142: What We’re Reading VI – Low-Risk Earning, Current Car Markets, & Potato Chips

Welcome to The Invested Dads Podcast. Simplifying financial topics so that you can take action and make your financial situation better. Helping you to understand the current world of financial planning and investments. Here are your hosts, Josh Robb and Austin Wilson.

Austin Wilson:
All right. Hey. Hey. Hey, welcome back to The Invested Dads Podcast, the podcast where we take you on a journey to better your financial future. I’m Austin Wilson research analyst at Hixon Zuercher Capital Management.

Josh Robb:
And I’m Josh Robb, Director of Wealth Management, also at Hixon Zuercher Capital Management. Austin how can people help us with this podcast?

Austin Wilson:
We would love it if you would subscribe if you’re not subscribed. If you are subscribed, thank you. We publish new episodes every single Thursday and you subscribing is the best way to make sure that you have them first. And we would also love it if you would leave us a review on Apple Podcasts or Spotify or Google podcasts or wherever else you listen to podcasts. Please leave us a review. That will help other people find us very easily. Josh, today we’re going to be talking about once again, because we do this a lot. What we’re reading.

Josh Robb:
Oh, right.

Austin Wilson:
Because we’re reading a lot of things all the time. Why don’t you kick us off with your first interesting article?

Josh Robb:
Oh, article. I had a book. Fox and Socks by Dr. Seuss.

Austin Wilson:
Fox and Socks.

Josh Robb:
That’s a good tongue twister book.

Austin Wilson:
Classic.

[1:16] – Josh’s First Article: A Low-Risk Way to Earn with Ibonds

Josh Robb:
Oh no. My first article, obviously the markets have been very volatile the first half of this year.

Austin Wilson:
Wait really?

Josh Robb:
Yes. Crypto is down more than 50%. What if I told you I have a low-risk way to earn 9.5% or more?

Austin Wilson:
I’d say you’re crazy.

Josh Robb:
I would say Ibonds.

Austin Wilson:
Ibonds.

Josh Robb:
Yes. There’s article.

Austin Wilson:
Jess’s ears are ringing.

Josh Robb:
That’s right.

Austin Wilson:
Right through the wall next to us.

Josh Robb:
By the way, all these articles will be linked in our show notes.

Austin Wilson:
They will.

Josh Robb:
Ibonds are a government security. It has the backing of the US government, so it’s considered to be-

Austin Wilson:
Risk free.

Josh Robb:
They call it risk free. As a compliance person it’s like-

Austin Wilson:
Is there a chance-

Josh Robb:
2011 there was a chance of default.

Austin Wilson:
You’re saying there’s a chance.

Josh Robb:
It’s considered to be a risk-free investment in general. But the thing that’s neat or interesting about Ibonds is that they have an inflation adjustment to them.

Austin Wilson:
I, meaning inflation.

Josh Robb:
I think it did. It wasn’t like an Apple thing that they were putting on.

Austin Wilson:
Right.

Josh Robb:
But for instance, sales of these Ibonds have been elevated over the last year. In June, the last month I had data for, there was $3.4 billion worth of Ibonds bought.

Austin Wilson:
Whoa.

Josh Robb:
That’s more than 950% higher than they were a year ago.

Austin Wilson:
That’s probably because inflation is-

Josh Robb:
Yes. Because inflation-

Austin Wilson:
… 950% higher than it was last year.

Josh Robb:
Yes. Obviously, they track it. How does it work? An I Bond, you get actually a fixed rate.

Austin Wilson:
Yep.

Josh Robb:
Which is a constant rate. And then on top of that, they give you a variable rate that they set twice a year and that rises, and falls based on inflation. And they use consumer price index.

Josh Robb:
If you were to buy it now, you could earn 9.62% was their last one. That will reset again, I believe in October. And so anytime you buy it from now, until they reset it, you get six months’ worth of that.

Austin Wilson:
They are reproving that.

Josh Robb:
Even if they move it in October, if you bought it the week before they adjusted it, you get six months’ worth of that interest rate before they adjust you.

