted to see
a good job market, which you know generally gives people
a lot of optimism, then this is not the direction
you want to be going. For some context, best way
that I can use to measure this would be the
number of job openings as reported by the Bureau of
(03:25):
Labor Statistics that peaked at an all time high back
in March of twenty twenty two at just over twelve
million job openings out there where.
Speaker 2 (03:34):
Now let's remember, let's remember yep, there was a lot
of talk from people all over the place that that
was too many job openings. It was too tight, too
hot at that point. Yes, okay, so it was too
tight at that point. Ye, twelve million openings.
Speaker 3 (03:49):
Now we're down to seven point seven million job openings, which,
by the way, is still a number that is larger
than any job openings number that we had ever seen
prior to the pandemic. And the answer is that it
is way too cool of a job market. Now, there's
been population growth, the labor market has certainly grown since
twenty eighteen, but the number of job openings is down
(04:14):
again substantially from March of twenty twenty two. But nothing
about it would indicate that we are at levels that
others would have previously described as a tremendously weak labor market.
Speaker 5 (04:24):
Right in.
Speaker 3 (04:27):
When did you graduate college, Chuck, Let's start there May
of two thousand and nine.
Speaker 4 (04:31):
Correct, nailed it right on the nose.
Speaker 3 (04:33):
In May of two thousand and nine, there were two
point five million job openings. By May of twenty ten,
that it increased to just shy of three million job
opening So we are a far cry away from what
I think most would describe as an incredibly weak labor market.
But nonetheless, it has been a pretty dramatic shift from
where we were a couple of years ago, when you
(04:54):
could demand a signing bonus and all sorts of other
benefits by signing on that dotted line.
Speaker 2 (05:00):
I think part of this is also just that we
do compare things to how they were recently. And we've
talked about this with gas prices. Look when gas was
two dollars a gallon and it goes up to three,
You're sitting there and you're like, oh, I can't believe
gas is three a gallon, Like this is awful.
Speaker 4 (05:14):
Wamp wamp womp wamp.
Speaker 2 (05:16):
Gas comes down from four to fifty to three, and
you're like, okay, like not not too shabby. Likewise, in
the job market, hey, if you have a job market
like two thousand and nine twenty ten, and you get
to the point where you have, you know, this level
of job openings or the ratio of openings to unemployed
which right now is similar to twenty seventeen levels. Remember
(05:39):
twenty seventeen, twenty eighteen, we were sitting here saying, hey,
the economy's cranking like things are pretty good right now.
On the other hand, you go from a labor market
that was, you know, so hot in twenty twenty two
that I mean again, this was when Walmart was saying, hey,
come be a truck driver for us. We'll pay you
one hundred and fifty thousand dollars a year. You've got
(06:01):
you know, big tech companies offering huge comp packages for
full remote work.
Speaker 4 (06:06):
Do whatever you want.
Speaker 2 (06:08):
You know, work underwater, you know, work you know, while
you're making ice cream, and hey, don't even work and
we'll still pay like it was nuts. So you're coming
from that, and it feels different when you get back
to the same point. So I think two things make
me nervous. The first is, Okay, we're back to you
know again, what looks like a twenty seventeen twenty eighteen
(06:29):
job market, which is a fine place to be, But
there also were indications that that job market is continuing
to weaken, and you don't want to end up back
in the twenty thirteen twenty fourteen market, right, because things
got pretty loose by that point.
Speaker 3 (06:44):
May I just bring up something from a quote from
this article that is just kind of silly to point
in here, quote, how bad is the jobs market? Even
job recruiters have struggled to keep their own jobs, never
mind fine to work for others.
Speaker 5 (06:57):
Guys.
Speaker 3 (06:57):
The first people that get laid off in a week
job market job recruiters. If you work for a big
tech company that says we are going to slash our
hiring plans over the next few years, where would you
fire people first? The people whose job is to find
new employees.
