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Energy Prices Defy the Worst Case Scenario · The Financial Exchange Show

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Speaker 1: is The Financial Exchange with Chuck Zada and Paul Lane.
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Speaker 2: It's Chuck, Paul, Tucker with you here on a Friday.
1:13
Speaker 2: And earlier today... Kevin Warsh, the Fed chair, gave a
1:17
Speaker 2: speech at the Jackson Hole Symposium for the Federal Reserve.
1:22
Speaker 2: And big takeaways from it, he talked a little bit
1:24
Speaker 2: more hawkishly. He confirmed that the Fed still wanted to
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Speaker 2: target 2% inflation and said that policy probably wasn't restrictive
1:34
Speaker 2: in a broad sense at this point. And so as
1:38
Speaker 2: a result of that, we come away with a market
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Speaker 2: that seemingly is trying to get on board and believing
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Speaker 2: that Warsh is going to be credible in his attempts
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Speaker 2: to pare down inflation. We'll see if that's actually the
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Speaker 2: case over the next few months or so based on
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Speaker 2: how he acts during that time and what actions the
2:01
Speaker 2: Federal Reserve takes. But at this point, Markets satisfied with
2:06
Speaker 2: what they've gotten from Warsh today. Kind of the opposite
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Speaker 2: of what we saw during the July meeting. So as
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Speaker 2: a result, you've got the S & P 500 up
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Speaker 2: 35 points. The Dow is up 226. The NASDAQ up 138.
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Speaker 2: So about a half percent gain across the major indices.
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Speaker 2: The 10-year Treasury up 1.6 basis points. Not much movement there.
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Speaker 2: The real move, though, watch what's going on between the
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Speaker 2: short and long end. One-year Treasury up almost nine basis points,
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Speaker 2: 30-year down one. That's what you want to see if
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Speaker 2: you think the Fed is going to be credible against inflation.
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Speaker 2: You've got the dollar index rallying as well, up 0.27%
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Speaker 2: to 99.34%. And you've got gold off 32 bucks an
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Speaker 2: ounce to 46.31%. Gas, I'm sorry, oil prices, we've got
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Speaker 2: West Texas Intermediate down 78 cents a barrel to $ 82. 75.
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Speaker 2: And gas, we've got the AAA national average right now
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Speaker 2: basically down about one cent overnight to $ 4. 089. You've got
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Speaker 2: diesel flat at $ 5. 61. So no major movement on that front.
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Speaker 2: Let's talk a little bit about this piece from the
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Speaker 2: New York Times now. After six months of Iran war,
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Speaker 2: markets defy worst fears. And specifically, talking about what we
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Speaker 2: are seeing in a number of key markets, obviously energy,
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Speaker 2: what we're seeing in equities, what we're seeing in the
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Speaker 2: bond market. And let's start first with energy markets, which
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Speaker 2: get oil basically up about 25% from the start of
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Speaker 2: the year here. But obviously, things were worse earlier in
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Speaker 2: the year and could have gotten far worse than this.
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Speaker 2: The takeaway here that I have is, look, ultimately, we
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Speaker 2: saw this in a few key instances. When push came
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Speaker 2: to shove and things were getting into a dangerous spot
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Speaker 2: in a number of these energy markets, we saw a
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Speaker 2: short-term deal reached in a couple of different occasions where
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Speaker 2: to try to get things moving through the Strait of Hormuz.
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Speaker 2: None of those have held, but they at least did
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Speaker 2: release enough oil out into the market to kind of
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Speaker 2: staunch the upward bleeding in energy prices. The other big
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Speaker 2: thing in this that is really the reason why we
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Speaker 2: didn't see oil hit, you know, 150 a barrel during
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Speaker 2: the spring, China basically cut its daily imports in half,
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Speaker 2: and that is the most important thing because otherwise we
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Speaker 2: would have gotten there way sooner. That was my biggest surprise.
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Speaker 3: When a lot of this broke out in March and April,
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Speaker 3: all the discussions were, and I think we even had
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Speaker 3: them on the show too, that if this persists through
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Speaker 3: the summer and early fall, we are going to see
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Speaker 3: energy prices that are out of control. And here we
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Speaker 3: sit with energy prices that, yes, they are 25% elevated,
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Speaker 3: but not the big issue that we anticipated. Some And
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Speaker 3: that was my biggest surprise, is China and its ability
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Speaker 3: to cut down its imports as the biggest importer in
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Speaker 3: the world, to draw on what has been reported as
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Speaker 3: $ 100 billion. no, not a hundred, a billion barrels in
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Speaker 3: reserves to be able to do those two things and
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Speaker 3: show their energy independence that many analysts did not think
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Speaker 3: was the case. Not like full independence, but the ability
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Speaker 3: to stave off the need to import at significant levels for,
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Speaker 3: I think, far longer than the market would have thought
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Speaker 3: initially prior to this conflict breaking out. That has really
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Speaker 3: been what has held things together on the energy front.
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Speaker 3: and has had it be less of an issue than
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Speaker 3: we would have anticipated.
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Speaker 2: Now, remember that that 25% move is just in crude oil.
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Speaker 2: If we take a look at gas, gas at the
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Speaker 2: beginning of the year nationwide was averaging about 275 and change.
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Speaker 2: We're now at 410. So gas has moved as opposed
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Speaker 2: to a 25% move. You're talking closer to a 40% move.
