Latest / The Financial Exchange Show / Is it time to embrace nuclear power?

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Is it time to embrace nuclear power? · The Financial Exchange Show

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Veterans Development Corporation. This is the Financial Exchange with Chuck
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Zada and Mike Armstrong.
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Speaker 2: Chuck, Mike and Tucker. No been with you.
1:16
Speaker 3: Oh, Ben significantly taller than Tucker.
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Speaker 2: I still can't see him behind the computer just because
1:22
there is It's mostly because I'm so short. Yeah, but
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markets are mixed day. The Dow's up one percent, So
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if you are you know someone who is pro Dow,
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it's a good day for you. Four hundred and four
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point a runies up s a P five hundred. Hey,
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you're up twelve points there about quarter percent. NASDAK down
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a tenth of a percent, sixteen points off today on
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the NASDAK tenure. US Treasury is down point one point
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zero one eight percent to three point seven to seven one.
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Oil West textas intermediate, bouncing back a little bit from
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its tough day yesterday. Up thirty three cents of barrels
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sixty eight a barrel, and we've got gold down eighteen
2:00
seventy announced to twenty six seventy six and twenty sense. Mike,
2:06
we're gonna should we talk nuclear power right now?
2:08
Speaker 3: I think it's pretty interesting.
2:10
Speaker 2: I want to talk nuclear power first. This headline of
2:12
the New York Times nuclear power is the new AI trade.
2:16
What could possibly go wrong? And the answer is if
2:20
all we're gonna do every time we mentioned nuclears be
2:23
like it's gonna melt down. It could melt down, Like
2:26
I mean, come on, like, yeah it it could melt down.
2:30
We've had meltdowns that have happened in the past. They
2:33
have been rare. They have been generally due to aside
2:39
from Chernobyl, generally due to, you know, problems outside of
2:45
you know, the overall design of the reactor and stuff
2:48
like that. Even Chernobyl wasn't the design, it was just
2:51
poorly operated, very poorly operated. They literally didn't understand what
2:56
they were doing. But look, if we're not gonna be
3:00
serious in talking about nuclear power is something that we
3:03
really need to be considering as you know, rounding out
3:07
how we want to generate power in the twenty first century,
3:12
then I don't think we're having a serious conversation about
3:14
the power needs that we have and where it's going
3:16
to come from. Because you pretty much have a couple
3:21
options at this point as far as what you can
3:23
do wind and solar. For all the growth that they've
3:26
had they're not stable baseloads. They are intermittent. Solar literally
3:31
does not generate any power at night, so every night,
3:34
you know, you will get nothing from it.
3:36
Speaker 3: And when some days and.
3:37
Speaker 2: Some days too. And wind, Hey, when the wind is blowing,
3:41
it's great, but you never know when winds will shift
3:43
and change and when you're not going to get you know,
3:44
the same kind of consistency that you want there. And
3:47
so as far as stable baseload you pretty much have
3:49
three options right now. You've got coal, net gas and
3:52
nuclear and coal and that gas. Look, if you're concerned
3:57
about the environment, you don't want to have as much
3:59
growth we've seen in parts of the world recently. Obviously
4:03
the US has been pulling back on coal plants. But hey,
4:05
you can only you know, use so much gnatgas in
4:08
so many places at once. In YadA, YadA. We have
4:11
to be seriously talking about nuclear power and just saying, hey,
4:16
what could possibly go wrong with, you know, adding more
4:19
nuclear power.
4:20
Speaker 3: It's just cheap. It is cheap and lazy.
4:23
Speaker 2: There's problems with every single power source out.
4:27
Speaker 3: There, especially coming from the New York Times.
4:29
Speaker 2: Right like in you find me the perfect power source,
4:35
you know, like what is it. People are gonna be like, well,
4:38
you know, you could you know, have fusion, Okay, well
4:40
we don't yet. Or hey, you could put solar panels
4:43
in space, Well yeah, I'm sure that's cheap. You know,
4:45
just launch solar panels into space and then get the
4:47
energy back. Every single way of generating power has drawbacks.
4:51
Speaker 3: So the reality of what could possibly go wrong, rather
4:54
than talking about the rather small likelihood of a nuclear
4:59
meltdown actually go wrong, is pieces like this reigniting sentiment
5:05
against nuclear power and precluding it from being constructed or
5:09
turned back on in the future. That's to me, what
5:11
could actually go wrong.
