Latest / The Financial Exchange Show / What role does politics play into the Fed's rate cut decision?

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What role does politics play into the Fed's rate cut decision? · The Financial Exchange Show

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  Mike Armstrong and Paul Lane.
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  Speaker 2: Good morning, and welcome back to the Financial Exchange. We've
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  got markets in a broad but mild cell off Dow
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  off one fifth of one percent, seventy nine points, the
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  S and P off half a percent, the NASDAK off
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  two thirds of one percent after reaching new all time
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  highs yesterday following Jerome Powell's Federal Reserve decision to lower
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  interest rates by fifty basis points. Speaking of which, and
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  then we're going to be moving into some discussion about
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  presidential politics and you know, economic proposals coming from either party,
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  but drome Powell was asked the specific question that many
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  are asking, which is It came from Edward Lawrence from
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  Fox Business, and the question was, quote, how do you
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  respond to the criticism that will likely come that a
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  deeper rate now before the election has some political motivations
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  And certainly was something that Jerome Powell anticipated getting in
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  terms of a question, and not surprising that he did,
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  and he tackled it in the only way that I
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  think he could, which is, quote, so you know, this
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  is my fourth presidential election at the FED. And you know,
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  it's always the same. We're always going into the meeting
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  in particular and asking what the right thing to do
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  for the people we serve, and we do that and
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  we make a decision as a group, and then we
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  announce it and we and that's always what it is.
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  It's never about anything else. He goes on but effectively,
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  you know, attempting to convince people that, yeah, this is
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  not a political decision. I do genuinely believe that it's
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  not a political decision. Jerome Powell seems as though he
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  was a big leader and proponent for the fifty bases
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  point rate cut, he had to pull people along within
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  the Federal Reserve. You had one voting member disagree for
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  the first time since two thousand and five. And you know,
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  remember too, that this is a Donald Trump appointee who
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  made the decision to cut rates by fifty basis points.
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  You had Elizabeth Warren the day of the meeting criticizing
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  the FED, saying they needed to go big with a
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  seventy five basis point rate cut, which I think anyone
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  serious looked at and said that that's completely outrageous. And
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  you've had Donald Trump after the fact saying that it
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  was entirely political and the only cut rates to favor
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  Harris going into the end of the election.
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  Speaker 3: I mean, that's what's going to happen come November two.
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  Speaker 2: That's the politics of the FED. That is the role
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  that they will constantly have to navigate of attempting to
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  convince the American public that they are not persuaded by
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  political pressure one direction or another. And I think compared
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  to other institutions, I think they've done a fairly good
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  job of backing that up in terms of not not
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  falling victim to the political pressure from one party or
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  the other.
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  Speaker 4: No, I like to think that they act on what
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  we just talked about the first out of the show,
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  inflation in the l remark in and focus on their
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  three objectives rather than politics. That's the way it should be,
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  and I hope it is the case.
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  Speaker 2: So a few different pieces to cover here. One would
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  be new and additional proposals coming from Donald Trump's campaign
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  when it comes to tax reform. The other would be
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  some older stuff coming to what Kamala Harris has proposed
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  in terms of taxes for some of the wealthiest Americans
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  out there. I'll have to say that Whenever we talk
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  about Kamala Harris's proposals on what she wants to do
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  regard to the economy, it's honestly kind of tough because
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  they're usually not terribly specific. The proposals that we've seen
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  from Donald Trump are very clear, and you know, we've
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  criticized many of them. But like, I don't want taxes
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  on tips, I want to I want to eliminate the
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  salt deduction that were passed as part of my Like
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  you know a number of things that are really clear
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  in terms of what the policy would be, Kamala Harris
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  is quite less clear, and I think that's a reasonable
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  criticism of her is, hey, your campaign really has not
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  proposed much that is clear in terms of what your
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  policy would be would be. But one of the biggest
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  areas that I've that has been criticized when it comes
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  to Kamala Harris has been her proposals on unrealized capital gains.
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  And this would be very difficult to enact, very difficult
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  for the IRS to enforce. But there's effectively a proposal
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  out there that would require tax payers with wealth over
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  one hundred million dollars, which, again I don't know how
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  you go about measuring and reporting to report unrealized gains
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  for each asset class annually, including the basis to original
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  purchase price and the market value as of December thirty
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  first so, and then also reporting total liabilities. And the
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  idea would be that hypothetically, they could pass a rule saying, Okay,
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  this is your unrealized gain on something like a B business,
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  and we're going to tax you on that unrealized gain annually.