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Speaker 2: And when we look at diesel, which is more heavily
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Speaker 2: impacted both because of what's going on in the Middle East,
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Speaker 2: but also the damage to Russian refineries, diesel prices are
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Speaker 2: up 50, 60 percent since the start of the year.
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Speaker 2: And those are only about 20 cents away from all
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Speaker 2: time highs now. So, yes, like the worst case scenarios
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Speaker 2: have not come to pass yet. But when you look
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Speaker 2: at what the actual products are that people buy, Paul,
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Speaker 2: you and I have never bought a barrel of crude oil.
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Speaker 2: We wouldn't even know what to do with it. Don't
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Speaker 2: even know like, you know, don't even know like what
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Speaker 2: what I would do with it. Like, again, like Mark
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Speaker 2: Fandetti and I joked about, are we going to start
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Speaker 2: like basement refineries or something like that? Obviously, you know,
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Speaker 2: we're not. But I don't even know what I would
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Speaker 2: do with crude oil. But look, I've talked to a
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Speaker 2: lot of people in the last couple of weeks that
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Speaker 2: in the New England region are starting to figure out, hey,
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Speaker 2: like we've got home heating oil. When should we be
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Speaker 2: buying crude? Those are conversations that are happening now, and
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Speaker 2: home heating oil basically tracks the price of diesel. Gas
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Speaker 2: prices remain elevated. So these are still things that are concerning,
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Speaker 2: but the big thing is, hey, why have they not
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Speaker 2: impacted the broader economy? I think there are two answers
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Speaker 2: that I have, Paul. The first is, in the first
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Speaker 2: half of the year, we had some larger tax refunds
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Speaker 2: and things like that that were helping to, you know,
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Speaker 2: make things more palatable on that front as far as
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Speaker 2: being able for households to pay for things. But the
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Speaker 2: other thing is what's been driving the economy for the
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Speaker 2: last four years remains the same today, and that is
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Speaker 2: the continued acceleration of the AI build-out. And that is
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Speaker 2: not something that is where gas and oil prices are
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Speaker 2: a huge factor.
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Speaker 3: No, certainly a very energy reliant area. And you could
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Speaker 3: make the argument on maybe some offshoots on like natural gas,
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Speaker 3: but yeah, not a pure oil and gas deal. And
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Speaker 3: these companies are willing to spend whatever it takes, even
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Speaker 3: if the energy costs are more elevated, they are putting
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Speaker 3: a bigger priority on the data center buildup rather than
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Speaker 3: getting concerned with energy prices. So Yeah, it has been
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Speaker 3: a surprise, a pleasant surprise, I think, for markets that
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Speaker 3: while it is more painful at the pump and diesel
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Speaker 3: costs are certainly more painful to deal with, it hasn't
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Speaker 3: led to the economic disruption that many would have thought
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Speaker 3: in March or April.
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Speaker 2: Let's take a quick break here. When we return, we've
8:31
Speaker 2: got some trivia and then we'll talk a little bit
8:34
Speaker 2: about the housing market next.
8:36
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10:05
Speaker 2: Paul, we got a piece from Axios here that I
10:09
Speaker 2: disagree with the premise on. It says the housing market's
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Speaker 2: fragile place And it talks about how, you know, housing
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Speaker 2: isn't good right now and that, you know, a lot
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Speaker 2: of people are locked into their homes and blah, blah, blah, blah, blah, blah.
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Speaker 2: All of which is true. But here's the deal is
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Speaker 2: if you look right now at what is happening in
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Speaker 2: the areas where things matter most to the national housing market.
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Speaker 2: And by that, I mean basically take away New England,
10:37
Speaker 2: take away the Midwest and take away California. Because those
10:42
Speaker 2: are not driving any kind of construction or activity. They're
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Speaker 2: just not. Really, it's the southern part of the country
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Speaker 2: that is kind of in the driver's seat there. Those
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Speaker 2: parts of the country have already gone through the housing
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Speaker 2: crap in the last couple of years. Talk to anyone
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Speaker 2: down in Fort Myers about how much value was lost
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Speaker 2: on homes from 2023 to 2025. Talk to anyone in Austin,
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Speaker 2: Texas about the same thing. Atlanta, Georgia, talk to anyone
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Speaker 2: in Phoenix. They'll tell you, yeah, it was really bad.
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Speaker 2: They'll now tell you, hey, inventory has stabilized, prices have stabilized,
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Speaker 2: and we've got signs that builders are getting ready to
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Speaker 2: come back to those markets in the next nine to
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Speaker 2: 12 months, which means that globally, not globally, nationally, you
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Speaker 2: start seeing uptick in housing activity that can kind of
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Speaker 2: take the torch from AI and and lead the economy
11:37
Speaker 2: at a certain point, probably in 27 or 28. I
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Speaker 2: think that it might be ready to, you know, really
11:43
Speaker 2: contribute to economic activity here in the Northeast where our
11:47
Speaker 2: show is based. There still is another probably year to
11:50
Speaker 2: year and a half of stuff to sort through. Same
11:52
Speaker 2: with the Midwest. California is its own different beast because
11:55
Speaker 2: there's basically no building that happens there at scale. At
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Speaker 2: this point, you have, you know, some that does, but again,
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Speaker 2: the places that typically can be built are already built.
