#38 – Fed Rate Cuts, University Degree Efficacy, Millionaire Renters, And Election Result Market Returns

Wes Moss [00:00:56]:
Connor, welcome.

Connor Miller [00:00:57]:
Wes, thank you for having me on.

Wes Moss [00:00:59]:
It’s so nice to be. It still hasn’t quite fell like fall this past week. It’s getting better.

Connor Miller [00:01:04]:
We’re getting there.

Wes Moss [00:01:05]:
It’s getting there. But today is the first day of fall. So this is a magical moment. This is the best time of the year in the south, at least weather wise. It’s college football season. We have a break this weekend, but mainly the reason I know that it’s fall is producer Mallory is over there with her pumpkin spice latte.

Connor Miller [00:01:26]:
You knew she was gonna break it out at some point.

Wes Moss [00:01:28]:
As soon as that comes, you know its fall.

Connor Miller [00:01:31]:
I’m actually surprised it wasn’t a little bit earlier.

Wes Moss [00:01:33]:
Yeah, I wonder. She’s in the booth so I can’t really get any info from her. But, but we know it’s, it’s fall when it’s pumpkin spice latte time. As a reminder, that’s the name of her cat as well. Did you know that?

Connor Miller [00:01:45]:
PSL right?

Wes Moss [00:01:46]:
Yeah. Pumpkin spice latte is the name of her cat. So anyway, huge week, it’s fall and it’s been a huge week at markets and of course the main event was the fed meeting and the main event happened and the main event was probably more entertaining than we really would have thought it would be. There was so much conjecture around and I think it was nine, I don’t know what, there’s always a survey about how many economists got it wrong, but I think this one was that only nine economists out of 100 1515 thought we’d get a half a percentage point cut. The other 95% of economists thought we’d get a quarter of a percentage point cut. And yet again, economists are really good as a group of being off well.

Connor Miller [00:02:36]:
And it is funny because when you look at the market expectations of what it was expecting going into the Fed meeting, the market nailed it, the market was pricing in a 50.5% cut.

Wes Moss [00:02:50]:
Half a percent.

Connor Miller [00:02:51]:
Half a percent cut. Yeah. Sorry. Whereas all the economists were saying, nope, it’s just going to be one quarter point cut.

Wes Moss [00:02:57]:
Well, and I listened to the Jerome Powell speech afterwards and it is interesting, and I want to get to what Powell said, the implication, what it means. Certainly the market, it’s funny this happened. I want to say the last time we met, we, as if I’m part of the Fed. The last time the Fed met, I remember it being, I think it was in July. And they came out, they didn’t cut rates, but they were very dovish. The market shot up 3400 points and then it finished lower that day. So on Wednesday, same thing happened. The Fed cut 50 basis points, half a percent.

Wes Moss [00:03:34]:
That was more than the market expected. And the market likes that. Lower interest rates, better for stimulating economic growth, better for companies, better for earnings. So you get this big market reaction up 400, 385 points. And then we finished. And then I was thinking, wait a minute, this happened in July. I bet you will finish down today. And we did.

Wes Moss [00:03:52]:
But then the next day, markets rallied really significantly.

Connor Miller [00:03:57]:
Yeah. And I think a lot of it kind of across the board, it definitely had to do.

Wes Moss [00:04:01]:
So the stock market so far is either breathing a sigh of relief or liking these lower rates.

Connor Miller [00:04:08]:
Well, remember, if you go back to July, that was when the Fed, even though they didn’t cut, they said, all right, we think inflation is mostly under control. Now we’re going to focus on the dual mandate, which is both price stability and full employment. And in Powell’s press conference on Wednesday, I think what the market then digested overnight and into Thursday was the fact that he was talking about the economy still looks pretty good. So we’re able to do this. We’re not cutting rates because the economy’s bad. We’re cutting rates because we’re moving into more of a normal interest rate environment. And so the market really liked that.

Wes Moss [00:04:43]:
So we’re going to get to more about the Fed, what it means for the market, the economy, in just a minute. But today, what we’re going to dive into, there’s some number, story number one is, of course, the Fed and interest rates. And because that has so many implications, mortgage rates, credit card rates, etcetera. So we’re talking the big fed interest rate cut. I wanted to do a quick assessment. We call it chime. So that’s our economic acronym of consumer spending and housing and interest rates and manufacturing and earnings and employment. There’s been some real mortgage activity.

Wes Moss [00:05:17]:
And I had an interesting conversation this week with someone in the mortgage that’s been in the mortgage business for 30 years. And it was interesting talking through where rates really are, which in large part are lower than what rate we see advertised. So that’s interesting. There’s a story about millionaire renters where you’ve got these wealthy folks at huge incomes. They are choosing to rent. And I pulled out some of the big, some of the expensive rental places in New York and Miami where people are spending 20 grand, 30 grand, up to 50 grand a month to rent. Lifetime renters, forever renters, they call them top ten colleges. Connor Miller, when it comes to starting salaries, I thought that was interesting this week.

Wes Moss [00:06:06]:
And there’s the story. Well, there’s peak stress and peak vacation, which we’ll explain what that means here in today’s show. And maybe just. You have a funny story about the iPhone.

Connor Miller [00:06:18]:
I do.

Wes Moss [00:06:19]:
And it has been on the COVID of the Wall Street Journal all week about the new iOS 18 update. Let’s start here, and then we’ll get to the Fed. But here we are. This is how big a deal iPhones are. Yes, there’s a new phone that’s recently launched, but there’s also a new operating system, which, for those who don’t have an Apple, that’s just when you download a new software, it’s essentially updating the internal workings of the iPhone. And there’s a new one, and I still haven’t done it because I still, I haven’t wanted to do it because sometimes they’re a little buggy when they first come out, but it’s that big of a deal. Just when iPhone releases a new software that every user just downloads and it changes a few little things. But Connor Miller, in a massive departure from his iPhone and tablet or his iPad, which I’ve seen you have a tablet ever since I’ve known you, goes out and buys a three screen.

Wes Moss [00:07:23]:
I’ve never seen anything like this. Samsung phone, Google phone, whatever, whatever you want to call it.

Connor Miller [00:07:30]:
Android.

Wes Moss [00:07:31]:
Android. Okay, so it was the Google phone, not the Samsung.

Connor Miller [00:07:35]:
Yeah, Google made the phone. And then, you know, Google’s got the Android software as well.

Wes Moss [00:07:39]:
So I go, I go into Conor’s office every day. We’re talking about markets. We’re looking at a variety of different economic indicators. We’re looking at where stocks are, where fixed income is, the chances of a fed cut or nothing. And I look on his desk and there’s this new contraption that has a screen on the back. It folds a screen on the inside and a screen when you open it.

