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