Latest / The Financial Exchange Show / AI’s Data Center Boom Runs Into a Higher-Rate Reality

Transcript

AI’s Data Center Boom Runs Into a Higher-Rate Reality · 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.
• 0:30
  Speaker 2: And.
• 0:33
  Speaker 1: This is The Financial Exchange with Mike Armstrong and Mark Vandetti.
• 0:38
  Speaker 1: Your exclusive look at business and financial news affecting your day,
• 0:42
  Speaker 1: your city, your world. Stay informed and up to date
• 0:46
  Speaker 1: about economic and market trends, plus breaking business news every day.
• 0:51
  Speaker 1: The Financial Exchange is a proud partner of the Disabled
• 0:53
  Speaker 1: American Veterans Department of Massachusetts. Help us support our great
• 0:57
  Speaker 1: American heroes by visiting dav5k. boston. com. and making a donation today.
• 1:03
  Speaker 1: This is The Financial Exchange with Mike Armstrong and Mark Vandetti.
• 1:13
  Speaker 3: Good morning and welcome back here to The Financial Exchange.
• 1:18
  Speaker 3: We're going to continue to keep an Prices cratering and
• 1:26
  Speaker 3: yields spiking again today. We've got the yield on the
• 1:29
  Speaker 3: 10-year treasury up over 5.26% now. That's an eight basis
• 1:34
  Speaker 3: point climb just in a matter of a few hours here.
• 1:39
  Speaker 4: Proximate cause, who knows? You never really know, but you
• 1:43
  Speaker 4: do have.
• 1:43
  Speaker 3: Oil prices spiking 3.3% after the president rejected Iranians' proposal
• 1:49
  Speaker 3: to reopen the Strait of Hormuz. I would imagine that
• 1:52
  Speaker 3: is playing some degree of a role here. But again,
• 1:54
  Speaker 3: we've seen a big spike in yields, certainly since the
• 1:58
  Speaker 3: outbreak of war between the U.S.
• 2:00
  Speaker 4: And Iran. And then more concretely.
• 2:03
  Speaker 3: Just over the course of the last month with the
• 2:05
  Speaker 3: yield on the 10-year Treasury bond, jumping some 50 basis
• 2:10
  Speaker 3: points just in the month of September, which is a big,
• 2:13
  Speaker 3: big climb. And, yeah, again, could speak to any number
• 2:19
  Speaker 3: of different things, inflation expectations, growth expectations, concerns about U.S.
• 2:23
  Speaker 4: Deficits.
• 2:25
  Speaker 3: It is really difficult to parse through any one of
• 2:28
  Speaker 3: those different causes, but the yield jumps that we are
• 2:32
  Speaker 3: seeing right now are irregular and oftentimes are accompanied by
• 2:40
  Speaker 3: blowups in financial markets of some sort or another.
• 2:43
  Speaker 4: I'm not saying... I don't mean to fearmonger.
• 2:47
  Speaker 3: What I mean by a blow up is some fund
• 2:50
  Speaker 3: out there somewhere being positioned incorrectly, leveraged too much and
• 2:54
  Speaker 3: blowing up in some way, shape or form and needing.
• 2:57
  Speaker 4: To sell off their assets or close up shop.
• 3:00
  Speaker 3: Not atypical when you see a 50 basis point spike
• 3:04
  Speaker 3: on the 10 year treasury in a short period of time.
• 3:06
  Speaker 4: Is that? I hope I'm not overstating it.
• 3:08
  Speaker 5: No, it's possible somebody could get caught unawares or, as
• 3:13
  Speaker 5: you said, look at long-term capital management in the late 1990s.
• 3:17
  Speaker 5: Treasury yields blew out. They weren't ready for that. And
• 3:21
  Speaker 5: they were highly leveraged, like 30 to 1, which means
• 3:26
  Speaker 5: they only had $ 1 in capital for every $ 30 in assets.
• 3:33
  Speaker 5: And when treasury yields moved the wrong way, the firm
• 3:35
  Speaker 5: went under. There were a lot of firms connected to them.
• 3:40
  Speaker 5: And I don't mean ownership-wise. I mean own similar positions
• 3:45
  Speaker 5: and would have been adversely affected had long-term capital management
• 3:48
  Speaker 5: been forced to liquidate everything in distressed fashion had they
• 3:52
  Speaker 5: gone bankrupt. So the Fed had to step in and
• 3:55
  Speaker 5: bail them out. But the notion of too big to fail,
• 3:59
  Speaker 5: which is kind of what I think kind of what
• 4:00
  Speaker 5: you're getting at. I don't want to go off on
• 4:01
  Speaker 5: a tangent here.
• 4:03
  Speaker 3: I'm not worried about too big to fail right now.
• 4:05
  Speaker 3: I'm just saying a hedge funder here or there might
• 4:07
  Speaker 3: blow up.
• 4:08
  Speaker 5: Yeah, I imagine almost certainly that'll happen. Hopefully those blowups,
• 4:12
  Speaker 5: as you put it, will be contained. That's always the question.
• 4:15
  Speaker 5: And if they're not contained, then the firm doing the
• 4:18
  Speaker 5: blowing up is probably too big to fail. And if
• 4:22
  Speaker 5: that designation hasn't been attached to them already, then it
• 4:25
  Speaker 5: will be when the Fed decides to step in, when
• 4:29
  Speaker 5: the Fed says, the Treasury and maybe the Federal Reserve, too,
• 4:32
  Speaker 5: decides to step in. Like they did for Silicon Valley Bank,
• 4:35
  Speaker 5: although it wasn't obvious that there would be repercussions, that
• 4:40
  Speaker 5: the blast radius there would be very wide. Maybe that's
• 4:43
  Speaker 5: not a good example.
• 4:45
  Speaker 3: Other things that come to mind when I see this,
• 4:47
  Speaker 3: obviously mortgage rates immediately. On September 1st, you had the
• 4:51
  Speaker 3: 30-year fixed rate mortgage at just under 7%, just under 6.9%,
• 4:54
  Speaker 3: in fact. As of Friday, according to mortgage news daily,
• 4:59
  Speaker 3: you're at seven point four three. You will almost certainly
• 5:02
  Speaker 3: be over seven point five percent by the time they
• 5:05
  Speaker 3: update their averages today. So mortgage rates climbing again in
• 5:10
  Speaker 3: the hopes of a robust fall housing season pretty much
• 5:13
  Speaker 3: behind us at this stage, I think.
• 5:15
  Speaker 4: And then, you know, all importantly here is.
• 5:19
  Speaker 3: The AI hyperscalers are trying to build out the future
• 5:25
  Speaker 3: of compute power and artificial intelligence at a time when
• 5:28
  Speaker 3: the cost of borrowing and the availability of borrowing is
• 5:31
  Speaker 3: getting tougher with these rates climbing.
• 5:34
  Speaker 5: Did you like that chart in the Financial Times this
• 5:36
  Speaker 5: morning that showed their commitments this year for the first
• 5:39
  Speaker 5: time eclipsing their cash flows?
