December 1, 2025 • 39 mins
Chuck Zodda and Mike Armstrong discuss what to expect in markets this week. Why Wall Street says December may not deliver a Santa Claus rally. Shoppers, drawn by steep discounts, power through Black Friday. Gen Z shoppers aren't spending like retailers need them to. Fed's beige book shows K-Shaped split deepens among consumers. Trump says he has made his choice to lead the Fed.
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Speaker 1 (00:00):
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(01:06):
and Mike Armstrong.
Speaker 2 (01:11):
Chuck, Mike and Tucker with you, and I hope you
all had a great Thanksgiving. Hope you have worked through
all that turkey, not worked off all the turkey, but
worked through it. Because generally you get to the Monday
after Thanksgiving and hey, even if you had, you know,
a nice juicy bird on the table on Thursday, it's
(01:33):
usually pretty dried out and not very good today. So
hope you made the best of you know, last week,
and we're happy to be back in the driver's seat
on December first, ready to power through the last month
of twenty twenty five.
Speaker 3 (01:47):
I'm not ready.
Speaker 2 (01:48):
What are you not ready for? Michael Man?
Speaker 3 (01:50):
I like it.
Speaker 4 (01:51):
You always suspect that maybe a too much Thanksgiving, But
you know, putting on my pants today compared to Tuesday
of last week, they look tight, the same pants and
they do not fit the same They don't look like
the same pants.
Speaker 3 (02:02):
They they they look different.
Speaker 4 (02:05):
And yeah, it was a gluttonous really four days, gluttonous
four days for me personally.
Speaker 2 (02:13):
I'll say this, so I love like, if you actually
know how to cook a turkey, fantastic. Okay, most of
our problems with turkey come from Americans desire to just, hey,
get that thing as overcooked as possible, because we're so
nervous about food bor and illnesses that really just aren't
present in large quantities or even small quantities in the
(02:36):
United States anymore. So if you just don't overcook your bird,
you're generally going to be in.
Speaker 3 (02:39):
A good spot.
Speaker 4 (02:40):
That said, there is nothing more embarrassing than poisoning twenty people.
Speaker 2 (02:43):
I can think of a few things more embarrassing. Not many,
there's a few. Yeah, But in any case, we digress. December.
So what do we have this month? A whole bunch
of weirdness, largely related to data coming out from the
governments shutdown on delayed. So this Friday we're gonna be
(03:03):
getting the core I'm sorry, the PCE price index for September.
Speaker 3 (03:10):
Wow, that's late.
Speaker 2 (03:11):
Who cares? Like, shouldn't even be like on the list anymore?
It is not influencing anything right now. This is also,
by the way, why how bad.
Speaker 4 (03:19):
Would it need to be to influence anything at all?
It need to be like a percentage point higher?
Speaker 2 (03:24):
Yeah, if core PC, if core PC came into like
six percent for the month, it would influence my decision
somewhat yeah. This is also why you remember the conversation
this summer about like, hey, these revisions are so big,
why don't they just wait and release the data longer?
Speaker 3 (03:42):
You know, later it's useless.
Speaker 2 (03:44):
It's because it's not useful to anyone if you're releasing
the data three months after it comes out the revisions. Again,
there's a reason why, like no one pays attention to
the revisions is because it's not relevant to what's coming next.
And so I think ultimately you need timely data and
the fact that we're getting the September PCE on December
(04:05):
fifth is kind of evidence of hey, like you can't
just wait for the data to be perfect, like publish
it and then revise if needed. That's how it should be.
Other than that, we got some ISM data coming out
today and Wednesday. ISM Manufacturing came out at ten am
this morning, reading a forty eight point two compared to
expectations of forty eight six to forty eight eight. I
(04:26):
have not had a chance to go through the whole
thing yet, but new orders declined and employment declined from
the prior reading, so those generally are pretty big components.
And ISM saying yeah, not great for the month of November.
The counter to this, the ISM Manufacturing Report has been
essentially useless over the last five years, so I'm not
sure that you should care too much about it today. Yeah,
(04:48):
it hasn't indicated what it used to. No, it just
has not been useful. Then later in the month, Okay,
next Tuesday, we're gonna be getting the Jolts Report, the
Job Openings Report, about a week delayed from when it
would otherwise be. But hey, nice that we're gonna get
it at least, and then we should be, you know,
come back to a regular cadence on that report. We
then have a FED meeting next Wednesday, which is going
(05:12):
to be happening without the without a few key pieces
of data. The first is UH non farm payrolls. The
job support is coming out the following Tuesday, December sixteenth,
because it takes a while to spool that back up. Also,
the producer price indext for November comes out on the
eleventh of December, the day after the FED meeting. Good,
(05:32):
and so there's been some chatter, Hey, sha, the FED
just push their meeting back a week, which quite honestly,
I don't know why they don't. It's not like there
is some kind of requirement that the FED meeting has
to be held at a certain time and certain date.
They choose a regular cadence because of how it works,
(05:53):
But it does.
Speaker 3 (05:54):
Seem rather useless to hold this meeting.
Speaker 2 (05:56):
What's what's the point of this?
Speaker 3 (05:58):
You're gonna spend all the time.
Speaker 2 (06:01):
Answering questions about well, if the data next week shows this,
what will you do?
Speaker 3 (06:05):
Yeah?
Speaker 2 (06:06):
Instead of delay, you know, like they really should just
delay and I'll go even further on this just because
I don't know, I think that this would be They
won't do this just because it would be too juicy.
I think if if they wanted to go this route,
but if you really wanted to get, you know, kind
of all the data that you wanted in order to
(06:27):
make your decision. Retail Sales four November comes out on
December seventeenth, and CPI comes out on the eighteenth.
Speaker 3 (06:35):
So Christmas Day FED meeting?
Speaker 2 (06:37):
What about a Christmas Eve FED meeting? Michael, Wednesday, December
twenty fourth, because they always do Wednesdays. Yea, hey, two pm?
Speaker 3 (06:45):
Does Jay still sport us purple tie for that?
Speaker 2 (06:48):
What are you giving us in our stockings?
Speaker 1 (06:50):
Jay?
Speaker 2 (06:50):
On Christmas Eve?
Speaker 3 (06:52):
Yeah?
Speaker 4 (06:52):
Yeah, Well not going to happen. So let's think about
they're probably not going to delay at all. It seems
very unlikely. Nobody next Wednesday, the fat is mentioned delaying,
and so I don't think it's going to happen. Jay
speaking tonight at eight pm, so you can tune in
and maybe he'll talk about it then, but probably not.
Speaker 2 (07:07):
So how sh how does that forget about?
Speaker 3 (07:11):
How should how does.
Speaker 4 (07:12):
The Fed approach this rate cutting decision or this rate
decision given the complete and utter absence of official data
on the economy.
Speaker 2 (07:23):
Generally, the best predictor of where the economy is going
to be tomorrow is where it was yesterday. Sure, because
the trend tends to be maintained, given the fact that
we have a labor market that has been weakening at
a pretty consistent.
Speaker 4 (07:40):
Rate except for last except for September, where job creation
bounced back to be about four x four to five.
Speaker 2 (07:47):
As even there, like if you look at it on
like a three month moving average, like you generally have
a this has been something that's been declining for like
three years now on a pretty consistent basis. And so
given that if the FED was nervous about downside risks
to employment in September and October, they should be cutting
in December. I've also said I don't think it matters
(08:10):
whether or not they cut in December. What's going to
matter is, hey, do they end up cutting probably another
one to one and a half percent, because the first
one and a half percent of rate cuts hasn't done
anything to help housing, which is the sector of the
economy that typically benefits the most from rate cuts.
Speaker 4 (08:25):
We usually talk about the FED in terms of this
one ubiquitous body, it's not, it's it's several voting eleven
voting members.
Speaker 3 (08:33):
How many voting members twelwelve twelve voting members.
Speaker 4 (08:37):
The agreement on cutting rates was not unanimous, and in fact,
you know.
Speaker 2 (08:42):
The idea that we had bidirectional descents, Yeah.
Speaker 4 (08:45):
I mean that, I guess would be My point is,
you know, if the FED believed that the economy was
weaking at the last meeting, well not all of them did,
and in fact you had some descents, and so I
don't think it's I think it's very likely that the
FED continues to cut rates at this next meeting. But
as many of them have been saying out loud of
the course, the last several weeks. It is not baked
(09:08):
in as a you know, absolute that the FED is
going to cut rates. I think it's likely what happens.
