Money Monday with Brian James

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Fifty five krc the talk station.

Heyoh, five fifty five KRCD Talk Station, A very happy Monday, see you. Oh he's made extra special because we get to hear from money. Monday's Brian James. Brian James, Smallworth financial financial planner. He is, so he's on top of money matters. Welcome back, Brian James. Hope you had a wonderful weekend.

Thank you, and good morning and happy President's Day to you. I hope your family got you something nice.

Yeah right, My wife and I don't even get it. Give it's all right. My wife and I his anniversary of our our engagement is Valentine's Day, and we don't even bother getting each other something for Valentine's Day. So less less likely that something's going to show up on President's Day. But stranger things have happened in this world. Do you get a president for President's Day?

Uh?

No, I don't.

I was really hoping that you maybe maybe the Thomas family had something going so we can steal it and start it up here.

But now we're kind of the same way.

We really just celebrate whatever we bought together last Well, happy Valentine's.

Day to us. There you go at that time.

That works for anniversaries too, just as he puts up an inflatable William Henry Harrison in his front yard to celebrate President's Day.

All right, that's a small fan club, that is, You.

Got that right, And maybe everybody's now curious to where wants to know where Joe got that particular inflatable item.

Anyway.

Pivoting over to money matters and something a lot of people economists of different stripes are saying Trump tariffs could lead to some temporary inflation. I mean, if you just do the numbers on it, it kind of makes sense, doesn't If if you increase the price or the tariff on something by twenty five percent, and it's important into the United States, that cost is going to be passed along to the consumer on some level.

Brian, Yeah, it absolutely is.

A tariff is literally nothing more than making stuff cost more.

That's the definition of it.

Now, we hope, of course, that that will be absorbed by the manufacturers overseas, but again that's hope, and you know hope in one hand, and you know what and the other Literally what happens is is this just gets passed through to.

The end consumer.

That's literally the why we call ourselves consumers. We are not the ones who get to control anything. We have to consume whatever is put out at whatever price it is produced. So yeah, generally speaking, prices will be going up. We're already seeing it anyway, And you can look at what happened in twenty sixteen. Not only have we done this in the past over over the you know, centuries,

Yeah, and it would really be insightful to know what the profit margin is. You know, like obviously you point to grocery stores and you think, oh my god, they're gouging me. But grocery store profit margins, like restaurant profit margins, are always in the single digits. You know. They they got a lot of waste, and they've got a lot of problems, they have a lot of theft, and price of groceries just go up, but you know, the margins

Yeah, that's right.

And I think you can look at the stock market and figure out the ustory of the stock market and figure out when those margins widened, when when they narrowed. Because that's literally the definition of the stock market, the opinion of shareholders of any level as to how profitable these companies are, and more importantly, how profitable do we anticipate.

They're going to be in the very near future.

If I'm an investor and I feel like things are moving in the direction of increased profitability, then that's a good sign for the stock market. But if I'm going to if I'm concerned that those profit margins are going to be narrowed, that doesn't mean we're going over the cliff.

It just means it's going to be harder.

And the industries that will survive better are the ones with arguably with wider profit margins. But at the same time, those are the ones who may have to sacrifice the most of that profit margin versus the grocery stores, as you mentioned, which are already razorsin to begin with.

Well, you know, and the other component. I just have to raise this because every time I read another article about how much any particular automobile manufacturer is losing per vehicle that they produce that are evs and how much money they're actually making on the say the internal combustion engine trucks, for example, I guess the salvation of Ford because Ford trucks move like crazy and their evs and lose millions and millions of dollars annually, so the price

Yeah, and I think that that's part of the political argument. You've got.

Those kinds of things should be put in place. And remember that the other weird thing about this that he has been particularly quiet on is the second in command, Elon Musk, some say first in command, is obviously directly connected to this, and he hasn't said a whole lot at all about the political rhetoric that goes directly after one of his companies. And I think that's very telling in terms of what are we really after here?

Well, and it was observed, I know Rachel I to argue the other day on her program that somehow Musk has gotten a four hundred million dollar armored Tesla vehicle State Department contract that actually went in place during the Biden administration, so it didn't have anything to do with Trump, but it didn't go through period. End of story there, And there are no current plans to issue a request to Tesla to make these vehicles or any other manufacturer for that to that end, and then I pivot over

Now maybe, But I don't know reading through this article that this is another case of re read the article, not the head of Top auto maker. Yeah, Top Automaker could move some production out of Mexico a mid Trump tariff.

