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AI Panic, Tariff Confusion & a Housing Market That Won’t Thaw · The Financial Exchange Show

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  Speaker 2: Lane good more than welcome back to the financial exchange
• 1:12
  Speaker 2: markets in recovery mode today after a pretty decent sell
• 1:16
  Speaker 2: off yesterday on the tales of another AI disruption report
• 1:21
  Speaker 2: from another researcher individual that painted a pretty dire scenario
• 1:28
  Speaker 2: out for how AI could evolve in the twenty twenty
• 1:32
  Speaker 2: six to twenty twenty eight landscape. We had stock selling
• 1:35
  Speaker 2: off yesterday, bit of recovery mode, as I mentioned, now
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  Speaker 2: Dow up three hundred and seventy five points three quarters
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  Speaker 2: of a percent, the S and P five hundred up
• 1:42
  Speaker 2: to thirty eight points more than half of a percent,
• 1:45
  Speaker 2: and the NASDAC up about nine tenths of one percent.
• 1:49
  Speaker 3: In early trading.
• 1:50
  Speaker 2: Here taking a look around, you've got oil prices falling
• 1:54
  Speaker 2: about three quarters of a percent, commodity prices moving, gold
• 1:58
  Speaker 2: down one percent, Sel up one percent. But the big
• 2:03
  Speaker 2: news over the last few days has been mostly about tariffs.
• 2:07
  Speaker 2: A tariff Supreme Court overruling the Trump administration's use of
• 2:11
  Speaker 2: IIPA tariffs refunds now to be this complicated process. Ten
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  Speaker 2: percent new average effective tariffs in place as of today, sorry,
• 2:20
  Speaker 2: not average effective ten percent global tariffs for a period
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  Speaker 2: of one hundred and fifty days in place now potentially
• 2:26
  Speaker 2: increasing to fifteen percent in the near future. And then
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  Speaker 2: this morning we did get the announcement of a pretty
• 2:31
  Speaker 2: big deal between Meta and Advanced micro Devices AMD. AMD stock,
• 2:36
  Speaker 2: who will be supplying semiconductors to Meta as part of
• 2:39
  Speaker 2: their AI buildout, is up about seven percent today. Meta
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  Speaker 2: stock in early trading, not moving a whole lot this morning,
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  Speaker 2: but concerns from investors even on that deal. While optimistic
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  Speaker 2: about these inking of this deal with AMD supplying chips
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  Speaker 2: to Meta, some concern about the kind of the circular
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  Speaker 2: nature of the deal because in addition to supplying semiconductors
• 3:03
  Speaker 2: in exchange for the one hundred billion dollars, AMD will
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  Speaker 2: also be supplying warrants for Meta to own a bunch
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  Speaker 2: of AMD stock, and you start to just link all
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  Speaker 2: of these companies and their success or failure together and
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  Speaker 2: raises some big questions. The other big news overnight was
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  Speaker 2: Home depots earnings out this morning, and in spite of
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  Speaker 2: slow housing sales, they did manage to eke out a
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  Speaker 2: surprise in terms of their earnings. Anything highlighting to you,
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  Speaker 2: Paul in terms of their performance in the most recent quarter,
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  Speaker 2: because again this stock pretty much flat for the last
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  Speaker 2: twelve months, up and down, but not having gained a
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  Speaker 2: whole lot of traction as the housing slow down has
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  Speaker 2: persisted through all of twenty twenty five.
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  Speaker 4: Yeah, they were able to post a increase on their
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  Speaker 4: comparable sales metric, which basically looks at stores that have
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  Speaker 4: been open for at least a year. They saw close
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  Speaker 4: to a half percent increase in the court that ended
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  Speaker 4: on February first. In terms of the numbers in general,
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  Speaker 4: they still are posted a four percent quarterly sales decline
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  Speaker 4: on the on the whole, and it still is a
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  Speaker 4: situation where the housing market, as noted by the CFO,
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  Speaker 4: has been sort of frozen over the last three years
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  Speaker 4: or so. They've seen some good growth on the professional
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  Speaker 4: contractor side of things. Home Duco has made some acquisitions
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  Speaker 4: to really sort of build out its pros division, who
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  Speaker 4: spend a lot more than the regular retail Joe, you know,
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  Speaker 4: you and I going to the store on a weekend basis.
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  Speaker 4: But ultimately them, like many other businesses out there, are
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  Speaker 4: still in a very tepid period of growth just because
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  Speaker 4: the housing market has really paused for the last few years.
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  Speaker 4: Home Depot, as you most people remember ripped COVID and
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  Speaker 4: post COVID because a lot of people had excess savings
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  Speaker 4: and we're looking to make upgrades to their properties.
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  Speaker 2: And without that transaction volume, that is the piece that
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  Speaker 2: is really driving. So four companies like home Depot not
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  Speaker 2: the only ones, furniture producers, flooring makers, all sorts of
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  Speaker 2: suppliers to the home manufacturing process are just seeing slowdowns
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  Speaker 2: because of the lack of transaction volume.
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  Speaker 3: I think the.
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  Speaker 2: Positive news on that front is we've talked a lot
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  Speaker 2: about the housing market obviously and showing signs of thawing there. Obviously,
• 5:20
  Speaker 2: affordability is still an issue, but you did see mortgage
• 5:23
  Speaker 2: rates yesterday go below six percent for the first time
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  Speaker 2: in a while according to Mortgage News Daily. And then
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  Speaker 2: the inventory situation is always one that I keep an
• 5:31
  Speaker 2: eye on. So most recent data that we have from
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  Speaker 2: National Association of Realtors is for January of twenty twenty six,
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  Speaker 2: and it gives us the number of active listings that
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  Speaker 2: are out there for single, multi family, et cetera, but
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  Speaker 2: specifically residential properties. And what it found is that compared
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  Speaker 2: to January of twenty twenty across the United States as
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  Speaker 2: a whole we're at about ninety six percent of the
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  Speaker 2: inventory levels that we were in January of twenty twenty.
