Speaker 1: Your summer pocket knife of information. It's the only way
Speaker 1: to stay informed. It's fifty five darc the Talk Station
Speaker 1: eight oh five.
Speaker 2: Here I think about karsd Talk station. It being Monday,
Speaker 2: it's that time of week gets to talk money matters.
Speaker 2: It's time for money Monday with Brian James from All
Speaker 2: with Financial Brian James, Welcome back to the Morning Show.
Speaker 1: Hope you had a great weekend. Good morning mister Thomas.
Speaker 1: Happy hot summer to you.
Speaker 2: Yeah, really, I thought we were done with that anyway.
Speaker 2: It is August. I guess we'll have to roll with
Speaker 2: it until the cooler temperatures come in. That's okay. Uh.
Speaker 2: It takes a little while for these tariffs to kind
Speaker 2: of settle in. You and I have talked a lot
Speaker 2: about Trump's on again, off again tariffs. You know, one
Speaker 2: minute there's a fifty percent tariff, next minute it's been
Speaker 2: held off. Negotiations begin or not, as the case may be.
Speaker 2: The point being, ultimately you hope to sit down with
Speaker 2: a country negotiate something that's palatable to both sides, sometimes successful,
Speaker 2: sometimes not. But higher tariffs everyone has been saying are
Speaker 2: going to result in higher prices, which does make sense.
Speaker 2: Apparently that's starting to trickle in in terms of the
Speaker 2: numbers that are reported.
Speaker 1: Yep, we're starting to see some you know, we've talked
Speaker 1: about this before. We're hitting the point where, you know,
Speaker 1: when the day we start talking about tariffs and the
Speaker 1: headlines is not the day they start having an impact
Speaker 1: on inflation, right, and in that situation for several months,
Speaker 1: and the way companies work, and we've talked about this
Speaker 1: several times too. Remember there was a spike in economic
Speaker 1: activity in Q one. It looked fantastic, which wasn't bad
Speaker 1: where the economy is still doing okay as we're sitting
Speaker 1: here right now. The spike in Q one had a
Speaker 1: lot to do with countries just staying ahead. Our companies
Speaker 1: rather staying ahead when these tariffs are going to kick in,
Speaker 1: because everybody knew something was on the horizon, we just
Speaker 1: didn't yet know what. Therefore, they were front loading their
Speaker 1: inventories and things they had to buy just to stay
Speaker 1: ahead of the pricing to buy themselves a little time. Well,
Speaker 1: clock's taking and we're now those resources are somewhat depleted.
Speaker 1: We kind of got to get back to where we were.
Speaker 1: So course, CPI, let's switch to today's headlines. Core CPI
Speaker 1: is projected to increase by about a three tenths of
Speaker 1: a percent in July. That's the largest gain since early
Speaker 1: twenty twenty five. I hate when we have headlines like
Speaker 1: that that compared to some historic period that is not
Speaker 1: that long ago, right, largest gain since six months ago. Wooh, yeah,
Speaker 1: it's a point. But it's the trajectory, of course. So
Speaker 1: yet we are seeing this because this is coming from
Speaker 1: tariff induced price increases, household furnishings, recreational goods, those kinds
Speaker 1: of things. Headline CPI of course, Now this is kind
Speaker 1: of ironic, Brian headline. CPI may only rise by point
Speaker 1: by by about point two percent, and that is helped
Speaker 1: by lower gasoline prices. How long has it been since
Speaker 1: we looked at gas and oil as something that's keeping
Speaker 1: inflation in check?
Speaker 2: Oh? I know, but I mean you can't deny the
Speaker 2: reality of it. Gas is a lot cheaper right now,
Speaker 2: and we can talk.
Speaker 1: About it all summer, right, we skipped you and I
Speaker 1: skipped over the entire vacation period. We didn't talk about
Speaker 1: the price of the pump. I don't think I said
Speaker 1: those words all summer long.