I tend to agree that it's the right thing to do,
but I expect there to be more descents.
Speaker 2 (09:18):
Let me throw another wrinkle into this, which is, even
if the FED does continue cutting beyond December, it might
not matter for what matters to the economy. And by
that I mean housing doesn't move based on where the
FED funds rate is. It moves based on where longer
(09:39):
term rates are. Ten year treasury, thirty year treasury, things
along those lines. Ten your treasury this morning is up
six point two basis points courtesy of Japan. Why Japan cause?
Earlier this morning, the Japanese Central Bank signaled that they
may end up raising rates at their upcoming December meeting,
which in turn has thrown Japanese got them bonds into
(10:01):
the next phase of their sell off that's been ongoing
for you know, the last eighteen to twenty four months now,
and so you've got Japanese bond yields blowing out top side,
which are taking global bond yields with them. Because everything
kind of moves in lockstep. So the tenure treasury is
up six point two basis points today. FED didn't do anything.
And quite honestly, if the Japanese Japanese Central Bank decides
(10:25):
they need to move in this fashion, which they may,
because hey, surprise, inflation's kind of picking up in Japan
and continuing to be a problem there, this could be
a problem for the rest of the world from a
borrowing perspective, and the FED could just be pushing on
a string here where they say, yeah, let's keep taking
rates down and the long end doesn't move as a
(10:45):
result of it.
Speaker 3 (10:46):
When was the first It was September was the first
rate cut? Yes, this year.
Speaker 4 (10:50):
I don't know the exact day, but according to Mortgage
News Daily on September fifth, the average thirty year fixed
rate mortgage was six point twenty nine.
Speaker 3 (10:58):
And today it is six two two.
Speaker 4 (11:02):
So you've had fifty base points of rate cuts and
no move in mortgage rates.
Speaker 2 (11:05):
No. And so this is where the FED could find
themselves in a bit of a pickle here where they
could say, yeah, like we want to cut rates. Of
course we do, and the market says that's great. It
ain't influencing the long end of the curve. Let's take
a quick break. When we return, we're going to talk
about where the Santa Claus is coming to the end
of year rally, and then we're gonna be talking about
(11:28):
what we're seeing for early Black Friday and Cyber Monday
sales numbers. Were you out and spending money? We'll let
you know after this.
Speaker 1 (11:38):
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Speaker 2 (12:27):
PCE. Here in Yahoo Finance, it's titled quote, I don't
know if we'll get that Santa Rally. Why Wall Street
says December may break from its usual strength. So basically
they're saying, hey, like stocks could go up, but they
could go down.
Speaker 4 (12:48):
Their main argument seems to be that, like, well, September
wasn't bad and it usually is, so maybe December Santa
Claus Rally is gonna be bad instead of good.
Speaker 2 (12:58):
And then November was, and you know, October had one
bad day in it. So you never know what you're
gonna get because the market's like a box of chocolates.
Speaker 4 (13:08):
So let's describe what the Santa Claus Rally is, because
it does not just mean that all of December is wonderful.
The Santa Claus Rally itself is actually the last five
trading days of the year plus the first two of January.
So that's like the actual If you're looking for what
people look at as the statistical significance of the Santa
Claus Rally, yes, it is not anytime soon.
Speaker 2 (13:29):
No, it's it's actually Santa Claus coming to town.
Speaker 4 (13:33):
It also is not hugely I mean, it's not a
hugely significant Porsche amount Like the average over I think
the last fifty years is somewhere in the one point
four percent.
Speaker 2 (13:46):
One and a half percent, and it happens on average
like seventy five to eighty percent of the time, So
it's you know again, it's it's statistically significant. Yeah, it happens,
and there are reasons why it happens. By the way,
Like if you just like look at it, do they
have to a Santa Claus kind of if you think
that Bill Ackman is Santa Claus. So look here, here's
(14:06):
why the Santa Claus rally typically happens. Number One, it
is a low volume time of year. The last few
basically the last trading week of any year, and then
the first couple of the next year. Basically every fund
is trying just to finish up its calendar year, and
the incentives are for them to chase performance. And if
performance has been good, that means that you typically see
(14:27):
that performance chase happen. So like there's really clear just
mechanical reasons in markets, you know why it would occur.
The other stuff that you see around the same time, Hey,
stocks that have typically lost heading into the last week
of the year tend to lose the last week of
the year because people harvest those losses, and then you
(14:47):
tend to see a little bit of short term out
performance the first couple trading days of next year as
new investors, you know that that that selling evaporates and
there's a dearth of sellers, and you know, I hate
the phrase more buyers than sellers, but it's kind of
what you have on you know, the next days. Hey,
there are more buyers who are willing to push prices
up as opposed to sellers who want to evacuate positions,
(15:10):
and so you tend to see that. So I think overall, look,
I don't know what this piece is supposed to tell us,
because A the Santa Claus rallies not something happens for
another three and a half weeks. B it's pretty much
someone saying, well, it might not happen this year, which okay,
(15:31):
like why is that news? It doesn't happen every year anyways.
And well, not quite as annoying as the pieces last
year that were like, hey, the first three days of
twenty twenty four were bad, does that mean stocks are
going to go down this year? It's not at that level.
But it's kind of just, Okay, what do I do
with this because it's kind of useless.
Speaker 4 (15:53):
We can agree there chuck, yeah, but I at least
understand what the Santa Claus rally is.
Speaker 3 (15:57):
It does not have anything to do with December.
Speaker 4 (15:59):
First, I know that all of you are are spotting
your elves for the first time of the year today,
but that is not what contributes to the stock market rally.
Elves on shelves is what I'm referring to here.
Speaker 2 (16:13):
Next up other things that annoy me. We're not doing
festivals today, right, Nope, no go. I should get that
on the calendar though, So get a cute up. I've
been building my list checking a Twista thank you piece
of the New York Times Shoppers drawn by steep discounts
power through Black Friday. So I've read a bunch of
pieces on Black Friday shopping trends. The good news is
(16:34):
basically all of them are like, yeah, they were Black
Friday was better than expected. The bad news is that
none of them show the same data. I've seen some
saying hey, Black Friday sales were up four percent, some
saying they were up nine percent, some saying they were
up three percent, some saying they were up six Like.
I've seen everything, and I just I don't know what
(16:54):
to do with this other than to say, basically, everything
continues to point towards dis bite, concerns about the labor
market and whether it's strong enough to support consumer spending
at these levels. Consumer spending still continues at these levels.
Speaker 4 (17:10):
Which is also very funny because last week all the
coverage was about how when Deloitte went and pulled consumers,
they all said that they were going to budget this
year and spend less than they did last year, and
we all called boloney on that one, because we never
do that outside of recession. I think, so let's start
with the Adobe data because that's the one that's most
quoted out there that I've seen, and that's the one
(17:31):
that I think even the President, you know, put out
there on social media, where there was a nine point
one percent increase year over year. They are measuring online
sales data estimates for Black Friday, so again that's not
what Black Friday is. It's traditionally going into stores. But nonetheless, there.
Speaker 2 (17:48):
I thought you had to wait to shop online until
Cyber Monday. Yeah, I thought it wasn't allowed on Friday.
Speaker 4 (17:53):
Incorrect, But you know, taking a look at this data,
I tried to then compare it to overall holiday shopping data,
which I pulled from Visa, and the correlation isn't that significant. Like,
you know, when it comes to overall holiday shopping season,
it the last several years has increased by like four
to five percent, and that's been the norm outside of
(18:13):
the pandemic when it surged massively. But for instance, in
twenty twenty two, Adobe estimated that Black Friday sales were
only up two point two percent compared to twenty twenty one,
and yet holiday shopping data came, you know, holiday shopping
overall five point eight percent increase. Likewise, the Adobe reported in
twenty twenty one that it actually shrank, and yet twenty
(18:34):
twenty one holiday shopping season up nearly twelve percent according
to Visa. So I don't know that this tells us anything.
Speaker 2 (18:42):
I maintain that we are in the same place that
we were three months ago, six months ago, nine months ago,
which is consumer spending is continuing to move up at
about a four to six percent.
