Latest / The Financial Exchange Show / How the Fed should deal with US stagflation risks

Transcript

How the Fed should deal with US stagflation risks · The Financial Exchange Show

• 0:00
  Speaker 1: The Financial Exchange is produced by Money Matters Radio and
• 0:02
  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.
• 0:25
  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
• 0:45
  Speaker 1: and market trends plus breaking business news every day. The
• 0:49
  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, dot Bust and making
• 1:00
  Speaker 1: a donation today. This is the Financial Exchange with Chuck Zada,
• 1:05
  Speaker 1: and Paul Lane.
• 1:08
  Speaker 2: Well, let's Chuck and Paul and talker with you. And
• 1:12
  Speaker 2: stocks are down. The Dow Jones Industrial Average, which doesn't
• 1:16
  Speaker 2: have a lot of technology names, not many technology names
• 1:20
  Speaker 2: in it, down eighty two points, so not much less
• 1:23
  Speaker 2: than a quarter percent. But then you get to some
• 1:25
  Speaker 2: of the other indices which do have tech stocks in them,
• 1:28
  Speaker 2: and it's not ideal. Today. The SMP is down fifty
• 1:32
  Speaker 2: seven points, just shy of one percent. The NASDAK is
• 1:36
  Speaker 2: off one point seven percent, about three hundred and sixty
• 1:39
  Speaker 2: three points, so NASDAK off about three percent in the
• 1:42
  Speaker 2: last two days right now, which I think that based
• 1:45
  Speaker 2: on our conversations, we can point to as a modest
• 1:48
  Speaker 2: decline in stocks that is escalating towards a pullback, but
• 1:53
  Speaker 2: not there yet and still well short of a correction
• 1:56
  Speaker 2: and even further short of a bear market. But nonetheless
• 2:00
  Speaker 2: us we do have stocks selling off today and this
• 2:03
  Speaker 2: has been pretty consistent over the course of the morning
• 2:07
  Speaker 2: so far. Bonds, on the other hand, not really doing
• 2:10
  Speaker 2: a ton in either direction. A little bit of a
• 2:12
  Speaker 2: bid for them, with the ten year treasury down two
• 2:16
  Speaker 2: point one basis points to four point two eight one,
• 2:19
  Speaker 2: so a little bit happening on that side of things.
• 2:22
  Speaker 2: When we take a look at what's going on with
• 2:25
  Speaker 2: the commodities, the ones that people you know actually care about,
• 2:30
  Speaker 2: and notice, oil is up forty eight cents a barrel
• 2:34
  Speaker 2: to sixty two eighty three on West Texas intermedia, and
• 2:38
  Speaker 2: gold is up thirty three twenty one ounce to thirty
• 2:41
  Speaker 2: three ninety one and ninety cents. If you're big into
• 2:44
  Speaker 2: palladium and platinum, well, I don't know anything about them
• 2:47
  Speaker 2: other than the fact that they both start with P.
• 2:50
  Speaker 2: So there's that. And on mortgage rates, we're continuing to
• 2:55
  Speaker 2: see mortgage rates fluttering around that six and a half
• 2:57
  Speaker 2: to six six range right now, up one basis point
• 3:00
  Speaker 2: compared to yesterday. It's six point six percent on the
• 3:03
  Speaker 2: national average four thirty year fixed rate mortgages from Mortgage
• 3:07
  Speaker 2: News Daily. So overall, equities down, bonds not really moving.
• 3:12
  Speaker 2: Oil and gold up modestly is the story of the day.
• 3:17
  Speaker 2: The story of Friday is that Jay Powell is going
• 3:20
  Speaker 2: to climb out of a bat infested cabin in Jackson Hole.
• 3:25
  Speaker 3: Hope he has nicer accommodations than that.
• 3:28
  Speaker 2: Didn't you read the story last week? No, they had
• 3:31
  Speaker 2: to push back when they were going to be arriving
• 3:33
  Speaker 2: because the cabins had eight bats in them, and so
• 3:38
  Speaker 2: they had to push back the arrival date to make
• 3:40
  Speaker 2: sure that the bats were out. They tested them for rabies.
• 3:43
  Speaker 2: They all came back negative.
• 3:45
  Speaker 4: Did they put sheets together like in Black Sheep and
• 3:47
  Speaker 4: try to push it out the door?
• 3:48
  Speaker 2: It's it's unclear exactly. I mean, I don't think Jay
• 3:53
  Speaker 2: Powell does his own extermination. It doesn't really seem like
• 3:56
  Speaker 2: that's his thing.
• 3:58
  Speaker 4: Not a handy guy.
• 4:00
  Speaker 3: And they're they're scrutinizing the FED in terms of what
• 4:02
  Speaker 3: they're expending on their accommodation. So perhaps this is the
• 4:05
  Speaker 3: pivot here. They're now staying in bad infested cabins instead
• 4:08
  Speaker 3: of the million dollar expansion of the facility.
• 4:10
  Speaker 2: I see Jay as being more of a gardener than
• 4:13
  Speaker 2: someone who does his own dry wall. But that's just me,
• 4:17
  Speaker 2: you know. I can see him walking in from outside
• 4:19
  Speaker 2: and saying, Chuck, take a look at these cherry tomatoes.
• 4:22
  Speaker 2: Do you see any signs of these? Do you see
• 4:25
  Speaker 2: any signs of inflation on these cherry tomatoes? No, whit,
• 4:30
  Speaker 2: because I've done an outstanding job, thank you. Uh So,
• 4:34
  Speaker 2: In any case, Jay Pollin and the gang. They are
• 4:37
  Speaker 2: out at Jackson Hole this week, and there's a piece
• 4:42
  Speaker 2: here from the Financial Times and it asked the question, look,
• 4:47
  Speaker 2: what first sentence, what should j Powell say about the
• 4:50
  Speaker 2: US economy when addressing the Jackson Hole symposium this week?