5:12
Speaker 2: I mean, look at any type of power you generate.
5:16
Let's let's go down the list and talk about the problems. Actually,
5:21
hydro power doesn't really have too many problems. Drought okay, yeah,
5:25
wind and solar. We already covered coal. Try putting your
5:28
mouth on a smokestack. You're you're gonna die. It's just
5:31
not good for you. Even if you're someone who's like, hey,
5:34
I don't think this is affecting the climate, do you
5:37
still want to like breathe that stuff in every day?
5:39
Probably not same thing with nat gas, not as dirty.
5:42
As coal, but still not great for you even on
5:45
wind solar. Hey, those things get old, you gotta dispose
5:47
of them. They're gonna take up space and landfills and
5:49
stuff like that. You know, the same argument gush for
5:52
nuclear you can melt down, and then you also have to
5:53
deal with the waste. There's a problem with every one
5:57
of these technologies. And to simply say, hey, we're not
6:01
going to go near nuclear because of the potential for
6:03
environmental problems. Every other form of power has environmental problems too,
6:08
except for maybe hydro. Hydro has its problems caused by
6:11
environmental problems caused by other power.
6:15
Speaker 3: Wind is tough to come up with a real compelling
6:18
So you.
6:19
Speaker 2: Did have the case where it was the I forget
6:21
where it was. It was either off the coast of
6:24
Martha's Vineyard or Connecticut. Maybe it was Fire Island or
6:26
block On somewhere down in that area. It broke off
6:29
the turbine that broke off off the cape. Yeah, and
6:32
you ended up with a bunch of not plexiglass, but
6:37
whatever the heck they're made out of, that was washing
6:39
up on beaches and causing some problems. So I'll take.
6:42
Speaker 3: That over nuclear. Waste washing up on beaches. But it's
6:46
all got its straight off totally.
6:47
Speaker 2: So I think that if we're going to actually talk about, hey,
6:51
artificial intelligence needs more power, where's it going to come from.
6:55
To just be like, well, we can't use nuclear so
7:00
kind of silly.
7:00
Speaker 3: So at the same time, Microsoft, you know, these companies
7:04
are desperate for electricity, and I think they also recognize
7:08
that in such a regulated industry, it wouldn't be a
7:10
great look for them to say, Hey, National Grid or
7:16
you know, ever source, we like, we'd like to buy
7:19
your power. And I know that means that you're going
7:22
to probably have to you know, brown out some of
7:24
your customers during the next heat wave. But we don't care.
7:27
So they're paying basically double market rate for the nuclear
7:31
power that's going to be generated here. And we've talked
7:33
at length about the potential outcomes here, and this is
7:38
where I've been optimistic. Is you are now the nuclear sorry,
7:43
the overall electricity electricity market is I hesitate to think
7:48
of more heavily regulated markets out there. You know, utility
7:52
markets in general are some of the most heavily regulated
7:55
markets in the country and in the world, and therefore
7:59
the rates that all of us consumers pay. While they've
8:04
gone up a lot, and we're probably not happy with them,
8:06
are probably below where they would be if there were
8:11
truly free markets here. And so where I land here
8:15
is if you've got a market buyer that is going
8:19
to drive the price of electricity up in all likelihood
8:22
because again, what you're doing here in this one limited instance,
8:25
you do have new supply coming on the market, but
8:28
by and large, you have a whole bunch of demand
8:30
coming on the market at once for electricity. And while
8:34
that may lead to some painful decision points in let's
8:39
say the next decade, when I get further out, I
8:42
think you have the real possibility of a significant amount
8:45
of new supply coming onto the market and innovation, Like
8:48
you generally don't get innovation in any area unless there
8:52
is money to be made.
8:55
Speaker 2: It's true, it's true. We talked about it awful lot.
9:00
Other way of phrasing it is, Hey, when you have
9:04
you know, stress in the system, that's when you see
9:06
that innovation as well, because again there's money to be
9:08
made because of that stress. We've talked about how you know,
9:13
basically everything that has been invented in human history is
9:17
because of enough stress that gets caused in the system
9:20
to cause someone to say, I need to figure out
9:22
a way to solve this problem, and they usually end
9:24
up making a boatload of money from it, or someone
9:26
does if they don't, you know, have good intellectual property
9:28
lawyers and protections and stuff like that.
