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Happy Monday by the time as right here, always looking forward to this segment because we get to hear from all Worth Financials Brian James talk Money Matters. You call it Money Monday with Brian James. Welcome back, Brian Hope. You had a nice weekend.
Good morning, nice hot, sweaty weekend, as we've become used to over the past several weeks.
Well, I know my grass is as high as an elephant's eye. Coming back to Oklahoma. The music, well, I gotta get the grass cut and keeps raining on me. Anyhow, moving away from that and talk about matters financial. Oh, now, I know Trump's been complaining about the FED chair. Uh, he wants interest rates lower. Powell says no, obviously hasn't lowered the interest rates. Jerome Powell currently head of the Fed. Now, Trump has already said he wouldn't fire Powell. Powell said
he'd never leave the job absent die. So we have until May. I guess there's going to be a natural changing in of the guard next May.
Yeah, May have twenty twenty six. And let's not forget that Trump himself did a point this particular FED shair, which is kind of funny. He was a comment from President Trump the other day last week sometime that he was surprised when he was appointed. Well the words came out of your mouth. So yeah, not sure exactly where that surprise comes from, but anyhow, Yeah, so he's he's pushing for pushing for a replacement. Trump says he will
not remove him that. Well, we'll see if that, if that actually sticks, but that doesn't mean we're not gonna go ahead and have the conversation about who might replace in May of twenty six when this current term is up.
Right, he did quite a few names being thrown around, and Scott be Sent for example, is one of them. But he's happy where he is as the Treasury secretary, so he's already said no, I don't want the job. But beyond that, we could talk about some of the other names they were thrown around. But let's as a fundamental thing, if Powell was out, whether he got fired or he died or he quit, just because you name a new chairman of the FED doesn't mean, they're going to lower interest rates, does it right?
And the the problem is that President Trump super super super once interest rates to come down, and he has he said that all through his first term, and he said that all through the campaign, and of course he's still trumpeting those ideas. Those are that's obviously an extremely business friendly proposition. If rates are lower, then it's cheaper to do business, and we would get an immediate pop in the stock market, a little bit, possibly a little
bit of a sugar high. Because the concern behind that, and the reason we don't necessarily want to do this, is because that can quickly trigger inflation, which we've just spent, however, many years trying to tamp down from from the COVID process. So at this point, the concern is that if he if he is able to get what he wants by simply putting a puppet or a mouthpiece in there, then that the long term chaos that could come out of
that would be pretty dangerous in terms of overall inflation spikes. Plus, the FED has always been famously independent politically. Yeah, that's one of the one of the departments that really has not been impacted by politics so much. There is a little bit of history there. Nixon got involved in it, and it did create some chaos and inflation and played a role in the stagflation era of the seventies. So there is precedent we can look at to see what
happens when we get too much political control. But you know, historically that area has stayed relatively free of political interference.
Well, I recall Carter screaming at yelling about Paul Vulkar because he one of the interest rates lowered back when Vulkar was head of the chair ahead of the FED, and Vulker refused to relent. So the other way on it. Yeah, exactly, We've been down this road before. So I appreciate the independence of the FED. Now, how independent is the FED chair in decision making because there are all kinds of you know, governing board members, they all have a say
in it. Or is the chairman exclusively responsible for making the decision?
Well, the buck stops with the chairman, but of course there's a lot of input from the various FED governors and who are regional as well as the board itself. And matter of fact, Trump is trying to stay ahead of that too as well by saying not only should should should chair Powell step down, he should also remove himself from the board so that we don't have a
situation of a shadow chair. So there's I'm sorry there was Scott percent that said that, but regardless, though, the whole point is they want Jerome Powell's opinion out of the mix entirely. So yes, there is a lot of input, but at the end of the day, the decision rests with the chair.
Well, this is a direct impact on treasury bills, right, Oh, of course, yeah, I mean treasury builded. The Fed will set rates.
We know how that works, right, They'll come out and they say rates go up, We're going to up a quarter percent, up a half percent, down, a quarter percent, whatever. But the market has an impact too, and because the market will, of course try to anticipate and I'm referring to the bond market here, the bond market will try
to anticipate what the moves are going to be. And so for example, you know, one of the popular things that people want to pay attention to this for is because maybe you're in a situation where you bought a house in the last three four years and you're paying six, seven, maybe even eight percent on a thirty year mortgage. Obviously, that's something that's not the norm. We're happier when we're in the three to four percent range there. I'm not sure we're all low way down there again, but the
lower the better. But you want to look at the ten year treasury that's what most mortgage mortgage rates are tracking. So the Federal Reserve will make the moves too, but the market will also anticipate which way bonds are going to go, and that itself can have impact on what where interstrates are going to go.