• 4:55
  Speaker 2: And again, this is something that happens every year, so
• 4:58
  Speaker 2: we have a little bit of a track record on,
• 5:00
  Speaker 2: you know, kind of how he's done on this. If
• 5:02
  Speaker 2: you want to look on the duvish side, look no
• 5:04
  Speaker 2: further than last year, when the statement was effectively, hey,
• 5:07
  Speaker 2: the balance of risks has changed and we need to
• 5:10
  Speaker 2: be prepared to respond appropriately given what they had been
• 5:14
  Speaker 2: seeing in the labor market at that time, which had
• 5:17
  Speaker 2: some concerns while the inflation rate was continuing to decline
• 5:22
  Speaker 2: over the course of last summer. So he said, look,
• 5:25
  Speaker 2: we need to be more dovish. The counter to this
• 5:27
  Speaker 2: is what we saw in twenty twenty two, when he basically,
• 5:31
  Speaker 2: you know, took a sledgehammer to the idea that the
• 5:36
  Speaker 2: FED was done, you know, raising rates and said, no,
• 5:38
  Speaker 2: we've still got some work to do and kicked off
• 5:41
  Speaker 2: another fifteen percent decline in stocks into October before they
• 5:44
  Speaker 2: finally bottomed in October of twenty twenty two. So the
• 5:47
  Speaker 2: question is at this point, look, you've got unemployment. Where
• 5:51
  Speaker 2: the unemployment rate and again this is the piece that matters,
• 5:55
  Speaker 2: is the unemployment rate currently sits at four point two
• 5:59
  Speaker 2: percent and has basically been pretty darn stagnant there over
• 6:05
  Speaker 2: the last year or so. I mean, you can make
• 6:07
  Speaker 2: it convince in case the job market has not materially
• 6:09
  Speaker 2: changed a ton over the last year. Again, right now,
• 6:15
  Speaker 2: if you go back a year ago, excuse me, the
• 6:19
  Speaker 2: unemployment rate in August of twenty twenty four four point
• 6:23
  Speaker 2: two percent, what is it today? Four point two percent?
• 6:27
  Speaker 2: That is no change on a statistical basis. This despite
• 6:31
  Speaker 2: the fact that the rate of job growth has slowed,
• 6:35
  Speaker 2: But it's also coincided with a point in time where
• 6:39
  Speaker 2: the number of people in the workforce that growth has
• 6:41
  Speaker 2: slowed as well. And the FED, with all the tools
• 6:46
  Speaker 2: they have at their disposal, they cannot put people into
• 6:49
  Speaker 2: the workforce. They can't do it. They don't have a
• 6:52
  Speaker 2: button they can push, that says ad worker. And so
• 6:56
  Speaker 2: the question is, look, if unemployment isn't moving up at
• 7:00
  Speaker 2: this point in time, which last summer it was, we
• 7:02
  Speaker 2: had seen it move from about three and a half
• 7:04
  Speaker 2: up to four point two percent. Hence the concern if
• 7:08
  Speaker 2: unemployment isn't moving up, but inflation is showing signs of
• 7:12
  Speaker 2: moving up, and there are still some concerns that unemployment
• 7:15
  Speaker 2: may move up in the future, how do you talk
• 7:18
  Speaker 2: about that in a way that convinces any one of anything.
• 7:22
  Speaker 2: It's not an enviable position to be in, Paul.
• 7:25
  Speaker 3: No, Ultimately, it's such a difficult position, and I'm sure
• 7:31
  Speaker 3: we're gonna get very little commentary that is significant. Maybe
• 7:36
  Speaker 3: I could be proven wrong, but ultimately, if I'm sitting
• 7:39
  Speaker 3: in his shoes, there is no reason to take one
• 7:42
  Speaker 3: hard stance one way or another, because ultimately we're still
• 7:46
  Speaker 3: trying to digest the full economic impact from the policies
• 7:49
  Speaker 3: that were put into place in April, and what we've
• 7:53
  Speaker 3: learned over the course of the last three or four
• 7:56
  Speaker 3: months or so is that it is unclear yet the
• 8:00
  Speaker 3: impact of tariffs. Perhaps it will be very muted and
• 8:03
  Speaker 3: there won't be much in the way of impact. There's
• 8:05
  Speaker 3: also a counter argument to say that there was a
• 8:07
  Speaker 3: front loading impact of imports and we haven't seen the
• 8:10
  Speaker 3: full effect of them. So from a monetary policy standpoint,
• 8:14
  Speaker 3: it's hard to make a declaration one way or another.
• 8:17
  Speaker 3: There are so many things that are in flux the
• 8:20
  Speaker 3: labor market. If you want to sit and make the
• 8:22
  Speaker 3: argument it's in a good place. You can outline all
• 8:25
  Speaker 3: the pieces. You said, four point two percent unemployment, nothing's
• 8:27
  Speaker 3: changed over a year. If you want to go the
• 8:29
  Speaker 3: other way, oh, continuing claims for extended period times, unemployment
• 8:33
  Speaker 3: that has ticked up, hiring has slowed, things like that.
• 8:37
  Speaker 3: There is just no clear direction on either of these things.
• 8:41
  Speaker 3: So your best bet kind of kick the can down
• 8:44
  Speaker 3: the road a little bit and see what the fall
• 8:46
  Speaker 3: has to bring.
• 8:47
  Speaker 2: I have all kinds of thoughts as to where Jay
• 8:50
  Speaker 2: Powell may go with this, because, on one hand, if
• 8:53
  Speaker 2: there's one thing that you can point to for Powell
• 8:56
  Speaker 2: and the Fed under his watch, they've generally acted with
• 9:00
  Speaker 2: a doubvish bias when faced with questions of what to do.
• 9:05
  Speaker 2: Last year when they started cutting interest rates, Okay, do
• 9:08
  Speaker 2: you need to cut by half a percent? You know,
• 9:10
  Speaker 2: to kick that off. Not necessarily, but they did back
• 9:14
  Speaker 2: in twenty twenty two when inflation was ratcheting up. They
• 9:17
  Speaker 2: moved really slowly at first. I still remember they raised
• 9:21
  Speaker 2: rates of quarter percent in March, and Powell was you know, all, hey,
• 9:25
  Speaker 2: we don't want to move faster because this Russian invasion
• 9:27
  Speaker 2: of Ukraine might alter you know, the balance and blot guys.
• 9:31
  Speaker 2: It's you know, the oil supplies are going to be
• 9:33
  Speaker 2: disrupted and commodities are going to be disrupted, and you
• 9:35
  Speaker 2: think that that's going to be good for inflation? Like no,
• 9:38
  Speaker 2: like you guys got to speed up. In late twenty eighteen,
• 9:43
  Speaker 2: when faced with questions as to the runoff of the
• 9:49
  Speaker 2: FED balance sheet, Powell said, nope, we're on autopilot. And
• 9:52
  Speaker 2: then a little bit later had to pivot and there
• 9:55
  Speaker 2: were no more rate hikes and that was it because
• 9:58
  Speaker 2: he didn't want to deal with a any any volatility
• 10:01
  Speaker 2: in the bond market. So I think that when I
• 10:05
  Speaker 2: look at Powell, there's one side of me that says, hey,
• 10:09
  Speaker 2: Powell has generally always aired on the douvish side of things.