• 5:40
  Speaker 4: Yeah.
• 5:41
  Speaker 5: So they have to. They are now. dependent on external finance.
• 5:45
  Speaker 3: So we're referring to a chart that was posted in the,
• 5:48
  Speaker 3: like Mark said, the Financial Times. And it was talking
• 5:50
  Speaker 3: about the five, yeah, the five hyperscalers, which they determined,
• 5:55
  Speaker 3: and I would agree with, are Oracle, Microsoft, Meta, Alphabet.
• 6:00
  Speaker 4: And Amazon.
• 6:01
  Speaker 3: So those five companies, they posted this chart of, okay,
• 6:04
  Speaker 3: what does CapEx look like over the last few years?
• 6:07
  Speaker 4: What is, what was it, operating cashflow? I think so.
• 6:11
  Speaker 4: Cash flow from operations.
• 6:12
  Speaker 5: Yeah, that would be the right metric.
• 6:13
  Speaker 3: And for the first time in 2026, the projected CapEx
• 6:16
  Speaker 3: is exceeding those cash flows, meaning.
• 6:20
  Speaker 4: Well, maybe.
• 6:20
  Speaker 5: They've got to go cup in hand.
• 6:22
  Speaker 4: To someone.
• 6:23
  Speaker 3: Yeah, I'm trying to think if there's more than two
• 6:25
  Speaker 3: ways to do that. One, you issue new equity.
• 6:28
  Speaker 5: You borrow from banks or you get a borrow.
• 6:30
  Speaker 4: Or you sell stock.
• 6:32
  Speaker 5: Yeah, which they're not. I guess.
• 6:34
  Speaker 4: Well, some of them have.
• 6:37
  Speaker 3: You can sell some of your other stuff that you have.
• 6:40
  Speaker 3: You can sell some of the stuff that you have,
• 6:42
  Speaker 3: or you can borrow money. Those are two ways to
• 6:44
  Speaker 3: fund this. And one of those two just got a
• 6:47
  Speaker 3: heck of a lot more expensive over the course of
• 6:48
  Speaker 3: the last 30 days. So we're going to cover a
• 6:52
  Speaker 3: piece later, like, oh, how do you know when the
• 6:55
  Speaker 3: whole boom is going to go bust? And the answer is,
• 6:58
  Speaker 3: when the lenders stop lending money, which is notoriously difficult
• 7:02
  Speaker 3: to figure out when that's.
• 7:03
  Speaker 4: Going to happen, so good luck.
• 7:04
  Speaker 3: But that's why this stuff matters so much critically right now.
• 7:09
  Speaker 3: The execution risk that these hyperscalers have on borrowing the
• 7:13
  Speaker 3: right amount of money, building the data centers properly, finding
• 7:18
  Speaker 3: the customers for those data centers when they are completed,
• 7:21
  Speaker 3: is critical not only to the success of their businesses,
• 7:23
  Speaker 3: but the U.S. economy as a whole right now. And
• 7:26
  Speaker 3: the cost of that just went up by pretty substantially overnight.
• 7:30
  Speaker 5: I mean, it's not an exaggeration to say AI is
• 7:32
  Speaker 5: keeping the economy going. You could always point to consumption,
• 7:35
  Speaker 5: but consumption, that is spending, is a pretty stable component
• 7:39
  Speaker 5: of overall spending, which we measure using gross domestic product,
• 7:43
  Speaker 5: or GDP. It's nearly always investment, though. that precipitates a
• 7:49
  Speaker 5: decline in investment and it could be inventories or could
• 7:51
  Speaker 5: be something else could be residential that is housing that
• 7:55
  Speaker 5: precipitates a recession so the economy is on a bit
• 7:58
  Speaker 5: of a tightrope right right now growing seemingly i'll just
• 8:02
  Speaker 5: say a trend maybe even a little above uh... trend
• 8:04
  Speaker 5: or potential this quarter if you but stock in the
• 8:08
  Speaker 5: atlanta fed's gdp now estimate if that turns around if
• 8:15
  Speaker 5: hyperscalers decide because the political environment suppose there's a change
• 8:19
  Speaker 5: in one or both houses of Congress or various state
• 8:22
  Speaker 5: houses around the country and they want to put a
• 8:25
  Speaker 5: stop to the relentless march of data centers. That could
• 8:28
  Speaker 5: be the catalyst that slows down investment and that turns
• 8:32
  Speaker 5: this whole narrative that has been driving things for really
• 8:35
  Speaker 5: the past several years.
• 8:36
  Speaker 3: Any one of them could be, yeah. Or it could
• 8:38
  Speaker 3: continue for another five years and we could be completely wrong.
• 8:41
  Speaker 5: That to me, because it's imminent, we've got, sure, it could, right.
• 8:45
  Speaker 3: Didn't think it would last since 2023 and it certainly has. So,
• 8:48
  Speaker 3: you know, there you have it. Nvidia introduced a new, quote,
• 8:52
  Speaker 3: double-layered artificial intelligence security system that it says would have
• 8:56
  Speaker 3: prevented the recent high-profile breach of Hugging Face by OpenAI's
• 9:00
  Speaker 3: AI models. It's possible they have something here, but I
• 9:06
  Speaker 3: get pretty suspicious of any company telling me that they
• 9:10
  Speaker 3: have the ability to prevent these AI agents from breaking
• 9:15
  Speaker 3: the rules and going wild based on what we've been
• 9:17
  Speaker 3: seeing this year. There's been documented case after case of
• 9:21
  Speaker 3: these AI agents being completely willing to ignore the guardrails
• 9:26
  Speaker 3: that are put in place by the creators of them
• 9:29
  Speaker 3: in order to accomplish tasks that they get assigned, including
• 9:33
  Speaker 3: breaking out of sandboxes, accessing the internet, diving into government
• 9:37
  Speaker 3: files on an unauthorized basis. And granted, NVIDIA knows a
• 9:43
  Speaker 3: lot about the hardware side of this, and I presume
• 9:46
  Speaker 3: that their solution here is some sort of, fail-safe kill switch,
• 9:51
  Speaker 3: but I just am suspicious.
• 9:53
  Speaker 5: I'll be blunt and just say, of course they would
• 9:55
  Speaker 5: say that.
• 9:56
  Speaker 4: Yeah.
• 9:57
  Speaker 5: What are they going to do? Say AI's not safe?
• 10:00
  Speaker 3: Right.
• 10:00
  Speaker 5: The whole company goes down the tubes. Yeah. I mean,
• 10:03
  Speaker 5: no offense, Mike, but I think I've said this before
• 10:06
  Speaker 5: for what it is worth. Don't trust the salesman, everybody.
• 10:10
  Speaker 5: And I don't mean that they're dishonest. I just mean
• 10:13
  Speaker 5: they're hopelessly conflicted.
• 10:14
  Speaker 4: Self-interested.
• 10:14
  Speaker 5: Hopelessly conflicted.