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  Unclear what the rate would be, but I mean, quite honestly,
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  we talk about taxes a lot on this show, and
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  this would be one of the proposals that would put
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  the United States as a global outlier in terms of taxation.
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  And those are the things that I get concerned about.
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  Right If we're finicking with the rate, you know, on
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  capital gains, whether it should be twenty or twenty five,
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  you know, we can have a realistic debate about what
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  that's going to do in terms of activity and investment.
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  When you talk about saying, hey, we're going to have
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  a new tax on unrealized capital gains just for people
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  with over one hundred million dollars, you start having questions
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  about where are people going to start relocating to it's
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  a very different conversation when you talk about something like that.
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  Speaker 4: I'm just not even sure I'm willing to have the conversation, Mike.
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  You know, I know it's it's something that we have
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  to bring up for the show, But I make that
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  point to say.
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  Speaker 2: Just because it's so unrealistic that it's ever going to happen.
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  Speaker 4: Administratively, it's an apple nightmare to be able to go
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  in and actually adhere to these potential policies. And then
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  I just can't get over that the biggest donors on
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  each side of the.
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  Speaker 3: Aisle are the people.
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  Speaker 4: Yeah, and I just call me a skeptic, but I
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  just don't think that you're gonna get the political push
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  when you've got billionaires who fund these campaigns so significantly
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  on the federal and local levels for different pointed off
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  officials that are gonna go for this. I just don't
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  think it's even really feasible to talk about until we
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  get a sweep in the sweep in Congress and Kamala
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  Harris in and like, all those probabilities together just aren't
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  high enough yet for me to go down this road.
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  Speaker 2: Yeah, I'm with you. This is of the economic policies
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  out there. One of the most extreme changes that has
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  been proposed that's been put out there on the Trump side.
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  We've talked about a number of them that have been
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  tossed out there. Some of the new ones are sort
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  of a dismantling of his own tax reform from twenty eighteen,
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  which is just again, it only makes context. It only
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  makes sense in the context of trying to buy votes.
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  I think is kind of where I land out.
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  Speaker 4: This is like the middle school class president saying I'll
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  get you guys free lunch and you know, recess and
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  stuff like that.
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  Speaker 3: It's just saying things that ultimately in middle.
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  Speaker 4: School you're like, yeah, I'd love to like have a
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  couple extra resis like, is that actually viable? Is that
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  actually something that is going to happen. All of these
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  endeavors seem a little bit misguided to me, that this
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  idea you'd be able to cap credit card rates, that's
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  not even on the tax side of things, but also
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  to repeal the Saal tax, the thing I got to
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  give him credit for. It's a very simplified tax system
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  that was incorporated in from the Tax and Jobs Cut
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  Act in twenty.
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  Speaker 2: Seventeen, seventy eighty percent of Americans are now not itemizing
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  their taxes.
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  Speaker 4: And it's really easy to fall it's it's been simplified greatly,
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  and I do think that along with lower marginal rates,
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  it's been a bit It's hard to argue that it
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  hasn't been a benefit to the economy over the last
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  you know, eight or nine years that it's been In.
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  Speaker 2: The original Trump tax reform, correct.
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  Speaker 4: You know, has every dollar gone to economic progress or
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  GDP grew up? No, absolutely not, That's not how it
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  goes with tax cuts. However, you can make the argument
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  that it certainly has been beneficial to the economy in
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  general from a deficit death side of things. That's a
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  whole nother conversation, but it is something that I do
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  think was was fantastic the way it's worked out.
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  Speaker 2: So the most recent proposal was at a campaign speech
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  in Long Island over the last week to restore the
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  salt deduction.
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  Speaker 4: Interesting where the location of that campaign you know meeting
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  was too the ultimate beneficiary of something like that being repealed.
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  Speaker 2: Yeah, So, I mean, if you need a sense for this, again,
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  if you're not familiar up until the Trump tax cuts, previously,
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  residents of states that had over ten thousand dollars of
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  state and local taxes. That's where the acronym salt comes from.
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  So income tax, property tax, sales tax. Add all that up.
