Latest / The Financial Exchange Show / Credit Card debt sets a new record at $1.21T

Transcript

Credit Card debt sets a new record at $1.21T · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:03
Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
0:05
Speaker 1: registered investment advisor. All opinions expressed are solely those of
0:08
Speaker 1: the hosts. Do not reflect the opinions of Armstrong Advisory
0:11
Speaker 1: or anyone else. Investments can lose money. This program does
0:14
Speaker 1: not offer any specific financial or investment advice. Please consult
0:17
Speaker 1: your own financial, tax, and estate planning advisors before making
0:20
Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
0:23
Speaker 1: this program do not endorse each other or their services.
0:26
Speaker 1: Armstrong and Money Matters Radio do not compensate each other
0:28
Speaker 1: for referrals and are not affiliated. This is the Financial
0:34
Speaker 1: Exchange with Chuck Zada and Paul Lane, your exclusive look
0:38
Speaker 1: at business and financial news affecting your day, your city,
0:42
Speaker 1: your world. Stay informed and up to date about economic
0:46
Speaker 1: and market trends, plus branking business news every day. The
0:50
Speaker 1: Financial Exchange is a proud partner of the Disabled American
0:53
Speaker 1: Veterans Department of Massachusetts. Help us support our great American
0:57
Speaker 1: heroes by visiting DAV five K Boston and making a
1:01
Speaker 1: donation today. This is the Financial Exchange with Chuck Zada,
1:06
Speaker 1: and Paul Lane.
1:10
Speaker 2: Kicking things off here.
1:11
Speaker 3: We got stocks modestly up today. The Dow Jones Industrial
1:17
Speaker 3: Average is up eighty points, a little less than a
1:20
Speaker 3: quarter percent.
1:21
Speaker 2: S ANDP doing a little bit better, up for tens
1:23
Speaker 2: percent or.
1:24
Speaker 3: Twenty five points, and the Nasdaq is up half a percent,
1:28
Speaker 3: or about one hundred and eight points. This despite the
1:30
Speaker 3: NASDAK having four hundred and three more stocks down than
1:34
Speaker 3: up today. It's just that when some of the ones
1:37
Speaker 3: that are up, our names like Apple, Palineer, Shopify tends
1:41
Speaker 3: to float the index because of the relative waitings in there.
1:45
Speaker 3: So overall, stocks off to a good start today after
1:49
Speaker 3: what's been, you know, a choppy few days here, and
1:53
Speaker 3: we've got bonds selling off just a little bit on
1:56
Speaker 3: the long end, nothing huge, but the ten years up
1:59
Speaker 3: two point two basis points to four point two one
2:02
Speaker 3: eight percent. In mortgage world, according to Mortgage News Daily,
2:06
Speaker 3: the national average for a thirty year fixed rate mortgage
2:09
Speaker 3: ticked up one basis point to six point five eight percent.
2:12
Speaker 2: But we're still at the low end.
2:13
Speaker 3: Of the range that we've been in in the last
2:15
Speaker 3: few months, so some good news for borrowers there as
2:19
Speaker 3: rates tick closer to six and a half than seven percent.
2:22
Speaker 3: We'll see if that loosens things up in what has
2:24
Speaker 3: been a pretty tough environment nationally for home sellers. But
2:29
Speaker 3: obviously everything's regional. If you're trying to sell home in
2:32
Speaker 3: Connecticut or in Massachusetts, probably not having too much trouble
2:36
Speaker 3: doing that. If you're trying to sell one in Florida
2:38
Speaker 3: or Colorado, it's a little bit of a different story
2:41
Speaker 3: the last year. So we'll see how things continue to evolve.
2:45
Speaker 3: By the way, even within parts of those states, you
2:47
Speaker 3: still have hot parts and parts that are not as hot,
2:50
Speaker 3: So it's, you know, very it's always local when it
2:53
Speaker 3: comes to real estate other things that are moving today.
2:56
Speaker 3: We've got oil up eighty one cents a barrel on
2:58
Speaker 3: West Texas Intermediate to sixty five ninety seven a barrel,
3:03
Speaker 3: and gold is up ten cents an ounce to thirty
3:09
Speaker 3: four thirty four and eighty cents. Glad we put on
3:11
Speaker 3: a shirt for that one. Let's talk a little bit
3:15
Speaker 3: about credit card debt. You always get these scary headlines
3:19
Speaker 3: like credit card debt reaches one point two to one
3:23
Speaker 3: trillion dollars in line with last year's all time high,
3:27
Speaker 3: and y FED fines and here's the thing. Couple different
3:31
Speaker 3: things that matter when it comes to credit card debt,
3:34
Speaker 3: because honestly, the top line number doesn't number one. What
3:41
Speaker 3: percentage of that is being carried month to month as
3:45
Speaker 3: a balance as opposed to being paid off generally it's
3:48
Speaker 3: about fifty percent is where where we see that number.
3:52
Speaker 3: So if you just get nervous about the overall number
3:55
Speaker 3: of credit card debt, the overall amount of credit card debt,
3:58
Speaker 3: you're kind of missing the boat in that line of
4:00
Speaker 3: that is not actually outstanding month to month. It's someone
4:04
Speaker 3: racks up fifteen hundred dollars a credit card debt in
4:06
Speaker 3: the month and they fully pay that balance off next month,
4:08
Speaker 3: and that's not really problematic.
4:10
Speaker 2: They might just want the points.
4:11
Speaker 4: However, I was surprised that it's fifty to fifty. If
4:14
Speaker 4: you had asked me to guess the percentage, I would
4:16
Speaker 4: have thought that more people paid off their credit cards.
4:18
Speaker 4: But that's me not recognizing how our country operates, Yeah,
4:22
Speaker 4: which is spend as much as you know you can.
4:25
Speaker 3: I would have thought it was close to sixty five
4:26
Speaker 3: to thirty five. Yeah, some way like not. It wouldn't
4:29
Speaker 3: have been like everyone, but.
4:30
Speaker 2: I would have thought sixty five thirty five. But I
4:32
Speaker 2: get what you're saying.
4:33
Speaker 3: The other piece is so one point two one trillion,
4:36
Speaker 3: it's it's in line with last year's all time high.