9:30
Speaker 3: Yeah, Now the downside, let's be clear about the downside
9:33
to this. Microsoft and others are willing to pay more
9:37
than you average person out there for electricity. They're willing
9:43
to pay more. So what does that do in the
9:45
short term, Well, if it were a free market, it
9:47
would drive rates out for everybody. Sure, And in the
9:50
short term that might not be the result because of
9:53
how heavily regulated this is. But in the short term
9:56
there could be problems there. There's a new competitor for
9:59
electric city and it's the same electricity you use to
10:03
power your house and charge your car and turn on
10:05
the lights. And so I hesitate to think that Microsoft
10:10
demanding a whole boatload of new electricity at the same
10:12
time the time kind of Google, Apple, Amazon and every
10:15
other tech company out there is going to do so
10:17
results in anything but higher prices for all of us.
10:20
Speaker 2: Wouldn't it be wild if you start. And I'm not
10:25
saying that this will happen, but wouldn't it be wild
10:28
if you start seeing tech companies contracting with like Westinghouse
10:32
to build nuclear reactors, to.
10:34
Speaker 3: Delicated nuclear just for themselves.
10:37
Speaker 2: We need this.
10:39
Speaker 3: It'd be crazy.
10:40
Speaker 2: Yeah, slap a big Microsoft logo on the side of
10:42
the cooling tower.
10:44
Speaker 3: Yeah, they're still so scared of nuclear technology that they're
10:47
not going to put their logo on it.
10:48
Speaker 2: But yeah, slap your competitor's logo on the cooling tower.
10:53
Speaker 1: Yeah.
10:53
Speaker 3: I mean, that's a real possibility.
10:55
Speaker 2: It'd be wild to see.
10:57
Speaker 3: It's a real possibility. And it also you also wonder
10:59
if you end up with a two tier system, right, like, a, Hey,
11:04
this is all the power generation for big tech companies,
11:06
and this is the crappy old power generation for you know,
11:11
powering people's homes that's unreliable, goes out every time there's
11:14
a hurricane. And uh, like, that's a real possibility here
11:19
if we stay under a state regulated system and tech
11:22
companies say we're going private with it.
11:24
Speaker 2: Just take a quick break here. When we come back,
11:26
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13:20
Speaker 2: Earlier this week, Boeing made their quote, best and final
13:23
offer to their unionized employees, and the union basically said,
13:32
we're not even bringing this to our members for a
13:34
vote now, basically like they literally said, no, we're not
13:38
bringing this to our members for a vote.
13:39
Speaker 3: You know how, sometimes you're working on a project at
13:42
work or maybe in school, and you know, you send
13:45
out the email saying final and then someone has to
13:48
net it, so you call it like jokingly final final
13:51
or yeah, final Final, Final version Final V two.
13:55
Speaker 2: Bestest and finalist offers coming next.
13:58
Speaker 3: So yeah, your best and final offer was not even
14:04
brought to a vote this time around. The last one
14:06
failed by like n six if it even got six
14:12
percent in favor, I don't know. It might have been
14:15
some abstentions, but nonetheless, it's I guess, just continued strike
14:22
for the foreseeable future at Boeing. Now, sometimes these things
14:26
get resolved quickly, but there's nothing in this piece, or
14:28
nothing that I'm hearing from either side that would indicate
14:30
to me that, oh, you're on the verge of a breakthrough.
14:33
Speaker 2: This piece, I think is a little too calm about
14:36
the state that Boeing finds itself in right now. Power
14:40
might have shifted to the union, but the strike isn't
14:42
existential for the company, neither of the quality problems or
14:45
years of losses. Aerospace is unique. There are only two
14:48
makers of large commercial aircraft on the planet, and it
14:50
isn't easy to make airplanes. Both Boeing and its rival
14:53
Airbus have backlogs worth hundreds of billions of dollars. That
14:55
backlog is profitable and the demand isn't going away. The
14:58
world needs more planes.
15:01
Speaker 3: So not existential.
15:02
Speaker 2: You can still go out of business if you are
15:05
one of the two companies in a duopoly. Yeah, I'm
15:09
not suggesting Boeing's going there, but this is making it
15:12
sound like, well, they can't go anywhere because the world
15:15
needs their planes.