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  Speaker 2: I'm compared that time period because it's obviously the most
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  Speaker 2: relevant January to January time period pre COVID. It was
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  Speaker 2: still a pretty tight housing market back then. But we're
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  Speaker 2: at least getting back to that normal level. And as
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  Speaker 2: we've talked about, some areas of the country, including some
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  Speaker 2: of the most populated areas of the country, are well
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  Speaker 2: above that. California is almost exactly at their pre COVID
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  Speaker 2: inventory levels, Florida, according to the same data, is at
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  Speaker 2: twenty two and a half percent more than their January
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  Speaker 2: twenty twenty levels, and Texas has a one hundred and
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  Speaker 2: thirty four percent of their pre COVID inventory level, So
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  Speaker 2: you've seen some improvement there. Again, if you're listening to
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  Speaker 2: us in the North East, I understand this is a
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  Speaker 2: foreign concept to you. In Connecticut, for example, the active
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  Speaker 2: listings in the state of Connecticut are twenty nine percent
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  Speaker 2: of where they were in January of twenty twenty. Still
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  Speaker 2: don't understand how Connecticut has just continued to have no
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  Speaker 2: homes for sale in main sixty one percent of total
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  Speaker 2: active listings compared to January twenty twenty in Massachusetts sixty
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  Speaker 2: three percent. I cherry picked a few states in the
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  Speaker 2: Northeast here just to give us an example, but New Hampshire, Vermont,
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  Speaker 2: they all, Rhode Island all fall the same trend as well,
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  Speaker 2: and so here it remains a highly regional scenario here,
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  Speaker 2: where overall across the country the situation is improving the
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  Speaker 2: problem for companies like home Depot. If you have inventory
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  Speaker 2: in places like Texas like Florida still going up, that
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  Speaker 2: means prices may still be likely to fall.
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  Speaker 3: That is not an environment that.
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  Speaker 2: You want to build homes in, right, and frankly, just
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  Speaker 2: not a lot of space in Connecticut to build new homes.
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  Speaker 2: So I'm not sure what it means for the overall
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  Speaker 2: state of housing development. I do expect that transaction volumes
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  Speaker 2: will pick up in twenty twenty six, because ultimately, if
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  Speaker 2: your home is sitting out there for sale in Florida
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  Speaker 2: for six months, you're probably going to ultimately lower the
• 7:58
  Speaker 2: price in order to attract a buyer or Texas or
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  Speaker 2: in other parts of the country that are seeing this
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  Speaker 2: trend develop, and that volume in of itself should help
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  Speaker 2: out these suppliers a little bit. But as you can
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  Speaker 2: imagine the amount of stuff you buy as a home
• 8:13
  Speaker 2: builder compared to the amount of stuff you buy as
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  Speaker 2: a buyer of an existing home, of a used home,
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  Speaker 2: if you will, it just doesn't compare.
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  Speaker 3: You know, we all do stuff.
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  Speaker 2: We all know, replace the light switches, we might paint something,
• 8:28
  Speaker 2: we might in my case, we did a giant renovation
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  Speaker 2: with new floors and a brand new kitchen and all
• 8:34
  Speaker 2: sorts of stuff. But even that compared to building a
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  Speaker 2: brand new home does not quite get you there. And
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  Speaker 2: the home building in this country is primarily done in
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  Speaker 2: the sun Belt, and those are the areas of the
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  Speaker 2: country where it just doesn't look terribly desirable right now
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  Speaker 2: to build.
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  Speaker 3: Right, let's take quick break.
• 8:48
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  Speaker 2: Paul, we continue to dive through and investors especially do
• 11:08
  Speaker 2: the good, the bad, and the ugly of the AI
• 11:12
  Speaker 2: trade and what it might mean for all different constituents,
• 11:16
  Speaker 2: from foreign companies supplying semiconductors to domestic companies that are
• 11:23
  Speaker 2: trying to implement the tools. There was just a story
• 11:26
  Speaker 2: out this morning of how a bunch of Chinese AI
• 11:30
  Speaker 2: developers have been training their own AI.
• 11:32
  Speaker 3: Tools on anthropics claude.
• 11:35
  Speaker 2: And you know what sort of national security concerns that represents, which,
• 11:39
  Speaker 2: by the way, I would think a heck of a
• 11:40
  Speaker 2: lot bigger than.
• 11:43
  Speaker 3: Any of the other stuff that.
• 11:44
  Speaker 2: We are worried about when it comes to national securities
• 11:46
  Speaker 2: such as importing cast iron. But nonetheless, we are trying
• 11:51
  Speaker 2: to everyone out there is trying to sort out who
• 11:52
  Speaker 2: is going to be the winner and loser. And quite frankly,
• 11:54
  Speaker 2: I think that I don't have any expertise in this.
• 11:57
  Speaker 2: But two competing pieces here. One, you know, the impact
• 12:02
  Speaker 2: of AI spending on the US economy may be overstated.
• 12:04
  Speaker 3: It's threat to the job market, isn't.
• 12:06
  Speaker 2: The other the economy needs more competition and AI could
• 12:09
  Speaker 2: make that happen. I can see how both of those
• 12:12
  Speaker 2: can be true. At the same time, what are we
• 12:15
  Speaker 2: outlining here? And I guess what's how do we stack
• 12:19
  Speaker 2: up the risks and opportunities here for something like this.