4:40
Speaker 3: But there's this little tiny thing called inflation, which means
4:45
Speaker 3: that in inflation adjusted terms, we're still actually below last
4:48
Speaker 3: year's all time high because prices have gone up almost
4:51
Speaker 3: three percent in the last year, and so relative to
4:54
Speaker 3: inflation and salaries, there's actually not as much credit card
4:57
Speaker 3: debt as there was last year. Other things that matter
5:02
Speaker 3: as it relates to, you know, credit card debt is hey,
5:07
Speaker 3: how much of it is actually delinquent? And what we've
5:10
Speaker 3: been seeing, interestingly, even though delinquencies went up in the
5:15
Speaker 3: first part of this year, the credit card cut issuers
5:19
Speaker 3: and the banks have said that they started to see
5:22
Speaker 3: a turn for the better in terms of delinquencies in
5:25
Speaker 3: the last few months. Whether that's just a little wiggle
5:27
Speaker 3: in the data or the start of a new trend,
5:30
Speaker 3: don't know.
5:31
Speaker 2: But I'm not someone who looks.
5:33
Speaker 3: At credit card debt and inherently just goes, oh no,
5:37
Speaker 3: like it's gonna be a huge problem. It's something to monitor.
5:40
Speaker 3: But the other thing about credit card debt, it usually doesn't.
5:43
Speaker 3: It's not big enough to cause a major financial crisis
5:47
Speaker 3: on its own. It's just not same as auto loans.
5:51
Speaker 3: It can cause, you know, some localized problems. And I'm
5:53
Speaker 3: not saying it's good for people that have a bunch
5:55
Speaker 3: of outstanding credit card debt, but in terms of the
5:57
Speaker 3: broad impact on the US economy, I think it's more
6:00
Speaker 3: indicative of where there may be problems as opposed to
6:04
Speaker 3: it being a problem in it of itself.
6:06
Speaker 4: Couldn't agree with you more. You hit a lot of
6:08
Speaker 4: the major points that on the credit card debt side
6:11
Speaker 4: of things, there's there's not too much left for me
6:15
Speaker 4: to add there. This is a you know, the longer
6:17
Speaker 4: you do this show, the more you start to get
6:20
Speaker 4: through the material that these all these you know, areas
6:23
Speaker 4: that we read from publications published on an annual basis,
6:26
Speaker 4: and this is one of the tropes that is a
6:29
Speaker 4: go to in terms of just putting out a big
6:31
Speaker 4: credit card debt number and saying it's reached a high
6:35
Speaker 4: And particularly when you use dollar values, first of all,
6:37
Speaker 4: trillions a huge number, and second of all, when you're
6:41
Speaker 4: accounting for inflation and things like that, it's it's always
6:45
Speaker 4: going to sound more dangerous or more peril for the
6:50
Speaker 4: economy seeing and hearing that number than what is actually
6:53
Speaker 4: underneath the surface, and you hit on kind of the
6:56
Speaker 4: considerations to take away from that number.
6:59
Speaker 3: Yeah, let's you know what actually would be fun to do,
7:03
Speaker 3: Like if we want to talk about good things, right,
7:06
Speaker 3: let's talk about average household income in the United States,
7:09
Speaker 3: not median, but average, because the average is what's actually
7:12
Speaker 3: going to matter for this calculation. Average household income is
7:15
Speaker 3: about one hundred and fourteen thousand dollars. Median is eighty thousand.
7:18
Speaker 3: So you've got a bunch of high earners that skew
7:19
Speaker 3: that average up, but the average matters for what I'm
7:23
Speaker 3: about to do. If we got one hundred and fourteen
7:25
Speaker 3: thousand dollars per year as the average household income, Paul,
7:30
Speaker 3: do you know how many households there are in the
7:31
Speaker 3: United States? I looked this up yesterday, which is the
7:33
Speaker 3: only reason I know it. One hundred million, pretty close
7:38
Speaker 3: one hundred and thirty million.
7:40
Speaker 4: So we'll take that. We'll take that.
7:42
Speaker 3: Here's the stat that I want to tell everyone is
7:45
Speaker 3: that in twenty twenty four, total household income hit a
7:49
Speaker 3: new record too, of about fourteen point eight trillion dollars.
7:53
Speaker 4: We've never made so much week.
7:54
Speaker 3: We've never made so much money. See what I did there, yep.
7:58
Speaker 3: So now it's not like everyone listening is like, well,
8:01
Speaker 3: you know, bub bah bah. And that's my point is,
8:03
Speaker 3: if you're gonna poop poo the good stuff, you got
8:05
Speaker 3: to poopoo the bad stuff, because ultimately, without context, none
8:08
Speaker 3: of it means anything. So, yes, we have more credit
8:11
Speaker 3: card debt than we've ever had, but we're also making
8:14
Speaker 3: more money than we ever had in the hole, and
8:17
Speaker 3: so whether that credit card debt is good or bad
8:20
Speaker 3: is not just a function of how big that number is,
8:22
Speaker 3: but how big that number is relative to incomes in
8:25
Speaker 3: the overall economy and all this other stuff.
8:29
Speaker 2: So there's that. Let's take a quick break here.
8:33
Speaker 3: When we come back, I do want to talk about
8:36
Speaker 3: a part of the economy that is really quite bad
8:39
Speaker 3: right now, and that is housing.
8:41
Speaker 2: So let's take a quick break. We'll talk housing.
8:43
Speaker 3: We've also got some trivia when we come back, so
8:45
Speaker 3: make sure you get ready for that.
8:49
Speaker 1: Find daily interviews and full shows of the Financial Exchange
8:52
Speaker 1: on no our YouTube page. Subscribe to our page and
8:55
Speaker 1: get caught up on anything and everything you might have missed.
8:58
Speaker 1: This is the Financial Exchange Radio Network. The Financial Exchange
9:04
Speaker 1: is life on Series XM's Business radio channel one thirty
9:07
Speaker 1: two weekdays from eleven to noon. Get the latest business
9:10
Speaker 1: and financial news from across the country and around the world,
9:13
Speaker 1: and keep up to date on how it might affect
9:16
Speaker 1: your wallet. That's the Financial Exchange weekdays from eleven to
9:19
Speaker 1: noon on Series XM's Business Radio Channel one thirty two days.