Speaker 3 (18:53):
Clip year over year.
Speaker 2 (18:54):
Three percent of that is inflation, which means there's like
one to three percent real spending growth. It's probably being
driven more by the high end consumer and until proven otherwise,
that trend is going to continue.
Speaker 4 (19:07):
By the way Visa is forecasting that overall holiday sales
will go up four point six percent this year.
Speaker 3 (19:12):
That compares to four to eight last year.
Speaker 4 (19:14):
So it seems to line up precisely with what you're
with what you're talking about there.
Speaker 2 (19:18):
So I think when we look at holiday shopping trends,
the message that I'll get out there is they're good.
They are no real signs of weakness, and that's a
good thing. Quick break here Wall Street watches Next.
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Speaker 1 (20:21):
Time now for Wall Street. Watch a complete look at
what's moving markets so far today right here on the
Financial Exchange Radio network.
Speaker 5 (20:30):
Well traders are returning from the Thanksgiving holiday and turning
the calendar to the final month of twenty twenty five,
where markets are currently seeing a modest sell off. Right now,
the Dow is down by seven tenths of one percent
or three hundred and thirty four points, SMP five hundred down,
two thirds of a percent or forty three points, NASDAK
(20:50):
down by three quarters of a percent or one hundred
and seventy eight points lower, Russell two thousands down over
eight tenths of one percent. Ten Your treasuryeled rise using
six basis points this morning at four point zero eighty
three percent. In crude oil up about one and a
half percent high treading a fifty nine dollars in thirty
eight cents a barrel. Some in Vidia related news to
(21:11):
begin with, where Nvidia invested two billion dollars in Synopsis
common stock is part of a broad strategic partnership. Shares
in the provider of software four chip designers are jumping
nearly four percent higher, while in Nvidia stock is rising
about one percent. Meanwhile, several crypto based stocks, including Coinbase,
seeing losses after bitcoins tumbled further to eighty five thousand dollars.
(21:36):
Coinbase shares are down by over five percent. Elsewhere, Eli
Lilly announced it is lowering the cash prices of single
dose vials of its Blockbuster weight loss drug zep Bound
on its direct to consumer platform Lily Direct. Eli stock
is down over half a percent. Barreck Mining stock is
up nearly three percent following reports that the company is
(21:58):
exploring spinning off at North American gold assets into a
listed business, separating the operations from golden copper minds in
riskier parts of the world. And When Resorts is climbing
three percent after Goldman Sachs included When on its Conviction
by list, saying the company has a best in class
Las Vegas business, while improvement in China's Macau region can
(22:21):
drive transformative upside. I'm Tucker Silva and that is Wall Street.
Speaker 2 (22:25):
Watch Mike, before we go further, this will kind of
tie into the fedbage book at some point. I just
saw a chiron, you know, go across the screen and
it was talking about Black Friday, and it said consumers
focused on value and deals. Mike, aside from twenty twenty one,
(22:47):
where like we were, you know, three stimulus checks deep.
Speaker 3 (22:51):
When don't we focus? Has that ever been?
Speaker 2 (22:53):
Like do you ever remember going into a year end
and businesses being like consumers, Well, I think people have
a boatload of money, so we're gonna, you know, just
not discount much. No, Like, do you ever like, is
this the most useless stuff to talk about?
Speaker 3 (23:08):
Yeah? It is not helpful?
Speaker 2 (23:12):
Like when do we ever see the headline consumers willing
to spend whatever it takes to get alexis under the tree,
and boy do they need a big tree.
Speaker 4 (23:25):
I was I played hockey last night, as I do
most Sunday nights, and I was talking to a pair
at Poorly Again the Thanksgiving workoff was not going well.
Speaker 3 (23:34):
But I was in good company. There.
Speaker 4 (23:36):
There's a pair of brothers who went to a hockey sale.
The largest played against sports in the country is in Dedham, Massachusetts,
and they had a sale starting at seven am, where
if you were in the door between seven and eight
am you'd get half off anyone item. They showed up
there at five point thirty and said that there were
(23:56):
over a thousand people out there. A thousand at again,
a very small again, being the biggest played against sports
in the country is not does not make it a
big store.
Speaker 2 (24:08):
No, that's like being the largest minnow. Yeah, it is
a small store.
Speaker 4 (24:12):
And they said that there were people pouring in, and
I just have to put my hand up and say
that I am personally shocked that there were no fistfights
at a store that predominantly sells hockey equipment.
Speaker 2 (24:22):
Right, you would think they'd have like a little like
corner where that's expected.
Speaker 3 (24:26):
Yeah.
Speaker 2 (24:26):
Yeah, so you reach for the item at the same time.
Speaker 4 (24:29):
Okay, I mean I get it, Like, you know, a
nice pair of hockey skates is going for like fifteen
hundred bucks these days, so are you curious?
Speaker 3 (24:36):
Oh yeah, jesus, Yeah.
Speaker 2 (24:38):
Like a top of the line hockey skate. I would
have figured like five hundred bucks.
Speaker 3 (24:43):
No, no, no.
Speaker 2 (24:44):
Fifteen hundred dollars.
Speaker 3 (24:46):
Yeah. Yeah, I bought mine used for seven hundred pooh. Yeah.
Speaker 2 (24:50):
Yeah, this is insane, like only equipment, you just really
like hockey? Yeah, goally equipment you need to take out
a mortgage.
Speaker 3 (24:56):
Correct, correct? Yeah.
Speaker 4 (24:59):
So I I don't know what that had to do
with anything, but yeah, I do think people were excited.
Speaker 3 (25:02):
That's what it had to do with. I do think
people were.
Speaker 4 (25:04):
Excited about deals, hence the massive lines outside of a
new and used hockey equipment retailer.
Speaker 2 (25:12):
So I've got a new thing that we got to
talk about. Then. So fed's Beage book shows K shaped
split deepens amongst consumers. That's the headline from Bloomberg.
Speaker 4 (25:21):
Okay, how did the fed's Beige book do that? Based
on stories that they get from people?
Speaker 2 (25:25):
Just you know, they hear about this and everything. I
am wondering if we have hit peaked K shaped peak
K shaped? And the reason I bring this up is
because everyone is talking about this right now. It is
the most visible discussion in markets and the economy right now.
Is this idea of the K shaped economy where the
(25:47):
high income earners are doing just fine and everybody else
is struggling. And I again, this thing. You can always
you know, extrapolate this further and it could always go
further than where it is today. But I'm just wondering if, look,
once everyone knows about this and is paying attention to it,
have we kind of gone to like is it something
(26:09):
that's going to be roped in from here?
Speaker 3 (26:11):
Now?
Speaker 4 (26:12):
My problem is I don't know how you measure measure it.
I don't have a good way to measure it. And
also it kind of changed over time. The concept started
during COVID, and specifically it was more used to describe
workers in some types of industries such as tech and
(26:35):
financial services, that largely kept their jobs.
Speaker 3 (26:37):
During COVID and worked remotely.
Speaker 4 (26:40):
Versus those in hospitality, retail, and food services who had
to go in if they were able to keep the
job and otherwise lost their job.
Speaker 3 (26:48):
And it's now morphed into people who.
Speaker 4 (26:51):
Are doing all right financially and people who are doing
poorly financially and that divergence. And I don't have a
I just don't have a good measuring stick to figure
out how we would have hit peak badness.
Speaker 3 (27:04):
I don't know.
Speaker 2 (27:05):
It just feels like at least it's every other story.
Speaker 4 (27:10):
Yeah that we agree, Yeah, I would agree that we
might have reached peak coverage of the K shaped economy.
I have no idea how to measure whether or not
the divergence between high income and high wealth consumers versus
low income and low wealth consumers.
Speaker 3 (27:25):
Has reached its peak.
Speaker 4 (27:27):
But I suspect that, like you do, given the fact
that we are covering it every single day on the program.
Somebody's writing about the K shaped economy every single day
that we've hit that point. I also think that because
it's become so popular, it's probably going to be the
term itself is going to be taken and applied to
other situations down the road.
Speaker 3 (27:47):
Like we decided, you know.
Speaker 4 (27:49):
Like we describe every bad part of the economy with
the term recession, we're gonna use K shape to describe
all sorts.
Speaker 2 (27:56):
Of kind of like whenever there's a scandal, we just
slap gate at the end of it. Yes, precisely, you know. Yes,
So this is going to be like what's it going
to be?