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Speaker 2: But what you do have happening in California, there's all
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Speaker 2: this AI money sloshing around. You see these listings in
12:11
Speaker 2: San Francisco that go for like 50 percent over asking price.
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Speaker 2: You're like, oh, like 50 percent in SF. What's the deal?
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Speaker 2: And it's like a six million dollar place that goes
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Speaker 2: for nine because some guy just got a bunch of
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Speaker 2: AI money. And OK, he's buying a place now. So
12:26
Speaker 2: I look at the housing market now and I'm very optimistic, actually,
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Speaker 2: for the next couple of years after it's basically been
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Speaker 2: kind of not great for like four years now.
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Speaker 3: I would say that I probably don't have as much optimism,
12:40
Speaker 3: but at the same time, not necessarily pessimism either. I
12:43
Speaker 3: do feel like there is the possibility on the pessimistic
12:46
Speaker 3: side that if you get lower rates, that would stir
12:48
Speaker 3: up some activity. But ultimately, if rates are to stay
12:52
Speaker 3: where they are, I still think that you could see
12:54
Speaker 3: muted activity on the housing front. Maybe some of the
12:57
Speaker 3: inventory that does get added in those areas that you
12:59
Speaker 3: mentioned is does boost things, but I tend to think
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Speaker 3: that it will continue to sort of march along at.
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Speaker 1: A steady pace.
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Speaker 3: But the idea of categorizing it as fragile, I would
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Speaker 3: agree with you that I disagree with that categorization. And
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Speaker 3: in particular, the other piece that I found sort of
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Speaker 3: frustrating with this Axios piece is this idea that because
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Speaker 3: homeowners are sitting on such a tremendous amount of equity,
13:24
Speaker 3: for those people who bought pre-COVID or maybe during the
13:28
Speaker 3: early beginnings of COVID, that is driving them to higher
13:31
Speaker 3: consumer spending. Maybe I'm wrong, but I've just never really
13:34
Speaker 3: thought of it that way, that just because I'm sitting
13:37
Speaker 3: on greater home equity because I bought my house in 2021,
13:40
Speaker 3: that drives me to spend more. Maybe the mortgage payment
13:43
Speaker 3: that I have being so low, that does drive spending elsewhere.
13:47
Speaker 3: But I just don't think on a year-to-year basis now,
13:49
Speaker 3: five or six years removed from some of the lower
13:52
Speaker 3: interest rates that really drives more consumer spending. So, uh, yeah,
13:56
Speaker 3: I have some bones to pick with this space too,
13:58
Speaker 3: not a fragile place. And I don't think higher homeowner
14:01
Speaker 3: equity leads to more consumer spending as a one-to-one correlation.
14:05
Speaker 2: Folks, the Armstrong advisory group has a guide available this month.
14:09
Speaker 2: It's titled navigating retirement housing choices. And it's all about, Hey,
14:14
Speaker 2: where should you be living at various points in your retirement?
14:18
Speaker 2: Can it be the same place that you raised your
14:19
Speaker 2: kids in? Or do you need to consider something that's
14:22
Speaker 2: maybe a little bit better suited for not being able
14:26
Speaker 2: to be as active? Maybe you've got too many stairs
14:28
Speaker 2: in your current place. Maybe you don't have enough stairs
14:30
Speaker 2: and you love going upstairs. I don't know. Everyone's different.
14:33
Speaker 2: But in any case, this is not just about figuring
14:36
Speaker 2: out where to live at the beginning of retirement. But
14:38
Speaker 2: what about as you get older? And what about as
14:40
Speaker 2: you maybe start to see your amount of physical activity
14:44
Speaker 2: and the amount that you can handle deteriorate? What should
14:48
Speaker 2: you be doing at all of those different points in time?
14:51
Speaker 2: And how do you think about what you might need
14:54
Speaker 2: in the future? The guide, again, is titled Navigating Retirement
14:58
Speaker 2: Housing Choices. And there are two ways that you can request.
15:01
Speaker 2: The first, you can go to armstrongadvisory.com. Right at the top,
15:05
Speaker 2: there's a little button that says Get Our Free Monthly Guide.
15:07
Speaker 2: You can click there and request it right through that page.
15:10
Speaker 2: Or you can call 800-393-4001. Again, the guide is titled
15:18
Speaker 2: Navigating Retirement Housing Choices, and you can request it at armstrongadvisory.com
15:23
Speaker 2: or by calling 800-393-4001. The proceeding was paid for by
15:29
Speaker 2: Armstrong Advisory Group, a registered investment advisor. Nothing in the
15:33
Speaker 2: ad or in any Armstrong guide is specific financial, legal,
15:35
Speaker 2: or tax advice. Consult your own financial, tax, and estate
15:38
Speaker 2: planning advisors before making any investment decisions. Armstrong may contact
15:41
Speaker 2: you to offer investment advisory services. Paul, we've got to
15:45
Speaker 2: talk a little bit about space here, if you're cool
15:48
Speaker 2: with that. Sure, let's do it. Yeah, we've got to
15:51
Speaker 2: talk about space. Tucker forwarded this on to me, and
15:52
Speaker 2: I'm glad he did. Did either of you happen to
15:55
Speaker 2: stay up for the.
15:59
Speaker 2: The lunar eclipse?
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Speaker 1: No.
16:00
Speaker 2: Yeah, the partial lunar eclipse last night.