Speaker 4 (07:12):
Right, why do you need them?
Speaker 5 (07:14):
So this is phrased as some big surprise.
Speaker 3 (07:19):
Every cycle that the labor market weekends, the first people
to lose their jobs are job recruiters. So don't don't
look at this as though it's a shocking news that
job recruiters are having a tough time finding work. Of
course they're having a tough time finding work. We're in
a weakening job market.
Speaker 2 (07:33):
Yeah, that's like, Hey, we're in a recession, and advertisers,
you know, can't you know, sell any ads, No kidding,
because there's no one to buy the stuff, you know,
So yeah, it's Look, we're in a situation where in
the next couple of months we need to see some
stability showing up in terms of job openings numbers, and
(07:54):
the unemployment rate needs to show that last month wasn't
a fluke and that it, you know, isn't gonna rise
much beyond four point two four point three percent. You
start getting into a place where, you know, job openings
are still declining by you know, three to four hundred
thousand a month for the next few months, and the
unemployment rate starts rising to four and a half or
(08:15):
four point six, we've got some problems. Like those are
the mental you know, marks that I have in the sand,
where hey, we get down to you know, under seven
million jobs while you have you know, north of seven
million people unemployed. Okay, that ratio starts to look a
little dodgy and unemployment gets up to four and a
half or four point six. Yeah, we've got the potential
(08:35):
for some ugly stuff there if those happen.
Speaker 4 (08:38):
So those are the numbers that I have in my head.
Speaker 2 (08:40):
But again, we'll have to see how it all evolves,
because the economy is always changing, it's never static, it's
never just well, this is what it is now.
Speaker 4 (08:50):
It's always moving.
Speaker 2 (08:51):
I mean two years ago, would you have thought we
would be, you know, having this conversation now, No, because everyone,
like everyone was hiring Willy Nilly. Yeah, I've never even
met WILLI nillion people were hiring him. So things can
change rather quickly, especially in the labor market.
Speaker 3 (09:08):
I try and do my best with these articles, Chuck,
to not just let my inner old man out, because.
Speaker 4 (09:16):
Every article I let him out, Michael let him out.
Speaker 5 (09:19):
It's not that bad of a job market.
Speaker 3 (09:21):
Like, I'm not trying to dissuade you or make you
feel bad if you are having a tough time finding
a job. I get how discouraging it is to sit
there and have a giant, expensive, shiny degree that you
just paid tens, if not hundreds of thousands of dollars
for and are not getting the nibble. But when I
see articles like this, you know, talking about the state
(09:44):
of the labor market and how difficult it is, I
would just implore you to go take some lessons from
those who got laid off in two thousand and eight
through throughwenty ten and needed to completely redefine themselves of
their working career in the decade that followed, and a
lot of people did, Yeah, it can get worse than this,
(10:07):
and we hope it doesn't.
Speaker 1 (10:09):
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Speaker 2 (10:40):
Mich Let's talk a little bit about Boeing. Thomas Black,
who's an opinion writer for Bloomberg, has a piece today.
It's titled Boeing needs to take a que from UPS
and pay its strikers, And basically it makes the point Boeing,
you have no leverage in these negotiations. Every month that
you go is going to worsen your bottom and top lines,
(11:02):
and you are not in a position to really demand anything.
So you need to pay your workers and get them
back to making planes. Otherwise you're gonna be in a
whole heap of trouble.
Speaker 3 (11:12):
Yeah, well, I don't disagree with that piece of argument.
I'm not sure about the comparison to make to UPS.
So he does make the contrast here, and UPS did
relent during their thread of a strike. They agreed to
pay their drivers forty nine dollars an hour by the
end of the contract, a really solid health insurance as
(11:33):
well as pension benefits. That comes to about one hundred
and seventy thousand dollars a year in terms of total
driver compensation package. If you make that comparison to FedEx,
for example, drivers of the ground unit there make around
twenty to twenty five dollars an hour and have no benefits.