9:23
Speaker 1: He's the Financial Exchange Radio Network.
9:32
Speaker 5: All right, time for trivia here in the Financial Exchange.
9:35
Speaker 5: And I think it was last night or earlier today
9:38
Speaker 5: it was announced that Disney's ESPN will acquire NFL Network's
9:42
Speaker 5: assets and the rights to stream the WWE's premium live events.
9:48
Speaker 5: ESPN began airing live sports back in nineteen eighty when
9:52
Speaker 5: it acquired the rights to the early rounds of the
9:56
Speaker 5: men's NCAA basketball Tournament. So question today is simply what
10:02
Speaker 5: year did Disney purchase ESPN? Again? Trivia question today, what
10:07
Speaker 5: year did Disney purchase ESPN? B the seventh person today
10:13
Speaker 5: at text us at six one, seven, three, six, two,
10:16
Speaker 5: thirteen eighty five with the correct answer You know when
10:18
Speaker 5: a Financial Exchange Show t shirt Once again, the seventh
10:21
Speaker 5: correct response to text us to the number six one, seven, three, six, two,
10:25
Speaker 5: thirteen eighty five will win that T shirt. See complete
10:28
Speaker 5: contest rules at Financial Exchange Show dot com.
10:31
Speaker 3: Paul, we got a piece from CNBC talking about housing,
10:36
Speaker 3: and basically housing is not in a good spot, whether
10:41
Speaker 3: you're talking about sales, volume, construction. It's it's dodgy out
10:46
Speaker 3: there in a large portion of the country right now.
10:48
Speaker 4: No question, there's a lot of angles that you could
10:51
Speaker 4: hit at it from a negative perspective, you know, first,
10:53
Speaker 4: starting with the affordability side of things. We have mortgage
10:57
Speaker 4: rates at seven percent for and those have stayed releatively
11:00
Speaker 4: level for the majority of this year. And you've got
11:04
Speaker 4: prices that have increased over the course of the last
11:06
Speaker 4: four or five years, you know, upwards of thirty forty
11:09
Speaker 4: fifty percent, depending on what area you're looking at. Now,
11:13
Speaker 4: what we've seen from the housing market this year, active
11:15
Speaker 4: inventory has risen significantly over the last twenty months in
11:20
Speaker 4: a row. We have seen more inventory available. We are
11:23
Speaker 4: now close to about a million homes that are listed nationally,
11:27
Speaker 4: which is right around where we were in pre pandemic
11:31
Speaker 4: levels for many years prior to that, when the housing
11:33
Speaker 4: market was just on fire. You saw very limited listings
11:37
Speaker 4: out there, much less than the million that I just quoted.
11:40
Speaker 4: And then if you just take a look at some
11:43
Speaker 4: of the other dynamics that we have in place here,
11:46
Speaker 4: we have areas of the country that are seeing declines
11:49
Speaker 4: from a pricing perspective in terms of what they're listing.
11:52
Speaker 4: If you look at Austin or floor areas of Florida,
11:55
Speaker 4: they have seen decreases over three to five percent for
11:59
Speaker 4: the last you're on their prices, and homes are being
12:01
Speaker 4: cut the prices on them listed. So, like you know,
12:04
Speaker 4: I just threw out four or five different things, and
12:07
Speaker 4: you could probably hit on more. It's just hard to
12:10
Speaker 4: point to any real positive that you can find for housing.
12:13
Speaker 4: And when we were having this conversation a couple of
12:16
Speaker 4: years ago, is hey, if inventory can just get back
12:18
Speaker 4: to where it was pre pandemic, that will create a
12:21
Speaker 4: more reasonable housing market. But what wasn't accounted for in
12:25
Speaker 4: that prediction is interest rates being a little bit higher,
12:28
Speaker 4: and as a result of that, you have not seen
12:31
Speaker 4: tremendous sales volume, and it's hard to make the argument
12:34
Speaker 4: that you're going to see it in the next six months.
12:36
Speaker 2: Or so either yeah.
12:37
Speaker 3: And in terms of what you're seeing on price cuts
12:40
Speaker 3: right now, this data from a Compass intelligence forty one
12:45
Speaker 3: point seven percent of listings out there currently have price
12:50
Speaker 3: cuts on them outside of the latter part of twenty
12:54
Speaker 3: twenty two. That is the highest percentage of listed properties
12:58
Speaker 3: with price cuts in the past twelve years. So it
13:02
Speaker 3: tells you what we're seeing normally at this time of year.
13:05
Speaker 3: You've got thirty one to thirty two percent of properties
13:08
Speaker 3: with price cuts on them in a normal market, and
13:12
Speaker 3: it just speaks to the fact that people can't afford
13:15
Speaker 3: these listed prices out there right now. And it's a
13:19
Speaker 3: combination of factors. It's the mortgage rates obviously, you know,
13:24
Speaker 3: having rates still in the six and a half to
13:25
Speaker 3: seven range is you know, tough for a lot of folks.
13:29
Speaker 3: But it's also home insurance premiums have gone up significantly,
13:34
Speaker 3: and so one of the things that you do see,
13:36
Speaker 3: you're seeing a higher percentage of deals falling through now
13:40
Speaker 3: than normal. Typically you see anywhere from like seven to
13:43
Speaker 3: ten percent of deals fall through between signing of a
13:48
Speaker 3: P and S and closing it. It varies in different
13:50
Speaker 3: states because of some states you don't have to sign
13:52
Speaker 3: a P and S. But basically it's usually seven to
13:54
Speaker 3: ten percent of deals fall through. For single family real estate,
13:57
Speaker 3: you're seeing close to fifteen to sixteen percent through now.
14:01
Speaker 3: And usually the reason why is you go and you
14:04
Speaker 3: get your homeowner's insurance quotes after you, you know, put
14:08
Speaker 3: the get the offer on the property, and people come
14:10
Speaker 3: back and they're like, oh, I thought it was gonna
14:12
Speaker 3: be three thousand new ensure this home and it's ten thousand.
14:14
Speaker 2: I can't afford that.