15:16
Speaker 3: I actually don't know that Boeing can go out of business.
15:19
Speaker 2: I think they can.
15:20
Speaker 3: I think they can go through bankruptcy, but I don't
15:21
know they can go out of business.
15:23
Speaker 2: Here's what I think can happen. I think Boeing Commercial
15:27
Aircraft can absolutely go out of business while the defense
15:31
side is spun off in order to preserve that because
15:33
of the national security issue.
15:35
Speaker 3: I'm even hesitant to say that commercial Aircraft division could
15:37
never go out of business. Here's what I do think
15:39
as a real existential threat to Boeing would be this
15:44
period of the better part of a decade now of
15:49
what do you want to call it, dumpster fire behavior
15:52
and execution, leaving the door open for an existential threat
15:56
to their business of new competition.
16:00
Speaker 2: Well not have petition Airbus eating their lunch. No, but
16:03
I mean like like no, there are no startup plane manufacturers.
16:08
Speaker 3: There aren't. But every year that this goes on how
16:12
desperately interested would China or India be in developing a
16:16
commercial aviation manufacturer. Well, China has been interested for decades.
16:19
They just they can't they can't do it. But I
16:21
mean again, the longer that you fall flat on your face,
16:25
the more of an opportunity presents itself. And so that's
16:28
what I view as the existential threat. I genuinely do
16:31
not believe that the United States government will in our
16:36
lifetimes allow Boeing to stop producing commercial aircraft.
16:40
Speaker 2: You think Boeing is too Boeing to fail?
16:42
Speaker 3: Yeah, there will be bailouts that would make the automaker
16:47
bailouts of two thousand and nine look like. I don't
16:51
have an analogy for this.
16:53
Speaker 2: What would they look like?
16:56
Speaker 3: Just very small in comparison to what they would be
16:58
willing to do.
16:58
Speaker 2: Ugy Bogue's ish. Yeah, you don't even know who Muggy
17:01
Bogues is doing. He's the one basketball player you know
17:04
him a shack? Yeah, just making sure Larry Bird.
17:13
Speaker 3: Like, there's just no way. But yeah, what can this strike? Again?
17:19
I don't know how you don't consider a downgrade of
17:22
their debt to not be an existential threat to the business.
17:25
So bankruptcy and you know, washing out of shareholders to
17:29
be an existential threat to their business. These are all
17:32
again not on the table tomorrow, but legitimate concerns for
17:36
this business.
17:37
Speaker 2: Here's here's why I'm not so sure about Boeing again.
17:43
I don't think Boeing's there now. I'm not saying they are.
17:45
But you know, would the US government ever let Boeing
17:49
stop making commercial airplanes, it might not be up to them.
17:54
Like if your planes keep getting delayed and having problems,
17:58
you just start losing orders, and that is what starts
18:02
to happen. Now Boeing's not there yet in terms of
18:06
the magnitude, but they've had a problem booking orders behind
18:10
Airbus for the last several years in a row. Now
18:12
that didn't used to be the case in the twenty tens.
18:16
And what what is Boeing going to be able to
18:20
do to say conclusively we've moved past these problems. It's
18:24
gonna take time. I mean, it's gonna take a decade
18:26
to come back from this.
18:27
Speaker 3: Yeah, oh easily, yep. I don't disagree on any of
18:29
those fronts.
18:32
Speaker 2: I mean, you got to remember these crashers with the Max,
18:35
didn't they happen in like twenty eighteen, twenty nineteen. It's
18:37
already been sixteen years point and it's been the.
18:39
Speaker 3: Better part of a decade now that Boeing's been a
18:41
dumpster fire.
18:42
Speaker 2: It's just woof. I mean, it's not great, Bob.
18:49
Speaker 3: We'll have a new update for you next week on
18:51
how long the Boeing strike will last and how much
18:53
they're gonna have to raise wages, and whether or not
18:55
that will result in a downgrade of their debt to junk.
18:58
Speaker 2: Again.
18:58
Speaker 3: We're talking about a downgrade, not to like, oh still
19:01
great investment grade, just not quite as good as it
19:03
used to be. Like they do with the US government
19:04
every once in a while, we're talking about junk bond
19:06
status for arguably the most important American manufacturer. End statement.