In fact, I will also just bring up from a
shareholder perspective that FedEx over the last five years has
(11:56):
returned about eighty five percent in price return to shareholders,
whereas UPS has returned twelve. I'm not saying that that
has directly to do with the compensation packages being offered
to one versus the other, but I'm not sure that
UPS is the shining example that Thomas is trying to
convey in terms of, hey, here's the way to turn
(12:18):
around your company.
Speaker 2 (12:20):
I think the big question is, Look, you're trying to
turn around this culture, and every week that your employees
are not working is a week that their skills are
atrophying rather than improving.
Speaker 4 (12:35):
I think that that's a valid point.
Speaker 2 (12:36):
As far as another unique wrinkle that Boeing does have
that takes away some of its leverage in negotiating here, yeah,
one hundred percent.
Speaker 3 (12:45):
I really do feel pretty strongly that Boeing has very
little in the way of leverage to argue this here.
They don't have a new plane that they're rolling out
in the next six months that they get to decide
where to manufacture. They are way behind on orders. They
really have no legitimate I guess threat to those Seattle
(13:11):
area Boeing workers to say, if you don't sign, this
is what we're going to I can't think of anything.
Allow you to strike and not pay you is the
only possible outcome here, and that almost undoubtedly hurts Boeing
more than it hurts I don't meant to minimize the
impact of those workers who aren't getting paid, but hurts
Boeing a heck of a lot. More So, I agree
(13:32):
with the overall conclusion where I diverged was is UPS
really the best shining example to compare to here? Their
drivers certainly do get paid a whole lot more, but
I don't know. In my mind, I'm not sure that
that has led to better delivery service. And when I
think of best in class, where am I going to
send a package? I don't see a huge differentiation between
(13:53):
UPS and FedEx in my view, Micha.
Speaker 2 (13:56):
Let's talk a little bit about open Ai, because it
was around this time last year that we had all
of the Palace intrigue about Hey, we went through four
CEOs in three days, and two of them were the
same person. And now we've got another shake up at
the top. Sam Altman, who is the CEO, still there,
but he has indicated that he wants open Ai to
(14:20):
become a for profit company. They're going through a restructuring
from their current setup, which has been kind of messy
where there's like a nonprofit parent and then a for
profit entity underneath, and this is kind of unwinding that
and flipping it on its head, where hey, you'd have
a for profit entity with a nonprofit that's spun out
from it instead, And we can talk about that and
(14:43):
what that means in a little bit but the more
interesting thing to me is you've got more upper and
upper echelon C suite people that are leaving, including Miramadi
who is again the chief technical officer for them. You've
(15:03):
got a couple other people that have left recently, Ilias Askever,
who was another co founder, John Shulman who was another
co founder, and another co founder, Greg Brockman, took a
leap of absence through the end of the year. So
it's it's pretty much. Oh and by the way, Elon Musk,
who was another co founder and one of the first
investors in the company, is suing open ai as well.
(15:26):
It raises the question, if open ai is really progressing
to such, you know, interesting things, and has such a
big road ahead of it, why are all of the
top people other than Altman leaving.
Speaker 3 (15:44):
I mean, the obvious answer would be moral objections. Hey,
we started this project with a long term goal of
forever being a non for profit. That is what I
was buying into. And now once there's billions of dollars
being dangled in your face, you're changing your tune and
say no, we need to switch over to a for profit.
That's that's the simplest that's the simplest explanation to all
(16:07):
of that.
Speaker 5 (16:09):
The other explanation would be.
Speaker 3 (16:13):
We don't see this going terribly well, and I'm getting
out of here while I can still save my reputation.
Speaker 5 (16:19):
Yeah, I don't know what you want to grab.