• 12:23
  Speaker 4: Let's tacko the job market first, where basically, what is
• 12:27
  Speaker 4: the premise of this piece and Barons and has been
• 12:30
  Speaker 4: suggested for the last year or so as these AI
• 12:34
  Speaker 4: developments keep coming through, is that there is going to
• 12:37
  Speaker 4: be a significant job loss on sort of the entry
• 12:41
  Speaker 4: level positions of the economy. Where you'll have I think
• 12:45
  Speaker 4: about myself selfishly whenever we get into these conversations, I
• 12:49
  Speaker 4: was hired out of college to work in a call center,
• 12:51
  Speaker 4: a job that five years from now. I don't think
• 12:55
  Speaker 4: that they're taking me on just because there are going
• 12:58
  Speaker 4: to be innovations within this space eliminate a lot of
• 13:01
  Speaker 4: those jobs, and so as a result of that, you
• 13:03
  Speaker 4: would see a big uptick in unemployment throughout the country.
• 13:07
  Speaker 4: I caution on some of the dire circumstances they're mentioned
• 13:10
  Speaker 4: here one in this piece. They're quoted the Anthropic CEO
• 13:13
  Speaker 4: who's behind a lot of the product innovations on cloud
• 13:17
  Speaker 4: and seems I'm sure has a very good feel of
• 13:20
  Speaker 4: where our official intelligence far better than me. But he
• 13:23
  Speaker 4: had mentioned this idea of unemployment rising to as high
• 13:26
  Speaker 4: as twenty percent as a result of these white college
• 13:29
  Speaker 4: jobs being eliminated by the end of the decade. I
• 13:31
  Speaker 4: tend to take that with a grain of salt. Obviously,
• 13:35
  Speaker 4: it's it's someone in the best interest of the CEO
• 13:38
  Speaker 4: of Anthropic to really trumpet AI and all of the
• 13:41
  Speaker 4: innovation that's going to bring. Adoption of new technology takes
• 13:45
  Speaker 4: time a little bit longer than I think tech companies
• 13:49
  Speaker 4: tend the pace that they tend to move that so
• 13:51
  Speaker 4: that's where we sit on the unemployment side.
• 13:54
  Speaker 2: I take on the unemployment side too. I just want
• 13:56
  Speaker 2: to bring this up that I don't know. I'm sure
• 13:59
  Speaker 2: there are jobs that will be made irrelevant because of
• 14:01
  Speaker 2: this new technology, just like there were jobs that were
• 14:03
  Speaker 2: made irrelevant with each technological innovation that got created. Before
• 14:08
  Speaker 2: the computer, there were a whole bunch of people who
• 14:10
  Speaker 2: used to sit in cubicles physically writing out spreadsheets for
• 14:14
  Speaker 2: accountants and for finance departments. And then the computer came
• 14:18
  Speaker 2: around you could do all those computations and those jobs
• 14:20
  Speaker 2: were eliminated. But guess what new ones were created? And
• 14:23
  Speaker 2: I think through AI of how that could how that
• 14:25
  Speaker 2: could play out?
• 14:26
  Speaker 3: Right?
• 14:28
  Speaker 2: Are there jobs that are done in our own organization
• 14:31
  Speaker 2: that might not need to be done if AI is successful?
• 14:34
  Speaker 3: Maybe? Right, Like maybe a.
• 14:37
  Speaker 2: Very basic analytical role where I am running numbers and
• 14:40
  Speaker 2: crunching them in the background is no longer necessary in an
• 14:43
  Speaker 2: organization like ours. But on the other hand, I think
• 14:46
  Speaker 2: of how much money I would pay somebody today to
• 14:51
  Speaker 2: come in and build a secure AI system, AI driven
• 14:57
  Speaker 2: system internally to my organization that could feed from all
• 15:00
  Speaker 2: of my different data and build me a efficiency tool
• 15:04
  Speaker 2: for my human beings that we like I would pay
• 15:07
  Speaker 2: a lot of six figures annually for somebody to come
• 15:10
  Speaker 2: work on that. And so I continue to believe that
• 15:13
  Speaker 2: with each technological technological innovation, there are entire industries that
• 15:18
  Speaker 2: will be put out of business, entire worker categories that
• 15:20
  Speaker 2: will not exist anymore because of it, like every other
• 15:23
  Speaker 2: technology has done, and then there will be new jobs
• 15:26
  Speaker 2: created as a result of that productivity. And that remains
• 15:31
  Speaker 2: my personal view in spite of all these dour predictions
• 15:33
  Speaker 2: about the labor mark.
• 15:34
  Speaker 3: Might as well.
• 15:35
  Speaker 4: That's why I push back on this idea of this
• 15:37
  Speaker 4: twenty percent unemployment, because guess what if I lose my
• 15:40
  Speaker 4: job doing this white collar gig that we have, I
• 15:43
  Speaker 4: guess I'm gonna go to my brother in LAWT Tree
• 15:45
  Speaker 4: Company and start grabbing an axe. Start so we're gonna know, sorry,
• 15:48
  Speaker 4: grab it changed all we are gonna just the point
• 15:51
  Speaker 4: being that we're gonna find that you gotta find a
• 15:54
  Speaker 4: new job, you gotta have.
• 15:54
  Speaker 2: The reality is I think that we as a society,
• 15:58
  Speaker 2: in the United States, especially but probably are really bad
• 16:01
  Speaker 2: at retraining existing workers, especially older ones.
• 16:05
  Speaker 3: And so I do have concerns about.