Connor Miller [00:08:04]:
Yeah, it’s a foldable phone, so it’s got a screen on the front, just like your normal phone or iPhone would have. But then you open it up and it’s got a bigger screen, more of like a tablet. It’s like the best of both worlds.

Wes Moss [00:08:16]:
So screen on the front, then you open up and you essentially have two screens side by side. So it’s a triple screen. The whole thing’s a screen. And I was thinking, wow, that seems like the best phone ever. And we were trying to do some, we were doing some translation applications and looking to see how that worked because of AI and how that works. And I thought, well, maybe Connor’s onto something. Good for you. What I didn’t expect is less than eight days later, that phone was gone.

Connor Miller [00:08:43]:
Back to my iPhone.

Wes Moss [00:08:45]:
Tell us what happened. It looked so promising.

Connor Miller [00:08:49]:
We gotta go back. I’ve been an iPhone user. I had the very first iPhone back in 2007 when it came out, I’ve been a huge Apple fan.

Wes Moss [00:08:56]:
Do you remember even what that was called? Was it just the iPhone, iPhone? Or was it. And then the next one was iPhone three.

Connor Miller [00:09:02]:
Then they had the three, then the three, and then they started naming them and. Yeah, got confused.

Wes Moss [00:09:06]:
Now we’re up to 16.

Connor Miller [00:09:07]:
Yeah, now we’re on the 16. And to be quite frank, the hardware just hasn’t changed on iPhones in what, four years now? They used to do it wherever, you know, you’d get these super cycles where every two years you get a big hardware upgrade and then in the middle you’d get one that was a little bit faster and they’ve basically had the same phone now for four or five years. And I was like, you know what? I’m done with this.

Wes Moss [00:09:29]:
Huh? Grass is greener.

Connor Miller [00:09:30]:
I want to try something.

Wes Moss [00:09:31]:
The grass might be greener.

Connor Miller [00:09:32]:
There’s other companies that are innovating on hardware. I want to try this. Even though I didn’t want to switch from iOS, I’m like, I just want to try it for the hardware.

Wes Moss [00:09:40]:
You’re thinking, hey, this phone works so well, why don’t I try something else? I’m bored. Because it works so well. So you said, oh, and I would say the three screen thing is pretty enticing, though. That looked cool.

Connor Miller [00:09:50]:
It was great for about three days. And then I think I must have.

Wes Moss [00:09:55]:
Found you on maybe it was like day two.

Connor Miller [00:09:57]:
Yeah, it was coming. Yeah. Coming off the weekend, excited about it.

Wes Moss [00:10:02]:
What happened?

Connor Miller [00:10:02]:
The excitement just started to wane, you know, I didn’t use the inside screen as much. And I’m like, you know what, I really just like the Apple software better. The hardware was really cool.

Wes Moss [00:10:14]:
But I just like, on the Google.

Connor Miller [00:10:16]:
Apple’s tagline, their slogan really should just be, it just works. It’s so natural. It’s so intuitive. I don’t need all the customization. They just, it just works. So they got me back.

Wes Moss [00:10:28]:
So with this new triple screen Google phone, even though it looks really cool, was it just not as intuitive? Was it a little clunkier when you were trying to move things around or cut and paste and just use daily normal function? It was Clunkier.

Connor Miller [00:10:43]:
Again, not to offend any Android users out there, I know we have a lot of them listening.

Wes Moss [00:10:47]:
Even this topic is like, we’re a very balanced show. It’s just like the country. It’s 50 50 Android iPhone. Don’t offend half of our listener base.

Connor Miller [00:10:57]:
It’s almost more polarizing than even politics, which we’ll talk about today, too, the iPhone and Android. But, yeah, it just, to me, it wasn’t as intuitive. I know it’s got all the customization. You know, I’m sure people will still argue it’s better. For me, Apple’s just better.

Wes Moss [00:11:13]:
So what do you do is turn it back in and get your credit towards the iPhone.

Connor Miller [00:11:16]:
Yeah. Had a two week refund policy. And so I’m back to my old phone. I’ll probably get the new iPhone.

Wes Moss [00:11:22]:
Speaking of government, we continue now, we’re not at an all time low, but I did find, because we did a presentation this week, really, Conor did most of the presentation talking about the election cycle and what it means for markets. And we’ve talked about this here on money matters several different times, seeing now that we’re how many days away from the election? Less than 50. Less than 50. But what’s interesting about this is that if you go back and look and Pew does this, and Pew research has done this for many, many years, but they’ve tracked the percentage of Americans that say they trust the government to do what is right just about always or most of the time. Now, as you can imagine, always is a very small number. Very few people say, oh, they do always do the right thing. But most of the time is someone in America saying, hey, I think the government knows what they’re doing. But it is an interesting chart, Conor Miller, where you saw it rise from around 20% of people saying, Americans saying that the government’s going to do just about either do what’s right always or do most of the time.

Wes Moss [00:12:31]:
And you put those two categories together, and it rose from kind of the mid nineties all the way into the early two thousands. And when it was at 60%. So 24 years ago, 60% of Americans said, yeah, the government’s doing. They’re doing exactly what they should be doing. And so it peaked under George W. Bush, and it was right at. Right around 911. So remember, we had some real unity.

Wes Moss [00:12:58]:
George W. Bush was in Manhattan after the terrorist attacks, and we really, as a sense of a nation, had really come together. And it’s been downhill ever since. It’s been downhill ever since. And last year, it got down to 16%. So pre Covid, it was 27%, got all the way down to 16%. Today, it’s a little bit higher, but still very near historic lows. Only 22% of Americans are saying that they have belief that the government’s always trying to do what’s best for everybody.

Connor Miller [00:13:30]:
And if you look at the chart, it is kind of funny. We saw a slight uptick during just the very beginning of the pandemic. Remember, that was like the. What was it?

Wes Moss [00:13:40]:
The, maybe we were coming together four.

Connor Miller [00:13:41]:
Weeks to stop the spread. It kind of resembled 911 a little bit, where everyone was kind of in it together. Unity. Patriotic. But, yeah, now we’re, now we’re back to basically historic lows.

Wes Moss [00:13:54]:
Well, and then part of this is that there’s another story this week that I think is interesting is that 41% of Americans say they are currently. So this is this week, 41% of folks are saying that they are at peak stress. So about as stressed as they have felt in the entire year so far. And the reasons come back to it kind of aligns with the election. Primary sources for anxiety right now this year include, number one, finances, kind of a big part of the election cycle, the economy, kind of a big part of the election cycle, physical health. And then number four on the list, the presidential election. So those are the big stressors. And number five on the list, other world issues.

