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AI Earnings Expectations Leave Little Room for Error · The Financial Exchange Show

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Speaker 1: and Paul Lane.
1:09
Speaker 2: It's Chuck, Paul and Tucker with you here and CD Astley.
1:15
Speaker 2: Kind of just a gross day in markets, very nice outside.
1:19
Speaker 2: The weather here is lovely, but uh, it's like the
1:23
Speaker 2: opposite of that song about like the weather outside being frightful,
1:27
Speaker 2: but the fire is delightful. The weather's actually delightful, but
1:31
Speaker 2: the market it's pretty frightful right now. We'll see if
1:36
Speaker 2: we can amend that one for the upcoming holiday season.
1:40
Speaker 2: You got stocks broadly selling off, nothing crazy, anywhere from
1:44
Speaker 2: about three quarters of percent on the Nasdaq to one
1:47
Speaker 2: and a half percent on the Dow. So like it's
1:49
Speaker 2: it's nothing crazy, but it's it's pretty broad selling that's
1:52
Speaker 2: happening right now. You know, the majority of stocks are down.
1:56
Speaker 2: We've only got around one hundred stocks in the S
1:59
Speaker 2: and P are positive today, so you know a lot
2:02
Speaker 2: of selling pressure. Bonds getting hit by selling pressure as well.
2:06
Speaker 2: They are moving to the upside, and yields ten youre
2:09
Speaker 2: treasury have six point six basis points to four point
2:12
Speaker 2: five nine five percent, so we're seeing those moving back
2:15
Speaker 2: up the last few days as well. Gold and precious
2:19
Speaker 2: metals as a result getting hit. Gold is down one
2:22
Speaker 2: oh three sixty and ounced to four fifty three and
2:25
Speaker 2: eighty cents, So again like nothing really going great here.
2:30
Speaker 2: The only place in markets that is seeing some green
2:34
Speaker 2: broadly is crude oil, which is not the place you
2:37
Speaker 2: want to be seeing green. But on renewed conflicts between
2:41
Speaker 2: the US and Iran overnight, as well as the President
2:43
Speaker 2: saying that in his opinion, the ceasefire is over and
2:47
Speaker 2: Iran threatening to retaliate with two to one responses in
2:51
Speaker 2: the event that the US strikes again. You've got crude
2:54
Speaker 2: oil up seven percent today on West Texas Intermediate to
2:57
Speaker 2: seventy five forty two, triple a national average. For gas
3:00
Speaker 2: prices not reflecting this, it is up six tenths and
3:02
Speaker 2: a cent to three seventy nine and six tenths. But
3:05
Speaker 2: based on where we're you know, sitting right now, if
3:08
Speaker 2: this is anything more than a momentary blip, we're probably
3:11
Speaker 2: heading back towards that three ninety range with oil, you
3:16
Speaker 2: know now in the mid seventies, and we'll just have
3:19
Speaker 2: to see how things go. I don't know if this
3:21
Speaker 2: is just going to be like a day or two
3:23
Speaker 2: and then it's done, or if this is you know,
3:25
Speaker 2: kind of the start of you know, renewed tensions between
3:28
Speaker 2: the US and Iran. But we'll see where this goes
3:31
Speaker 2: and see what happens. I think that's basically everything that
3:37
Speaker 2: is moving that's notable in markets if you're looking for
3:41
Speaker 2: like the places to hide in markets right now today,
3:45
Speaker 2: energy as you would expect following that, energy stocks are
3:48
Speaker 2: moving up, so you've got that happening. China seeing a
3:51
Speaker 2: bit of a rally today as well, and that's pretty
3:54
Speaker 2: much the only place that you can hide. Semiconductors are
3:57
Speaker 2: up a little bit today after selling off for the
4:00
Speaker 2: last several days. There's been a ton of volatility in
4:02
Speaker 2: the semiconductor space, and we'll discuss that a little bit later.
4:06
Speaker 2: But yeah, this is, you know, again, just kind of
4:09
Speaker 2: an ugly day overall. They happen sometimes, doesn't mean that
4:14
Speaker 2: the world is ending or you know, the sky's falling.
4:17
Speaker 2: We'll just have to see what comes of it in
4:19
Speaker 2: the coming days. Speaking of which, we've got an earning
4:21
Speaker 2: season that kicks off in earnest next Tuesday, as the
4:24
Speaker 2: big banks get moving and Goldman Sachs saying that, hey,
4:28
Speaker 2: this wave of earning surprises that we've seen for the
4:31
Speaker 2: last couple of quarters gonna be a little bit challenging
4:34
Speaker 2: to repeat given what's now priced into the market.
4:38
Speaker 1: Pall.
4:38
Speaker 3: Yeah, what we saw in Q one of twenty six
4:41
Speaker 3: was year of a year earning growth of twenty five
4:44
Speaker 3: percent plus a lot of that driven by companies in
4:47
Speaker 3: the tech sector, but also it was it was broader
4:50
Speaker 3: based too. We did see many of the sections within
4:53
Speaker 3: the S and P five hundred seeing some pretty positive
4:55
Speaker 3: range growth. Now the bar remains high or perhaps higher
5:01
Speaker 3: for Q two, where analysts are really going to be
5:03
Speaker 3: looking for a continued momentum of earnings growth. The consensus
5:08
Speaker 3: forecast for Q two is that twenty two percent. But
5:12
Speaker 3: it seems as if that it's going to be hard
5:17
Speaker 3: to sort of surprise or impress market pundits and investors,
5:23
Speaker 3: because you know, Q one really reflected the sort of
5:28
Speaker 3: trickle down impact of the huge CAPEC expenditures from the
5:31
Speaker 3: big hyperscalers that is upwards of seven hundred billion dollars
5:35
Speaker 3: by the Microsofts and Googles of the world. That is
5:39
Speaker 3: having impact to a lot of different businesses, Micron and
5:43
Speaker 3: sand Disc and others being some of the biggest beneficiaries.