• 10:15
  Speaker 2: You know, I think he wants to be hawkish, but
• 10:18
  Speaker 2: his actual behavior tends to be more dovish more than
• 10:22
  Speaker 2: anything else. So there's part of me that says, okay,
• 10:24
  Speaker 2: like he's gonna tea things up on that side. But
• 10:28
  Speaker 2: you've obviously got the relationship with President Trump, which I
• 10:32
  Speaker 2: think at this point you can say is not ideal.
• 10:36
  Speaker 2: It's not an ideal working relationship between the two of them.
• 10:39
  Speaker 2: I don't think there's there's much love lost between the
• 10:41
  Speaker 2: two and so part of me looks at that and says, Okay,
• 10:44
  Speaker 2: if there's another thing that Jay Powell's done over the
• 10:46
  Speaker 2: course of this year shorter timeframe, he wants to maintain
• 10:51
  Speaker 2: the idea of FED independence, Definitely, and is there any
• 10:55
  Speaker 2: better way to maintain the idea of FED independence than
• 10:57
  Speaker 2: at Jackson Hole, saying I mean again, I don't think
• 11:02
  Speaker 2: he'll do this, but he in theory could say, hey, look,
• 11:06
  Speaker 2: we've got inflation ratcheting up right now, unemployment is still
• 11:09
  Speaker 2: at or near historic lows. You guys are lucky we're
• 11:12
  Speaker 2: not hiking today. I don't think he'll do that, But like,
• 11:16
  Speaker 2: if he really wanted to go that route, that's where
• 11:19
  Speaker 2: he could go. What is he ultimately going to end
• 11:23
  Speaker 2: up saying here? Probably more of what we've heard for
• 11:26
  Speaker 2: the last couple of years, which is where data dependent
• 11:29
  Speaker 2: will go where the data tells us. Right now, we're
• 11:32
  Speaker 2: still trying to analyze the risks and as they evolve,
• 11:35
  Speaker 2: we'll do what we need to do. I don't think
• 11:37
  Speaker 2: he's really going to throw a major bone to either
• 11:39
  Speaker 2: the Hawks or Doves just because I think he wants
• 11:42
  Speaker 2: to keep his options open for the fall, because quite honestly,
• 11:46
  Speaker 2: I don't think he really knows exactly what we're going
• 11:48
  Speaker 2: to see over the next few months.
• 11:50
  Speaker 3: None of us.
• 11:50
  Speaker 2: Two. Let's take a quick break here. When we come back,
• 11:53
  Speaker 2: we've got trivia and we're talking lows earnings.
• 11:56
  Speaker 1: After that, The Financial Exchange is life on Series XM's
• 12:01
  Speaker 1: Business radio channel one thirty two weekdays from eleven to noon.
• 12:05
  Speaker 1: Get the latest business and financial news from across the
• 12:08
  Speaker 1: country and around the world, and keep up to date
• 12:10
  Speaker 1: on how it might affect your wallet. That's the Financial
• 12:13
  Speaker 1: Exchange weekdays from eleven to noon on Series XM's Business
• 12:17
  Speaker 1: Radio Channel one thirty two. This is the Financial Exchange
• 12:21
  Speaker 1: Radio Network. Find daily interviews and full shows of the
• 12:24
  Speaker 1: Financial Exchange on our YouTube page. Subscribe to our page
• 12:28
  Speaker 1: and get caught up on anything and everything you might
• 12:31
  Speaker 1: have missed. This is the Financial Exchange Radio Network.
• 12:36
  Speaker 4: Now it's a great time to register for the dav
• 12:39
  Speaker 4: five K taking place Saturday November eighth that Fort Independence
• 12:43
  Speaker 4: on Castle Island. Theresa has sold out each of the
• 12:46
  Speaker 4: past four years, and slots are continuing to fill up quickly,
• 12:49
  Speaker 4: so don't delay. Visit DAV five k dot Boston and
• 12:53
  Speaker 4: reserve your spot, or join our team here at the
• 12:56
  Speaker 4: Financial Exchange by registering under team TFE. That's Saturday, November
• 13:02
  Speaker 4: eighth for this year's DAV five K. Sign up now
• 13:05
  Speaker 4: at DAV five k dot Boston. Time for trivia here
• 13:08
  Speaker 4: in the Financial Exchange. Going to continue our World War
• 13:11
  Speaker 4: two trivia question theme here this month and our look
• 13:15
  Speaker 4: at famous leaders will continue today. Trivia question who is
• 13:19
  Speaker 4: the Supreme Commander of the Allied Forces in Europe?
• 13:23
  Speaker 2: Once again?
• 13:23
  Speaker 4: Who is the Supreme Commander of the Allied Forces in Europe?
• 13:29
  Speaker 4: Be the fourth person today to text us at six
• 13:31
  Speaker 4: one seven three six two thirteen eighty five with correct answer,
• 13:35
  Speaker 4: and you win a Financial Exchange Show T shirt once again.
• 13:38
  Speaker 4: The fourth correct response to text us to the number
• 13:41
  Speaker 4: six one seven three six two thirteen eighty five will
• 13:45
  Speaker 4: win that T shirt. See complete contest rules at Financial
• 13:48
  Speaker 4: Exchange Show dot com.
• 13:50
  Speaker 2: Paul, we had Low's report earnings before the bell Today?
• 13:55
  Speaker 2: Are there stocks staring to new highs as a result?
• 13:59
  Speaker 2: See what I did there? Yes, those hies.
• 14:02
  Speaker 3: If you will here you it is up. It was
• 14:06
  Speaker 3: up three percent earlier in trading, but looks like it's
• 14:10
  Speaker 3: only up about close to one percent at the moment.
• 14:13
  Speaker 3: This was a pretty good quarter from Loew's, Chuck. We
• 14:15
  Speaker 3: saw them come in and beat on earnings. They anticipate
• 14:20
  Speaker 3: that the full year fiscal sales will range from eighty
• 14:23
  Speaker 3: four and a half to eighty five and a half billion.
• 14:25
  Speaker 3: That's up from previous forecasts. And they also made an
• 14:29
  Speaker 3: acquisition in the home professional space, purchasing foundation building materials
• 14:35
  Speaker 3: for eight point eight billion. This is off the heels
• 14:38
  Speaker 3: of them also purchasing Arson Design Group earlier this year,
• 14:43
  Speaker 3: and really reiterates between Low's and Home Depot. There's been
• 14:46
  Speaker 3: a tremendous amount of focus on building out the professional
• 14:50
  Speaker 3: contractor space. If you look at the total sales from
• 14:53
  Speaker 3: Home Depot we covered their earnings the other day, about
• 14:56
  Speaker 3: fifty five percent of their sales are two professional contractors.