19:15
Speaker 2: Taking a look at markets, the Dow's up four forty two,
19:17
the S and P is up eight, Nasdaq is down
19:19
forty five, so again, kind of a split market at
19:22
the moment. We're gonna take a quick break. When we
19:24
come back, we've got the trivia answer, and then we're
19:26
gonna talk to you about why your homeowner's insurance bill
19:28
probably isn't coming down anytime soon.
19:40
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Speaker 2: All right.
20:11
Speaker 4: Today's trivia question was how many James Bond films did
20:15
Sean Connery Starin Your answer seven, Starting in nineteen sixty
20:20
two with Doctor No, Connery made seven Bond films. His
20:24
Bond films made over six hundred million dollars.
20:27
Speaker 2: At the box office.
20:28
Speaker 4: That's not inflation adjusted. Today's winner is Tom from Oxford, Connecticut,
20:35
and our Applebee's one hundred dollars gift card winner is
20:37
Michael from Portland, Maine.
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Speaker 2: Where did doctor No get his doctorate from.
21:01
Speaker 3: It's probably an honorary.
21:04
Speaker 2: From what college.
21:07
Speaker 3: I don't know who gives that the most honorary degrees,
21:10
Probably Dartmouth Harvard.
21:13
Speaker 2: Nerds. Anyways, let's talk a little bit about homeowner's insurance.
21:19
You've just seen this issue that's been bubbling for the
21:22
last several years now about homeowners insurance premiums rising very
21:27
significantly and unfortunately they are not coming down anytime soon.
21:33
For evidence of that, take a look at the destruction
21:36
that's happening across the southeastern United States right now in Florida, Georgia,
21:42
South Carolina, North Carolina, and what's going on there. Three
21:47
main factors driving up homeowners insurance cost The first, more
21:50
natural disasters. This is the first five year period now
21:53
in which the US has ever been hit by a
21:56
major hurricane in five straight years. Great, that's kind of
22:00
not great. And again, who's to say it will continue
22:02
or not. But when you have more large natural disasters hitting,
22:08
it's going to result in more repairs. Second piece repair
22:12
costs are up because labor costs and material costs have
22:14
been up. Material costs have come back down. Mike the
22:17
labor costs ever come back down. Don't know that we've
22:20
ever seen it.
22:21
Speaker 3: Maybe briefly.
22:22
Speaker 2: Nine, they don't, maybe very briefly.
22:25
Speaker 1: No.
22:25
Speaker 3: Nine, you saw labor costs come down, but generally speaking, no,
22:27
you don't see it happen.
22:28
Speaker 2: Labor costs move in one direction because people don't like
22:30
to be paid less for doing the same work the
22:32
next year. The piece of lumber that you used to
22:35
rebuild your house doesn't have feelings, doesn't have feelings. People do.
22:38
They've got egos, and so labor costs don't come down.
22:40
So those costs have gone up and they're not coming down.
22:43
The third piece is you've had as a result of this,
22:46
insurance fraud has become more and more lucrative, and so
22:48
you've had more insurance fraud as well. And this is
22:51
why I'm tough for to crack down on than check
22:54
fraud at Fidelity well as long as listen, if people
22:58
were posting it on social media, I'm sure you could
23:00
catch them easily, but I guess they're not doing that.
23:03
This is why, in particular homeowners insurance rates it's not
23:06
uniform across the country. In particular Florida, we've talked about
23:11
this quite a bit, and it depends on where exactly
23:13
you are in Florida and your carrier and YadA YadA.
23:17
But you've had well documented cases of homeowners insurance premiums
23:21
in Florida and other parts of the Southeast going up
23:24
by over one hundred and twenty percent over the last
23:26
several years combined, not not in one year. Maybe some
23:29
people have had that other places that you're seeing it
23:32
in condos and you know, trying to cover the master
23:35
insurance for condo associations, those costs have spiked. In particular.
23:40
California is another state that's going through this right now,
23:43
largely because of fires and things like that, where fire
23:48
coverage on you know, in particular condo developments, it's almost
23:52
impossible to actually get for the full value of the
23:54
property at this point. And these factors are continuing to
23:58
build and there's probably not much relief coming at any
24:01
point in the near future, and for people in those
24:04
highly impacted areas, it's probably going to continue to get worse.