Speaker 4 (28:05):
Like there's you know, three terrible teams in the MLB,
and they're describing the K shaped Okay, fall season?
Speaker 2 (28:13):
Yeah, got it? Yeah, you know, Toyota comes out and
has three colors of a car. Oh, that one's you know,
the bottom of the K. Yeah, you want to be
top of the K.
Speaker 4 (28:22):
You do want to be top of the K if
you are a consumer brand like that.
Speaker 2 (28:27):
Let's take a quick break and when we come back.
President Trump says that he has made his choice to
leave the Federal Reserve. He hasn't told us who it
is yet, but we'll discuss after this.
Speaker 1 (28:39):
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(29:00):
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Speaker 2 (29:18):
President Trump says that he has made his choice to
leave the Federal Reserve, but hasn't told us yet who
that person is widely expected to be Kevin Hassett, who
runs the Council of Economic Advisors. And that's what we know.
Speaker 4 (29:35):
Yeah, well, let's talk about what else we know about this.
Whoever his pick is is undoubtedly going to be on
a path to lower interest rates. Now I will buy
that once you are in the role, your viewpoints might change.
But to be very clear, the only people the President
is willing to consider for the role are those who
(29:57):
have very publicly come out saying that they believe interest
should be substantially lower than where.
Speaker 3 (30:01):
They are right now.
Speaker 4 (30:02):
Yes, so I do believe that whoever he puts into
this role Hassett or otherwise is going to be leading
a charge to lower interest rates. But as we talked
about earlier, we talked about the FED frequently as this
unanimous body, it is not. It is a group of
twelve people who vote on policy decisions surrounding interest rates,
and they don't seem to all agree. Furthermore, what the
(30:25):
presence seems to be focusing on mostly is, hey, how
do I bring down things like mortgage rates which will
give things a boost? And as we've seen recently, the
FED really has no control over that, and those are
going to be much more susceptible to other factors in
the economy that is outside the control of at least
the Federal Reserve.
Speaker 2 (30:43):
FED has cut the FED funds rate one and a
half percent since the middle of last September. The average
thirty year fixed rate mortgage has gone from six point
one five to six point two two percent during that time, right, Like,
that's that's the whole ballgame. Now, the FED could in
the start to try to exert more control over the
(31:04):
long end of the yield curve. But remember there is
no free lunch anywhere, but especially in financial markets. And
so if you say, hey, the Fed's gonna undertake what
they call yield curve control, which is not only are
they gonna target a rate for the short end, but
for the long end. You then have to wonder, Okay,
what does that do to everything that depends on that?
(31:26):
If the FED says, yeah, we want to get you know,
mortgage rates down to five percent, okay, buckle up, because
I bet the price of lumber is gonna be going up,
and I bet the price of steel and aluminum are
gonna be going up, and I bet the price of
everything's going up. And that means that inflation's higher, and
that's not good for anyone either. So there's no free
(31:47):
lunch on all this stuff. There's there's no button that
the FED pushes that is that just has like low inflation,
high growth, right, Like, that's that's the button that we want.
It's the easy button from Staples. But I've had one
of those and it doesn't connect to anything and doesn't
actually work.
Speaker 4 (32:04):
A very funny but sort of dangerous prank that a
family member of mine pulled is they replaced a first
aid kit with just an easy button from Staples.
Speaker 2 (32:15):
What does that mean?
Speaker 4 (32:15):
You opened up the first aid kit and there was
no first aid materials in there.
Speaker 3 (32:19):
It was just an easy button.
Speaker 2 (32:20):
From that seems like something that you could get charged
a crime for.
Speaker 3 (32:23):
I thought it was hilarious.
Speaker 2 (32:24):
It just wasn't like a public one.
Speaker 3 (32:25):
Right, this was just inside our home.
Speaker 2 (32:27):
Okay, yeah, yeah, that seems dangerous. You didn't like that one,
just yeah, we took imagined.
Speaker 4 (32:38):
Well, yeah, child's running up there with a sliced hand
and you go for the band aids.
Speaker 2 (32:43):
It's just empty. Other than a stupid that was easy button. Hey,
we're trying to get the AED. Oh look it's just
an easy button. It's not good. They were good.
Speaker 5 (32:55):
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Speaker 2 (34:15):
I'm just trying to think of other variations on the
easy button easy button replacement for the first aid kit. Yeah,
you could do again. None of these are good ideas,
but funny.
Speaker 5 (34:27):
Don't recommend them.
Speaker 2 (34:28):
I'm just picturing like someone like going to like use
a fire extinguisher and it's just like there's just a
fart machine, yeah or something like that, Like yeah, or
like you get in a car accident. It's just like
instead of an airbag, it's a whoope cushion, Like yeah, yeah.
Speaker 4 (34:42):
Yeah, that does actually work. Actually, those starts pranks just
right up my alley. I feel like you could do
a good.
Speaker 2 (34:48):
Snl skit on this somehow, but I don't know, like exactly.
Speaker 4 (34:52):
How you Real world appeal not a great idea, but
cartoonish like pranks are right up my alley.
Speaker 2 (34:57):
Boston landlords quote willing to do anything thing as rental
market cools.
Speaker 4 (35:03):
There's not a there's not a group that gets a
lot less pity than Boston area landlords made a killing
over the last several decades in terms of home price appreciation,
and your average asking rent is now three forty three dollars,
which is actually down a few bucks compared to the
(35:23):
recent ties.
Speaker 2 (35:24):
So I guess I'm just trying to like think through this.
So if you look at, you know, the Boston market
for real estate, traditionally it's been a really strong one's
it doesn't have the peaks and valleys of what we
see in a place like Miami as an example. It
tends to be a slower growth, but very consistent growth.
Because Boston has historically had a disproportionate share of its
(35:50):
income generated from people in the healthcare and education fields,
which tend to be more impervious to recession than other It's.
Speaker 4 (35:59):
It's also one of the more difficult areas of the
country to build, the historical city, with very severe restrictions
on height of new buildings and all sorts of things
like that. Historical preservation is pretty big in that city,
and so unlike say Miami, it's more difficult to get
approval for new buildings.
Speaker 3 (36:15):
So all of those things.
Speaker 2 (36:16):
Have you know, led to pretty honestly, the Nimbia is strong.
Speaker 3 (36:23):
Yeah, the Nimby is strong. Stone to Boston area.
Speaker 4 (36:28):
I think what you're seeing right now is a reversal
of a few of those trends. Right The exact same
things that kept Boston area real estate flying again comparatively
high during the Great Financial Crisis, which were again universities
still spending money and areas like biotech and healthcare research
(36:49):
still getting a lot of funding from the government were
what kept things afloat, And those are the exact opposite
effects that you are seeing right now. Right there's been
government cuts to education spending and research spending, and that's
on the margin a lot of what the Boston market
relies upon. And so I don't find this immensely surprising. No,
(37:11):
if you take it in combination with some concerns about
what could be rent control across the entire state of Massachusetts,
which again we don't know yet but could be on
the ballot for next year, I can see why landlords
are more concerned than usual in the Greater Boston area.
Speaker 2 (37:32):
So here's the piece that I come back to. Then,
if they're really that concerned, why are they not selling
their units? Yeah, because we're not seeing an uptick in
listings for sale for you know, like you're not seeing that.
Speaker 3 (37:46):
Yeah.
Speaker 4 (37:47):
I mean my answer would be, this isn't a logical
and correct decision to make. But every time I talk
to anybody who owns rental property in the Greater Boston area,
they're always like, oh God, I can't afford to pay that.
I don't want to pay the tax is on that sale,
which is a bad reason to hold real estate. But
you think about the can to pay the tax, you
(38:07):
would have the money from, you just don't want to.
And I think, especially when you talk about small landlords,
that is a very significant effect and especially when you're
factor in now things like the millionaire's tax, which, again,
if you're selling a three story unit in the South
End that you've owned for two generations, you might be
(38:30):
popping into that millionaire's tax threshold. I think there's just
an unwillingness to sell in some real estate markets.
Speaker 2 (38:35):
Let just take a quick break here. When we come back,
we've got a whole bunch more coming up an hour
or two. Make sure you stick around.
The Financial Exchange is produced by Money Matters Radio and
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(01:06):
and Mike Armstrong.
