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California has created an insurance nightmare · The Financial Exchange Show

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  Speaker 1: This is the Financial Exchange with Chuck Zadath and Mike Armstraw.
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  Speaker 2: Kicking off hour two of the Financial Exchange. It's Chuck,
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  Speaker 2: Mike Tucker and a bunch of stocks losing money with
• 1:15
  Speaker 2: you today, and the S and P five hundred down
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  Speaker 2: ninety two points, the Dow is off six forty five,
• 1:20
  Speaker 2: and the Nasdaq down three point fifty nine, so overall
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  Speaker 2: about a one and a half to one and three
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  Speaker 2: quarter percent drop on all major US indices. Interesting things
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  Speaker 2: happening in the bond market today. So we had a
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  Speaker 2: jobs report this morning at eight thirty that was much
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  Speaker 2: stronger than anticipated and so originally had one hundred thousand jobs. Yes,
• 1:40
  Speaker 2: and so you had a pretty strong sell off that
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  Speaker 2: was happening in the bond market, with the ten year
• 1:46
  Speaker 2: moving from about four point six to eight up to
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  Speaker 2: almost four eight tenure sits now at four to seven five,
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  Speaker 2: so it's come back in a little bit. The thirty
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  Speaker 2: year bond, which was also up about ten bases points
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  Speaker 2: crossing five percent, now only up two point six base point,
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  Speaker 2: so again coming in a little bit. But that sell
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  Speaker 2: off based on, hey, there's there's more activity in the
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  Speaker 2: mark in the economy, and so the Fed's not going
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  Speaker 2: to be able to cut and that could slow the
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  Speaker 2: economy further. That's what I think we're seeing as far
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  Speaker 2: as the action in equity markets and how it's relating
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  Speaker 2: to what's going on in bonds. Oil West Texas Intermediate
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  Speaker 2: up two dollars and twenty cents a barrel to seventy
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  Speaker 2: six twelve. This as the United States imposing new sanctions
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  Speaker 2: on the Russian oil industry, targeting Russian oil companies Gasprom
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  Speaker 2: Neft and Curguit Neft gas and that includes one hundred
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  Speaker 2: and eighty oil tankers, more than a dozen energy officials
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  Speaker 2: and executives, and so on and so forth. So that's
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  Speaker 2: what's got oil moving today, which takes us to the
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  Speaker 2: triple A national average gas prices which fell three tenths
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  Speaker 2: of percent to three h six and six tenths overnight. Unfortunately,
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  Speaker 2: it's probably not going to stay there. Looks like that'll
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  Speaker 2: be moving up in a fairly short order, probably getting
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  Speaker 2: towards that three ten to three fifteen mark in the
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  Speaker 2: next week or two. And we've got gold up thirty
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  Speaker 2: one twenty announce to twenty seven twenty two even anything
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  Speaker 2: else you want to add on the job of report, Mike.
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  Speaker 3: No I think it just as we've talked about over
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  Speaker 3: and over again, and now this December jobs report.
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  Speaker 2: Just weighs on further.
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  Speaker 3: It presents a very difficult conundrum for an incoming Trump administration.
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  Speaker 3: They with unemployment now down at four point one percent,
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  Speaker 3: if you go and tax cut taxes dramatically and increase
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  Speaker 3: business activity with that, you have a real possibility of inflation.
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  Speaker 3: And I don't know exactly what the focus is going
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  Speaker 3: to be if it's going to get the terrorist done
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  Speaker 3: first and then go from there. But depending on the
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  Speaker 3: order of operations here, I'll be interested to see a
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  Speaker 3: what an incoming Republican administration can get done through Congress.
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  Speaker 3: And with unemployment dropping like this, it should it stay consistent?
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  Speaker 3: Did we consistently create a couple hundred thousand jobs a month.
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  Speaker 3: It's a very different economy, as we've talked about than
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  Speaker 3: the last time Donald Trump took office.
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  Speaker 2: Did you see I wish I had the exact quote.
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  Speaker 2: I saw it yesterday. I forget which House committee this
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  Speaker 2: came in front of, but it was the lead Republican
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  Speaker 2: on the committee was going through like a slide a
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  Speaker 2: set of slides of Hey, here's what we're considering doing
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  Speaker 2: on taxes, and it included a business tax rate, a
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  Speaker 2: corporate tax rate hike a Republican and I said, it
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  Speaker 2: was like like an accident, like, oh, that wasn't supposed
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  Speaker 2: to be in there, but you kind of look at
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  Speaker 2: you like you're making a presentation to a House committee.
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  Speaker 2: How do you accidentally put it?
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  Speaker 4: Jody Errington?
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  Speaker 2: Yes, that How did you find that? So quickly?
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  Speaker 1: Google?
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  Speaker 2: What'd you google? Though?
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  Speaker 4: House Committee taxes?
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  Speaker 5: In?
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  Speaker 2: Then a cl news There you go best in the
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  Speaker 2: biz right there? Yeah, accidentally included a slide showing a
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  Speaker 2: corporate tax rate hike. But I don't think the corporate
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  Speaker 2: tax rate is going to go up. But I think
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  Speaker 2: it just speaks to the fact that, look, in the
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  Speaker 2: situation that you're in right now, you can't just go
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  Speaker 2: expand the deficit too much further, just because it's already
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  Speaker 2: at really high annual levels. We're talking about running deficits
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  Speaker 2: around sixty seven percent, and historically the place where it
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  Speaker 2: gets more sustainable is about half that. And there is
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  Speaker 2: no concrete plan to deal with this. And look, here's
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  Speaker 2: the deal. Democrats and Republicans are both gonna have to
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  Speaker 2: take some els. They're gonna have to take some els.
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  Speaker 2: You gotta reign and spending, and you probably have to
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  Speaker 2: have taxes go up in a couple places. Also not
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  Speaker 2: gonna happen. Then again under this administration, not gonna happen.
