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Nvidia is booming without help from China · The Financial Exchange Show

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  Speaker 2: Kick it off our Thursday show. It is Chuck, Mike
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  Speaker 2: and Tucker with you and pretty light news Day today
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  Speaker 2: with Well, here here's the small stuff that we have
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  Speaker 2: to work through. There's a court that's struck down a
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  Speaker 2: bunch of tariffs. The largest semiconductor manufacturer in the world
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  Speaker 2: by dollar volume reported earnings and those are, you know.
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  Speaker 3: The largest company in the world.
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  Speaker 2: Generally, it depends on the day. Yeah, it depends on
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  Speaker 2: the day. That's why I didn't, you know, go that way.
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  Speaker 2: But look, we've actually got a boatload to talk about,
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  Speaker 2: and I think we have to start with this tariff
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  Speaker 2: piece because here's what happened. At six point fifteen yesterday.
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  Speaker 2: I was sitting down having a lovely faheated dinner at home,
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  Speaker 2: nice as I, you know, tend to, and all of
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  Speaker 2: a sudden, my phone starts buzzing and I'm like, that's interesting,
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  Speaker 2: Like who could be calling right now? And in fact
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  Speaker 2: it was no one, but I did get an alert
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  Speaker 2: that the International Court of I'm sorry, the Court of
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  Speaker 2: International Trade. Who I have their T shirts. I've been
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  Speaker 2: to all their concerts. I follow them very closely. They
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  Speaker 2: issued a ruling basically striking down a wide swath of
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  Speaker 2: tariffs that the Trump administration had imposed. Interestingly enough, the
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  Speaker 2: awards that I got weren't from any major news source,
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  Speaker 2: because no major news source picked this up until like
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  Speaker 2: an hour and a half later, which I found kind
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  Speaker 2: of wild and is just mind blowing to me that
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  Speaker 2: basically no one was paying attention to this and no
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  Speaker 2: one knew what to do with it once it came
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  Speaker 2: out for like an hour and a half. It wasn't
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  Speaker 2: even you know, a cnbcal Earth that came through and said, oh,
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  Speaker 2: like here's that was like seven forty five or eight PM.
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  Speaker 3: So here's the rules that the Trump administration has been using.
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  Speaker 3: It's the International Emergency Economic Powers Act of nineteen seventy.
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  Speaker 2: So commonly knows as IEPA.
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  Speaker 3: AIPA, And the quote from the three judge panel was
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  Speaker 3: the Court does not read AIPA to confirm to confer
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  Speaker 3: such unbounded authority and sets aside the challenge tariffs imposed
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  Speaker 3: there under. This was a suit brought by something like
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  Speaker 3: a dozen different states as well as five or six
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  Speaker 3: individual companies who would have been affected by these wide
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  Speaker 3: sweeping tariffs, and this court struck it down. Was it unanimous.
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  Speaker 3: I didn't, Yes, So it was a three court, three
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  Speaker 3: judge panel.
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  Speaker 2: That it was a three judge panel that ruled the
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  Speaker 2: just so everyone knows again like no one follows the
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  Speaker 2: International the Court of International Trade, No one has any
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  Speaker 2: idea what the heck they do. To be completely honest,
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  Speaker 2: it is a nine judge group that sits. The ones
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  Speaker 2: that sat for this case, one was an Obama appointee,
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  Speaker 2: one was a Reagan appointee, and one was a Trump appointee.
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  Speaker 2: So I don't think you can, you know, look at
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  Speaker 2: this and be like, well it was you know, a
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  Speaker 2: bunch of Obama judge. No, like one of Trump's own
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  Speaker 2: appointed judges did this. And I'm not here to say
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  Speaker 2: whether this is right or wrong, but more just to say, hey, like,
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  Speaker 2: at least in the composition of who viewed this case,
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  Speaker 2: you can view it as being pretty balanced, I think.
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  Speaker 2: And the big thing the tariffs that were struck down,
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  Speaker 2: they pulled three of them. I actually, by the way,
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  Speaker 2: this is like the first time I've ever read a
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  Speaker 2: full legal not a brief, but a full legal decision.
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  Speaker 2: It was like a forty page decision. And I sat
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  Speaker 2: down last night to be like, what is going on here,
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  Speaker 2: because this is kind of a big one. It's it's
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  Speaker 2: kind of important. And basically the basically there were three
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  Speaker 2: days different tariffs that the that this court ruled on,
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  Speaker 2: and when you look at how they broke this down,
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  Speaker 2: the first one was a set of tariffs imposed on China, Mexico,
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  Speaker 2: and Canada related to fentanyl trafficking and not to you know,
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  Speaker 2: tariff the fentanyl that was being trafficked, because obviously, if
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  Speaker 2: something's being smuggled, it's kind of hard to tariff the
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  Speaker 2: illegal in the first place. No no one declares that
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  Speaker 2: the border. Hey I've got a bunch of fentanyl, Like,
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  Speaker 2: here's the market value of it. The court said, look,
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  Speaker 2: if you want to go and stop feedanl trafficking, that's
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  Speaker 2: all well and good, but tariffs cannot be Tariffs cannot
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  Speaker 2: be imposed by the executive branch for the purpose of
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  Speaker 2: leverage because they do not actually do anything to stop
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  Speaker 2: the flow of fentanyl in and of itself. Okay, So
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  Speaker 2: that was part one. The second big piece was the
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  Speaker 2: reciprocal tariffs, which were imposed on April second, went into
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  Speaker 2: a fe later and so on and so forth, and
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  Speaker 2: the court basically said, look, you can't have this. You know,
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  Speaker 2: you can't be using the IEPA, which requires you to
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  Speaker 2: you know, declare a state of emergency for something that
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  Speaker 2: can last forever, because that basically means that you are
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  Speaker 2: using the word emergency in a way that doesn't really
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  Speaker 2: fit with how it's used in the English language. And
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  Speaker 2: so no, you can't actually do this.