Speaker 2 (01:11):
Chuck, Mike and Tucker with you, and I hope you
all had a great Thanksgiving. Hope you have worked through
all that turkey, not worked off all the turkey, but
worked through it. Because generally you get to the Monday
after Thanksgiving and hey, even if you had, you know,
a nice juicy bird on the table on Thursday, it's
(01:33):
usually pretty dried out and not very good today. So
hope you made the best of you know, last week,
and we're happy to be back in the driver's seat
on December first, ready to power through the last month
of twenty twenty five.
Speaker 3 (01:47):
I'm not ready.
Speaker 2 (01:48):
What are you not ready for? Michael Man?
Speaker 3 (01:50):
I like it.
Speaker 4 (01:51):
You always suspect that maybe a too much Thanksgiving, But
you know, putting on my pants today compared to Tuesday
of last week, they look tight, the same pants and
they do not fit the same They don't look like
the same pants.
Speaker 3 (02:02):
They they they look different.
Speaker 4 (02:05):
And yeah, it was a gluttonous really four days, gluttonous
four days for me personally.
Speaker 2 (02:13):
I'll say this, so I love like, if you actually
know how to cook a turkey, fantastic. Okay, most of
our problems with turkey come from Americans desire to just, hey,
get that thing as overcooked as possible, because we're so
nervous about food bor and illnesses that really just aren't
present in large quantities or even small quantities in the
(02:36):
United States anymore. So if you just don't overcook your bird,
you're generally going to be in.
Speaker 3 (02:39):
A good spot.
Speaker 4 (02:40):
That said, there is nothing more embarrassing than poisoning twenty people.
Speaker 2 (02:43):
I can think of a few things more embarrassing. Not many,
there's a few. Yeah, But in any case, we digress. December.
So what do we have this month? A whole bunch
of weirdness, largely related to data coming out from the
governments shutdown on delayed. So this Friday we're gonna be
(03:03):
getting the core I'm sorry, the PCE price index for September.
Speaker 3 (03:10):
Wow, that's late.
Speaker 2 (03:11):
Who cares? Like, shouldn't even be like on the list anymore?
It is not influencing anything right now. This is also,
by the way, why how bad.
Speaker 4 (03:19):
Would it need to be to influence anything at all?
It need to be like a percentage point higher?
Speaker 2 (03:24):
Yeah, if core PC, if core PC came into like
six percent for the month, it would influence my decision
somewhat yeah. This is also why you remember the conversation
this summer about like, hey, these revisions are so big,
why don't they just wait and release the data longer?
Speaker 3 (03:42):
You know, later it's useless.
Speaker 2 (03:44):
It's because it's not useful to anyone if you're releasing
the data three months after it comes out the revisions. Again,
there's a reason why, like no one pays attention to
the revisions is because it's not relevant to what's coming next.
And so I think ultimately you need timely data and
the fact that we're getting the September PCE on December
(04:05):
fifth is kind of evidence of hey, like you can't
just wait for the data to be perfect, like publish
it and then revise if needed. That's how it should be.
Other than that, we got some ISM data coming out
today and Wednesday. ISM Manufacturing came out at ten am
this morning, reading a forty eight point two compared to
expectations of forty eight six to forty eight eight. I
(04:26):
have not had a chance to go through the whole
thing yet, but new orders declined and employment declined from
the prior reading, so those generally are pretty big components.
And ISM saying yeah, not great for the month of November.
The counter to this, the ISM Manufacturing Report has been
essentially useless over the last five years, so I'm not
sure that you should care too much about it today. Yeah,
(04:48):
it hasn't indicated what it used to. No, it just
has not been useful. Then later in the month, Okay,
next Tuesday, we're gonna be getting the Jolts Report, the
Job Openings Report, about a week delayed from when it
would otherwise be. But hey, nice that we're gonna get
it at least, and then we should be, you know,
come back to a regular cadence on that report. We
then have a FED meeting next Wednesday, which is going
(05:12):
to be happening without the without a few key pieces
of data. The first is UH non farm payrolls. The
job support is coming out the following Tuesday, December sixteenth,
because it takes a while to spool that back up. Also,
the producer price indext for November comes out on the
eleventh of December, the day after the FED meeting. Good,
(05:32):
and so there's been some chatter, Hey, sha, the FED
just push their meeting back a week, which quite honestly,
I don't know why they don't. It's not like there
is some kind of requirement that the FED meeting has
to be held at a certain time and certain date.
They choose a regular cadence because of how it works,
(05:53):
But it does.
Speaker 3 (05:54):
Seem rather useless to hold this meeting.
Speaker 2 (05:56):
What's what's the point of this?
Speaker 3 (05:58):
You're gonna spend all the time.
Speaker 2 (06:01):
Answering questions about well, if the data next week shows this,
what will you do?
Speaker 3 (06:05):
Yeah?
Speaker 2 (06:06):
Instead of delay, you know, like they really should just
delay and I'll go even further on this just because
I don't know, I think that this would be They
won't do this just because it would be too juicy.
I think if if they wanted to go this route,
but if you really wanted to get, you know, kind
of all the data that you wanted in order to
(06:27):
make your decision. Retail Sales four November comes out on
December seventeenth, and CPI comes out on the eighteenth.
Speaker 3 (06:35):
So Christmas Day FED meeting?
Speaker 2 (06:37):
What about a Christmas Eve FED meeting? Michael, Wednesday, December
twenty fourth, because they always do Wednesdays. Yea, hey, two pm?
Speaker 3 (06:45):
Does Jay still sport us purple tie for that?
Speaker 2 (06:48):
What are you giving us in our stockings?
Speaker 1 (06:50):
Jay?
Speaker 2 (06:50):
On Christmas Eve?
Speaker 3 (06:52):
Yeah?
Speaker 4 (06:52):
Yeah, Well not going to happen. So let's think about
they're probably not going to delay at all. It seems
very unlikely. Nobody next Wednesday, the fat is mentioned delaying,
and so I don't think it's going to happen. Jay
speaking tonight at eight pm, so you can tune in
and maybe he'll talk about it then, but probably not.
Speaker 2 (07:07):
So how sh how does that forget about?
Speaker 3 (07:11):
How should how does.
Speaker 4 (07:12):
The Fed approach this rate cutting decision or this rate
decision given the complete and utter absence of official data
on the economy.
Speaker 2 (07:23):
Generally, the best predictor of where the economy is going
to be tomorrow is where it was yesterday. Sure, because
the trend tends to be maintained, given the fact that
we have a labor market that has been weakening at
a pretty consistent.
Speaker 4 (07:40):
Rate except for last except for September, where job creation
bounced back to be about four x four to five.
Speaker 2 (07:47):
As even there, like if you look at it on
like a three month moving average, like you generally have
a this has been something that's been declining for like
three years now on a pretty consistent basis. And so
given that if the FED was nervous about downside risks
to employment in September and October, they should be cutting
in December. I've also said I don't think it matters
(08:10):
whether or not they cut in December. What's going to
matter is, hey, do they end up cutting probably another
one to one and a half percent, because the first
one and a half percent of rate cuts hasn't done
anything to help housing, which is the sector of the
economy that typically benefits the most from rate cuts.
Speaker 4 (08:25):
We usually talk about the FED in terms of this
one ubiquitous body, it's not, it's it's several voting eleven
voting members.
Speaker 3 (08:33):
How many voting members twelwelve twelve voting members.
Speaker 4 (08:37):
The agreement on cutting rates was not unanimous, and in fact,
you know.
Speaker 2 (08:42):
The idea that we had bidirectional descents, Yeah.
Speaker 4 (08:45):
I mean that, I guess would be My point is,
you know, if the FED believed that the economy was
weaking at the last meeting, well not all of them did,
and in fact you had some descents, and so I
don't think it's I think it's very likely that the
FED continues to cut rates at this next meeting. But
as many of them have been saying out loud of
the course, the last several weeks. It is not baked
(09:08):
in as a you know, absolute that the FED is
going to cut rates. I think it's likely what happens.
I tend to agree that it's the right thing to do,
but I expect there to be more descents.