14:16
Speaker 3: Other things that you're seeing that are making it challenging
14:18
Speaker 3: property taxes have gone up as well in a lot
14:20
Speaker 3: of places. And this is before you get to the
14:23
Speaker 3: new problem that we're all going to be hearing an
14:26
Speaker 3: awful lot about in the next couple of years, which
14:29
Speaker 3: is electricity rates and utility rates. Because data centers are
14:33
Speaker 3: just eating electricity. They open their big data center mouths
14:38
Speaker 3: and go nom noam numb and they take all the
14:40
Speaker 3: electricity that they want. And so housing is is in
14:45
Speaker 3: quite a pickle.
14:46
Speaker 2: Now.
14:46
Speaker 3: The good news is that it does suggest that, hey,
14:49
Speaker 3: housing is likely to become more affordable in the future,
14:53
Speaker 3: but it's tough for me to see like any kind
14:56
Speaker 3: of significant decline in prices now, just because I think
15:00
Speaker 3: there's at least a baseline, but it might be something
15:02
Speaker 3: where relative to broader inflation, maybe you just see like
15:06
Speaker 3: five or six years where home prices don't really go anywhere,
15:09
Speaker 3: and that's how the housing market normalizes as incomes catch
15:12
Speaker 3: up to where prices are. So it's it's messy, it's challenging.
15:16
Speaker 3: It's gonna still depend a ton on local markets, but
15:21
Speaker 3: it's a little bit dodgy out there, especially for home
15:23
Speaker 3: builders who are now continuing to reduce new construction. And
15:27
Speaker 3: I think we're on the verge of maybe starting to
15:29
Speaker 3: see an uptick in either layoffs in the construction industry
15:34
Speaker 3: or just reduced head counts that come through theirs.
15:36
Speaker 4: Yeah, you mentioned the income catching up, and what was
15:39
Speaker 4: rattling around my head as you had mentioned earlier that
15:41
Speaker 4: the average income was one hundred fourteen thousand. I think
15:43
Speaker 4: he said for the house medians eighty thousand. Yeah, so
15:46
Speaker 4: the average at one hundred fourteen thousand. Let's say the
15:49
Speaker 4: I believe the median home prices call it four twenty
15:52
Speaker 4: five to four fifty throughout the country if you just
15:54
Speaker 4: look at the standard. Okay, someone puts twenty percent down
15:57
Speaker 4: and has a three hundred and sixty thousand dollars mortgage
16:00
Speaker 4: that would equate to a ballpark. I mean, it varies
16:03
Speaker 4: depending on where you live. You know, twenty five hundred
16:05
Speaker 4: bucks for a monthly mortgage payment, that same person who's
16:08
Speaker 4: making one hundred and fourteen thousand from an income perspective,
16:12
Speaker 4: maybe they're walking away with call it seventy or eighty
16:15
Speaker 4: grand a year, and then you maverage that out monthly,
16:19
Speaker 4: they're pulling in five grand a month. Again all ballpark numbers.
16:23
Speaker 4: But if twenty five hundred bucks needs to go to
16:25
Speaker 4: your mortgage and you're pulling in five or six k,
16:28
Speaker 4: that's eating up a lot of your net after tax income.
16:32
Speaker 4: So that just speaks to the affordability issue that we're
16:34
Speaker 4: seeing here. The incomes just haven't caught up.
16:36
Speaker 3: Yeah, real problem there. McDonald's reported earnings this morning, and
16:43
Speaker 3: a few different takes that I have on this. So overall,
16:47
Speaker 3: like the tenor of all of the articles being written
16:52
Speaker 3: about this is, Hey, McDonald's is showing you know, some
16:55
Speaker 3: new growth because they're you know, finally conveying value and
16:59
Speaker 3: this and that. But I gotta tell you the way
17:03
Speaker 3: that McDonald's is actually talking about their business.
17:08
Speaker 2: Is not good.
17:09
Speaker 3: And what I mean by that is, I'm going to
17:12
Speaker 3: read just a couple quotes from McDonald's here. Turning to
17:18
Speaker 3: the US business, comp sales were up two point five
17:20
Speaker 3: percent in the quarter. We outperformed nearing competitors on both
17:23
Speaker 3: comp sales and comp guest counts. Certainly, overall QSR traffic
17:28
Speaker 3: in the US remained challenging, as visits across the industry
17:31
Speaker 3: by low income consumers once again declined by double digits
17:35
Speaker 3: versus the prior period.
17:39
Speaker 4: That's not good, right.
17:40
Speaker 3: Like, it's basically telling you, hey, low income consumers, which
17:43
Speaker 3: is the bread and butter of McDonald's, they're declining now.
17:47
Speaker 3: Interesting thing that I want to point out also on
17:49
Speaker 3: this Marriott reported earnings a couple days ago. I can't
17:53
Speaker 3: remember exactly when it was. They have three categories that
17:57
Speaker 3: they report as line items for or their different brands.
18:02
Speaker 3: They've got their Luxury, Premium and what they call their
18:04
Speaker 3: select Luxury is JW, Marriott, Ritz, Carlton W Hotels Luxury.
18:10
Speaker 3: The metric that you look at here is what's called
18:13
Speaker 3: RevPAR Revenue per available room. Luxury was up for to
18:18
Speaker 3: one for the quarter compared to last year, so they
18:21
Speaker 3: say okay, like great, like high high end movement like
18:25
Speaker 3: got it Premium, which is Marriott Sheridan Weston kind of
18:29
Speaker 3: that next tier down up one percent for RevPAR year
18:32
Speaker 3: over year, Select which is Courtyard Residents in Fairfield, again
18:37
Speaker 3: further down market and cheaper price points down one point
18:41
Speaker 3: five percent. Everything that we are seeing out there is
18:45
Speaker 3: that low income households are just getting bludgeoned right now.
18:50
Speaker 3: And it hasn't mattered in the broader economic data quite honestly,
18:56
Speaker 3: because incomes are so skewed that as long as that
18:59
Speaker 3: highigh end consumer is spending, there's so much spending that's
19:05
Speaker 3: driven by the top ten percent, and so there's there
19:09
Speaker 3: are so many people that are hurting in the country
19:11
Speaker 3: right now, and you're seeing it in these earnings reports
19:13
Speaker 3: where McDonald's is like, yeah, low income spending visit, low
19:16
Speaker 3: income visits down double digits. Marriot's seeing, you know, declines
19:20
Speaker 3: in those areas as well, but the high end is
19:23
Speaker 3: still cranking, partly because there's just so much money slashing
19:27
Speaker 3: around at the top end of the income spectrum. Quick
19:30
Speaker 3: break here we got the Trivia answer and Wall Street
19:33
Speaker 3: Watch next.