5:45
Speaker 3: It just seems like now this is sort of built
5:49
Speaker 3: into expectations, So I feel like it is going to
5:52
Speaker 3: be hard to have Q two be appreciated or acknowledged
5:56
Speaker 3: as much as Q one earnings.
5:58
Speaker 2: Chuck, Yeah, I think that's and you know, in terms
6:02
Speaker 2: of the expectations and where people think the growth is
6:07
Speaker 2: going to come from in earnings, it's two places. As
6:11
Speaker 2: you mentioned, it's tech and energy Also is the other
6:14
Speaker 2: place that you're seeing these higher earnings projected as well.
6:18
Speaker 2: Remember Q two encompassed the period where oil was you know,
6:21
Speaker 2: in that ninety to one hundred and fifteen dollars range.
6:24
Speaker 2: So even though prices have come down subsequently, you had
6:27
Speaker 2: a big chunk of that quarter where oil prices were
6:29
Speaker 2: heavily elevated, and so energy earnings, the estimates of them
6:36
Speaker 2: grew by sixty one and a half percent over the
6:38
Speaker 2: course of the quarter. So that's according to data from
6:42
Speaker 2: fact sets. So you've got a lot of this just
6:45
Speaker 2: priced in right now. And again it's not to say
6:49
Speaker 2: that this is you know, bad or the end of
6:52
Speaker 2: you know, any of what we've seen in markets, because
6:55
Speaker 2: here's the thing. We've gone through a few of these
6:57
Speaker 2: cycles since the AI boom kicked off in early twenty three.
7:02
Speaker 2: We've had three distinct times where it looked like the
7:05
Speaker 2: AI cycle was slowing down and then subsequently picked back up.
7:09
Speaker 2: The first was towards the middle of twenty twenty four.
7:13
Speaker 2: Right around this time in twenty twenty four, you saw,
7:16
Speaker 2: you know, not semiconductor stocks, but it was the big hyperscalers.
7:19
Speaker 2: At the time, they were kind of you know, on
7:21
Speaker 2: shakier ground, and then they found their footing and they
7:24
Speaker 2: moved along. About six months later in Q one of
7:27
Speaker 2: twenty twenty five started happening again, and then in the
7:32
Speaker 2: spring and summer of last year they took off as
7:35
Speaker 2: you know, new customers were announced and so on and
7:37
Speaker 2: so forth. We saw another wave of this starting in
7:41
Speaker 2: Q one of this year. Again tech stocks kind of
7:44
Speaker 2: lagging in this, and that that ended in late March
7:49
Speaker 2: when you know, everyone started getting rate limited and throttled
7:53
Speaker 2: in having their usage throttled because there just weren't enough
7:56
Speaker 2: chips to power all of the demand that was now
7:58
Speaker 2: showing up for AI. So we'll see where this goes
8:03
Speaker 2: from here. I don't know that you know, this is
8:07
Speaker 2: anything more than just hey, AI stocks and semiconductors taking
8:10
Speaker 2: you know, a month or two pause or maybe a
8:12
Speaker 2: quarter or two pause. It could be the start of
8:15
Speaker 2: that inflection point where as we've talked about, Hey, in
8:19
Speaker 2: every semiconductor cycle we've ever seen, you get to a
8:22
Speaker 2: point where things get pretty ugly, and maybe this is
8:24
Speaker 2: that point as well. I don't know, but it certainly
8:28
Speaker 2: is a period where the expectations for those earnings are
8:32
Speaker 2: high now because this has been priced in, and so
8:36
Speaker 2: companies got to do something really special in order to
8:39
Speaker 2: you know, keep that trade moving.
8:41
Speaker 3: Yeah, I think there would be less emphasis on the
8:42
Speaker 3: numbers and more emphasis on commentary.
8:44
Speaker 2: I do agree with what is put out.
8:47
Speaker 3: Here in the Bloomberg piece that any sort of commentary
8:51
Speaker 3: specific not to earnings but to expenses and CAPEX build
8:55
Speaker 3: out from the big hyperscalers will be scrutinized really heavily.
8:58
Speaker 3: They're gonna want to see investors that they're keeping on
9:01
Speaker 3: that same trend.
9:02
Speaker 2: So that's what we've got coming up in earnings in
9:06
Speaker 2: the coming quarters. When we come back. Let's take a
9:10
Speaker 2: quick break. Now, when we come back, we'll do a
9:11
Speaker 2: little bit of trivia and then we're going to talk
9:15
Speaker 2: SpaceX next.