Speaker 2 (09:18):
Let me throw another wrinkle into this, which is, even
if the FED does continue cutting beyond December, it might
not matter for what matters to the economy. And by
that I mean housing doesn't move based on where the
FED funds rate is. It moves based on where longer
(09:39):
term rates are. Ten year treasury, thirty year treasury, things
along those lines. Ten your treasury this morning is up
six point two basis points courtesy of Japan. Why Japan cause?
Earlier this morning, the Japanese Central Bank signaled that they
may end up raising rates at their upcoming December meeting,
which in turn has thrown Japanese got them bonds into
(10:01):
the next phase of their sell off that's been ongoing
for you know, the last eighteen to twenty four months now,
and so you've got Japanese bond yields blowing out top side,
which are taking global bond yields with them. Because everything
kind of moves in lockstep. So the tenure treasury is
up six point two basis points today. FED didn't do anything.
And quite honestly, if the Japanese Japanese Central Bank decides
(10:25):
they need to move in this fashion, which they may,
because hey, surprise, inflation's kind of picking up in Japan
and continuing to be a problem there, this could be
a problem for the rest of the world from a
borrowing perspective, and the FED could just be pushing on
a string here where they say, yeah, let's keep taking
rates down and the long end doesn't move as a
(10:45):
result of it.
Speaker 3 (10:46):
When was the first It was September was the first
rate cut? Yes, this year.
Speaker 4 (10:50):
I don't know the exact day, but according to Mortgage
News Daily on September fifth, the average thirty year fixed
rate mortgage was six point twenty nine.
Speaker 3 (10:58):
And today it is six two two.
Speaker 4 (11:02):
So you've had fifty base points of rate cuts and
no move in mortgage rates.
Speaker 2 (11:05):
No. And so this is where the FED could find
themselves in a bit of a pickle here where they
could say, yeah, like we want to cut rates. Of
course we do, and the market says that's great. It
ain't influencing the long end of the curve. Let's take
a quick break. When we return, we're going to talk
about where the Santa Claus is coming to the end
of year rally, and then we're gonna be talking about
(11:28):
what we're seeing for early Black Friday and Cyber Monday
sales numbers. Were you out and spending money? We'll let
you know after this.
Speaker 1 (11:38):
This is your home for the most comprehensive coverage of
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(12:00):
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Speaker 5 (12:10):
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Thank you veterans for all you've done.
Speaker 2 (12:27):
PCE. Here in Yahoo Finance, it's titled quote, I don't
know if we'll get that Santa Rally. Why Wall Street
says December may break from its usual strength. So basically
they're saying, hey, like stocks could go up, but they
could go down.
Speaker 4 (12:48):
Their main argument seems to be that, like, well, September
wasn't bad and it usually is, so maybe December Santa
Claus Rally is gonna be bad instead of good.
Speaker 2 (12:58):
And then November was, and you know, October had one
bad day in it. So you never know what you're
gonna get because the market's like a box of chocolates.
Speaker 4 (13:08):
So let's describe what the Santa Claus Rally is, because
it does not just mean that all of December is wonderful.
The Santa Claus Rally itself is actually the last five
trading days of the year plus the first two of January.
So that's like the actual If you're looking for what
people look at as the statistical significance of the Santa
Claus Rally, yes, it is not anytime soon.
Speaker 2 (13:29):
No, it's it's actually Santa Claus coming to town.
Speaker 4 (13:33):
It also is not hugely I mean, it's not a
hugely significant Porsche amount Like the average over I think
the last fifty years is somewhere in the one point
four percent.
Speaker 2 (13:46):
One and a half percent, and it happens on average
like seventy five to eighty percent of the time, So
it's you know again, it's it's statistically significant. Yeah, it happens,
and there are reasons why it happens. By the way,
Like if you just like look at it, do they
have to a Santa Claus kind of if you think
that Bill Ackman is Santa Claus. So look here, here's
(14:06):
why the Santa Claus rally typically happens. Number One, it
is a low volume time of year. The last few
basically the last trading week of any year, and then
the first couple of the next year. Basically every fund
is trying just to finish up its calendar year, and
the incentives are for them to chase performance. And if
performance has been good, that means that you typically see
(14:27):
that performance chase happen. So like there's really clear just
mechanical reasons in markets, you know why it would occur.
The other stuff that you see around the same time, Hey,
stocks that have typically lost heading into the last week
of the year tend to lose the last week of
the year because people harvest those losses, and then you
(14:47):
tend to see a little bit of short term out
performance the first couple trading days of next year as
new investors, you know that that that selling evaporates and
there's a dearth of sellers, and you know, I hate
the phrase more buyers than sellers, but it's kind of
what you have on you know, the next days. Hey,
there are more buyers who are willing to push prices
up as opposed to sellers who want to evacuate positions,
(15:10):
and so you tend to see that. So I think overall, look,
I don't know what this piece is supposed to tell us,
because A the Santa Claus rallies not something happens for
another three and a half weeks. B it's pretty much
someone saying, well, it might not happen this year, which okay,
(15:31):
like why is that news? It doesn't happen every year anyways.
And well, not quite as annoying as the pieces last
year that were like, hey, the first three days of
twenty twenty four were bad, does that mean stocks are
going to go down this year? It's not at that level.
But it's kind of just, Okay, what do I do
with this because it's kind of useless.
Speaker 4 (15:53):
We can agree there chuck, yeah, but I at least
understand what the Santa Claus rally is.
Speaker 3 (15:57):
It does not have anything to do with December.
Speaker 4 (15:59):
First, I know that all of you are are spotting
your elves for the first time of the year today,
but that is not what contributes to the stock market rally.
Elves on shelves is what I'm referring to here.
Speaker 2 (16:13):
Next up other things that annoy me. We're not doing
festivals today, right, Nope, no go. I should get that
on the calendar though, So get a cute up. I've
been building my list checking a Twista thank you piece
of the New York Times Shoppers drawn by steep discounts
power through Black Friday. So I've read a bunch of
pieces on Black Friday shopping trends. The good news is
(16:34):
basically all of them are like, yeah, they were Black
Friday was better than expected. The bad news is that
none of them show the same data. I've seen some
saying hey, Black Friday sales were up four percent, some
saying they were up nine percent, some saying they were
up three percent, some saying they were up six Like.
I've seen everything, and I just I don't know what
(16:54):
to do with this other than to say, basically, everything
continues to point towards dis bite, concerns about the labor
market and whether it's strong enough to support consumer spending
at these levels. Consumer spending still continues at these levels.
Speaker 4 (17:10):
Which is also very funny because last week all the
coverage was about how when Deloitte went and pulled consumers,
they all said that they were going to budget this
year and spend less than they did last year, and
we all called boloney on that one, because we never
do that outside of recession. I think, so let's start
with the Adobe data because that's the one that's most
quoted out there that I've seen, and that's the one
(17:31):
that I think even the President, you know, put out
there on social media, where there was a nine point
one percent increase year over year. They are measuring online
sales data estimates for Black Friday, so again that's not
what Black Friday is. It's traditionally going into stores. But nonetheless, there.
Speaker 2 (17:48):
I thought you had to wait to shop online until
Cyber Monday. Yeah, I thought it wasn't allowed on Friday.
Speaker 4 (17:53):
Incorrect, But you know, taking a look at this data,
I tried to then compare it to overall holiday shopping data,
which I pulled from Visa, and the correlation isn't that significant. Like,
you know, when it comes to overall holiday shopping season,
it the last several years has increased by like four
to five percent, and that's been the norm outside of
(18:13):
the pandemic when it surged massively. But for instance, in
twenty twenty two, Adobe estimated that Black Friday sales were
only up two point two percent compared to twenty twenty one,
and yet holiday shopping data came, you know, holiday shopping
overall five point eight percent increase. Likewise, the Adobe reported in
twenty twenty one that it actually shrank, and yet twenty
(18:34):
twenty one holiday shopping season up nearly twelve percent according
to Visa. So I don't know that this tells us anything.
Speaker 2 (18:42):
I maintain that we are in the same place that
we were three months ago, six months ago, nine months ago,
which is consumer spending is continuing to move up at
about a four to six percent.
Speaker 3 (18:53):
Clip year over year.
Speaker 2 (18:54):
Three percent of that is inflation, which means there's like
one to three percent real spending growth. It's probably being
driven more by the high end consumer and until proven otherwise,
that trend is going to continue.
Speaker 4 (19:07):
By the way Visa is forecasting that overall holiday sales
will go up four point six percent this year.