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  If you could deduct it, then you would be able
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  to and that was capped during the Trump tax cuts
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  at ten grand. Yes, so you know, millionaires and billionaires
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  in places like New Jersey and Connecticut saw a massive
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  tax increase, not quite because you had, you know, the
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  corresponding cuts, but compared to other states where hey, you
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  didn't have as much taxes, and say state like Texas
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  or Florida, you had a potential to save a whole
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  lot more by moving there, and a lot of people
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  did relocate from places. You know. I remember one billionaire
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  in New Jersey leaving the state and ended up costing
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  the state of New Jersey something like ten percent of
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  their total tax revenue. This would again, if you're going
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  forward with this change one. You know, let's talk about
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  the fact that you're just running up deficits further. But
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  who are you benefiting. You're benefiting the highest income receivers
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  in states like Massachusetts, like New Jersey, like New York,
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  and also complicating the tax code even Further, I'm generally, again,
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  as much as I hated being here in Massachusetts where
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  I can't deduct all that stuff, and I would love
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  to get this back, I think it kind of made
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  sense if you're trying to propose tax policy like you
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  did and washing it away, I don't think benefits anyone
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  other than you know, millionaires in those high income tax states.
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  Speaker 5: Yeah.
• 11:24
  Speaker 4: The one last thing I'll add there is that I
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  didn't wasn't even think about the city tax. That is
• 11:28
  a huge deduction that if you work in Manhattan, for example,
• 11:31
  that's a ten percent local tax that you're assessed if
• 11:34
  you're a high income earner there. That in addition to
• 11:36
  your property taxes wherever you live, New Jersey or whatever,
• 11:39
  it's a huge bump. So it's something that those states
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  really benefited from in twenty sixteen, but not over the
• 11:46
  last eight or ninety eight years.
• 11:47
  Speaker 2: Let's say a quick break. When we come back. Trivia
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  Speaker 2: The Nuclear Power Plant for the last remaining reactor on
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  three Mile Island was shut down in twenty nineteen due
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  to the cost to run the power plant and the
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  prices they were getting for the energy. According to a
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  reportment the Wall Street Journal, Constellation Energy, who owns the plant,
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  would be firing it back up here for one customer.
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  Speaker 3: It's a big one, though.
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  Speaker 2: It's a big one. Microsoft will be buying the electricity
• 16:35
  generated by the nuclear power plant entirely, presumably for their
• 16:40
  artificial intelligence computing that takes up, as we all know now,
• 16:44
  an absolute ton of electricity. And this is interesting. This
• 16:49
  is the first real evidence we are seeing of the
• 16:51
  impact on the utility market and what might be coming
• 16:54
  in the future. For all of this obviously a bit
• 16:58
  of a different case because you have an existing nuclear
• 17:00
  power plant, not something that needs to be constructed new,
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  but it does. I mean, let's think about just plain
• 17:07
  old economics here. What's happened kind of overnight, but really
• 17:12
  over the last couple of years is a creation of
• 17:16
  a whole bunch of new demand for electricity. To my knowledge,
• 17:20
  there's very little new supply that has been coming on
• 17:23
  the market, and so what I would generally anticipate if
• 17:27
  We're talking about companies like Microsoft and Google requiring a
• 17:31
  whole bunch of new electricity that they were previously not consuming,
• 17:35
  and no new supply coming on. Granted, this specific story
• 17:39
  speaks to new supply coming online, but this is pretty
• 17:41
  limited supply and demand. Demand goes up, no new supply,
• 17:44
  prices go up, sure, and I'm interested to see how
• 17:47
  that plays out because this look electricity and net gas
• 17:53
  and all of these costs that we use to heat
• 17:54
  our homes cool our homes throughout the United States, They've
• 17:57
  already gone up quite considerably, have pretty much every different
• 18:02
  area of honome ownership, between insurance costs, mortgages, and everything else.
• 18:07
  And this has the possibility, not necessarily how it will
• 18:10
  go because it's a heavily regulated industry, but to drive
• 18:13
  those costs up even further. That's my guess as to
• 18:16
  the short term impact. Quite honestly, long term, I'm quite optimistic.
• 18:21
  I think that long term, if you have these juggernauts
• 18:23
  demanding electricity and really pushing companies to come up with
• 18:28
  new forms of generation, I'm really hopeful that it could
• 18:30
  mean a whole bunch of new nuke plants coming online
• 18:33
  and more supply down the road, But in the short
• 18:37
  term it does kind of give me pause and a
• 18:40
  little bit of concern there.
• 18:41
  Speaker 4: Yeah, the long term piece I am optimistic about as well.