Speaker 2: No, and it's the first year, I think, and I
Speaker 2: mean this is the heavy driving time. Of course it
Speaker 2: has been since school let out. So the idea that
Speaker 2: gasoline hasn't been up when it traditionally spikes, it's a
Speaker 2: great omen are we are we should we anticipate lower
Speaker 2: price gasoline into the future.
Speaker 1: Brian, You know that that's always tough to guess. My
Speaker 1: crystal balls as broke as everybody else is. However, we
Speaker 1: do seem to be in an environment where things are friendly,
Speaker 1: Supplies are okay, We've we've got more friendly regulation towards
Speaker 1: drilling in this country. Uh, And I think that's what's
Speaker 1: what's keeping it down. There's a lot of people not
Speaker 1: happy about that, and there's you know, there's downsides to
Speaker 1: all this as well, but currently that's what pushes it
Speaker 1: down the list of stuff we should be worried about
Speaker 1: in terms about the overall economy. Now, I'm not overly
Speaker 1: worried that we're gonna be talking about gas prices in
Speaker 1: the near future.
Speaker 2: Well, I keep hearing about all these billions of dollars
Speaker 2: that the US has taken in as a consequence of
Speaker 2: these increased tariffs. Where's where's our slice of that?
Speaker 1: Action. Brian. You know, that's a great question, and I
Speaker 1: really wish somebody could get past Carolyn Lovett with that
Speaker 1: and just force the president to answer to say, where
Speaker 1: are all these dollars going? Great, we're generating all this money,
Speaker 1: you know, from these tariffs, where does it actually land?
Speaker 1: Is it getting distributed? Uh, you know, to to the
Speaker 1: you know, to the people who voted all this into place.
Speaker 1: My guess is going to be no. Otherwise we'd be
Speaker 1: talking about that because it would start to sell votes
Speaker 1: for the midterms. So my guess is it's simply going
Speaker 1: in to fill the holes that were that are being
Speaker 1: created with some of the tax cuts on corporations. And
Speaker 1: since we focused more on cutting taxes and really haven't
Speaker 1: done much in the way of spending, dose seems to
Speaker 1: have kind of gone away very very quietly, I might add.
Speaker 1: I you know, when you read all this on paper,
Speaker 1: when it became clear what the platform was going to be,
Speaker 1: it sounded like there was going to be a body
Speaker 1: that was going to cut costs, and then there was
Speaker 1: going to be a body that was going to figure
Speaker 1: out how to lower taxes in response. So at least
Speaker 1: we keep things whatever balanced means anymore. But that does
Speaker 1: not seem to have happened. I haven't whatever happened to
Speaker 1: that wall of receipts from dose. I don't know. That's
Speaker 1: a long winded answer to say, I don't know, but
Speaker 1: I sure am curious just like you.
Speaker 2: No, I mean, it's a legit why I asked it
Speaker 2: out a lot, it's a legitimate question. But I suppose
Speaker 2: if you're looking at all the numbers, Let's say at
Speaker 2: the end of the year, we've taken in X billions
Speaker 2: of dollars. That's money that we got that we otherwise
Speaker 2: wouldn't have received. So the numbers, at least in terms
Speaker 2: of like deficit spending will be less, right, all things
Speaker 2: being equal, just by virtue of the tariffs coming in.
Speaker 1: Yeah, and that that is again on paper. I want
Speaker 1: to see this work mechanically, so let's talk about the
Speaker 1: mechanics of it. So when we collect tariffs, they're collected
Speaker 1: by the customs and border patrols, sent directly to the treasury.
Speaker 1: They're not ear marked specifically for anything unless that's unless
Speaker 1: that's legislatively done, which that's not something we do anymore apparently.
Speaker 1: But usually it just goes into the kind of overall
Speaker 1: general government spending, reducing the federal deficit, and sometimes there
Speaker 1: are specific earmarks for subsidies like we mentioned, but that
Speaker 1: is in the past, that's what we've done in the past.
Speaker 1: Now we are very not exactly transparent about where it's going.