19:40
Speaker 6: Bringing the latest financial news straight to your radio. Every day.
19:44
Speaker 6: It's the Financial Exchange on the Financial Exchange Radio Network.
19:50
Speaker 6: Time now for Wall Street.
19:52
Speaker 1: Watch a complete look at what's moving markets so far
19:55
Speaker 1: today right here on the Financial Exchange Radio Network.
19:59
Speaker 5: Markets adding to their recent gains as trigaders react to
20:02
Speaker 5: a new batch of second quarter earnings. President Trump also
20:06
Speaker 5: signed an executive order imposing an additional twenty five percent
20:09
Speaker 5: tariff on India on top of the twenty five percent
20:13
Speaker 5: rates they already face. Right now, the Dow is up
20:16
Speaker 5: three tenths of one percent, or one hundred and thirty
20:19
Speaker 5: nine points. S and P five hundred is up nearly
20:22
Speaker 5: seven tenths of one percent or forty two points. Nasdaq
20:25
Speaker 5: up nearly nine tenths of one percent, or one hundred
20:28
Speaker 5: and seventy seven points. RUSS two thousand is off by
20:32
Speaker 5: about a quarter of a percent. Ten Yere treasureyealed is
20:35
Speaker 5: up by two basis points at four point two to
20:38
Speaker 5: two percent, and crude oil is up about one percent higher,
20:42
Speaker 5: trading at sixty five dollars and seventy five cents a barrel.
20:46
Speaker 5: McDonald's reported earnings this morning, beating street forecast, as the
20:49
Speaker 5: fast food giant said its same store sales rebounded to
20:52
Speaker 5: grow three point eight percent in the second quarter. McDonald's
20:57
Speaker 5: chairs are up by three percent, meanwhile Disney down by
20:59
Speaker 5: three percent, despite the media and entertainment giant beating earnings
21:04
Speaker 5: estimates and meeting revenue expectations in the previous quarter. Elsewhere,
21:08
Speaker 5: AMD shares are off over seven percent despite the chip
21:11
Speaker 5: maker beating earnings in revenue forecasts. Another tech name and
21:15
Speaker 5: super micro Computer sinking almost twenty percent after the server
21:19
Speaker 5: and maker reported disappointing quarterly results and issued week quarterly earnings.
21:24
Speaker 5: The company also cut its annual revenue outlook. Snap the
21:29
Speaker 5: company behind Snapchat, reported a wider quarterly loss in miss
21:33
Speaker 5: sales expectations after a problem with its ad platform. Shares
21:37
Speaker 5: are down by eighteen percent, Shopify jumping nineteen percent after
21:41
Speaker 5: the company top analyst estimates for the second quarter and
21:45
Speaker 5: gave an optimistic guidance for the third quarter. Overall second
21:48
Speaker 5: quarter sales Search thirty one percent year over year, and
21:52
Speaker 5: Apple up by five percent after President Trump announced that
21:56
Speaker 5: Apple will commit to spend another one hundred billion dollars
22:00
Speaker 5: on domestic manufacturing. I'm Tucker Silva and that is Wall
22:03
Speaker 5: Street Watch and in the previous segment, we asked you
22:06
Speaker 5: the trivia question what year did Disney purchase ESPN? That
22:11
Speaker 5: would be nineteen ninety six. Casey from Derry, New Hampshire
22:15
Speaker 5: is our winner today taking home a Financial Exchange Show
22:19
Speaker 5: t shirt and we played trivia every day here in
22:21
Speaker 5: the Financial Exchange See complete contest rules at Financial Exchange
22:25
Speaker 5: Show dot com.
22:26
Speaker 2: Paul, we got Disney earnings. What do we see from them?
22:29
Speaker 4: Oh man, There's a lot going on here, Chuck. In
22:32
Speaker 4: terms of what we saw from Disney here, they had
22:35
Speaker 4: the huge announcements that Tucker had alluded to with the
22:38
Speaker 4: deal with the ESPN and WW We'll get into that
22:41
Speaker 4: for a second. But in terms of what we saw
22:43
Speaker 4: on their numbers here from a quarterly basis, they came
22:47
Speaker 4: in pretty well on their adjusted earnings per share, but
22:50
Speaker 4: they missed a little bit on revenue. Basically, they have
22:54
Speaker 4: different components to their business. Of course, the parks and
22:57
Speaker 4: experiences area. They saw really strong results there, both domestically
23:01
Speaker 4: and internationally, sort of disputing the notion that there was
23:04
Speaker 4: any kind of concern with the US consumer. They saw
23:07
Speaker 4: that revenue increased internationally in their parks by six percent,
23:11
Speaker 4: and then we saw a bump on the domestic side
23:15
Speaker 4: of things for the theme parks, resorts and cruises of
23:19
Speaker 4: ten percent. So across those two channels doing quite well.
23:23
Speaker 4: What has been a constant drag on Disney is their
23:26
Speaker 4: linear cable networks. That has just been an area where
23:29
Speaker 4: they've seen consistent revenue declines somewhere around I believe fifteen percent.
23:34
Speaker 4: They saw a decline there, and some of these broadcasters
23:38
Speaker 4: like ABC and FX, their revenue and operating income dropped
23:42
Speaker 4: even further. So there's the parks doing really well, you've
23:46
Speaker 4: got the linear cable business continuing to be a drag
23:49
Speaker 4: on earnings. And then the third vehicle of growth is
23:52
Speaker 4: the consumer. The subscription services here Disney Plus and Hulu
23:57
Speaker 4: and others, and those actually reported some pretty strong numbers.
24:01
Speaker 4: They're up to about one hundred and twenty eight million
24:03
Speaker 4: subscribers on Disney Plus who lose up to about fifty
24:06
Speaker 4: five and a half million, And now that division is
24:08
Speaker 4: starting to make money I believe, reporting a billion dollars
24:12
Speaker 4: in revenue there. This is an area that was losing
24:14
Speaker 4: billions of dollars from them before, so it's exhausting to
24:17
Speaker 4: get through all that. What does this all mean in
24:22
Speaker 4: terms of what it Disney. Where is Disney going, because
24:26
Speaker 4: they've been muddled in they've been.