• 16:07
  Speaker 2: The fifty five year old website developer yep I have
• 16:10
  Speaker 2: concerns about the forty nine year old who's been working
• 16:13
  Speaker 2: in software sales or all of these different areas, data consolidation,
• 16:18
  Speaker 2: any of these areas that are very obviously easy to
• 16:21
  Speaker 2: do from AI perspective. And if you are in the
• 16:24
  Speaker 2: second half of your career because of agism in the
• 16:27
  Speaker 2: workplace and because of your skill set getting disrupted, Yeah,
• 16:31
  Speaker 2: I worry about that on an individual basis, just not
• 16:33
  Speaker 2: as a societal basis.
• 16:37
  Speaker 3: The competition piece, though, is.
• 16:38
  Speaker 2: More interesting to me, So we have you can look
• 16:42
  Speaker 2: at the competition piece from a number of different lenses.
• 16:44
  Speaker 2: Certainly there are fewer publicly traded companies available in markets today.
• 16:51
  Speaker 2: One other measure that I thought was interesting, According to
• 16:53
  Speaker 2: the Federal Reserve, the share of employment accounted for by
• 16:56
  Speaker 2: newly formed firms fell forty three percent between nineteen eighty
• 17:00
  Speaker 2: and twenty sixteen. So hey, new companies are just not
• 17:04
  Speaker 2: employing as many people now, and new companies have a
• 17:08
  Speaker 2: lot to offer, right Sometimes you're getting compensated with shares
• 17:11
  Speaker 2: in the company. How many people do you know that
• 17:13
  Speaker 2: worked in you know, a new startup twenty years ago
• 17:18
  Speaker 2: that did not you know, they worked as a secretary
• 17:20
  Speaker 2: or as an HR manager that you know, came into
• 17:23
  Speaker 2: a lot of wealth because it was a successful company
• 17:25
  Speaker 2: that you know, issued shares as a form of their compensation.
• 17:28
  Speaker 2: There's a lot of that that is not occurring as
• 17:31
  Speaker 2: much these days because of the giant motes of huge companies.
• 17:35
  Speaker 2: And I think most certainly, if there is one result
• 17:38
  Speaker 2: of the AI spend and build out from these companies,
• 17:43
  Speaker 2: it does seem to me that it's going to be
• 17:47
  Speaker 2: easier to launch a company with all the tools you
• 17:52
  Speaker 2: need because the startup costs are just going to be smaller. Right,
• 17:55
  Speaker 2: specifically in the software area, but in other areas too. Right,
• 17:58
  Speaker 2: if it has to do with does sinning a website,
• 18:00
  Speaker 2: setting up my own internal systems, and specifically in the
• 18:03
  Speaker 2: software space, creating a usable piece of technology that I
• 18:07
  Speaker 2: can sell to the public, that looks like it's going
• 18:10
  Speaker 2: to be a lot easier in the future.
• 18:12
  Speaker 3: And so my hope would be.
• 18:15
  Speaker 2: That it does challenge the modes of some of these
• 18:17
  Speaker 2: giant behemoths that have remained dominant in the tech space
• 18:21
  Speaker 2: for a couple of decades now, because by the way,
• 18:24
  Speaker 2: that's been the trend. You know, go take a look
• 18:26
  Speaker 2: at the ten largest tech companies in nineteen eighty and
• 18:29
  Speaker 2: then go look at nineteen ninety, twenty, twenty ten, twenty twenty.
• 18:33
  Speaker 2: Generally speaking, when you go look at the list, there's
• 18:37
  Speaker 2: a lot of turnover, right, and there really hasn't been
• 18:39
  Speaker 2: for the last fifteen twenty ish years. You know, it's
• 18:42
  Speaker 2: been the giant Microsoft's Apples, Amazons, Alphabet for the last
• 18:49
  Speaker 2: fifteen twenty years. Those guys have dominated, and Video obviously
• 18:51
  Speaker 2: came through the rankings now and is up there. But
• 18:54
  Speaker 2: I expect we'll see more disruption, and my hope would
• 18:57
  Speaker 2: be that that disruption comes in the form of newly
• 18:59
  Speaker 2: created companies with innovative ideas.
• 19:01
  Speaker 4: I would hope so these big tech companies wield a
• 19:04
  Speaker 4: lot of power, but hopefully that there can be some
• 19:06
  Speaker 4: challenge to them going forward.
• 19:07
  Speaker 2: Yeah, because to your point, for the last few decade,
• 19:09
  Speaker 2: last decade at least, they've been able to buy up
• 19:12
  Speaker 2: any interesting idea that's come to market.
• 19:14
  Speaker 4: Yeah, hopefully the rich don't get richer with this next evolution.
• 19:18
  Speaker 3: Let's take a quick break here on the Financial Exchange.
• 19:20
  Speaker 2: When we come back, full market recap coming up here
• 19:23
  Speaker 2: with Wall Street Watch.
• 19:40
  Speaker 1: Bringing the latest financial news straight to your radio every day.
• 19:44
  Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
• 19:50
  Speaker 1: Time now for Wall Street watch a complete look at
• 19:53
  Speaker 1: what's moving market so far today right here on the
• 19:56
  Speaker 1: Financial Exchange Radio Network.