Austin Wilson:
I bet there are going to be a lot of people doing that. Because inflation’s coming down.

Josh Robb:
Let’s say, worst case scenario-

Austin Wilson:
Hopefully.

Josh Robb:
Worst case scenario, you were to buy it right now or early on when they adjusted that rate and then inflation went to zero, not going to happen.

Austin Wilson:
Right.

Josh Robb:
And so they readjust the rate and you’re getting a 0% return because they readjusted it. You would still over the course of that 12 months, get a 4.8% return.

Austin Wilson:
There you go.

Josh Robb:
Based on where it’s at now. That’s pretty crazy.

Austin Wilson:
The real question is-

Josh Robb:
Yes.

Austin Wilson:
… why doesn’t everyone buy millions of dollars of this?

Josh Robb:
Yes. First one is that they have restrictions on the amount you can purchase. You can buy each person, individually can buy $10,000 worth of Ibonds per calendar year.

Austin Wilson:
A married couple can buy $20,000?

Josh Robb:
Each can buy it. And it’s per calendar year. You have to buy it directly from the government. They have a website set up for it. We’ll get to that in just a second. And then you can also, if you get a tax refund use up to an additional $5,000 of your refund to buy. You can get $15,000 total there. Now it’s per person. There are some caveats. You can’t have some trusts and things buy it as well, but in general, per person, but includes kids. There’s no income restrictions. It’s not like a Roth where you have to have earned income or anything.

Austin Wilson:
Ya.

Josh Robb:
You can buy it for other people as well. The other thing is there’s some restrictions on it on the other end. You must hold it for one year. There’s one-year minimum holding. Then after that, if you sell before five years, you have to give up the last three months of interest.

Austin Wilson:
Gotcha.

Josh Robb:
There’s, I don’t want to call it penalty for selling early. You’re giving up interest so they don’t lose money on that.

Austin Wilson:
You just get less.

Josh Robb:
Yep. You get less.

Austin Wilson:
Yep.

Josh Robb:
Those are two reasons why people may not just go all in on it. It’s not liquid in the first year. And then after that, there is a short little penalty. Then the last one is you can’t really aggregate it with anything else. It’s not like if you use a custodian, you can buy these and put it into your account. It has to be through the government.

Austin Wilson:
Yeah.

Josh Robb:
On that site. The site is horrible. I think it was created by Al Gore as the first test-

Austin Wilson:
For the internet.

Josh Robb:
… for a website. Yes. I’m pretty sure it’s just archaic. It’s clunky. It’s old. In fact, and I don’t think this is a security feature. I think it’s just stupidity. You can’t type in your password. You have to use your mouse and click the letters and numbers on a keyboard on the screen to type your password in.

Austin Wilson:
Oh, my.

Josh Robb:
Now, maybe that is for security purposes. I don’t know.

Austin Wilson:
Yeah, bots can’t do that.

Josh Robb:
I don’t know. But it is archaic. So that is something to know. But if you’re looking for something on some money that you don’t plan on using within the first year for sure, but in the next five years and you think inflation’s going to stay at least elevated, it’s going to yield more than your savings account theoretically.

Austin Wilson:
Yes.

Josh Robb:
Inflation’s not probably going to get down to a half a percent, which is about where an average savings income is.

Austin Wilson:
Yeah, exactly.

Josh Robb:
And even those high yields are just about what, 1.2%.

Austin Wilson:
Yep.

Josh Robb:
Theoretical, if you don’t need the money and you can afford to wait that timeframe, that’s an option.

Austin Wilson:
Speaking of archaic.

Josh Robb:
Yes.

[5:55] – Austin’s First Article: The Current Car Markets

Austin Wilson:
My first article, it is says headline from CNBC, linked in the show notes. “Consumers are shelling out an average $10,000 more for used cars than if prices were “normal” research shows.”

Austin Wilson:
The average price for a used car is $33,341.

Josh Robb:
Ouch.

Austin Wilson:
Which is $172 below the peak from March according to a research firm called CoPilot. Nearly new vehicles. These are used vehicles only one to three years old.

Josh Robb:
Okay.