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  Speaker 3: I find that one interesting.
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  Speaker 2: I'm not a legal scholarship looks. For instance, I'm not
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  Speaker 2: evaluating these on the merits because I have no cake
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  Speaker 2: like for exact you and I did not know this
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  Speaker 2: court existed before yesterday.
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  Speaker 3: Well for example, right, like, could you claim that there
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  Speaker 3: is a permanent emergency when it comes to the UH
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  Speaker 3: tariffs that are gonna be placed on steel and aluminum?
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  Speaker 3: I think you would be given more leeway on that.
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  Speaker 3: But nonetheless, this is the merits they struck it down on.
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  Speaker 3: You know, there is no potential end to this, and
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  Speaker 3: therefore you can't use it. Oh, next, so.
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  Speaker 2: You've got two of those. The first one was knows
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  Speaker 2: the trafficking tariffs, that's the first one. Second was worldwide
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  Speaker 2: and retaliatory of tariffs, and those were basically again those
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  Speaker 2: are two and three. So those were the combined ones
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  Speaker 2: that you had there. And the interesting thing in this
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  Speaker 2: ruling is that it is something where even though they
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  Speaker 2: disagreed and said, look, you can't impose these tariffs this way,
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  Speaker 2: they did pretty much go out of their way to
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  Speaker 2: be like, hey, here are a bunch of other ways
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  Speaker 2: that you could go and impose tariffs if you wanted to,
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  Speaker 2: and if you did them this way. These are the
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  Speaker 2: limitations of what you can and can't do. But if
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  Speaker 2: you really want to impose tariffs, here are the you know,
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  Speaker 2: the noted you know, case laws that you can use,
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  Speaker 2: and the different sections of US government regulations that you
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  Speaker 2: can go about using. So basically where we stand right
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  Speaker 2: now is they gave the executive branch ten days to
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  Speaker 2: pull this back and do something else. They also said, look,
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  Speaker 2: you can't just modify these to go on and you know,
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  Speaker 2: change them. You're not going to do these anymore, right,
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  Speaker 2: So they said you can't modify them, which means that
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  Speaker 2: the President and the White House have to go and
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  Speaker 2: kind of reformulate.
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  Speaker 3: Their plan or appeal immediately and get heard by a
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  Speaker 3: court very quickly.
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  Speaker 2: Either way, there's no guarantee that there's you know, a
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  Speaker 2: stay that gets put in place on this, and this
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  Speaker 2: would actually have to go to the federal appeals for
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  Speaker 2: it's a federal circuit of the appeals court, so it's
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  Speaker 2: it's separate because there's a certain circuit court that sees
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  Speaker 2: that covers this jurisdiction of stuff that falls, you know,
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  Speaker 2: beyond the purview of stuff happening in any particular state
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  Speaker 2: or region of the country. So it then goes to
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  Speaker 2: you know, that federal circuit appeals court, and that from
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  Speaker 2: what I've seen, in order to get a final rule
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  Speaker 2: potentially could take you know, three to four months, because
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  Speaker 2: remember this ruling took three to four months to get
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  Speaker 2: here because the lawsuits started, you know, pretty quickly, and
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  Speaker 2: so I think.
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  Speaker 3: Not quite three or four. Right when was the first
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  Speaker 3: announcement of the fentanyl teriff. I think that was March.
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  Speaker 2: March against almost three months, it's almost June, yeah, you know,
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  Speaker 2: so this was I'm seeing if I can find and
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  Speaker 2: a half filed here. I can't find it. It's not
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  Speaker 2: really relevant, it's not really useful, but it could be
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  Speaker 2: a few months. So Goldman Sachs came out yesterday with
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  Speaker 2: a piece basically saying, hey, here's some of the relevant
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  Speaker 2: areas that could be used. I poked around with Noted
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  Speaker 2: i llegal scholar Chat Gptes to see, you know, some
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  Speaker 2: of these things that came up with some of the
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  Speaker 2: stuff that Goldman did. So what I want to do.
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  Speaker 2: I want to take a break here and then when
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  Speaker 2: we come back talk about some of the things that
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  Speaker 2: you may see the Trump administration engage over the next
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  Speaker 2: days and weeks if they want to to put some
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  Speaker 2: or all of these tariffs back in place while this
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  Speaker 2: case is making its way through the legal system. So
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  Speaker 2: let's take a quick break and then we'll kind of
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  Speaker 2: go through some of the options there. With the full
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  Speaker 2: understanding none of us have any idea what's going to
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  Speaker 2: happen on this because I look at pretty much every
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  Speaker 2: juncture that we've gotten to and while I think we
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  Speaker 2: may have had like the broad strokes right, I don't
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  Speaker 2: think there's anyone who's been exactly right on every single thing.
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  Speaker 2: So it's just, hey, let's learn about what can potentially
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  Speaker 2: happen from here, and we'll see where we go. So
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  Speaker 2: let's take a quick break, and then we'll talk about
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  Speaker 2: some of those tariff tools that could be used by
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  Speaker 2: the White House.
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  Speaker 3: All right.