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11:04
Speaker 2: A small rocket company out of Texas by the name
11:07
Speaker 2: of SpaceX began trading on in the Nasdaq one hundred
11:12
Speaker 2: index yesterday. SpaceX obviously listed on the Nasdaq, but the
11:16
Speaker 2: Nasdaq one hundred is a smaller, more exclusive index that well, again,
11:22
Speaker 2: as you would expect, it's you know, one hundred of
11:24
Speaker 2: the most important companies on the Nasdaq. And so it
11:28
Speaker 2: started trading in the Nasdaq one hundred yesterday and the
11:32
Speaker 2: shares fell six point eight percent, which made people want
11:34
Speaker 2: to write a story about it, even though it doesn't
11:37
Speaker 2: really matter what a stock does on its first day
11:39
Speaker 2: of an index inclusion. I think that the more interesting
11:43
Speaker 2: thing to me, quite honestly, Paul, and this is from
11:47
Speaker 2: a good friend, Luke Kawa from Sherwood News, who we
11:49
Speaker 2: have on the show from time to time. The first
11:52
Speaker 2: day that SpaceX traded, its daily volume was north of
11:57
Speaker 2: one hundred and sixty percent of in Nvidia and Micron shares. Okay,
12:04
Speaker 2: so like everyone was trading this thing. What we are
12:08
Speaker 2: seeing now is that as recently as last week, there
12:12
Speaker 2: was a day in which SpaceX trading volume was only
12:15
Speaker 2: six and a half percent of Nvidia and Micron, so
12:19
Speaker 2: just not as much trading interest. Some of this is
12:22
Speaker 2: due to the fact that the float is lower so
12:24
Speaker 2: that there are just few shares to go around, but
12:26
Speaker 2: if people want to buy it, you can turn over
12:28
Speaker 2: as much of that as you want. Like it's what
12:30
Speaker 2: it is. But I do find it interesting that I
12:36
Speaker 2: gotta be honest with you. Look, maybe it's because I've
12:38
Speaker 2: been on vacation for a couple of weeks. I haven't
12:40
Speaker 2: heard many people talking about it much in the last
12:43
Speaker 2: week or two. It seems like it's not that it's fizzled.
12:46
Speaker 2: It's just okay, it's become, you know, another stock in
12:49
Speaker 2: the background and we don't have to talk about it
12:51
Speaker 2: every day. And I actually think that that's a good
12:54
Speaker 2: thing if it's not being highlighted as much. I think
12:57
Speaker 2: that whenever everyone is paying attention to one parteid reular stock,
13:00
Speaker 2: it tends to be a challenging environment to operate in
13:03
Speaker 2: where you've got to do truly, you know, extraordinary things
13:06
Speaker 2: in order for the stock to keep moving forward. And
13:08
Speaker 2: I think would be the best thing for the stock
13:10
Speaker 2: if it stops being you know, something that everyone needs
13:13
Speaker 2: to focus on every hour of the day.
13:15
Speaker 3: Yeah, it's it's definitely come up in our stack, more
13:18
Speaker 3: sober reflection of it being post July fourth and just
13:20
Speaker 3: kind of a slower time. But the commentary around it,
13:23
Speaker 3: to your point, is not so much about what is
13:25
Speaker 3: happening with the company or the business. It's much more
13:28
Speaker 3: about these anecdotal stories on their inclusion in the Nasdaq
13:32
Speaker 3: one hundred. And also there's the rumor out there of
13:37
Speaker 3: the potential merger between Tesla and SpaceX. But again, this
13:40
Speaker 3: is all just people who write in financial presses for
13:44
Speaker 3: you know, clicks and for views sort of putting it together,
13:47
Speaker 3: but less emphasis sort of on the actual company and
13:52
Speaker 3: trading the stock itself. It's just sort of, hey, it's
13:54
Speaker 3: out there, let's let's wait and see. I don't believe
13:57
Speaker 3: they come out with their first earning support. Again, this
13:59
Speaker 3: stock is not going to be really driven by by
14:01
Speaker 3: ernis because it doesn't it doesn't make any money. But
14:04
Speaker 3: they'll obviously have some more commentary on their plans.
14:06
Speaker 2: I don't think.
14:07
Speaker 3: That's until early August. I want to say, when they
14:10
Speaker 3: come out with their first turn.
14:12
Speaker 2: It'll be fun. Yeah, that'll be fun. Uh, if the
14:15
Speaker 2: two companies did merge Tesla and SpaceX, what would you
14:18
Speaker 2: call them? Spesla space Tesla.
14:23
Speaker 3: It's got to be an X in there, known musk.
14:26
Speaker 3: It's whether we're ending it with a spax, Teesla, Spessla.
14:32
Speaker 4: I just said that, Yeah.
14:35
Speaker 2: You could call it Tesla AX, but that sounds like
14:38
Speaker 2: a different kind of product. Yes, it does. They'll probably
14:41
Speaker 2: just call it. They'll probably just call it X. They
14:43
Speaker 2: could get into laxatives. That would kind of be full circle,
14:48
Speaker 2: I think. I don't know how, but it would be.
14:50
Speaker 2: Uh anyway, So that's what's going on with SpaceX. I
14:53
Speaker 2: think if they can blend in the background more, which
14:56
Speaker 2: is not really a strong suit of elon musks, but
14:58
Speaker 2: if they can blend a little bit, I think would
15:00
Speaker 2: actually be the best thing for them. Apple can to
15:05
Speaker 2: spend thirty billion dollars buying US made chips from Broadcom.
15:09
Speaker 2: This actually not like there's I have two divergent views
15:14
Speaker 2: on this. The first is I think it's really impressive
15:16
Speaker 2: that we've gotten to the point where we have the
15:20
Speaker 2: chip production available domestically for Apple to be able to
15:23
Speaker 2: buy these, right. I think that's great. By and large,
15:28
Speaker 2: this thirty billion dollars is happening over the next five years.
15:31
Speaker 2: It's money they were going to spend somewhere anyways, So
15:33
Speaker 2: it's not exactly like new money or anything like that.
15:37
Speaker 2: They had to buy these chips from somewhere. But I
15:40
Speaker 2: think it's great that they're able to do it from
15:43
Speaker 2: US production because it does show that we're finding ways to,
15:46
Speaker 2: you know, boost up semiconductive production domestically. Yeah.