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  Speaker 2: Then good luck, I know, because as Elon Musk admitted yesterday, hey,
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  Speaker 2: dose probably isn't gonna be able to cut two trillion
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  Speaker 2: dollars in spending. Yeah.
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  Speaker 3: So again, this is why it's such a fascinating exercise.
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  Speaker 3: Here is Trump administration wants to cut taxes. I don't
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  Speaker 3: know the Republicans are going to fall in line. Wants
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  Speaker 3: to find a bunch of spending cuts. Elon Musk already
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  Speaker 3: saying that he can't find them. And with a report
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  Speaker 3: and market reaction like the one we are seeing today.
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  Speaker 3: If you go start insinuating that you're going to deliver
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  Speaker 3: massive tax cuts, what happens with yields.
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  Speaker 2: Choke ten years going to six if you have problems,
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  Speaker 2: If you have a package of tax cuts with no
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  Speaker 2: corresponding spending decreases, ten years going to six like that,
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  Speaker 2: that's where you're heading, and good luck to the economy.
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  Speaker 2: In equity markets with the ten year at six, you
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  Speaker 2: want eight and a half percent, nine percent mortgage rates again.
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  Speaker 2: Good luck.
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  Speaker 3: It's just a very yeah, threading the needle is going
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  Speaker 3: to be challenging this time around.
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  Speaker 2: It is speaking of challenging Los Angeles continuing to bat
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  Speaker 2: through just historic wildfires that are hopping from place to
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  Speaker 2: place in the city. The winds have now died down
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  Speaker 2: in LA, which should help with preventing the start of
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  Speaker 2: new fires from happening as easily. The main way that
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  Speaker 2: these new fires were popping up was, hey, you've got
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  Speaker 2: a house that's on fire. Part of it, you know,
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  Speaker 2: you got forty mile an hour winds with eighty mile
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  Speaker 2: an hour gus. Part of it blows two miles away
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  Speaker 2: in the gust and lights a whole new area on fire.
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  Speaker 2: So that appears to at least be not as big
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  Speaker 2: of an isition now. But you still have these fires
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  Speaker 2: largely uncontained in a lot of cases. And the estimates
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  Speaker 2: now are that insured losses could be more than twenty
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  Speaker 2: billion dollars and total economic losses close to fifty billion.
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  Speaker 2: This according to JP Morgan analyst Jimmy Buller. And so
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  Speaker 2: obviously this is just you know, talking about it from
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  Speaker 2: the economic standpoint. I can't imagine actually living out there
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  Speaker 2: and being you know, seeing these fires popping up, and
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  Speaker 2: the fact that there are at this point fewer than
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  Speaker 2: ten people confirmed dead, I think does speak to the
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  Speaker 2: fact that as as as hard as it has been
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  Speaker 2: to contain these fires, they've at least done a good
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  Speaker 2: job of getting people out of harm's way. Because they're
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  Speaker 2: now estimating that more than ten thousand structures have been
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  Speaker 2: destroyed at this point. That's up from three thousand early yesterday, the.
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  Speaker 3: State's insurance Commissioner, Ricardo Lara, issued a one year mandatory
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  Speaker 3: moratorium to shield those neighborhoods for canceling or non renewing
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  Speaker 3: residential policies that are in those la neighborhoods. Which what
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  Speaker 3: do we We got to pause here on that.
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  Speaker 2: So that's new as of like today. Yeah, okay, So
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  Speaker 2: here's the deal. If you were covered by one of
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  Speaker 2: those policies before, even if they cancel it tomorrow, you
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  Speaker 2: still were covered during the period in which your house burned. True,
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  Speaker 2: a one year moratorium on this, Mike, How easy is
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  Speaker 2: it to just demolish and rebuild a whole house in
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  Speaker 2: one year? Not too easy? What are you going to
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  Speaker 2: be covering during that time? You're already getting the insurance
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  Speaker 2: money coming out.
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  Speaker 3: One year doesn't make any sense. Here's what does make sense.
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  Speaker 3: LA is burning right now and your policy is due
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  Speaker 3: to renew today. I do generally agree that, Hey, so
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  Speaker 3: long as your home is in danger of burning, having
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  Speaker 3: a moratorium on that company from being able to cancel
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  Speaker 3: your policy in the midst of all that, well, that
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  Speaker 3: should be a baseline of how the baseline assumption of
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  Speaker 3: how insurance work.
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  Speaker 2: Yes, I don't know what a one year shield on
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  Speaker 2: all this.
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  Speaker 3: Does because it's but I here seems silly.
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  Speaker 2: Here's the problem. I have absolutely no sympathy for the
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  Speaker 2: the insurance commissions, in the insurance Commission in California, so
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  Speaker 2: they push on this. They have basically created this situation
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  Speaker 2: where you have people being dropped because they're not allowing
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  Speaker 2: carriers to charge market based. It's actually more and worse,
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  Speaker 2: and that's worse. So here's the thing about California. Do
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  Speaker 2: we need to take a break or can I go
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  Speaker 2: for two minutes? Okay, we can go. So California is
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  Speaker 2: a state that talks about how they want to be
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  Speaker 2: on the cutting edge of climate change and how they
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  Speaker 2: want to be able to reduce the impacts of climate change.
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  Speaker 2: At the same time, they refuse to let insurers use
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  Speaker 2: climate based models to actually price their policies because they
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  Speaker 2: know exactly where I was going. They know that those
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  Speaker 2: policies would be horribly expensive when pricing in the risks
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  Speaker 2: that they're seeing.
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  Speaker 3: So what California has done, and they've changed this a
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  Speaker 3: bit now, but we're doing for years, was saying to
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  Speaker 3: insurance companies, you may not use predictive technology to price
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  Speaker 3: your policies because what it's going to result in is
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  Speaker 3: in my prices that basically are state's going to burn down.
