In this episode of Rush to Reason, dive into the complexities of economic policy and the factors influencing the current housing market slump. Host John Rush unpacks the recent tax reforms that have provided significant relief for businesses and individuals alike, offering a much-needed boost to the economy. Special guest Phil Kerpen discusses the impact of federal decisions on everyday Americans and the potential solutions for the ongoing housing crisis. Listeners can gain valuable insights into the interplay between federal policy and personal finance. From understanding the benefits of accelerated depreciation for businesses to exploring the role of the
SPEAKER 08 :
This is Rush to Reason.
SPEAKER 20 :
You are going to shut your damn yapper and listen for a change because I got you pegged, sweetheart. You want to take the easy way out because you’re scared. And you’re scared because if you try and fail, there’s only you to blame. Let me break this down for you. Life is scary. Get used to it. There are no magical fixes.
SPEAKER 08 :
With your host, John Rush.
SPEAKER 20 :
My advice to you is to do what your parents did.
SPEAKER 19 :
Get a job, sir. You haven’t made everybody equal. You’ve made them the same and there’s a big difference.
SPEAKER 17 :
Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life. That there’s something wrong with the world. You don’t know what it is, but it’s there. It is this feeling that has brought you to me.
SPEAKER 19 :
Are you crazy? Am I? Or am I so sane that you just blew your mind?
SPEAKER 18 :
It’s Rush to Reason with your host, John Rush, presented by Cub Creek Heating and Air Conditioning.
SPEAKER 10 :
All right, hour three, Rush to Reason, Denver’s Afternoon Rush, KLZ 560. Been a busy day so far. Wednesdays typically are, by the way, halfway through the week for most of you. A hump day, as most call it. And we do health and wellness, of course. For those of you maybe that don’t listen, we do health and wellness for the first hour or so. on Wednesdays, and then Richard Battle joins us. We talk some politics, do some things along those lines. And then typically in this last hour, I try to put as many things in. Scott Garlis normally joins us at 530, and I try to put as many things in on the financial end of things as I can. It doesn’t always work out quite that way, but I do try to make Wednesdays that way because I feel like the health and wellness ends of things is the start. We then have Richard Battle follow up. We do some leadership things and some things along those lines and, you know, political stuff as well. And then the last hour, I try to talk about the financial end of things, because to me, that’s part of the health and wellness end of things. Not that we do health and wellness all three hours, but I do try to incorporate as many things along those lines as we possibly can. So anyways, I appreciate each and every one of you that join us and the questions that come in and the text line. And I will say that when I’m by myself, like on days like today, if i don’t get back to you quickly on the text line just know that i may read it scan it and i’ll get back to you as quickly as i can doesn’t always work that way but i do my very best and you may only get a you know one word two word answer and That’s why. So it’s not because I haven’t read it or I’m not paying attention. I do my best to do that while I’m on air. But when I’m by myself and I’m trying to talk and type and do all these things at one time, it does make it a little bit more difficult in that way. So the bridge to nowhere. Governor Polis, people that voted on the – we talked about this last week. I gave out the website where you could go and you could vote and so on, give comment on. Overwhelmingly, 90-plus percent people that responded said, heck no. We don’t want that. And thankfully, that’s the case. So the bridge to nowhere has been canceled. In fact, Polis said that he would chain himself to the Capitol to make sure that that doesn’t move forward. And I’ll talk about that here once we’re done with Phil Kirpin. Phil, welcome. What’s going on today, sir?
SPEAKER 03 :
Well, I will just tell you the one bad thing about all the lockdowns and the COVID craziness being over is that the traffic in Washington, D.C. is so out of control now. You cannot get anywhere without spending an hour in the car. So that’s the downside of getting all these federal workers back in the office if you live here like I do.
SPEAKER 10 :
No, same thing. What’s going on here? Same thing here. No, I can attest to exactly the same thing. I was telling somebody the other day that during COVID, I could pretty much drive where I wanted to in a matter of minutes.
SPEAKER 03 :
It was the best. Yeah, now it’s not. I’ll tell you even the craziest thing. D.C. actually suspended all parking enforcement for like a few months during COVID. Wow. So I could just park wherever I wanted. That was nice. That was insane.
SPEAKER 10 :
All right, talk to us. Speaking of all that, speaking of the economy and the big, beautiful bill and some of the things that have happened and even some of the results that we’ve seen happen on tariffs, we saw a deal made with Japan. Talk to us about the economy, where we’re at, and what’s going on.
SPEAKER 03 :
Well, we’ve got a lot of positives right now. I think the big, beautiful bill lifted the biggest fear and uncertainty that had been hanging over the economy, which was the possibility of a massive tax hike coming at the end of this year. And I think a lot of people expected we were going to spend most of the year figuring out what was going to happen on tax. And instead, the president and the speaker made good on what they said they were going to do, and they cleared it by July 4th. So I think there’s a big sigh of relief from everyone in business in this country that not only They’re not going to be a big tax cut coming at the end of the year, but we got a pretty significant tax cut in a lot of ways out of that bill as well, especially for capital investment. And the capital expenditure provisions, 100% depreciation, first-year write-off for equipment and software, now for qualified production facilities as well. For the first time, we’re going to have structures that are subject to accelerated bonus depreciation. Huge, huh?