• 10:16
  Speaker 3: Yes, but I will also acknowledge that plenty of AI
• 10:19
  Speaker 3: leaders have been more than willing to say that, oh,
• 10:21
  Speaker 3: we think that this might actually kill us in spite
• 10:24
  Speaker 3: of us spending all this money.
• 10:26
  Speaker 5: Yeah, I don't know how to interpret that. The whole,
• 10:29
  Speaker 5: please regulate me.
• 10:31
  Speaker 4: Yeah.
• 10:31
  Speaker 5: It sounds disingenuous, and maybe they just want to capture
• 10:35
  Speaker 5: the government agency responsible for doing the regulating. They could
• 10:37
  Speaker 5: constrain themselves. Why don't they? Plenty of people have made
• 10:40
  Speaker 5: that point. It's not a deep thought on my part.
• 10:43
  Speaker 5: I'm suspicious of anything the industry tells me. Would we
• 10:47
  Speaker 5: ever let the coal industry regulate itself? The guys that
• 10:52
  Speaker 5: were pumping CFCs into the atmosphere, eating a hole in
• 10:55
  Speaker 5: the ozone? We'll let Aquanet. regulate themselves. You want to
• 11:01
  Speaker 5: pull back on CFCs and your hairspray? We'd encourage, of
• 11:05
  Speaker 5: course not. Government is supposed to step in here, and
• 11:07
  Speaker 5: that's us, through our elected representatives, and put a stop
• 11:11
  Speaker 5: to something that represents a clear and present or whatever danger.
• 11:15
  Speaker 5: I'm sorry for the tangent there, but what in the
• 11:17
  Speaker 5: world are we doing?
• 11:18
  Speaker 3: Let's take a quick break. When we come back, I
• 11:20
  Speaker 3: want to talk about Biden. I want to go from
• 11:23
  Speaker 3: this macro perspective down to a very specific data center
• 11:27
  Speaker 3: that's being built in Pennsylvania. It's an interesting reason why
• 11:31
  Speaker 3: we're talking about it, about $ 45 million of reasons why
• 11:35
  Speaker 3: we're talking about it.
• 11:36
  Speaker 4: Quick break. That's next on The Financial Exchange.
• 11:38
  Speaker 1: From markets to money to business and financial news, watch
• 11:42
  Speaker 1: The Financial Exchange every day on YouTube. Hit that subscribe
• 11:46
  Speaker 1: button and keep up to date on the market news
• 11:48
  Speaker 1: you need to know. This is The Financial Exchange. The
• 11:52
  Speaker 1: Financial Exchange Show podcast drops every day on Apple, Spotify,
• 11:56
  Speaker 1: and iHeartRadio. Hit that subscribe button and leave us a
• 11:59
  Speaker 1: five-star review. You're listening to the Financial Exchange Radio Network.
• 12:09
  Speaker 2: The Financial Exchange streams live every day on YouTube. Be
• 12:14
  Speaker 2: sure to subscribe to our YouTube page and follow Market
• 12:17
  Speaker 2: Activity all morning long. Only here on the Financial Exchange
• 12:20
  Speaker 2: Radio Network. All you have to do is go to YouTube,
• 12:23
  Speaker 2: search for the Financial Exchange, and be sure to hit
• 12:26
  Speaker 2: that subscribe button.
• 12:29
  Speaker 3: Just continue to keep an eye on bond rates and
• 12:31
  Speaker 3: markets here. I was talking about earlier the 10-year treasury,
• 12:35
  Speaker 3: and I'm trying to find out the last time we
• 12:37
  Speaker 3: were at these levels. I believe it was very briefly
• 12:41
  Speaker 3: in 06 and 07. I'm looking at a spike that
• 12:43
  Speaker 3: happened in April of 06, where apparently the high we
• 12:46
  Speaker 3: reached on that 10-year was 5.26% intraday. I do think, again, Mark,
• 12:55
  Speaker 3: to your point, April of 07, we briefly hit 533.
• 12:59
  Speaker 3: So we are testing levels that we have not seen
• 13:02
  Speaker 3: since that period of time during the another period of
• 13:07
  Speaker 3: massive economic growth and obviously from a completely different area
• 13:12
  Speaker 3: of the market, but ultimately leading to a lot of turmoil.
• 13:17
  Speaker 3: I don't think you can look at rates alone and
• 13:19
  Speaker 3: say that they're going to lead to some sort of
• 13:21
  Speaker 3: recession or crash, but that's the company we are keeping
• 13:24
  Speaker 3: right now is the highest rates that we've seen in 2019,
• 13:27
  Speaker 3: 20 years.
• 13:29
  Speaker 5: Yeah, the reasons were in some ways similar. We had
• 13:32
  Speaker 5: rising oil prices. The Fed was tightening.
• 13:34
  Speaker 1: Mm-hmm.
• 13:35
  Speaker 5: The economy was growing, I want to say, a bit
• 13:40
  Speaker 5: about the same rate. Just say a trend, because about
• 13:43
  Speaker 5: the same rate isn't really a helpful comparison at about
• 13:45
  Speaker 5: its potential rate in 2007, leading up to the disaster.
• 13:49
  Speaker 1: Of course.
• 13:52
  Speaker 5: The narrative now, the stories around why rates are rising is,
• 13:55
  Speaker 5: of course, different people cite AI and the investments required
• 14:00
  Speaker 5: to keep it going. And, of course, they cite the
• 14:03
  Speaker 5: usual boogeyman, which I think is valid in this case.
• 14:06
  Speaker 5: But who knows? Reckless, totally out of control, undisciplined fiscal policy.
• 14:13
  Speaker 3: There is a little town in Pennsylvania, and I'm taking
• 14:18
  Speaker 3: a look at it. It looks a little bit southwest
• 14:22
  Speaker 3: of Scranton, northeast of Hershey. Middle of the Poconos, a
• 14:28
  Speaker 3: very small town that is... considering whether or not to
• 14:33
  Speaker 3: allow a data center to be built. And we've been
• 14:36
  Speaker 3: talking about these blowups that have been occurring all over
• 14:39
  Speaker 3: the place over the course of the last several months,
• 14:42
  Speaker 3: and frankly, years, where more and more local municipalities are
• 14:47
  Speaker 3: turning sour on the idea of these data centers. They
• 14:50
  Speaker 3: didn't used to be unpopular. In fact, a lot of
• 14:53
  Speaker 3: states and municipalities have tax incentives for companies to build
• 14:57
  Speaker 3: data centers in their area. They've started to get rid
• 15:00
  Speaker 3: of those pretty rapidly as they start to understand what
• 15:03
  Speaker 3: that might.
• 15:03
  Speaker 4: Mean for their communities.
• 15:04
  Speaker 3: But one has a pretty novel approach that I've been
• 15:08
  Speaker 3: saying they need to adapt in order to get this
• 15:11
  Speaker 3: stuff done. North Point Development began sending letters in June
• 15:16
  Speaker 3: of this year to residents saying that the developer himself
• 15:21
  Speaker 3: or themselves would give $ 10, 000 to every household in town.