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  Speaker 3: And so instead you must look at historical data only
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  Speaker 3: when pricing out policies. And guess what insurers said, screw you,
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  Speaker 3: We're not writing policies police. Yeah, why like yeah? And
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  Speaker 3: I think I would agree there with the hypocrisy of
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  Speaker 3: California saying hey, you can't use this. I can I
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  Speaker 3: can see well, I would disagree with it. I could
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  Speaker 3: see a state like Mississippi saying no, we don't want
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  Speaker 3: you using forecasting models.
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  Speaker 2: Least you're persistent there.
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  Speaker 3: Yeah, you're at least being consistent in your messaging of
• 11:20
  Speaker 3: we don't believe science.
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  Speaker 2: If you are California doing this, you are just completely,
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  Speaker 2: and the result is that you've screwed over the people
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  Speaker 2: that you're trying to protect, as the State Insurance commissioner. Correct,
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  Speaker 2: because this is why so many have had dropped coverage
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  Speaker 2: and now don't have coverage for this stuff. Now.
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  Speaker 3: To be clear, I don't know that that was Ricardo
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  Speaker 3: Lera specifically, no, but the commission itself has had a
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  Speaker 3: long period of time of this type of behavior and the.
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  Speaker 2: Reason why I've gotten guess what, the State Insurance Commission
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  Speaker 2: they're elected positions, right if like, of course you can
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  Speaker 2: to vote for the person who says they're gonna like
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  Speaker 2: keep the increases from going up. Yeah, And at the
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  Speaker 2: same time, the very policies that they've you know, gone
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  Speaker 2: through to get here have screwed over the people that
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  Speaker 2: need to be protected because their homes have now been destroyed.
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  Speaker 2: So I I just feel so bad for the people
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  Speaker 2: that live there. And I know that, like it's so
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  Speaker 2: popular now to be like, well they had to come.
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  Speaker 2: Screw you if you're saying that like someone had it
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  Speaker 2: coming from a natural disaster, Okay, no one deserves to
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  Speaker 2: have this happen to them, but we deserve better than
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  Speaker 2: just being you know, politicians that focus on, well, we
• 12:31
  Speaker 2: got to get to the next election, regardless of what
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  Speaker 2: it means for how we're actually managing the risks that
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  Speaker 2: are out there. Okay, because there are thousands of people
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  Speaker 2: now and I get it, like some of them are
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  Speaker 2: very wealthy, and oh, like, how could you feel bad?
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  Speaker 2: No one deserves to have their home destroyed. I don't
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  Speaker 2: care if you have four hundred million dollars or four
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  Speaker 2: dollars like, no one just deserves to have it happen.
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  Speaker 2: We can have honest convers I can they have, like
• 12:56
  Speaker 2: one or two people but no generally speaking, agreed, Sure,
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  Speaker 2: but like, we can have honest conversations about how do
• 13:03
  Speaker 2: we deal with this going forward and how do we, like,
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  Speaker 2: should we be rebuilding these homes the exact same way
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  Speaker 2: or in these locations. Fine, that's a conversation to have,
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  Speaker 2: but let's please get past all this stuff about well,
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  Speaker 2: like they knew what, no one deserves to have this
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  Speaker 2: happen to them. And it sucks even more that the
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  Speaker 2: policies that are in place for handling home insurance in
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  Speaker 2: California have made it worse for a lot of people. Agreed,
• 13:29
  Speaker 2: we have to take a break. We have to do
• 13:30
  Speaker 2: trivia when we come back.
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  Speaker 3: I do want to get back to the wildfires again though,
• 13:34
  Speaker 3: talk about a little bit more. You know, most of
• 13:36
  Speaker 3: our listeners aren't in California. They're here in Northeast. Why
• 13:39
  Speaker 3: other than basic community this should matter to you and
• 13:41
  Speaker 3: what you are likely to see as a result of
• 13:43
  Speaker 3: send these wildfires out in California. Quick Break Trivia's next.
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  Speaker 2: Mike, So, let's say that most people listening to our
• 15:36
  Speaker 2: show right now probably don't live in California or Florida
• 15:40
  Speaker 2: to or North Carolina, the sure the three areas of
• 15:43
  Speaker 2: the country that have had you know, the highest you know,
• 15:47
  Speaker 2: types of damage from natural disasters in the last year.
• 15:52
  Speaker 2: Why should someone who lives in Portland, Maine, or Providence,
• 15:58
  Speaker 2: Rhode Island or Portland, why should they care about what's
• 16:01
  Speaker 2: happening in insurance markets out of state.
• 16:04
  Speaker 3: Well, I guess the most direct reason would be that historically,
• 16:10
  Speaker 3: when insurers have lost a whole bunch of money in
• 16:13
  Speaker 3: one state, they don't just sit there and say, well, Okay,
• 16:17
  Speaker 3: that's too bad.
• 16:18
  Speaker 2: They go to look and raise premiums.
• 16:20
  Speaker 3: Across the country, and some of that will likely show
• 16:24
  Speaker 3: up on your bill as well, like all state does
• 16:29
  Speaker 3: business across the country. If they lose billions of dollars
• 16:32
  Speaker 3: in California, they're gonna look to make it up in
• 16:34
  Speaker 3: California most certainly, but they're gonna look to make it up.
• 16:36
  Speaker 2: Everywhere as well.
• 16:38
  Speaker 3: And if your state insurance regulator is a little bit
• 16:45
  Speaker 3: looser with how much they allow for increases, then you
• 16:48
  Speaker 3: might be in a state that sees a bunch of that. Historically,
• 16:50
  Speaker 3: Vermont and Virginia were two that were named here as
• 16:53
  Speaker 3: lighter Touch when it comes to the regulation of the
• 16:55
  Speaker 3: insurance market, and so those customers have seen fairly big increases.