Speaker 2 (16:20):
Honestly, it's kind of one of those two because in
addition to Muradi yesterday, by the way, Bob McGrew who's
the chief research officer of the firm, Ann Barrett Zof
who was the vice president of research there, they both
resigned yesterday as well. So you've got again kind of
a talent exodus here. And it's not to say that
(16:42):
the open aye is you know in trouble that this
means bad things for them. We've seen companies that lose
good talent, and the mark of great companies is that
they find replacements for that talent and they continue on.
But it is something whenever you see an exoding of
this magnitude from the C suite and founders in a
(17:03):
short period of time, you do kind of look at
it and one option is, yeah, this company isn't what
we thought it was in terms of the overall moral
mission and what we thought we were building. It's one possibility.
The other one is, hey, the growth, like there's something
wrong in the future that hasn't yet been realized. I
need to get out before it hits the fan. And
(17:25):
again you don't know which one it is until later,
and you might not ever know, I mean they. It
could be that both of these things are problems now
and turn into minor issues down the road, but we'll see.
Speaker 4 (17:39):
So that's kind of where we stand.
Speaker 3 (17:41):
Taking a look at markets still in positive territory across
the board. NASDAK now though only up about one fifth
of one percent, whereas the Dow up closer to half
a percent.
Speaker 1 (18:05):
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(18:27):
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Speaker 2 (18:34):
Mike, just a little bit of news being broken today.
Super micro computer you remember them about a month.
Speaker 4 (18:43):
Or so ago.
Speaker 2 (18:45):
A short sellar Hindenberg Research alleges that there were accounting
issues there. Today, the DOJ has reportedly opened a probe
into the company, and so super micro Computer shares down
another twelve nowteen percent today to three ninety seven a share.
Speaker 4 (19:04):
At the moment, this was a company that was worth.
Speaker 2 (19:07):
North of twelve hundred a share and hit a fifty
two week high of twelve twenty nine a share back
in March of this year. So it's been a very
tough six month period for owners of super micro Computer,
and that pain unfortunately for those shareholders continuing today.
Speaker 3 (19:26):
Yeah, not not great. You'll see where We'll see where
it goes. But I guess the only lesson here is
you can't possibly know what's going on behind closed doors.
And even some of the best run and most hyped
companies out there, and some of the seemingly best high
flyer names out there throughout history have turned out in
(19:49):
very limited cases, but some cases be running firms that
it may be doing things that would be conceived as
untoward or outright illegal. In some cases, raising the full
retirement age to sixty nine on Social Security would apparently
not save the program. Check the Congressional Budget Office ransom
(20:10):
numbers in terms of what they deemed to be a
policy solution that has been out there, and the general
policy solution that they outlined here was gradually increasing the
full retirement age from age sixty seven up to age
sixty nine, delaying the maximum benefit retirement age from seventy
(20:30):
to seventy two, while keeping the early filing age at
age sixty two. And the general conclusion here was that
Social Security is so screwed up at this point and
underfunded that even those dramatic measures would do nothing to
slow down the pace at which this program is going
to run out of money in twenty thirty four.
Speaker 2 (20:49):
Good good, how I was being sarcastic. It's not good
now quite no. So here's the thing. You can't fix
it by pulling just one lever in this magnitude like.
Speaker 5 (21:03):
You might have been able to twenty years ago.
Speaker 2 (21:06):
Sure, but no one actually wants to do anything with this.
And again, it's going to be really interesting in twenty
thirty two the race to lose control of Congress and
the presidency because no one wants to be responsible for
actually what is going to happen. It's gonna be wild
to watch. But the problem is that, look, we need
(21:29):
to do something here, and that something can be very simple.
It doesn't have to be overly complicated. You can pull
a few different levers, and the best way to ensure
that no one gets screwed disproportionately is to pull all
of those levers just a little bit. You change a
little bit as far as the retirement age, not too much.