• 18:44
  If you're looking for more carbon free energy out there,
• 18:48
  the best way that you're gonna get innovation is money
• 18:52
  coming into those areas. And if you have people who
• 18:55
  have basically unlimited pocketbooks like Microsoft and some of these others, Yeah,
• 18:59
  trying to look at alternatives because they're not gonna be
• 19:03
  well received. If they're pushing more demands on the grid,
• 19:06
  it's gonna be a lot easier for them to push
• 19:08
  this through if it's renewable energy.
• 19:09
  Speaker 3: If these big companies are going.
• 19:11
  Speaker 4: To make the capital outlays to do that, that will
• 19:13
  cause more innovation in the space because there will be
• 19:15
  nuclear power, pants or other forms of energy out there
• 19:18
  looking to receive those dollars.
• 19:20
  Speaker 2: So I'm just waiting for the story. I almost promise
• 19:23
  you we will cover a story a few years from
• 19:25
  now of another Texas blackout or something like that where
• 19:29
  at the same time, Google's running all of their processors
• 19:32
  and continues to AI computing. Just wait, it's going to
• 19:35
  happen at some point, and that'll be a turning Point
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  quick Break. We'll have the Trivia Winter next.
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• 20:31
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• 20:34
  of the one hundred dollars gift card to Applebee's was
• 20:37
  Joe from Sandwich, mass So congrats to both winners there
• 20:41
  and Trivia is brought to you by Applebee's. Enjoy half
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  price late night appetizers after nine pm. Enjoying Club Applebee's
• 20:47
  to enjoy exclusive deals and specials. It'll get a free
• 20:50
  appetizer just for signing up. Now, that's eating good in
• 20:53
  the neighborhood board. We're prohibited dine in only.
• 20:56
  Speaker 2: I know, we all just kind of become our own parents.
• 20:59
  But I just think remember as a child, this relates
• 21:02
  back to peanut Eminem's just being a bunch of like terrible,
• 21:07
  rambunctious kids and my father trying to get all of
• 21:09
  our energy out of us, and so he would give
• 21:12
  us each a peanut eminem for every lap we ran
• 21:14
  around the house. And I totally do that type of
• 21:18
  thing with my kids these days. I just specifically create
• 21:21
  activities for them just to get energy out of them and.
• 21:24
  Speaker 6: Trump and then you get the sugar crash after, yeah,
• 21:27
  which is not great.
• 21:28
  Speaker 4: But again, how many laughs do you think Mike was
• 21:31
  knocking out? No more than four or five?
• 21:33
  Speaker 2: Excuse you. I was a very just kidd tiny athletic
• 21:37
  young child. I just have changed a fair bit over
• 21:39
  the years.
• 21:40
  Speaker 1: Grew two inches.
• 21:41
  Speaker 2: Yeah, yeah, I've grown a total of two inches since
• 21:44
  I was ten years old. Amazon has a new TV
• 21:50
  show out that again, the innovation coming out of this
• 21:54
  company is always fascinating, but a new Shark Tank style
• 21:57
  show that they're going to be putting on Prime presumably.
• 22:01
  I assume they're not going to toss the thing on
• 22:02
  Netflix or something like that. But what's the premise of
• 22:05
  this new Shark Tank themed show that they're putting out here, Paul.
• 22:08
  Speaker 3: So, basically, Mike what it is. It's called by it now.
• 22:12
  Speaker 4: It's going to come out on October thirtieth, and it's
• 22:14
  going to be a cross between kind of the Home
• 22:15
  Shopping Network and Shark Tank, where contestants will come on
• 22:19
  there with their inventions and pitch ninety seconds to the
• 22:22
  audience as to why they feel that their invention should
• 22:26
  be posted on Amazon, and then if the audience votes
• 22:30
  that it is good enough or up to snuff, it
• 22:33
  will go to a judge panel, which includes Tony Hawk,
• 22:36
  Blackest star Anthony Anderson and actress Tabitha Brown. I hope
• 22:39
  this is a rotating panel because I think you'd probably
• 22:42
  want some people who are a little more business qualified, not.
• 22:45
  Speaker 2: Like just so long as Tony Hawk is always yeah.
• 22:48
  Speaker 3: I'm down with that.
• 22:49
  Speaker 4: I am big, big Tony Hawk approval rating there. But
• 22:52
  then ultimately the winner will get twenty thousand dollars if
• 22:55
  they are the winner of the episode, and they will
• 22:58
  also get the placement on Amazon's platform to be able
• 23:02
  to sell their product globally.