• 14:59
  Speaker 3: They've done a tremendous amount of investment in building out
• 15:02
  Speaker 3: that space. There seems to be sort of the thought
• 15:05
  Speaker 3: that that business is, you know, the ticket items are
• 15:08
  Speaker 3: going to be bigger, but also a little bit more
• 15:11
  Speaker 3: resilient and less fickle than the typical do it yourself
• 15:14
  Speaker 3: for who might push back some products. Lows the way
• 15:17
  Speaker 3: that they make up their sales, they're only about thirty
• 15:20
  Speaker 3: percent pros, seventy percent the typical, you know, regular weekend
• 15:24
  Speaker 3: joe do it yourself. So that was some of the
• 15:26
  Speaker 3: bigger takeaways is Low's also having this focus on trying
• 15:31
  Speaker 3: to build out its professional contractor side of things, but
• 15:34
  Speaker 3: from an income perspective, earnings things like that. Overall, relatively
• 15:38
  Speaker 3: good quarter from Lows. They echo some of the similar
• 15:41
  Speaker 3: trends that Home Depot said that, you know, the home
• 15:43
  Speaker 3: improvement demand we've talked about the real estate market is weaker,
• 15:47
  Speaker 3: but they still came in with, you know, pretty solid
• 15:49
  Speaker 3: sales growth.
• 15:50
  Speaker 2: Here, let's talk a little bit about this piece from Barons.
• 15:54
  Speaker 2: The headline on it is newbie investors are taking more
• 15:58
  Speaker 2: risks than experienced one survey fines. This is from Fidelity's
• 16:03
  Speaker 2: first ever State of the American Investors study. They released
• 16:08
  Speaker 2: this on Tuesday, and they surveyed about two thousand American
• 16:11
  Speaker 2: adults with twenty five thousand dollars or more of investable assets.
• 16:17
  Speaker 2: They split respondents into three groups. Those who have fewer
• 16:19
  Speaker 2: than five years of investing experience those with six to
• 16:22
  Speaker 2: ten of those with eleven or more, and what they
• 16:26
  Speaker 2: saw was that novice investors tended to be more confident
• 16:33
  Speaker 2: than their experienced peers. Fifty six percent believed that their
• 16:36
  Speaker 2: portfolios would perform better next year, compared with thirty four
• 16:39
  Speaker 2: percent of season investors. And investing novices also had higher
• 16:43
  Speaker 2: risk tolerances, with eighteen percent saying they were pursuing quote
• 16:47
  Speaker 2: risk on strategies. And it's tough to tell if there's
• 16:51
  Speaker 2: any meat here, just because this is the first time
• 16:54
  Speaker 2: Fidelity has done this, so you can't compare it to
• 16:57
  Speaker 2: prior studies or prior generations or anything like that. But
• 17:00
  Speaker 2: I think in general it's not surprising to me that
• 17:06
  Speaker 2: newer investors tend to be more confident, probably wrongly so
• 17:11
  Speaker 2: either A like you think about investors over the last
• 17:15
  Speaker 2: fifteen years in general, if you just started investing recently,
• 17:19
  Speaker 2: you've basically only seen you know, secular bull markets in
• 17:22
  Speaker 2: the United States. You haven't seen any kind of long
• 17:24
  Speaker 2: term bear market in quite a while. If you're new
• 17:27
  Speaker 2: to investing, so you've probably done pretty decently. The other
• 17:32
  Speaker 2: piece is, look, I remember when you know I was
• 17:34
  Speaker 2: starting out, I know, heard an idea from someone about,
• 17:38
  Speaker 2: you know, investing, and I'd be like, oh, yeah, like
• 17:40
  Speaker 2: that's it, Like I'm a genius. I'm gonna be able
• 17:42
  Speaker 2: to do this, and like I'll just wait for it
• 17:44
  Speaker 2: to compound and do this and that and then lo
• 17:46
  Speaker 2: and behold, Hey, it didn't work out all the time.
• 17:48
  Speaker 2: And it's like, oh, so it doesn't just work like that.
• 17:51
  Speaker 2: So I'm not surprised by the results of this. No.
• 17:54
  Speaker 3: It echoes the conversation we had on the show yesterday,
• 17:56
  Speaker 3: where early on, you're willing to take more risks, you
• 18:00
  Speaker 3: want a higher reward, you want to double your five
• 18:03
  Speaker 3: hundred bucks that you put in versus the older investor
• 18:06
  Speaker 3: has a lot more capital. They want to protect that more.
• 18:10
  Speaker 3: And when you're early on investing, you hear something at
• 18:13
  Speaker 3: a bar, or you bump into somebody that has an idea,
• 18:16
  Speaker 3: and just like you were saying, oh, that sounds great,
• 18:18
  Speaker 3: I'll invest in it, and the greed sort of lights
• 18:21
  Speaker 3: up that you'll be able to double your money or
• 18:23
  Speaker 3: whatever the case. Sure, maybe the interesting thing that I
• 18:25
  Speaker 3: found from the study and you learn the hard way,
• 18:27
  Speaker 3: but that's not the case, is that sixty four percent
• 18:29
  Speaker 3: of investors thought that they would match or exceed their
• 18:32
  Speaker 3: performance from last year. But fifty percent of investors think
• 18:36
  Speaker 3: that the market is going to perform worse than last year,
• 18:39
  Speaker 3: which is sort of a I'm gonna do great, but
• 18:43
  Speaker 3: the market is going to go down. An experienced investor
• 18:46
  Speaker 3: would tell you good luck beating the market by that
• 18:49
  Speaker 3: significance of a sum. It is dang near and possible
• 18:54
  Speaker 3: to do.
• 18:55
  Speaker 2: If it were that easy to do consistently, you could
• 18:59
  Speaker 2: probably make more money by managing other people's money than
• 19:03
  Speaker 2: doing it just for yourself, which is why it's really
• 19:06
  Speaker 2: hard for even experienced investment managers to do that. It's
• 19:12
  Speaker 2: what works for you one year can get you absolutely
• 19:15
  Speaker 2: bludge in the next year or next week. You just
• 19:17
  Speaker 2: don't know. Case in point. Look at anything related to
• 19:20
  Speaker 2: AI last week versus this week, like you just don't
• 19:24
  Speaker 2: know what you're gonna get. Quick break here. When we
• 19:26
  Speaker 2: come back, we've got the Trivia Answer and Wall Street Watch.