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Speaker 4: I was in bed by nine.
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Speaker 2: Oh, my goodness. You didn't even know it was going on. Well,
16:06
Speaker 2: I've got to say, for those of you who are
16:07
Speaker 2: watching on the old YouTube... The picture behind me is
16:11
Speaker 2: not of that eclipse, but it's of another partial lunar eclipse.
16:14
Speaker 2: I was going to say, that was quick. I had
16:16
Speaker 2: to develop very quickly. No, unfortunately, my telescope skills, they're
16:20
Speaker 2: not great. They're okay at best. I do have a telescope,
16:25
Speaker 2: but it's not as cool as the one that NASA
16:27
Speaker 2: is going to be launching on Sunday, which is the
16:30
Speaker 2: Roman Space Telescope, which was built by Julius Caesar back
16:33
Speaker 2: in 266 B.C., No, it's actually named after Susan Roman,
16:38
Speaker 2: who was the first chief of astronomy and first female
16:43
Speaker 2: executive to ever lead the agency. And basically the deal
16:47
Speaker 2: with the Roman Space Telescope, the camera is built to
16:52
Speaker 2: have a field of view a hundred times larger than
16:57
Speaker 2: the Hubble Telescope, which, remember, Hubble's been down for a
17:00
Speaker 2: while now. The James Webb replaced Hubble maybe eight or
17:04
Speaker 2: ten years ago, I think. But this basically every picture
17:08
Speaker 2: you take with this Roman space telescope is going to
17:12
Speaker 2: have basically the equivalent of a hundred pictures that Hubble
17:15
Speaker 2: would have had to take. So it's just like wild
17:19
Speaker 2: what you can do there. It also has a spectrometer
17:24
Speaker 2: which measures different visible light that's coming, not just visible,
17:28
Speaker 2: but visible and visible. you know, UV, infrared, all that
17:31
Speaker 2: stuff that's coming in. And the goal there is to
17:34
Speaker 2: be able to learn about the potential for other planets
17:38
Speaker 2: in other solar systems so that we can figure out, hey,
17:42
Speaker 2: is there anything that looks kind of like Earth that's
17:44
Speaker 2: out there? So as a space geek, I'm pretty fired
17:49
Speaker 2: up about this one, if I'm being honest.
17:51
Speaker 4: So when are we going to start seeing these images
17:54
Speaker 4: if it's launching on Sunday?
17:56
Speaker 2: My guess, based on what we saw from James Webb
18:01
Speaker 2: launched in 2021, I think the first pictures we got
18:04
Speaker 2: from it were about a year later. Oh, a year.
18:08
Speaker 5: Oh.
18:08
Speaker 2: So I think you're probably looking like mid to late
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Speaker 2: 27 for the first pictures that we can get from
18:18
Speaker 2: the Roman telescope.
18:20
Speaker 5: Wow.
18:21
Speaker 1: Yeah.
18:21
Speaker 3: There are some stories that come up where I'm glad
18:24
Speaker 3: that you're here to cover it, Chuck, and that I
18:27
Speaker 3: didn't have to chip in much there. You did a
18:29
Speaker 3: great job covering it, but I would be unable to
18:32
Speaker 3: add much insight.
18:32
Speaker 2: Paul's not a space guy, can you tell? Paul's more
18:35
Speaker 2: of a garlic guy, we know. We know. But yeah,
18:39
Speaker 2: so NASA's going to be launching this on Sunday is
18:42
Speaker 2: when the launch is taking place. It is a little early.
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Speaker 2: I won't be up for this one, to be honest.
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Speaker 2: It's at 620. Actually, 620. I'll probably be up. Who
18:51
Speaker 2: am I kidding?
18:52
Speaker 4: Why would you want to watch a telescope being launched?
18:54
Speaker 2: What do you mean? Why wouldn't you?
18:56
Speaker 5: Busy.
18:57
Speaker 2: What are you doing at 620?
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Speaker 4: Probably wrangling the kids around to something.
19:02
Speaker 1: Coffee. Oh, no.
19:03
Speaker 2: We have a hard don't come out of your room
19:05
Speaker 2: until 7 a.m.
19:06
Speaker 1: Oh, that must be nice.
19:07
Speaker 2: It's pretty good most of the time. Yeah, it's pretty good.
19:11
Speaker 2: But let's take a quick break. And when we return,
19:17
Speaker 2: we've got the trivia answer and Wall Street Watch.
19:27
Speaker 1: Bringing the latest financial news straight to your radio every day.
19:31
Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
19:37
Speaker 2: And now for.
19:38
Speaker 1: Wall Street Watch, tracking the stocks, the data, and the
19:41
Speaker 1: headlines driving markets so far today, right here on the
19:44
Speaker 1: Financial Exchange Radio Network.
19:47
Speaker 4: Markets are modestly in positive territory after Fed Chairman Kevin
19:51
Speaker 4: Warsh gave his first keynote address at the Jackson Hole
19:54
Speaker 4: Symposium where he indicated inflation isn't slowing. and vows to
19:58
Speaker 4: hit the Fed's 2% target. Right now, the Dow is
20:02
Speaker 4: up 0.4% or 208 points higher. S & P 500
20:03
Speaker 4: up by a similar measure, 32 points higher. NASDAQ up
20:04
Speaker 4: nearly 0.5% or 124 points up. Russell 2000 retreating about 0.5%.