Speaker 3 (19:12):
That compares to four to eight last year.
Speaker 4 (19:14):
So it seems to line up precisely with what you're
with what you're talking about there.
Speaker 2 (19:18):
So I think when we look at holiday shopping trends,
the message that I'll get out there is they're good.
They are no real signs of weakness, and that's a
good thing. Quick break here Wall Street watches Next.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter. At
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on the Financial Exchange Radio Network.
Speaker 6 (19:51):
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Speaker 1 (20:21):
Time now for Wall Street. Watch a complete look at
what's moving markets so far today right here on the
Financial Exchange Radio network.
Speaker 5 (20:30):
Well traders are returning from the Thanksgiving holiday and turning
the calendar to the final month of twenty twenty five,
where markets are currently seeing a modest sell off. Right now,
the Dow is down by seven tenths of one percent
or three hundred and thirty four points, SMP five hundred down,
two thirds of a percent or forty three points, NASDAK
(20:50):
down by three quarters of a percent or one hundred
and seventy eight points lower, Russell two thousands down over
eight tenths of one percent. Ten Your treasuryeled rise using
six basis points this morning at four point zero eighty
three percent. In crude oil up about one and a
half percent high treading a fifty nine dollars in thirty
eight cents a barrel. Some in Vidia related news to
(21:11):
begin with, where Nvidia invested two billion dollars in Synopsis
common stock is part of a broad strategic partnership. Shares
in the provider of software four chip designers are jumping
nearly four percent higher, while in Nvidia stock is rising
about one percent. Meanwhile, several crypto based stocks, including Coinbase,
seeing losses after bitcoins tumbled further to eighty five thousand dollars.
(21:36):
Coinbase shares are down by over five percent. Elsewhere, Eli
Lilly announced it is lowering the cash prices of single
dose vials of its Blockbuster weight loss drug zep Bound
on its direct to consumer platform Lily Direct. Eli stock
is down over half a percent. Barreck Mining stock is
up nearly three percent following reports that the company is
(21:58):
exploring spinning off at North American gold assets into a
listed business, separating the operations from golden copper minds in
riskier parts of the world. And When Resorts is climbing
three percent after Goldman Sachs included When on its Conviction
by list, saying the company has a best in class
Las Vegas business, while improvement in China's Macau region can
(22:21):
drive transformative upside. I'm Tucker Silva and that is Wall Street.
Speaker 2 (22:25):
Watch Mike, before we go further, this will kind of
tie into the fedbage book at some point. I just
saw a chiron, you know, go across the screen and
it was talking about Black Friday, and it said consumers
focused on value and deals. Mike, aside from twenty twenty one,
(22:47):
where like we were, you know, three stimulus checks deep.
Speaker 3 (22:51):
When don't we focus? Has that ever been?
Speaker 2 (22:53):
Like do you ever remember going into a year end
and businesses being like consumers, Well, I think people have
a boatload of money, so we're gonna, you know, just
not discount much. No, Like, do you ever like, is
this the most useless stuff to talk about?
Speaker 3 (23:08):
Yeah? It is not helpful?
Speaker 2 (23:12):
Like when do we ever see the headline consumers willing
to spend whatever it takes to get alexis under the tree,
and boy do they need a big tree.
Speaker 4 (23:25):
I was I played hockey last night, as I do
most Sunday nights, and I was talking to a pair
at Poorly Again the Thanksgiving workoff was not going well.
Speaker 3 (23:34):
But I was in good company. There.
Speaker 4 (23:36):
There's a pair of brothers who went to a hockey sale.
The largest played against sports in the country is in Dedham, Massachusetts,
and they had a sale starting at seven am, where
if you were in the door between seven and eight
am you'd get half off anyone item. They showed up
there at five point thirty and said that there were
(23:56):
over a thousand people out there. A thousand at again,
a very small again, being the biggest played against sports
in the country is not does not make it a
big store.
Speaker 2 (24:08):
No, that's like being the largest minnow. Yeah, it is
a small store.
Speaker 4 (24:12):
And they said that there were people pouring in, and
I just have to put my hand up and say
that I am personally shocked that there were no fistfights
at a store that predominantly sells hockey equipment.
Speaker 2 (24:22):
Right, you would think they'd have like a little like
corner where that's expected.
Speaker 3 (24:26):
Yeah.
Speaker 2 (24:26):
Yeah, so you reach for the item at the same time.
Speaker 4 (24:29):
Okay, I mean I get it, Like, you know, a
nice pair of hockey skates is going for like fifteen
hundred bucks these days, so are you curious?
Speaker 3 (24:36):
Oh yeah, jesus, Yeah.
Speaker 2 (24:38):
Like a top of the line hockey skate. I would
have figured like five hundred bucks.
Speaker 3 (24:43):
No, no, no.
Speaker 2 (24:44):
Fifteen hundred dollars.
Speaker 3 (24:46):
Yeah. Yeah, I bought mine used for seven hundred pooh. Yeah.
Speaker 2 (24:50):
Yeah, this is insane, like only equipment, you just really
like hockey? Yeah, goally equipment you need to take out
a mortgage.
Speaker 3 (24:56):
Correct, correct? Yeah.
Speaker 4 (24:59):
So I I don't know what that had to do
with anything, but yeah, I do think people were excited.
Speaker 3 (25:02):
That's what it had to do with. I do think
people were.
Speaker 4 (25:04):
Excited about deals, hence the massive lines outside of a
new and used hockey equipment retailer.
Speaker 2 (25:12):
So I've got a new thing that we got to
talk about. Then. So fed's Beage book shows K shaped
split deepens amongst consumers. That's the headline from Bloomberg.
Speaker 4 (25:21):
Okay, how did the fed's Beige book do that? Based
on stories that they get from people?
Speaker 2 (25:25):
Just you know, they hear about this and everything. I
am wondering if we have hit peaked K shaped peak
K shaped? And the reason I bring this up is
because everyone is talking about this right now. It is
the most visible discussion in markets and the economy right now.
Is this idea of the K shaped economy where the
(25:47):
high income earners are doing just fine and everybody else
is struggling. And I again, this thing. You can always
you know, extrapolate this further and it could always go
further than where it is today. But I'm just wondering if, look,
once everyone knows about this and is paying attention to it,
have we kind of gone to like is it something
(26:09):
that's going to be roped in from here?
Speaker 3 (26:11):
Now?
Speaker 4 (26:12):
My problem is I don't know how you measure measure it.
I don't have a good way to measure it. And
also it kind of changed over time. The concept started
during COVID, and specifically it was more used to describe
workers in some types of industries such as tech and
(26:35):
financial services, that largely kept their jobs.
Speaker 3 (26:37):
During COVID and worked remotely.
Speaker 4 (26:40):
Versus those in hospitality, retail, and food services who had
to go in if they were able to keep the
job and otherwise lost their job.
Speaker 3 (26:48):
And it's now morphed into people who.
Speaker 4 (26:51):
Are doing all right financially and people who are doing
poorly financially and that divergence. And I don't have a
I just don't have a good measuring stick to figure
out how we would have hit peak badness.
Speaker 3 (27:04):
I don't know.
Speaker 2 (27:05):
It just feels like at least it's every other story.
Speaker 4 (27:10):
Yeah that we agree, Yeah, I would agree that we
might have reached peak coverage of the K shaped economy.
I have no idea how to measure whether or not
the divergence between high income and high wealth consumers versus
low income and low wealth consumers.
Speaker 3 (27:25):
Has reached its peak.
Speaker 4 (27:27):
But I suspect that, like you do, given the fact
that we are covering it every single day on the program.
Somebody's writing about the K shaped economy every single day
that we've hit that point. I also think that because
it's become so popular, it's probably going to be the
term itself is going to be taken and applied to
other situations down the road.
Speaker 3 (27:47):
Like we decided, you know.
Speaker 4 (27:49):
Like we describe every bad part of the economy with
the term recession, we're gonna use K shape to describe
all sorts.
Speaker 2 (27:56):
Of kind of like whenever there's a scandal, we just
slap gate at the end of it. Yes, precisely, you know. Yes,
So this is going to be like what's it going
to be?
Speaker 4 (28:05):
Like there's you know, three terrible teams in the MLB,
and they're describing the K shaped Okay, fall season?