Wes Moss [00:14:45]:
Almost a third of, more than a third of people are worried about finances, and that’s why they’re stressed. Almost a third of people of the economy and about 20% or one in five are stressed because of the election, which goes back to this pew research poll that just says Americans are kind of, this is not a time where Americans are saying everyone, they’re doing all the right things up there in Washington. And that, of course, then leads to even more worried about the election, which then leads to worry about the stock market and those are the questions I’ve been getting over the last, really several months about the election. What’s that mean for stocks? Connor Miller has been doing a whole lot of work around that, and we’ll talk about that after we return. If you’ve ever done a Jane Fonda workout or if you remember as a kid rocky running the steps, and if Michael Keaton is still mister mom to you. But guess what? It’s officially time to do some retirement planning. It’s Wes moss from money matters. Weren’t those the good old days? Well, with a little bit of retirement planning, there are plenty of good days ahead.

Wes Moss [00:15:54]:
Schedule an appointment with our team today@yourwealth.com. dot that’s your, yourwealth.com dot. You’ve been presenting about politics and the stock market a whole lot this week.

Connor Miller [00:16:10]:
Yeah, we did two in the same day on Wednesday, so it was quite a long day, but it was really fun. Both crowds were really engaged. Just a lot of energy in the room, really wanting to one just kind of see where we stand on the race and then ultimately what that is going to translate to for our finances and the stock market are people, do.

Wes Moss [00:16:33]:
You get the question about, is the Federal Reserve political? Do people ask about the Fed and politics at all? Because that was a huge topic this week as well. People mostly believe that they’re independent.

Connor Miller [00:16:44]:
I actually haven’t gotten that question yet, though. I did. We always try to make these presentations interactive so that I’m not just speaking for 35, 40 minutes straight.

Wes Moss [00:16:54]:
That’s right. You have this thing called slido that does the real time polls while you’re speaking, which is fantastic. I don’t know how, I’ve never done that in a presentation. I need to.

Connor Miller [00:17:04]:
And the most amazing thing was, I mean, we’re basically in a 50 50 race, depending on which day you look. And when we gauged the audience on Wednesday, it came out to almost virtually 50 50.

Wes Moss [00:17:19]:
Okay, so explain to our money matters listeners what is the question that you asked and what is slido, this real time? What does it really do?

Connor Miller [00:17:28]:
Yeah, so we have this interactive tool you can put into a presentation. You scan a QR code and you can put in the result to the question that was not who are you going to vote for? We felt like that would be a.

Wes Moss [00:17:39]:
Maybe it’s too probing.

Connor Miller [00:17:40]:
Yeah, too probing, invasive. But who do you think is gonna win the election? And you never know.

Wes Moss [00:17:45]:
So hold on. Who do you think is gonna win the election? You’ve got 100 people in the audience. They all scan the QR code that’s on the PowerPoint, it immediately takes them to the poll and then they answer the question and the results in real time change on the screen to see.

Connor Miller [00:18:03]:
You get people live results. So you’d see, you know, Trump took a lead and then Harris took a lead. At the end of it, I think we had about 60 or 70 respondents. It was 52 48 at the end of the day, which is what I was hoping for going into it, just to show how tight the race.

Wes Moss [00:18:20]:
Tight the race is.

Connor Miller [00:18:22]:
But I didn’t even expect it to be that close.

Wes Moss [00:18:25]:
Here we are in Georgia, 50 50, at least. That’s. At least that audience. So it’s a 50 50 race. It’s going to come down to probably one state. Pretty much, yeah. I mean, remember, at least now we see that that could change.

Connor Miller [00:18:39]:
2016 and 2020, really both came down to three states. 2016, it was about 80,000 votes. 2020 was even less, like 43,000 votes.

Wes Moss [00:18:49]:
So less than a stadium? Less than the Mercedes Benz Stadium.

Connor Miller [00:18:53]:
Yeah.

Wes Moss [00:18:53]:
The whole country decided by a group. Less than a Falcons game today.

Connor Miller [00:18:59]:
When you look at where the polls are, it could come down to one state potentially. I mean, you got to throw Georgia in there. But really, Pennsylvania will probably be the key state that decides the election.

Wes Moss [00:19:10]:
Now, what was your statistic around the number, how it could even be smaller? So let’s just say that it does come down to Pennsylvania and then Pennsylvania as a microcosm, it could be already is very, very tight. Right. That looks very, very tight at this point. What was your statistic around? Was it 7 million approximate voters in the state of Pennsylvania? What was that statistic?

Connor Miller [00:19:37]:
Yeah. So on Wednesday, when we looked, there was about a .2% difference in the real clear politics polling average in Pennsylvania between Trump and Harris.

Wes Moss [00:19:46]:
So it’s almost dead even. Almost dead even 2% of the voter base there is.

Connor Miller [00:19:53]:
Yeah. So in 2020, about 7 million people voted in Pennsylvania, just slightly under. So if you take 0.2%, you multiply it by 7 million. Our number was 13 or 14,000 votes, which ultimately could decide the election if it ended up being that close.

Wes Moss [00:20:10]:
Could you imagine in an election cycle here in the United States that it could be decided by. That’s not. Now, that’s not a Falcons game, that’s a small music venue.

Connor Miller [00:20:20]:
Yeah.

Wes Moss [00:20:21]:
Kind of a mid range artist.

Connor Miller [00:20:22]:
And think about the, you know, just how big the us electorate is to come down to that few votes. I mean, it really, you know, they say every vote counts. Well, it really is going to every vote is going to count in November.

Wes Moss [00:20:36]:
Every single vote will count. And it’s not just the state of Pennsylvania, but it really is going to be tight. So when it comes to the election cycle, there’s obviously this worry. You also asked the audience, what political combination ends up being the best for the stock market. Is it a democratic president and a Republican House or republican president in a democratic House? And it was. That was, our audience ended up getting that pretty correct, didn’t they?

Connor Miller [00:21:08]:
Yeah. So when you look at the best returns over time by balance of power in Washington, looking at it split between who wins the presidency, who wins the Senate, who wins the House, we kept it simple and just said, okay, do you think the market does better when you have either a Democrat that controls the presidency and Congress, or you have a republican president and a democratic Congress and the crowd got it right. The best results on average, and they’re all pretty tight when you look at.

Wes Moss [00:21:42]:
Well, I think that’s the point of this. The point is that all the combinations are similar.

Connor Miller [00:21:47]:
Exactly.

Wes Moss [00:21:48]:
But however, the combination that has historically coincided with the best market returns has been what?

Connor Miller [00:21:55]:
That is just slightly higher than the others is a democratic president and then a republican controlled Congress, or at least republican controlled one branch of Congress and then the next.

Wes Moss [00:22:09]:
What about the inverse of that? Republican president, democratic house?