15:49
Speaker 3: I think the hard thing that I have sort of
15:52
Speaker 3: processing with this story is that there are so many
15:55
Speaker 3: different types of chips, and once you kind of look
15:58
Speaker 3: out the expensive one, that's kind of where I'm going
16:00
Speaker 3: with it. Is like, I think that if you weren't
16:03
Speaker 3: dialed into it, you would just say, oh, generally speaking,
16:06
Speaker 3: if you're just following the semi conductor market, you know
16:09
Speaker 3: that the most sophisticated chips get manufactured in Taiwan and
16:13
Speaker 3: South Korea, and largely Taiwan really does the highest cutting
16:16
Speaker 3: edge ons Taiwan Semiconductor, So I think at first glance,
16:19
Speaker 3: you can say, oh, great, we're putting some more of
16:21
Speaker 3: this production back on shore while Taiwan Semiconductor is building
16:25
Speaker 3: a fab in Arizona. These chips these radio chips that
16:29
Speaker 3: are manufactured by Broadcom have been manufactured by them for
16:34
Speaker 3: a bit. It's good that Apple continues to purchase from them,
16:37
Speaker 3: but and that there's continued investment in building out US
16:42
Speaker 3: general semiconductor manufacturing, because that is a weakness. But on
16:46
Speaker 3: initial glance, you could think as if this was US,
16:51
Speaker 3: you know, taking away some of the manufacturing prowess from Taiwan,
16:54
Speaker 3: and that isn't the case here.
16:57
Speaker 2: No, in this case, I'll quote the iPhone make said Wednesday,
17:00
Speaker 2: it's forged a new deal with its longtime partner that
17:03
Speaker 2: will spur the production of more than fifteen billion chips
17:05
Speaker 2: on US soil. So I did the math so that
17:07
Speaker 2: you don't have to if you divide fifteen billion, Rather,
17:11
Speaker 2: if you divide thirty billion dollars by fifteen billion chips,
17:14
Speaker 2: it means the average chip cost is around two dollars
17:17
Speaker 2: a chip. I couldn't believe. Yeah, so these are these
17:19
Speaker 2: are not you know, the Nvidia processors that are going
17:22
Speaker 2: for like four thousand of chip. There fifty thousand chips. Yeah,
17:27
Speaker 2: these are like the basics that go into it. It's like, oh,
17:31
Speaker 2: you need like something that is going to like a
17:34
Speaker 2: Bluetooth chip that's going to be in your.
17:36
Speaker 3: Want to hook up your phone to your car. That
17:38
Speaker 3: chip Q is from Broadcon here. That's what we're talking about.
17:42
Speaker 2: That's the kind of stuff which again it's it's important
17:45
Speaker 2: you still need to have this stuff produced domestically, but
17:49
Speaker 2: it's it's not the stuff that we really need to
17:52
Speaker 2: ramp up because well listen, you need anything in the semispace.
17:56
Speaker 2: But it's this is stuff that we've been able to
17:59
Speaker 2: produce for a while also domestically. So it's good, but
18:03
Speaker 2: I think you got to understand what it actually is
18:06
Speaker 2: here speaking of Apple in a contest that I really
18:10
Speaker 2: just don't care about piece from MarketWatch, Apple's closing it
18:14
Speaker 2: on in videos it looks to reclaim the title of
18:16
Speaker 2: largest US company. So I gotta be honest. I know
18:21
Speaker 2: that we like to refer to like the largest company
18:23
Speaker 2: based on market cap because like value is you know
18:26
Speaker 2: what matters in this and that I really think that
18:29
Speaker 2: if if you want to say that you're the biggest company,
18:33
Speaker 2: I think you got to base it on revenue to
18:34
Speaker 2: be honest. You know, like let's say that next year
18:38
Speaker 2: SpaceX goes in triples and so it's a six trillion
18:41
Speaker 2: dollar company, its.
18:42
Speaker 3: Economic impact is not nearly as significant. It doesn't touch.
18:46
Speaker 3: It doesn't touch like Amazon touches everybody from packages at
18:50
Speaker 3: their door or Walmart. I believe my guests on the
18:53
Speaker 3: top revenue, it's going to be one of those two
18:55
Speaker 3: that they do one hundred billion dollars a quarter, ish
18:58
Speaker 3: that they would probably be the ones that have the
19:02
Speaker 3: revenue grab. But I could see that argument that we
19:07
Speaker 3: are far more exposed to those companies than we are
19:09
Speaker 3: in Vidia. Think about our day to day, it's not
19:13
Speaker 3: really impacted by Nvidia Apple. I guess certainly all of
19:17
Speaker 3: us are as consumer facing hardware, but certainly in Vidia
19:22
Speaker 3: is largely being sold to the hyperskillers.
19:26
Speaker 2: Take a quick break. When we return, we've got the
19:29
Speaker 2: Trivia Answer and Wall Street.