Speaker 2 (28:13):
Yeah, got it? Yeah, you know, Toyota comes out and
has three colors of a car. Oh, that one's you know,
the bottom of the K. Yeah, you want to be
top of the K.
Speaker 4 (28:22):
You do want to be top of the K if
you are a consumer brand like that.
Speaker 2 (28:27):
Let's take a quick break and when we come back.
President Trump says that he has made his choice to
leave the Federal Reserve. He hasn't told us who it
is yet, but we'll discuss after this.
Speaker 1 (28:39):
Miss any of the show. The Financial Exchange Show podcast
is available on Apple, Spotify, and iHeartRadio. Hit the subscribe
button and leave us a five star review. This is
the Financial Exchange Radio Network. Find daily interviews and full
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(29:00):
everything you might have missed. This is the Financial Exchange
Radio Network.
Speaker 2 (29:18):
President Trump says that he has made his choice to
leave the Federal Reserve, but hasn't told us yet who
that person is widely expected to be Kevin Hassett, who
runs the Council of Economic Advisors. And that's what we know.
Speaker 4 (29:35):
Yeah, well, let's talk about what else we know about this.
Whoever his pick is is undoubtedly going to be on
a path to lower interest rates. Now I will buy
that once you are in the role, your viewpoints might change.
But to be very clear, the only people the President
is willing to consider for the role are those who
(29:57):
have very publicly come out saying that they believe interest
should be substantially lower than where.
Speaker 3 (30:01):
They are right now.
Speaker 4 (30:02):
Yes, so I do believe that whoever he puts into
this role Hassett or otherwise is going to be leading
a charge to lower interest rates. But as we talked
about earlier, we talked about the FED frequently as this
unanimous body, it is not. It is a group of
twelve people who vote on policy decisions surrounding interest rates,
and they don't seem to all agree. Furthermore, what the
(30:25):
presence seems to be focusing on mostly is, hey, how
do I bring down things like mortgage rates which will
give things a boost? And as we've seen recently, the
FED really has no control over that, and those are
going to be much more susceptible to other factors in
the economy that is outside the control of at least
the Federal Reserve.
Speaker 2 (30:43):
FED has cut the FED funds rate one and a
half percent since the middle of last September. The average
thirty year fixed rate mortgage has gone from six point
one five to six point two two percent during that time, right, Like,
that's that's the whole ballgame. Now, the FED could in
the start to try to exert more control over the
(31:04):
long end of the yield curve. But remember there is
no free lunch anywhere, but especially in financial markets. And
so if you say, hey, the Fed's gonna undertake what
they call yield curve control, which is not only are
they gonna target a rate for the short end, but
for the long end. You then have to wonder, Okay,
what does that do to everything that depends on that?
(31:26):
If the FED says, yeah, we want to get you know,
mortgage rates down to five percent, okay, buckle up, because
I bet the price of lumber is gonna be going up,
and I bet the price of steel and aluminum are
gonna be going up, and I bet the price of
everything's going up. And that means that inflation's higher, and
that's not good for anyone either. So there's no free
(31:47):
lunch on all this stuff. There's there's no button that
the FED pushes that is that just has like low inflation,
high growth, right, Like, that's that's the button that we want.
It's the easy button from Staples. But I've had one
of those and it doesn't connect to anything and doesn't
actually work.
Speaker 4 (32:04):
A very funny but sort of dangerous prank that a
family member of mine pulled is they replaced a first
aid kit with just an easy button from Staples.
Speaker 2 (32:15):
What does that mean?
Speaker 4 (32:15):
You opened up the first aid kit and there was
no first aid materials in there.
Speaker 3 (32:19):
It was just an easy button.
Speaker 2 (32:20):
From that seems like something that you could get charged
a crime for.
Speaker 3 (32:23):
I thought it was hilarious.
Speaker 2 (32:24):
It just wasn't like a public one.
Speaker 3 (32:25):
Right, this was just inside our home.
Speaker 2 (32:27):
Okay, yeah, yeah, that seems dangerous. You didn't like that one,
just yeah, we took imagined.
Speaker 4 (32:38):
Well, yeah, child's running up there with a sliced hand
and you go for the band aids.
Speaker 2 (32:43):
It's just empty. Other than a stupid that was easy button. Hey,
we're trying to get the AED. Oh look it's just
an easy button. It's not good. They were good.
Speaker 5 (32:55):
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Speaker 2 (34:15):
I'm just trying to think of other variations on the
easy button easy button replacement for the first aid kit. Yeah,
you could do again. None of these are good ideas,
but funny.
Speaker 5 (34:27):
Don't recommend them.
Speaker 2 (34:28):
I'm just picturing like someone like going to like use
a fire extinguisher and it's just like there's just a
fart machine, yeah or something like that, Like yeah, or
like you get in a car accident. It's just like
instead of an airbag, it's a whoope cushion, Like yeah, yeah.
Speaker 4 (34:42):
Yeah, that does actually work. Actually, those starts pranks just
right up my alley. I feel like you could do
a good.
Speaker 2 (34:48):
Snl skit on this somehow, but I don't know, like exactly.
Speaker 4 (34:52):
How you Real world appeal not a great idea, but
cartoonish like pranks are right up my alley.
Speaker 2 (34:57):
Boston landlords quote willing to do anything thing as rental
market cools.
Speaker 4 (35:03):
There's not a there's not a group that gets a
lot less pity than Boston area landlords made a killing
over the last several decades in terms of home price appreciation,
and your average asking rent is now three forty three dollars,
which is actually down a few bucks compared to the
(35:23):
recent ties.
Speaker 2 (35:24):
So I guess I'm just trying to like think through this.
So if you look at, you know, the Boston market
for real estate, traditionally it's been a really strong one's
it doesn't have the peaks and valleys of what we
see in a place like Miami as an example. It
tends to be a slower growth, but very consistent growth.
Because Boston has historically had a disproportionate share of its
(35:50):
income generated from people in the healthcare and education fields,
which tend to be more impervious to recession than other It's.
Speaker 4 (35:59):
It's also one of the more difficult areas of the
country to build, the historical city, with very severe restrictions
on height of new buildings and all sorts of things
like that. Historical preservation is pretty big in that city,
and so unlike say Miami, it's more difficult to get
approval for new buildings.
Speaker 3 (36:15):
So all of those things.
Speaker 2 (36:16):
Have you know, led to pretty honestly, the Nimbia is strong.
Speaker 3 (36:23):
Yeah, the Nimby is strong. Stone to Boston area.
Speaker 4 (36:28):
I think what you're seeing right now is a reversal
of a few of those trends. Right The exact same
things that kept Boston area real estate flying again comparatively
high during the Great Financial Crisis, which were again universities
still spending money and areas like biotech and healthcare research
(36:49):
still getting a lot of funding from the government were
what kept things afloat, And those are the exact opposite
effects that you are seeing right now. Right there's been
government cuts to education spending and research spending, and that's
on the margin a lot of what the Boston market
relies upon. And so I don't find this immensely surprising. No,
(37:11):
if you take it in combination with some concerns about
what could be rent control across the entire state of Massachusetts,
which again we don't know yet but could be on
the ballot for next year, I can see why landlords
are more concerned than usual in the Greater Boston area.
Speaker 2 (37:32):
So here's the piece that I come back to. Then,
if they're really that concerned, why are they not selling
their units? Yeah, because we're not seeing an uptick in
listings for sale for you know, like you're not seeing that.
Speaker 3 (37:46):
Yeah.
Speaker 4 (37:47):
I mean my answer would be, this isn't a logical
and correct decision to make. But every time I talk
to anybody who owns rental property in the Greater Boston area,
they're always like, oh God, I can't afford to pay that.
I don't want to pay the tax is on that sale,
which is a bad reason to hold real estate. But
you think about the can to pay the tax, you
(38:07):
would have the money from, you just don't want to.
And I think, especially when you talk about small landlords,
that is a very significant effect and especially when you're
factor in now things like the millionaire's tax, which, again,
if you're selling a three story unit in the South
End that you've owned for two generations, you might be
(38:30):
popping into that millionaire's tax threshold. I think there's just
an unwillingness to sell in some real estate markets.
Speaker 2 (38:35):
Let just take a quick break here. When we come back,
we've got a whole bunch more coming up an hour
or two. Make sure you stick around.
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