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  Speaker 3: I think another large question that continues to loom in
• 17:04
  Speaker 3: the back of my mind is should these states, California
• 17:07
  Speaker 3: and Florida most specifically continue down their current path of
• 17:11
  Speaker 3: becoming the last in the insurer of last resort in
• 17:14
  Speaker 3: their markets, which they have done dramatically, although I think
• 17:17
  Speaker 3: Florida has taken some intelligent steps to back off of
• 17:19
  Speaker 3: that a little bit of the last few years. But
• 17:21
  Speaker 3: should it continue, we run a real risk of a
• 17:25
  Speaker 3: natural disaster bankrupting one of these states, in which case,
• 17:28
  Speaker 3: my guess, and it's a complete guess, would be that
• 17:31
  Speaker 3: all of us end up bailing it out. But that's
• 17:34
  Speaker 3: the quick answer is that historically speaking, when California burdens,
• 17:38
  Speaker 3: everybody else pays higher insurance rates as a result.
• 17:41
  Speaker 2: The other thing that I think we all need to
• 17:42
  Speaker 2: be aware of on this is remember when we talk
• 17:46
  Speaker 2: about people buying homes. There are a couple different components
• 17:50
  Speaker 2: of this. The first is, hey, most people generally buy
• 17:52
  Speaker 2: homes using borrowed money. Most of us don't just have
• 17:55
  Speaker 2: four hundred thousand dollars sitting around where we're like, yeah, like,
• 17:57
  Speaker 2: go buy that one. Yeah. So theigest part of your
• 18:01
  Speaker 2: bill on a monthly basis historically has been your principal
• 18:06
  Speaker 2: and interest. If you know you're buying a four hundred
• 18:08
  Speaker 2: thousand dollars home, you say, Okay, this is gonna be
• 18:09
  Speaker 2: you know, fifteen hundred bucks a month or whatever it
• 18:11
  Speaker 2: ends up working out to be. That's my big thing.
• 18:14
  Speaker 2: My insurance might cost me another couple hundred bucks, but
• 18:17
  Speaker 2: I can make that work sure if insurance costs start
• 18:21
  Speaker 2: moving from where they are today in many parts of
• 18:24
  Speaker 2: the country up towards you know, where places like Florida
• 18:27
  Speaker 2: have god and California are likely going. Now, this is
• 18:32
  Speaker 2: something where it ends up affecting your ability to close
• 18:36
  Speaker 2: on a property because you say, oh, like yeah, I
• 18:38
  Speaker 2: got my pre approval to buy this place, and then
• 18:41
  Speaker 2: you go to get your insurance and it's twice what
• 18:44
  Speaker 2: you thought it was going to be. And that has
• 18:47
  Speaker 2: the impact a of in the short term just really
• 18:49
  Speaker 2: slowing the ability for housing transactions to happen, but b
• 18:54
  Speaker 2: it starts pushing home prices down because the only way
• 18:57
  Speaker 2: that you can close those deals is with lower home prices.
• 19:00
  Speaker 2: Where you're borrowing less money now because you have a
• 19:02
  Speaker 2: higher insurance component each month. And so this is something
• 19:06
  Speaker 2: that has the potential to affect all of us. And
• 19:09
  Speaker 2: I can't believe I sound like I'm defending insurance companies.
• 19:12
  Speaker 2: This is not because insurance companies are greedy, greedy and
• 19:16
  Speaker 2: trying to steal. It's because there's only so much money
• 19:19
  Speaker 2: that they have to go around, and if they just
• 19:21
  Speaker 2: keep taking losses over and over, they will not exist anymore.
• 19:25
  Speaker 2: And then we've got bigger problems when it comes to
• 19:27
  Speaker 2: trying to buy a house. Let's take a quick break.
• 19:30
  Speaker 2: When we come back, we got the trivia answer, and
• 19:33
  Speaker 2: then we're talking Taiwan Semiconductor after this.
• 19:42
  Speaker 6: Bringing the latest financial news straight to your radio. Every day,
• 19:47
  Speaker 6: it's the Financial Exchange on the Financial Exchange Radio Network.
• 19:53
  Speaker 6: Text us at six one seven three six two one
• 19:55
  Speaker 6: three eighty five with your comments and questions about today's
• 19:58
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• 20:00
  Speaker 6: stories we are covering. This is the Financial Exchange Radio Network.
• 20:07
  Speaker 4: Trivia question today was how many Emmy Awards did James
• 20:10
  Speaker 4: Gandolfini win for his betrayal of Tony Soprano. I'll be three.
• 20:15
  Speaker 4: He was nominated for Best Actor and Drama five times
• 20:18
  Speaker 4: and won the award three times. Winner today of the
• 20:21
  Speaker 4: Financial Exchange Show T shirt was Paul from Revere, Mass
• 20:25
  Speaker 4: Congrats to Paul, and we played trivia every day here
• 20:28
  Speaker 4: on the Financial Exchange. See complete contest rules at Financial
• 20:32
  Speaker 4: Exchange Show dot com.
• 20:34
  Speaker 2: Taiwan Semiconductor and they reported their quarterly earnings estimates or
• 20:40
  Speaker 2: not estimates. They beat their quarterly earnings estimates. They had
• 20:43
  Speaker 2: a thirty nine percent annual rise in their Q four
• 20:47
  Speaker 2: revenue up to twenty six point three billion dollars. That
• 20:52
  Speaker 2: was also a couple percentage points better than expectations, and
• 20:56
  Speaker 2: they saw that growth accelerate in particular in December. One
• 21:00
  Speaker 2: of the interesting things I learned this morning about stocks
• 21:03
  Speaker 2: that trade in Taiwan as they do monthly reporting. Actually
• 21:07
  Speaker 2: that's terrible. I'm just saying that they do. I'm not
• 21:10
  Speaker 2: saying it's good or bad, just that they do. But
• 21:14
  Speaker 2: so ultimately still indicating, yeah, we've got all kinds of
• 21:18
  Speaker 2: demand for us to make chips from everyone, and AI's
• 21:22
  Speaker 2: driving it. Yeah. I think of.
