Let's Talk About The Stock Market

9 o'clock. The final hour of Richmond's Morning News with Rich Herrera starts now. Wake up with Rich or play catch up all day. At 933, we break all the rules. This is News Radio, WRVA. All the rules. Rules breakers left and right. Super Dave loses his mind. As I blow up the clock, I do anything I want. Right, Super Dave? I lose my mind over more than just that. Like what? What do I do that drives you crazy? I'll make you a list because I can't get into everything on the year. Hey, let's go talk to Michael Greer joining us this morning on Richmond's morning news. All right, Michael, good morning. Back for a second. We're breaking all the rules, baby. Breaking all the rules. Okay, so here's a deal. We only have a couple minutes every morning to talk about all these things that we see in market reports and we see on cable news and everybody throws out these numbers like, oh, we all know exactly what all of this stuff means. So I thought maybe we should just take a moment. Pump the brakes. Take a deep breath. Do a little, I don't know, Econ 101 to remind everybody what all these numbers mean. Because I've actually never, ever, ever seen anybody in the media that wants to talk about the Dow, the S&P 500, to the NASDAQ to actually explain what any of these things really are. So I'm going to lean on you. So let's start with the Dow, the S&P 500, NASDAQ. We hear them quoted all the time. But what exactly are they? Yes, good question. So I'll try to. be concise this morning. So the Dow is, the Dow, S&P, and the NASDAQ are all just indexes that basically measure how a group of stocks are performing, right? So, for example, the Dow, 30 large, large cap stocks, really big U.S. stocks. For instance? So for instance, I have a list of these, let's see, some of the things, 3M, Alpha, Google, Amazon. So these are big major companies that should. be able to give us an insight of how the economy's doing, how they're doing. Exactly, exactly. Yep, yep, very much so. And so the S&P, those are, and each of these, you know, like the S&P and the NASDAQ both have separate indexes that can measure a smaller amount, but we're just talking large. The big stuff we see on cable TV. Yep, exactly. S&P 500, it's 500 major U.S. companies. It's broader. So again, remember the Dow is just large cap. There's only 30 in there. The S&P has some tech, has some. It's more of a cross-section. Cross-section, absolutely. And a cross-section from the NASDAQ, right? So the NASDAX is the next one we're looking at. But we'll stick with the S&P some examples. There's some crossover, right? So we talked about Apple and Google and some of those. Those are in the S&P as well. But then you have Nvidia, Microsoft.

you know, broadcom, some of the tech stocks, and it covers a bigger, bigger brush, right? Broader brush. And then NASDAQ leans more towards Silicon Valley. Yes, yeah. Heavily weighted towards technologies, some of the thing, NVIDIA, you know, Apple. Tesla, some of these tech companies that are in there. And it's anywhere from 2,500 to 3,000. And then you have smaller indices that the NASDAQ 100 and yada, right? We don't care about that. So let me ask you this question. You ready? Yes. When we say the Dow's up 300, but NASDAX's down 1%. What does that actually mean to the average person? So some of that, when we're seeing them, part of that is maybe rotating out of, so for example, we have actually seen a lot of that in the last couple of, probably the last month. We've seen Nazat going down where the Dow was going up. Some of that can tell us that maybe the market or the big boys, the hedge funds, the mutual fund companies, all those guys are rotating out of tech. They feel like, hey, maybe these are, we've gotten good value out of here. Let's do some rotations. So maybe we sell out of some of those and we go into the safer big boys in the Dow. Okay. So that's part of what's going on. Okay. So Dow's up 300. Hey, these big companies that everybody knows are doing great. NASDAX down a little bit. Okay. You know what? I'm going to go, I'm going to dump out some of my dot-com stocks and go back into something that's bigger. And you could see where the technology, sometimes the technology is going to take off, sometimes it's going to wane. So you kind of see where technology is versus brick and mortar. Yeah, that can tell you. When the market gets to where we are right now, where we're very, very stretched on valuations and it's at all-time highs. Less of this is clear. You get a little bit more of what we call leverage, where people can borrow against their own stocks to buy more so they're not using their own real money. So evaluation is what the boys on Wall Street think that your company should be worth, and then I have to go ahead and meet their expectations. All right, let's move on. Yeah, exactly. Yep. Yeah, because I don't want you, because this is so easy. No, we could dig deep. So you keep me online here. I'm going to keep you online. Okay. Next one is inflation. CPI. So we talked about this earlier this morning. Talk to me about what inflation means and what the consumer price index tracks. Yeah, so basically it's measuring how much we're paying for stuff, right? So everything across the economy, anything from food to retail, our groceries are eating out, all of that is what the CPI is going to measure. Now there's smaller measurements that you get rid of core, which is food and transportation gas, that type of stuff. And so we measure it a little bit different that way. But overall, when you hear CPI, it's measuring the cost of broader goods across the whole country. Stuff, right. Okay. Because, again, there's a hard cost. Like, we've been talking about the price of...