24:08
Speaker 3: Yeah of bad news. It's been making presidential headlines. Neither Canada,
24:14
in my view, has any way to fix this because
24:16
there is there's no there is no way to there's
24:19
no fix to this. We've talked about this before. How again,
24:22
this is another one of those heavily regulated industries. Should
24:26
you I'm trying to think of the common arguments for
24:29
when things get too expensive. Hey, let's deregulate. Okay, what
24:34
happens in a deregulation of this market, Well, what happens
24:40
is there are wide swaths of the country that you
24:43
just can't buy home owners insurance for right.
24:47
Speaker 2: Kind of happening. I mean you look at parts of
24:49
even in Look look at Florida. Now they're the most
24:52
the highest number of properties ever on the state run
24:56
insurance company because there are large parts of Florida that
24:58
insurers won't touch right.
25:00
Speaker 3: Now, right, And just to be clear, like that's regulation,
25:03
right when the state of Florida steps into the market
25:06
and says there is no free market solution to this,
25:09
so we are providing one that's the opposite of deregulation. Yes, right,
25:14
but that's that the market approach would be wide swats
25:18
the country either see their insurance premium go up like
25:21
a thousandfold or just go uninsured.
25:23
Speaker 2: Maybe not one thousandfold, I mean for.
25:25
Speaker 3: Some parts of the country, Like if you want to
25:26
try and get insure to ensure some of these homes
25:30
in coastal Florida rights that have they've previously pulled out
25:36
of the market. And what's it going to cost to
25:37
get one of those policies? Yeah, yeah, it might be.
25:40
Speaker 2: Right if it's let's say you got a two million
25:42
dollar home sitting on Biscayne Bay and you're saying, okay,
25:46
right now, I can ensure this for you know, my
25:48
premiums went from fifteen grand a year to thirty A
25:51
real market rate for that property might be like one
25:54
hundred and fifty two hundred thousand dollars a year at
25:56
this point.
25:57
Speaker 3: Yeah, So, I mean the market based solution would be
26:02
homes no longer existing in large swas the country, which
26:05
we've I guess decided is not an acceptable outcome. But
26:10
premiums aren't going down.
26:12
Speaker 2: No, no, And anybody that tells you that they've got
26:16
a solution to them, ask for some details.
26:20
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27:23
Speaker 2: Mike, I want to talk a little bit about the
27:25
NFL here. They have a media deal with everybody, well
27:30
basically everybody, maybe not who don't they have a deal
27:34
with that Netflix? No, they have three Netflix Christmas Day
27:37
games this year, NBC, ABC, CBS, Amazon, Amazon, who's left Google?
27:46
They don't have anyone thing with Warner Brothers or WarnerMedia
27:50
or whatever the heck it's called. There's no, there's no
27:52
NFL games on TBS, T and t USA anything like that.
27:56
Speaker 3: It must be TV. Although isn't that the same parent
27:59
company as U Paramount. No, that's different, separate.
28:04
Speaker 2: Okay, remember it's everything's all everything, simultaneously fragmented and altogether
28:09
right now, yeah, very I was thinking about the Nickelodeon game.
28:11
Speaker 3: But that's that's the Paramount parent company.
28:13
Speaker 2: So the NFL has an eleven year, one hundred and
28:18
ten billion dollar TV deal that's out there, and it's
28:21
the biggest TV deal that's ever been signed in the US.
28:25
But the deal was signed several years ago. And in
28:29
case people haven't noticed, the NBA just signed a new
28:33
eleven year media rights agreement earlier this year. And that
28:39
is ben what's the annual value on that? Is that
28:41
like seven or eight billion dollars? It's I forget the
28:44
total that it is between like, uh, yeah, it's eleven
28:47
year seventy six billion dollars. So yeah, it's a seven
28:49
billion dollar a year deal. The NBA is, as much
28:53
as it's a great product these days, is a fraction
28:56
of the size of the NFL when it comes to
28:58
the market. So the NFL is sitting there like, oh,
29:00
we've got an out clause in twenty twenty nine, and
29:03
you better believe that we're looking for like fifteen to
29:08
probably twenty billion dollars a year is kind of where
29:11
they're aiming on this.
29:12
Speaker 3: Here's my question about all this. Everyone's talking about it
29:15
as though, Okay, are they gonna deepen their ties with
29:18
Amazon or Netflix or this, that or the other. If
29:21
you are the NFL and you're talking about a deal
29:24
of this scot scale, why not just go at your
29:27
own develop the NFL streaming network because they just do
29:32
it all by yourself. You've got five years to figure
29:34
that out.