Austin Wilson:
They have an average listing price that is $13,145 more than it would be if typical depreciation had occurred over the past two years. The nearly new cars really haven’t depreciated as far as values go over the last couple years.

Austin Wilson:
High used car prices have pushed the average trade in value above $10,000 for the first time ever.

Josh Robb:
That’s the average trade in.

Austin Wilson:
Average trade average trade-in value.

Josh Robb:
Okay.

Austin Wilson:
Dealers want-

Josh Robb:
So my junk car-

Austin Wilson:
… want to sell your used-

Josh Robb:
My junker.

Austin Wilson:
Yeah. They want to sell your used car so they’re giving you more money for it.

Josh Robb:
Because they know they can sell it for a higher price.

Austin Wilson:
Because they know they can sell it for more money. It’s just crazy.

Josh Robb:
By the way, the average new car price is $47,100 and some dollars.

Austin Wilson:
Wow.

Josh Robb:
But so $47,000 and you said the average used car is $33,000.

Austin Wilson:
Yeah.

Josh Robb:
For an extra $14,000, you could get a brand new car.

Austin Wilson:
Well, and the interesting thing is if you have a warranty. What’d you say, $47,000?

Josh Robb:
Yeah.

Austin Wilson:
The average, nearly new vehicle, yeah. Is $42,314.

Josh Robb:
Geez. What are you giving up?

Austin Wilson:
Why don’t you just buy a new one?

Josh Robb:
Yeah, might as well.

Austin Wilson:
Yeah. For a couple thousand dollars.

Josh Robb:
And you probably get a warranty.

Austin Wilson:
You get a brand-new car that no one’s-

Josh Robb:
Yeah. Maybe they’ll throw in a little car air freshen or something for you?

Austin Wilson:
Yeah. What a deal?

Josh Robb:
Or like those big, that one dealership does those big Shamu inflatables.

Austin Wilson:
Ooh.

Josh Robb:
Have you seen that? Oh yeah. I don’t know how you can afford not to.

Austin Wilson:
There was a quote from CoPilot CEO and founder, Pat Ryan that said, “Despite the signs of a slowing economy, rising interest rates and high fuel prices, the used car market is holding firm, which is why the near record used car prices are still what we’re seeing, even though things are slowing down a little bit.” Consumer buying remains strong, at least partly due to spill over demand from the new car markets, so that-

Josh Robb:
Or can’t find it.

Austin Wilson:
…forcing people to buy used.

Josh Robb:
People come over. Yep.

Austin Wilson:
Supply chain issues is another one. Primarily on ongoing chip shortage have left dealer lots with fewer vehicles to sell. Something that hasn’t changed.

Josh Robb:
Every time I hear chip shortage, I get a little anxious that they’re talking about potato chips. Then I remember it’s not, so then I calm down.

Austin Wilson:
I know because you got to have your chip.

Josh Robb:
Yeah. Don’t stress me out.

Austin Wilson:
What’s your favorite chip flavor?

Josh Robb:
Chip flavor? I do the salt and vinegar.

Austin Wilson:
Okay.

Josh Robb:
I love the salt and vinegar.

Austin Wilson:
Those things taste like vomit.

Josh Robb:
I can eat those any time of day. Oh, they’re so good. Oh man.

Austin Wilson:
I’m a salt and pepper guy.

Josh Robb:
Okay. Yeah. That’s good.

Austin Wilson:
Like a kettle chip. Salt and pepper.

Josh Robb:
Oh yeah. That’s good.

Austin Wilson:
That’s my jam. My wife likes the barbecue.

Josh Robb:
Oh barbecue. My oldest daughter loves those. And sour cream and onion I’ll do every once in a while, just to mix it up. I love just plain regular ones with like a chip dip.

Austin Wilson:
Oh, like a Ruffle?

Josh Robb:
Yeah. And then you have it with-

Austin Wilson:
Sour cream and onion dip or whatever or French onion dip?

Josh Robb:
Yes.

Austin Wilson:
Oh that’s some good stuff right there.

Josh Robb:
Yeah. And then they had these chips and it was flavored with it’s like a steak house flavor.