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Speaker 1: Street Watch treking the stocks, the data and the headlines
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Speaker 4: Radio markets are now accelerating the losses by midday, after
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Speaker 4: President Trump said the ceasefire with Iran was over, following
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Speaker 4: another round of er Anya attacks in the straight of
20:07
Speaker 4: four moods, sending oil higher. Right now, the Dow selling
20:11
Speaker 4: off one and a half percent or eight hundred and
20:13
Speaker 4: nine points, SMP five hundred down nearly one percent or
20:17
Speaker 4: seventy one points lower, Nasdaq down nearly one percent or
20:21
Speaker 4: two hundred and forty eight points, Russell two thousand selling
20:24
Speaker 4: off one and a half percent. Ten You're Treasure reeled
20:27
Speaker 4: up six basis points at four point five to nine percent,
20:31
Speaker 4: and oil jumping seven percent higher, trading right around seventy
20:36
Speaker 4: five dollars a barrel. Energy stocks including Chevron and others
20:40
Speaker 4: are seeing gains in reaction to increased tensions with Iran,
20:43
Speaker 4: while travel stocks including United Delta, Incredible, CRUs are seeing
20:48
Speaker 4: losses of anywhere between three and five percent. Meanwhile, Apple
20:52
Speaker 4: said plans to increase investment in US made chips, with
20:55
Speaker 4: plans to spend more than thirty billion dollars with Broadcom
21:00
Speaker 4: in the next five years. Apple shares down modestly, while
21:03
Speaker 4: Broadcom up by four percent after sinking eighteen percent yesterday
21:08
Speaker 4: following plans to sell more shares. Rivian automotive stock is
21:11
Speaker 4: down about two percent today, and at two o'clock this afternoon,
21:16
Speaker 4: the FED will post meeting minutes from Kevin Walsh's first
21:19
Speaker 4: meeting as FED chair. I'm Tucker Silva and that is
21:24
Speaker 4: Wall Street Watch. And in the previous segment we asked
21:28
Speaker 4: you the trivia question which president did Nelson Rockefeller serve
21:32
Speaker 4: as vice president under? That would be Gerald Ford and
21:36
Speaker 4: Phil from Westborough, Mass is our winner today, taking home
21:39
Speaker 4: a Financial Exchange Show t shirt. Congrats to Phil, and
21:42
Speaker 4: we play trivia every day here on the Financial Exchange.
21:46
Speaker 4: See complete contest rules at Financial Exchange Show dot com. Paul,
21:51
Speaker 4: we got a piece here from market Watch. It's titled
21:53
Speaker 4: have it saved enough for retirement? Here's what not to do?
21:57
Speaker 2: Quote it's usually wrong? What should what should one not do?
22:01
Speaker 2: If you haven't saved not?
22:03
Speaker 3: The biggest thing would be the focus needs to be
22:06
Speaker 3: on maximizing your savings, but not trying to swing for
22:10
Speaker 3: the fences. From an investment return perspective, the discipline needed
22:15
Speaker 3: to just try and increase your savings and build the
22:18
Speaker 3: base that you need for retirement is far more important
22:21
Speaker 3: than trying to invest overly speculative or trying to make
22:26
Speaker 3: up for lost time not investing in the market by
22:29
Speaker 3: putting all your eggs in one basket into one company
22:32
Speaker 3: or into taking on investments that you think are going
22:36
Speaker 3: to pay off with greater returns but have a great
22:39
Speaker 3: deal of risk associated with them. So that certainly is
22:43
Speaker 3: a big one here, and the the other one is
22:47
Speaker 3: just understanding sort of what you are going to need
22:52
Speaker 3: in retirement, I think is really important, so that way
22:55
Speaker 3: you can have a base towards building that you need
22:59
Speaker 3: to build to rather than just saying arbitrarily you're going
23:04
Speaker 3: to hang it up at a certain point of time.
23:05
Speaker 3: So I think on the risk side, are the biggest
23:08
Speaker 3: mistake is just not trying to overdo it and swing
23:11
Speaker 3: to the fences on the investing.
23:13
Speaker 2: Yeah, the place where it does make sense to try
23:16
Speaker 2: to overdo it if you're set on, hey, I need
23:19
Speaker 2: to retire at this point, but I haven't done enough beforehand.
23:22
Speaker 2: The place that you need to overdo it then is Okay,
23:26
Speaker 2: how can I increase my savings rate? Like what can
23:28
Speaker 2: I do in order to get more money into these accounts?
23:33
Speaker 2: And look, that has trade offs. There's different ways that
23:37
Speaker 2: you can save more money. The first one you can
23:40
Speaker 2: work more years that allows you to save more money.
23:43
Speaker 2: The second you can spend less during the years that
23:45
Speaker 2: you're already planned to work in order to save more
23:48
Speaker 2: during each of those and that has the added benefit
23:52
Speaker 2: of Hey, if you get good at, you know, living
23:54
Speaker 2: on a smaller monthly budget, well then you also don't
23:57
Speaker 2: need to save as much because you're not needing to
23:59
Speaker 2: spend as much much later on as well. So there's
24:02
Speaker 2: different trade offs depending on how you approach it. But yeah,
24:06
Speaker 2: trying to to swing for the fences and hit home
24:08
Speaker 2: runs it quite honestly, like I understand the impulse. I do, Like,
24:15
Speaker 2: I totally get it, but you have to understand the
24:18
Speaker 2: reason why most of those home runs are priced the
24:20
Speaker 2: way that they're priced is because they're not going to
24:23
Speaker 2: work out in most cases, right, Like, it's it's just
24:26
Speaker 2: how it is.
24:26
Speaker 3: Having a recurring plan of savings to me, too, is
24:29
Speaker 3: so critical. You can't just say you're going to save
24:33
Speaker 3: more and tab it for the end of the year.
24:35
Speaker 3: It really has to be something that is regimented, similar
24:37
Speaker 3: to a four to one K contribution where it comes
24:40
Speaker 3: right off the top or right after your paycheck. I
24:42
Speaker 3: think that is really critical, folks.