But you got to look past the veneer of a lower mortgage rate, don't you, Because you mentioned inflation being impacted. When the rates come down, you worry about inflation. There could be a spike and business activity gets generated, et cetera. But people keep talking about, gosh, we want the interest rates lower because I want a lower interest rate from my home. Now, that's all well and good if you're going to refinance and stay where you are, but that's
not going to increase the stock of housing. In fact, we can you consider inflation the lower it is the charge to borrow money, the rate at which you borrow. It seems like the demand would go up, putting upward pressure on the price of a home. Yes, absolutely, and we haven't had that much downward Prince right. All stories we hear kind of anecdotal stories about how there's less activity, fewer housing starts, that kind of thing, but the prices
have not yet dropped. That's how strong the demand has been. So yes, you're absolutely right. I think I think it depends on what situation you're in. If you already bought a house, then you really really want a rate cut so you can refinance, because you heard all the awesome stories when you were younger of the prior fifteen twenty, when refinancing was something you did every six months, you know, on date night, you.
Know, go out for dinner after work. It was just a regular routine. But on the other hand, if you are shopping for a house, you may not want that. You arguably might even want rates to tick up higher, so it'll finally break the back of housing demand and things will pull back a little bit. Now, all of those are a very short term in nature, and it really just depends on what your own individual situation is.
But these are all things. Unfortunately, we will not have a perfect situation somebody's going to end up on the short end.
Of the stick clearly. Now moving away from just the housing industry because you know the obviously that's governed purely by supply and demand. If there's not enough houses out there, the price is going to go up. It's the greatest
illustration you can have of that. What about other areas of the how it would impact from an inflationary standpoint, other areas of businesses generally speaking, Why is it that a lower interest rate we would have an inflationary reaction Outside of the housing market.
It generates a lot more hats being thrown in the ring. So in other words, if rates are low, that means I can get money for cheaper than I could before. And the best type of money to invest with is somebody else's. So that's where you hear about all these things about companies borrowing to invest or or you know, the fabulously wealthy set borrows against their holdings and simply wants to pay down the debt rather than liquidate those actual holdings to pay for their bills. And this is
something the average person gets to do. But that is we've set up a system in this country where that is a very profitable thing to be able to take advantage of. So that generates a lot more activity, and it it generates just people going out and doing things and buying more products and so on and so forth because they're cheap, especially now, because we will when that happens, Brian, we will convince ourselves of scarcity. These rates that aren't
going to stay low forever. I better do things right now. We saw this with products and imports in the first quarter of the year, where we saw a big spike in imports in anticipation of the character coming. Yeah, so anticipation will itself drive prices up.
Well, you know, you've got an opportunity to borrow for less. Of course you're gonna jump on that. That makes perfect sense. Now, let me just get a comment or two from you on this comical notion that you need a what is it, two and a half billion dollar Reserve office upgrade? Yeah?
What the hell this one? It really feels like this is one that you know, the government is operating out of buildings at one hundred and fifty two hundred years old, so I'm sure they need upgrades and things here and there. But yeah, two and a half billion dollars low on the price the end. However, Jer Powell, it hasn't ever been someone who is a ostentatious, look at me type of a person. So I can't I can't simply lay the blame at his feet to say that this was
a mistake from the beginning. It does really seem to be what's what is anything? Go find anything that we can point at him and point out the weakness of him. And I'm speaking of you know, those who are on the warpath to get rid of him. Sure, if that's what they came up with, I'm feeling a little more confident about Chair Powell.
No, and I'll agree with you all day long on that conclusion. And I don't I personally. I know Trump's been pointing the finger of Powell over this renovation cost, but to me, it exists beyond who's responsible for making the decision two and a half billion dollars. It's I know, you can build a brand new Bengals stadium for that kind of money.
Yeah, absolutely, And there seems to be obviously, we need a lot more context behind this to understand exactly where that face. I cannot imagine Chair Powell spends a lot of time looking at marble samples. With the job that he has, I'm pretty sure there are people to do this, and I have a feeling that kind of came out of left field when he realized he was going to have to have a bigger opinion on it and be more vocal than than he had.