(21:53):
You change a little bit as far as how you tax,
how you collect funds for Social Security. You don't have
to raise the Social Security tax rate. You can expand
the tax base on which it's collected, which yes, does
raise you know, that tax rate on higher income earners,
but it doesn't affect you know, the bottom eighty to
(22:15):
ninety percent of income earners in the country today. And
then you probably make some kind of adjustment to benefits
as well. And this way everyone gets penalized in some
certain way. And maybe you say, look, we're gonna have
this phase in over a fifteen to twenty year period.
Speaker 4 (22:31):
In that way, no one.
Speaker 2 (22:32):
Above age fifty is impacted since they're closer to retirement
and won't have time to adjust their planning.
Speaker 4 (22:38):
Chuck.
Speaker 3 (22:38):
That is a well thought out and appropriately expressed opinion
on ways to solve social security do you think anything
like that will actually happen.
Speaker 2 (22:46):
No, here's what will happen is in twenty thirty two,
Congress will get together and say, well, we're just gonna
change the law so that Social Security can pay out
one hundred percent of its benefits and we're not going
to figure out how to pay for it, but we're
just gonna re right it that way and will run
larger deficits to cover it.
Speaker 4 (23:02):
And that's probably where we're going.
Speaker 5 (23:04):
Yeah, that sucks.
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Speaker 3 (24:09):
I probably shouldn't just say that sucks. That sucks, because
the solution that, in my view as well, is probably
the most likely, is to just completely ignore the actual
finances of this program that has been not collecting enough
revenue to pay seniors out for quite some time now,
(24:30):
and simply just write a check and mortgage your future
in order to do so. And I agree that's the
dumbest possible outcome. It increases deficits unsustainably. Even further, it's
probably the most likely because what's been proven time and
time again is that people vote for handouts that's what
they vote on. It's why both president candidates right now
(24:53):
are running on that entire premise. It's not that the
Social Security Trust Fund was stolen from. No, politicians have
been stealing from the Trust Fund. And Barack Obama did
impose a payroll tax holiday in twenty eleven and twenty
twelve where people didn't have to pay as much in
Donald Trump did the same in August of twenty twenty
for certain employers. So those have happened, and we can
(25:13):
talk about whether or not that was a good idea
with hindsight. So those things have occurred, But this isn't
you know, Look, is there social security disability abuse going on?
Speaker 5 (25:24):
Certainly?
Speaker 3 (25:24):
Is there social security abuse in different ways going on.
Sure is somebody out there stealing from the trust Fund
over the last few decades in order to make this
all fall apart. No, it was built on a premise
that no longer exists. We don't have a growing population,
and there are so many ways in which you could
sustainably fix the problem. But voters don't seem to care
(25:48):
about deficit reduction and fiscal responsibility in the same ways
that they seemed to at least in the nineties and
two thousands for that too.
Speaker 2 (26:01):
I guess the other thing that you could add as
something that potentially helps to fix the situation if you
want to, you know, throw one more thing on the
puzzle that definitely won't happen. It is figure out a
way to increase legal immigration in the demographics of people
in their twenties and thirties, because that gets you more
people paying in during their working years and then able
(26:23):
to you know, you're able to collect more money without
those payouts happening for a longer period of time.
Speaker 4 (26:30):
The odds we've kind of done that happening.
Speaker 3 (26:32):
We've kind of done that over the last year or
so in terms of issuing somewhere permits with immigration. But yeah,
the odds, not nearly on a large scale basis. You know,
take what's happened over the last few years and put
that on steroids, like, come on, it's.
Speaker 4 (26:46):
Not gonna happen exactly.
Speaker 2 (26:49):
Let's see, do you want to talk about money market
funds or McDonald's.
Speaker 3 (26:52):
Uh, McDonald's sounds far more interesting. Was We're closed in
on noon and Mike gets hungrier and hungrier.
Speaker 2 (26:58):
It's titled the End of the Cheap Burger and it's
basically making the case that look, fast food burger prices,
they're up sixteen percent from five years ago. According to
technomics Ignite Menu. I guess that's the company that studies
these things. The average price of a fast food restaurant
burger is now eight dollars and forty one cents uh.