24:28
Speaker 2: Just not even Disney.
24:29
Speaker 3: So like you try to unpack what this means as
24:32
Speaker 3: far as all the different segments that they're operating in,
24:35
Speaker 3: and they're telling you, Okay, parks are pretty good, which
24:38
Speaker 3: is interesting to me because travel in general is kind
24:42
Speaker 3: of not good right now. You know, we were talking
24:45
Speaker 3: about you know, hotels and airlines are generally seeing some sluggishness.
24:49
Speaker 3: We've seen all kinds of data out of Vegas that
24:52
Speaker 3: you know, travel to Vegas is down, and that's usually
24:54
Speaker 3: kind of a good bell weather for you know, the
24:56
Speaker 3: broader travel economy. And yet Disney just continues to print
25:01
Speaker 3: money on the park side of things. So it's okay,
25:03
Speaker 3: maybe there's just value in that brand there and that's
25:05
Speaker 3: something unique the media side of the equation, honestly, like,
25:13
Speaker 3: how does anyone make money?
25:14
Speaker 2: At this point?
25:14
Speaker 3: It seems like legacy media companies are having trouble making
25:18
Speaker 3: money there streaming aside from Netflix. Everyone's Netflix's, Uh, everyone's
25:23
Speaker 3: having trouble making money in streaming aside from Netflix.
25:27
Speaker 2: What gives? Like, where can you make money in that
25:30
Speaker 2: video space these days?
25:33
Speaker 4: It's really building your content, and that's it's an arms
25:37
Speaker 4: race to build your content, and that sort of dovetails
25:40
Speaker 4: into what they're doing from a strategic stampoint. I'm at
25:43
Speaker 4: least starting to see their plan sort of through the
25:47
Speaker 4: trees here in terms of what they're they're looking to do.
25:50
Speaker 4: You have to be able to have a differentiated product
25:52
Speaker 4: linet that is going to get people to pay the
25:55
Speaker 4: subscription of the monthly costs for whether it's Disney Plus
25:58
Speaker 4: or ESPN. It seems like the cable stuff is just
26:02
Speaker 4: going to be completely continue to be completely decimated and
26:06
Speaker 4: there's gonna be less and less programming on there. I'm
26:09
Speaker 4: just sitting here wondering as to why I keep cable
26:12
Speaker 4: anymore because ESPN seems like they're shifting to having a
26:16
Speaker 4: lot of the NFL content going to be on their
26:19
Speaker 4: app that's coming out I think in the fall, for
26:21
Speaker 4: thirty weeks a month, and why do you continue to
26:24
Speaker 4: have it? But to answer your question, how do they
26:26
Speaker 4: make money, is that it's going to have to be
26:28
Speaker 4: replicating Netflix's success by building up enough content that allows
26:33
Speaker 4: for people to be willing to pay the monthly cost
26:36
Speaker 4: for subscription.
26:38
Speaker 5: Well believe it or not, the holidays are just around
26:40
Speaker 5: the corner, So now's the time to plan that winter escape.
26:44
Speaker 5: Trade in the cold for sunshine, sea breezes, and island
26:47
Speaker 5: vibes in the US Virgin Islands, America's Caribbean paradise. Whether
26:51
Speaker 5: it's a romantic retreat, a family celebration, or a solo recharge.
26:55
Speaker 5: Before the New year, Sant Croix, Saint Thomas and Saint
26:58
Speaker 5: John offered the ultimate warm weather getaway. Lounge on sun
27:02
Speaker 5: drench beaches, explore vibrant culture and celebrate the holiday's island style.
27:08
Speaker 5: No passport, no hassle, just warm weather, clear blue water,
27:13
Speaker 5: and unforgettable memories. This is where the stress melts away
27:17
Speaker 5: and you find yourself naturally in rhythm with the heartbeat
27:21
Speaker 5: of the islands. Go to visit USVII dot com and
27:25
Speaker 5: book your trip today. That's visit USVII dot com, the
27:29
Speaker 5: US Virgin Islands, America's Caribbean Paradise. Your holiday escape starts
27:34
Speaker 5: here at visit USVII dot com.
27:38
Speaker 3: Can we talk a little bit more about one other
27:40
Speaker 3: aspect of streaming that you touched on kind of tangently there,
27:44
Speaker 3: Sports sports on streaming platforms.
27:51
Speaker 2: It's it's brutal.
27:53
Speaker 3: It's okay, you've got you know, the MLB Game of
27:57
Speaker 3: the Week on Apple TV.
27:58
Speaker 5: Plus last Friday of the Socks at that.
28:02
Speaker 3: Well, if I don't subscribe to it, then screw it.
28:05
Speaker 3: I'm just not gonna get to watch like the fun
28:06
Speaker 3: important games, and so you end up missing.
28:08
Speaker 2: Out on that stuff. And I'm sorry, I'm just not gonna.
28:11
Speaker 3: Pay for every different streaming service to have all of
28:14
Speaker 3: the games that I want to watch. I get that
28:17
Speaker 3: it generates, you know, revenue for the pro sports leagues
28:20
Speaker 3: in these deals, but honestly, it's a horrible fan experience
28:24
Speaker 3: and it just makes people upset at them.
28:27
Speaker 4: Horrible fan experience in the sense that you have to
28:29
Speaker 4: navigate where the heck is the game.
28:31
Speaker 3: I got a pay extra in order to watch games
28:33
Speaker 3: that would otherwise be so watch.
28:35
Speaker 4: That Friday one? Was it on Neesson too at the
28:37
Speaker 4: same time?
28:38
Speaker 5: No, No, this past Sunday, apparently there's a Roku Sports.
28:44
Speaker 5: Not only was the game on Roku, but it was
28:46
Speaker 5: at eleven thirty five the more, where.
28:48
Speaker 3: Do I start my own sports streaming deal? Well, I
28:50
Speaker 3: watched the Socks was that Kid's Day?