• 21:25
  Speaker 3: There are a few companies that are more important to
• 21:27
  Speaker 3: the semiconductor industry in terms of innovation and driving forward.
• 21:30
  Speaker 3: There aren't any that are more important in terms of
• 21:32
  Speaker 3: actually delivering delivering semiconductors to the general public.
• 21:35
  Speaker 2: Correct, So what they do is is pretty important. I'm
• 21:40
  Speaker 2: want to go to this story here. Americans are tipping
• 21:42
  Speaker 2: less than they have in years. Has our balance gotten
• 21:45
  Speaker 2: better or is it something else?
• 21:48
  Speaker 3: No, it's it's about gratuities and specifically what oh that tipping?
• 21:53
  Speaker 3: What toast is reporting, which is a company that handles
• 21:58
  Speaker 3: payment systems in restaurants, is that the average tip at
• 22:01
  Speaker 3: full service restaurants dropped to nineteen point three percent for
• 22:05
  Speaker 3: the three months that ended September thirtieth. So a few
• 22:07
  Speaker 3: key points I had to reread. One full service restaurants.
• 22:10
  Speaker 3: This is not your dunkin Donuts, This is not you know,
• 22:13
  Speaker 3: anything else. It is a full service, sit down restaurant.
• 22:16
  Speaker 3: Tips are on the decline, and they point to largely
• 22:19
  Speaker 3: backlash from consumers about being asked to tip everywhere they go.
• 22:23
  Speaker 2: This seems like the wrong place to take it out. YEP,
• 22:26
  Speaker 2: I agree. I tend to twenty percent.
• 22:29
  Speaker 3: Is my minimum for tipping for full service restaurants. There
• 22:33
  Speaker 3: are a few places that I have and I bring
• 22:36
  Speaker 3: it up mainly because I still don't know what's right
• 22:38
  Speaker 3: and wrong with tipping.
• 22:39
  Speaker 2: But if I go to a bar and order a beer,
• 22:43
  Speaker 2: you tip? You tip? What am I supposed to tip?
• 22:46
  Speaker 2: These days?
• 22:46
  Speaker 3: If I order a beer that's thirteen dollars and all
• 22:50
  Speaker 3: the bartender did was turn around and pour the nozzle,
• 22:52
  Speaker 3: I genuinely don't know anymore. I used to tip a buck,
• 22:56
  Speaker 3: and now I feel like I'm being a cheap skate.
• 22:58
  Speaker 3: If somebody makes me a cock TI, I usually tip
• 23:01
  Speaker 3: a percentage because it seems more full service to me.
• 23:03
  Speaker 2: Let me throw a different one at you. You you
• 23:05
  Speaker 2: tip when you go to a bar? I do if
• 23:07
  Speaker 2: you're at a concert or sporting event and someone pours
• 23:10
  Speaker 2: you a drink, do you tip them?
• 23:13
  Speaker 3: Sometimes they're doing the exact same thing, it's just a
• 23:17
  Speaker 3: different venue. So it's like, although at Fenway, UH tip
• 23:23
  Speaker 3: well twenty three dollars beer that you pull out of
• 23:25
  Speaker 3: the fridge yourself. Yeah, that's a no.
• 23:28
  Speaker 2: But if someone's like pouring you a nice full beer,
• 23:31
  Speaker 2: I hear you right, Like, doesn't it seem reasonable to
• 23:34
  Speaker 2: tip on that the same way that you would at
• 23:36
  Speaker 2: a bar.
• 23:36
  Speaker 3: I go to a non full service UH cafeteria style
• 23:40
  Speaker 3: restaurant up in one of my offices where I do business,
• 23:43
  Speaker 3: and I pretty much always select one of the pre
• 23:46
  Speaker 3: made options.
• 23:47
  Speaker 2: That's in the case there half a rap. You can
• 23:49
  Speaker 2: see a rap?
• 23:50
  Speaker 3: Yeah, exactly. Do I tip twenty percent on somebody putting
• 23:55
  Speaker 3: a rap on a plate for me and bringing me
• 23:57
  Speaker 3: to the cash register.
• 23:59
  Speaker 2: There is just two.
• 24:00
  Speaker 3: And by the way, they didn't have a tip screen
• 24:02
  Speaker 3: up until five years ago when everybody implemented these things,
• 24:05
  Speaker 3: so I never had tipped before, and then all of
• 24:07
  Speaker 3: a sudden it's it's being pushed upon you in new
• 24:12
  Speaker 3: and previously unfound areas.
• 24:14
  Speaker 2: So I don't know what to do in all those
• 24:15
  Speaker 2: gray areas. Are the are the tough ones. The fact
• 24:18
  Speaker 2: full service restaurants tip being less at restaurants, it's kind
• 24:20
  Speaker 2: of like, I understand why it's probably happening. It doesn't
• 24:25
  Speaker 2: mean I think it's right. But if people are feeling
• 24:29
  Speaker 2: that things have continued to get more expensive and they're
• 24:31
  Speaker 2: feeling tight, I can see them taking it out by saying, Okay,
• 24:34
  Speaker 2: I'm going to tip a couple percentage points less. Not
• 24:36
  Speaker 2: because they're trying to hurt the weight staff, but just
• 24:39
  Speaker 2: things are tight and they're trying to make it work.
• 24:41
  Speaker 3: Yeah, I really want to see this the turnaround terminals
• 24:45
  Speaker 3: I would really like to see disappear everywhere other than
• 24:48
  Speaker 3: full service restaurants. I don't have a problem with them
• 24:51
  Speaker 3: bringing the terminal to me at the table at a
• 24:53
  Speaker 3: full service restaurant.
• 24:54
  Speaker 2: That happened last night. I think that's convenient. I'm all
• 24:56
  Speaker 2: on board. Oh I'd rather have it come to the table.