• 19:59
  Speaker 5: Market's a rebound after yesterday's sell off, which was driven
• 20:02
  Speaker 5: by a viral report by Satrini Research highlighting AI's potential
• 20:07
  Speaker 5: disruption on several fronts. Right now, the Dow is up
• 20:12
  Speaker 5: six tenths of one percent or two hundred and ninety
• 20:14
  Speaker 5: five points, SMP five hundreds up nearly half a percent
• 20:18
  Speaker 5: or thirty one points, NASDAC up about three quarters of
• 20:22
  Speaker 5: a percent or one hundred and seventy one points, Russell
• 20:24
  Speaker 5: two thousands up just over nine tenths of one percent,
• 20:28
  Speaker 5: a ten year treasure reel flat at the moment at
• 20:30
  Speaker 5: four point zero three one percent, and crude oil down
• 20:34
  Speaker 5: about a quarter percent, trading just above sixty six dollars
• 20:38
  Speaker 5: a barrel. More AI spending to report this morning after
• 20:42
  Speaker 5: Meta and AMD agreed to a deal worth over one
• 20:45
  Speaker 5: hundred billion dollars where Meta will buy six gigawatts of
• 20:50
  Speaker 5: AI computing power from AMD. The deal could also result
• 20:55
  Speaker 5: in Meta owning as much as ten percent of AMD stock.
• 20:59
  Speaker 5: AMD shares a rallying seven percent, while MetaStock is flat. Meanwhile,
• 21:04
  Speaker 5: Home Deepo reported better than expected fourth quarter results, despite
• 21:08
  Speaker 5: profit falling. The home improvement retailer said it isn't planning
• 21:12
  Speaker 5: more price hikes after raising him last year to offset tariffs.
• 21:16
  Speaker 5: Home Depot shares are up by about three percent. Elsewhere,
• 21:20
  Speaker 5: Nova Nordis plans to cut US list prices for its
• 21:24
  Speaker 5: weight loss and diabetes drugs we Govi and ozempic by
• 21:28
  Speaker 5: up to half beginning next year. Novo stock is down
• 21:31
  Speaker 5: by two percent. Spirit Airlines has reached an agreement with
• 21:35
  Speaker 5: its lenders to emerge from bankruptcy by early summer as
• 21:39
  Speaker 5: a smaller but still independent company. Spirit also plans to
• 21:43
  Speaker 5: announce it we'll get rid of even more of its
• 21:45
  Speaker 5: air bus fleet. And Warner Brothers Discovery said this morning
• 21:50
  Speaker 5: it has received a revised offer from Paramount to buy
• 21:54
  Speaker 5: its entire company, but didn't provide details of what the
• 21:57
  Speaker 5: offer included. Warnerstock is up over half a percent, while
• 22:01
  Speaker 5: Paramount shares are down modestly. I'm Tucker Silvan. That is
• 22:06
  Speaker 5: Wall Street watching the previous segment. We asked you the
• 22:09
  Speaker 5: trivia question how many gold medals has the US women's
• 22:12
  Speaker 5: hockey team won at the Olympics. It'll be three. George
• 22:17
  Speaker 5: from Kingsboro, Mass is our winner today, taking home the
• 22:19
  Speaker 5: Financial Exchange Show T shirt. We play trivia every day
• 22:23
  Speaker 5: here on the Financial Exchange. See complete contest rules at
• 22:27
  Speaker 5: Financial Exchange Show dot com.
• 22:28
  Speaker 2: I'm pretty sure I just booked my mother in law
• 22:30
  Speaker 2: on a Spirit Airlines flight. Hopefully that's not one of
• 22:33
  Speaker 2: the airbuses that they will be selling off prior to April.
• 22:36
  Speaker 3: Should not be very happy with me. I don't think no.
• 22:41
  Speaker 2: Jamie Diamond out with his you know, once a quarter
• 22:44
  Speaker 2: doom and gloom predictions, do we what is? What does
• 22:47
  Speaker 2: Sir Jamie have to say this time?
• 22:50
  Speaker 4: What he's saying is that he's seeing a couple of
• 22:52
  Speaker 4: people doing some dumb things.
• 22:54
  Speaker 3: They're just doing the cockroaches.
• 22:57
  Speaker 4: No, that cockroaches coat has gone so much play since
• 23:01
  Speaker 4: he maybe because we're just so just in the weeds
• 23:04
  Speaker 4: with this stuff that has just mentioned. Every single time
• 23:07
  Speaker 4: credit comes private credit comes up. But what he's seeing
• 23:10
  Speaker 4: is he's seeing that some lenders are doing some quote
• 23:13
  Speaker 4: unquote dumb things to create ANII, which is net interest
• 23:17
  Speaker 4: income as well chronicled on the show and through other
• 23:20
  Speaker 4: financial presses You've had several areas of potential deterioration in
• 23:25
  Speaker 4: private credit. That is, lending that is not done by
• 23:29
  Speaker 4: the large banks like JP Morgan, which Jamie Diamond heads up.
• 23:33
  Speaker 4: And part of the reason that this private credit industry
• 23:35
  Speaker 4: had got created was really post two thousand and eight
• 23:38
  Speaker 4: financial crisis. There was a tremendous amount of scrutiny on
• 23:41
  Speaker 4: the major banks and the lending that they could do,
• 23:43
  Speaker 4: and this private credit sucked up a lot of that
• 23:46
  Speaker 4: demand for small and mid sized companies.
• 23:48
  Speaker 2: I was going to say, you know, the quote here
• 23:50
  Speaker 2: parallels to the era before the two thousand and eight
• 23:53
  Speaker 2: financial crisis when a rush to make loans ended disastrously,
• 23:57
  Speaker 2: And okay, I can see the parallel, but this is
• 24:00
  Speaker 2: also coming from the CEO who runs a bank that
• 24:03
  Speaker 2: can't really make those loans. And so whenever you talk
• 24:07
  Speaker 2: about Jamie's comments, which I don't take as disingenuous, I
• 24:10
  Speaker 2: really don't. I think he does put out these statements.