29:35
Speaker 2: You got all the risk. The NFL doesn't do any
29:37
of that, right, So that's the thing. I know, they
29:40
don't do any of the broadcasts. They don't know, they
29:41
don't do any of that stuff. Think about how much
29:44
more lucrative to them would it be if they hired
29:46
all the talent internally and just dealt with it. It's
29:48
all risk though, That's the true thing. And when I
29:50
say it's all risk, right now, all they do is
29:53
they sell the rights. They don't care about anything else.
29:55
They don't have to sell ads, Like, they don't have
29:58
to do any of the production. They don't have to
30:01
make sure the servers don't crash on Thursday night. They
30:04
don't have to do any of that. Yeah, all they
30:06
do is they sell the product and they are done. Like,
30:10
do you know how many people the NFL actually employs.
30:14
It's like six hundred. There's like they don't employ anyone.
30:18
Speaker 3: Yeah, it would be a huge shift, But it just
30:21
comes to me like why bother diving into these deeper relationships.
30:26
You are such a big platform that people will come
30:29
to you trying to figure out but the end of
30:32
like you look at the numbers.
30:33
Speaker 2: I don't have the current ones right now, but the
30:35
number of actual employees of the NFL, it's in like
30:40
the hundreds, maybe just over a thousand like that. There
30:43
aren't many, and it's because they don't do anything other
30:47
than make sure the games happen.
30:49
Speaker 3: According to Zipia, three thousand, five hundred and ninety five.
30:54
Speaker 2: Okay, more than I thought. But but again it's tiny.
30:58
I mean you look at like how big you know,
31:00
CBS is and all, Like the NFL doesn't want any
31:04
of the risk. They don't want the headcount, Like the
31:05
NFL doesn't want to be like, hey, let's hire a
31:08
bunch of HR people and start managing thousands of ad sales.
31:13
Speaker 3: I hear you, They're not gonna do this, But I
31:15
just I don't get why you would sell it all
31:17
to Netflix with no risk, no risk.
31:20
Speaker 2: That's like you're selling the product instead of making the product,
31:25
so there's no risks. Someone else has to actually make
31:28
the final product and then sell the ads and stuff. Yeah,
31:31
there's no risk. All you do. All you do is
31:34
show up and get a check, and everyone handles all
31:37
the other stuff. Let's take a quick break. When we
31:39
come back, we're joined by paul A Monica from Baron's
31:41
We're Talking Nike right after this.
31:44
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32:01
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32:06
Speaker 5: Network, Ladies and gentlemen the weekend.
32:10
Speaker 6: As promise, We're joined now by the one and only
32:19
Paul Amonica from Barons and we're gonna be talking a
32:23
little bit.
32:23
Speaker 2: Of Nike with Paul. Paul. How are you today, I'm good?
32:27
Speaker 5: Thanks.
32:28
Speaker 2: How you guys doing doing well? Just stay up for
32:30
the game last night or did you crash halfway through
32:33
like I did?
32:35
Speaker 5: Unfortunately I stayed to the bitter end to watch Daniel
32:40
Jones not able to complete any passes.
32:44
Speaker 2: I'm sorry to hear that last five yards. Sorry to
32:47
hear that is Daniel Jones, a Nike athlete.
32:51
Speaker 5: You know what, I do not know if that's the
32:54
case your Nike stock, I wouldn't be as bullish on it.
32:58
Speaker 2: Probably out tough day for Daniel Jones. But let's let's
33:02
talk a little bit about Nike. They have a new
33:05
CEO coming in to lead them. What went wrong with
33:09
the previous CEO and what are the thoughts about how
33:11
the new guy can turn things around?
33:14
Speaker 7: Yeah, I think there's a lot of hope that Elliott Hill,
33:17
who was a long time executive in Nike who retired
33:22
and is coming back to succeed.
33:24
Speaker 5: John Donahoe is retiring now is Nike CEO. Is that
33:29
Nike is going to hopefully get a product refresh. I mean,
33:32
they have really struggled against some upstarts. It used to
33:36
be the case that you know, Nike really only had
33:38
to worry about Adidas and maybe Rebok back in the day.