Speaker 1: So we're collecting about fifty billion dollars annually, and the
Speaker 1: average tariff as we're sitting here right now is about
Speaker 1: seventeen percent on imported goods. That's the highest it's been
Speaker 1: since about the nineteen thirties, Brian, So somebody is going
Speaker 1: to have to explain where all these dollars are going,
Speaker 1: since we're bringing in more than we have in a century. Yep,
Speaker 1: no doubt.
Speaker 2: And one of the things I saw I noted in
Speaker 2: the article in terms of price hikes, they say firms
Speaker 2: are having a difficult time hiking prices in spite of
Speaker 2: the fact that they're now facing these teriffs they have
Speaker 2: to deal with because real disposable income growth has not
Speaker 2: been very good for the household, so the tail in
Speaker 2: people who are buying goods and services don't have any
Speaker 2: more money to deal with a price increase, which is
Speaker 2: causing firms and maybe hold off on increasing prices which
Speaker 2: means their profits are lower, which means their quarterly earning
Speaker 2: statements are going to be lower.
Speaker 1: Yeah. So the narrative that that happened during the during
Speaker 1: the campaign and has continued is that other countries are
Speaker 1: going to pay for this, other countries will pay Well,
Speaker 1: that's not really the case. What we're doing is we're
Speaker 1: increasing the cost of doing businesses for domestic company companies
Speaker 1: who have to bring in these resources to create and
Speaker 1: sell their products, they have to pass those through so
Speaker 1: and eventually the consumer has pricing power. We live pretty
Speaker 1: high on the hog in this country, so yes, when
Speaker 1: we have to, that's a good thing. But when we
Speaker 1: have to, we can and do tighten our belts. That's
Speaker 1: what we're starting to see. We're starting to see the
Speaker 1: end consumer saying you know what, I really don't need this.
Speaker 1: I can find another solution for this problem. I don't
Speaker 1: need to spend this much. And that means those costs
Speaker 1: are not being passed through. They are being born, however,
Speaker 1: by the companies that produce those products and services, not
Speaker 1: the countries that sell us the resources.
Speaker 2: All right, and the whole hope I believe, but the
Speaker 2: Trump administrations that over time that will re shore. A
Speaker 2: lot of the things that we're buying from these higher
Speaker 2: tariff countries, now you'll choose to build the products here
Speaker 2: in the United States. But you know, there's still this long,
Speaker 2: long standing reality that the reason these things got off
Speaker 2: short in the first place, manufacturing, et cetera. If it's
Speaker 2: going to a hell of a lot cheaper to do
Speaker 2: it in those other countries. Question whether the tariff makes
Speaker 2: that historic challenge, you know, to compete with United States,
Speaker 2: which has all these ocean rules and these environmental rules,
Speaker 2: and it has all these labor rules, and instead of
Speaker 2: making the price of building something here more expensive, does
Speaker 2: that balance that to create a better environment here to
Speaker 2: the extent that it's going to negate the tariff So
Speaker 2: far it.
Speaker 1: Would seem to on paper, yes, we are. We are
Speaker 1: seeing headlines of companies that are bringing manufacturing back on sure.
Speaker 1: So Apple has committed to six hundred billion dollars over
Speaker 1: four years. Right then there's a huge plant going in
Speaker 1: down in Harrisburg, Kentucky. That's gonna be that's a corning
Speaker 1: plant that they make gorilla gleyes all the glass and iPhones.
Speaker 1: So there are things happening. Taiwan Semiconductors is committing a
Speaker 1: lot in the United States, Nvidia, Hyundai, Ford. There are
Speaker 1: a lot of plans to get these factories up and running, however,
Speaker 1: but like you mentioned, what does it cost to pay
Speaker 1: a factory worker here in the United States versus somewhere else.