SPEAKER 10 :
And you want to stop for a moment there, Phil, because one thing I haven’t really covered much on the program, but that’s huge for all of you listening. And most would know this, but some Phil won’t. And the reason why that’s such a big deal is when you’re looking at, you know, even if you’re a foreign entity and you’re looking at bringing a plant here or you’re looking at. You’re an American company and you want your General Motors and you want to bring a factory back here from wherever, Brazil, Mexico, Canada, wherever it happens to be. The ability to take that infrastructure that you’re building internally and be able to have that depreciation in that particular year and help that out against your taxes, your tax burden, I should say, that is huge.
SPEAKER 03 :
It’s massive. And in fact, you know, we talk a lot about how the tax cuts were going to expire at the end of this year. And that was true for most of them. But the expensing provisions had already started to expire. That’s right. That’s right. They’re ticking down already. So we’re only at 40 percent bonus. That’s right. Until this passed. But the thing that was so smart about what they did is every version of this bill, as it was moving forward, said they were going to bring back expensing retroactive to January 19th, retroactive to when Trump came back into office. And so I think we actually saw a lot of capital expenditures pick up even in anticipation of the bill passing because companies are like, I’m going to be able to write this off by the time we do our taxes. And in fact, they were right. And if you look at what’s happened this year, capital expenditures are up pretty substantially. And that’s really important because capital investment… raises productivity. And you need to have productivity growth to have wage growth. People need to be able to produce more if you’re going to pay them more. And so it’s really positive. And in fact, we now, real weekly earnings, median real weekly earnings just now in the latest data released from the Bureau of Labor Statistics are back where they were at the peak during the previous Trump term. So we have now gotten out of the hole that we were in because of Biden’s inflation and weak economy. And now finally, The average, the median worker, they’re making as much in real terms, inflation adjusted as much as they were before Biden. So it took a long time to dig out of that hole. But, you know, in another sense, it kind of didn’t take that long. Trump’s been in six months and, you know, we’re back to very positive economic outlook, I think. And, you know, the regulatory policy has been outstanding as well. The energy policy has been outstanding. The big is kind of remaining piece of the puzzle is the trade front. And so as we see these deals come together, we may be able to resolve that one also.
SPEAKER 10 :
Yeah, and last but not least, and I don’t know where you stand on this, but the Fed, in my opinion, to get housing back up and going against the one piece of the puzzle with everything you’ve said, spot on, agree with everything. The one thing, though, that we’ve got to get back on track is the housing end of things. It’s in a slump right now, and until the Fed decides to do something, and before somebody texts me or emails me and tells me that short-term rates don’t affect mortgages, True, not directly, but they do as time goes by. So please don’t send me that. I know how all of that works, structurally speaking. I also know that when the Fed lowers rates, mortgage rates will follow. Maybe not directly that day, but they will follow, Phil. And right now it’s stagnant.
SPEAKER 03 :
Well, I think we’ve got to have some restraint on federal spending, because I think a lot of the reasons that the long-term interest rates have stayed stubbornly high, even last year when the Fed cut short-term rates, long-term rates didn’t really budge. A lot of that’s just the expectation that inflation’s going to come back, because people look at the federal budget outlook, and they just assume there’s going to be a lot of money printing when we try to meet all these obligations. So I’d like to see Congress do a lot more on spending. I do think we’re going to have a very different Fed next year when there’s a new chair there, and I hope that I hope they take the view that the job of the Fed is just to have a stable and predictable growth of the money supply and let the market determine everything else. I think that’s the right approach, and that’s where I’d like to see them go. Now, all of that said, I think that the best idea that I’ve heard recently for dealing with this housing situation is to reform the capital gains tax. And the president floated this idea of making primary residences totally exempt. I actually prefer… uh… ted cruz’s idea which is to put an inflation adjustment in the basis for capital gains on all assets and so if you sell stock you sell a home you sell any other kind of property you shouldn’t pay tax on the total nominal increase in price if a lot of that was inflation true you should only pay tax on the inflation adjustment increase if there is any and i think if we can do that and i’m hoping that’ll be the centerpiece of the next reconciliation bill i mean that’s such a good idea if we could do that you’re going to have a lot more housing inventory come onto the market because you’re going to have a lot of houses where people can sell with much less of a tax bite than they’re looking at right now.
SPEAKER 10 :
Phil, I’ll tell you, the other thing that that would do as well, I think, and this is a whole side note that most people don’t ever think about, but you talk about businesses and small businesses and they may have the opportunity to own the building that their business is in. And part of the holdback of that is you get an owner that bought that building 30 years ago. The basis is now – they’ve written almost all of it off. It’s a 39-year depreciation. They’ve written the majority of that off. The reality is there’s not much basis left. They’re going to pay huge capital gains because of what you’re talking about. If, on the other hand, they could do what you’re talking about, they may be more incentivized to sell. This person now gets another opportunity. They get to buy the building their business is in. It makes them more stable. They get to have some upside. All of that could also happen with what you’re talking about.