• 19:40
  Speaker 1: Bringing the latest financial news straight to your radio. Every day.
• 19:45
  Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
• 19:50
  Speaker 1: Time now for Wall Street Watch, a complete look at
• 19:54
  Speaker 1: what's moving market so far today right here on the
• 19:57
  Speaker 1: Financial Exchange Radio Network.
• 20:00
  Speaker 4: Well. The selloff in the tech sector is escalating today,
• 20:03
  Speaker 4: although not as bad as about an hour ago, is
• 20:06
  Speaker 4: traders react to more retailer earnings. Wall Street does also
• 20:09
  Speaker 4: waiting minutes from the FEDS July meeting, due out at
• 20:12
  Speaker 4: two o'clock this afternoon. Right now, the Dow is up
• 20:16
  Speaker 4: modestly by twenty two points, SMP five hundred is down
• 20:19
  Speaker 4: nearly half a percent, or twenty nine points, and the
• 20:22
  Speaker 4: Nasdaq now down one percent or two hundred and eight points.
• 20:27
  Speaker 4: Russell two thousand is off by nearly seven tenths of
• 20:29
  Speaker 4: one percent. Ten year Treasure reeled down one basis point
• 20:32
  Speaker 4: at four point two nine to one percent. In crude
• 20:36
  Speaker 4: oil up one percent higher today, trading at sixty three
• 20:39
  Speaker 4: dollars a barrel. Target down by seven percent after the
• 20:42
  Speaker 4: retailer posted its eleventh straight quarter of flat or falling sales.
• 20:47
  Speaker 4: The company noted improving quarterly traffic in sales trends, but
• 20:50
  Speaker 4: also noted terrorf related in other cost pressures and challenging
• 20:55
  Speaker 4: retail conditions. However, the bigger news from Target is the
• 20:58
  Speaker 4: appointment of COO Michael Fidelki as its next CEO, succeeding
• 21:03
  Speaker 4: Brian Cornell. Meanwhile, Lows boosted its annual outlook after beating
• 21:08
  Speaker 4: earnings forecast for the second quarter. The Home improvement of
• 21:11
  Speaker 4: retailer also announced it agreed to buy distributor Foundation building
• 21:14
  Speaker 4: materials for eight point eight billion dollars a low stock
• 21:18
  Speaker 4: is up modestly. Another retailer in TJX, seeing gains of
• 21:22
  Speaker 4: three percent after the TJ Max and Home Goods parent
• 21:25
  Speaker 4: company lifted its annual profit forecast after reporting better than
• 21:29
  Speaker 4: expected second quarter results where consumers flocked to discount stores
• 21:34
  Speaker 4: in search of deals elsewhere. CNBC reporting that Intel is
• 21:38
  Speaker 4: in talks with other large investors to receive an equity
• 21:42
  Speaker 4: infusion at a discounted price. Intel is down by six
• 21:45
  Speaker 4: percent after its recent skid pall Andeer shares a down
• 21:49
  Speaker 4: over five percent now, bringing its total losses over the
• 21:53
  Speaker 4: last five sessions to about eighteen percent. And car rental
• 21:56
  Speaker 4: company Hurts seeing a gain of about five percent after
• 22:00
  Speaker 4: announced it will begin selling use cars on Amazon Autos
• 22:04
  Speaker 4: in four different cities as soon as today, and we'll
• 22:07
  Speaker 4: expand to forty five locations nationwide. I'm Tucker Silva and
• 22:12
  Speaker 4: that is Wall Street Watch. And in the previous segment,
• 22:15
  Speaker 4: we asked you the trivia question who is the Supreme
• 22:18
  Speaker 4: Commander of the Allied Forces in Europe? That would be
• 22:22
  Speaker 4: Dwight D. Eisenhower. Michael from Longmeadow, Mass is our winner today,
• 22:26
  Speaker 4: taking home a Financial Exchange Show t shirt. Congrats to Michael,
• 22:30
  Speaker 4: and we play trivia every day here in the Financial
• 22:32
  Speaker 4: Exchange See complete contest rules at Financial Exchange Show dot com.
• 22:37
  Speaker 2: Piece here from market Watch whether Russell two thousand has
• 22:41
  Speaker 2: a real chance to beat the S and P five hundred. Finally,
• 22:46
  Speaker 2: so here's what gets outlined in this piece. Small caps
• 22:50
  Speaker 2: are cheap relative to large caps. Okay, they've been cheap
• 22:55
  Speaker 2: for twenty years. Who cares. Valuation is not a reason
• 22:59
  Speaker 2: for something to move up or down.
• 23:02
  Speaker 3: Yeah, I love talking about this piece. Not specific to
• 23:06
  Speaker 3: whether or not Russell two thousand is a good bet
• 23:09
  Speaker 3: right now, but more this common rhetoric with portfolio construction
• 23:14
  Speaker 3: was has always been, going back to studies done in
• 23:18
  Speaker 3: the eighties that are, and the inception of the Russell
• 23:22
  Speaker 3: two thousand that came off this study, was that you
• 23:25
  Speaker 3: needed small caps in your portfolio because yes, they'd be
• 23:27
  Speaker 3: more volatile over time, but they would outperform their larger
• 23:30
  Speaker 3: cap peers.
• 23:31
  Speaker 2: And the idea of the small cap premium exactly.
• 23:34
  Speaker 3: And so when we're talking about small caps, we're talking
• 23:36
  Speaker 3: about smaller sized company. Large caps would be the big
• 23:39
  Speaker 3: ones that we talk about every single day. But if
• 23:42
  Speaker 3: you look at the performance of the S and P
• 23:44
  Speaker 3: five hundred compared to that of the Russell two thousand,
• 23:47
  Speaker 3: the S and P has crushed it ten years, fifteen years,
• 23:51
  Speaker 3: twenty years, and even if you go back since inception,
• 23:53
  Speaker 3: the S and P five hundred now is better performing
• 23:57
  Speaker 3: from a total return standpoint than the Russell two thousand.
• 23:59
  Speaker 3: I just wonder recently, I've questioned that theory myself, that
• 24:04
  Speaker 3: the market conditions have changed dramatically, where the quality of
• 24:08
  Speaker 3: the companies in the Russell two thousand they tend to
• 24:11
  Speaker 3: be not profitable, they tend to be heavily leveraged. And
• 24:16
  Speaker 3: you can say that this is just a point in
• 24:18
  Speaker 3: time where interest rates are a little bit higher, but
• 24:20
  Speaker 3: also you have a private equity market that can keep
• 24:23
  Speaker 3: these companies longer private, for much longer than they could previously.