• 15:24
  Speaker 4: If they.
• 15:28
  Speaker 3: Get this thing completed. Which I have to say, you know,
• 15:34
  Speaker 3: say what you will about bribery. It is a very
• 15:37
  Speaker 3: quick and effective way to get things done.
• 15:40
  Speaker 5: It's attention-grabbing.
• 15:42
  Speaker 1: Yeah.
• 15:43
  Speaker 4: It's not illegal bribery. It is bribery.
• 15:45
  Speaker 5: But it's contingent on completion.
• 15:47
  Speaker 4: Yep.
• 15:48
  Speaker 3: So it's not vote to approve this data center. It
• 15:52
  Speaker 3: is allow us to finish completion of building this data
• 15:56
  Speaker 3: center And there's 4,500 households in Hazel Township approximately, so
• 16:00
  Speaker 3: you're looking at a price tag of about $ 45 million,
• 16:03
  Speaker 3: which is probably a fraction of the cost.
• 16:05
  Speaker 4: To build this thing.
• 16:06
  Speaker 3: But I'll tell you, median household income there in Hazel Township, $ 60, 000.
• 16:12
  Speaker 3: Every household getting one-sixth of your income in a one-time payment.
• 16:18
  Speaker 4: I don't know, seems pretty tough to me to pass
• 16:20
  Speaker 4: up on that. I recognize that.
• 16:25
  Speaker 3: It's going to be loud. It's going to be a
• 16:26
  Speaker 3: lot of construction. Who knows what it's going to do
• 16:28
  Speaker 3: to the long-term viability of real estate in the town
• 16:31
  Speaker 3: and all sorts of other side effects. But $ 10, 000 ain't nothing.
• 16:37
  Speaker 5: Yeah. Assuming they finish and don't just lay a pad
• 16:40
  Speaker 5: down and then walk away.
• 16:42
  Speaker 4: In which case you don't have a noisy data center
• 16:46
  Speaker 4: operating in your backyard.
• 16:48
  Speaker 5: No, you just have a 100,000 square foot slab of concrete.
• 16:52
  Speaker 5: Good luck breaking that up.
• 16:54
  Speaker 1: Yeah.
• 16:54
  Speaker 5: Even if you could, where would you put it? No
• 16:56
  Speaker 5: one's going to haul it out of there.
• 16:57
  Speaker 4: It built 15 hockey rinks.
• 16:59
  Speaker 5: You know, it's, it's reminiscent of, uh, I live in
• 17:02
  Speaker 5: a town with a large, uh, outlet.
• 17:05
  Speaker 4: I live in Rentham, Massachusetts for those shopping outlet.
• 17:08
  Speaker 3: Yeah.
• 17:08
  Speaker 5: And, uh, it's helped keep our taxes low. I think
• 17:11
  Speaker 5: I've never seen a comparison of what they would be
• 17:15
  Speaker 5: with or without it. Maybe it exists in fairness to
• 17:18
  Speaker 5: the board, uh, to the, to the board of finance,
• 17:21
  Speaker 5: finance committee. Um, But I wouldn't be surprised if it
• 17:24
  Speaker 5: didn't exist, but I'll take it at face value that
• 17:26
  Speaker 5: these things help keep taxes down. And I don't know
• 17:29
  Speaker 5: anybody who abuts it or lives within, say, a quarter mile,
• 17:34
  Speaker 5: but my guess is they don't love it.
• 17:37
  Speaker 4: Sure.
• 17:38
  Speaker 5: My point is there are trade-offs, and beware. You're signing away.
• 17:43
  Speaker 4: You also have a giant concert venue over there, don't you?
• 17:46
  Speaker 4: Is that in Mansfield?
• 17:48
  Speaker 5: Yeah, you're thinking of.
• 17:49
  Speaker 4: Great Woods.
• 17:49
  Speaker 5: Yeah, no, no, that's down the street.
• 17:52
  Speaker 4: That's the same town, though, isn't it?
• 17:53
  Speaker 5: No.
• 17:54
  Speaker 2: Mansfield, yeah.
• 17:55
  Speaker 1: What?
• 17:56
  Speaker 4: Right?
• 17:57
  Speaker 1: Yeah.
• 17:57
  Speaker 4: As their shopping center?
• 17:59
  Speaker 5: Mansfield has an outlet, too. Oh, okay. You think of
• 18:02
  Speaker 5: the commons?
• 18:02
  Speaker 4: I don't know.
• 18:03
  Speaker 5: Mansfield has some commons that may be assigning property.
• 18:05
  Speaker 4: Sorry, I thought it was the same town. Never mind.
• 18:06
  Speaker 5: I mean, before you sell out to... And I don't
• 18:08
  Speaker 5: mean sell out in a negative sense. For some people,
• 18:10
  Speaker 5: this is a life-changing amount of money. I mean... It
• 18:13
  Speaker 5: doesn't sound like there's any negotiation involved, though. Yeah, okay,
• 18:15
  Speaker 5: I'll do it for 25, and I get the check now,
• 18:17
  Speaker 5: not upon completion. That, to me, is a little more appetizing.
• 18:21
  Speaker 5: But they don't have any leverage here. Just be wary
• 18:24
  Speaker 5: of selling your soul, potentially, for lack of a less
• 18:27
  Speaker 5: dramatic way of putting it, to a big corporation.
• 18:30
  Speaker 1: Yeah.
• 18:30
  Speaker 5: And I'm sure they're being told that. I'm not saying
• 18:32
  Speaker 5: anything that their grandmother wouldn't have told them.
• 18:35
  Speaker 3: The only curious thing to me is, will this be effective? Yeah,
• 18:37
  Speaker 3: because if it is, I think it might be a
• 18:39
  Speaker 3: model that they implement. Hey, let's go seek out... lower
• 18:42
  Speaker 3: income towns with small populations, uh, who else have access
• 18:47
  Speaker 3: to energy and we will just, you've driven through there.
• 18:50
  Speaker 5: You know what, you know what they're taught. This is
• 18:51
  Speaker 5: an area where you don't like, if I stop here,
• 18:55
  Speaker 5: you know, you call the wife and kids and it's,
• 18:57
  Speaker 5: Hey guys, it's been great. I'm, I'm stuck near somewhere
• 19:00
  Speaker 5: near the Poconos, but it's not the Poconos. Um, no offense,
• 19:03
  Speaker 5: but you, you, you, you do like survival skills. It's
• 19:06
  Speaker 5: sort of the middle of, In a nice way, but
• 19:09
  Speaker 5: there's no major hospitals there.
• 19:10
  Speaker 3: But, you know, we've been talking at length about how
• 19:12
  Speaker 3: these companies are doing a, pardon me, piss-poor job of
• 19:16
  Speaker 3: selling the public on why they should allow these things
• 19:18
  Speaker 3: in their communities. And I don't know that this fixes it,
• 19:21
  Speaker 3: but it might.
• 19:22
  Speaker 5: They're doing what the Joker did in the first Batman.