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  Speaker 2: So you've got this ruling from the US Court of
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  Speaker 2: International Trade, which kind of wild actually that this thing exists,
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  Speaker 2: like as a standalone court, as a standalone court. I
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  Speaker 2: was reading just the Wikipedia history of this puppy, and basically,
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  Speaker 2: there's always, not always, but dating back to eighteen ninety,
• 12:05
  Speaker 2: there was always some group that would help to sort
• 12:11
  Speaker 2: through like customs disputes in the United States, because like
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  Speaker 2: they would be a problem. One of my favorite stories
• 12:19
  Speaker 2: not a US custom dispute, but just while we're on
• 12:21
  Speaker 2: the topic. You're familiar with ice, right, the substance that
• 12:26
  Speaker 2: water makes when it freezes.
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  Speaker 3: I thought we were talking about immigration and customs enforcement.
• 12:30
  Speaker 2: No ice. So the first commercial ice exporter in the
• 12:35
  Speaker 2: world was actually from Massachusetts. No, it was actually from
• 12:39
  Speaker 2: It was not Christoff, It was actually in Massachusetts. I
• 12:43
  Speaker 2: forget the pond. It was some pond up on the
• 12:45
  Speaker 2: north shore somewhere. But they started exporting ice across state
• 12:51
  Speaker 2: lines or okay, mind doesn't everywhere they could. They got
• 12:55
  Speaker 2: to the point where they actually were shipping ice across
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  Speaker 2: the ocean to the u UK in order to provide
• 13:02
  Speaker 2: the UK with ice because as cold as it might
• 13:04
  Speaker 2: get in the UK, it doesn't generally get ultra freezy,
• 13:07
  Speaker 2: and they didn't have any ice. Ice gets to the UK,
• 13:13
  Speaker 2: it sits on the dock until it melts because the
• 13:15
  Speaker 2: customs people could not figure out what to classify it
• 13:20
  Speaker 2: as for import because no one had ever imported ice
• 13:23
  Speaker 2: into the United Kingdom before, so it literally melted into
• 13:27
  Speaker 2: water on the docks the first time they tried to
• 13:29
  Speaker 2: do it. Getting back to this, so Goldman Sachs comes
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  Speaker 2: out and says, Okay, you've had this ruling by the
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  Speaker 2: United States Court of International Trade. What can the executive
• 13:42
  Speaker 2: branch do from here? If they want to reimpose these
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  Speaker 2: tariffs while things are making their way through the legal system.
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  Speaker 2: The simplest and cleanest thing that they can do is
• 13:54
  Speaker 2: using something called Section one twenty two authority, which gives
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  Speaker 2: the pres the ability to impose tariffs or quotas on
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  Speaker 2: all imports from all countries if they want to if
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  Speaker 2: the US balance of payments is seriously threatened, and this
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  Speaker 2: can be a maximum fifteen percent tariff that they can
• 14:14
  Speaker 2: go up to, which remember we had a blanket ten
• 14:16
  Speaker 2: so that covers it. The catch is that this has
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  Speaker 2: a maximum duration of one hundred and fifty days that
• 14:21
  Speaker 2: it can be in effect before it requires congressional improval
• 14:25
  Speaker 2: in order to be extended from there at least gives
• 14:27
  Speaker 2: you time to work through the courts, So that's a possibility.
• 14:29
  Speaker 2: You don't need any justification. You can basically just slap
• 14:32
  Speaker 2: this thing on and say, yep, here we go. We're
• 14:35
  Speaker 2: going with this and you know, we're we're going to
• 14:38
  Speaker 2: put this into place. So that's you know, one thing
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  Speaker 2: that you can do. Other things that are being talked about.
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  Speaker 2: Section two thirty two. This is the portion of the
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  Speaker 2: Trade Expansion Act of nineteen sixty two which allows for
• 14:53
  Speaker 2: tariffs to be imposed if imports of goods threatened national security.
• 14:58
  Speaker 2: And this is what's currently still being a post. By
• 15:00
  Speaker 2: the way, this was not struck down by this court.
• 15:04
  Speaker 2: This is still being opposed for auto imports and for
• 15:08
  Speaker 2: stealing aluminum imports, so those are still in place. And
• 15:11
  Speaker 2: pretty much what you can do is the Secretary of Commerce,
• 15:15
  Speaker 2: you know, calls for an investigation. They then present a
• 15:19
  Speaker 2: report to the president and the president has ninety days
• 15:21
  Speaker 2: to decide on action and implement at that point.
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  Speaker 3: But these specifically would not be broad across the board,
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  Speaker 3: because I don't think you're going to slap terraffs on
• 15:30
  Speaker 3: champagne for national security concerns. You would have to go
• 15:33
  Speaker 3: after specific products, it seems, so the.
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  Speaker 2: Specific products or specific countries.
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  Speaker 3: Yeah, drugs or you know, other items.
• 15:39
  Speaker 2: Semiconductors, drugs, you know, things like that that you can do.
• 15:44
  Speaker 2: Another one that you can go through Section three. Oh,
• 15:46
  Speaker 2: one of the Trade Act of nineteen seventy four. The
• 15:50
  Speaker 2: US Trade Representative again initiates an investigation, this time looking
• 15:54
  Speaker 2: for unfair trade practices. So this is more if you
• 15:58
  Speaker 2: wanted to go after a specific country, you know, without
• 16:02
  Speaker 2: a national security concern. This could potentially be a mechanism
• 16:06
  Speaker 2: that the Trump administration uses to pursue tariffs against China.
• 16:13
  Speaker 2: US Trade Representative goes through an investigation.
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  Speaker 3: Again.
• 16:15
  Speaker 2: If they find a foreign practice to be discriminatory and
• 16:19
  Speaker 2: it burns US commerce, the US Trade Representative recommends action,
• 16:23
  Speaker 2: and the President can then impose tariffs on the country.