• 24:13
  Speaker 2: I think he probably does believe them. They also usually
• 24:16
  Speaker 2: happen to be very self serving for his bank. It's okay,
• 24:20
  Speaker 2: but you have to take these things in context, I think,
• 24:22
  Speaker 2: and he has called for you know, disaster and financial
• 24:28
  Speaker 2: hurricanes on the horizon for a few years now, and
• 24:31
  Speaker 2: they haven't come to pass.
• 24:32
  Speaker 3: And it's not to say that they won't in the future.
• 24:34
  Speaker 2: But oftentimes when I look at these comments, it's really
• 24:37
  Speaker 2: easy to see how that scenario could line up quite
• 24:40
  Speaker 2: well with how his bank is run, and so I
• 24:43
  Speaker 2: think you have to take that in the context of
• 24:45
  Speaker 2: which it's delivered. But nonetheless, one thing that I do
• 24:49
  Speaker 2: think is becoming clear is that this technology that a
• 24:55
  Speaker 2: few years ago was frankly not that impressive, you know,
• 25:01
  Speaker 2: misquoted things, couldn't do math, and really hallucinated quite a bit,
• 25:09
  Speaker 2: is taking on a different form. And I think one
• 25:12
  Speaker 2: point from one of the tweets that we saw a
• 25:14
  Speaker 2: few weeks ago that rang familiar to me is if
• 25:18
  Speaker 2: you used AI six months ago and it seemed to irrelevant,
• 25:22
  Speaker 2: your experience is irrelevant because it is evolving that quickly
• 25:27
  Speaker 2: and clearly disrupting things from large banks to private credit firms,
• 25:32
  Speaker 2: to Indian customer service providers and Taiwanese chip manufacturers. I
• 25:38
  Speaker 2: think the other piece that is concerning to me today
• 25:42
  Speaker 2: that we've pointed out is markets are the US market
• 25:46
  Speaker 2: in particular is more concentrated than it has either ever
• 25:50
  Speaker 2: been or certainly been in the last half century. And
• 25:53
  Speaker 2: I think where that leads a lot of investors is
• 25:56
  Speaker 2: using the tools that we typically do, which are index
• 25:58
  Speaker 2: funds in this day and age, ask for a lot
• 26:00
  Speaker 2: of them.
• 26:01
  Speaker 3: Which has been a major growth area.
• 26:03
  Speaker 2: Is in a portfolio that may not be as diversified
• 26:07
  Speaker 2: and may be overly exposed to some of those risky areas.
• 26:10
  Speaker 2: Then people realize, and that's fine. If you understand what
• 26:15
  Speaker 2: it is you're doing, if you have a thesis to
• 26:17
  Speaker 2: why you're investing the way you.
• 26:18
  Speaker 3: Are, perhaps that's great. If you don't.
• 26:22
  Speaker 2: If you've set a portfolio up five years ago and
• 26:24
  Speaker 2: just set it and forget it, it's probably done quite well.
• 26:28
  Speaker 2: But if you don't fully understand what it is you own,
• 26:31
  Speaker 2: why you own it, and how it's going to contribute
• 26:33
  Speaker 2: to your financial future, I'd encourage you to speak with
• 26:37
  Speaker 2: a financial advisor. It's not to say you need to
• 26:40
  Speaker 2: work with one permanently, but it is to say, if
• 26:42
  Speaker 2: you don't fully understand what you own and why you
• 26:44
  Speaker 2: own it, it's a good benchmark to maybe get somewhat
• 26:47
  Speaker 2: better understanding. And if you can do that on your
• 26:49
  Speaker 2: own great if you could use a second opinion and
• 26:52
  Speaker 2: could use some expert advice on this is how my
• 26:54
  Speaker 2: portfolio is allocated and this is how I see using
• 26:57
  Speaker 2: it over the course of the next decade. That is
• 27:00
  Speaker 2: critically important, more so when you are starting the distribution
• 27:04
  Speaker 2: phase rather than the contribution savings phase. If you have
• 27:07
  Speaker 2: questions like that, if you're looking for somebody to just
• 27:09
  Speaker 2: give you a second opinion on what it is you're
• 27:11
  Speaker 2: doing now and how you might alter it in the future,
• 27:14
  Speaker 2: please give the folks at Armstrong Advisory Group a call.
• 27:16
  Speaker 2: Offices scattered throughout the New England area meet with folks
• 27:19
  Speaker 2: over the phone via zoom whatever's most convenient for you,
• 27:21
  Speaker 2: but we'll sit.
• 27:22
  Speaker 3: Down with you.
• 27:22
  Speaker 2: We'll evaluate what it is you're doing today and give
• 27:25
  Speaker 2: you our honest opinion on how that lines up well
• 27:27
  Speaker 2: or poorly with how you plan to execute your plans
• 27:31
  Speaker 2: over the course of the next few years. The number
• 27:34
  Speaker 2: to call the Book of your Time is eight hundred
• 27:36
  Speaker 2: three nine three for zero zero one. You can go
• 27:39
  Speaker 2: to Armstrong Advisory dot com as well. There's a get
• 27:43
  Speaker 2: started button where you can book time for us to
• 27:45
  Speaker 2: call you back. But that phone number once again eight
• 27:47
  Speaker 2: hundred three nine three for zero zero one.
• 27:50
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 27:52
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 27:55
  Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
• 27:58
  Speaker 1: your own financial tax in cleanning advisors before making any
• 28:01
  Speaker 1: investment decisions. Armstrong make contact you to offer investment advisory services.
• 28:05
  Speaker 2: Well, Paul, Apple has announced they're going to be rolling
• 28:07
  Speaker 2: out a made in America mac Mini. That's a mouthful,
• 28:12
  Speaker 2: as part of a push to manufacture more domestically here.