• 24:59
  Speaker 3: With the coffe shops, with the non full service restaurants,
• 25:03
  Speaker 3: with the chipotles. I am sick of it. I don't
• 25:05
  Speaker 3: think that's an area that we should be generally pressured
• 25:09
  Speaker 3: to tip. And I just want it gone pay your
• 25:11
  Speaker 3: people the right amount. I just I'm sick and tired
• 25:15
  Speaker 3: of this all falling on us. And if you're a
• 25:18
  Speaker 3: server at a full service restaurant, then you're you're filling
• 25:20
  Speaker 3: the backlash right now when you probably shouldn't be. Hey,
• 25:23
  Speaker 3: it should probably be felt elsewhere.
• 25:24
  Speaker 2: Yeah, I agree.
• 25:25
  Speaker 4: According to jen Worth, the average monthly cost for a
• 25:28
  Speaker 4: private room in New England could double by twenty forty
• 25:31
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• 25:34
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• 26:19
  Speaker 1: The proceeding was paid for and the views expressed are
• 26:21
  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
• 26:23
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• 26:26
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• 26:28
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• 26:30
  Speaker 2: TikTok is at the Supreme Court today, and based on
• 26:35
  Speaker 2: my reading just on on Twitter of what's going on there,
• 26:39
  Speaker 2: it doesn't sound like it's going very well for TikTok No.
• 26:42
  Speaker 2: So they are appealing the law that basically forces them
• 26:48
  Speaker 2: to either find a sale before January nineteenth, or they
• 26:53
  Speaker 2: will no longer be able to be listed in app
• 26:55
  Speaker 2: stores and basically can no longer push updates and you
• 26:58
  Speaker 2: can still have TikTok on your phone. It's not banning
• 27:01
  Speaker 2: people from how it. Eventually it'll break down. The thing
• 27:03
  Speaker 2: will break down and just won't work, is where this
• 27:06
  Speaker 2: is going. And just reading through people who were you know,
• 27:11
  Speaker 2: actual lawyers who were you know, looking at what's going
• 27:14
  Speaker 2: on there, and it seems like it's going very badly.
• 27:19
  Speaker 2: Where every justice who has been questioning TikTok to this
• 27:22
  Speaker 2: point has had some questions. So I'll just quote you.
• 27:26
  Speaker 2: This is from Ben Yellen on on Twitter on x
• 27:31
  Speaker 2: Thomas is the first to ask questions. Seems skeptical that
• 27:34
  Speaker 2: TikTok has First Amendment speech rights. Here Roberts now asking
• 27:37
  Speaker 2: questions along the same lines. Congress found that Bye Dances
• 27:40
  Speaker 2: a Chinese controlled entity that does not have First Amendment rights.
• 27:43
  Speaker 2: This is like kind of the crux of the issue.
• 27:45
  Speaker 2: So to my area talking about the level of scrutiny,
• 27:48
  Speaker 2: she like Roberts and Thomas before her, seemed quite skeptical
• 27:50
  Speaker 2: of TikTok and thinks the government has a compelling interest.
• 27:53
  Speaker 2: Kavanaugh brings up something that Circuit Judge Schrinavassen brought up.
• 27:57
  Speaker 2: There's a long history of government actions to fight malign
• 28:00
  Speaker 2: or an influence. Alito asking if hypothetically the TikTok attorney
• 28:03
  Speaker 2: would support a ban if TikTok were indisputably owned by
• 28:06
  Speaker 2: the Chinese government itself. He's trying to get to where
• 28:09
  Speaker 2: you draw the line, considering we know that byte Dance
• 28:11
  Speaker 2: has a direct back channel to the Chinese government. Gorsuch
• 28:15
  Speaker 2: asks if TikTok's issue is one of timing. If TikTok
• 28:18
  Speaker 2: were given unlimited time, could they conduct a sale. TikTok
• 28:23
  Speaker 2: attorney describes why, even given unlimited time, there are practical
• 28:26
  Speaker 2: reasons why devestment is impossible. I don't know what those
• 28:28
  Speaker 2: would be.
• 28:29
  Speaker 3: The Chinese government prevared meing you I'm doing so would
• 28:31
  Speaker 3: be maybe one of those.
• 28:32
  Speaker 2: Kagan getting it something really interesting. The law only says
• 28:35
  Speaker 2: that byte Dance must divest or else, but TikTok would
• 28:37
  Speaker 2: still have the right to develop its own algorithms separately
• 28:39
  Speaker 2: from Byte Dance. TikTok lawyer fighting the premise of her question.
• 28:44
  Speaker 2: Kind of interesting there. Kavna asks, what will happen on
• 28:46
  Speaker 2: January nineteenth. If TikTok loses the case and TikTok's attorney
• 28:49
  Speaker 2: seems unsure about it, Barrett tries to drill down on
• 28:53
  Speaker 2: exactly why it's impractical for Byte Dance to divest from TikTok.
• 28:57
  Speaker 2: TikTok's attorney claims they would lose the source code that
• 28:59
  Speaker 2: makes the platform what it is and it would be
• 29:01
  Speaker 2: impossible to recreate. Justice seems skeptical of that argument.
• 29:05
  Speaker 3: So yeah, not going well for TikTok. Seems like a
• 29:09
  Speaker 3: band is likely to go into place into that case.
• 29:11
  Speaker 3: What I will point out though, is Donald Trump has
• 29:14
  Speaker 3: done it and about face on this one, and there
• 29:16
  Speaker 3: is an immense I know, this was a law passed
• 29:19
  Speaker 3: by Congress, but there is a large amount of deference
• 29:22
  Speaker 3: given to the White House on determining whether or not
• 29:25
  Speaker 3: TikTok in the future is complying with this law. And
• 29:28
  Speaker 3: so what I have read is that could a Trump
• 29:30
  Speaker 3: administration come in and say, well, you know, it was
• 29:34
  Speaker 3: under the influence of the Chinese government but no longer
• 29:36
  Speaker 3: is hypothetically yes. I don't know why you would do that,
• 29:40
  Speaker 3: but hypothetically yes.