• 16:28
  Speaker 2: Another one probably doesn't apply here. Section to A one
• 16:32
  Speaker 2: of the Trade Act of nineteen seventy four. This is
• 16:36
  Speaker 2: more to protect domestic industry that's injured by a surge
• 16:39
  Speaker 2: in imports. Doesn't necessarily apply here. But again, maybe you
• 16:44
  Speaker 2: get creative with the thinking and this and that, and
• 16:48
  Speaker 2: you know, you figure out, okay, is there anything else
• 16:50
  Speaker 2: that we can do? Other ones that are out there.
• 16:53
  Speaker 2: Section three point thirty eight. If the Terriff Act of
• 16:55
  Speaker 2: nineteen thirty allows the President to retaliate against countries that
• 17:00
  Speaker 2: impose discriminatory or unreasonable import restrictions against the US goods.
• 17:05
  Speaker 2: So this you basically have to prove that a country
• 17:07
  Speaker 2: is preventing the US from exporting to them the way
• 17:12
  Speaker 2: that you would like to.
• 17:14
  Speaker 1: Uh.
• 17:14
  Speaker 2: Section two h five of the Agricultural Adjustment Act of
• 17:17
  Speaker 2: nineteen thirty three would help to protect domestic agriculture production.
• 17:24
  Speaker 2: You've got Section two O four of the Agriculture Act
• 17:26
  Speaker 2: of nineteen fifty six, which relates to textiles and apparel.
• 17:30
  Speaker 2: So you've got like some more targeted things that you
• 17:32
  Speaker 2: can do there. But the ones that seem like they
• 17:35
  Speaker 2: are being talked about, and probably the you know, the
• 17:38
  Speaker 2: ones that are next to be seen that section one
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  Speaker 2: twenty two, which allows for rapid blanket tarffs to be
• 17:44
  Speaker 2: put in place, and then the two thirty two teriffs
• 17:46
  Speaker 2: for national security and three oh one four country specific tariffs. Okay,
• 17:53
  Speaker 2: what does this all mean?
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  Speaker 3: I think short term it means that, well, the immediate term,
• 18:00
  Speaker 3: companies are probably still paying tariffs on imports for the
• 18:03
  Speaker 3: next few days here, but have no idea what to
• 18:06
  Speaker 3: do when it comes to products that might be shipped
• 18:09
  Speaker 3: into the US over the coming weeks. It raises significant
• 18:13
  Speaker 3: questions about the Trump administration's leverage with countries with which
• 18:18
  Speaker 3: they are negotiating, because if.
• 18:20
  Speaker 2: You're another country, you're not negotiating anymore.
• 18:22
  Speaker 3: As of today, I think you might still be negotiating,
• 18:25
  Speaker 3: but your end goal is simply delay, delayed, delay, because
• 18:28
  Speaker 3: you don't want to You don't want to make the
• 18:29
  Speaker 3: Trump administration so angry just by walking away from the table,
• 18:32
  Speaker 3: because for all you know, Supreme Court might just overrule
• 18:35
  Speaker 3: all this and say no, they're fine to go do this.
• 18:38
  Speaker 3: So I don't think they want to just piss off
• 18:40
  Speaker 3: the White House. But I do think their end goal
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  Speaker 3: is delay as far as you can and don't negotiate hard.
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  Speaker 2: I disgree if if I am a country that is
• 18:51
  Speaker 2: trying to negotiate these tariffs away, and these tariffs are
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  Speaker 2: now away, I'm not doing anything until i know whether
• 18:57
  Speaker 2: they're back or not. Otherwise I'm just negotiating against myself.
• 19:01
  Speaker 3: Yeah, you you are, unless it's okay. Well, now I
• 19:05
  Speaker 3: have the power again, and since you were unwilling to
• 19:07
  Speaker 3: negotiate during this period of time, I'm retaliating, retaliating with
• 19:10
  Speaker 3: forty percent tariffs on you. That is a that is
• 19:13
  Speaker 3: a real threat. I think that the White House could use.
• 19:17
  Speaker 2: We think they're good and they're gonna believe that after
• 19:19
  Speaker 2: last Friday.
• 19:20
  Speaker 3: I don't know. I don't know.
• 19:23
  Speaker 2: Let's take a quick break here. When we come back,
• 19:25
  Speaker 2: let's talk Nvidia after this.
• 19:40
  Speaker 1: Like us on Facebook and follow us on Twitter at
• 19:43
  Speaker 1: TFE show. Breaking business news is always first right here
• 19:48
  Speaker 1: on the Financial Exchange Radio Network. Time now for Wall Street.
• 19:53
  Speaker 1: Watch a complete look at what's moving market so far
• 19:56
  Speaker 1: today right here on the Financial Exchange Radio Network.
• 20:00
  Speaker 4: Busy Dan Wall Street, where traders are reacting to several
• 20:03
  Speaker 4: market movers this morning, including a setback for President Trump's tariffs,
• 20:08
  Speaker 4: where federal court ruled Trump didn't have the authority to
• 20:12
  Speaker 4: impose sweeping tariffs in virtually every nation, voiding the levees.
• 20:16
  Speaker 4: The Trump administration plans to appeal the ruling. On top
• 20:19
  Speaker 4: of all of that, we have earnings from Nvidia right now.
• 20:24
  Speaker 4: The Dow is up by only six points now, SMP
• 20:28
  Speaker 4: five hundred is up by about a third of a percent,
• 20:30
  Speaker 4: or eighteen points, and the Nasdaq is up just over
• 20:34
  Speaker 4: half a percent, or one hundred and five points higher.
• 20:36
  Speaker 4: RUSSED two thousand is completely flat. Ten year treasure reeled
• 20:40
  Speaker 4: is down by two basis points now at four point
• 20:43
  Speaker 4: four to five percent. Dan crude oil down about two percent,
• 20:47
  Speaker 4: lower training at sixty dollars and sixty eight cents a barrel.