SPEAKER 03 :
Yeah, it’s such a good point. There’s a lot of commercial real estate in this country that’s been held not just through the Biden inflation bulge, but even going all the way back to Carter. And if you bought property before the dollar was totally debated, if you bought property before Nixon closed the gold window, The nominal increase is insane, but the purchasing power that you got out of it, it’s not that big because so much of that was inflationary. And so if we took that into account, starting with Reagan, we took this into account on regular income tax. That’s why the brackets adjust every year to take account of inflation. But we never do the same thing for capital gain. And so this is really important. It is.
SPEAKER 10 :
And for really quick, for those of you listening that might not be tracking with me what that does. And, Phil, you know where I’m going with this. For those people that have been holding those buildings for that long, in some cases maybe even passed down generationally where the families owned it for 20, 30, 40, 50 years even, when you’ve got the ability now to step up that basis and not have that huge capital gain tax bill, meaning you now can cash out, if you would, Take that money because right now the only way to cash out is 1031 exchange it, meaning you’re just going to another property. So the money never really, quote unquote, goes back into the economy the way you’re talking. And if they did that, some of that capital would come back out and go back into the economy or right now it’s sitting.
SPEAKER 03 :
Yeah, I think it would be a huge boom for reallocating capital, be more efficient, big productivity, big economic growth booster. So I like that the administration is talking about it. A lot of people say that maybe they should try to do it through a Treasury regulation or an IRS ruling or something like that. I say do it the right way. Do it the right way. Yeah, I’m with you. So we don’t have litigation. Absolutely. That’s how I would try to do it.
SPEAKER 10 :
Absolutely. Phil, how do folks find you?
SPEAKER 03 :
AmericanCommitment.org is the website, and I’m on X. It’s my last name, at Kerpen, K-E-R-P-E-N.
SPEAKER 10 :
Phil, as always, I appreciate you very much. Thanks for joining us. All right. Have a good one. Have a great night. Appreciate you. Flesh Law coming up next, 303-806-8886.
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SPEAKER 10 :
This is Rush to Reason on KLZ 560. We are back. Rush to Reason, Denver’s Afternoon Rush, KLZ 560. Bill and Lakewood, go ahead, sir.
SPEAKER 06 :
I need your opinion. Yeah, go ahead. I’m getting different steps to put on my truck. Oh. Is there a market for the old ones?
SPEAKER 10 :
Facebook Marketplace, if you’re lucky, but I’ll tell you, Bill, probably not much of one. I hate to say that, but probably not much of one.
SPEAKER 06 :
You should set up a little corner on your website.
SPEAKER 10 :
Oh, man. Yeah, I’ll tell you, though. It’s hard because I do some selling of used stuff, all the stuff I’ve gone through with my dad and his estate and so on. I have done. My wife has done plenty of selling in the last year, and I will tell you, Bill, it literally becomes a full-time job, and it’s a pain in the rear.
SPEAKER 06 :
And who wants to deal with people?
SPEAKER 10 :
That’s the problem. It’s not the listing of or getting the item, you know, pictures taken and all of that. That’s the easy part. I’m sorry. It’s the dealing with people that’s a pain in the rear.
SPEAKER 06 :
Well, you know, the steps, they look brand new, the ones that are on it. It’s just that my knees can’t handle the step up, you know.
SPEAKER 10 :
It’s killing me. Gotcha.
SPEAKER 06 :
And the steps that drop down, you know. Right. At least… It’s either that or get rid of the car, you know?
SPEAKER 10 :
And is it a ZR2? It’s 70. It’s a Z71? Yeah, 71, yeah. Okay. You know what? If you’ve got room, what you might do is just keep them so when you go to sell the truck someday, the person could put the original steps back on it, but that becomes a room issue.
SPEAKER 06 :
Small work for my wife.
SPEAKER 10 :
I might be dead. Well, and I hear you on that one as well, Bill. I mean, I’m going through some of my own stuff thinking that down the road, I don’t want my kids to have to go through all this junk.
SPEAKER 06 :
Well, see, I’ll call you on Saturday again, but I’m thinking this is the last truck. See, I’m thinking, you know, my 94, I think it’s time to get rid of that, too. It is.
SPEAKER 10 :
It’s overdue. Absolutely.
SPEAKER 06 :
And it makes somebody a good work truck. Yes, it would.
SPEAKER 10 :
Well, call me Saturday. We’ll have people listening that might be able to piece that together. So, Bill, have a great rest of your day. Appreciate you as well. And, yeah, folks, I’m sorry. I mean, that was a Saturday call. But I will tell you this. The Facebook Marketplace thing, that does apply, financially speaking, even as we try to do a lot of financial things during this hour. Yeah, the listing of things, getting them on Marketplace, that’s the easy part. My wife will tell you that. That’s the piece of cake part. And I’m sorry to say this, but it’s the dealing with the people, the knuckleheads, that’s what becomes the issue. You know, all of the different messages that come back and forth and, you know, are they still available? And will you take this? And it’s a pain in the neck. And I wish there was an easier way to do things, but there isn’t. So, yeah, for those of you that are looking to sell anything used, and it doesn’t have to be car parts, it could be literally anything. There are things on Marketplace that it’s like a giant flea market. on Facebook. What they should have called it was Facebook flea market is what they really should have called it instead of marketplace because that’s really what it is. But you can literally buy anything and everything there. So anyways, at the end of the day, if you want to use it, use it. Just remember that it is a pain in the neck dealing with people. The people make it hard, not Facebook. I’m not criticizing Facebook at all. That part’s easy. It’s the people you deal with that actually make it difficult. Now, I will also say this. And occasionally, you get somebody that’s just super nice. And I’ve met some of those folks. In fact, I’m dealing with some of them on a routine basis, some of the stuff that I’ve sold from my dad’s estate. I’ve met some really, really great people, and it’s been really nice to meet them, and it’s nice to know that there’s still some people out there that are like that. I want to be careful and not be super critical because, yes, there are some really good, nice people that you end up meeting that you end up basically making some nice bonds with, and I mean that sincerely. They’re really, really great people at the end of the day. So I don’t want to make it sound like they’re all bad. The biggest issue is you have to cycle through them to find the good ones. Dan, you’re next. Go ahead.