24:44
Speaker 2: The Armstrong Advisory Group has a new guide available this month,
24:48
Speaker 2: and look, I gotta be honest. When I get into
24:51
Speaker 2: the investment management world, one of the things that no
24:55
Speaker 2: one ever told me was that unfortunately, like I'd be
25:00
Speaker 2: dealing with an awful lot of death. Like when you
25:03
Speaker 2: work with folks that are older, the unfortunate thing is
25:07
Speaker 2: that there comes a day when you can't work with
25:09
Speaker 2: them anymore. And you know, I didn't really understand this
25:13
Speaker 2: starting out, but you know, having been in the business
25:15
Speaker 2: for seventeen years now at this point, you see some things.
25:20
Speaker 2: And one of the things that we noticed, you know,
25:23
Speaker 2: as a firm, is just that families need to have
25:27
Speaker 2: conversations about their inheritance in advance. And there's no right
25:31
Speaker 2: way to do it. But the wrong way is to
25:33
Speaker 2: not have the conversation at all. And so we put
25:35
Speaker 2: together a guide on this topic. It's titled talking to
25:38
Speaker 2: your kids about inheritance and whether you're planning on leaving
25:42
Speaker 2: them nothing or you know, a healthy nest egg, It's
25:47
Speaker 2: a conversation that needs to be had. And this goes
25:50
Speaker 2: through you know, hey, when should you have the conversation,
25:52
Speaker 2: What topics can you potentially discuss? What are ways to
25:56
Speaker 2: have different discussions depending on what you're comfortable divulging to
26:00
Speaker 2: your kids, And again I think it's a really important
26:03
Speaker 2: topic because look, the worst time for an air of
26:08
Speaker 2: any kind to learn about inheritance is as it's being
26:10
Speaker 2: given to them because they haven't had time to prepare
26:12
Speaker 2: for it, and having the conversations in advance always a
26:17
Speaker 2: better option if you can.
26:19
Speaker 1: So.
26:20
Speaker 2: The guide is titled talking to your Kids about Inheritance.
26:22
Speaker 2: Two ways to request the first you can call eight
26:24
Speaker 2: hundred three nine three for zero zero one. Second way
26:28
Speaker 2: go to Armstrong Advisory dot com and click on the
26:31
Speaker 2: monthly guide button and you can request it there. Again,
26:34
Speaker 2: that phone number is eight hundred three nine three for
26:37
Speaker 2: zero zero one, or go to Armstrong Advisory dot com.
26:42
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
26:44
Speaker 1: registered investment advisor. Nothing in the ad or in any
26:47
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
26:50
Speaker 1: your own financial, tax, and estate planning advisors before making
26:53
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
26:56
Speaker 1: advisory services.
26:58
Speaker 2: Piece in the Wall Street Journal talking about the two
27:00
Speaker 2: major USAI companies. It's titled Anthropics. Political risks are real,
27:05
Speaker 2: but open aies loom even larger, And here's the rub
27:13
Speaker 2: This piece is talking about okay, like Anthropic, you know,
27:16
Speaker 2: has had some disputes with the Trump administration over a
27:20
Speaker 2: bunch of different stuff. Open AI has not. Open AI has,
27:23
Speaker 2: you know, more kind of cozied up to the Trump administration.
27:26
Speaker 2: And basically what the pieces outlining is okay, Like, yeah,
27:29
Speaker 2: Anthropic might have trouble now, but depending on how you know,
27:33
Speaker 2: subsequent presidential elections go, maybe open AI has more trouble.
27:37
Speaker 2: The fact of the matter is, I have no idea
27:38
Speaker 2: what's gonna happen in twenty twenty eight, twenty thirty two,
27:41
Speaker 2: twenty thirty six, and twenty forty, which is why most
27:45
Speaker 2: smart companies don't usually try to pick sides when it
27:48
Speaker 2: comes to the parties that they are donating to our supporting.
27:53
Speaker 2: There's there's a reason why if you look at you know,
27:55
Speaker 2: donation histories, you know, for you know, executives, historically most
28:00
Speaker 2: them tend to donate to both major parties because they
28:02
Speaker 2: want to be in the good graces of whoever is
28:04
Speaker 2: in power at any particular point in time. So, look,
28:10
Speaker 2: I don't know who's going to have you know, the
28:12
Speaker 2: bigger problems politically, you know, two, four, six, twelve years
28:17
Speaker 2: down the road, what I do know. The bigger problem
28:20
Speaker 2: in my opinion is, Hey, if you're running a company
28:22
Speaker 2: and you're like, well, I got to hitch my horse
28:24
Speaker 2: to that wagon, I'm just not sure that that's something
28:27
Speaker 2: that you should be doing because you don't know how
28:30
Speaker 2: future elections are going to work out either. Yeah.
28:33
Speaker 3: I think we saw this to cover a different sector
28:36
Speaker 3: on the auto manufacturing side, where there was a tremendous
28:38
Speaker 3: amount of investment in electric vehicles by a lot of
28:42
Speaker 3: the major US manufacturers, and that was I think heavily
28:46
Speaker 3: influenced by policy at the time, and now it's shifted
28:49
Speaker 3: back in the other direction. And the major takeaway is
28:52
Speaker 3: just on a business side, you shouldn't invest for what
28:56
Speaker 3: potentially the you know, the political climate may be in
29:00
Speaker 3: favor or against. You should invest in things that are
29:03
Speaker 3: going to sell and be of use to it to consumers.
29:07
Speaker 2: Sticking with the AI topic, American AI companies say Chinese
29:10
Speaker 2: copycats are quickly catching up. They say they're unfairly copying
29:14
Speaker 2: their AI systems using a technique called distillation.
29:19
Speaker 3: Or are you surprised this is Have you not been
29:23
Speaker 3: watching the last thirty forty years?