Talks, according to the CEO. But to read to me, yeah exactly.

That reads to me if you read that too quickly, you go, hey, cool, they're going to pull those jobs back across the border.

But in reality, some other.

Sources are indicating that they they they may just reduce production. So in other words, Nissan is simply making possibly making a business decision that this isn't the best time for us. Things are not going as well as they could be. We're not going to shut things down, but at the same time, we're just not going to produce as much. We're gonna kind of wait it out. Nobody has said that they're building that Nissan is building a new factory in you know, some farmtown in the middle of nowhere.

Well, and I had I listen.

I know where the source was from because I read the same thing you had read, which is silent on the where the plant might move the jobs to issue. Still some speculation swirling about it. One of my listeners called this morning and said that it was moving them to Flint, Michigan. Now I don't know where that source came from, but I suppose it's a possibility.

Brian, Yeah, anything is possible at this point. But you would think if that was the goal, if the goal was to orchestrate, you know, these tariffs to drive that exact activity, then that would have been tied to the initial announcement. Now, of course, we can't force Nissan to do or any company to do anything. All we can do is make them uncomfortable in directions that so that they'll start behaving.

The way we would like them to.

But we can't force the absolute outcome. This is where tariffs can kind of blow up on people. And if you go back in the you know, throughout history, and this is this is a flashback from Ferris Bueller. If you remember ben Stein talking about the Holy Smoot tariffs. Oh yeah, well he was talking about terrfact.

Did they work? No, they did not.

And the United States saying further into the Great Depression, so they don't always work well.

It's going to be an interesting economic experiment we're all going to be living through. Keep your popcorn out. It may hurt, it may help. We have no idea at this point but to speculate, including where Nissan might or might not move its manufacturing facilities from Mexico. Brian Javes, let's pause for a briefly a little bit early in this segment because we've got two more topics to go over. More homes are being pulled from the market, which is

Yeah, So the Walsters Journal is reporting that seventy three thousand homes were pulled from sale in December of twenty twenty four, meaning that some people said seventy three thousand people said, you know, what, the heck with it?

I don't want to deal with it.

We're just either going to stay here or we will come back and try again. That's a sixty four percent increase compared to December of twenty three, when there were only forty some thousand homes that were pulled. So basically this is this could be the sign of the beginning of a pullback in the housing market. It does indicate a lack of buyers, right, if you're not housed in your home, that means the buyers aren't there. But usually

Huh.

Buyer's price range has decreased from where it has been in the past. That could be the sign of a pullback that we know is inevitably gonna happen. It has been anticipated for a long time it just hasn't happened yet. This could be the first shot across the bow.

Well, that would be actually a good development, more of a sort of a shaking out or a settling of these ridiculous prices. I know that the demand was so high that you could get crazy amounts for your home, but the whole idea that maybe your expectations in terms of your home value a little bit too high. So if you really want to sell your home, you're gonna have to adjust the price downward. That would be I think a good development.

It would be just like anything else, though, it's gonna be a catalyst that will come along with other stuff, both good and bad. So you know, some people bought houses in November December something like that and.

Paid whatever market that a market rate was at that time.

Those folks, should they have to move, they're gonna have a problem because prices will have dropped.

They could be underwater on their mortgages.

However, I would not start running around worrying that this is going to be something like two thousand and eight all over again. Two thousand and eight was far more about the infrastructure the mortgage business.

The mortgage lending market.

Collapsed which prevented basically the entire market from buying houses, and the way we had done in the past, this as we're sitting here right now, would appear to be nothing more than a price adjustment. Basically, the way to think about it is that there are fewer buyers at the price range where we are currently asking. However, those buyers are still out there because we know the economy. The economy's in pretty solid shape, regardless of your politics.

Well, when you pull your house from the market, doesn't that suggest that you really didn't need to sell it. I mean, you just maybe wanted to tap into this over zealous price house market and get that equity out of there. Y you why you can get it at this premium rate. But if you pull it off the market, I guess you're staying put.

And that could be.

That could be some people who just sat down at the dinner table and say, you know what, we've always talked about moving.

Maybe this is a little sooner than we anticipate.

Yeah, so let's go ahead and throw it out there on the market at a crazy price and just see if we can get it. Some of them got it over the past couple of years. Others maybe asked just a little bit too high and the interest waned. And of course the if you talk to any realtor, they'll tell you that a house that sits on the market for a very long time starts to get a little bit of a of a stigma to it. Yeah, nobody wants to touch this. It's been listed for six months.