Speaker 1: There are so many moving parts to this, Brian. You've
Speaker 1: got countries that we've relied on for I don't know,
Speaker 1: maybe a notch or two above slave labor because they
Speaker 1: earn nothing but they work in the factories here. You
Speaker 1: can't do that because we do want to maintain a
Speaker 1: certain standard of living for our citizens. However, that makes
Speaker 1: everything more expensive. So what I have not yet seen
Speaker 1: is what falls out. What's the cost of an iPhone
Speaker 1: is that is manufactured completely in the United States. How
Speaker 1: much does it go up so that we can have
Speaker 1: that stamp on it. I don't know what's good or
Speaker 1: bad about it, but that's a question has been answered
Speaker 1: yet for me.
Speaker 2: Maybe there's that component or element that, well, Americans be
Speaker 2: more willing to pay a little bit more for something
Speaker 2: made here. I know there's still some measure of patriotism
Speaker 2: when it comes to choosing where goods and services are
Speaker 2: created and.
Speaker 1: Manage absolutely, that still results in inflation somehow, some way.
Speaker 1: So it does you know, political support purposes. But money
Speaker 1: is money.
Speaker 2: Money is money. Let's come up on eight fifty fifty
Speaker 2: five KRCD talk station. Do you want crypto in your
Speaker 2: four oh one K and some new benefits companies are
Speaker 2: offering those two more subjects'll get in the next segment
Speaker 2: with Brian James. I'll be right back fifty five krc
Speaker 2: dot Com eight nineteen fifty five kr CD talk station
Speaker 2: doing that money Monday thing with all the financials Brian
Speaker 2: James A. Brian, we've talked about this before. Private equity
Speaker 2: as one of the things that they're opening up to
Speaker 2: include in four to one K program investments along with
Speaker 2: maybe cryptocurrencies in a state of FLUXI appear to be
Speaker 2: I guess quick question up front, why can't we invest
Speaker 2: our four oh one K dollars in these things? Or
Speaker 2: haven't been able to deal with these things already? What's
Speaker 2: what's wrong with them as an investment vehicle?
Speaker 1: Well, in the past, I would say the Department of
Speaker 1: Labor has rules in place. By the way the Department
Speaker 1: of Labor governs four oh one k's retirement plans, not
Speaker 1: directly the SEC. The SEC plays a role, But you
Speaker 1: can own a mutual fund inside your four oh one K,
Speaker 1: that is that the DL has an opinion on. You
Speaker 1: can own the exact same tick or symbol mutual fund
Speaker 1: outside in just a plain old broker's account, and the
Speaker 1: DL has nothing to do with it. So Department of
Speaker 1: Labor historically has weighed in on retirement assets and basically
Speaker 1: decided that the companies who provide them, your employers and
Speaker 1: my employer has a fiduciary obligation to some extent to
Speaker 1: make sure that people don't you know, effectively have enough
Speaker 1: rope to hang themselves. And so that's why over the
Speaker 1: years you've probably seen the reduction in options in your
Speaker 1: four one K. I would see people early in my career.
Speaker 1: They would bring in the list of choices they have
Speaker 1: for all their mutual funds, and there'd be like fifty
Speaker 1: of them on there. The result of that is people
Speaker 1: would do nothing, and they would leave it sit in
Speaker 1: the money market for ten fifteen years, and then we
Speaker 1: would have to kind of explain exactly how much money
Speaker 1: had been left on the table because they didn't sit
Speaker 1: down and figure out how that works. Now and the
Speaker 1: pendulum kind of swung the other direction. Then we saw
Speaker 1: a lot of reduction to the choices you have and simplification.
Speaker 1: That's when target date funds came in. You know you're
Speaker 1: gonna retire in twenty fifty five. Here's here's a catch
Speaker 1: all fund. Throw it all in there and be done
Speaker 1: with it. And you saw now nowadays there are funds
Speaker 1: out there or four to one k's that have very
Speaker 1: few options. Pendulum is now swinging back the other way.
Speaker 1: We're throwing the door open. So President Trump signed an
Speaker 1: order on the on August seventh, just the other day
Speaker 1: called Democratizing Access to Alternative Assets for four oh one K.