Well, you know, you'd expect some measure of fiscal responsibility from the head of the FED. That's all I'm saying. You know that's fair, that's a fair assessment. I just yell out loud. I'm putting my foot down. There's no way of office renovations should ever cost this much. You're going to get lesser expensive chairs. Live with it. It's say fifteen right now, more with Brian James speaking of Tariff's solid earnings report masking tariff volatility. That's subject coming
up next. I hope you can stick around.
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Eleven this morning. Any rain in the area of the predictable end around two pm if you've got it today, mostly cloudy, high of eighty two to be clear. When I'm sixty five for the low not as human tomorrow nice on that note, sunny, and eighty five for the high. Clear sky is overnight down to seventy three all the way up to ninety one on Wednesday with mostly sunny skies seventy four. Right now, let's get a traffic update.
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Hey nineteen fifty five kir CD Talk station Happy Monday, Monday Monday with Brian James from All with Financial. Let's talk about earnings. Says earnings beats might mask tear of volatility these two weeks. And I'm looking at the Wall Street Journal top of the scroll there Dow Jones SMP and Nasdaq all ticking up at about a quarter percent up, so futures are up this morning. Headline, Front page, Wall Street General, the US economy is regaining its swagger, evidence mounting.
The companies and consumers who held back during the spring's tariff chill are starting to splurge again. And yet we have Donald Trump saying he's going to implement some new tariffs beginning August first, most notably in the European Union, a minimum of fifteen to twenty percent tariffs. So I'm having a difficult time reconciling what all this actually means. Brian James. It seems like we got good information over here, but oh my god, those evil tariffs are coming. And
is that going to change people's buying habits? Are people going to stop buying? I doesn't seem to be bothering anybody right now anyway, Brian.
Yeah, it's not really spooking the herd. And we've been through this before, of course. In early April that was the first round of all the tariff chaos, and the market took an absolute beating, dropping in some cases close to twenty percent depending on the index you're looking at. And so we're going through this again. However, the headlines
are no different. It's the same headlines. We're picking on a country and here's a percent number that we're going to throw out of them, and we're going to give them a deadline, the same thing we did in April. But the market is now used to this. So where we're looking at now August first, a fifty percent tariff on copper imports. This is purportedly for national security reasons. This is mostly gonna hit Chile with a significant impact
of construction, electronics, auto energy. You know, it used to be that copper was used in plumbing and construction. That was kind of it. But now just about everything we touch nowadays, since everything has to have data moving across it, copper is just everywhere.
So copper is.
Almost a better indicator of overall economic activity than crude oil. Kind of crude oil used to be the more the more oil we buy, the more activity we must have. Well now it's copper. And so there's gonna be a fifty percent tariff coming on August first, depending on how those other countries react, and thirty percent on EU and Mexico.
And that's that one's I think probably the most well known that we've got hanging out there, although with Mexico some of the USMCA compliant goods might sneak out of that, and then on again twenty five to thirty five percent on Canada, Japan, South Korea, and a few more so August first, that's the we're playing chicken right now. We'll see who's going to swerve here in a week or so.
So the goal of the tariff, like, for example, copper, we buy the copper right, we need it here. We don't have a giant copper mind where we're manufacturing our own. So there is an idea to reshore American copper production. It's just to teariff the country that we're buying it from. Correct, Yeah, the only.
Way that we can. If if we could find something in our own dirt that did the same thing that copper did, but you know, maybe even better, then we would do that instead. We wouldn't be talking about tariffs. We would throw it out here. But some things we simply cannot produce at home.
Now.
In so far as Chilean copper production, we're okay, we can get it now. It's going to be fifty percent more when the tariff goes in effect, what are we asking from them that we would harm ourselves so much because there is such a huge demand for copper. Brian James, Well.
We are simply asking, we're asking them to pay up. You want to do business here, We're and we're kind of, you know, taking a flyer on this, thinking that we are such a big market. We're just throwing our weight around. We are. The United States is the largest market by far, not even close to many many other markets that might be buying these products, and we're we're simply looking for
a better deal. It's really no different than we used to We used to hear the stories about, uh, you kind of still do about Walmart driving small mom and pop shops out of business, uh, because they were looking for every to save every possible penny they possibly could. They're the biggest, you know, the biggest knife in the drawer, so they're going to use their weight. That's the same thing the United States is doing here across all these countries. All right.
Well, another thing I saw in this report that you provided to me some it looks like pretty good news to me. Upbeat to start to the earning season helped to quell off these tariff fears. Around eighty three percent of the S and P five hundred companies that are reported earnings have exceeded expectations. That's pretty damn good, right there, Brian.