Austin Wilson:
That sounds really good.

Josh Robb:
It reminded me of, if you go to a steakhouse and you order fries and they’re on the same plate as your steak and the juices of the steak absorb into the fry.

Austin Wilson:
Oh yeah.

Josh Robb:
You take a bite of it, but it’s crispy. That’s what it was.

Austin Wilson:
That’s awesome.

Josh Robb:
And it actually was pretty good.

Austin Wilson:
That’s awesome.

Josh Robb:
I actually enjoyed it a lot. But it’s one that you have a weird after taste afterwards because it’s like steak.

Austin Wilson:
Need to wash down with something.

Josh Robb:
Yeah. Chips.

Austin Wilson:
A couple more thoughts on used cars. That was our chip detour. The amount consumers are paying above normal also depends on the age of the car. This is where I came to that point earlier. Nearly new vehicles, one to three, have an average listing price of $42,314, which is bonkers. Which is $13,145 like I mentioned earlier, more than it would’ve been on a normal depreciation schedule.

Josh Robb:
Yes.

Austin Wilson:
By contrast vehicles that are eight to 13 years old, come with an average price of $18,038 or $5,416, 43% more than the previously forecast depreciated amount.

Josh Robb:
That’s crazy.

Austin Wilson:
Absolutely crazy. But that category the eight- to 13-year-old range, that’s the one that actually has been trending downward for a couple months. Not the nearly new ones. Here’s some interesting points too. Typically, you and I would say in most cases, especially when you’re buying a vehicle, the depreciating asset, we would recommend if you can, paying cash is better because it’s depreciating.

Josh Robb:
Yes.

Austin Wilson:
It’s not ideal, but most people finance vehicles with loans.

Josh Robb:
Yes.

Austin Wilson:
Here are some interesting figures. Be prepared for sizable monthly payments. The average monthly payment over 70.3 months, which is a couple months shy of six years is around the average.

Josh Robb:
That’s crazy.

Austin Wilson:
$678 a month.

Josh Robb:
Do most people have their car for six years?

Austin Wilson:
I don’t know.

Josh Robb:
What’s the average length of owning a car?

Austin Wilson:
Oh I don’t. That’s a great.

Josh Robb:
Hey, I know I look at the cars I’ve had and I’m past there.

Austin Wilson:
Yeah. But that is a good question.

Josh Robb:
In general, I wonder what the average length of owning it is. If you still owe money on the car when you’re ready to switch it out.

Austin Wilson:
Yeah. That’s the average of a new vehicle. Now used vehicles, still over about the 70.8 months.

Josh Robb:
Used. Yep.

Austin Wilson:
Used vehicle loan $555. That is just crazy. And interest rates have ticked up. Average new car interest rate, 5%. Average used car loan 8.2%.

Josh Robb:
Yeah. Don’t do that.

Austin Wilson:
Don’t do that. That’s me. That’s my number.

Josh Robb:
I’m just having a hard time comprehending 45% increase in those prices, roughly between those two newer and older used cars. That’s a huge increase in used car prices.

Austin Wilson:
Yeah.

Josh Robb:
If you have a car you don’t need, you can make bank.

Austin Wilson:
Oh, absolutely.

Josh Robb:
If you’re not replacing it, but just getting rid of it.

Austin Wilson:
Oh yeah. What if you’re like a retired couple closing two cars to one car?

Josh Robb:
Yeah, that’s it?

Austin Wilson:
This is the time of your life.

Josh Robb:
Or you just say we can survive for a little while on one car.

Austin Wilson:
I know.

Josh Robb:
That’s it.

Austin Wilson:
I’ve thought about that with as close as I live to work. I can’t make it work, but it’s so tempting.

Josh Robb:
Should have done it in the early spring when you could have nice weather-

Austin Wilson:
Right. Walk to work.

Josh Robb:
… for a handful months and hope the prices come down by the time winter sets in and you need a car.

Austin Wilson:
Which clearly, they haven’t.

Josh Robb:
They have not. Well, you said a little bit.

Austin Wilson:
A little bit, yeah.