roofing supplies for some reason is shot up exponentially. So we're warning people if you need to re-shingle your house, do it right now because you're seeing some big inflation in those. So that kind of brings that whole breadbasket of everything out there, minus your gas, which is going to be, you know, spikes going on and around and food. Okay. Now, here's the big question that I think people need to understand. I need to understand if inflation is dropping from 6% to 3% way. Yeah, is that great? Well, wait a minute. I don't see that at the grocery store. Why are people still complaining that groceries rent and everything else is so expensive when we've seen? And we talked about this yesterday. Biden had, you know, 21% interest or inflation going on. Trump's much smaller. But I'm still paying more. Right, right. So what that means is... say we're measuring 3% growth. We grew 3% last year. Year before that, we grew 20%. Now we're growing at 6%. Well, it's a cumulative, right? So you had 20% growth. We saw another 3%, another 3%. So the prices haven't necessarily come down. That's more of disinflation, right? The rate at which we're growing has come down, not deflation, which is deflation means... Like you deflate a balloon, right? So the prices are actually coming down. So there's a mix of that. What they measure is, hey, what are things costing on an ongoing basis? They're telling us, oh, we're growing at 3%. Well, we haven't come back down necessarily from the 20 to 40%. You know, the Big Mac hasn't gone from... We just stopped growing. I just stopped getting fatter. Exactly. So if I go on big... Okay, so let me see if this works. I go on vacation and I eat like a pig and I put on 10 pounds. Right. But then I come home and I'm just still eating, but not as much as I did when I was on a cruise. And I gained a little bit of weight. I haven't lost any weight. I just stopped gaining weight as much as I did on the cruise. Exactly. Perfect. Perfect example. So you've disinflated what your growth of your fat, right? But I'm not going to get skinnier. Until I go on that diet, and that diet is when we start having a what? Well, a recession a lot of times. Bingo. Deflationary is, recessions are deflationary, and they can be good. Really, we need recessions every five years, but we've gone on this stretch where the government has been pumping money in for so long. They're artificially propping up the economy, and so they're all proud that we're only growing at 3%, right? Ridiculous. But when we have a recession, people lose their jobs. Yes, and that's the negative side. The problem is right now you have 70% of the country that's struggling paycheck to paycheck. If we had a recession, they would benefit, right? So you've got 70% of people that are struggling, and so they're already working two to three part-time jobs.

So if the prices start to come down, then they're able to make it a little bit better. So, again, we need them more frequently instead of these big slam downs every 10 years or so. Right. But as a politician... Oh my gosh, if I have a recession under my watch, I'm going to get kicked out of office. Exactly. And that's the problem is the lifetime politicians become more motivated to stay in their office than they are to have a truly healthy economy. So they're just going to use our tax dollars to grow the economy by every dollar of GDP growth we borrow too. So is that really a growth? And now you know why I'm a classical economist, because once you start Let's be honest, during the Biden administration, we had modern monetary policy that just said, we're going to pump more money in there, and we're going to keep this sucker going by dumping as much money into the economy as we can. And that's how we'll keep everything going. But you see where, and that's where, you know, people want to get mad at me, but that American Rescue Plan and that Inflation Reduction Act did not reduce any inflation. In fact, they made it worse because the economy was starting to heat up as we got out of COVID. People are coming back out of their houses. They were going back to work. We were ready just to take off. And instead of using regular gasoline, they put aviation fuel in the gas tank, overheated the economy, caused the inflation to go through the roof. This is all in the Biden administration. Yep. Yep. $10 trillion in and stimulus. Yeah, just way, way too much. Inflation went through the roof. Trump came in, took out all the avgas, the aviation fuel out of it. Inflation's gone back to where probably should be. but it's not brought the prices down. So if you want to bring the prices down, people are going to have to lose their job in a recession, and nobody wants that. Boom. Yep, exactly. I should have studied economics in college. There you go. All right. I love it. All right. So we're going to do this. We're going to do this more often, Michael. We get a chance to kind of show people exactly what all this is. Because, again, Like when I worked in sports, people go, oh, you know, the QBR rating for a quarterback. I don't know what a QBR rating is. What's the war for this guy? What's the value of a replacement player? There's so many of these things that we throw out there. I think it's good that we just every once in a while reinforce them. So thank you for this morning. Absolutely. All right. I'll talk to you tomorrow, bud. All right. Sounds good. Have a great one. All right. All right. We'll continue with you. It's News Radio WRVA. I'm Rich Scherer. Coming up, we'll take another look at traffic right here on the Voice of Virginia News Radio, WRVA.