• 24:27
  Speaker 3: So I just wonder if that paradigm shift really is
• 24:30
  Speaker 3: still something that should be taken as just true fact
• 24:36
  Speaker 3: as when you do portfolio construction.
• 24:38
  Speaker 2: This is not physics here. It's something where market conditions
• 24:42
  Speaker 2: are always evolving. Economic conditions are always evolving. And though
• 24:46
  Speaker 2: there are some truths that you can come back to
• 24:48
  Speaker 2: that you should at least pay attention to, generally you
• 24:52
  Speaker 2: never get the exact same response all the time on
• 24:55
  Speaker 2: the same timeline, simply because things are always a little
• 24:58
  Speaker 2: different than they were four and just because something might
• 25:02
  Speaker 2: have even lasted for twenty thirty forty years doesn't mean
• 25:05
  Speaker 2: it's gonna last for the next twenty thirty forty I
• 25:07
  Speaker 2: remember back in you know, around two thousand and five,
• 25:10
  Speaker 2: all people wanted to buy were emerging market stocks because
• 25:13
  Speaker 2: they've been absolutely you know, bludgeoning US equities on a
• 25:16
  Speaker 2: relative basis. It was all about Brazil and China and
• 25:19
  Speaker 2: India and Russia. And now you look at performance for
• 25:22
  Speaker 2: the last twenty years and you're like, ooh, like, I
• 25:25
  Speaker 2: hope I didn't continue doing that, because it completely reversed it.
• 25:31
  Speaker 2: I mean, you look at Chinese markets for the last
• 25:32
  Speaker 2: twenty years, they're basically flat. Like it's it's just just
• 25:36
  Speaker 2: because something worked for even a decade or two doesn't
• 25:39
  Speaker 2: mean it's gonna work for the next couple.
• 25:41
  Speaker 3: I was reading something. And this goes way back in
• 25:43
  Speaker 3: the nineteen fifties. They used to have to pay a
• 25:45
  Speaker 3: higher divin and yield on stocks for people to own
• 25:47
  Speaker 3: them because of the risk that went with them over bonds. Yeah,
• 25:50
  Speaker 3: and now think about how counterintuitive that was when someone
• 25:53
  Speaker 3: was quoting the piece saying it will change. It's never
• 25:56
  Speaker 3: It's never changed since really, I mean stocks just there's
• 25:59
  Speaker 3: some divid in pay out there, but it's not that
• 26:01
  Speaker 3: same in balance that you had previously.
• 26:03
  Speaker 4: Well, the holidays are just around the corner, believe it
• 26:06
  Speaker 4: or not. So now's the time to plan your winter escape.
• 26:09
  Speaker 4: Trade in the cold for sunshine, sea breezes, and island
• 26:12
  Speaker 4: vibes in the US Virgin Islands, America's Caribbean paradise. Whether
• 26:17
  Speaker 4: it's a romantic retreat, a family celebration, or a solo recharge.
• 26:21
  Speaker 4: Before the new year, Saint Croix, Saint Thomas, and Saint
• 26:24
  Speaker 4: John offered the ultimate warm weather getaway. Lounge on sun
• 26:28
  Speaker 4: drenched beaches, explore vibrant culture and celebrate the holiday's island style.
• 26:33
  Speaker 4: No passport, no hassle, just warm weather, clear blue water
• 26:37
  Speaker 4: and unforgettable memories. This is where the stress melts away
• 26:41
  Speaker 4: and you find yourself naturally in rhythm with the heartbeat
• 26:44
  Speaker 4: of the Islands. Go to visit USVII dot com and
• 26:48
  Speaker 4: book your trip today. That's visit USVII dot com the
• 26:52
  Speaker 4: US Virgin Islands, America's Caribbean paradise. Your holiday escape starts
• 26:57
  Speaker 4: here at visit USVII dot com.
• 27:00
  Speaker 2: All right, we got to talk a little bit about
• 27:01
  Speaker 2: data centers here because this is absolutely going to be
• 27:05
  Speaker 2: just a massive story over the next couple of years.
• 27:07
  Speaker 2: And we're not going to talk about whether AI is
• 27:09
  Speaker 2: good or bad, because I don't know, it's both. We
• 27:13
  Speaker 2: cover that enough about like whether we like AI or don't.
• 27:16
  Speaker 2: This is specifically about the economics and feasibility of the
• 27:22
  Speaker 2: massive scale in data center construction that we're seeing right now.
• 27:26
  Speaker 2: So if you go back and look at twenty fourteen
• 27:29
  Speaker 2: in the United States, in twenty fourteen, data centers used
• 27:32
  Speaker 2: about one percent of all US electricity. It's not very much.
• 27:36
  Speaker 2: One in every one hundred watts, vaults, whatever you want
• 27:40
  Speaker 2: to measure it in was used. It would probably be
• 27:43
  Speaker 2: wats or a lot hours, but anyways, those were one
• 27:48
  Speaker 2: percent of all electricity usage in the US. Was data
• 27:50
  Speaker 2: centers today with the expansion that we've seen in particular
• 27:53
  Speaker 2: over the last five years. It's up to around four
• 27:56
  Speaker 2: point four percent. Okay, that's a you know, or fold increase,
• 28:01
  Speaker 2: but sure, we can figure this out. The projections are
• 28:05
  Speaker 2: that by twenty twenty eight, three years from now, you're
• 28:07
  Speaker 2: going to be around twelve percent of all electricity usage
• 28:11
  Speaker 2: in the US is from data centers. And here's the
• 28:13
  Speaker 2: problem is that we do not build enough new capacity
• 28:18
  Speaker 2: on the power generation side to be able to power
• 28:21
  Speaker 2: all of these data centers as cheaply as we're powering
• 28:24
  Speaker 2: them today. And so what you are already starting to
• 28:28
  Speaker 2: see are significant increases in the price of electricity because
• 28:34
  Speaker 2: you have these data centers now competing with you know,
• 28:37
  Speaker 2: residential homes for the same power. And if you know
• 28:42
  Speaker 2: anyone who works in the business of developing power generation,
• 28:47
  Speaker 2: they'll tell you that it sucks. It takes quite literally
• 28:52
  Speaker 2: eight to twelve years from start to finish to get
• 28:55
  Speaker 2: a project moving approved, you know, all the regular quatory
• 29:00
  Speaker 2: approvals and everything constructed and then hooked up to the
• 29:03
  Speaker 2: interconnection and data centers. On the other hand, it doesn't
• 29:08
  Speaker 2: take that long. It can be a year or two
• 29:10
  Speaker 2: from you know, start to finish, and so what we
• 29:13
  Speaker 2: have here is going to be a huge mismatch between
• 29:17
  Speaker 2: electricity supply and demand. And you're already starting to see
• 29:20
  Speaker 2: this years and some of this year and some of
• 29:22
  Speaker 2: the interconnection auctions for wholesale electricity prices. You're seeing double
• 29:28
  Speaker 2: and even in some cases triple digit price increases on
• 29:32
  Speaker 2: the wholesale market that are eventually going to have to
• 29:35
  Speaker 2: get through to the end buyer just because the interconnection
• 29:40
  Speaker 2: can't eat all of those costs. And so I gotta
• 29:45
  Speaker 2: tell you there's a real problem here because you can't
• 29:49
  Speaker 2: develop electricity generation quickly enough in the US to keep
• 29:52
  Speaker 2: up with this. And this is going to absolutely be
• 29:56
  Speaker 2: a major political battle over the next two to three years,
• 29:59
  Speaker 2: is too how do we manage electricity costs for all
• 30:02
  Speaker 2: of this AI slop that gets generated.