[11:52] – Josh’s Second Article: Home Builder Sentiment

Josh Robb:
Okay. My next article is talking about home building. uTrack being our research analyst, all the fun, different surveys. So, sediment.

Austin Wilson:
Yep.

Josh Robb:
Is the-

Austin Wilson:
Sediment like the stuff-

Josh Robb:
The rocks and the ground.

Austin Wilson:
… with the ground, layers.

Josh Robb:
Yep. Yep. Home builder sediment, that’s the foundation they put everything on is down. They must be putting deeper foundations.

Austin Wilson:
Oh, you must mean sentiment.

Josh Robb:
Sentiment. That’s a better word.

Austin Wilson:
Yeah.

Josh Robb:
I like that. Their opinions, their feelings are down. And the last reading we got was for July. And so, in the article, they’re talking about the confidence among builders. This is not looking at people in the housing market, but the actual workers, the builders that are building new homes. Confidence among builders in the nation’s single family housing market fell in July to the lowest levels since the start of the pandemic.

Austin Wilson:
Wow.

Josh Robb:
Which is crazy in that we’ve seen lumber prices go down. It’s getting a little bit better for them to build. And the pandemic, obviously nobody wanted to build because you were stuck with everything shut down. That was interesting to me.

Josh Robb:
And the National Association of Home Builders and Wells Fargo, they do a housing market index. They found that sentiment dropped 12 points to 55 and sentiment stood at 80 in July of last year.

Austin Wilson:
It dropped.

Josh Robb:
We went from 80 to 55. That marks the largest single month drop in the 37-year history with the only exception being April of 2020 when that just fell off the cliff, which I would call an outlier.

Austin Wilson:
Right.

Josh Robb:
But if we’re the second worst one after that, that’s-

Austin Wilson:
Pretty bad.

Josh Robb:
… pretty intense. Yeah. The average rate on a 30-year fixed mortgage. You just talked about this. Interest rates are going up. It has nearly doubled since January and is now around 6% for a mortgage, 30-year mortgage. When they did this survey, they also looked at what was going on and they found that of the new home contracts or existing home contracts that they were building 14.9, I’ll round up to 15, 14.9% of those contracts fell through in June. In other words, they were canceled. That’s causing some problems. And then the price of a newly built home. This is the average price. In May, was the last one they had these numbers for, was $449,000.

Austin Wilson:
Wow.

Josh Robb:
It was $450,000 is the average price for a new home. That’s up 15% from a year ago.

Austin Wilson:
15%.

Josh Robb:
And that’s with lumber prices coming down and some of those other things. Inflation has really hit them. 13% of the builders that they did in the survey reported that they’ve been reducing home prices this past month to help limit cancellations and improve their sales.

Austin Wilson:
Whoa.

Josh Robb:
The houses they’re building and then trying to sell, they’re actually lowering those prices to try to get rid of them.

Austin Wilson:
Crazy.

Josh Robb:
Obviously we have production bottlenecks, rising building costs and high inflation. We’re seeing then they’re slowing down construction and we already know there’s a shortage, so this is not helping. And so, we’re going to continue to see higher prices I think for a while. In that, when you aren’t building enough homes to keep up with demand, that’s going to be a problem.

Austin Wilson:
I know crazy. It’s all about supplying demand.

Josh Robb:
Yes.

[14:50] – Dad Joke of the Week

Austin Wilson:
All right, Josh. Hit me up.

Josh Robb:
All right.

Austin Wilson:
Dad joke of the week.

Josh Robb:
Dad joke of the week. My wife and I went on a trip a little while ago. This is pre COVID. I don’t know how many years ago, but we did a trip, and it was a cruise. And part of that we did an excursion, and it was swimming with the dolphins. Pretty fun.

Austin Wilson:
Oh, I’ve always wanted to do that.

Josh Robb:
Ever done that? Never done it. It’s fun. Very intense. Very strong.

Austin Wilson:
Oh, yeah.

Josh Robb:
Kind of expensive.

Austin Wilson:
Yep.

Josh Robb:
You know, what’s more expensive? Swimming with sharks.