SPEAKER 05 :
So Marketplace is a joke. I put a boat on Marketplace this year. and the first within an hour at somebody I I listed at twenty-five hundred to make it I’ll give you a thousand bucks so I had all these people so I finally put on the Adam like you must be physically present in order to make an offer no lowball offers and I still had people make me offers Wow so what what I’m probably gonna end up doing is it’s a little small 14-foot fishing boat I’m going to next year probably run it out to Missouri. I got friends in Macon and that’s kind of the area that the fishing pole would be good. I’m going to put it in a consignment place and just get it sold that way. And I’ll probably do the same. I’ve got a short bed truck. My dad gave me his 2019 Chevy Silverado long bed and the Right. By the way, I think you’re bringing up a great point, Dan, by the way, which we should share with everybody. And this is like trying to sell a four-wheel drive.
SPEAKER 10 :
In Florida or Arizona, if you’re going to sell a four-wheel drive, you bring it to Colorado and sell it because it’ll bring a higher price. To your point, you’re going to sell a boat. This is not a boating area. I’m sorry. We don’t have enough water in Colorado to hardly own a boat, and I know boat owners are going to be mad at me for saying that, but the reality, Dan, is we don’t have that much water, meaning if you want to get a better price for a boat, go somewhere where there’s water.
SPEAKER 05 :
Well, and I have boats, and the thing is these people on Marketplace don’t understand the value of a boat. I was selling it with With the trolling motor, the fish finder, the batteries, basically all you had to do is you buy it, license it, and you could put it on the lake the same day. Nice. And they don’t understand the value of what it is. I mean, it’s an old boat, but by the time you buy a new trolling motor, fish finder, and everything else, you’re talking $800 at least in accessories plus the batteries, plus the you know, the life jackets and all the other gear that you have to have with them. So you’re talking $1,000 alone in the accessories, and the boat is a solid boat. It doesn’t leak. It’s an old motor, but it runs good.
SPEAKER 10 :
By the way, that’s a good thing when the boat doesn’t leak.
SPEAKER 05 :
Yeah. It had a leak, and I fixed it, and you know how I fixed it?
SPEAKER 09 :
What?
SPEAKER 05 :
I took it to the dock.
SPEAKER 09 :
Oh, good one, Dan, good one, good one.
SPEAKER 05 :
So anyways, Marketplace is a joke if you’re trying to sell anything bigger than furniture or clothes or shoes. It’s not even worth it.
SPEAKER 10 :
Yeah, and even on the car thing, I’ve sold a few cars off of it, and even it, you have to be really wise. Maybe that’s the best way for me to say that, Dan. Wise on the different things that you’re doing and the people that you’re talking to. That’s a great topic. I might actually throw that into a Saturday show, by the way, and talk about some of that, because I haven’t done that for a while, and more and more people keep using it. And And, again, as I said, there’s some really good people on there. There’s some really flaky people. And you have to know how to decipher one from another.
SPEAKER 05 :
Yeah, and it’s just I got tired of it, so I took it off. Like I said, I’m going to run it out to Missouri or Kansas where there’s a whole lot more water, little lakes. This boat would be perfect for us. Yeah.
SPEAKER 10 :
probably get it sold next year cool cool so awesome that was my two no i appreciate that dan thank you you know my wife’s texting me as well saying yep there’s a lot of flakes there’s also some really good people you got to cycle through those and find you know find them and that’s not always easy to do and i will give some tips i will do that i’m putting that in my notes i’ll talk about that i know we’re going to be on remote out at the red lion car show uh this this coming saturday so feel free to stop by and say hi by the way i would i would appreciate meeting all of you if you’re out in the area feel free to come on by and say hi and we would enjoy that uh i will talk about some of this because that’s one of those topics that i’ll have a little extra time on a remote to do so and it’s one of those where you really kind of have to know what you’re doing so you don’t get taken advantage of because there’s a lot of scammers i’m going to talk about some of those potentially after we talk to scott garless here in a moment but a lot of scammers out there that you want to avoid as well roof savers of colorado coming up next and dave wants to help you with all of your roof needs commercial residential it doesn’t matter what it is he’s there to help he can put an entire roof on your place and work through your insurance company in doing so on the same token he can extend the life of your current roof And depending upon the insurance company, either keep that insurance or lessen its cost by doing so. Talk to Dave on how all that works today. 303-710-6916.