29:26
Speaker 2: Have you not like, yeah, do not understand how Chinese
29:29
Speaker 2: companies basically examine their Western counterparts, figure out how they work,
29:34
Speaker 2: and then try to undercut them on price while increasing
29:37
Speaker 2: supply dramatically. This is what China does in just about
29:39
Speaker 2: every the playbook industry they get into. It doesn't matter
29:42
Speaker 2: if it's electric vehicles, solar panels, electronics, I don't know,
29:50
Speaker 2: nose rings like it doesn't matter what it is. Like this,
29:53
Speaker 2: this is the general playbook for China, and sending a
29:58
Speaker 2: strongly worded letter saying, hey, do something about this to
30:01
Speaker 2: Congress guys, this is what it is. And the other
30:06
Speaker 2: piece that I will add, we've talked about this for
30:09
Speaker 2: the last you know, six to nine months as well. Hey,
30:11
Speaker 2: when you start releasing you know, more models in the
30:14
Speaker 2: AI spectrum, it's a sign of commoditization. If there's one
30:18
Speaker 2: thing China excels at, it's competing, often unfairly in commoditized battlefields.
30:24
Speaker 2: Like that's what they do. So I don't know what
30:29
Speaker 2: you can.
30:29
Speaker 3: You can yell and scream about this as much as
30:31
Speaker 3: you want, but there's nothing. There's I don't unless it's
30:35
Speaker 3: almost nothing to be done.
30:37
Speaker 2: Unless you're willing to accept the pain of confronting China
30:40
Speaker 2: directly and what that means. Then there's not much that
30:43
Speaker 2: can be done on this.
30:45
Speaker 3: There really isn't. Especially it doesn't have any They not
30:48
Speaker 3: be unfair, It may be unfair, or it may be
30:50
Speaker 3: frustrating to these companies that have close to trillion dollar
30:54
Speaker 3: valuations and their proprietary models are a big part of
30:57
Speaker 3: the the IP behind those valuations. Ultimately, there's always going
31:02
Speaker 3: to be attempts to try and rip off that ip.
31:06
Speaker 2: Quick break here when we return Stack Route, Lets.
31:12
Speaker 1: Remember you can watch the show live every day on
31:15
Speaker 1: our YouTube page. We've got market updates and breaking business
31:19
Speaker 1: news all morning long, plus a full archive of all
31:22
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31:29
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31:33
Speaker 1: here on the Financial Exchange Radio Network.
31:51
Speaker 2: Do a little bit of stack Roulette. Paul, can I
31:53
Speaker 2: start things off?
31:54
Speaker 1: Sure?
31:54
Speaker 2: Thing? You like bats?
31:58
Speaker 3: Baseball, bats, bat bats, the animal bats Batman not a
32:02
Speaker 3: huge son's a huge Batman fan, but not a fan
32:06
Speaker 3: of bats.
32:06
Speaker 2: Yeah. Yeah, I'm not a big fan of bats either,
32:08
Speaker 2: and neither is this Piled from California who apparently was
32:13
Speaker 2: slumbering overnight in Denver between legs of you know, flying
32:17
Speaker 2: and I guess the story is that there was an
32:21
Speaker 2: opening under the room's ac unit that a bunch of
32:25
Speaker 2: bats ended up living in, and they didn't give him
32:29
Speaker 2: a new room. He tried to stuff the hole with
32:32
Speaker 2: a towel, but the bats came through while he was sleeping.
32:37
Speaker 4: Now that yeah, this was like two thirty in the morning, right, Yes.
32:40
Speaker 2: The bats came through while he was sleeping, and he
32:43
Speaker 2: had to fight them off because there were bats flying
32:47
Speaker 2: around the room and one of them bit him, apparently
32:51
Speaker 2: on his ankle or foot. And so if you get
32:55
Speaker 2: bitten by a bat, you gotta go through rabies treatment
32:57
Speaker 2: and this and that. He racked up one hundred and
32:59
Speaker 2: two dollars in medical bills, and so he's asking for
33:03
Speaker 2: damages to cover those, plus pain and suffering. The hotel,
33:07
Speaker 2: which happens to be under the A branch of Marriott. Marriott,
33:13
Speaker 2: is apparently not offering even a quarter of what the
33:16
Speaker 2: medical bills were, according to the plaintiff's lawyer. So again,
33:21
Speaker 2: what's being publicly said, like, I don't exactly know, but
33:24
Speaker 2: what I can tell you is it's hard to think
33:28
Speaker 2: of something worse than waking up with a bunch of
33:32
Speaker 2: bats floating around your hotel room.
33:36
Speaker 3: Definitely, it is up there in terms of hotel room
33:40
Speaker 3: disaster experience that you know.
33:42
Speaker 2: Like specific to like a room like obviously like hey,
33:45
Speaker 2: like the whole hotel burnt down, Like yeah, that would
33:48
Speaker 2: be bad, I get that right. But you know, like
33:50
Speaker 2: you walk into a room and things that like you
33:53
Speaker 2: don't want to see. They're the inconveniences where you're like, no,
33:56
Speaker 2: I need like another room, like bed bugs. You see
33:59
Speaker 2: a few of those, which I I've been in a
34:00
Speaker 2: couple of those places. You're like, no, this isn't gonna work. Sorry,
34:03
Speaker 2: can you put me somewhere else? Or I'm gonna go
34:05
Speaker 2: get to a different hotel because the bugs might follow me.
34:09
Speaker 2: Bats are kind of a deal breaker.