20:06
Speaker 4: Tenure Tresreal is now up 3 basis points at 4.70%
20:08
Speaker 4: and oil dipping about half a percent, trading at $ 83
20:25
Speaker 4: a barrel. Marvell Technology reported higher revenue and earnings in
20:28
Speaker 4: the previous quarter, where the semiconductor company raised its guidance
20:32
Speaker 4: for the current and upcoming fiscal years. However, investors are
20:35
Speaker 4: seemingly not impressed by its 2028 fiscal outlook, sending shares
20:40
Speaker 4: down by 8%. Meanwhile, Bloomberg reported that a consortium including
20:44
Speaker 4: Advent and Stripe, decided to abandon its $ 50 billion pursuit
20:49
Speaker 4: of PayPal. PayPal shares are down by 11% on that news.
20:54
Speaker 4: And Gap is seeing its stock rally nearly 13% after
20:58
Speaker 4: the retailer announced it hired retail veteran Michael Francis as
21:02
Speaker 4: its next CEO of Old Navy, its largest brand. Francis
21:07
Speaker 4: has previous experience at Target in the early 2000s and
21:11
Speaker 4: also served as a key consultant at Walmart for about
21:15
Speaker 4: a decade. I'm Tucker Silva. That is Wall Street Watch.
21:18
Speaker 4: And in the previous segment, we asked you the trivia question,
21:20
Speaker 4: what real-world job did the woman who inspired the song
21:24
Speaker 4: Jolene hold? That would be a bank teller. And Keith
21:28
Speaker 4: from Concord, New Hampshire, is our winner today, taking home
21:31
Speaker 4: a Financial Exchange Show t-shirt. Congrats to Keith. We play
21:35
Speaker 4: trivia every Friday here on the Financial Exchange. See complete
21:39
Speaker 4: contest rules at financialexchangeshow.com.
21:43
Speaker 2: Paul, we got a piece in Bloomberg. AI's two-minute home
21:46
Speaker 2: refinancing's menace mortgage securities. So this is, you got lenders saying, hey,
21:52
Speaker 2: we're going to be able to do a refinance in
21:54
Speaker 2: 10 minutes once AI is fully integrated. To which I say, baloney.
22:00
Speaker 2: You're not. Okay. Now, they say that right now you
22:05
Speaker 2: can do it in 30 minutes. As someone who, admittedly,
22:08
Speaker 2: I have not refinanced in about four or five years. But, Paul,
22:11
Speaker 2: have you ever refinanced a mortgage?
22:14
Speaker 3: I have not.
22:15
Speaker 2: So, I have. I've done it twice, actually. And here's
22:20
Speaker 2: the problem. Number one, these time frames assume that the
22:24
Speaker 2: average person is going to be able to get all
22:26
Speaker 2: of the documents needed right when they need them. Paul,
22:31
Speaker 2: as someone who's dealt with paperwork, or as anyone who's
22:34
Speaker 2: ever dealt with paperwork, how often would you say... That
22:38
Speaker 2: the person giving you completed paperwork has fully completed every
22:44
Speaker 2: single thing that they need to do exactly how it
22:46
Speaker 2: needs to be done.
22:48
Speaker 3: It's a small percentage of cases. It really is. They're
22:52
Speaker 3: very often is something that is out of their grasp.
22:55
Speaker 3: And doing this for a living, I... put myself in
22:58
Speaker 3: the upper echelon of people who would be well-equipped to
23:01
Speaker 3: get all of that paperwork together relatively quickly, just.
23:04
Speaker 2: Because it's what we do.
23:05
Speaker 3: I mean, getting tax documents, W-2s, all that stuff is
23:09
Speaker 3: so analogous to a lot of the paperwork stuff that
23:11
Speaker 3: we do. But there are many people out there who
23:15
Speaker 3: struggle greatly to pull all that together readily.
23:18
Speaker 2: On top of it, another thing that typically happens during
23:21
Speaker 2: a mortgage refinance, they got to do an appraisal. You're
23:26
Speaker 2: going to just do an AI appraisal? Like, we're just
23:27
Speaker 2: going to do that? Like, okay, like, how is it
23:30
Speaker 2: going to know how that went? You know, like, how
23:33
Speaker 2: is it actually going to go? Like, tell me a
23:35
Speaker 2: little bit about this. So, look, do I believe that
23:39
Speaker 2: you can, you know, cut down the time in order to,
23:43
Speaker 2: you know, time needed in order to approve a refinance? Sure.
23:49
Speaker 2: Does it mean that.
23:52
Speaker 2: You are going to necessarily be able to do that
23:56
Speaker 2: many more refinances? Not necessarily. Look, they're saying like, oh,
24:01
Speaker 2: we'll be able to reach out to people that are
24:03
Speaker 2: eligible more easily. What, you don't know the interest rates
24:06
Speaker 2: of your people and you can't send an automated email
24:08
Speaker 2: right now about refinancing? Why do you need AI to
24:11
Speaker 2: do that? You don't. There are systems that are like,
24:15
Speaker 2: if you have any decent CRM and you're a mortgage broker,
24:19
Speaker 2: a mortgage... whatever you call it, whatever it is. Okay.
24:24
Speaker 2: Here's Jim. His mortgage rate is X right now. They're
24:26
Speaker 2: Y send an email to Jim and do that for
24:29
Speaker 2: all of the people where Y is higher than X.