• 30:06
  Speaker 3: The state of Virginia is a great example of They
• 30:08
  Speaker 3: have the most data centers out there. They have six
• 30:10
  Speaker 3: hundred data centers, and they use those data centers use
• 30:13
  Speaker 3: as much electricity as two million households. That's half of
• 30:17
  Speaker 3: the households in the state. Virginia took a very lack
• 30:20
  Speaker 3: stance on allowing for data centers to be built within
• 30:23
  Speaker 3: their state. But I can guarantee you if that you
• 30:25
  Speaker 3: were to ask any Virginia residents from electricity standpoint, the
• 30:29
  Speaker 3: total cost increase. I mean, we've all seen it. They're
• 30:32
  Speaker 3: feeling the burden of that. Plus there's also issues with
• 30:36
  Speaker 3: water consumption. There's a lot of negatives that can come
• 30:40
  Speaker 3: from the data center build out that I don't think
• 30:44
  Speaker 3: regular people would be as familiar with. It's really a
• 30:48
  Speaker 3: huge problem, and the grid is not equipped to handle it,
• 30:51
  Speaker 3: like you mentioned, and even more investment in the grid.
• 30:54
  Speaker 3: The way that the grid is structured, there's gonna need
• 30:56
  Speaker 3: to be other avenues that are utilized for this power generation,
• 31:01
  Speaker 3: and we're not anywhere close to being able to satisfy
• 31:04
  Speaker 3: the consumption need that's going to be here if AI
• 31:07
  Speaker 3: keeps trending the way it is, so data centers, like
• 31:10
  Speaker 3: you said, could be under huge scrutiny for development some
• 31:13
  Speaker 3: of these other states around the country.
• 31:15
  Speaker 2: Quick break here when we come back. We got stack
• 31:17
  Speaker 2: rou Let.
• 31:20
  Speaker 1: Here the Financial Exchange every day from eleven to noon,
• 31:23
  Speaker 1: Non serious XM's Business Radio Channel one thirty two. Keep
• 31:27
  Speaker 1: it here for the latest business and financial news and
• 31:30
  Speaker 1: the trends on Wall Street. The Financial Exchange is now
• 31:33
  Speaker 1: live on Serious XM's business radio channel one thirty two.
• 31:36
  Speaker 1: Face is the Financial Exchange Radio Network. The Financial Exchange
• 31:41
  Speaker 1: streams live on YouTube. Subscribe to our page and stay
• 31:45
  Speaker 1: up to date on breaking business news all morning long.
• 31:48
  Speaker 1: Face is the Financial Exchange Radio Network.
• 32:02
  Speaker 2: Paul, what do you got for me for stacks?
• 32:05
  Speaker 3: Talk a little bit about some fast food joints you
• 32:10
  Speaker 3: called Chipotle? What do you call it? Fast casual?
• 32:12
  Speaker 2: Fast casual?
• 32:13
  Speaker 3: Little fast casual and fast food shatter here?
• 32:15
  Speaker 2: How come there's no fast formal food category.
• 32:19
  Speaker 3: I don't think you can have fast and formal.
• 32:22
  Speaker 2: We're going to work on that.
• 32:24
  Speaker 3: Chipotle is aiming to target college students, which is a
• 32:27
  Speaker 3: big percentage of their store can what would be store
• 32:33
  Speaker 3: visitors around college campuses. That's really where Chipotle has a
• 32:38
  Speaker 3: lot of their presence. They're trying to create a system
• 32:42
  Speaker 3: where college students can spend money at Chipotle and get
• 32:46
  Speaker 3: rewards bonuses that might get them a free burrito, but
• 32:48
  Speaker 3: also some dorm decord. They are going to tell me
• 32:53
  Speaker 3: they're going to be offering a collection of bean bag chairs,
• 32:59
  Speaker 3: doormats saying leave my Chipotle here. An embroidered pillar pillow
• 33:04
  Speaker 3: that says it's okay to be a little extra, so
• 33:08
  Speaker 3: some little Chipotle swag with those burrito purchases for those
• 33:12
  Speaker 3: kids going back to school here in September. That compares
• 33:17
  Speaker 3: with McDonald's strategy of keeping its value meals around. Big
• 33:21
  Speaker 3: Max had soared to big mcmeals had soared to eighteen
• 33:24
  Speaker 3: bucks in someplaces throughout the country. There's been this huge
• 33:27
  Speaker 3: focus by McDonald's to have their five dollar breakfast and
• 33:31
  Speaker 3: their value meals come back, and they just recently agreed
• 33:35
  Speaker 3: to have its US franchisees keep some of these combo
• 33:38
  Speaker 3: meals in place that are fifteen percent cheaper than the
• 33:41
  Speaker 3: sum of those individual parts together for the next six
• 33:45
  Speaker 3: months plus here because they've seen a lot of success there. Chipotle,
• 33:49
  Speaker 3: on the other hand, has been struggling. They have seen
• 33:52
  Speaker 3: a four percent drop in their same store sales, so
• 33:54
  Speaker 3: they're trying to reignite things. Chuck with a little bit
• 33:57
  Speaker 3: of dorm room decor for those burrito per fascinating.