33:42
But you know, now you've got Hoka, you know, which
33:46
is owned by Deckers, the company that also makes ugs,
33:49
you have on holdings, you know, a you know European
33:53
running shoe giant, New Balance as well. All of really
33:58
gained in roads and and significant market share against Nike.
34:03
And I think the biggest problem that Nike had was
34:07
that you know, donaho to his credit, really helped get
34:11
Nike on track to be you know, selling more directly
34:15
to the consumer and using technology a lot more effectively.
34:19
I mean, he was, after all, formerly the CEO of
34:22
eBay and Service now but I think that I see
34:26
some similarities to what happened with Starbucks when Kevin Johnson,
34:30
the former Microsoft and Juniper Networks exec took them over briefly.
34:36
They did a good job of making mobile orders a
34:40
real important part of the Starbucks equation. But Starbucks and Nike,
34:45
at the end of the day are not tech companies.
34:47
They are consumer products companies. So who cares if you
34:51
can do a mobile order for coffee that is overpriced
34:54
and doesn't taste good? And the same notion, who cares
34:57
if you can buy Nike sneakers customized directly online if
35:02
the sneakers aren't as cool as what you're going to
35:04
get from Hooka and on. So I think with Hill,
35:09
the focus is going to be once again on the product.
35:12
Let's make some sneakers that people actually want to buy,
35:15
and you know that probably means continuing to work pretty
35:18
closely with the athletes that are partners and that are
35:21
big brand ambassadors. You know, Air Jordan's were obviously and
35:26
still are very very popular for a reason.
35:29
Speaker 2: Are there any parts of the Nike business in particular
35:32
that have shown the greatest weakness in recent years?
35:36
Speaker 5: Yeah, I mean, I think in general it's really about
35:40
the shoes. I mean, they need a refresh with the
35:44
sneakers to prove to younger consumers that the Nike swoosh,
35:50
as iconic as it is, is something worth paying up for.
35:54
I think that you know, a lot of younger consumers
35:58
again have been flocking to these other smaller rivals, you know,
36:03
in some respects, you know, lower price point shoes as well.
36:07
So I think it's difficult balance for Nike because they've
36:10
always been the premium high end company for sneaker heads
36:15
because of the partnerships they have, and I think Hill
36:18
is going to have to try and both branch out
36:21
to those sneaker enthusiasts, but also you know the core
36:26
US consumer who you know, may just need a pair
36:30
of sneakers for running or going to the gym, or
36:33
you know kids you know who are now back in
36:35
school wanting them for fashion reasons.
36:38
Speaker 2: Very good, Paul. We appreciate you joining us today. I
36:40
hope you have a fantastic weekend and we'll talk to
36:44
you soon.
36:45
Speaker 5: I don't have any football to watch anymore, so it's
36:47
going to be a good weekend.
36:48
Speaker 2: You can always put on the Pats game.
36:52
Speaker 5: I could.
36:53
Speaker 2: I don't know if you'd want to, but you could. Paul,
36:57
thanks again for joining us. That is Paul Monica from
37:01
Barons talking about Nike. Who the Patriots have this weekend
37:06
is at San Francisco, Yes, Sir, San Francisco lost last week, right,
37:11
they did. Should be a tough one. Should be a
37:15
tough one. Taking a look at markets as we head
37:17
towards the top of the hour, the Dow Jones Industrial
37:21
Average up three hundred and ninety two points a little
37:23
less than one percent, the S and P five hundreds
37:25
up three pretty much flat, and the NASDAC down fifty
37:28
points about a third of a percent. At the moment,
37:31
we've got the ten year US Treasury down two point
37:34
three basis points to three point seven six six percent.
37:38
To overall, a fairly quiet day for markets as a whole.
37:42
Next week, though, we do have some things they could
37:45
start moving things around a little bit, some more growth
37:47
related data Tuesday, ism manufacturing and Jolt's job openings data.
37:53
Thursday we get ISM services and weekly jobless claims. Friday
37:57
we get the jobs report for September, so a lot
38:00
come in next week. And then remember we're closing it
38:04
on earning seasons starting up again as well. Banks kick
38:07
things off Friday, October eleven, So one more week until
38:11
earnings start to get cranking again. But it's gonna be
38:15
a busy October as we get moving. Hope you all
38:17
have a great weekend and we'll see you back here
38:20
on Monday on the Financial Exchange