Austin Wilson:
Tell me why.

Josh Robb:
Cost me an arm and a leg.

Austin Wilson:
Ha, ha, ha. I’ve always told Jenna. I would totally go shark swimming. Not like big sharks, but you go with, there are tours.

Josh Robb:
Nurse sharks. Nurse sharks. They’re nice.

Austin Wilson:
Or their tours where they go to an area where they know there’s a lot of sharks, but they don’t bother people because there’s so much-

Josh Robb:
Food.

Austin Wilson:
… food to go around. I thought that would be so cool.

Josh Robb:
I would do the cage one.

Austin Wilson:
With a great white?

Josh Robb:
Yeah. I would do that.

Austin Wilson:
Yeah. Let’s go.

Josh Robb:
In the cage though.

Austin Wilson:
Yeah, that’s cool.

Josh Robb:
I’m not going out, but I’ll be in the cage.

Austin Wilson:
Sharks are not, they’re scary, but they’re not the worst things in the world. Right?

Josh Robb:
They’re up there. But yeah, you’re right. I mean, yeah. You look at the statistics of shark attacks versus other things and-

Austin Wilson:
Right.

Josh Robb:
But if you’re actively putting yourself in the middle of them, that’s a whole other story.

Austin Wilson:
Shark bait.

Josh Robb:
Shark bait is-

Austin Wilson:
Oh, ah.

Josh Robb:
Good times. Good times. Shark week. Great time in the year.

Austin Wilson:
It is. I actually saw-

Josh Robb:
In July.

Austin Wilson:
… I haven’t watched it, but there was this segment talking about these sharks that go up on beaches. They go from the ocean-

Josh Robb:
They come on up to get you?

Austin Wilson:
Yeah. I don’t know what-

Josh Robb:
Land sharks?

Austin Wilson:
I don’t know if they crawl on their bellies or what they do, but real. It’s real.

Josh Robb:
Oh man.

Austin Wilson:
It’s on shark week. It has to be real.

Josh Robb:
You’re no longer safe.

Austin Wilson:
I know. But that’s like those bull sharks that swim with the rivers.

Josh Robb:
Oh, up. Yeah. That’s the crazy thing.

Austin Wilson:
That freaks me out.

Josh Robb:
I’m at freshwater. I should be okay.

Austin Wilson:
Yeah. You’re in Texas in a river. Nope. Bull shark.

Josh Robb:
Nope.

[16:30] – Austin’s Second Article: Europe Affordability

Austin Wilson:
All right. My second article titled Americans who can’t afford homes are moving to Europe instead.

Josh Robb:
Yep. On my way.

Austin Wilson:
This is a Bloomberg article. You may not have access to it. We have a Bloomberg-

Josh Robb:
Just trust Austin.

Austin Wilson:
We have a Bloomberg subscription. But more Americans are relocating to Europe driven across the Atlantic by rising cost of living, inflated, house prizes, a surging dollar and political rancor at home. They’re annoyed with politics. They’re a really strong dollar. Inflation’s high, but your really strong dollar also goes very far in Europe right now. Some thoughts there. House prices ridiculously expensive right now.

Josh Robb:
Just talked about it.

Austin Wilson:
As you just talked about. A couple of the most popular destinations are Italy, Portugal, Spain, Greece, and France. Sotheby’s is a real estate or auction agency. They said requests from Americans looking to move to Greece was 40% in the April to June period compared to a year earlier.

Josh Robb:
Because they have a stable government.

Austin Wilson:
Yeah, yeah, exactly. In France and Italy, US demand is the highest it’s been in three years according to the Knight Frank real estate specialist.

Josh Robb:
I mean it’s a bad stat. Three years, two of those years, you can’t go anywhere. Hey, I’m just saying.

Austin Wilson:
I’m just bringing you the news, Josh.

Josh Robb:
I gotcha. I gotcha.

Austin Wilson:
The news. And Americans made up 12% of Sotheby’s Italian revenue in the first quarter compared to just 5% a year ago. Retirees have been looking to do that as well. A lot of that is due to real estate in Europe is relatively cheap, particularly in smaller towns and cities and remote work is more available.