• 23:04
  Speaker 2: So I'm a huge What a dystopian world we're living
• 23:07
  in where you go and like pitch your product on
• 23:10
  a TV show sponsored by the largest retail almost the
• 23:13
  largest retailer in the world, and the win is a
• 23:18
  you know, for a business, a small amount of prize cash.
• 23:21
  But then you get your item featured at the top
• 23:25
  of a search bar on Amazon's website. It's just so
• 23:28
  weird and dystopian. I would do, of course I would.
• 23:32
  It's a huge I spend all my time shopping on Amazon.
• 23:34
  Speaker 3: When you're saying dystopia, it's a huge coupe for the
• 23:36
  business owners.
• 23:37
  Speaker 2: Yeah, no it is. I mean it's a huge success.
• 23:39
  If you're able to market this type of things, like
• 23:42
  the preferred product on Amazon's web page right at the top,
• 23:45
  you're going to kill it. I'm not just debating any
• 23:47
  of this, it's just it just seems weird to me.
• 23:52
  Speaker 3: Hey, the world changes.
• 23:53
  Speaker 2: Yeah, it's uh, it certainly does. And yeah that that's
• 23:57
  going to be Again. The part that's a little bit
• 24:00
  weird too, is like you think about all the criticisms
• 24:03
  from small business owners of Amazon over the years, like,
• 24:06
  put my product out there and three months later it
• 24:08
  tried the.
• 24:09
  Speaker 3: Cutthroat their cutthroat. It's a they're a tough supplier to
• 24:12
  deal with. Yeah, I guess that's what it's to deal with.
• 24:15
  Speaker 2: That's the dystopian part of this is they're framing it
• 24:17
  as you know, helping the mom and pops out there,
• 24:21
  and if anything, Amazon has destroyed the mom and pops
• 24:25
  of many different businesses over the last ten years. They
• 24:29
  are just they have eaten everything. You think about all
• 24:32
  of the you know, small hardware stores and and just
• 24:36
  nick knack stores that Amazon has destroyed over the years.
• 24:38
  That's that's the dystopian part of it, is like we
• 24:42
  have just hollowed out small stores in American towns, and
• 24:47
  now come on down so you can pitt your product
• 24:49
  and we can put it on our website. Pizza Hut.
• 24:52
  I talked about this the other day, how I really
• 24:54
  like innovative ways for people to get their resumes twenty
• 24:57
  four hours ago. Yeah, that's the other day. Now, the
• 25:00
  other day is like two days ago. No, that's the
• 25:02
  other day.
• 25:02
  Speaker 6: Was the day in the past, No, yesterday was yesterday.
• 25:05
  The other day is like a couple of days ago.
• 25:09
  Alrighty break the tie here, Paul.
• 25:11
  Speaker 2: I just think the other day is any day in
• 25:12
  the past that's I think that's just the other day.
• 25:16
  Is any day in the past that Mike can't remember.
• 25:18
  Speaker 4: I think it's too aggressive, too aggressive, too aggressive to
• 25:20
  come after him for that pizza hut.
• 25:25
  Speaker 2: I don't know.
• 25:26
  Speaker 3: I don't think it's aggressive.
• 25:27
  Speaker 6: I'm just trying to feel like, Hey, the other day
• 25:29
  sounds like it was Monday, yeah, or is twenty four
• 25:31
  hours ago?
• 25:32
  Speaker 2: I have been pretty notorious about not remembering which days
• 25:35
  I talked about. Certa pizza hut will be printing job
• 25:39
  seekers resumes on pizza boxes and delivering them to employers
• 25:44
  in quote the toughest job market. Who's calling this one
• 25:49
  the toughest job market? Again? I don't mean to, you know,
• 25:53
  put my old man get off my lawn stump speech
• 25:56
  out here, But anyone who lived through the twenty and ten, eleven, twelve,
• 26:03
  and two thousand and nine job market, that was the
• 26:05
  toughest job market. For anyone that's currently living there weren't
• 26:09
  a whole lot of people that were entering the labor
• 26:11
  force during the Great Depression. That one was worse. But
• 26:14
  you know, for for people still alive today. This is
• 26:18
  not the quote toughest job market. I'll put that aside
• 26:22
  for a minute here, and and uh, you know, not
• 26:24
  blame Pizza Hut for that one annoying or innovative Paul,
• 26:29
  What do you think.
• 26:30
  Speaker 4: How can they be assured that it's going to go
• 26:32
  to the right hands of the employer? No, I how
• 26:35
  do we know it's just not going to.