Connor Miller [00:22:13]:
Same thing. Just to tick under the best. And the three best outcomes all come when you have either you have one party that is president and you have the other party that controls Congress. So basically you just have a split. Washington, which.

Wes Moss [00:22:32]:
Reminds me of gridlock is good. When it comes to politics, gridlock is good. We don’t want necessarily, what is not necessarily great for markets is a completely one sided Washington where things can just sail right through without debate. One side controls everything. That’s really not necessarily from a policy perspective. The market doesn’t love that. The market doesn’t like uncertainty. So you think about, you’ve got this.

Wes Moss [00:22:58]:
If you have a one sided Washington, who knows what’s coming down the pike? New bill, new bill, new act, new regulation, whatever it may be. When you have a split and you’ve got this gridlock, it makes sense that the market says, well, not a whole lot is going to be able to change easily in a meaningful way if we’re gridlocked.

Connor Miller [00:23:18]:
And the good news for investors is that’s the most likely outcome come November.

Wes Moss [00:23:26]:
1 of those two. A split.

Connor Miller [00:23:28]:
Yeah. And really, even if there’s not a split, even if one side takes control of Washington in general, it’s going to be so close that you’re still going.

Wes Moss [00:23:40]:
To be difficult to be really difficult.

Connor Miller [00:23:42]:
To get these broad, sweeping legislative changes.

Wes Moss [00:23:44]:
What were those rates of return, though? So the combinations were approximately.

Connor Miller [00:23:49]:
Yeah, when you. So when you have a democratic president, a Republican Senate, and a. Or, sorry, a democratic Senate, republican controlled house, about 15.7% per annum on average. Per annum. The next two, which was a republican president and a democratic controlled Congress, still.

Wes Moss [00:24:09]:
In the 14 range.

Connor Miller [00:24:10]:
Yeah, high, high thirteen s. And so really, no matter how you slice it up, the market really does well at taking any one of those outcomes in stride.

Wes Moss [00:24:21]:
I think the other way to look at it, and we can’t do this here on radio, but the visual, if you look at a chart that imagine you look at the s and p 500 over the course of the last 70 years or 80 years, and you see this, the little black line that goes from the bottom left of the page to the upper right of the page, and you see the growth in the s and p 500 over all those years. But imagine then filling in and shading the entire graph, either in red or blue, for the years of either Democrat or Republican Washington, if you will. And the visual, what I remember from that visual is that essentially, over time, as markets have gone up, they’ve gone up under red and blue and red and blue. There’s a couple blues that are pretty flat, there’s a couple of reds that are kind of flat. But over time, you’ve got this wallpaper that’s red and blue with different political combinations, and the market just continues higher, at least over time. So. And I think that’s the point here, is that however you’re looking at these numbers and slicing different political combinations, market performance, or if you look at it over a broader period of time, kind of your favorite, whereas if you’re only investing under Democrats and only investing under republicans, the returns are 95% less, essentially, than just being invested throughout, and be invested under both party control. And part of that is just the virtue of time, of being invested throughout cycles, no matter who’s in office.

Wes Moss [00:25:49]:
But you put all of these statistics together, these economic studies together, and you relay them back to what have markets done? And you can almost say, and I know this may be blasphemy if you’re hyper sensitive with politics, is that to markets, politics don’t matter. And it’s that simple. Now, you can make a great argument that, of course, for certain sectors, policy absolutely matters, and where money is getting appropriations, go to one sector and then not another sector, and then regulation from the government so, yes, of course, government does impact industry, no question about it. But in a broader sense, the entirety of the s and p 500, all of those companies together en masse, collectively figure out a way to succeed no matter who’s in Washington. That’s the point.

Connor Miller [00:26:42]:
I think that’s something we all understand conceptually separately. Right. We know the market goes up over time. We know we have different political administrations. We have Republicans that are president. We have Democrats that are president. I think we kind of struggle to merge those two together. And that’s the simplicity of that slide that just shows, yeah, we have different regimes and the market goes up over time.

Wes Moss [00:27:06]:
I guess that’s our takeaway here. And you’re not calling who’s going to win the election? Conor Miller, too close to call. That’s an easy out for you. It’s an easy out for you, isn’t it?

Connor Miller [00:27:15]:
I’m going to stay that way until, until we know.

Wes Moss [00:27:18]:
Let’s do a check in on the misery index, which is just essentially the combination of inflation plus unemployment. If it is lower around election time relative to where it was a year ago, the party in power has tended to stay in power. If the misery index goes up, the party that’s in power tends to get the boot. And when we get new leadership. Where’s the misery index today relative to a year ago?

Connor Miller [00:27:47]:
The misery index is slightly below where it was a year ago, meaning personal finances are improving just slightly.

Wes Moss [00:27:54]:
Ever so slightly. Yeah. So we’ll see. But still, you could still say it’s too close to call. Top colleges. There was something must have been released this week when it comes to college surveys because they were the most fun colleges and the most bougie colleges and the most which, there were a bunch of colleges I’d never heard of. I think the most fun, palatial college on the list was called Scripps. Connor, have you ever even heard of Scripps college? I haven’t, but we’re not talking about that.

Wes Moss [00:28:30]:
What we did want to pull is the ten colleges for the best starting salaries. And as you can imagine, let’s do, I like this, I’ll do the top five here because we have one right in our backyard, about a mile away from where we are right now. So University of Pennsylvania, number five on the list. Number four, again, top colleges for best starting salaries coming out of school, the Georgia Institute of Technology. Georgia Tech. Then number three, Princeton University. Number two, Stanford University. And then, of course, this one is no shocker.

Wes Moss [00:29:11]:
MIT. Mit at the top of the list. And what do these folks make at these colleges.

Connor Miller [00:29:18]:
So this is looking at average starting salaries coming out of college, which is way above, you know, my college is not on the list, so way above, you know, what, what I made coming out of college. But if you look at the top five, at least, really pretty much every college in the top ten, all starting north of $100,000 for starting salaries coming out of college. So again, we’ll do the same thing. We’ll start with, with Georgia Tech, approximately 90,000 to 100,000 coming out of college.

Wes Moss [00:29:49]:
And then, of course, you’ve got, if you’re in STEM type programs or science, technology, what’s the engineering and math? So stem. Those salaries tend to obviously be even higher. So you get, Georgia Tech is averaging 90 to 100, but it’s not uncommon to have somebody make 130 or 150,000 even coming right out of Georgia Tech. Princeton is 100 to 110, Stanford, similar, 110 to 120, and then MIT on average, almost 135 grand per year on average.

Connor Miller [00:30:29]:
So really, even though the cost of college has gone up, you’re getting a pretty solid bang for your buck if you attend one of those universities.