Josh Robb:
Yeah.

Austin Wilson:
That’s something there. One example is that the euro and the dollar have reached parity for the first time since 2002. $1 equal one euro, which means you could really travel Europe for about 20% less than you could about a year ago.

Josh Robb:
Because it’s cheaper than-

Austin Wilson:
Yeah. In relative terms. Now they’re facing inflation like we are here so it’s all relative.

Austin Wilson:
Couple examples. There was an Atlanta based lady, 40-year-old. She was wanting to buy a home in Italy. It came true because she was paying $3,000 a month for a four-bedroom house to rent in Atlanta. And she found it impossible to buy a home that she wanted to do with her $300,000 of cash she had on hand. She turned to Italy, and she was able to buy a 3,100 square foot house in Mussomeli, Sicily.

Josh Robb:
Oh nice.

Austin Wilson:
As well as a smaller home next door and an 800 square foot storefront for 60,000 euros.

Josh Robb:
And that’s at parity.

Austin Wilson:
Yeah. $60 grand.

Josh Robb:
It cost her $60,000 roughly. That’s crazy.

Austin Wilson:
Crazy. Another example, Miami based lady named Kathleen Kirk, she ended up buying a three bedroom, three story home in Mussomeli, the same village as that other lady-

Josh Robb:
Oh, best friends, probably.

Austin Wilson:
… for 37,000 euros last November. She’s planning to retire in a couple years. She is an officer with Homeland Security, and she wanted to move to a country where she could live comfortably on a public pension. And she’s able to do that with buying a house for $30 grand.

Josh Robb:
Yeah, buying a house for $37,000, yeah.

Austin Wilson:
Craziness. Anyway, that’s just something interesting that’s going on right now.

[19:24] – Josh’s Third Article: Toys ‘R’ Us & Macy’s Partnership

Josh Robb:
All right. I’m going to jump on Zillow. All right. My third and final article is exciting for me, Toys ‘R’ Us. It’s back.

Austin Wilson:
It’s back with Geoffrey the Giraffe.

Josh Robb:
Yes. Geoffrey the Giraffe is back. I love Toys ‘R’ Us. It’s a fun place to go. We would take our kids every year in November-ish timeframe, and they would have those little scan guns like you do for registries for wedding registries or baby registries. But at Toys ‘R’ Us, you could give it to your kid, and they could scan and create their own Christmas list.

Austin Wilson:
Print it.

Josh Robb:
And then you could edit it yourself and then send it to family members to help them out. That was always a fun trip for us. Kids loved it. Toys ‘R’ Us went bankrupt back in 2018. Closed all their stores. And so they’ve just announced that they’re partnering with Macy’s and they’re going to have a toy shop in all of their US stores.

Austin Wilson:
Wow.

Josh Robb:
That’s their goal this year. They’ll feature hands on demonstrations, little tables to play with stuff, interact with toys. And every place will have a life size Geoffrey the Giraffe on a bench for photos for all the nostalgic adults. Because the kids will be like, “Why am we taking a picture with this draft? It’s weird.”

Austin Wilson:
Mom and dad are like, “Do it. It’s Geoffrey.”

Josh Robb:
“I have a picture when I was a kid.” They announced this back in 2021 and they’ve put some in their big flagships and they’re slowly expanding it out. They did note that Macy’s toy sales were up 15 times higher in their first quarter compared to before they announced this with-

Austin Wilson:
Really?

Josh Robb:
That seems to help.

Austin Wilson:
I’ve always wondered why we don’t have a Macy’s here in Findlay.

Josh Robb:
Yeah. Interesting. I don’t know.

Austin Wilson:
Big enough city.

Josh Robb:
There was one in Lima. Well, don’t go to Lima.

Austin Wilson:
Yeah.

Josh Robb:
You could go there for Macy’s that’s what you do.

[21:00] – Austin’s Third Article: Strong Dollars Earnings Impact

Austin Wilson:
Exactly. All right. My last article. Strong dollars earnings impact. The strong dollar is likely to negatively impact corporate earnings. This is from Investopedia. Links in the show notes. For the first time in 20 years, talked about this a second ago. The US dollars about parity with the euro and it’s hit a 20 year high against the Japanese Yen.