28:53
Speaker 4: Because it seemed like I saw like a lot of
28:55
Speaker 4: kids running the bases and some like sort of promotional. Yeah,
28:57
Speaker 4: they do that once in a while. Okay, I thought
28:59
Speaker 4: maybe that was part of it. But completely agree with you.
29:02
Speaker 4: The streaming experience, with the amount of commercials that the
29:07
Speaker 4: NFL has as a product, and if you're just talking
29:09
Speaker 4: about like, for example, the standalone Thursday Night game on
29:12
Speaker 4: Amazon Prime, it's very difficult to be locked into Amazon
29:16
Speaker 4: Prime and not have the flexibility to flick around or
29:20
Speaker 4: you just got to leave it in general to go
29:22
Speaker 4: look at what else is on. It's that user fan
29:26
Speaker 4: experience is frust is frustrating. For sure.
29:29
Speaker 2: There's other stuff that I just want. Who was it?
29:31
Speaker 2: What was the league that did?
29:32
Speaker 3: It was Christmas Day games in one of the league's Netflix. No,
29:36
Speaker 3: it wasn't because I subscribed to Netflix. There's another one
29:39
Speaker 3: who was doing something and I was just like, I'm
29:41
Speaker 3: not gonna do this because maybe it was HBO or
29:44
Speaker 3: Paramount Plus for the NFL.
29:46
Speaker 2: It could have been the NBA.
29:48
Speaker 3: I don't remember, but it's just it's it's exhausting trying
29:52
Speaker 3: to figure out where the games are and then do
29:54
Speaker 3: I subscribe to that or if I canceled it because
29:57
Speaker 3: there's nothing else worth watching because I I can't watch
30:00
Speaker 3: nineties reruns of you know, Fraser anymore. Like I don't know,
30:06
Speaker 3: I've just kind of had it with sports on streaming
30:08
Speaker 3: platforms just.
30:11
Speaker 4: Well, speaking of which, right this NFL take it.
30:14
Speaker 2: I know, I know, it's just I can't get there.
30:20
Speaker 2: I can't get there.
30:21
Speaker 3: And I know that's, you know, kind of old man
30:24
Speaker 3: yells at cloud, But that cloud sucks.
30:31
Speaker 2: Let's take a quick break.
30:32
Speaker 3: When we come back, we'll talk about something more uplifting
30:34
Speaker 3: with a little stack roulette to finish the show.
30:37
Speaker 1: The Financial Exchange Show podcast drops every day on Apple, Spotify,
30:41
Speaker 1: and iHeartRadio. Hit that subscribe button then leave us a
30:44
Speaker 1: five star review. You're listening to the Financial Exchange Radio Network.
30:49
Speaker 1: The Financial Exchange is now available every day from eleven
30:52
Speaker 1: to noon on Serious XM's Business Radio Channel one thirty two.
30:56
Speaker 1: Stay informed about the latest from Wall Street, fiscal policy,
30:59
Speaker 1: and breaking business news.
31:01
Speaker 6: Every day.
31:01
Speaker 1: The Financial Exchange is life on Serious XM's Business Radio
31:05
Speaker 1: Channel one thirty two. This is the Financial Exchange Radio Network.
31:19
Speaker 5: The Financial Exchange is a proud partner of the Disabled
31:22
Speaker 5: American Veterans Department of Massachusetts and now's the perfect time
31:26
Speaker 5: to register for this year's five k at Castle Island
31:30
Speaker 5: by visiting DAV five k dot Boston. The event will
31:35
Speaker 5: so again, So if you're interested in participating, now's the
31:39
Speaker 5: time to reserve your spot. Come out and help support
31:41
Speaker 5: our great American heroes by joining us for the DAV
31:44
Speaker 5: five k. Visit DAV five k dot Boston to register
31:49
Speaker 5: or to make a donation today. That's DAV five k
31:53
Speaker 5: dot Boston.
31:55
Speaker 2: All right, so kick off, stack rolette. I want to
31:57
Speaker 2: talk about Uber.
31:58
Speaker 3: The headline here is Uber boosts buybacks by twenty billion
32:02
Speaker 3: dollars after upbeat forecast. And I got to be one
32:04
Speaker 3: hundred percent honest. I read this, and I my first
32:07
Speaker 3: thought was, where the heck did Uber get twenty billion dollars?
32:11
Speaker 3: And then I spent a little bit of time kind
32:13
Speaker 3: of looking through Uber's numbers, and I gotta tell you,
32:19
Speaker 3: Derek Kazhrashahi has done an absolutely fantastic job building a
32:26
Speaker 3: monster of a company. First of all, kazhra Shahi's been
32:30
Speaker 3: there eight years now, which is insane. He started there
32:33
Speaker 3: in August of twenty seventeen after Travis Kohlanik was posting
32:37
Speaker 3: initial and I was reading this morning about this, I
32:41
Speaker 3: forgot the other two candidates, the leading candidates to take
32:44
Speaker 3: that job were Jeff Immel and Meg Whitman. Wow, Like,
32:50
Speaker 3: my goodness, how lucky are they? How lucky are they
32:53
Speaker 3: that they ended up with uh with Kazhrau Shahi because
32:56
Speaker 3: quite honestly, I don't know that mL or Whitman would
32:58
Speaker 3: have been great in that role. And so I look
33:03
Speaker 3: at this and just to give you like some context
33:06
Speaker 3: for what I'm talking about here, so if you look
33:08
Speaker 3: at Uber's revenue, doing forty five billion dollars a year
33:13
Speaker 3: in revenue now, that has quadrupled since Q one of
33:17
Speaker 3: twenty one. Wow, So the business has just exploded in popularity.
33:22
Speaker 3: A lot of it was in twenty one and twenty two,
33:24
Speaker 3: but again just monster revenue growth. Operating margins have gone
33:30
Speaker 3: from and this is.
33:31
Speaker 2: The big thing.
33:32
Speaker 3: They've gone from being hugely unprofitable like negative forty percent
33:35
Speaker 3: margins for most of like twenty one and twenty two
33:39
Speaker 3: to eight percent margins at this point, Like they're profitable business.
33:42
Speaker 3: Their free cash flow for the last twelve months is
33:45
Speaker 3: now eight billion dollars in continuing to rise.
33:50
Speaker 2: You know, like this is not some.