• 26:37
  Speaker 2: Security guard at Morgan Stanley? Yeah?
• 26:39
  Speaker 3: Yeah, right, Like, how do we know it's going to
• 26:42
  get right hands? Yeah?
• 26:44
  Speaker 4: I mean they could open up the box and by
• 26:47
  the time the executives are getting to eat the pizza,
• 26:49
  they can't even see the top of it. What executive
• 26:52
  is running down? Oh the deliveries here, I got it?
• 26:54
  Oh he got me Pezza, Tucker, I'll head down, I'll
• 26:56
  grab the box.
• 26:58
  Speaker 3: Right, that's the CEO of the company.
• 26:59
  Speaker 2: Like, how I'm thinking that this may work on companies
• 27:04
  that are thirty people or smaller, maybe fifty people are smaller.
• 27:08
  You could get reliably, reliably good information to say, Okay,
• 27:14
  the Armstrong Advisor Group's hiring. I've looked up their address.
• 27:17
  They appear to be here. I'm gonna send them a
• 27:19
  pizza with my red.
• 27:20
  Speaker 6: So then we get eight pizzas a day here on
• 27:22
  the lobby.
• 27:23
  Speaker 2: Well, I'm right, but here's the thing.
• 27:25
  Speaker 4: Think about who is usually the order of operations getting
• 27:28
  the food, Like we get lunches on Fridays, usually send
• 27:31
  out the youngest, most not tenured employee to do that task,
• 27:35
  Like they're the ones behind the pizza pickup usually, so
• 27:40
  how does.
• 27:40
  Speaker 2: That get apply for their job?
• 27:44
  Speaker 3: So they rip off the cover of the pizza.
• 27:46
  Speaker 2: B Yeah, you know, Like I said, I'm I'm a
• 27:48
  big fan of these innovative ways. We covered this one
• 27:51
  the other day Tucker and Mistrum where this this guy
• 27:55
  looking for a job in tech just posted It wasn't
• 27:59
  his resume, but it was like his name, uh looking
• 28:03
  for work and a QR code linking to his LinkedIn
• 28:05
  profile and literally printed like hundreds of these things and
• 28:09
  duct taped them to telephone polls outside of tech companies
• 28:11
  in New York. And like I applaud the hustle, I
• 28:16
  applaud the hustle. This one, I'm not sure how successful
• 28:19
  it's going to be either as a sales stunt for
• 28:22
  Pizza Hut or as a means for people getting jobs.
• 28:25
  Speaker 3: So I guess I got us talking about people.
• 28:28
  Speaker 2: I hope to be proven wrong. It's just because I'm hungry.
• 28:30
  It's the only reason we landed here. I'm starving, so
• 28:32
  I said, let's talk about the Pizza Hut story. Let's
• 28:34
  take a quick break though. When we come back, paul
• 28:37
  A Monica's joining us to round out our Friday show,
• 28:40
  talking to us about PayPal. We'll be right back with
• 28:43
  Paul after this.
• 28:45
  Speaker 1: The Financial Exchange streams live on YouTube. Like our page
• 28:49
  and stay up to date on breaking business news all morning.
• 28:52
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• 28:57
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• 29:00
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  That's visit USVII dot com.
• 29:45
  Speaker 2: Joining us now is Paul Lamonica from Barons to talk
• 29:48
  a bit about PayPal holdings. Paul as always, thanks for
• 29:51
  joining us. Appreciate it.
• 29:53
  Speaker 5: Yeah, thank you.
• 29:54
  Speaker 2: So before we get into the new partnerships and what's
• 29:56
  driving up the stock, you know, over the last month
• 29:59
  or so, can you talk to us about just the
• 30:02
  I mean, there's been a number of companies that have
• 30:05
  fallen into this category. But it looks to me like
• 30:08
  the company erased something like two thirds of its value
• 30:10
  from the peaks back in twenty twenty one. What exactly
• 30:13
  pumped this stock up so much? And then where did
• 30:15
  it all go?