Josh Robb:
There you go.

Austin Wilson:
It’s about one for 100 or so right now. The euro has been under pressure amid concerns that high fuel prices in Europe will push the continent into recession. While a strong dollar can be good for US consumers buying imported goods or traveling to other countries, the strong currency often has a negative impact on corporate earnings. A stronger dollar will make American products more expensive in Europe and Japan. And we’ve had early warnings from Nike and Microsoft showing the dollar’s gain this year will make second quarter sales and profits look weaker than they are for many companies.

Tech companies could be especially hit hard since they get most of their sales from outside the US. Companies like Apple, Meta platforms, Facebook, Alphabet, Netflix, all going to be hit by the strong dollar. The dollar index, this is the dollar compared to a group, a basket of other currencies from around the world, it’s up about 16% this year hitting the highest level since 2002, recently. According to Morgan Stanley, that could translate into a fall of about 8% in earnings per share for the S&P 500 just on-

Josh Robb:
The movement of the dollar.

Austin Wilson:
… currency alone.

Josh Robb:
Wow.

Austin Wilson:
Crazy. The dollars also expected to keep gaining strength, at least until the Federal Reserve changes its monetary policy. The aggressive interest rate hikes have added to the dollar’s strength. And what this really is caused by is interest rate differential. Our interest rates are now higher than a lot of the worlds, so people are flocking to the dollar for higher interest.

Josh Robb:
That’s right.

Austin Wilson:
Where that’s not what they have been able to do for a little bit of a while since we had zero interest for a long time. Here’s a quote from the editor in chief at Investopedia. “As the US dollar remains strong, the currencies of emerging markets are at multi-year lows and the Japanese Yen is at a 20-year low. That is making the odds of a global recession more likely.”

Josh Robb:
Okay.

Austin Wilson:
Definitely going to be an impact earning season.

Josh Robb:
Pessimistic.

Austin Wilson:
As we’re already seeing. As Americans, we think strong dollar, very good and in some ways it is.

Josh Robb:
Outside sales. Not good.

Austin Wilson:
Your dollar goes very far when you’re buying things in not dollars. However, it does have an impact when you’re looking the other way.

Josh Robb:
Great articles. The best ever. I think they were amazing articles to read and or listen to.

Josh Robb:
Now, as a reminder, we have the Investopedia second half stock draft of 2022.

Austin Wilson:
Oh, we do. I’m not winning. You’re not either.

Josh Robb:
I’m not. I’m in the middle. Although I went from last place to 10th place and that was pretty good. Went from 21 to 10. That’s a pretty good jump.

Austin Wilson:
That’s good. Hey. There you go.

Josh Robb:
But it’s not too late for you to enter. And in fact, you enter now you’ll be probably beating us or really close to that. Join us. You could go to our website. There’s information there on our Facebook page or wherever you can get that. We also did a podcast a while back on all the information and the rules. Check that out, join us. It’s free. It doesn’t cost anything.

Austin Wilson:
Absolutely.

Josh Robb:
It’s not real money.

Austin Wilson:
Yeah. Thank you for being here. We will have another episode out next Thursday. But until then, share this episode with anyone you think would be interested in one of those articles that we were talking about today. And please remember you can always email us any ideas or questions to hello@theinvesteddads.com. Well until next Thursday, have a great week.

Josh Robb:
All right. Talk to you later. Bye.

Thank you for listening to the Invested Dads Podcast. This episode has ended, but your journey towards a better financial future doesn’t have to. Head over to Theinvesteddads.com to access all the links and resources mentioned in today’s show. If you enjoyed this episode and we had a positive impact on your life, leave us a review. Click subscribe, and don’t miss the next episode. Josh Robb and Austin Wilson work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin or any podcast guest are solely their own opinions and do not reflect the opinions of Hixon Zuercher Capital Management.

This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that the statements, opinions or forecast provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses, which would reduce returns. Securities investing involves risk, including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.