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SPEAKER 10 :
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SPEAKER 08 :
The best export we have is common sense. You’re listening to Rush to Reason.
SPEAKER 10 :
All right, we are back. Rush to Reason, Denver’s Afternoon Rush, KLZ 560. We’ve got a couple of segments left. Scott Garlis joining us now. Scott, welcome. How are you today, sir? Hey, John, I’m well. How are you? Always good. Always good to hear from you as well. And we saw some big news came out today about the tariffs and the deal with Japan and so on. And it’s not just even, Scott, a tariff deal. It’s a tariff with some reciprocal agreements and some investment in the U.S. I mean, it’s actually a bigger deal than I think most people realize.
SPEAKER 07 :
It completely is. And you hit the nail on the head. What’s really interesting about this deal is the investment part of it. So Japan is going to start an investment fund that puts $550 billion worth of new money to work in the United States. And I say that new money, that’s what the administration is saying, because That means it’s not money that’s already working on projects that are here. This is money that hasn’t previously been put to work. So that’s a big deal, and that’s a big deal for the U.S. economy.
SPEAKER 10 :
Yeah, that’s a half a trillion dollars.
SPEAKER 07 :
It’s a half a trillion dollars, yes.
SPEAKER 10 :
And really quick, Scott, too, I think this is the thing that – I’m sorry to say it doesn’t get talked about by even a lot of the – how should I say this? The news publications that should understand this, it doesn’t get talked about enough because I don’t know what the multiplier of that $550 billion is, but I’ve got to believe the multiplier is probably – two to four times that amount, meaning that that could easily be a couple trillion dollars when it’s all said and done. Am I correct?
SPEAKER 07 :
Totally. When you add up the jobs that are created just directly to those projects and then the ancillary jobs that are created, money that’s constructing whatever factories they’re going to build, and then the restaurants associated, delivery drivers, pizza drivers, you name it. It just it starts to add up in a lot of different ways in terms of spending production. It’s yeah, these these are all good things for the U.S. economy. And so that’s it didn’t get covered because I feel like this is a very positive outcome of this negotiation. I agree.
SPEAKER 10 :
I agree.
SPEAKER 07 :
I cover that.
SPEAKER 10 :
I mean, why give President Trump any kudos? And that’s why they didn’t cover it. That’s my feeling, Scott. I think you’re 100 percent correct.
SPEAKER 07 :
Yeah, I mean, the bulk of what we see on the TV is people want to focus on the most negative things because it’s just, I don’t know why, it’s just what they want to do. And this is a really positive thing. And then the other part of it is by doing this, Japan apparently came to the U.S. with this idea because they wanted to get the tariff rates down. And in particular, Trump had said 25% tariff rate on your cars. Well, by doing this, they got it down to 15%. And this is better than what was originally proposed on April 2nd. So that’s a good deal for Japan. It’s a good deal for the U.S. You know, the other side of this equation is, you know, I think we’ve had a big game of chicken going on with a bunch of these countries. I think the U.K. was first elite. They got a 10% baseline tariff rate. And Trump said, you know, They’re the first ones to step up and do this. They’re going to get the best treatment. They’re going to get the best deal. Well, now, you know, they actually, a couple weeks ago, from what I was reading, like, they were close to a 10% deal with the EU. But the problem with the EU, like, Germany wanted to go. Germany wanted to do this. The problem with the EU is, like, all 27 countries have to sign off.
SPEAKER 09 :
Right, right.
SPEAKER 07 :
Nobody can balk. And so… There are some countries that balk. Macron in particular has been pushing back. He’s the president of France. So they still don’t have a deal. They’re still trying to figure it out. But I think now that Japan’s gone, India is supposedly closed. So there are a couple of holdups.
SPEAKER 10 :
Really quick, I’m glad you said that because my thought was once you get somebody like Japan, which is a pretty big trade partner, not the biggest, but a pretty big trade partner, once they come to the table and they make a deal, you’ve got to believe that some of these other countries, I know you’re going to talk about Canada as well. We’ll talk about that independently because I have my own thoughts there. But reality is when you get somebody like Japan to come along and say, okay, we can make this work for us, we can make this work for the U.S., and at the end of the deal this is a win-win, other countries have to pay attention to that.
SPEAKER 07 :
Well, that’s exactly my point where I was going with Canada. You know, you haven’t heard a whole lot about Canada and Mexico lately other than they’re trying to figure something out. And, you know, I think that the way Trump has talked and the way things seem to be playing out is like, hey, look, if you guys are going to do something, you want to giddy up and get going here. You want to get something done before this deadline. Because he seems, you know, there have been some extensions. He seems pretty earnest, we’ll see. But he seems pretty earnest about, hey, when August gets here now, They’ve said also China, Bessette was making comments the other day, that a trade deal with China, they feel really good on the trade side.
SPEAKER 10 :
Nope, did I lose you, Scott? No, you’re back. Sorry, I lost you for a moment. They said they felt really good about the trade side, then we lost you.
SPEAKER 07 :
Yeah, okay. No, Bessette said they feel really good about the trade side. There’s just a couple other things they’re going to work out, but They feel so good about where negotiations are, they’re actually willing to extend China. So that’s another – like if you get something done with China, that tells those other countries.