It is we're on a good run. And uh and this is uh, you know again, this is what we're What we always talk about here is what did the analyst think was gonna happen versus what did happen. And we talked about this last week, you and I did with a handful of different companies. But this week it's out Alphabet, which owns Google and YouTube, stronger than first quarter growth. On Thursday, Intel was up. So it was
a lot of technology stocks this week. And again those are the ones that benefit a lot from Copper with all the data houses and things that they have to build out there. So we're just continuing this role of companies being in a good spot and earning more than that cost them to sell their products, which is the core of everything we want to do. And so that's a sign of a stable economy. Inflation is currently not an issue. I agree with President Trump there. It is
currently as we're sitting here, not an issue. Some of the decisions he would prefer that we make may with regards to tariffs as well as interest rate decisions that he would very much like to see Fed Chair Powell put in place that could trigger inflation. Those are concerns and the market is a little bit hesitant on that. That's why we haven't seen it going through the roof.
It's up a little bit every day, which is good, but at the same time, we haven't seen any huge spikes that you might normally expect when we have such positive earning reports coming out.
All right, Unlike copper, which is obviously a mandated necessary you know, you can't live without it type of item. Given all of the applications you put copper in. What is it that we buy from the European Union that is a must have item like copper. I mean, I understand lumber coming from Canada that impacts housing. You gotta have lumber, Gotta have copper for the pipes, gotta have copper for the electrician, electritricity transmission lines, et cetera. You
can't do without it. Honestly, as much as I love Scotch, I can do without it. If the price goes up too high, I just won't buy it. So it's discretionary versus mandatories. Where really the rubber hits the road, and what are we getting from Europe that we consider mandatory or desperately needed.
Yeah, well, well, obviously, you know, Scott's deliveries to the West side of Cincinnati are a major major indicator that we watch to see, you know, exactly what's going on between our relationships there. But now a lot of pharmaceuticals, medicinal products that's about one hundred and twenty seven billion dollars last year, a lot of nuclear equipment, boilers, engines, things like that. And then of course there are vehicles Mercedes BMW that there's still plenty of those on the
road over here. So it's much more industrial types of things that's happened to be based elsewhere. But again, pharmaceuticals are being the bigger one. Think of companies like Sanofi and Bayar And we know we do not manufacture a lot of our own drug share. That's one of the things the current administration would like us to.
Yeah, well, maybe we'll have some activity in that direction.
Let's pause.
When Brian James back about picking the right financial planner, he's biased in that regard being a financial planner eight twenty five right now fifty five KCD talk station.
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A twenty nine ifif you have KRCD Talks Station one more segment with Brian James f Whileworth Financial a financial planner he is, so let's talk about financial planning. It's really important to have someone in your corner working on your side of the table and not for somebody else when it comes to financial planning. Isn't that a premier thing to think about when you're looking for a financial planner?
Brian James, Well, yeah, and you're right, I am a little bit biased here. There's a reason I chose to get into this industry. And if the topic is what we look for in a financial advisor, you want to make sure that you're you're gonna learn something right. You don't need the old approach. You know from twenty thirty forty years ago, was somebody who can sell me some
kind of product. And I remember my dad and his uncles and my uncles trading these these these people they knew and it was always whoever got them the most recent you know, good good hot stock tip. This is in the eighties when there was really nothing more than I want to throw money into something and watch it grow. There wasn't a lot of thought of how do I, how do I plan for taxes, how do I you know,
put all the puzzle pieces together. So you want to make sure you're talking to somebody who is who is going to teach you something, who's gonna look at your situation and show it to you from a different point of view, so that you can think about things that you hadn't thought about before.
That's really the key, Okay, And I think one of the things that's always recommended by financial planners is get a handle on what you spend money on throughout the year. That's actually become a lot easier because you know, I'll get, for example, from my master card at the end of the year, I break down month to month and categories
about everything that I use my credit card for. It's it's very eye opening, but it makes it really east easy to figure out how much you charge in a year and that you can apply to your once and your what your needs might be in retirement.