Speaker 1: I tried to figure out the acronym for that. There
Speaker 1: isn't one. I was looking for qt C I. I
Speaker 1: was disappointed. But anyway, this order directs that the d L,
Speaker 1: the SEC, and the Treasury to update their regulations to
Speaker 1: enable alternative assets. And this is the kind of stuff
Speaker 1: such as private equity, real estate, cryptocurrency, private debt, private equity,
Speaker 1: private debt. By the way, what those are. Those are
Speaker 1: direct arrangements between you, you, one human being, and some business.
Speaker 1: There's no exchange, there's no stock market, bond market behind it.
Speaker 1: It's just an exchange between you and you know, whoever
Speaker 1: is the borrowing entity or taking your capital for their investment.
Speaker 1: Technology these days allows that to happen en mass, which
Speaker 1: means it can look to the sort of like a
Speaker 1: mutual fund, but there are just a lot more or
Speaker 1: a lot fewer guardrails, if you will. So the reason
Speaker 1: they're doing this though, Brian, twelve trillion dollars is out
Speaker 1: there in four to one case that currently is limited
Speaker 1: to mostly stock and bond and mutual fund type investments.
Speaker 1: Obviously there's a lot of people out there who want
Speaker 1: to get their pause on those dollars to push capital endeavors.
Speaker 2: Okay, which you know crypto you know, it's like peace
Speaker 2: of God to me, Brian James. There's so many different
Speaker 2: crypto forms out there, I can't keep track of even
Speaker 2: the names. They seem to come out almost on a
Speaker 2: daily basis. Of course, Bitcoin's the most widely known among them.
Speaker 2: And man, the price of bitcoin has gone through the roof,
Speaker 2: But I mean, are are they really more valuable than
Speaker 2: anything but ether?
Speaker 1: Brian? You know I have said this before on these airwaves,
Speaker 1: and I'll say it again and I'll say it to
Speaker 1: my clients. Crypto has a role. It plays a role
Speaker 1: somehow in our financial world, but to me, not yet.
Speaker 1: It's just a medium of speculation, that's all it is,
Speaker 1: not being We don't even call it currency anymore. We
Speaker 1: just call crypto. Used to be cryptocurrency. Now it's just crypto.
Speaker 1: A currency is something that gets exchanged for other things.
Speaker 1: This is just something we own and we hope the
Speaker 1: price goes up. That's not how it was touted to
Speaker 1: begin with. I believe eventually it will take its role
Speaker 1: there somewhere, because there are a lot of efficiencies and
Speaker 1: things to be gained by doing business on the blockchain, frankly,
Speaker 1: but whether it's bitcoin or dogecoin or trump coin or
Speaker 1: all of that, that's the speculative side of things. So
Speaker 1: I'm a little concerned. I'm not a little I'm significantly
Speaker 1: concerned about people again having way too much access to this.
Speaker 1: So think about it this way. If I'm somebody who
Speaker 1: has never invested, and now I can in my four
Speaker 1: to one K, but I never had the opportunity, so
Speaker 1: I didn't bother to learn. If I just go check
Speaker 1: a box that, yeah, I want twenty five percent or
Speaker 1: fifty or worse in my four to one k and
Speaker 1: whatever the new crypto fund is, then I'm going to
Speaker 1: about to learn a hard lesson about life.
Speaker 2: Well, and it sounds to me like a bubble that's
Speaker 2: ripe to burst. Brian, Yeah, it's tough to say.
Speaker 1: That's not the only thing to hold me back on
Speaker 1: that is that the demand is obviously still there, I drew.
Speaker 1: It's a little different from the other you know, manias
Speaker 1: that we've had in the past, because there does seem
Speaker 1: to be some utility to it at some point. However,
Speaker 1: we are not yet using it that way, and really
Speaker 1: our leaders aren't talking about it that way.
Speaker 2: Yeah, you can't go to Kroger and pay your bill
Speaker 2: with crypto, right.
Speaker 1: They don't want it either, because they don't want their
Speaker 1: unserceivable to bounce, you know.