Wes Moss [00:30:35]:
Still a long payback. Still a fairly long payback. When these schools, now, not all of these are $80,000 a year, but they’re, some of these are pretty significant. Here’s one that I had not heard of. That’s on the, on the, when it comes. And this was looking at a separate list from the Wall Street Journal. Look. No, this, this was in the, the journal article, number seven on the list, 115 to 125 starting salaries.

Wes Moss [00:31:01]:
Harvey Mudd College.

Connor Miller [00:31:04]:
That’s another one I haven’t heard of.

Wes Moss [00:31:06]:
I’ve never even heard of that.

Connor Miller [00:31:07]:
We’ll have to look to see.

Wes Moss [00:31:08]:
Where, where is the Harvey Mudd? Where’s Harvey mudd? Think about that. Even if these are 80 grand a year to attend, payback’s pretty quick, payback is pretty quick as solid investments. The news of the week, Conor Miller. I would say if there was a main event, the main event was a little more entertaining than we thought it would be. The conjecture around what the Federal Reserve would do with interest rates. For the last month, the market has been market, the news have been obsessed. First we were obsessed with inflation. Then once inflation started to come down in a meaningful way, we have been the market itself, the collective market, the bottom market, the stock market, the financial media has been, they have been obsessed with the Federal Reserve cutting interest rates.

Wes Moss [00:31:59]:
The party was over. We had zero interest rates and then negative interest rates for so long. And then the Fed got super aggressive after inflation went almost double digits here in the United States. And ever since they went on the warpath against inflation, their ammunition is to raise rates. It’s turned up the heat, which slows down the economy. So we have seen the unemployment rate go up and inflation though, at least get very close to their target, which is two, hey, we want 2%. We’re going to talk about dual mandate in just a second because they think Jerome Powell said dual mandate 100 times in the press conference. So the market has been very antsy about having the Fed at least make the first move.

Wes Moss [00:32:49]:
We know rates have been high for a long time. Monetary policy is tight. Everything’s expensive. If you don’t already own a house, good luck. Can’t buy a house because mortgage rates were at 7.8% at one point. Nothing all that long ago. Just shutting people out of the housing market and keeping people in their homes because of the lock in rate. With low mortgage rates that 80% of current homeowners actually have, you’re not going to go from a 3.5% mortgage to a new place with a seven that doesn’t work at the dinner table.

Wes Moss [00:33:20]:
That conversations, no way. Not even considering it. So we’re anticipating maybe if the Fed finally starts to lower rates, it could do so much for the housing market and really be, of course, stimulative to the economy, which we’ve seen start to get a little bit, I wouldn’t say weak at all, but certainly slow down at least a little bit. And the prevailing thought was that we’d end up with a quarter of a percent. The Fed is measured. The Fed doesn’t like to make big moves. We’re at five and a quarter to five and a half. So it’s just going to be a slow, steady quarter percent.

Wes Moss [00:33:58]:
Quarter percent, quarter percent. Over the course of many months and many meetings, there was an outside chance that this past Wednesday the Fed would cut up to a half a percent, which is a much more sizable move. And guess what? That’s what happened. And I was refreshing. I think I was in a meeting, but I was also refreshing CNBC at 02:00 to see what it was. Where’s my alert? Where’s my alert? And wham, here we get a half a point cut. So Conor Miller, what does that mean to you?

Connor Miller [00:34:33]:
Look, I think it means that the Fed probably believes they could have cut back in July, July.

Wes Moss [00:34:42]:
So the Fed, when they started to talk about cutting, they could have maybe actually started a couple of months ago.

Connor Miller [00:34:47]:
So I think they were just playing a little bit of a game of catch up to. And Powell said this in his press conference, to stay ahead of the curve, right? To stay ahead of the game. And really you got to go back. I mean, it doesn’t necessarily feel like it, but it’s been over a year since the Fed went into pause mode. Last time they raised rates was, I believe, July of 2023.

Wes Moss [00:35:08]:
So it’s been a year and a quarter.

Connor Miller [00:35:10]:
Almost been a year and a quarter. And yeah, look, we had a little bit of a scare with inflation in the first quarter of this year that kind of put the brakes on for the Fed. They’re like, we’re just going to keep things where they are. The economy still looks in good shape, want to make sure we get inflation under control. And then as data came in over the last several months, it became pretty clear that it was not a matter of if the Fed is going to cut, but when and by how much. And as we saw on Wednesday, they decided to start things off with a bang and go half a percent.

Wes Moss [00:35:40]:
Here’s what the Fed meeting, I think means to America. If you’re an american family, what do you care about what just happened? The financial media makes a big deal out of it. But what does this mean at the conversation at the dinner table? And here it is, I was speaking with a long tenured mortgage advisor this week about said, hey, what’s your activity look like? Where’s my story from this week? We had to bring up this headline Connor Miller had to do with, and this is before the Fed cut, by the way, right before the Federal Reserve cut on Wednesday, this story came out, I want to say on Monday or Tuesday, and it says this weekly mortgage demand surges 14% as interest rates hit two year low. This is before the Federal Reserve cut rates. So I said, well, what kind of activity you see in here? Refinances. Refinancing. Refinancing. Because, well, wait a minute.

Wes Moss [00:36:46]:
Okay, if rates, the published rate is now down to 6.130 year fix. If you did a 7% or 7.5% rate a year ago, then maybe you’re already thinking about refinancing. So that’s number one. But here’s what I think is interesting, is that they just did a loan this week for five and a half percent, 5.5%. There’s a little bit of a misnomer. I think when you look at the average 30 year fixed rate, you can pull it up on Bloomberg or anywhere, Wall Street Journal, you can pull it up and you’ll see it in a little above six. Still, the reality is if you talk to a mortgage broker or mortgage advisor, mortgages are already getting done at sub six because that’s the average. So if you’ve got that’s good credit, not so perfect credit.

Wes Moss [00:37:35]:
So we’re already starting to see some of these mortgages with a five handle. And yes, you can pay a little bit. You can pay with some points to get it down even lower. It depends on. So that situation may or may not make sense. If you think you’re going to stay in the house for a long time, maybe you want to buy down the rate. It usually takes about two years to kind of pay for itself. But if you think you’re going to move, you may not want to do that.

Wes Moss [00:38:00]:
Or in this case, if we think that rates are just going to be a lot lower in two years, then you can just refinance anyway. But the activity is starting to pick up and now with the Fed moving even more quickly, I think it’s not going to be that long before americans start talking about 5% mortgages.

Connor Miller [00:38:20]:
I think important note there that you mentioned, this was before the Fed meeting that you had that conversation. And I talked to the same mortgage advisor and he was really optimistic, really hoping that the Fed would move by a half percent. And he said, yeah, look, if the Fed starts moving here pretty quickly, then you could see rates come down from there even.