• 29:41
  Speaker 2: In theory, Let's take a quick break here and when
• 29:45
  Speaker 2: we come back, we'll do a little bit of stack Roulette.
• 29:47
  Speaker 4: Now we got Paul Lamonica.
• 29:49
  Speaker 2: That's what I meant by stack Roulette. We're gonna have
• 29:50
  Speaker 2: Paul the Monica surprise right after this. I really surprised,
• 29:55
  Speaker 2: and uh yeah, it's Chuck Roulette.
• 29:59
  Speaker 1: Fine daily into reviews and full shows of the Financial
• 30:01
  Speaker 1: Exchange on how are YouTube page? Get cut up on
• 30:04
  Speaker 1: anything and everything you might have missed. This is the
• 30:07
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• 30:12
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• 30:15
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• 30:18
  Speaker 1: all of our interviews and full shows. This is your
• 30:21
  Speaker 1: home for the latest business and financial news in New
• 30:24
  Speaker 1: England and around the country. This is the Financial Exchange
• 30:28
  Speaker 1: Radio Network. Ladies and gentlemen, the weekend.
• 30:38
  Speaker 2: As promised, we are now joined by Paul Monica from
• 30:42
  Speaker 2: Barons and we're talking about Micro's strategy. Paul, how are
• 30:47
  Speaker 2: you today?
• 30:48
  Speaker 5: I'm good.
• 30:49
  Speaker 2: Thanks you guys, so we're doing great. Welcome to twenty
• 30:52
  Speaker 2: twenty five. It's our first time talking to you this year,
• 30:54
  Speaker 2: at least my first time talking to you this year.
• 30:57
  Speaker 2: I was out last Friday, and I wanted to talk
• 31:00
  Speaker 2: to you a little bit about this piece that you
• 31:02
  Speaker 2: put together on micro Strategy and for those who aren't
• 31:05
  Speaker 2: familiar with micro Strategy, what's the tie between them and bitcoin?
• 31:11
  Speaker 5: Yeah, So micro Strategy what's interesting is that it's a
• 31:15
  Speaker 5: somewhat small software company that over the past couple of
• 31:19
  Speaker 5: years has really made ways because Michael Saylor, the former
• 31:25
  Speaker 5: CEO now executive chairman at the company, has really been
• 31:30
  Speaker 5: a bitcoin evangelist. He's gone all in on, you know,
• 31:35
  Speaker 5: the world's most valuable cryptocurrency. And what what micro Strategy
• 31:39
  Speaker 5: has been doing is they've de emphasized the software business
• 31:42
  Speaker 5: that have been using corporate proceeds and raising money through
• 31:47
  Speaker 5: stock and debt offerings to buy a lot of bitcoin.
• 31:52
  Speaker 5: So at last check, micro Strategy had about forty billion
• 31:58
  Speaker 5: or so or it's a bitcoin on its balance sheet,
• 32:02
  Speaker 5: you know. So the question is the stock, which is
• 32:06
  Speaker 5: you know, trading it about twice of the value of
• 32:09
  Speaker 5: its bitcoin holdings. Is that overvalued or is it a
• 32:13
  Speaker 5: bet that this company will continue to accumulate even more
• 32:16
  Speaker 5: bitcoin and then as bitcoin prices rise, that's good for
• 32:21
  Speaker 5: micro Strategy.
• 32:22
  Speaker 2: What's the what's what's the downside here. I mean it
• 32:26
  Speaker 2: seems to me, look if if this is a stock
• 32:28
  Speaker 2: that's done better than the price of bitcoin over the
• 32:30
  Speaker 2: last year, is there similar downside where hey, if Crypto
• 32:34
  Speaker 2: starts to go into another you know, crypto winter whatever
• 32:37
  Speaker 2: they call it next time, does is this leverage in
• 32:40
  Speaker 2: some way towards like how does it work on that side?
• 32:43
  Speaker 5: Yeah? I mean that is I think the big risk
• 32:47
  Speaker 5: that if crypto were to tank, that then you're left
• 32:53
  Speaker 5: with a company that has a holding that is worth
• 32:57
  Speaker 5: significantly less. The good news for or now is that
• 33:02
  Speaker 5: the price that Micro Strategy has been buying its bitcoin at,
• 33:07
  Speaker 5: it's got you know, about four hundred and forty seven
• 33:10
  Speaker 5: thousand and four hundred and seventy bitcoins on it's balancing
• 33:13
  Speaker 5: to last check, and that changes, you know, with further purchases.
• 33:18
  Speaker 5: The value of the average purchase price is about sixty
• 33:22
  Speaker 5: two thousand, five hundred according to regulatory filings from the company.
• 33:27
  Speaker 5: So at a price that's you know, hovering just under
• 33:30
  Speaker 5: one hundred thousand, they obviously have a pretty decent uh
• 33:34
  Speaker 5: you know, uh profit on paper on those bitcoin holdings. Now,
• 33:38
  Speaker 5: of course, there are some people who think that bitcoin
• 33:42
  Speaker 5: is worth a lot more than one hundred thousand. You know,
• 33:44
  Speaker 5: some people I've talked to said two hundred thousand, you know,
• 33:47
  Speaker 5: could be doable this year. But if if you don't
• 33:51
  Speaker 5: get bitcoin prices going out that much, that's obviously going
• 33:54
  Speaker 5: to be a problem. And I think micro Strategy will
• 33:57
  Speaker 5: remain a bottable stock that you know, moves more on
• 34:00
  Speaker 5: what's happening in the crypto markets than with its core
• 34:04
  Speaker 5: software business that's now a lot smaller part of the
• 34:08
  Speaker 5: company and is also losing money and you know, not
• 34:11
  Speaker 5: generating a lot.