• 28:17
  Speaker 2: Does this matter or is it an attempt to please
• 28:20
  Speaker 2: the Trump administration?
• 28:22
  Speaker 4: Definitely the latter.
• 28:23
  Speaker 2: The last I looked, the Macmini accounts for less than
• 28:26
  Speaker 2: one percent of total Apple sales. So are they going
• 28:29
  Speaker 2: to do this out of like a old circuit city
• 28:32
  Speaker 2: warehouse or something like that, because it seems like it
• 28:34
  Speaker 2: does not amount to much.
• 28:36
  Speaker 3: In terms of Apple's overall business model.
• 28:39
  Speaker 4: No, it's going to be They announced that they're going
• 28:42
  Speaker 4: to open a twenty thousand square foot manufacturing facility for sorry,
• 28:47
  Speaker 4: a facility for manufacturing training, and that was also part
• 28:52
  Speaker 4: of the announcement for what's going to be put together
• 28:54
  Speaker 4: in Houston. That just pales in comparison to some of
• 28:57
  Speaker 4: the you know, huge humong data centers that are being built,
• 29:02
  Speaker 4: or if you were to look at its factories in
• 29:04
  Speaker 4: China or other areas, it's a really really small piece
• 29:08
  Speaker 4: of the pie.
• 29:09
  Speaker 3: Yeah. I tend to think that that's all this is.
• 29:12
  Speaker 2: If you want to try and convince me that you know,
• 29:15
  Speaker 2: step in the right direction and proof of concept. You
• 29:17
  Speaker 2: gotta do something small before you do something big. Sure,
• 29:20
  Speaker 2: but Apple's business model has been heavily reliant on very
• 29:26
  Speaker 2: inexpensive manufacturing by some of the foremost experts in manufacturing,
• 29:31
  Speaker 2: neither of which is done in the United States. No expertise,
• 29:36
  Speaker 2: nor the inexpense.
• 29:37
  Speaker 4: The expertise, and the sourcing of the resources that go
• 29:41
  Speaker 4: into Apple products are global in nature, and there really
• 29:45
  Speaker 4: hasn't been an area to consolidate all those parts here domestically.
• 29:50
  Speaker 4: Maybe this is a step in that direction. I tend
• 29:52
  Speaker 4: to grade it with a little bit of skepticism. Will
• 29:55
  Speaker 4: say tremendous appreciation for iPads after traveling with young kids
• 30:00
  Speaker 4: over the last week or so, that technology was quite
• 30:04
  Speaker 4: life changing for flights.
• 30:05
  Speaker 2: But as amazing as it was if it were manufactured
• 30:08
  Speaker 2: here domestically and cost three.
• 30:09
  Speaker 3: Grand peer wouldn't have two. Probably take a quick break
• 30:13
  Speaker 3: when we come back. But a stack roulet is.
• 30:15
  Speaker 1: Next Smart Financial Talk. Whenever you want, find the Financial
• 30:20
  Speaker 1: Exchange on YouTube, hit that subscribe button and keep up
• 30:23
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• 30:26
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• 30:31
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• 30:34
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• 30:38
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• 30:49
  Speaker 2: Time for a bit of stack rou let here, Paul,
• 30:52
  Speaker 2: what do you have to kick things off?
• 30:55
  Speaker 4: There was one I was gonna potentially go after ball
• 30:58
  Speaker 4: skip it. PayPal a try takeover interest after a stock slump.
• 31:03
  Speaker 4: The company is fielding meetings with banks and an interest
• 31:07
  Speaker 4: for different suitors out there to try and buy certain
• 31:10
  Speaker 4: PayPal assets. PayPal is been one of the biggest beneficiaries
• 31:15
  Speaker 4: of the digital payment ecosystem, developed back in the late
• 31:20
  Speaker 4: nineties by a slew of different entrepreneurs who have gone
• 31:24
  Speaker 4: on to tremendous success and now they boast a really
• 31:28
  Speaker 4: significant network when it comes to payments all across the globe.
• 31:32
  Speaker 4: But they've really struggled over the course of the last
• 31:36
  Speaker 4: few years or so the stock has fallen about forty
• 31:38
  Speaker 4: six percent over the last year or so, and they're
• 31:42
  Speaker 4: trying to find ways to monetize some of its payment technologies.
• 31:46
  Speaker 4: They also have lost significant market share to Apple Pay
• 31:51
  Speaker 4: and Google Pay, so they're looking for a strategic pivot
• 31:54
  Speaker 4: of sorts. It'll be interesting to see if anyone finds
• 31:57
  Speaker 4: them as an appealing acquisition target. The company stock had
• 32:01
  Speaker 4: jumped as much as ten percent on that news that
• 32:04
  Speaker 4: had leaked out the other day.
• 32:06
  Speaker 2: This is again, I mean, their stock wasn't doing terribly
• 32:09
  Speaker 2: well before the AI disruption trade, but you know, it
• 32:12
  Speaker 2: was sitting at like, let's take a look mid January
• 32:16
  Speaker 2: fifty five bucks a share before creating down to forty
• 32:19
  Speaker 2: bucks a share in early February. Out of these AI concerns,
• 32:22
  Speaker 2: and this is another one the payment networks argument on AI,
• 32:26
  Speaker 2: I'm not sure I fully understand. I get the competition
• 32:29
  Speaker 2: from you know, I pay for a lot of things
• 32:32
  Speaker 2: on my watch with my credit card loaded into there
• 32:35
  Speaker 2: via Google Pay. I know other people to use Apple Pay.