Yeah, that could become one of your goals, and that should be one of your goals. Obviously we all have our own ships. We need to keep a float. That's where everything starts. And once you've got a handle on what your current cash flow is and you kind of nailed it if you're using credit cards, I think that's a great idea. By the way, if you're somebody who's responsible with credit cards, then get your rewards, pick something that works for you, and then use the tools that
the credit card companies provide. But not everybody looks at. They're buried in that website somewhere. Every time you swipe that card, whatever that is is going to get categorized as a restaurant, as a gas station, as whatever. So you'll know exactly what it costs you just to keep that ship afloat. Then, in addition to that, there are other things you're doing. You've got a mortgage, you've got some other things. There are places like Duke that don't
allow you to use your credit card. You're going to look at your checking account for that. But that'll give you your basic, your baseline of here's how much an income we need to just keep the ship afloat. On top of that, you can layer the things that you'll want to do in retirement because you have more time. Perhaps that's more travel, or maybe it's supporting the kids, grandkids, so on and so forth.
All right, and obviously things change over time. You hopefully maybe once you reach retirement, don't have a mortgage that you have to pay for.
Well, it can be a decision, right, if you're somebody who's you've got one of those two and a half three percent mortgages, then you may want to maintain them. Matter of fact, I would advise maintaining that, just make the cash flow work for you. And some people a lot of people hesitate on that because we kind of get in our heads that well, someone else has to give me money so that I can survive. Therefore my
entire budget has to be squished into my Social Security check. Meanwhile, I'm going to ignore the two million dollar nest egg that I've set aside. Rather than paying off the mortgage in a lump, which would probably cost you a good amount of taxes by liquidating the resources you would need to do that, then simply start taking at least that mortgage payment out. Just take it out on a monthly basis,
five days before the mortgage payment is due. All you've done is build a money machine and then Again, this is if you've got one of those two and a half three percent mortgages, then maybe needs another five to ten years to get paid off. Now a different situation if you just move somewhere and l three four years. Now you've got a you know, a twenty five years left on a six percent mortgage. That's a different discussion.
But again, this is where a financial advisor can help you see the impact of paying it all off in a lump or perhaps meeting the middle ground and paying a little more so that it's only got seven years versus fifteen or something like that.
Fair enough, And I know one of the points in the article about choosing a financial planner, and this person's initial you know, is walking through the process of arranging with the financial planner paragraph caption. Advisors aren't just for rich people. You will meet with people just starting out in their careers, but they don't have a giant stack of two hundred thousand dollars that they're ready to invest.
Correct, Brian, Absolutely, we'll talk to anybody because the education part of that's frankly what I enjoy the most. That doesn't mean we necessarily have to have a formalized relationships necessarily, But a lot of times all people really need is some basic understanding. And I'll have many meetings with my client's kids who are just getting started, and they hit, you know, they hit on the big topics of I'm putting money in my four one k am I putting
in enough? How do I decide whether to put money on the traditional side versus the roth side? And should I pay off this mortgage? There is a notion that I shouldn't have any debt. All debt is evil? Should I pay off this mortgage? Should I spend you know, twenty years not saving anything because I want to get this house paid off? The answered that is a hard no.
We got to do a little bit of everything. But yes, some of these things are basic, just understanding what is the impact of long term savings and what should I expect out of the market in terms of ups and downs. If I can arm somebody with that and they go off for thirty years, they'll come back with a much bigger puzzle for me to solve.
Yeah, and I know we've had this conversation before going back to the mortgage. Yeah, I did have a like like three percent mortgage but ended up paying extra each month to get it paid off. I hate debt, and a mortgage to me is just one more debt I owe somebody money. I don't like being in that position. I know I could have made more in the market had I left the market, like to you guys, to invest or something more than the three percent that I'm
being charge in interest. But just from a comfort standpoint, I'm that weird guy that I just I can't bide owing someone money man now.
And there's a I wouldn't call that weird. That's just it's just a point of view, and there's nothing wrong with it. I also happen to know that you have a financial advisor behind you, and I know you went through the process of, Okay, if we pay it off sooner, the mortgage goes away sooner in our in our overall assets look like this, versus if we if we simply let it all go and pay off the mortgage as
minimally as possible, looks like that. And then you made an educated decision that you were more comfortable with with not having the mortgage in place, And that is perfectly This is a perfectly rational way to do it. It's not always about what what's the biggest number that falls out of the bottom of the spreadsheet.
Well, and the smartest thing you can do from a financial standing standing plan point. Standing our financial planning standpoint, Brian, out kick your coverage with your choice of spouse.
That is that I've done that as well myself, and yeah, that is a huge impact. If you're on the same page with regard to money.
Amen to that, Brian. Jay is always a pleasure to have you on the program. Appreciate all with financial loaning out for the segments, and I look forward to next Monday, another edition of Money Monday.
Have a good week, stay cool and you do the same.
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