24:33
Speaker 3: Well, the other thing that isn't discussed here, but I
24:36
Speaker 3: imagine would be a big part of it for anyone
24:38
Speaker 3: looking to refinance check. A big part of it is
24:40
Speaker 3: what are the closing costs going to be? And if
24:42
Speaker 3: you're not going to lower the closing costs in conjunction
24:46
Speaker 3: with making the process more seamless, then, then ultimately that
24:50
Speaker 3: is something that's not gonna lead to more refinances because
24:53
Speaker 3: you have to scrutinize whether going 1% lower on your mortgage,
24:59
Speaker 3: whatever the differential is, okay, I can trim off a
25:02
Speaker 3: half percent on my mortgage by refining, but what's the
25:05
Speaker 3: closing cost? Because ultimately that comes down to be a
25:08
Speaker 3: major factor whether or not you're going to do that
25:11
Speaker 3: refinance and how long you're gonna stay in the home.
25:14
Speaker 3: This doesn't solve it. Just making it an easier process
25:16
Speaker 3: Unless they're going to trim the closing costs, which is
25:18
Speaker 3: cutting into their profitability, I just don't know how it
25:21
Speaker 3: leads to more refis just because AI is in the mix.
25:24
Speaker 2: I tend to agree. Paul, let's talk now about this
25:27
Speaker 2: piece from Axios, the top-growing jobs in the country. Occupations
25:31
Speaker 2: projected to add the most jobs between 2025 and 2035.
25:33
Speaker 2: What jobs are they?
25:38
Speaker 3: Healthcare is really the number one. Home healthcare aides, 850,000
25:42
Speaker 3: jobs projected. I really always like to put many grains
25:46
Speaker 3: of salt when you're looking at 10-year job projections. I
25:49
Speaker 3: think that's a futile effort. I don't even know if
25:53
Speaker 3: it's worth putting too much stock in here as well,
25:55
Speaker 3: because after the home healthcare aides, which I think all
25:57
Speaker 3: of us can get behind, you've got an aging population,
26:00
Speaker 3: the baby boomers are becoming the most dominant demographic. Healthcare,
26:04
Speaker 3: for the most part, is relatively immune from the impacts
26:08
Speaker 3: of AI. Yeah, there's arguments that robotics are going to
26:11
Speaker 3: step in, but there's a lot of counter arguments that
26:13
Speaker 3: say nursing and healthcare is going to be the last
26:16
Speaker 3: space that AI would disrupt. After that is where I
26:20
Speaker 3: start to pick some fights here. They say that stockers
26:23
Speaker 3: and order fillers and fast food counter workers are the
26:26
Speaker 3: next two or three jobs that would see tremendous growth.
26:30
Speaker 3: in this next decade. To me, those seem like they
26:33
Speaker 3: are ripe for disruption with AI. Again, come back to
26:37
Speaker 3: my original point, who am I to guess or who
26:40
Speaker 3: is Axios to guess what the next 10 years will
26:42
Speaker 3: look like on the job front? I can get behind
26:44
Speaker 3: the home healthcare aides, a little more skeptical on the
26:47
Speaker 3: fast food counter workers. That just seems like that is
26:50
Speaker 3: really a low hanging fruit for AI to be able
26:54
Speaker 3: to eliminate. Maybe not the workers in the back of
26:56
Speaker 3: the kitchen, but certainly people up the front You already
26:59
Speaker 3: have kiosks very prevalent at McDonald's and other fast food
27:02
Speaker 3: areas that would seem to not allow for a lot
27:05
Speaker 3: of jobs to be added in that space.
27:07
Speaker 2: Let's take a quick break here. When we return, we're
27:09
Speaker 2: going to be joined by Paul LaMonica from Barron's next.
27:35
Speaker 2: we get to paul monica paul you got anything for
27:42
Speaker 2: me for uh stack roulette.
27:45
Speaker 3: Let's take a little bit about this piece here on
27:49
Speaker 3: the ncaa they are now going to be selling jersey
27:53
Speaker 3: patches or rather the universities will be able to sell
27:57
Speaker 3: that space on jerseys out to businesses alike where Ohio
28:02
Speaker 3: state has inked a deal with JP Morgan chase for
28:04
Speaker 3: 17 million bucks a year to have patches on there.
28:08
Speaker 3: So just the continued commercialization of the NCAA.
28:13
Speaker 2: Can I, like, I'm sure there's a reason, but I
28:16
Speaker 2: got to ask a question. It's probably just overall like
28:21
Speaker 2: brand awareness, but, J.P. Morgan Chase. Okay, so they put
28:25
Speaker 2: a Chase logo on the Ohio State jersey, which, first
28:29
Speaker 2: of all, like, blue on red. Like, no, the Ohio
28:32
Speaker 2: State jersey should be red, white, and black and, you know,
28:34
Speaker 2: silver pants. Like, full stop. Who's the person who's like,
28:41
Speaker 2: you know what? There's a Chase logo on that jersey.
28:45
Speaker 2: I'm going to get a mortgage from them or I'm
28:49
Speaker 2: going to see if I can do my small business
28:51
Speaker 2: loan through them. I've never understood it for some of
28:54
Speaker 2: these logos. I'm sure they've done it, the research and
28:58
Speaker 2: the brand awareness and this and that. I get it.