SPEAKER 10 :
So really quick, how do we get the thin-skinned Canadians to jump on board? Because, man alive, they are just – I don’t know what other words to use. They’re just butthurt over everything that’s gone on so far. I’ve never seen a country so thin-skinned in my life.
SPEAKER 07 :
Well, I think with these other countries starting to go, you know, gosh, Mark Carney said, I’m going to be the guy that gets everybody to rally together and gang up, you know, and go against Trump. Well, if all your other players in that ensemble are starting to disappear, you know, you don’t want to isolate yourself because that’s just going to be bad for you. And so I wouldn’t be surprised that if Canada doesn’t, we don’t start hearing something about a Canadian deal soon.
SPEAKER 10 :
Well, the reality is, and we’ve said this all along, I’ve been saying it for quite some time. I know you have as well. And it’s something that I think people, countries, by the way, they understand this. By the way, I think they understand it better than we do sometimes, better than some of our political parties do here in America. And that is we are the world’s largest customer. And I know that when you’re somebody’s largest customer, you tend to get more things than the next customer gets because that’s how things work, Scott. It’s as simple as that. I know from being in business the majority of my adult life that when you’ve got a very large customer that requests something, you do everything you possibly can to bend over backwards to accommodate said customer because they’re your biggest customer. We as a country until now have never used that clout. Shame on us.
SPEAKER 07 :
Yeah, basically, yes. That’s right.
SPEAKER 10 :
And we finally are. And countries finally are realizing that, you know what, we can’t live without the United States of America, so we better figure this stuff out. Canada, by the way, is one of them, and they are dumb in waiting as long. They think they can hold out, and they’ve got this, you know, I read some of the stories because we’re so close, you know, you get to see some of the things. And I think Canada feels like, you know, we can go without the U.S. We don’t need them. Yeah, they do, actually.
SPEAKER 07 :
Yeah, I mean, I think people could go without the U.S., but it’ll get more expensive for them.
SPEAKER 10 :
Well, Canada doesn’t realize this, but one thing, one thing alone, which a lot of the citizens of Canada enjoy, and that is the oil that flows through the U.S., in fact, gets exported because it flows through the U.S. And without us, that oil doesn’t even get exported because those knuckleheads up there and all their stupid environmental policies and so on eliminated them building other pipelines to export said oil. They don’t have any choice. They need us. Exactly right. So, again, I don’t know how that’s going to end in Canada. This is a prediction of mine, Scott. I think they will be one of the last ones to come to the table because they’re going to do everything they possibly can to weather this storm. The problem is it’s going to kill their economy, and they don’t have any choice but to rectify that.
SPEAKER 07 :
Yeah, you know, so one of the interesting things there, a lot of stuff I’ve been doing, somebody did an interview with the U.K. government about this, and the U.K. negotiators say – or said the reason they were able to get a deal so quickly and get something done they’re happy with is they approached it like a business transaction instead of a political transaction. And they said the stumbling block for a lot of these other countries is they’re trying to approach this as a political transaction and do it do it that route, and that’s just not what Trump wants to do or the Senate wants to do or a lot of other things.
SPEAKER 10 :
Not going to end well. All right, talk to us about stock buybacks and how that may be kicking in soon and what that means.
SPEAKER 07 :
Yeah, yeah, sure. So, well, really quickly, can I go back to one other really quick point? No, absolutely.
SPEAKER 10 :
Go ahead, Scott. Absolutely. Go. No, you’re fine.
SPEAKER 07 :
So, you know, I think what people need to understand here, too, is that, you know, the reason the stock market initially sank is everybody had these reasons doomsday scenarios about what’s going to happen with tariffs and the worst case scenario. And it’s going to be disaster. And the Fed kind of went in that direction, too. And they’re saying, oh, my God, what this is, what you can do to inflation. Well, you know, these deals we’re signing are much better than those doomsday scenarios. So, you know, again, this goes back to if it’s going to play out this way and we’re going to see, let’s say like it’s a 15 percent baseline rate when you start to average everybody out. that’s far better than what they expected after April 2nd. And so back to the Fed and talking about inflation, I mean, I think this is another thing that’s going to show up, and it’s not having the inflationary impact that the Fed thinks it’s going to have or has been waiting for.
SPEAKER 10 :
Great point.
SPEAKER 07 :
And again, it should push the Fed in the direction that hey you guys need to cut because it’s also if it’s not going to have that inflationary impact you know what else is really good for the u.s economy right and you know what else is good for going into the next thing we’re going to talk about it’s going to be good for corporate america because it means their margins aren’t going to disappear and they’re going to keep making money and so you know what they’re going to do with that money they’re going to spend that money buying back the shares of their companies
SPEAKER 10 :
Okay, so what does that, in layman’s terms, what does that do to folks that own shares in the company?
SPEAKER 07 :
So if you own shares, let’s say you have a company that has, what is it, like a million shares or a hundred million shares outstanding, they make about a billion dollars in earnings. That’s about $10 per share in earnings, right? So if you reduce that, or I’m sorry, about 10, anyway, if you reduce it by about 10%, then all of a sudden that… You have less shares, same earnings. That earnings power goes up to $11.11 because of that reduction from the buyback.
SPEAKER 10 :
Because there’s simply not as many out there to dilute it as much, meaning your shares are going to generate more wealth for you.