(27:21):
And even at McDonald's right now, the average price of
a big Mac with no fries, no drink, just the
sandwich five dollars and twenty nine cents. That's a twenty
one percent increase from five years ago as well. And
the case that they are making there is, look, the
price of the cost of raising a cattle herd now
(27:42):
is meaningfully higher than it used to be, and as such,
it's tough to grow that herd to the size that
you need in order to get burger prices down. And
so what's going to change in the near future in
order to get burger prices down. We're not seeing it
from kind of the the ultimate supply and demand side,
which is how many cows are you gonna have out there?
Speaker 5 (28:03):
I'll just throw it out there.
Speaker 3 (28:05):
Five years from now, the idea of a five dollars
burger is going to be that that's an incredibly cheap burger.
We just haven't gotten used to prices yet. And quite honestly,
five dollars is a relatively cheap price.
Speaker 5 (28:15):
For a for a burger.
Speaker 1 (28:17):
Yeah, but no fries.
Speaker 5 (28:18):
Come on, I hear you.
Speaker 3 (28:20):
I thought where the story was going is everyone's paying
for like, you know, five guys and in and out
Burger and these places that have traditionally shakeshack charge a
little bit more. But the fact matter is even McDonald's
has had to raise prices by twenty percent in order
to maintain profits. And so guess what, they're not going
back down and we're going to have to get used
to it.
Speaker 4 (28:39):
Wampamp.
Speaker 1 (28:39):
Yeah.
Speaker 2 (28:40):
Sorry with that, let's take a quick break and when
we come back, we'll do a little bit of stack Roulette.
Speaker 1 (28:47):
Find daily interviews and full shows of the Financial Exchange
on our YouTube page. Like us on YouTube and get
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This is the Financial Exchange Radio Network. Financial Exchange streams
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date on breaking business news. All morning. Long Face is
(29:07):
the Financial Exchange Radio Network.
Speaker 4 (29:13):
All right, Mike, what do you have for me for
Stack Roulette.
Speaker 3 (29:15):
I want to talk a little bit about childcare. There's
a plan from the Harris campaign which does not seem
fully thought out yet. But she's made a statement that quote,
no working family should pay more than seven percent of
their income. It says in childcare. I'm guessing she meant
(29:37):
on childcare. And I say, this is not terribly well
thought out. I mean, it's more than we've gotten from
anybody else on the ideas of what we should do
with childcare. But I just don't really understand what that's
intended to mean, why it's seven percent.
Speaker 5 (29:55):
And what you would do with that information.
Speaker 3 (29:58):
I suppose one of the logical if you were going
to say, yeah, it's law that you aren't you know,
if you spend more than seven percent of your income
on childcare, then I suppose you could be issued a
tax credit or refundable tax credit if you put those
items on your tax return. But effectively, what we're saying
here if you go that route, is that, hey, we
(30:20):
want childcare to be an income based solution, kind of
the way that we deal with other things like I
guess college education and FAFSA and things.
Speaker 5 (30:31):
Along those lines.
Speaker 3 (30:32):
Although this would be a little bit more direct and
just brings up a host of other questions such as, Okay, well,
what if I forego working in order to raise my
own kids at home and not pay for, you know,
three thousand dollars a month in childcare? What is the
solution for that person? And I mean more generally, I
(30:52):
think the question is do we as society think that, yeah,
people who make a bunch more money should be forced
by the government to pay more for childcare, whereas people
that make less money don't pay as much for childcare.
That seems to be what's on the table here. Like
I said, I don't think it's a really hashed out
policy statement in terms of what they would actually do.
(31:14):
But if you're going to say, hey, it's capped at
seven percent, then the logical answer to me seems to be, Okay,
no matter how many kids you have, no matter this, that,
or the other, you'll be issued a tax credit for
against your adjusted gross income for any childcare expenses that
are over seven percent.