• 20:51
  Speaker 4: Video posted better than expected first quarter results, where the
• 20:53
  Speaker 4: chip maker saw its sales continue to boom despite the
• 20:57
  Speaker 4: company being shut out of China. Revenue reached just over
• 21:01
  Speaker 4: forty four billion dollars or sixty nine percent increase. Chuck
• 21:05
  Speaker 4: and Mike will have more on Nvidia coming up here,
• 21:08
  Speaker 4: and that stock is actually up by four percent. Other
• 21:11
  Speaker 4: chip makers seeing gains as well. Meanwhile, Best Buy down
• 21:15
  Speaker 4: by over eight percent after the consumer electronics retail retailer
• 21:20
  Speaker 4: lowered its full year guidance for sales and adjusted earnings
• 21:24
  Speaker 4: per share. The company CFO said the reduced outlook was
• 21:28
  Speaker 4: due to tariffs for the quarter. Best Buy miss quarterly
• 21:31
  Speaker 4: revenue forecasts. Elsewhere, Salesforce reported better than expected earnings and
• 21:36
  Speaker 4: raised its annual sales outlook as AI continues to boost
• 21:40
  Speaker 4: its business.
• 21:41
  Speaker 2: Earlier this week, the company.
• 21:43
  Speaker 4: Agreed to pay eight billion dollars for data management software
• 21:48
  Speaker 4: maker Informatica. Salesforce is actually down by over six percent,
• 21:52
  Speaker 4: and United Airlines and Jet Blue agreed to enter a
• 21:56
  Speaker 4: partnership called Blue Sky that will allow customers of either
• 22:00
  Speaker 4: Airline to earn frequent flyer miles. On the other the
• 22:04
  Speaker 4: agreement will also allow United Airlines to return to JFK
• 22:09
  Speaker 4: International Airport in New York, which it left back in
• 22:12
  Speaker 4: twenty fifteen. United Airlines is up by over one percent. Well,
• 22:17
  Speaker 4: Jet Blue shares are retreating by three percent. I'm Tucker Silvan,
• 22:20
  Speaker 4: that's Wall Street Watch.
• 22:22
  Speaker 2: I wonder what Jet Blue got for that.
• 22:27
  Speaker 3: For co marketing the flights, I mean for.
• 22:30
  Speaker 2: Giving them space a JFK. Yeah, there's one reason, and
• 22:34
  Speaker 2: one reason only why United's doing this right now.
• 22:37
  Speaker 3: They don't like Newark.
• 22:38
  Speaker 2: Yeah, they have a major hubb at Newark and they
• 22:41
  Speaker 2: know that Newark is in deep crap.
• 22:45
  Speaker 3: Yeah. I don't know that you need to give Jet
• 22:46
  Speaker 3: Blue a whole lot, like quite honestly, just the idea
• 22:50
  Speaker 3: of getting something, Well, you're marketing their flights on your page.
• 22:53
  Speaker 3: Isn't that enough for Jet Blue?
• 22:57
  Speaker 1: Really?
• 22:57
  Speaker 2: Jet Blue needs jet Blue needs money. Yeah, like that
• 23:01
  Speaker 2: that's the Jet Blue needs money and has gates at JFK.
• 23:04
  Speaker 3: Yeah.
• 23:06
  Speaker 2: Yes, maybe there's there's got to be something going back there,
• 23:10
  Speaker 2: because if all you're doing is just giving up the
• 23:12
  Speaker 2: space so that someone else can like take it, then
• 23:17
  Speaker 2: it doesn't seem like great business to me, but I
• 23:20
  Speaker 2: also run an airline.
• 23:22
  Speaker 3: Neither of vibe. But there hasn't been much that I
• 23:23
  Speaker 3: could describe as great business over at jet Blue over
• 23:26
  Speaker 3: the last five years.
• 23:26
  Speaker 2: It's been a challenge and it really sucks because I
• 23:28
  Speaker 2: really used to like jet Blue. Right behind there's still
• 23:31
  Speaker 2: fine Ish, Like here's the thing that I will say, Sorry,
• 23:34
  Speaker 2: I'm not gonna call them fine ish when they have
• 23:37
  Speaker 2: fallen in the worst or second to worst reliability like
• 23:42
  Speaker 2: this year, three years in a row. Really yes, And
• 23:44
  Speaker 2: this is what I was gonna say, is it's basically
• 23:47
  Speaker 2: what area of the country gets hit by bad storms
• 23:49
  Speaker 2: in any given year, and if it's your area and
• 23:52
  Speaker 2: your numbers up, okay, like you're taking the hit.
• 23:58
  Speaker 3: I don't know. Jet Blue is been very much towards
• 24:01
  Speaker 3: the bottom for I think the last five.
• 24:03
  Speaker 2: Let me, let me, let me pull this because I
• 24:05
  Speaker 2: just saw this. Hang on, I just saw this a
• 24:09
  Speaker 2: week or two ago. I want to make sure that
• 24:10
  Speaker 2: I get it right. Don't don't even do that. It's
• 24:14
  Speaker 2: gonna take me here we go. Got it twenty two
• 24:17
  Speaker 2: days ago. And again it's JD Power. But these are
• 24:20
  Speaker 2: the guys who always do this stuff. They have their
• 24:23
  Speaker 2: North American Airline Customer Satisfaction Survey. Okay, Jet Blue Airways
• 24:28
  Speaker 2: ranks highest in customer satisfaction with a score of seven
• 24:31
  Speaker 2: thirty eight. Delta was second, Alaska was third. So again,
• 24:36
  Speaker 2: it just depends on like what year, what storms hid
• 24:39
  Speaker 2: in any given year, and that's where you like you
• 24:43
  Speaker 2: end up. So last year, there weren't any giant storms
• 24:47
  Speaker 2: in Boston or New York, and so Jet Blue was fine.