Wes Moss [00:38:42]:
Well, here’s, here’s another statistic from this. Again, pre Fed meeting refinance applications were up 24% from the previous week, 127% higher than they were a year ago. The mortgage applications for home purchases were up 5% last week. I think you’re going to see that to really start accelerate. And Powell talked about that. So in his meeting, in the press conference, he talked about housing. So first of all, that’s one of the still sticky areas. A reporter asked a question about housing and how that factors into the decision.

Wes Moss [00:39:18]:
One of the issues that the Powell said is that we still see inflation higher than we thought it would be when it comes to rents. So the Federal Reserve looks at, when you look at CPI, the consumer price index, you’re going to see the rent category. It’s not coming down as fast as they thought it would be, and that makes some sense. But we know that leases only come up once a year and sometimes they’re even longer than that. So it takes a while for the price of a lease to change. That’s number one. The other thought here is that the Oer owner equivalent rent that hasn’t come down as quickly either. And that’s a measure of what you think you can re renting your home out for.

Wes Moss [00:39:57]:
So that’s been stickier. And he alluded to the problem within the market is that there’s not a lot of transactions because the conversation with you and your partner, your spouse, is that, well, I’m not going to switch to an expensive mortgage right now if I’m already locked in. But his point is that lock in effect of, hey, I don’t want to leave my three and a half percent mortgage. That could be diminished to some extent when we start to see some lower rates. His overarching point about housing, though, is just that we have a supply issue. We just don’t have enough homes. And he said, look, there’s nothing we can do about that. As the federal reserve, he said, this is not our job.

Wes Moss [00:40:38]:
That’s developers and cities to, to allow land to be developed and homes to be built. He’s like, all we can do is all we’re doing is monetary policy. Lowering rates is what is really the only tool they have for this. But he said it could translate into housing activities. Plenty of demand, just still not quite enough supply.

Connor Miller [00:40:59]:
Yeah, you took the words right out my mouth. It really is at this point a supply issue. And one of the things that he, he hit at, and, you know, it’s kind of common sense, but for the majority of Americans that would be purchasing a home, that also means they’re going to put another home on the market. So you would have some increased demand, but you’re also going to see more supply come up all at the same time.

Wes Moss [00:41:21]:
Dual mandate. Dual mandate. Dual mandate. He said this 100 times. What is the mandate? What is the Federal Reserve’s dual mandate? Maximum employment and stable prices just means they want a low unemployment rate and they want prices to stay steady, meaning that we don’t want 8% inflation per year. And the other, I think, overarching point that Jerome Powell made this week is that, look, the economy, we’ve seen a lot of progress in this. Inflation has come down to 2.2%, but employment showing some signs of softening. But put it all together and they’ve gained confidence that if they’re balancing like where, do we have more risk here? Do we have risk that inflation’s going to bubble back up, or do we have more risk that unemployment’s going to bubble higher than we want it? And now they’re squarely looking at that side of the dual mandate for the last almost two years.

Wes Moss [00:42:20]:
It’s all been targeted at inflation. Let’s put this fire out. Don’t worry about this other brewing issue now. It’s completely switched. We’ve basically. Now he also didn’t say that problem solved. He didn’t say mission accomplished. He’s smart to say that.

Wes Moss [00:42:36]:
I think the CB’s reporter said, would you say you did the job done, mission accomplished? And pals way too smart to fall into that trap. He said, oh, no, mission’s never accomplished.

Connor Miller [00:42:46]:
Yeah, probably a little bit of hedging going on there. I think if you asked him, you know, personally, if he feels like mission accomplished, he probably does. And look, against most odds, I think a lot of people who have looked at history, there’s not a lot of times where the Fed has been able to successfully raise rates without slowing down the economy too much.

Wes Moss [00:43:06]:
The other point is that he emphasized they are not on a preset course. It’s not as though because they started, there’s no guarantee they’re going to continue at each meeting at a certain rate. It’s data dependent. And they’re looking at what the mandate, it’s dual. It’s a dual mandate. It’s a dual mandate. It’s a dual mandate. And you are listening to money matters.

Wes Moss [00:43:26]:
I’m your host west moss, along with Conor Miller. You can find us at your wealth while you are wealth.com dot. More money matters, straight ahead. It’s fed week, or it was this past week was fed week. Major Federal Reserve decision lowering interest rates by a half a percent. It’s all sorts of positive news if you are looking to get a mortgage or any sort of loan. Interest rates have just continued to get a little bit cheaper. Now, Connor Miller, who joins me in studio, a lot of this was already baked in and the market was already anticipating at least some of this.

Wes Moss [00:44:05]:
And that’s why we’ve seen the ten year treasury drop well before the Federal Reserve lowered rates.

Connor Miller [00:44:11]:
Yeah, I mean, the ten year treasury has dropped a full 1% really since April. And that was kind of the inflection point where started, the data started coming in better than expected on inflation. We’ve got a little bit of a weaker jobs report in July, and rates just continue to come in again, expecting that the Fed was going to begin a relatively long journey of normalizing interest rates.

Wes Moss [00:44:36]:
If you look at a chart of the US ten year treasury, again, this is the bond market determines interest rates, not the Federal Reserve. The Federal Reserve only if you look at a chart, they’re only effectuating the very, very short term rates. That’s the federal funds rate, ultra short term rates. And of course, then that helps wag the tail of where all other interest rates go. But here we are a year ago, approximately the ten year treasury, which is the real proxy for where mortgage rates are derived from, was right at 5%, or almost at 5%. So you add another 2% to that. Now that’s how you got to, how you get to seven or even higher. Here we are, as of this past week, all the way down to 3.7.

Wes Moss [00:45:23]:
So it’s a huge amount of progress. And even if you go back to this spring, Connor Miller, if you go to call it April of this year, we were getting closer to five as well. We’d come down, backed almost 5%, and it’s been essentially straight down ever since. And I think that’s when the market started to get this idea, the bond market started to get this idea that, hey, I think the Fed at some point is going to have to start cutting. And that’s exactly what happened.

Connor Miller [00:45:50]:
And you could say, well, why or even how does this happen? Really think about it. We got pretty cozy with those five, five and a half, 6% money market and cd rates. And then when the writing started to become pretty clear on the wall that the Fed was going to start cutting, I think you saw a lot of investors start to extend out and try to lock in some of those rates. And so it just works as supply and demand, the more buyers you have, the price of those bonds goes up and the yield comes down because of that inverse relationship between the two.