29:01
Speaker 2: They're smarter people than me at marketing. But I always
29:04
Speaker 2: wonder with some of these things, I'm like... you know,
29:06
Speaker 2: with certain things you understand, it's like, Oh, I wonder
29:09
Speaker 2: like what that is. Let me go look it up.
29:12
Speaker 2: And that'll convince me to go like, you know, use them.
29:16
Speaker 2: But in this case, like who's the person who didn't
29:18
Speaker 2: know about JP Morgan chase, but watches an Ohio state
29:22
Speaker 2: game this year and is like, yeah, that's going to
29:25
Speaker 2: be my bank. The same thing.
29:28
Speaker 3: Yeah, you get the brand recognition, like I think Bumble's
29:31
Speaker 3: on one of the NBA jerseys and it's like, where
29:33
Speaker 3: are they driving value from that? But you want to
29:36
Speaker 3: elevate your brand so people know what it is and
29:38
Speaker 3: maybe ask the question to try.
29:40
Speaker 2: And figure it out.
29:41
Speaker 3: But otherwise, you scratch your head when it's these huge companies.
29:44
Speaker 3: What real benefit is it? I'm sure there's some subliminal
29:47
Speaker 3: effect that we're unaware of, but it's always made me
29:51
Speaker 3: scratch my head too as to why a Celtics jersey
29:54
Speaker 3: being sponsored by a business does that business any good.
29:58
Speaker 2: Now, another one. New Mexico State football. They are going
30:01
Speaker 2: to have... Their jersey patch is going to be from
30:04
Speaker 2: the Inn of the Mountain Gods, which is a casino
30:07
Speaker 2: and resort, presumably somewhere in New Mexico, I would imagine.
30:12
Speaker 2: Two thoughts on this. Number one, I see that. I'm like, oh, okay,
30:15
Speaker 2: that's interesting. I've never heard of them. I get how
30:18
Speaker 2: that could drive more business.
30:20
Speaker 1: Right.
30:21
Speaker 2: The downside, though, the name is way too long. How
30:24
Speaker 2: are you going to be able to read that on
30:26
Speaker 2: a jersey patch?
30:27
Speaker 1: Like.
30:28
Speaker 2: Plus, I'm sure it's not a recognizable logo because we've
30:31
Speaker 2: never heard of it. So it's like there has to
30:34
Speaker 2: be a balance here, you know, in terms of what works.
30:37
Speaker 2: But again, these are smarter people than me when it
30:40
Speaker 2: comes to, you know, these kinds of things. So I
30:45
Speaker 2: think that broadly speaking... I really don't get the JP
30:51
Speaker 2: Morgan one, but hey, we'll see kind of what happens.
30:55
Speaker 2: We've now got Paul and Monica all queued up and
30:57
Speaker 2: ready to go for us. Paul, I've been talking to
31:00
Speaker 2: one Paul. Now I've got other Paul, but you're still
31:04
Speaker 2: my favorite Paul. So what's going on, Paul?
31:06
Speaker 5: It's very nice of you.
31:08
Speaker 2: How's everything going?
31:10
Speaker 5: Yeah, pretty good. How's everything going with you guys?
31:13
Speaker 2: We're good. Let's talk a little bit about software this week.
31:16
Speaker 2: Big week for the software sector. Really big few months.
31:20
Speaker 2: We had, you know, in the first quarter of this year, the,
31:24
Speaker 2: you know, kind of plummeting of software companies as one
31:28
Speaker 2: of the big stories in the SEC.
31:29
Speaker 5: Yes, the so-called SaaSpocalypse.
31:31
Speaker 2: Yes, exactly. The SaaSpocalypse was coming. Now we've got, like, the.
31:39
Speaker 2: The sass. I'm trying to work that into like Renaissance,
31:42
Speaker 2: but I can't make it work.
31:44
Speaker 5: But in any case, a little bit, a bit of
31:46
Speaker 5: a tongue twister there.
31:47
Speaker 2: Yeah, it's tough. But what's happening? What's led to this
31:51
Speaker 2: bounce back?
31:53
Speaker 5: Yeah, I mean, Salesforce, look at their earnings a few
31:56
Speaker 5: days ago. The stock was the best performer in the
31:59
Speaker 5: S & P 500, even on the day that Nvidia
32:02
Speaker 5: rallied yesterday. So chips and software moving in the same direction.
32:06
Speaker 5: I think what we saw is that some of the
32:10
Speaker 5: worst case fears about AI destroying the value proposition for
32:15
Speaker 5: big software companies are That really was overblown because Salesforce
32:21
Speaker 5: still has several products that a lot of corporations really
32:26
Speaker 5: rely on and also The narrative that AI was going
32:31
Speaker 5: to kill software instead of partnering with it, I think,
32:36
Speaker 5: was overblown. Just look now, Salesforce partnering, extending its partnership
32:41
Speaker 5: with Anthropic for various cloud-related plugins, and that is helping
32:48
Speaker 5: Salesforce as well.
32:49
Speaker 2: You look at Salesforce.
32:51
Speaker 5: Stock is rallying again today, the IGV software ETF, which
32:56
Speaker 5: had been languishing for much of the year. It's still
32:58
Speaker 5: underperforming the broader market, but it's now back in positive
33:01
Speaker 5: territory for the year. So I think it really does
33:04
Speaker 5: go to show that investors were probably over dramatizing the
33:10
Speaker 5: impact that AI would have on software. It's not a
33:13
Speaker 5: death knell necessarily.