• 24:51
  Speaker 3: So I have always looked at the Wall Street Journal's
• 24:55
  Speaker 3: airline reliability rankings and this is where Jet Blue comes
• 24:59
  Speaker 3: to mind, and I'm looking for the previous data. But
• 25:01
  Speaker 3: in twenty twenty four, they ranked Jet Blue as sixth out.
• 25:05
  Speaker 2: Of nine, So like fine ish, like middle of the pack.
• 25:08
  Speaker 3: Yeah, you know, I'm gonna look through the previous years
• 25:15
  Speaker 3: because it has been a stroke.
• 25:16
  Speaker 2: It's been bad, But I think it's just like, hey,
• 25:19
  Speaker 2: you had a few years where New York was just
• 25:21
  Speaker 2: getting pummeled by stuff, and so JFK is not a
• 25:24
  Speaker 2: good place to operate. Out of who's worst on that list,
• 25:26
  Speaker 2: Mike for the most.
• 25:27
  Speaker 3: Recently, Frontier, followed by Spirit and then American American worse
• 25:33
  Speaker 3: than Jet Blue, I.
• 25:36
  Speaker 2: Don't even know where Frontier Spirit are based out they
• 25:38
  Speaker 2: even have like real hubs or is it just hey,
• 25:41
  Speaker 2: we'll land the plane where we land it and you
• 25:43
  Speaker 2: get a taxi to wherever you get like, yeah, that's oh,
• 25:45
  Speaker 2: you thought that's my experience. You thought you were flying
• 25:47
  Speaker 2: Boston in Vegas. Here's Atlantic City there, Casino's there too.
• 25:51
  Speaker 3: Yeah, close enough.
• 25:54
  Speaker 2: Right, let's talk about in video. They reported earnings after
• 25:58
  Speaker 2: the bell yesterday and and I think this can best
• 26:02
  Speaker 2: be described, and this is by people you know who
• 26:06
  Speaker 2: follow in Vidia more closely than I do, as a
• 26:10
  Speaker 2: confusing earnings report, because you're trying to strip out the
• 26:13
  Speaker 2: impact of not being able to sell to China as
• 26:16
  Speaker 2: much as you used to be, but also what's going on,
• 26:20
  Speaker 2: like how how much is that actually impacting margins and
• 26:23
  Speaker 2: sales growth? And how much of that inventory is being
• 26:26
  Speaker 2: repurposed to be sent somewhere else, And it's just.
• 26:30
  Speaker 3: How big of a question mark is your long term
• 26:32
  Speaker 3: ability to sell into China?
• 26:34
  Speaker 2: Right? So, I think this is one that is viewed
• 26:37
  Speaker 2: kind of confusingly. Now, the stock did enough to you know,
• 26:41
  Speaker 2: kind of please any critics immediately after it was up
• 26:45
  Speaker 2: about six percent after hours as we sit here right now,
• 26:48
  Speaker 2: it's up about four. So you know, clearly you look
• 26:51
  Speaker 2: at it and you say, okay, like they did something right.
• 26:54
  Speaker 2: But the piece that's I guess interesting to me is, look,
• 26:59
  Speaker 2: they should forty four billion dollars worth of revenue in
• 27:02
  Speaker 2: the quarter sixteen nine increase a lot of stuff. I mean,
• 27:06
  Speaker 2: that's half a billion dollars a day of chips and
• 27:09
  Speaker 2: sixty nine percent increase, as you said, but only a
• 27:13
  Speaker 2: touch higher than expectations. Expectations were for forty three billion
• 27:16
  Speaker 2: in change in revenue. And I point this out simply
• 27:21
  Speaker 2: because in twenty twenty three, like we'd have the quarters
• 27:25
  Speaker 2: where people would be expecting like eight billion in revenue
• 27:27
  Speaker 2: for video and they come in with like fourteen, and
• 27:32
  Speaker 2: so the magnitude of the beats is narrowing.
• 27:36
  Speaker 3: Well, the expectation I think was weaker here. They don't
• 27:42
  Speaker 3: think investors were expecting quite as much as prize because
• 27:44
  Speaker 3: of the China situation.
• 27:46
  Speaker 2: Correct, But I think the point that I'm getting at
• 27:48
  Speaker 2: is they still are seeing. They're not knocking the cover
• 27:54
  Speaker 2: off the ball the way they used to in terms
• 27:56
  Speaker 2: of beating expectations. And maybe it's just that we understand
• 27:58
  Speaker 2: the business better. I use the cove we you know,
• 28:01
  Speaker 2: for analysts to follow the stock. Maybe maybe that it's
• 28:04
  Speaker 2: just analysts understand the business better and know how to price,
• 28:07
  Speaker 2: you know what's going on there. But you're not seeing
• 28:10
  Speaker 2: you know, them beating revenue by you know, forty percent
• 28:14
  Speaker 2: like they used to wear fifty percent or sixty percent.