Wes Moss [00:46:22]:
So here’s what I think on the bottom line with the Fed is that they were very clear about, hey, they’ve made progress on the two things they’re looking to do. The dual mandate, which they mentioned it seemed like 100 times, inflation is down close to the 2% level. And yes, we have a moderately softening labor market. But all in, they felt like a half a percent was the right kind of sweet spot. Powell said many times, I think this is the other big takeaway. The economy is good. Economy is good. It’s solid.

Wes Moss [00:46:54]:
He said good. He said solid. And their job at the Fed is to keep it good. And I think that to me, along with reminding all of us that they have two mandates. Dual mandate. Dual mandate. Dual mandate. Federal reserve is now in cutting mode and the market likes it.

Wes Moss [00:47:14]:
Connor Miller, we have a lot to get through in the next segment or so here. I’m not going to say it’s quite a lightning round, but we want to know bull markets versus bear markets. How long each one lasts typically? Why are millionaires not buying homes and renting instead? Chime, which is an economic overview. It’s a lot to get to. Where do you want to start?

Connor Miller [00:47:42]:
Let’s start with the bull and bear markets.

Wes Moss [00:47:44]:
Okay, so this is, it’s funny. I mean, I’ve studied this, I’ve written about this, and it’s still somewhat surprising every time I see, see these statistics. And particularly when you look at it visually, when you think about investing, I think it’s always important to be educated about the long term success of markets diversified, just s and P 500 or the Dow or a total stock market index. You’re going to see that it of course, has grown over the course of time. And you’ve got to be patient because there’s some dips and some valleys. And I think that visual is really important for people to understand. It gives you some reassurance that over time the United States keeps growing than the equity market should too, as well, as long as earnings are growing. What shakes people out is the periods of time that kind of get masked.

Wes Moss [00:48:34]:
When you look at an 80 year chart, 80 year chart, your brain says, oh, it just goes pretty much up. But what makes investing so hard is that those periods that you would zoom in on, where you’re down 30, 40, 50%, they might not look all that bad in the course of a hundred year chart. I but when you’re living it and you’re down, you have a terrible market for a year or two years or three years. Really early in my career, from the year 2000 to really 2010, was almost a flat period of time because we had two massive bear markets. But again, you look on a really long term chart, was that, that period all that bad? So it’s constructive to look at this long term trend. But from an education standpoint, this chart in front of me may be even better, which is showing the length of expansion when we’re in a bull market and then the length of decline when we’re in a bear. And when you look at this visually, I think this may be better than a long term mountain chart because it just shows you that the bull markets, when stocks are going up in general, 20% or more, and that starts to be counted as a bull market, the progress lasts so much longer than the decline. And when you see that visually, wait a minute, these uptrends look much more robust and powerful than the negatives we see.

Wes Moss [00:50:04]:
And the negatives don’t seem to last all that long. If you look at the, and here are the bottom line statistics. I think what matters, if you go back to 1942, bull markets, the length they last, the time that we have stocks in either an up pattern or down pattern, bull markets outlast bears by a factor of four to one. So on average, bulls, that’s what markets are doing. Well, last almost four and a half years, 4.3 years to be exact. Think about that. That’s a substantial period of time. And on the upside, they average about 150% return.

Wes Moss [00:50:44]:
Bear markets, on the other hand, last, on average, 11.1 months. So on average, not even a year, and they average negative 32%. So think about that. If you were to put those two together, we can live with this, right? When things are bad, on average, it’s for a year down 30 30 32%. But when things are good, it’s four times as long as the bad, 4.3 years on average, up 150%. And I think that, to me, is another way of looking at long term investing. You know, there’s going to be some pain, but if you look and see that the good parts outlast the bad by a pretty big multiple, maybe it helps us keep and stay invested.

Connor Miller [00:51:28]:
And really, you know, kind of speaks to the perils of market timing, right? Because it’s maybe not quite as extreme as finding a needle in a haystack. But when you think about how long and really strong bull markets are lasting over four years, accumulating a return of 150%, whereas bear markets last less than a year, accumulating, it’s painful. Right?

Wes Moss [00:51:53]:
And by the way, a year is a long period of time. It’s not like we wake up, oh, things will be better tomorrow or next week. No, a year is a long time.

Connor Miller [00:52:00]:
Yeah. That’s just the average, right? Some are longer, some are shorter. And it is extremely painful the moment. But for the people out there trying to time in and say, well, the market just hit a new high, I’m going to get out. It’s not, it’s not a one for one. A lot of times, these bull markets last significantly longer than trying to time a bear market.

Wes Moss [00:52:21]:
Point well taken. Thank you for the chart. It’s one for the ages. How about this headline, Connor Miller. These millionaires can afford their dream home, but they’re renting instead. The rise in wealthy renters reflects how the calculus around home ownership has changed in the United States. How about your peer group? You guys are in the, I would say you guys are in the significant flow, your age range. You guys are all, this is when things are going, they’re going, well, people are making money.

Wes Moss [00:52:58]:
Most of your peer group have already bought houses, or do you have some renters? Not to say all of your peer group are multimillionaires yet.

Connor Miller [00:53:06]:
Yeah. And it’s kind of split too, right? Some have settled down, had kids. I’d say that cohort is a little more likely to be in the home ownership category, whereas as others are, they may not be married yet, haven’t had kids, and they may be more likely to rent. So I’d say it’s fairly split 50 50. And really it was the people that bought in a couple years ago. Before housing.

Wes Moss [00:53:31]:
Before housing. This is a real time story as of this year. In 2024, for example, George Gugnin, he was in Silicon Valley and then he was in Miami and decided to go to New York and just rent. He said, I’m not going to put this much money down, I’m just going to rent. Now he pays almost 20 grand a month to rent, $19,000 a month to rent. Imagine this, it’s 200. And that, here’s the math on that. 228 grand a year in rent at a 40% tax rate.

Wes Moss [00:54:05]:
And we know New York’s a lot more than 40%. So it’s really, it could be actually 50% or even more if you, if you count all the other taxes that go into it. He’d have to make over 400k. His 1st $400,000 would go to his rent. So after taxes, that’s how much that would cost. So I started looking around too, some of these other places that are expensive. 220 Central park south in New York City. The luxury residential tower, I guess its prime location, its lavish everything.

Wes Moss [00:54:39]:
You get the views of Central park, of course, and this will range, its a big range, but it can be 50 grand up to $100,000 per month for rent. Here’s one in, I guess, sunny Isles Beach. I think this is in Miami, maybe the estates at Aquilina. $30 to $50,000 per month rent. Now the point here is that what do you get to rent? What do you get from renting that you don’t get from buying? So firstly, you don’t get the appreciation of a home. And we know it’s been proven over and over and over again and why. The reason us net worth and household wealth is at a peak, the most it’s ever been in history, is because of the housing market, because we have a lot of homeowners, we have significant homeownership in the United States and we’ve seen home prices. I pulled up the case Shiller home price, national Home price index just since COVID So 2019 to today, up 52% on average.