• 30:17
  Speaker 5: Yeah? I think the big concern is that there is,
• 30:20
  as you point out, a lot more competition for PayPal
• 30:25
  and Venmo, which I think a lot of people probably
• 30:28
  know the company most for. But when you think about
• 30:30
  things now you can pay via Apple pay. You know,
• 30:33
  Alphabet has a Google Pay of course, there's Block, which
• 30:38
  is the owner of Square and cash app, and then
• 30:41
  you have Stripe in the private area. You know, that
• 30:45
  is you know, a company that is a competitor with
• 30:49
  regards to mobile payments. And then finally, the big banks
• 30:51
  themselves want a piece of this. They have a consortium
• 30:55
  strangely called Early Warning Services that you know that that
• 31:00
  is the consortium the don't zell and another new you know,
• 31:05
  checkout type digital wallet service called pays pa Ze. So
• 31:11
  there is a lot of competition. But PayPal has made
• 31:14
  a bunch of partnerships in the past year under a
• 31:17
  new CEO, and that's helping the stock recover.
• 31:19
  Speaker 3: Yeah.
• 31:20
  Speaker 2: So talk to us about those partnerships, and you know,
• 31:22
  some of them read to me almost as Hey, these
• 31:24
  big tech companies like Amazon are trying to push off
• 31:27
  concerns about anti trust. Others are real, you know, genuine
• 31:32
  inroads that they're making with big suppliers and and e
• 31:35
  commerce websites. Where have they seen success recently?
• 31:39
  Speaker 5: Yeah, I mean Amazon obviously the most recent announcement earlier
• 31:43
  this week, that's a very significant one. You know, letting
• 31:47
  customers use you know, paypals systems to buy products, certain
• 31:52
  products on Amazon, So brands that use to buy with
• 31:56
  Prime initiative, you know, that's something that you can have
• 32:01
  PayPal now available at checkout. Prime members can link starting
• 32:06
  next to year, Amazon accounts to their PayPal accounts. So
• 32:09
  that is very very significant for PayPal. But the company
• 32:15
  also doing some deals recently for its fast Lane guest
• 32:21
  checkout service to try and boost growth, and that is
• 32:24
  something that allows customers to easily access payment and address
• 32:28
  information with their email only without entering the passwords. You
• 32:32
  don't necessarily have to be a PayPal vemo. These services
• 32:36
  don't have to necessarily be PayPal venmo friendly to allow
• 32:41
  customers to use them. So they launched fast Lane earlier
• 32:45
  this year and it's partnered with the European giant fintech
• 32:49
  ad Yen, as well as buy Serve here in the US.
• 32:52
  And then most recently, PayPal also did a deal with Shopify,
• 32:56
  Canadian e commerce giant kind of similar to Amazon on
• 33:00
  that makes PayPal one of the top online credit and
• 33:03
  debtit card processors for Shopify payments in the US. So
• 33:07
  you add all this up and it's very significant. These
• 33:10
  are a lot of deals that you could boost the
• 33:14
  PayPal network. Overall and by extension revenue and earnings.
• 33:19
  Speaker 2: You point out that look, PayPal stock, it's out more
• 33:21
  than fifteen percent in the past six months, outperformed both
• 33:24
  the S and P and NASDAC during that time period.
• 33:27
  I guess the question is, you know, clearly some excited
• 33:30
  analysts out there about the business prospects. What allows PayPal
• 33:34
  to distinguish itself in this space? I mean, coming from
• 33:37
  an outsider perspective, I just have a tough time defining
• 33:41
  why I would want to use PayPal over say Amazon
• 33:44
  service or Google Pays service. Is it just a trust
• 33:48
  thing with you know, people that have used PayPal for
• 33:51
  for decades now, with you know its origins with eBay.
• 33:55
  Speaker 5: Yeah, I think that is a big part of it.
• 33:57
  And then obviously you know Venmo is b ill a
• 34:01
  very popular peer to peer payment service, particularly with you know,
• 34:07
  younger consumers millennials, gen z, but even gray bird gray
• 34:11
  beards like like like me have a Venmo account and
• 34:15
  use that pretty frequently easily pay people when I need to,
• 34:21
  So that is something that I think is a big boost.
• 34:23
  But at the bottom line is none of this would
• 34:26
  matter if PayPal wasn't a historically cheap stock because it
• 34:30
  had fallen so dramatically over the past couple of years.
• 34:34
  Last track, it was trading for you know, a little
• 34:36
  under fifteen times twenty twenty five earnings in you know,
• 34:42
  and that is something that is just a giant discount
• 34:46
  to its historical average of twenty six. So, you know,
• 34:50
  this is a company that I think can continue to
• 34:52
  do well.
• 34:53
  Speaker 2: It's Paul Monica joining us to talk about PayPal and
• 34:57
  the recent growth that they have seen. Always appreciate it, Paul. Thanks,
• 35:01
  talk to you next week.