Speaker 2: And the widely fluctuating value of any cryptocurrency in terms
Speaker 2: of its market value, like thirty thousand dollars per coin
Speaker 2: on bitcoin, and that could change tomorrow, it could be
Speaker 2: worth fifteen thousand. How do you judge the value of
Speaker 2: any given transaction with an ever fluctuating, widely fluctuating market.
Speaker 1: It's all again, all any investment is is the product
Speaker 1: of an auction. That's all the stock market is. What
Speaker 1: does everybody think it's worth right now? Today? Your house
Speaker 1: isn't an auction. Somebody will pay something for it. What
Speaker 1: is the something? Cryptocurrency changes twenty four hours, seven days
Speaker 1: a week. The other thing i'll throw out here for
Speaker 1: those of you who might be excited thinking about this,
Speaker 1: remember if you're dipping your toe in the water, dip
Speaker 1: your small toe, because even if this goes the wrong
Speaker 1: way on you, you will not get to deduct the
Speaker 1: loss because it's tax sheltered all ready inside your four
Speaker 1: oh one ky ooh.
Speaker 2: Valuable point from Brian James real quick here we won't
Speaker 2: have time to dive on really deeply. But is the
Speaker 2: market that competitive for employers out there hiring people that
Speaker 2: they have to offer all these different extra options beyond
Speaker 2: just four one K match and some some medical insurance apparently.
Speaker 1: So we've got some companies out there offering some pretty
Speaker 1: pretty crazy things out there. So there's there's the typical, right.
Speaker 1: So Amazon will cover ninety five percent of tuition for
Speaker 1: in demand career training, Starbucks does similar, Walmart target They're
Speaker 1: they're all helping people get higher educations that's not too crazy.
Speaker 1: That's been out there for a while, but we're now
Speaker 1: starting to see things such as surrogacy, adoption and fertility
Speaker 1: support out there. This isn't a bad thing, it's just
Speaker 1: it's an interesting a step that we're taking. Morgan Stanley
Speaker 1: into a Deloitte or some of the names on that list.
Speaker 1: Here's a crazy one. Some of the fintech providers out there,
Speaker 1: these these are the these are the sort of West
Speaker 1: Coast kind of out there technology companies mortgage as a benefit,
Speaker 1: so on buying education, interest rate discounts. So in other words,
Speaker 1: what they're doing is what is scaring the pants off
Speaker 1: of people, and then let's try to offer that as
Speaker 1: some kind some kind of a benefit to work here.
Speaker 1: And of course this is happening in well, California, because
Speaker 1: that's where people are most scared of them.
Speaker 2: Yeah, no doubt. Who can afford a home in California.
Speaker 2: And of course something Joe Strecker gets paid vacations with
Speaker 2: a stipend company, retreats music festivals there, you go add
Speaker 2: it to the list. Well, if competition's out there, and
Speaker 2: you're gonna have to step up to the plate to
Speaker 2: compete in the market, that's what they're doing. Brian James
Speaker 2: Allworth Financial, appreciate your company for loaning you out every
Speaker 2: Monday for a few segments, and as like today, look
Speaker 2: forward another edition of the segment next Monday. I hope
Speaker 2: you have a wonderful week, my friend, you too. Go
Speaker 2: Reds game and a half out, Go Reds eight twenty six,
Speaker 2: and go cincinnti Va. We're gonna hear from the actually
Speaker 2: every Federal Credit Union golf outing. We're gonna hear the
Speaker 2: details from Todd Kine on that next, followed by the Cincinntiva,
Speaker 2: the return of Todd Sledge. We'll get a recap of
Speaker 2: the Voa Country Music Festival, and then the August twenty
Speaker 2: third Veteran Appreciation Day coming up. We've heard a little
Speaker 2: bit about that. We'll get a little bit more in
Speaker 2: the eight to forty segment. I hope you can stick
Speaker 2: around for that.
Speaker 1: Fifty five KRC the talk station. The Simply Money Minute
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