Speaker 2 (31:33):
We really have not come up with, and again this
has been a problem for when we talk about childcare
and the cost of it. Remember, there are really only
like two or three generations that have ever had to
deal with this, Like in nineteen ten, you had like
a four year old and it was okay, like put
them out in the field and they're working at that
point on your farm, Like, this is kind of a
(31:55):
new thing that we're dealing with. And so so it
is clear that unlike other parts of the economy where
you've been able to, you know, have costs rise more slowly,
mostly on the good side, but even some stuff on
the services side of things, this is an area where
(32:17):
costs have gone up much more quickly than these other,
you know, parts of the economy for two reasons. The
first is generally you don't have any efficiencies that you
can get to because you need.
Speaker 4 (32:27):
A certain amount of labor.
Speaker 2 (32:28):
And part of it, we've been increasing the amount of
labor needed at a state level in many states because
you know, we've realized, hey, it's not great to have
you know, fifteen two year olds with one supervisor. That's
probably not a great recipe for success. So you've actually
seen some decreases in efficiency on that side of things.
(32:49):
And then coupled with the fact that hey, you've got
increase insurance cost increase operating costs like that, those areas
have driven up the cost too, So it's getting to
the point where where it's untenable for a lot of
families to be able to afford to do this. But
it's also untenable for families to say, hey, one of us,
you know, one spouse is going to drop out of
(33:11):
the workforce and not work in order to raise our
kids because they need that second income in order to survive.
So it's a it's a problem that doesn't have a
great top down solution, I think, quite honestly, I'm not.
Speaker 3 (33:27):
The market based solution is for higher and higher prices
because you don't have a you don't have a situation
where you can make it more efficient. You don't have
a situation where you can outsource any part of the
product to a area of the country or the world
with less costly labor. Artificial intelligence doesn't get you anywhere
on childcare, and so you are left in a position
(33:49):
where the market based solution is for very expensive childcare.
And I guess the question, the only real question to
that is that is that a outcome that the American
public is comfortable with or is it something that they
want the government to subsidize. Those are really the only
two policy outcomes that I can think of.
Speaker 2 (34:10):
I don't know that subsidizing ends up necessarily being the
ant like it's.
Speaker 4 (34:16):
I don't have a good answer.
Speaker 5 (34:18):
There is one.
Speaker 3 (34:19):
If you want to make childcare cheaper, it has to
get subsidized because the market will not make it cheaper. Yeah,
I can't think of any again, I mean, yes, are
there ways you can make the market cheaper? Sure, allow
childcare facilities to care for, you know, five six month
olds instead of the current three regulation. You have one
(34:42):
or two infant deaths, and that's going to go in
the other direction pretty quickly. So that's what I mean
by the market solution is not going to result in
anything other than continued high prices.
Speaker 2 (34:52):
Can we talk about something a little bit more uplifting
to end on?
Speaker 4 (34:55):
Yeah?
Speaker 5 (34:56):
Please?
Speaker 2 (34:56):
Got I want to talk about the Bridgerton Ball, which
an event that was supposed to be happening in Michigan
and it is really good, going off similar vibes to
the Willy Walkee experience that was like all AI generated
and turned out to be like one very sad umpa
lumpa with like a chocolate bar back.
Speaker 4 (35:17):
Into the spring.
Speaker 2 (35:18):
And this apparently they rescheduled the original dates that they
were going to be having this, and it turned out
it was because they wouldn't pay the original.
Speaker 4 (35:28):
Venue the full amount that they owed them. That came
out later.
Speaker 2 (35:32):
And then when people did show up, they had like
a single violin person there. They had no weight staff
to clear tables or anything. And they promised, you know,
a bunch of dancers that they were going to have
there to help you know, people dance, and they had
hired one stripper.
Speaker 4 (35:48):
Not great. We're done for the day on the Financial Exchange.
Speaker 2 (35:51):
We will see you tomorrow to wrap up the week.
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