• 19:24
  Speaker 5: They're throwing money out before he killed everybody.
• 19:26
  Speaker 4: Yeah, but who knows if they're going to kill everybody.
• 19:29
  Speaker 4: Let's not jump to conclusions. I didn't say that. Ten grand.
• 19:33
  Speaker 4: Quick break. Wall Street Watch is next.
• 19:39
  Speaker 1: Bringing the latest financial news straight to your radio every day.
• 19:44
  Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
• 19:50
  Speaker 4: Time now for.
• 19:51
  Speaker 1: Wall street watch tracking the stocks the data and the
• 19:54
  Speaker 1: headlines driving markets so far today right here on the
• 19:57
  Speaker 1: financial exchange radio.
• 19:59
  Speaker 2: Network equity equity markets are accelerating their sell-off by midday
• 20:05
  Speaker 2: As oil and treasury yields are on the rise again
• 20:08
  Speaker 2: after President Trump rejected Iran's truce proposal over the weekend.
• 20:12
  Speaker 2: Right now, the Dow is down three quarters of a
• 20:14
  Speaker 2: percent or 401 points lower. S & P 500 down
• 20:18
  Speaker 2: over eight tenths of a percent or 66 points off.
• 20:21
  Speaker 2: NASDAQ selling off one percent or 269 points lower. Russell
• 20:25
  Speaker 2: 2000 also down about one percent. 10-year treasury yield up
• 20:29
  Speaker 2: another 8 basis points and is now at 5.263%. Crude
• 20:33
  Speaker 2: oil up 3% higher, trading at $ 95 a barrel, while
• 20:36
  Speaker 2: Brent is also up by 3%, trading at $ 107 a barrel.
• 20:38
  Speaker 2: NVIDIA's stock is up 2% after the AI and Chip
• 20:40
  Speaker 2: Giants board approved a $ 150 billion share buyback. This marks
• 20:42
  Speaker 2: the largest ever U.S. stock buyback, surpassing the $ 110 billion
• 20:46
  Speaker 2: buyback that Apple made back in 2024. Meanwhile, after its
• 21:00
  Speaker 2: near 13% rally last week, driven by optimism around its
• 21:04
  Speaker 2: AI agent Muse, Meta shares are retreating 4% today. Speaking
• 21:08
  Speaker 2: of Meta, the Facebook parent hired MongoDB CEO CJ Desai
• 21:13
  Speaker 2: as its chief enterprise platform officer. MongoDB's stock is tanking
• 21:18
  Speaker 2: 17% on that news, and SpaceX shares are down modestly
• 21:23
  Speaker 2: after It conducted a significant Starship launch earlier this morning
• 21:26
  Speaker 2: on its first orbital flight test that could pave the
• 21:30
  Speaker 2: way for the test rocket to begin regular satellite launches.
• 21:35
  Speaker 2: I'm Tucker Silva and that is Wall Street Watch.
• 21:38
  Speaker 3: Folks, we want to talk to you about the event
• 21:40
  Speaker 3: coming up this Thursday in Enfield, Connecticut, the Fairfield by
• 21:43
  Speaker 3: Marriott Inn & Suites. Matt Zurich will be doing a
• 21:47
  Speaker 3: presentation all about Social Security issues. all of the ins
• 21:50
  Speaker 3: and outs and rules that have changed a whole bunch
• 21:52
  Speaker 3: over the course of the last decade. Effie Vassoulis will
• 21:55
  Speaker 3: be joining us as well, giving a presentation on all
• 21:57
  Speaker 3: the complexities around Medicare, where different income thresholds kick in,
• 22:02
  Speaker 3: all the different potential plans that are available to you,
• 22:04
  Speaker 3: and key dates that you need to know about. This
• 22:06
  Speaker 3: is our last event in a series of events we've
• 22:09
  Speaker 3: been doing on Social Security and Medicare essentials. We chose
• 22:13
  Speaker 3: these two topics because, quite honestly, as financial advisors, they
• 22:17
  Speaker 3: are easily, the most asked about programs and questions that
• 22:21
  Speaker 3: we get about folks' retirement and financial future. Everyone needs
• 22:26
  Speaker 3: to know and wants to know, when should I be
• 22:29
  Speaker 3: pulling Social Security? How is it going to affect me?
• 22:32
  Speaker 3: And what do my options look like for covering my insurance,
• 22:36
  Speaker 3: my health care costs down the road? If you have
• 22:39
  Speaker 3: those questions too, register for free at armstrongadvisory.com slash events.
• 22:46
  Speaker 3: or give us a call for more information, 800-393-4001. But again,
• 22:51
  Speaker 3: the event details, it's this Thursday, October 1st, in Enfield, Connecticut,
• 22:56
  Speaker 3: at the Fairfield Marriott Inn & Suites, 5 p.m., free
• 23:00
  Speaker 3: to attend, but you must register ahead of time, armstrongadvisory.com
• 23:04
  Speaker 3: slash events, or 800-393-4001.
• 23:09
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 23:11
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 23:13
  Speaker 1: Armstrong guide is specific financial, legal, or tax advice. Consult
• 23:17
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 23:19
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 23:22
  Speaker 1: advisory services.
• 23:24
  Speaker 3: Mark, the Wall Street Journal has a piece today that
• 23:28
  Speaker 3: would sure be convenient if they could answer for me.
• 23:30
  Speaker 3: How to know when the AI boom is about to
• 23:33
  Speaker 3: go bust. That would be very useful in terms of
• 23:38
  Speaker 3: avoiding any sort of market downturn. So do they have
• 23:42
  Speaker 3: or do you have any reliable way of determining when
• 23:46
  Speaker 3: the spigot's going to turn off and all of a
• 23:48
  Speaker 3: sudden the AI boom is going to go bust?
• 23:50
  Speaker 5: Well, when the narrative changes.
• 23:52
  Speaker 4: Oh. When's the narrative going to change?
• 23:55
  Speaker 5: Well, the story. A fancy way of saying narrative is
• 23:58
  Speaker 5: a Robert Shiller term. He talked about stories driving asset
• 24:01
  Speaker 5: prices way in excess of that was the essence of it.
• 24:04
  Speaker 5: That's a rational exuberance. That's a bubble. When people stop
• 24:08
  Speaker 5: believing that AI will generate enough cash flow to pay
• 24:11
  Speaker 5: for itself, Thorsten Stork of Apollo, their economist, among other things,
• 24:18
  Speaker 5: I think he distills it to a single number, $ 2 trillion.
• 24:21
  Speaker 5: That's what they need to cover. That's what they'll need
• 24:23
  Speaker 5: in revenue per year to justify their projected expenses. When
• 24:26
  Speaker 5: people stop believing, or if, not when, excuse me. I
• 24:29
  Speaker 5: happen to believe it is an if, but... I don't know, obviously.
• 24:34
  Speaker 5: So when, or if, excuse me, if, again, people stop
• 24:37
  Speaker 5: believing that, then the bottom will fall out, Mike. Or
• 24:40
  Speaker 5: I'll say again, a change in political leadership in Washington
• 24:43
  Speaker 5: or at the state level that turns tables on hyperscalers.