SPEAKER 07 :
Exactly. Not only that, but so as that happens… the multiple on these things stay the same. Like if it’s a growth company, you know, we’ll put like a 32 multiple on a $10 in earnings means it should trade around 320 bucks a share. Well, now all of a sudden, if they buy back these shares and that number’s $11 and 11 cents, you put a 32 multiple on it. That’s a stock that should be trading at like $353 a share. Gotcha.
SPEAKER 10 :
So automatically your shares got to be worth more money as well.
SPEAKER 07 :
Exactly.
SPEAKER 10 :
Because it’s the old supply and demand. There’s not as much supply as there once was, right?
SPEAKER 07 :
That’s exactly what it is. Okay. And so right now what you’re seeing is tech companies are becoming a bigger and bigger part of the S&P 500. They’re up to about 34%. And so these guys, because of what’s happening with AI, they’re seeing demand go up, their margins are going up, so they’re going to have more money to retire their shares.
SPEAKER 04 :
Hmm.
SPEAKER 07 :
So as that happens, there are going to be less shares outstanding in the S&P 500. And this is why, you know, for people to keep it simple, I recommend buying things like just buying shares of the S&P 500 via the SPY ETF. Because as these buybacks happen and the earnings power of the S&P 500 keeps expanding, that’s going to keep driving up the value of the overall index. And to keep it simple, you can buy the SPY, you can collect a dividend, and watch these shares appreciate as all these buybacks happen.
SPEAKER 10 :
Okay. Good to know. There’s also, and I talked about this with one of our guests here earlier, in some of the additional, you know, potential tax cuts. code changes whereby they may want to take, you know, Trump’s floating out there that, hey, let’s just make all residential income. There’s no capital gains on or let’s do some sort of a basis adjustment, might even be able to apply some of that basis adjustment to commercial property. And as I was saying earlier, Scott, If they do that, and some of these people that have been holding on to commercial property, in some cases, generationally speaking, they may be more apt to sell, put some of that cash back into the economy, which is where that cash goes. Where right now, no offense, it’s really, I mean, it’s in the economy. But it’s not. There’s a value of an asset there. But that money that was originally spent that went in somebody else’s pocket some 50 years ago that might have, by the way, in some cases might have been a few hundred thousand dollars that may be worth several million today. And I’m not exaggerating what I’m saying. You can now take that several million with a basis adjustment. That family or that individual can sell that property, not have a huge tax bill. And that several million dollars now rolls right back into the economy where currently it’s not doing anything.
SPEAKER 07 :
I mean, it’s a really interesting idea from a growth perspective, too. Because I think about it in terms of, if you’re getting all these companies to make commitments to building new factories in the U.S., they’re going to need properties to buy, space to buy. And if they can do it Let’s say there’s an old building that’s kind of run down, but they can buy it for the right price and rip it down and put up a factory or whatever. That is a great way to get those things to happen.
SPEAKER 10 :
That’s right, because for all of you listening, you’re thinking, well, why would that happen anyways? Why wouldn’t somebody just cash out? Well, depending upon the building and if it’s got tenants in it, even though it’s old and run down, if it’s still generating wealth for that particular family or that particular organization, The reality, Scott, is they don’t want to sell because the tax burden is so high that by the time they’re done selling, there’s no incentive to sell because they can’t rebasis things when they ought to be able to, by the way. That just makes common sense. Go ahead and let that thing inflate to what it would be otherwise so that you now have a higher basis and you’re not having to pay as much in capital gains tax. That’s exactly what we should do. That would incentivize some of these people to sell where they wouldn’t otherwise.
SPEAKER 07 :
Exactly. And then let’s go back to interest rates again, and talking about all these different types of things. And maybe the rollover in the property leads to construction of new buildings and all sorts of growth. That’s a big part of why he wants to get interest rates down, too. At least I think so. I think so, too.
SPEAKER 10 :
I agree.
SPEAKER 07 :
If you have all these companies coming in to invest, they’re inevitably going to want to borrow some of that money. And, you know, if you can get those borrowing costs way down, that’s probably going to incentivize them to build more and spend more.
SPEAKER 10 :
And some would say, and that’s another one where I don’t think a lot of folks really understand, they’d be like, okay, well, why would a, you know, company that’s worth a billion dollars want to borrow money to put up a hundred million dollar business? factory or maybe a 500 million dollar factory scott at the end of the day they may even have cash in the bank to go ahead and build it and the reason is because they can use that capital to continue to grow their business and make that happen they can use somebody else’s money at a pretty low interest rate to make that capital investment on the building stretch that out over the next you know 25 to 30 years why wouldn’t you do it that way yeah so for somebody so if they have a return on income of that money you’re talking about they already have of say let’s say they
SPEAKER 07 :
they have it like 10% or 11%, and they can borrow at 5%, their cash earn is 6% difference, right? Correct.
SPEAKER 10 :
You do that all day long. And by the way, the numbers, when you talk about that working capital inside of a business that might actually have a gross profit that’s way higher than that, at the end of the day, that margin is even larger.
SPEAKER 07 :
Exactly. And that shows up in the form of spending and jobs.