• 35:03
  Speaker 5: Thanks alln How it going guys.
• 35:04
  Speaker 2: Uh, The price war in weight loss drugs is apparently
• 35:08
  showing up here, which we'll see what that means for
• 35:10
  the big companies like Lily, who have seen tremendous stock
• 35:14
  price growth over the last few months. But I don't
• 35:17
  know about you, Paul, but I have because I've known
• 35:21
  a few people that have gone on these drugs and
• 35:23
  experience just kind of incredible results. The more and more
• 35:26
  I look around and see people, I start wondering, like, oh, yeah,
• 35:30
  I saw that person the other day and they seem
• 35:32
  to have lost a ton of weight. And not that
• 35:35
  it's any of my business at all, nor would I
• 35:37
  ever ask but it starts automatically going through my head like, oh, yeah,
• 35:40
  I wonder if they're I wonder if they're on the
• 35:42
  uh the ozempics, and you know, seeing that weight loss
• 35:46
  because of it, and doctors from what I have seen too,
• 35:49
  clearly getting more and more comfortable with prescribing these things.
• 35:51
  Speaker 3: Yeah, I did.
• 35:52
  Speaker 4: It's interesting that this article comes up because I did
• 35:54
  a deep dive listen to like a three or four
• 35:56
  hour podcast on nover Nordice, and just the evolution of
• 36:00
  this industry, which I thought was more of a newer industry,
• 36:03
  but in a sense it's not just because Nova Noordis
• 36:07
  has been doing insulin for over one hundred years and
• 36:09
  this is evolving off of that. Where the GLP one
• 36:12
  and semi glutide, which is basically the fulcrum for all
• 36:15
  the weight loss efforts that you see, is something that
• 36:17
  has been researched for over twenty years. The idea of
• 36:20
  it coming on the public market, though, has surged significantly
• 36:24
  over the course of the last couple of years. There's
• 36:25
  been a lot of hate for weight loss drugs because
• 36:28
  there's history of some bad actors out there, like Zenzen
• 36:31
  and some others that had all sorts of dramatic impacts,
• 36:34
  but for the most part here the science behind these
• 36:38
  has not indicated any significant long term effects. There's some
• 36:42
  concerns out there that some people one out of six
• 36:45
  I believe I was quoted, have to drop out of
• 36:48
  using these drugs. But they are really powerful. And the
• 36:51
  thing that blew me away in listening to this podcast
• 36:53
  was that there could potentially be other ways that these
• 36:56
  could be beneficial for your overall health system.
• 36:58
  Speaker 3: Beyond just weight laws.
• 37:00
  Speaker 4: That these glp ones could reach other organs of the
• 37:03
  body and have positive effects on the reducing heart risk
• 37:06
  and other areas of other different body parts like liver
• 37:11
  and kidney and others out there.
• 37:12
  Speaker 2: So I have a close personal friend who maybe was
• 37:17
  slightly overweight, but you wouldn't describe him as obese or
• 37:20
  you know, you or generally fat. But you know, in
• 37:23
  conversations with doctors and cholesterol concerns that they had, they're like, no, yeah,
• 37:28
  I mean he's lost a ton of weight in addition
• 37:31
  to you know, tackling a lot of his cholesterol issues. Yeah,
• 37:35
  it's just been fascinating.
• 37:36
  Speaker 4: So it circles back to this idea of if you're
• 37:39
  Eli Ley and NorVa noticed. Those are the two players
• 37:42
  in this space. It's pretty much those two that you
• 37:44
  have to speak of. It does seem like there is
• 37:46
  a price race to getting lower. But the thing that
• 37:49
  I'll mention and here is that the demand for this
• 37:51
  stuff far exceeds the supply. The supply piece is far
• 37:55
  behind what the demand is because the demand is so rampant.
• 37:58
  I mean, forty percent of this country sob so there's
• 38:01
  a huge market for it and not enough supply there.
• 38:03
  And the biggest thing to hit is Medicare. You gotta
• 38:06
  get it Medicare approved.
• 38:07
  Speaker 2: Markets remain broadly down across the board, Dow off one
• 38:11
  fifth of one percent, SMP down a third of one percent,
• 38:15
  and the Nasdaq down a little bit less than half percent,
• 38:17
  So improving but still negative for the day. We'll have
• 38:20
  a full market recap next week. Have a fantastic weekend, everybody,
• 38:24
  and we'll see you back then.