• 24:49
  Speaker 5: Right now we've got leadership that's very supportive of data centers.
• 24:52
  Speaker 5: Let them reign, the president said. If he doesn't, if
• 24:56
  Speaker 5: that is not the governing doctrine at some point, that
• 25:00
  Speaker 5: could change the narrative.
• 25:02
  Speaker 3: Unfortunately for all of us, I suspect that it might
• 25:04
  Speaker 3: happen after the market already crashes.
• 25:06
  Speaker 4: The journal outlines one example.
• 25:07
  Speaker 5: Why would it crash in the first place?
• 25:09
  Speaker 3: The narrative twists and then the bottom falls out. So
• 25:13
  Speaker 3: the poster child that they talk about in this article
• 25:15
  Speaker 3: was Pets.com.
• 25:16
  Speaker 4: I'm going to quote here.
• 25:17
  Speaker 3: In early 2000, Ernst & Young gave the company a
• 25:19
  Speaker 3: clean audit opinion with no warning about its ability to
• 25:22
  Speaker 3: continue as a going concern. That was in part because
• 25:24
  Speaker 3: it seemed able to keep raising cash from investors no
• 25:27
  Speaker 3: matter how much money it lost. The online retail at
• 25:29
  Speaker 3: the time was selling products for $ 5 that cost $ 10
• 25:33
  Speaker 3: to buy and $ 50 to market. The NASDAQ was reaching
• 25:36
  Speaker 3: new highs. Then the market crashed, the money ran out,
• 25:39
  Speaker 3: and the company shut down.
• 25:40
  Speaker 4: In November of 2000.
• 25:41
  Speaker 3: So Pets.com going out of business and the bust that
• 25:45
  Speaker 3: they're describing did not happen before the stock market fell apart.
• 25:49
  Speaker 3: It occurred in no small part because the market fell apart,
• 25:53
  Speaker 3: and all of a sudden the narrative.
• 25:54
  Speaker 4: Was no longer.
• 25:55
  Speaker 5: That's why the overall narrative, I think, is more important here.
• 25:57
  Speaker 5: It's not just going to be Oracle... pulls out of something.
• 26:01
  Speaker 4: Right.
• 26:02
  Speaker 5: It's got to be people stop believing that these companies
• 26:05
  Speaker 5: can generate enough revenue to keep AI going in indefinitely. Yeah.
• 26:10
  Speaker 4: And, you know, in hindsight, Pets.com is an obvious one.
• 26:12
  Speaker 5: Well, there are others.
• 26:13
  Speaker 3: Selling items for $ 50 and losing $ 60 per item. But, yeah,
• 26:16
  Speaker 3: history is, you know, filled with these types of things.
• 26:21
  Speaker 5: But even that era, VanWeb or WebVan, whatever the heck
• 26:24
  Speaker 5: it was called, grocery delivery, that was mid-' 90s. Priceline was, like,
• 26:28
  Speaker 5: all they did is buy and sell you know, tickets.
• 26:31
  Speaker 5: And people thought that deserved a 100x valuation. So there
• 26:35
  Speaker 5: are so many examples, but the bottom didn't truly fall
• 26:38
  Speaker 5: out until people no longer believed the hype.
• 26:41
  Speaker 3: I also don't even know where I would look to
• 26:43
  Speaker 3: try and determine when the lenders are going to stop lending, right?
• 26:46
  Speaker 3: Should I be looking at the banks? Would I be
• 26:48
  Speaker 3: looking at private credit and seeing how their stock prices
• 26:50
  Speaker 3: are doing? Because there was a few of those types
• 26:53
  Speaker 3: of stories that played out over the course of the
• 26:55
  Speaker 3: last few years. Private credit is loaning a boatload of
• 26:57
  Speaker 3: money to this AI build-out. Stocks are not doing terribly well,
• 27:00
  Speaker 3: but it continued. So yeah, I think unfortunately for all
• 27:04
  Speaker 3: of us, determining when that narrative has shifted and when
• 27:09
  Speaker 3: it's going to impact stock prices, if you're of the
• 27:11
  Speaker 3: same mindset that Mark clearly is, that this is a
• 27:14
  Speaker 3: when and not an if, I think it's going to
• 27:17
  Speaker 3: be very, very difficult to do. I think it's going
• 27:20
  Speaker 3: to be very, very difficult to identify in any sort
• 27:23
  Speaker 3: of real time.
• 27:25
  Speaker 5: Well, you'll know by the market reaction. Oh, there's the
• 27:27
  Speaker 5: straw that broke the camel's back. That's not the right analogy.
• 27:32
  Speaker 5: That's not the right expression.
• 27:34
  Speaker 3: Even there, it's tough to know, right? The stock market,
• 27:37
  Speaker 3: what is the stat that I love to say? During
• 27:39
  Speaker 3: the dot-com bubble, I know stocks, they fell by like 40%.
• 27:45
  Speaker 3: but had, I think, three separate times where they rallied
• 27:48
  Speaker 3: by 10% in between.
• 27:49
  Speaker 5: There were some monster rallies.
• 27:51
  Speaker 3: It is notoriously difficult to know, even in the moment, oh, yeah,
• 27:54
  Speaker 3: this market has finally popped and it's falling apart because
• 27:57
  Speaker 3: there's all these rallies in between.
• 27:57
  Speaker 5: One thing I distinctly remember is the Wall Street Journal
• 28:00
  Speaker 5: writing when the NASDAQ had only fallen by 20%. I
• 28:03
  Speaker 5: think it fell by more than recovered a little bit.
• 28:06
  Speaker 5: We've learned our lesson. Somebody wrote, one of their market
• 28:09
  Speaker 5: commentators at the time, this was healthy news. purging was required, etc.
• 28:16
  Speaker 3: And of course, they were right, but not by the level.
• 28:19
  Speaker 5: No, the NASDAQ would ultimately profit, you know, 20% of
• 28:24
  Speaker 5: its previous value.
• 28:25
  Speaker 3: Let's take a quick break. When we return, a bit
• 28:28
  Speaker 3: of Stack Roulette is next on the Financial Exchange.
• 28:38
  Speaker 1: Keep it here for the latest business and financial news
• 28:40
  Speaker 1: and the trends on Wall Street. The Financial Exchange is
• 28:43
  Speaker 1: now live on Sirius XM's Business Radio Channel 132. This
• 28:48
  Speaker 1: is the Financial Exchange Radio Network. Stay informed and prepared
• 28:53
  Speaker 1: for market changes and breaking business news. The Financial Exchange
• 28:56
  Speaker 1: is live every day on YouTube. Tune in, subscribe, and
• 29:00
  Speaker 1: keep up to date on all of our show's content
• 29:02
  Speaker 1: on a daily basis. This is the Financial Exchange Radio Network.
• 29:19
  Speaker 4: Mark, may I kick us off for a stack of letters?