• 28:16
  Speaker 2: It's it's much more. It's much more like a conventional
• 28:20
  Speaker 2: company where yeah, the revenue might beat by you know,
• 28:24
  Speaker 2: single digits in terms of percentages, and then you can
• 28:28
  Speaker 2: go from there. It's it's not what it was in
• 28:31
  Speaker 2: twenty twenty two, and it probably never will be again
• 28:33
  Speaker 2: because that's just not sustainable. I think the two pieces
• 28:39
  Speaker 2: that are the long term questions for them what happens
• 28:42
  Speaker 2: with China and the additional sales that they're drumming up
• 28:48
  Speaker 2: through the Middle East through these data center partnerships and
• 28:50
  Speaker 2: things like that. How big do those get? And they
• 28:55
  Speaker 2: can those replace any potential lost China revenue? Right? That's
• 29:01
  Speaker 2: I think the ballgame for them. Everything else, look, I
• 29:06
  Speaker 2: don't follow like where every chip from Nvidia gets sent
• 29:09
  Speaker 2: in this in that, but everything else in the broad
• 29:12
  Speaker 2: numbers is pretty good as long as that margin weakness
• 29:17
  Speaker 2: gross margins drop from the mid seventies down to sixty one.
• 29:21
  Speaker 2: If that margin weakness is real and not just a
• 29:24
  Speaker 2: China issue, Danny start looking at this a little differently.
• 29:27
  Speaker 2: They've pretty much said, hey, we expect these margins to
• 29:30
  Speaker 2: rally back into the low seventies. Okay, you've got a
• 29:33
  Speaker 2: few quarters to do that. If they don't, and if
• 29:37
  Speaker 2: they continue tailing the wrong way, then it tells you
• 29:40
  Speaker 2: something about how competition's affecting their business and how it
• 29:44
  Speaker 2: potentially impacts their profitability going forward.
• 29:47
  Speaker 3: The other big question that I have outside of Nvidia
• 29:50
  Speaker 3: here is very simply, are the export restrictions to China
• 29:55
  Speaker 3: going to be successful or not? And by successful, I
• 29:57
  Speaker 3: mean will it delay china domestic AI and chip industry.
• 30:03
  Speaker 3: I have some doubts there, but I'm not I'm not
• 30:05
  Speaker 3: an expert on all this. What the Trump administration has
• 30:07
  Speaker 3: effectively done is taking the Biden restrictions, ramped them up,
• 30:13
  Speaker 3: but allowed for Nvidia to sell to many other countries
• 30:17
  Speaker 3: that were areas of concern for the Biden administration. And
• 30:21
  Speaker 3: you know the question is, can you really trust that
• 30:23
  Speaker 3: a chip going to Saudi Arabia doesn't end up in
• 30:27
  Speaker 3: China ultimately right, because I bet the Chinese are willing
• 30:30
  Speaker 3: to pay a pretty high price for that chip that
• 30:32
  Speaker 3: Saudi that Saudis can now buy.
• 30:34
  Speaker 2: Sure and right, you're going to buy these the Kataris
• 30:38
  Speaker 2: are going to be buy I mean.
• 30:39
  Speaker 3: Can they reverse engineer it as well as they have
• 30:42
  Speaker 3: just about everything else and continue to build that waled
• 30:45
  Speaker 3: off city of an economy that China has been seeking
• 30:48
  Speaker 3: for decades now of we can make it here, consume
• 30:51
  Speaker 3: it here, and not have to worry about which country
• 30:54
  Speaker 3: hits US with restrictions.
• 30:55
  Speaker 2: Next, let's take a quick break. When we come back
• 30:58
  Speaker 2: a little bit more on the current state of US
• 31:01
  Speaker 2: China trade. Maybe a couple of little hurdles popping up
• 31:07
  Speaker 2: here and there. We'll discuss right after this text.
• 31:10
  Speaker 1: Us at six one seven three, six two one three
• 31:12
  Speaker 1: eighty five with your comments and questions about today's show,
• 31:15
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• 31:17
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• 31:22
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• 31:31
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• 31:34
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• 31:38
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• 31:50
  Speaker 2: PEACE of the New York Times. Title is export controls
• 31:53
  Speaker 2: are endangering the fragile US China truce. And basically, on
• 31:58
  Speaker 2: May twelfth, about two and a half weeks ago, we
• 32:01
  Speaker 2: had the announcement that the terifrates were coming down in
• 32:04
  Speaker 2: both directions, and basically then what we have seen. One
• 32:10
  Speaker 2: of the things that was supposed to happen was China
• 32:13
  Speaker 2: was supposed to start resuming the export of rare earth
• 32:18
  Speaker 2: materials to the United States. A lot of these things
• 32:21
  Speaker 2: are used in the production of you know, motors for cars, semiconductors, aircraft,
• 32:27
  Speaker 2: lots of stuff that spin spins uses these rare earth materials.
• 32:33
  Speaker 2: And what we have seen is instead China has only
• 32:40
  Speaker 2: turned the spigot back on a little bit, it seems like,
• 32:43
  Speaker 2: and in response, the United States has suspended the shipment
• 32:48
  Speaker 2: of American semiconductors and some jet engine equipment that is
• 32:52
  Speaker 2: needed for China's commercial aircraft to China. So, even though
• 32:57
  Speaker 2: tarifrates have come down, it's not exactly like everyone is
• 33:01
  Speaker 2: just you know, playing nice now. There still are some
• 33:03
  Speaker 2: tensions and things that are being worked through that again
• 33:07
  Speaker 2: can probably be resolved in the next however long or
• 33:11
  Speaker 2: you know, you could see a case where this potentially
• 33:13
  Speaker 2: ratchets up again and becomes more contentious.
• 33:16
  Speaker 3: Yeah, it's just one of the key areas we've highlighted
• 33:18
  Speaker 3: all along is the non tariff barriers that can be
• 33:21
  Speaker 3: put into place by China when it comes to strategic industries.
• 33:25
  Speaker 3: And yeah, I mean it affected Ford. They had to
• 33:27
  Speaker 3: close down and explore manufacturing facility for a week because
• 33:31
  Speaker 3: not enough magnets. Not enough magnets. Can't make the cars
• 33:35
  Speaker 3: without the magnets. And let's be clear, other than the
• 33:38
  Speaker 3: F series trucks, it's about the last manufacturing facility Forward
• 33:42
  Speaker 3: wants to close.