• 34:12
  Speaker 2: Repon micro Strategy. They were added to was the Nasdaq
• 34:16
  Speaker 2: that they were added to at the end of last year.
• 34:18
  Speaker 5: I have the double check. I believe that was the case.
• 34:22
  Speaker 5: The NATDAK one hundred. It was you know, in the
• 34:25
  Speaker 5: Russell up, you know, two thousand added to that last year,
• 34:29
  Speaker 5: you know, as or about a year or two ago
• 34:32
  Speaker 5: as well. I think there were hopes of the S
• 34:34
  Speaker 5: and P five hundred.
• 34:35
  Speaker 6: But that is yet that.
• 34:38
  Speaker 2: When we look at a company like this, where it
• 34:42
  Speaker 2: is it wrong to say that most of the value
• 34:44
  Speaker 2: is just because they own something up because they do something.
• 34:49
  Speaker 5: I mean, at this point that is probably accurate, but
• 34:54
  Speaker 5: I don't think micro Strategy, particularly Michael Saylor, would dispute
• 34:59
  Speaker 5: that at or even say that that is a criticism.
• 35:04
  Speaker 5: They are, you know, kind of priding themselves now on
• 35:09
  Speaker 5: being this top big cooin holding company, and the more
• 35:14
  Speaker 5: that they own, you know, the more that the stock
• 35:18
  Speaker 5: value could go higher. So for the foreseeable future, they
• 35:22
  Speaker 5: are planning to buy even more. And they've even you know,
• 35:27
  Speaker 5: announced a two billion preferred stock offering as well, which
• 35:32
  Speaker 5: you know, some analysts think, you know, could lead to
• 35:35
  Speaker 5: more institutions buying up the stock because a lot of
• 35:39
  Speaker 5: institutions love the big yield that they can get on
• 35:43
  Speaker 5: preferred stock.
• 35:45
  Speaker 2: Are there any other companies that are taking this approach
• 35:48
  Speaker 2: to bitcoin? I know, I know at one point, for
• 35:50
  Speaker 2: a brief period, Tesla said that they would accept it
• 35:52
  Speaker 2: as a form of payment. They've subsequently moved away from that.
• 35:55
  Speaker 2: But is anyone else doing what micro Strategy is doing?
• 36:01
  Speaker 5: Not at this scale? I mean, I wrote a story
• 36:05
  Speaker 5: late last year about how there were a couple of
• 36:08
  Speaker 5: small biotech firms that had announced I believe like million
• 36:15
  Speaker 5: dollar purchase plans to add bitcoin to their corporate balance sheet,
• 36:20
  Speaker 5: basically saying that they feel that that, along with cash,
• 36:23
  Speaker 5: is a good way to diversify some of their holdings
• 36:28
  Speaker 5: and be a good store of value. But you've yet
• 36:30
  Speaker 5: to see another major company along lines to micro strategy
• 36:34
  Speaker 5: do this. Microsoft actually had a shareholder resolution to add
• 36:39
  Speaker 5: bitcoin to their corporate treasury and that got shot down.
• 36:43
  Speaker 5: So I think a lot of investors are waiting for
• 36:46
  Speaker 5: more mainstream companies to do this as opposed to just
• 36:50
  Speaker 5: micro strategy, which it's no secret if you just look
• 36:54
  Speaker 5: at Michael Saylor's x speed. He is a huge goodcoin
• 37:00
  Speaker 5: proponent and is tweeting or posting constantly about bitcoin and
• 37:07
  Speaker 5: the value that he sees in that cryptocurrency.
• 37:09
  Speaker 2: Very good, appreciate you joining us today.
• 37:11
  Speaker 5: Paul, Thank you very much. Have a good week.
• 37:13
  Speaker 2: Any guys youto. That is Paul Monica from Baron's talking
• 37:16
  Speaker 2: about micro strategy. Mike, we've got thirty seconds. What do
• 37:19
  Speaker 2: you got?
• 37:20
  Speaker 3: Funny story about somebody being stuck in a driverless cab
• 37:23
  Speaker 3: a way MO to be specifically, which I am happy
• 37:26
  Speaker 3: to pronounce that I've been in myself, but this is
• 37:29
  Speaker 3: apparently more than one occasion where a self driving car
• 37:32
  Speaker 3: has gotten a little bit confused about directions and in
• 37:35
  Speaker 3: this case had a passenger in it and just kept
• 37:37
  Speaker 3: doing loops around the Phoenix Airport. Pretty tight loops too.
• 37:40
  Speaker 3: This was not like a small it's not like a
• 37:42
  Speaker 3: three mile loop that it kept doing, but for seven
• 37:45
  Speaker 3: minutes or so, just kind of kept going in circles.
• 37:47
  Speaker 3: And when it's a car that drives itself, you can't
• 37:50
  Speaker 3: exactly just stop it. So eventually got the thing back
• 37:53
  Speaker 3: on courus had a conversation with a live conversation with
• 37:56
  Speaker 3: an agent who noticed that there was a problem with
• 37:59
  Speaker 3: the car and was able to get this thing stopped
• 38:02
  Speaker 3: and back on course. But it does seem to me
• 38:04
  Speaker 3: that there should be a faster way to declare an
• 38:06
  Speaker 3: emergency in one of these things, like.
• 38:07
  Speaker 2: Maybe a button on the app like let me out,
• 38:09
  Speaker 2: let me out of this thing, because that was apparently
• 38:12
  Speaker 2: not an option. Yeah, normally when you hear about circling
• 38:15
  Speaker 2: an airport, it's the plane, not the car. Right. We
• 38:17
  Speaker 2: are done for the day, done for the week. Everyone,
• 38:19
  Speaker 2: have a great weekend. We're back on Monday. We got
• 38:22
  Speaker 2: a whole full week ready to go for you.