33:53
Speaker 3: Rinky dink never gonna make a profit company like we
33:56
Speaker 3: always used to think of them. They are a real
33:59
Speaker 3: business that generates profits and has a huge moat, largely
34:03
Speaker 3: because it's really just hard to break into that business
34:05
Speaker 3: because of the network effects and you have to just
34:07
Speaker 3: be huge to exist in there. But they they are
34:11
Speaker 3: an absolute monster as far as what they've turned the
34:15
Speaker 3: company into from a business perspective. So I saw this
34:18
Speaker 3: story and I'm like, Uber's boosting their buyback, but to
34:20
Speaker 3: twenty billion dollars. Where the heck are they gonna get? Oh,
34:23
Speaker 3: Like I didn't realize. Yeah, it's it totally slipped by
34:28
Speaker 3: me that they had become this and they're just cranking
34:32
Speaker 3: right now.
34:32
Speaker 4: The stock has reflected that they were up forty eight
34:35
Speaker 4: percent year to date as of Tuesday's close. And I
34:38
Speaker 4: think that the autonomous vehicle market is also another area
34:42
Speaker 4: that they've done a great job. They've made a lot
34:44
Speaker 4: of partnerships in place with other companies out there, with
34:48
Speaker 4: way Mow and Apollogo and some of these other venture
34:52
Speaker 4: backed autonomous vehicles out there. From a margin perspective, again,
34:57
Speaker 4: I'm going probably way far down the road that is
35:00
Speaker 4: just going to drive down eventually. The cost you would
35:04
Speaker 4: think for on the expense side of things, for Uber,
35:07
Speaker 4: if they're able to strip out some of the driver
35:11
Speaker 4: side of things, which you would think is a longer
35:14
Speaker 4: term focus that they would have.
35:15
Speaker 2: Yeah, so I just found that wild.
35:17
Speaker 3: And again, a lot of times, you know, we might
35:19
Speaker 3: kind of poop poo what companies are doing. But these
35:20
Speaker 3: guys have just been cranking the last few years, and
35:23
Speaker 3: Casual Shaw, he has just done an outstanding job getting
35:27
Speaker 3: them to where they are right now.
35:28
Speaker 4: Chuck, I was gonna go with an open AI story,
35:31
Speaker 4: but I have to make sure we keep our favorite
35:33
Speaker 4: producer happy here and mention a story about Coles. And
35:37
Speaker 4: so the backstory to this for listeners out there is
35:40
Speaker 4: Tucker has had a propensity over the years to put
35:44
Speaker 4: we have a stack where we're the stuff we're going
35:46
Speaker 4: to talk about on the show. He has had a
35:47
Speaker 4: propensity to put a lot of stories about Coles, and
35:50
Speaker 4: at one point in time I finally said on air, Tucker,
35:52
Speaker 4: why do we continue to talk about Coles? And Tucker,
35:57
Speaker 4: I'm not putting words in out defended that it is
35:59
Speaker 4: a good reata that we should be keeping an eye
36:02
Speaker 4: on it. And of course I cover this story today
36:06
Speaker 4: that his favorite company is now mixed up in the
36:09
Speaker 4: meme world, where their stock has gone up as much
36:12
Speaker 4: as one hundred and five percent interday to twenty one
36:15
Speaker 4: dollars a share. This was a company that I couldn't
36:18
Speaker 4: believe this. It's had four CEOs in the last three years.
36:22
Speaker 2: What bad? What one?
36:24
Speaker 4: It gets worse? One of them actually Bucan, one of
36:28
Speaker 4: them actually began was fired for directing millions of dollars
36:30
Speaker 4: of business to someone she had a personal, undisclosed relationship with.
36:34
Speaker 4: I'm fine, did I do something wrong? Was I not
36:38
Speaker 4: supposed to do that? They now are have an interim CEO,
36:42
Speaker 4: but they're looking I remember Intern. They've got an intern
36:46
Speaker 4: no interim CEO in place, but they're hoping they can
36:51
Speaker 4: ride the wave of this memestock frenzy where they could
36:56
Speaker 4: deal with some of their debt.
36:57
Speaker 2: Here, guys, once you're a memestock, you've already lost.
37:00
Speaker 4: It's true, not in Tucker's mind.
37:02
Speaker 2: This could be the comeback.
37:03
Speaker 3: He's not gonna be about your business then, Like, does
37:05
Speaker 3: anyone look at a MC and is like.
37:08
Speaker 2: Movie theaters? Hey they bought a gold mine?
37:11
Speaker 3: Like no, Like it's like you kind of become a
37:13
Speaker 3: laughing stock, and we let them defend them.
37:18
Speaker 5: I was gonna say, is I like going into Coles
37:19
Speaker 5: because it's a a condensed version of a Target. Uh,
37:24
Speaker 5: and no one's in there. Accurately, I like going there
37:28
Speaker 5: because no one's there.
37:29
Speaker 2: It's great.
37:29
Speaker 4: It has similar offerings to Target. I thought they were
37:31
Speaker 4: only apparel, no stuff, Yeah, toys, you name it, they
37:38
Speaker 4: got it.
37:38
Speaker 3: They get all kinds of stuff, but not groceries. Cole's, unfligately,
37:42
Speaker 3: has become what we all feared Macy's would be. You know,
37:46
Speaker 3: like the Cole's is the real Macy's is. I guess
37:50
Speaker 3: the way that I'll phrase it's just it's you feel
37:54
Speaker 3: bad for them because again they.
37:58
Speaker 2: Well I mean to get returns.
38:01
Speaker 4: I don't know, they haven't haven't evolved.
38:03
Speaker 3: It is what it is, you know, it's there's There's
38:06
Speaker 3: just not much that you can say about it, quite honestly.
38:08
Speaker 3: Markets stretching their legs a little bit. The Dow is
38:10
Speaker 3: now one hundred and sixteen points s and P up
38:13
Speaker 3: forty eight, NASDAK up two o seven, so a lot
38:15
Speaker 3: of green on the board.
38:16
Speaker 2: We'll see if it continues.
38:18
Speaker 3: We get weekly jobless claims tomorrow and we'll cover that
38:21
Speaker 3: on the show.
38:22
Speaker 2: See you then,