• 33:43
  Speaker 2: Down, I would imagine.
• 33:44
  Speaker 3: I mean, that's one of their most profitable vehicles that
• 33:46
  Speaker 3: they produce, and there's a lot of demand for it.
• 33:49
  Speaker 3: So I think that that's probably up there in terms
• 33:52
  Speaker 3: of most profitable areas to shut down of their business.
• 33:56
  Speaker 2: And probably probably highest volume also, I'd imagine that that
• 33:59
  Speaker 2: one is up there as well. So I think this
• 34:00
  Speaker 2: will be something that we have to monitor over the
• 34:03
  Speaker 2: next you know, over the rest of the summer to
• 34:05
  Speaker 2: see how it evolves and how This potentially impacts the
• 34:09
  Speaker 2: economies of both countries even you know, kind of without
• 34:14
  Speaker 2: the tariff piece being front and center.
• 34:16
  Speaker 4: The United States Virgin Islands has consistently voted one of
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  Speaker 4: the top Caribbean destinations. In recently two of their beaches,
• 34:24
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• 34:27
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• 35:17
  Speaker 2: You know, four doesn't sell as many Explorers as I
• 35:19
  Speaker 2: thought they did. No, it's not a tiny number. It
• 35:23
  Speaker 2: is around one hundred and ninety thousand. But I remember
• 35:26
  Speaker 2: in the late nineties, you know, they were selling like
• 35:28
  Speaker 2: three four hundred thousand of those.
• 35:30
  Speaker 3: I mean, like those are they still the I feel
• 35:33
  Speaker 3: like they're still the most popular police fleet car that
• 35:36
  Speaker 3: you can purchase.
• 35:37
  Speaker 2: I would imagine, I would imagine.
• 35:39
  Speaker 4: I mean it's I haven't seen anything else in terms
• 35:42
  Speaker 4: of police No, what was the what was.
• 35:45
  Speaker 3: The police department that bought a bunch of Teslas somewhere
• 35:48
  Speaker 3: out in California? Yeah, yeah, funny stuff somewhere out there.
• 35:52
  Speaker 2: Uh, let's see this piece from the Wall Street Journal,
• 35:55
  Speaker 2: the FED forecasts stagflation.
• 35:58
  Speaker 3: Well, I hope now, because the FED play book for
• 36:00
  Speaker 3: stagflation is pretty much prey. Yeah.
• 36:04
  Speaker 2: I mean, here's the thing is in the FITS talked
• 36:07
  Speaker 2: about this. The way they handle a stagflationary scenario in
• 36:12
  Speaker 2: which growth slows and inflation goes up is they basically says,
• 36:17
  Speaker 2: it's triage which area is a bigger concern and that's
• 36:21
  Speaker 2: the one we'll address, And you know which one's the
• 36:25
  Speaker 2: bigger concern is probably which everyone comes first, because I
• 36:28
  Speaker 2: think there's a you know, there's a path where if
• 36:29
  Speaker 2: you get this, it could come in waves.
• 36:32
  Speaker 3: And so you know, Okay, we're getting hit by the
• 36:35
  Speaker 3: the inflation first, all right, high up rates. Oh boy.
• 36:38
  Speaker 3: Six months later here comes the unemployment story. So we
• 36:41
  Speaker 3: need to deal with that and honestly talk to experts like,
• 36:47
  Speaker 3: there isn't a Fed playbook for stagflation.
• 36:50
  Speaker 1: No.
• 36:51
  Speaker 2: Look, you can only move policy in one direction at
• 36:53
  Speaker 2: a time. You can't simultaneously ease and titan. I mean
• 36:59
  Speaker 2: technically you can, but it just wouldn't do anything. Yeah,
• 37:03
  Speaker 2: you know, you could be like, well, we're gonna start
• 37:06
  Speaker 2: a bond buying program, but we're gonna raise the Fed
• 37:09
  Speaker 2: funds rate. Well, that doesn't really do anything for anyone.
• 37:13
  Speaker 3: Again, Stagflation being the combination of a stagnating economy i e.
• 37:17
  Speaker 3: Recession with a period of high inflation. Last time we
• 37:20
  Speaker 3: got it was the nineteen seventies, and the Feds.
• 37:25
  Speaker 2: I guess we saw it in early twenty two as.
• 37:26
  Speaker 3: Well it could, but it was very brief and it
• 37:29
  Speaker 3: wasn't as staggy. Yeah, it was more inflation y in
• 37:34
  Speaker 3: either case, the fed's tools can only really address one
• 37:38
  Speaker 3: of those problems at a time.
• 37:40
  Speaker 2: Yeah, So I think the way it works is, if
• 37:44
  Speaker 2: you've got inflation starting to tick up, you know, back
• 37:46
  Speaker 2: towards four and unemployment staying low, fed's gonna hike. Yeah, fun,
• 37:52
  Speaker 2: amployment starts ticking up towards five, and inflation still hanging
• 37:55
  Speaker 2: out around three, Fed's gonna cut. Like that's that's kind
• 37:59
  Speaker 2: of the the basic framework that I used to look
• 38:02
  Speaker 2: at it. We haven't seen any stagflation in the US
• 38:07
  Speaker 2: for fifty years, so we're all flying by the seat
• 38:11
  Speaker 2: of our pants if that's what we actually get quick
• 38:13
  Speaker 2: break here when we come back, we got hour two
• 38:16
  Speaker 2: including we got a big announcement about the show coming
• 38:19
  Speaker 2: up at the start of hour two right after this