Wes Moss [00:55:44]:
And we know a lot of stories where XYZ House is up 100%. If it’s on the water, on a lake and you happen to be smart enough to own it before COVID it’s up a lot more than 50%. It’s up more like 100, maybe 150%. So we take that off the table. But the argument here, and this is assuming, because you’re still paying rent, assuming you didn’t plunk a bunch of money down on a house for a down payment or pay for it in cash, that money could be working somewhere else. So if you’re in the fintech industry or you’re in the Silicon Valley and you think that your venture capital investments are going to be 30% a year, housing is going to be five, then that’s an argument to rent and not plunk a bunch of money down on real estate. That’s number one. Number two, just flexibility.

Wes Moss [00:56:34]:
It’s a big deal to sell a home. It’s a big deal to furnish a home and get your house, get everything done on the inside of a house. If you’re in a luxury apartment, sometimes, yes, you might be bringing in your own furniture sometimes a lot of things are already done for you, but it’s just a convenient, if you have the money to afford it. And it sounds like what these super high net worth or earning folks are doing, they’re just choosing maximum flexibility and they’re investing their money somewhere else. Yeah.

Connor Miller [00:57:04]:
And that doesn’t even consider the upkeep of owning a home. And I just had to get new sod planted. All the things that you kind of just feel like, you know, you’re throwing money away that could be going somewhere else. Gotta get your house painted. All of the upkeep associated with it, too.

Wes Moss [00:57:19]:
I just had to do both of those things. I had to paint my house. I had to do that. I opted not for sod and did some of that spray where it’s almost like a green spray of seed, and then it grows really quickly. Have you ever seen that?

Connor Miller [00:57:33]:
No, I haven’t.

Wes Moss [00:57:34]:
It’s almost like a. It comes out in like, almost a fire hose. You spray it right onto dirt, and it’s all. It’s essentially the seed and the soil altogether. Within a week, within ten days, you’re mowing it.

Connor Miller [00:57:50]:
Ours was pretty, pretty cool, pretty gone. So we just. We decided to rip it out and get some new grass in. But again, it’s, it’s, those aren’t the fun investments. The fun investments are the, the kitchen and the bathroom and all those things.

Wes Moss [00:58:03]:
Not a lot of. What would you get? I don’t know what. It’s not a lot of utility. The upside surprise of Saad now I think, listen, Saad is pretty awesome. Immediately you get to see the beautiful green new lawn.

Connor Miller [00:58:19]:
That is true.

Wes Moss [00:58:20]:
Come on.

Connor Miller [00:58:20]:
Yeah, we’ll get use out of it. With the kids running around and playing.

Wes Moss [00:58:24]:
He needs a house. You immediately get that. Those are two awesome handsome ones. I’d rather do sod and I’d rather do paint than a kitchen counter.

Connor Miller [00:58:34]:
Okay. At least it’s not an air conditioning unit. I don’t want to jinx it.

Wes Moss [00:58:38]:
But that, there’s no fun in that.

Connor Miller [00:58:39]:
No fun in that.

Wes Moss [00:58:41]:
So speaking of the economy, we’ve got consumer spending, which housing inflation, interest rates, manufacturing and earnings and employment. If I look through that list and we can go through at least some of these examples, the us consumer is doing actually pretty well. If you look at consumer sentiment, that has risen pretty substantially since the beginning of COVID or since the COVID low. It’s not back to where it was pre Covid, but it continues to improve retail sales. The latest number there, we see growth, at least a little bit of expansion. Household net worth in the United States at an all time high, 500. Is that 154 trillion, Connor might be. And then delinquency rates across all household liabilities down to only about 2%.

Wes Moss [00:59:34]:
That was 2.5% in 2019. So the consumer and paying their debt is actually in a better place than we saw even before. COVID we talked a lot today about the Federal Reserve, the half a percent cut, which was a somewhat of a shock to the market. The market liked it. The equity markets seem to have celebrated that after a kind of a pause and reflection. But I think my big takeaway from this week and listening to the Federal Reserve Chairman Powell and thinking about the economy is that they really emphasize they’re looking at two really important pieces of their job and that’s what it’s called their dual mandate. On the one side, they’ve been fighting and battling inflation for the last year and a half and they’ve mostly won that battle, though they’ll never say they’re done. And secondly, they’re here to keep the labor market as strong as possible.

Wes Moss [01:00:32]:
They want maximum employment. Connor Miller here in the studio with me. But Conor, I think my favorite chart of the week as we are looking through chime the consumer, consumer sentiment, housing, interest rates, manufacturing, which we’ve talked a lot about categories throughout today. Manufacturing, slightly contracting, so not terrible, but not great. Earnings, we know, have continued to grow for the S and P 500. And then employment. That’s the big, that is the really big important piece, I would say, of all of the chime economic acronym that we look at. My favorite chart has to do with employment.

Wes Moss [01:01:10]:
And it’s not the unemployment rate that I’m looking at. It’s not jobless claims I’m looking at. It’s not the U six employment survey. It’s not private payrolls or ADP when it comes to employment. It’s the jolts survey. It’s the jolt survey overlaid with the unemployment level. So this is to me, the most fascinating chart that’s been rocked by Covid and has come back to balance. And that’s looking at the number of open jobs in the United States.

Wes Moss [01:01:40]:
Job vacancies. The sign outside the hotel. We’ve got room. And those seeking to book a room. Job vacancies versus job seekers. And we had this remarkable seismic shift that happened right after Covid, the world shut down. There were 23 million people looking for a job, 23 million people unemployed. And there were about 4.5 million jobs open.

Wes Moss [01:02:07]:
So kind of a lot of people for not a whole lot of jobs. Terrible economic environment, horrible labor market. And then after about two years, we had this very unique situation that again, in economic history has been very rare, where we had 12 million job openings and we had only 6 million people looking. Wait a minute, two job openings for everyone looking. Now we’re back to almost even. So now we’re back to 7.2 million people who are looking for jobs and 7.6 million jobs open. So a few more vacancies than we have people. It’s a good sign.

Wes Moss [01:02:45]:
But mostly why I like it is the labor market and this is the Federal Reserve pointed to this this week is getting closer to a balance. And I think that’s good news. Conor Miller can we leave it at that?

Connor Miller [01:02:57]:
I think we can.

Wes Moss [01:02:59]:
You can find me and Connor Miller. It’s easy to do so@yourwealth.com. dot those emails come straight to our team. Youryourwealth.com. have a wonderful rest of your day.

Mallory Boggs [01:03:15]:
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Mallory Boggs [01:04:03]:
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