SPEAKER 10 :
Yeah, I mean, even a lot of small to midsize companies, Scott, can run with a 15% to 20% bottom line. Well, if they can get to a 15% to 20% bottom line and you can keep that money making that 15% to 20% and go borrow money to build a building at 4.5% to 5%, well, you’re not going to use your capital for that. You’re going to go borrow it.
SPEAKER 07 :
Completely. You’re crazy if you don’t.
SPEAKER 10 :
That’s right. You’re not doing your investors well if you do it any other way. So, again, but here’s, as you know, Scott, there’s this threshold where, you know, if commercial property and building buildings and so on is up in that, you know, for a while now it was 7% or 8%. There’s some stuff out there now that’s in the mid-6s, even low 6s. But if you can get that down around 5% from 8%, that’s a huge number, and that’s enough incentive now for folks to start building again.
SPEAKER 07 :
That is a humongous number, and yes, I couldn’t agree with you more.
SPEAKER 10 :
And that’s where the Fed right now, as far as I’m concerned, is missing out. That’s just my own opinion.
SPEAKER 07 :
No, that is. And so that leads me back to another thing. Paul Tudor Jones was talking about this before the election. He’s talking about what are ways we can get the U.S. out of debt. And one of the ideas he floated out there was you inflate your way out of debt. And so what he’s talking about is exactly this. Get rates down. Get growth going. Get businesses to spend on things like this. Get all these new investment dollars coming in the country, spending on these things. And you know what’s going to happen? Tax receipts are going to pick up so much that the U.S. can start using that money to retire their outstanding debt, which is at higher rates, and refund it at lower rates and save themselves a ton of money in the process.
SPEAKER 10 :
That’s right. Well said. Scott, as always, I appreciate you. How do folks find you?
SPEAKER 07 :
Yeah, sure. Twitter, LinkedIn, or Substack, C. Scott Garlis.
SPEAKER 10 :
Scott, as always, I appreciate it, man. Have a great evening. John, thanks so much for your time. All right. Take care. We’ll talk to you next week. Golden Eagle Financial coming up next. If you want exact, direct advice on what you need to do with your investment portfolio, talk to Al today. Golden Eagle Financial. Find him at klzradio.com.
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SPEAKER 10 :
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SPEAKER 08 :
This isn’t rage radio. This is real, relatable radio. Back to Rush to Reason.
SPEAKER 10 :
All right, one little segment. We’ve got one more commercial I’ve got to squeeze in here before we close out the show. But this is… Probably something I should come back and talk about more tomorrow, which I’ll do my best to do. But Trump versus Colorado. This is an article out of the Colorado Sun talking about how the president’s energy agenda is clashing with the state’s lofty green ambitions. Yeah, because the reality is the green ambitions that Colorado has will actually decrease our power supply, what we have available. And on top of that, the lofty goal of EVs, which, by the way, now is definitely not going to get met. These are goals that, frankly, and I said it back when these goals first got started, they’re unattainable. These are pipe dreams. This is wishful thinking. And even this article out of the Colorado Sun talks about how if this goes forward, and they win, and the Trump administration doesn’t get its way in not closing down coal-fired power plants and so on, at the end of the day, this will increase people’s electric bill significantly. And yes, folks, it actually will. And it’s interesting. This is an article that is very much a total leftist website talking about how, if in fact this happens, energy bills will increase for the average family $165 and by 2035 $280. So the reality is it’s a big increase. It’s about a 8% 8 to 13% increase depending upon other factors that of course right now are totally because you don’t know the future exactly. But reality is, and I think, by the way, those are conservative numbers. I don’t think those numbers are anywhere close to what it will actually be. Now, they’ll talk about, you know, what’s lost. Well, you know, that’s going to be bad for the environment and this, that, and the other. And again, folks, nothing could be further from the truth because what all these greenies forget is that all of these things they want to replace coal, fire, power plants with still take oil and energy to produce. And at the end of the day, there is no net gain. There just isn’t. They haven’t proven it yet. And the reason they haven’t proven it yet is because they can’t because there isn’t. So one other thing I need to mention, veteran windows and doors along these same lines as far as energy and all of that goes. The Energy Star rating, unless something happens in the Trump administration and they change what the EPA wants to do with the Energy Star rating of windows. At our elevation, we’re going to be in bad shape. And what I mean by that, and Dave can explain this from veteran windows and doors, but what’s going to happen is the Energy Star rating will change, and it will affect the windows that you can buy after the first of the year being totally different than what you can buy right now. What you can buy right now, by the way, is even more efficient than what they want things to change to. It’s government. I can’t explain it. Dave can. But unless they change the rules, you better buy something now in 2025, not in 2026. Talk to Dave today. Find him at klzradio.com.
SPEAKER 19 :
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SPEAKER 08 :
Suck it up, buttercup. Back to Rush to Reason.
SPEAKER 10 :
All right, that’s going to do it for today. If you sent me some text messages, I will do my best to get those answered this evening. Again, I didn’t have a ton of time here during today with all of the things we had going on to stop and do that. So if you sent me a text message, never fear, I will get that answered and responded to as quickly as I can. Have a great night, though. Don’t forget, tomorrow, same time, same place, Rush to Reason, Denver’s Afternoon Rush, KLZ 560.
SPEAKER 1 :
Thank you.