• 34:02
  Speaker 2: I don't think it's no more, you know, but you know,
• 34:05
  Speaker 2: just you don't want to. Yeah, when I'm in college,
• 34:08
  Speaker 2: I really wanted Chipotle doormat. That's really gonna get me
• 34:13
  Speaker 2: some like serious swag like, oh yeah, that's just great.
• 34:17
  Speaker 3: You see the guy in the second floor, he's got
• 34:18
  Speaker 3: a Chipotle doormat.
• 34:20
  Speaker 2: Yeah, I can't wait. Uh Walmart shrimp may have been
• 34:23
  Speaker 2: exposed to radioactive material, FDA says, So apparently this is
• 34:27
  Speaker 2: with regards to some shrimp out of Indonesia. The two
• 34:31
  Speaker 2: questions that I have are how did they get exposed
• 34:35
  Speaker 2: to radioactive material in why Indonesia? And number two, where
• 34:39
  Speaker 2: can I get some? This is how you turn into
• 34:43
  Speaker 2: shrimp man.
• 34:44
  Speaker 3: Fried shrimp, nuclear shrimp.
• 34:47
  Speaker 2: It's probably not a great eddie. I think it's what
• 34:49
  Speaker 2: did it say? Caesium is in there and that's not
• 34:52
  Speaker 2: stuff that you want to be anywhere near. So apparently
• 34:54
  Speaker 2: it was shrimp exported to I believe thirteen states.
• 34:57
  Speaker 3: Thirteen states Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Missouri, Mississippi, Ohio, Oklahoma, Pennsylvania, Texas,
• 35:04
  Speaker 3: and West Virginia.
• 35:06
  Speaker 2: Did you say Louisiana?
• 35:07
  Speaker 3: Yes? I did.
• 35:08
  Speaker 2: Why are we buying what kind of shrimp? Was it
• 35:13
  Speaker 2: Indonesian shrimp and sending it to Louisiana?
• 35:17
  Speaker 3: Yes, frozen shrimp, But I believe.
• 35:18
  Speaker 2: They have shrimp in Louisiana. I've been there a few times.
• 35:23
  Speaker 2: Why do we need to get frozen shrimp from Indonesia
• 35:26
  Speaker 2: and send it to like the shrimp capital of the
• 35:31
  Speaker 2: United States.
• 35:32
  Speaker 3: Especially with tariffs in place, you think that they'd look
• 35:35
  Speaker 3: to uh Bubba Gump Shrimp to get their shrimp from
• 35:38
  Speaker 3: rather than going all the way over to Indonesia.
• 35:40
  Speaker 2: I'm just saying, what are we doing here? New York
• 35:43
  Speaker 2: Times with a piece titled come one, Come On, buy
• 35:46
  Speaker 2: your TV subscriptions here, and it's talking about how Americans
• 35:50
  Speaker 2: now starting to sign up for multiple services through a
• 35:53
  Speaker 2: single provider instead of apps cable. It sounds like cobble,
• 35:58
  Speaker 2: I think, is how it's pronounced. But look, people want
• 36:02
  Speaker 2: things bundled because honestly, unbundled services are bad for everyone. Look,
• 36:08
  Speaker 2: we had a golden age of unbundling in the late
• 36:12
  Speaker 2: twenty tens because everyone underpriced their product and lost money
• 36:15
  Speaker 2: on it, which was great for us. But once companies
• 36:18
  Speaker 2: finally realize that, oh gee, we can't just lose money
• 36:20
  Speaker 2: forever on this, it's no longer great for us or
• 36:24
  Speaker 2: for them. And so what you find is that the
• 36:27
  Speaker 2: cable bundled despite having two hundred channels and you're like, well,
• 36:30
  Speaker 2: I only watch six of these. The fact is you
• 36:33
  Speaker 2: pay a cent a month for all of the ones
• 36:35
  Speaker 2: that you don't watch, and no one else watches. The
• 36:38
  Speaker 2: content providers still get the revenue from that. You really
• 36:41
  Speaker 2: don't pay anything more, and the stations that you do
• 36:45
  Speaker 2: want you get cheaper still because not everyone wants those. Either.
• 36:49
  Speaker 2: The highest cable rights fees out there ESPN, I don't
• 36:52
  Speaker 2: know what they are today. The last time I looked,
• 36:54
  Speaker 2: they were like eight to twelve dollars per month is
• 36:57
  Speaker 2: kind of where it was. But there's a reason why
• 37:00
  Speaker 2: ESPN on it's dedicated streaming apps, is more expensive than that,
• 37:04
  Speaker 2: and it's because not everyone watches ESPN. Even the most
• 37:08
  Speaker 2: watched football games of the year, the Super Bowl and
• 37:11
  Speaker 2: stuff like that. You get maybe half of Americans that
• 37:14
  Speaker 2: actually watch, and the other half subsidizes the whole thing,
• 37:17
  Speaker 2: but you subsidize them watching QBC, and so it all
• 37:21
  Speaker 2: works together so that you all get better deals and
• 37:25
  Speaker 2: the companies get revenues. So we're gonna head back to bundling.
• 37:30
  Speaker 2: It's just the worst part of this is that it's
• 37:33
  Speaker 2: gonna end up going through streaming instead of cable, which
• 37:36
  Speaker 2: By the way, streaming is just a less efficient transmission
• 37:39
  Speaker 2: mechanism for cable in terms of the amount of data
• 37:43
  Speaker 2: that you have to send back and forth. So we've
• 37:46
  Speaker 2: basically reinvented cable, but less efficient.
• 37:49
  Speaker 3: Yes, and it's interesting. YouTube TV is kind of an
• 37:52
  Speaker 3: example of a company that came out really cheap on
• 37:54
  Speaker 3: the pricing front, but they're increasing their prices more and more.
• 37:58
  Speaker 3: To be I'm not saying that they're equal to cable,
• 38:01
  Speaker 3: but they're getting pretty close.
• 38:02
  Speaker 2: It doesn't feel as fun as when it was forty
• 38:04
  Speaker 2: dollars a month now that it's.
• 38:05
  Speaker 3: Eighty two exactly.
• 38:07
  Speaker 2: But I digress. Markets remain negative, though not as bad
• 38:11
  Speaker 2: as they were earlier. There's still plenty of time in
• 38:14
  Speaker 2: the day, and don't worry, we're gonna be here tomorrow.
• 38:16
  Speaker 2: We'll recap what happened today and talk about a whole
• 38:18
  Speaker 2: bunch of new stuff then