34:12
Speaker 3: Bats are definitely a deal breaker. Any birds deal breaker,
34:16
Speaker 3: but not nearly as concerning as having a bad in
34:19
Speaker 3: your room anything, any any critter that you're you're up
34:23
Speaker 3: against in your hotel room.
34:25
Speaker 2: Just not a good time.
34:26
Speaker 3: Why is Marriott playing such hardball? They just think they
34:29
Speaker 3: got the lawyers on staff. Why can't they just why
34:32
Speaker 3: is this even in the news? How come is that don't.
34:33
Speaker 2: You settle it. Don't you not want us talking about
34:36
Speaker 2: the story that one of your Denver hotels had bats
34:39
Speaker 2: in it?
34:41
Speaker 3: Not to be little one hundred thousand bucks, but like
34:43
Speaker 3: relative to Marriott, Skuys and' skills, that's what I'm saying, Like,
34:47
Speaker 3: why the pr from this story alone getting out is
34:51
Speaker 3: far worse damage than anything that could have just been
34:55
Speaker 3: financially just taken care of very quickly here with a
35:00
Speaker 3: a quick check to But I guess they just want
35:02
Speaker 3: to drag it out in court and use their lawyers
35:06
Speaker 3: on retainer to make this work.
35:07
Speaker 4: And also they couldn't get them a room, they said,
35:10
Speaker 4: because it was so in the middle of the night.
35:13
Speaker 2: Huh, Like what does that mean? You're do you have
35:16
Speaker 2: a room or not? You run hotels? You put me.
35:19
Speaker 4: A cot in the lobby because I'm not staying in
35:22
Speaker 4: this room because it's infested with baths.
35:26
Speaker 2: What are we doing?
35:28
Speaker 4: Get the guy out of the room.
35:30
Speaker 2: So, yeah, it just doesn't make it just doesn't make
35:37
Speaker 2: much sense. There's no one in the gym at two
35:40
Speaker 2: thirty in the morning. Put put a cot in there.
35:42
Speaker 3: Yeah, I'd rather be in there.
35:43
Speaker 2: What's the worst hotel experience either of you have had.
35:48
Speaker 3: I staying in a hostel in Amsterdam studying a BROA.
35:51
Speaker 2: No, no, it's got to be a hotel. Hostiles different Okay, okay, okay,
35:54
Speaker 2: like the expectations, they are just different.
35:56
Speaker 3: It's not going to be nearly as bad in this
35:58
Speaker 3: case with hotel. But walk in and you know, people's
36:01
Speaker 3: stuff was in the room, so they had assigned us
36:03
Speaker 3: the wrong way.
36:04
Speaker 2: It's like, whoa, this is a problem.
36:06
Speaker 3: Yes, someone could walk in at some point like how
36:09
Speaker 3: did I get in here? And why is there people's
36:10
Speaker 3: stuff in here? That was the worst, But it doesn't
36:13
Speaker 3: come close to the bad experience.
36:14
Speaker 2: How about you? Uh so senior year high school? Uh
36:18
Speaker 2: somehow we uh, my friends and I we convinced our
36:20
Speaker 2: parents to let us go to the Bahamas for spring break.
36:22
Speaker 2: Like god, we were the only high school people there.
36:24
Speaker 2: We had to like make up that we were in
36:26
Speaker 2: college because everyone was just like, what are you guys
36:28
Speaker 2: doing here? Like you you shouldn't be here. So the
36:31
Speaker 2: first day I wake up in the morning and I'm like, okay,
36:36
Speaker 2: I gotta go to the bathroom, flush the toilet, and
36:39
Speaker 2: immediately afterwards, the ceiling above me opens up and water
36:44
Speaker 2: just starts pouring out into the bath. I don't know
36:47
Speaker 2: if it was like related to me flushing the toilet
36:49
Speaker 2: or just a coincidence, but I flushed it, and the
36:52
Speaker 2: ceiling above just starts pouring out water from this drop
36:55
Speaker 2: ceiling just everywhere, just like.
36:58
Speaker 4: Oh, you were like the last possible flush before the
37:00
Speaker 4: pipe exploded.
37:01
Speaker 2: Well, here's the thing. This was in like early two thousands.
37:06
Speaker 2: It was airfare, hotel and all meals included, and it
37:11
Speaker 2: was five hundred dollars for the week, so you know,
37:13
Speaker 2: the quality of place wasn't particularly good. That's pretty cheap,
37:17
Speaker 2: you know, like it was. It was not a high
37:19
Speaker 2: quality establishment that we were staying at, so it was fine.
37:24
Speaker 2: I still don't know how they fixed it, but like
37:26
Speaker 2: we came back after the morning and everything was was fixed.
37:29
Speaker 2: Sex tape most likely. Taking a look at markets as
37:33
Speaker 2: we head towards the top of the hour, still in
37:36
Speaker 2: negative territory. We've got the Dow off one and a
37:39
Speaker 2: half percent, SMPS off one, Nasdaq off one, so all
37:42
Speaker 2: major indices now getting bopped on the head. Pretty good tenure.
37:46
Speaker 2: Treasury continuing to sell off, also down six point four
37:50
Speaker 2: basis points, sorry, up six point four basis points. To
37:53
Speaker 2: four point five nine three percent. We're done for the day.
37:59
Speaker 2: But the the good news, we're not done for the
38:01
Speaker 2: week because it's only Wednesday, which means we're gonna be
38:04
Speaker 2: back tomorrow and Friday. You should join us for both
38:09
Speaker 2: of them because it's gonna be a party. Let's take
38:12
Speaker 2: a quick break for the rest of the day. We'll
38:14
Speaker 2: see you tomorrow. On the Financial Exchange