Let it, let it go.

And so you do have to kind of pull it down, let let some time pass, and then and then repost it.

Well, it seems to me that rather than having an air of negativity about it, that represents an option or an opportunity for a buyer to go in and maybe lowball it a little bit and get a better deal than they're asking. It never hurts to ask. Brian.

Absolutely, Yeah, So I think this might just be an more of an optimst. Then, yes, it's a pullback, but it's a pullback from an extreme. I think our society and our economy does just fine as long as we left the pendulum swing back and forth without too much panic. They can only swing so far before we have to anticipate an opposite reaction.

Well, I can only hope this represents an opportunity for some of the younger buyers who have been priced out of the market. I just did the home costs. I've seen closings on houses and you'd read be like you got six hundred grand for that thing. It's like how anyway?

Yeah, I couldn't agree more.

I talk to my client's children, adult kids all the time, and it is amazing to me. I put myself back in their shoes, and I wrote, when I'm their age, mid twenties or so, this was the next thing.

I know.

I'm going to be here.

I've got my career here in Cincinnati. It's time to put down roots. That's really not a consideration. They're still renting, and they anticipate they're going to rent for another seven.

Or eight years, even though they know they're not leaving town. It's a scary time for that.

All right, And double down on that by pivoting over to the other topic we're talking about this morning before we part company. Americans finding it harder and harder to pay off their debt.

Absolutely, so go figure we owe money.

So total household debt in the United States rose by about a half a percent in the fourth quarter of twenty twenty four. These numbers sound tiny, but they're really not. That gets us to eighteen trillion dollars. You know, we say the word trillion a lot more often nowadays. It used to be the word billion was an attention yetter billion has become the new million.

Now we talk about trillions when we're worried about it.

So this has covered all loan categories, mortgages, auto loans, credit cards, homewke, we lands of credits. Everything saw increases. Credit card balances themselves are at one point two trillion dollars. That's a seven percent increase over the previous year. That's how much less people are able to pay their bills with their normal cash flow. We're rotating these balances on a much more frequent rate.

Than we used to.

So the solution, Brian, your financial planning advice to deal with this type of thing or prevent this type of thing from happening. These credit card interest rates are just sick crazy.

They are. They are.

So there was a bill, there has been and this was something that Trump talked about on the campaign trail and he has still talked about to this day. There's a bill that has been introduced. It's going to cap credit card interest rates at ten percent. Now, again, it's just a bill. So guess who is out there fighting against it? The banks and the lenders really are. They love their twenty seven percent credit card rates, So there's going to be lobbyists. There's going to be pushed back

You forget about it.

They're waiting for you to push it into the seventh month of a six month bonus.

So as soon as that happens, you're gonna start paying high interest rates. It is okay in that situation.

If you've got good credit scores, go get one of those zero percent balanced transfer offers. If those are showing up to your mailbox, take advantage of it. That will buy you some more time. But don't forget about it again.

Now does that impact your credit score by doing that? Transferring to it will?

So yeah, yeah, if you're going to apply for a new line of credit. Yes, there will be a hit that. That's of course a hard credit pool. You're literally proactively voluntarily asking for credit.

But at the same time, what it will do assuming you get approved. You gotta have a good credit score for this to work.

But assuming you get approved, there will be an opposite reaction because now you will have extra credit available to you that will drive your score up.

It's a little coumenraterintuitive, isn't it.

It's so counterintuitive. It's just like the it's like alchemy, you know. I just don't understand how they really say that. You go ahead and get more up, more opportunity to get more line of credit available, and that will make your score grow up.

I just I don't know.

Just see that as a risky proposition. But whatever do they if they.

Ever recourse it does one plus one equals potatoes. That's exactly how the credit card.

Issuest Yeah, Phase three profit Brian James. Appreciate your insights on these topics every Monday. We'll do it again next Monday. And thanks again to all Worth for loaning you out. We'll talk. Have a great week, my friend.

All right, you two, we'll talk to you next Monday.

Enjoy that President's week yees, stay warm too, eight twenty six Right now if you have KS the talk station joking over the phone lines, we have a little time to talk between now and my next guest eight forty with Susie Kahn, local author of the book. Like Swan's really interesting subject out of that book, and I love having the local authors on the program, so we'll do that at eight forty. Otherwise, local stories coming up next fifty five KRC dot