33:15
Speaker 2: So this raises the obvious question then, if companies aren't
33:19
Speaker 2: going to cut their current software expense, But AI companies
33:24
Speaker 2: are spending trillions of dollars to build out all of
33:27
Speaker 2: these new data centers and platforms for being able to
33:33
Speaker 2: do any of the AI work that needs to be done.
33:36
Speaker 2: Where's the money going to come from in order for
33:39
Speaker 2: companies to actually spend enough on AI services for this
33:44
Speaker 2: stuff to pay off?
33:46
Speaker 5: Yeah, I mean, it's a great question. I mean, obviously,
33:49
Speaker 5: there are some concerns about the quote unquote hyperscalers and
33:53
Speaker 5: all the money that they're spending. Amazon had a negative
33:57
Speaker 5: free cash flow quarter because of the spending. There are
34:03
Speaker 5: worries about how much meta Facebook parent is spending on
34:08
Speaker 5: AI and whether or not that's going to pan out.
34:10
Speaker 5: But I think that as long as we see continued
34:16
Speaker 5: gains in earnings and margins for the likes of Amazon
34:19
Speaker 5: and Alphabet and other quote unquote hyperscalers, Microsoft, the companies
34:24
Speaker 5: that have big cloud platforms, it does seem like these
34:28
Speaker 5: AI investments are eventually going to pan out. And then obviously,
34:32
Speaker 5: there's also NVIDIA spending money, even though that's raising concerns
34:37
Speaker 5: about vendor financing, circular financing, bringing back Some of the
34:42
Speaker 5: worries of the dot-com era when companies like Lucent and
34:47
Speaker 5: Alcatel and Nortel were spending a lot on their customers.
34:51
Speaker 5: NVIDIA obviously is pumping in a lot of money to
34:54
Speaker 5: open AI, what is it, over $ 100 billion to help
34:58
Speaker 5: build a data center in Ohio. So NVIDIA, as their
35:03
Speaker 5: earnings showed yesterday, clearly is still in a position of
35:06
Speaker 5: strength to fund a lot of this AI boom.
35:10
Speaker 2: Very good. Paul, appreciate you joining us today. Thanks so
35:13
Speaker 2: much for the time, and I hope you have a
35:15
Speaker 2: fantastic weekend.
35:17
Speaker 5: Thanks a lot.
35:18
Speaker 2: Same to you guys. That is Paul LaMonica with Barron's.
35:23
Speaker 2: Paul Lane, what do you have for me for Stack Roulette?
35:26
Speaker 3: Do you want to be a cool boss, Chuck? There
35:30
Speaker 3: is a piece here in the Wall Street Journal that
35:34
Speaker 3: you no longer can be the life of the party
35:36
Speaker 3: if you want to be a cool boss. I thought
35:39
Speaker 3: that was always kind of implied, but there are several
35:43
Speaker 3: different stories here, one including a Netflix vice president who
35:47
Speaker 3: lost his job after telling his colleagues about his use
35:51
Speaker 3: of ketamine to treat depression, as well as chugging a
35:54
Speaker 3: pint of Guinness while standing on his head at a
35:58
Speaker 3: company retreat. He's suing now for wrongful termination and I
36:03
Speaker 3: don't really understand when this paradigm shifted, but apparently there
36:09
Speaker 3: has been more attempts for these startup CEOs or even
36:14
Speaker 3: a well-established company like Netflix trying to rein in these bosses.
36:19
Speaker 3: Another great story here in this Wall Street Journal piece,
36:21
Speaker 3: a startup CEO got raked over the internet coals for
36:24
Speaker 3: bringing a tattoo artist to a party and offering job
36:27
Speaker 3: interviews to anyone willing to get tattooed.
36:31
Speaker 2: When did this happen? So, a few things. Number one, yeah,
36:37
Speaker 2: it's probably not a great thing to equate someone's job
36:40
Speaker 2: prospects to getting a tattoo. Like, you shouldn't... Depends on
36:46
Speaker 2: the tattoo, I guess.
36:49
Speaker 3: AG tattoos, you're in for life.
36:52
Speaker 2: Financial exchange tattoos, you're in. But some of the stuff, like,
36:56
Speaker 2: a lot of this I don't think is exclusive to, like, executives, right?
37:01
Speaker 2: In general, there's stuff that you can't do today that 50, 60,
37:07
Speaker 2: 70 years ago would have been commonplace in the workforce.
37:10
Speaker 2: So I don't think that this is necessarily related to
37:14
Speaker 2: executives in any way, shape, or form. But it certainly
37:19
Speaker 2: is something where standards change over time, and sometimes those
37:21
Speaker 2: standards get tighter, sometimes they get looser. And I think
37:25
Speaker 2: that's just kind of what we're seeing right now at
37:28
Speaker 2: this point. Uh, but yeah, I, I don't think a
37:32
Speaker 2: hiring manager should be saying, if you get this tattoo,
37:36
Speaker 2: you have a better chance of getting a job that
37:39
Speaker 2: I can see is quite problematic. Let's take a quick
37:42
Speaker 2: break here when we return after the weekend. So it's
37:46
Speaker 2: actually a slightly longer break. Well, we've got a busy
37:49
Speaker 2: week next week with a bunch of economic data.