• 29:21
  Speaker 4: Is that all right by you?
• 29:22
  Speaker 5: Please do.
• 29:23
  Speaker 3: Barron's asks, to rent or buy what seniors are doing
• 29:27
  Speaker 3: and why? And the piece outlines really only one statistic
• 29:32
  Speaker 3: that I found to be misleading, but was the entire
• 29:37
  Speaker 3: premise of the article. So the number of Americans... renters
• 29:41
  Speaker 3: aged 65 and older surged by 30% between 2013 and 2023. Okay.
• 29:44
  Speaker 1: Okay.
• 29:44
  Speaker 3: So 65 plus year olds, there's more of them renting today,
• 29:46
  Speaker 3: 2023 than there were back in 2013. The article then
• 29:49
  Speaker 3: goes on to explain all the reasons that seniors might
• 30:00
  Speaker 3: be more inclined to rent today than they were in 2013.
• 30:03
  Speaker 4: Like, proportionally more?
• 30:04
  Speaker 5: Because we know there's more of them.
• 30:05
  Speaker 4: That's exactly the point, Mark.
• 30:07
  Speaker 2: Oh, sorry.
• 30:07
  Speaker 4: Because they completely ignore the fact.
• 30:08
  Speaker 5: I didn't mean to steal your.
• 30:09
  Speaker 4: You're fine.
• 30:10
  Speaker 3: The population of 65-plus-year-olds went from 44.7 million in 2013.
• 30:17
  Speaker 4: To 59.2 million in 2023.
• 30:18
  Speaker 5: Yeah, I thought they meant per capita for that cohort.
• 30:21
  Speaker 4: Yeah, it's not per capita. It's nothing.
• 30:24
  Speaker 3: There are more renters who are baby boomers because there
• 30:27
  Speaker 3: are more baby boomers.
• 30:28
  Speaker 5: That's weak.
• 30:29
  Speaker 4: That's a really poorly done piece.
• 30:31
  Speaker 5: Yeah, you've got to run it through Gemini or something, guys.
• 30:34
  Speaker 4: You need to set.
• 30:35
  Speaker 3: And we're going to get hit with so many of
• 30:37
  Speaker 3: these different pieces about how, you know, seniors are now
• 30:40
  Speaker 3: more inclined to do this. No, there's just a whole
• 30:42
  Speaker 3: crap load more seniors than there were 10 years ago.
• 30:46
  Speaker 3: So do not get distracted by this piece. It does
• 30:49
  Speaker 3: not appear to me... That seniors are any more interested
• 30:52
  Speaker 3: in renting than they were 13 years ago.
• 30:53
  Speaker 5: Suppose they were, though. Suppose they were. What would be
• 30:55
  Speaker 5: the implication? Like we should be looking at multifamily housing
• 30:58
  Speaker 5: that's elderly friendly if you're an investor? What's like the–
• 31:01
  Speaker 5: why is it of interest to me potentially as a
• 31:03
  Speaker 5: reader of the– I'm sorry. Barron's. Publication of Barron's.
• 31:07
  Speaker 3: Why would that– I mean, the only thing that I
• 31:09
  Speaker 3: think is interesting about this statistic is that there are
• 31:13
  Speaker 3: a whole bunch more 65-plus-year-olds than there were previously.
• 31:16
  Speaker 4: So I would.
• 31:17
  Speaker 3: Normally expect demand for things like health care services, independent living,
• 31:25
  Speaker 3: nursing homes, all of that stuff, to go up over
• 31:28
  Speaker 3: the course of the next couple of decades rather than down.
• 31:33
  Speaker 4: But again.
• 31:34
  Speaker 3: You just told me, hey, there's 30% more renters than
• 31:37
  Speaker 3: there were 13 years ago who are over 65. But again,
• 31:42
  Speaker 3: there's 32% more people that are over the age of 65.
• 31:45
  Speaker 3: So in fact, if we take that math factually, that, hey,
• 31:51
  Speaker 3: the total number of renters is up 30% and the
• 31:53
  Speaker 3: total number of 65-plus-year-olds is up 32%, in fact, it
• 31:56
  Speaker 3: would indicate that there are fewer, a smaller portion of
• 32:00
  Speaker 3: 65-plus-year-olds that are interested in renting.
• 32:02
  Speaker 1: Right.
• 32:03
  Speaker 4: Than there were back in 2013.
• 32:05
  Speaker 5: Right, right, right.
• 32:06
  Speaker 3: So I don't find this to be interesting or useful.
• 32:11
  Speaker 3: And I guess beware of articles that you read that
• 32:13
  Speaker 3: tell you that, oh.
• 32:15
  Speaker 4: Yeah, boomers' behaviors are really changing.
• 32:18
  Speaker 3: No, most of the impacts that we are seeing is
• 32:20
  Speaker 3: that they are doing things exactly the way that previous
• 32:23
  Speaker 3: generations did, but there happened to be about a third
• 32:27
  Speaker 3: more of them compared to 15 years ago.
• 32:29
  Speaker 5: Yeah, it's all baked in the cake. You can't do
• 32:31
  Speaker 5: anything about demography. We know what the population is going
• 32:35
  Speaker 5: to look like.
• 32:36
  Speaker 1: Right.
• 32:37
  Speaker 5: Shorter term anyway. Longer term depends on immigration.
• 32:40
  Speaker 4: Yeah.
• 32:41
  Speaker 5: And trends that we can't foresee right now, like if
• 32:43
  Speaker 5: people suddenly start to decide to have three instead of 1.8
• 32:47
  Speaker 5: kids or something.
• 32:48
  Speaker 4: Two things seem very likely to me.
• 32:50
  Speaker 3: There will be more colleges that go bust because there's
• 32:53
  Speaker 3: not enough young kids that are available to attend college.
• 32:58
  Speaker 3: and the cost of senior care of all sorts is
• 33:02
  Speaker 3: going to continue to skyrocket because there are so many
• 33:05
  Speaker 3: more of them to care for.
• 33:07
  Speaker 5: Yeah, if we discourage people who would take those jobs
• 33:12
  Speaker 5: from coming into the country, and that appears to be
• 33:14
  Speaker 5: the tendency, both here and it's global, by the way,
• 33:17
  Speaker 5: it's not just America. So we shut our doors to
• 33:20
  Speaker 5: people willing to do difficult, demanding, low-wage jobs. With a
• 33:24
  Speaker 5: swelling elderly population, you better hope humanoid robots learn how
• 33:28
  Speaker 5: to go get me my prune.
• 33:29
  Speaker 4: Juice in 10 years. What do you have for us, Mark?
• 33:33
  Speaker 5: This story has more of a point, I think. Headline,
• 33:35
  Speaker 5: General Motors, from the Financial Times, warns on U.S. car
• 33:39
  Speaker 5: market as car makers seek safe haven from Chinese rivals.
• 33:42
  Speaker 4: Again, these U.S. automakers are just terrified of Chinese competition.
• 33:47
  Speaker 5: It's not. Actually, that was my reaction, too. That's why
• 33:49
  Speaker 5: I bring it up. It's not that. It's competition from competitors. Volkswagen, Stellantis, Toyota, Nissan,
• 33:55
  Speaker 5: and others who are seeking an oasis, a place that
• 34:01
  Speaker 5: will be free from Chinese competition.
• 34:04
  Speaker 3: Oh, so it's all the foreign automakers that are just saying, hey,
• 34:07
  Speaker 3: we can't sell anywhere but.
• 34:08
  Speaker 5: The United States. Nobody thinks they can compete with China.
• 34:11
  Speaker 4: The U.S.
• 34:11
  Speaker 5: Market is very lucrative. So I used to think, well,
• 34:15
  Speaker 5: if we prevent Chinese companies from coming in, selling their
• 34:19
  Speaker 5: apparently really neat, uh... evs and other gadgets uh... other
• 34:23
  Speaker 5: other cars with various gadgets here gm is going to
• 34:26
  Speaker 5: be like the old days get ready to drive a
• 34:28
  Speaker 5: citation again i i should say that some of the
• 34:31
  Speaker 5: site some citations were solid but on average they sucked
• 34:34
  Speaker 5: forgive me but they did anyway uh... no gm is
• 34:38
  Speaker 5: is worried is that huh do you have to keep
• 34:41
  Speaker 5: up with uh... foreign automakers who increasingly want to make
• 34:45
  Speaker 5: cars here so they cannot be insulated from chinese cars.
• 34:48
  Speaker 3: Which is in effect the same thing But it's an
• 34:50
  Speaker 3: interesting way for it to play out.
• 34:51
  Speaker 5: The problem in the 60s, 70s, and 80s that made
• 34:54
  Speaker 5: GM fat and lazy and Ford too, I guess, was
• 34:58
  Speaker 5: absence of competition. And this had me thinking, well, maybe
• 35:02
  Speaker 5: that won't be the case if it's just one country
• 35:04
  Speaker 5: we're excluding. Whereas we excluded all imports, all, say, more
• 35:11
  Speaker 5: economical foreign imports in the prior era. If it's just
• 35:14
  Speaker 5: China we're icing out here, maybe the implications for quality
• 35:20
  Speaker 5: and price won't be as dire as they were in
• 35:22
  Speaker 5: that era.
• 35:23
  Speaker 3: Yeah, the hedging opportunity there is quite interesting, right? If
• 35:26
  Speaker 3: you can convince the American government that you are in
• 35:31
  Speaker 3: fact not a Chinese car producer, the incentive would seem
• 35:35
  Speaker 3: to be to make as much of this thing in
• 35:36
  Speaker 3: China as possible because they seem very good at producing a.
• 35:39
  Speaker 4: High-quality, cheap car.
• 35:41
  Speaker 3: And so if you're Volvo or Stellantis or any of
• 35:43
  Speaker 3: these companies, I would think the temptation is, okay, let's
• 35:46
  Speaker 3: source as much stuff as we can from these guys
• 35:47
  Speaker 3: because they seem quite good at it, and then maybe
• 35:50
  Speaker 3: we can convince the U.S.
• 35:50
  Speaker 4: Government that it's in fact made in the U.S.
• 35:53
  Speaker 5: Yeah, I don't know what rules of origin will apply
• 35:55
  Speaker 5: to inputs. I assume, I mean, what we're worried about
• 35:58
  Speaker 5: is Chinese tech companies That can ultimately tell our car
• 36:02
  Speaker 5: to run us over if there's ever a conflict. So
• 36:06
  Speaker 5: I assume you want to keep it out.
• 36:08
  Speaker 4: Yeah, I would think so.
• 36:09
  Speaker 5: Categorically.
• 36:11
  Speaker 3: Whenever I think of Chinese cars, I continue to think
• 36:14
  Speaker 3: of the... What are we calling these things? The hybrids
• 36:19
  Speaker 3: that are actually e-vehicle, e-Vs.
• 36:23
  Speaker 4: I think they're called e-revs.
• 36:25
  Speaker 3: There are a whole bunch of them that are apparently
• 36:27
  Speaker 3: going to hit the market in... Let me pull them
• 36:33
  Speaker 3: all up if I can get a list of them.
• 36:35
  Speaker 5: These are Chinese-made cars?
• 36:36
  Speaker 4: No, these are the U.S.
• 36:37
  Speaker 3: Companies that are basically stealing some Chinese technology that doesn't
• 36:40
  Speaker 3: need to be stolen because it's not.
• 36:41
  Speaker 4: All that crazy. But these are fully electric vehicles.
• 36:47
  Speaker 3: That increase their range capacity substantially by putting in a
• 36:52
  Speaker 3: gas generator into the car, which doesn't actually power any
• 36:55
  Speaker 3: of the systems.
• 36:56
  Speaker 4: So it doesn't power your drives. All it does is
• 36:59
  Speaker 4: recharge your battery.
• 37:01
  Speaker 3: And by doing so, Ram is planning to roll out
• 37:07
  Speaker 3: a 690-mile total range truck. Hyundai Santa Fe planning on
• 37:13
  Speaker 3: rolling out a 600-mile combined range E-Rev. Genesis, which is,
• 37:18
  Speaker 3: is that Hyundai's luxury brand?
• 37:21
  Speaker 1: Yes.
• 37:22
  Speaker 3: Um, you know, they're talking about rolling out one that's
• 37:24
  Speaker 3: going to have 640 miles of range.
• 37:26
  Speaker 4: I think a bunch of automakers really missed the.
• 37:31
  Speaker 3: Mark on the U S market for EVs, like very
• 37:33
  Speaker 3: clearly Ford.
• 37:35
  Speaker 5: And others were spinning because policy keeps changing. I mean,
• 37:37
  Speaker 5: one does sympathize.
• 37:38
  Speaker 3: Yeah, I can, I can appreciate that. Uh, Biden administration
• 37:42
  Speaker 3: was pushing this stuff. Then it got pulled way back
• 37:45
  Speaker 3: by the Trump administration. They all got caught off sides. Nonetheless,
• 37:48
  Speaker 3: they don't seem to be investing in this space, and
• 37:51
  Speaker 3: I will personally be shocked if these are not financially successful.
• 37:54
  Speaker 3: They're easier to make than hybrids. They are all the
• 38:00
  Speaker 3: benefits of an EV plus a generator on site.
• 38:03
  Speaker 4: I don't know. I would line up to buy one personally.
• 38:04
  Speaker 5: You could probably change the oil yourself. It's just a
• 38:06
  Speaker 5: little plug.
• 38:07
  Speaker 4: We've got to take a quick break for the rest
• 38:09
  Speaker 4: of the day. Markets. Continue to be ugly, a little
• 38:13
  Speaker 4: bit better than they.
• 38:13
  Speaker 3: Were when we caught the mid-program, but we will be
• 38:17
  Speaker 3: back tomorrow with a full update for you.
• 38:20
  Speaker 4: Have a great rest of your day.