• 32:38
  Speaker 2: I can see how that disrupts PayPal's business model. The
• 32:42
  Speaker 2: AI piece, I'm just unclear about why we think AI
• 32:47
  Speaker 2: is going to disrupt Visa, master Card, PayPal's existing payment networks,
• 32:54
  Speaker 2: like PayPal has other issues, so I'm not lumping them
• 32:57
  Speaker 2: entirely in with them. It's a lot of easier for
• 33:00
  Speaker 2: me to pay via Amazon Pay or Google Pay than
• 33:04
  Speaker 2: it is PayPal because of how my networks are lined up,
• 33:07
  Speaker 2: and that's a problem for them. But a I really
• 33:10
  Speaker 2: going to create a faster and cheaper payment network.
• 33:13
  Speaker 4: I just think about, you know, getting my driveway by
• 33:16
  Speaker 4: the other day paying through Venmo, Like the amount of
• 33:18
  Speaker 4: transactions you do through Vemo just does Hey, I just
• 33:21
  Speaker 4: rap that. I'm just trying to think that through and
• 33:22
  Speaker 4: I don't think so. I think it's just maybe simplifies
• 33:25
  Speaker 4: the path where I tell some agent, hey, pay Mike
• 33:28
  Speaker 4: Armstrong twenty bucks for pizza, and it saves me one
• 33:31
  Speaker 4: or two steps of going through the app. But other
• 33:34
  Speaker 4: than that, I don't know if you can replicate the
• 33:36
  Speaker 4: networks some of the networks that's created where I have
• 33:39
  Speaker 4: saved contacts in and many recipients that I've sent money
• 33:42
  Speaker 4: to before, Like, what is going to be my impetus
• 33:45
  Speaker 4: to change from using Venmo as an example of something
• 33:48
  Speaker 4: that falls under PayPal's the only.
• 33:50
  Speaker 2: Thing I think it does is And this is a
• 33:53
  Speaker 2: you know, a truth for every software company out there is,
• 33:56
  Speaker 2: can you now create a PayPal network competitive or a
• 34:00
  Speaker 2: Venmo competitor, or a Google pay competitor for a lot cheaper?
• 34:04
  Speaker 3: Right?
• 34:04
  Speaker 1: Like?
• 34:05
  Speaker 3: You can?
• 34:05
  Speaker 2: You can create the software and the interconnections, I think,
• 34:09
  Speaker 2: cheaper than you could before.
• 34:11
  Speaker 4: But how do you get the network effects? How do
• 34:13
  Speaker 4: you replicate me and you and Tucker all being on
• 34:16
  Speaker 4: the same I don't have work And what is the
• 34:19
  Speaker 4: pitch to get us there? Because right now us transacting
• 34:22
  Speaker 4: on Venmo, there's no cost to me.
• 34:24
  Speaker 2: I suppose what you would have to do is go
• 34:27
  Speaker 2: after the retailers and say, hey, I am going to
• 34:29
  Speaker 2: be a new payment network that is going to take
• 34:31
  Speaker 2: half of what Visa takes.
• 34:32
  Speaker 4: Yeah, and right undercut the vigue that they've taken there.
• 34:36
  Speaker 2: But those guys have such a massive market command that
• 34:40
  Speaker 2: I can't imagine. You know, you imagine you're seven to eleven.
• 34:44
  Speaker 2: Well maybe that's the answer. Maybe seven to eleven and
• 34:45
  Speaker 2: all these retailers can set up their own proprietary payment
• 34:48
  Speaker 2: networks with a combination of AI systems plus crypto, you
• 34:52
  Speaker 2: know type thing I that.
• 34:56
  Speaker 4: Was all those credit cards out there you'd Visa would
• 35:00
  Speaker 4: clop back with something to say, Okay, you're not gonna
• 35:02
  Speaker 4: accept my payment, then.
• 35:06
  Speaker 3: This is what I'm gonna do. I don't know.
• 35:08
  Speaker 2: This technology to me seems a little bit too close.
• 35:12
  Speaker 2: We've talked about this, right. The easiest to disrupt businesses
• 35:16
  Speaker 2: seem to me to be the ones that are furthest
• 35:18
  Speaker 2: away from people or things, and this one's pretty close, right, Like,
• 35:25
  Speaker 2: this is a direct to consumer product. In a lot
• 35:27
  Speaker 2: of cases, I physically have a credit card in my pocket.
• 35:32
  Speaker 2: This is one of those where you're not selling software
• 35:34
  Speaker 2: to another business. Here you are selling a trusted payment
• 35:38
  Speaker 2: network directly to a consumer. And it's gonna take me
• 35:41
  Speaker 2: a lot of confidence to say, yeah, I am now
• 35:45
  Speaker 2: switching to payment dot Ai, this new network that is
• 35:49
  Speaker 2: supposedly going to be safe and secure my money. Man,
• 35:54
  Speaker 2: I'm not sure I would be making that switch anytime soon. Yeah,
• 35:57
  Speaker 2: so we will see.
• 35:59
  Speaker 3: Automake could start raising prices this year. Heard that one before,
• 36:03
  Speaker 3: But here is the circumstances for automakers. Generally.
• 36:09
  Speaker 2: Demand has been a little bit rough on the part
• 36:12
  Speaker 2: of consumers, mainly because the new cars are very expensive.
• 36:16
  Speaker 2: The tariffs that have been in place while they have
• 36:19
  Speaker 2: been all over the place and changing nearly every single
• 36:23
  Speaker 2: month for automakers, and they have gotten a lot of exemptions.
• 36:26
  Speaker 2: They've largely taken the approach of, hey, let's just wait
• 36:29
  Speaker 2: this out and see how it goes before dramatically raising
• 36:32
  Speaker 2: prices or relocating manufacturing facilities. The longer this goes on,
• 36:38
  Speaker 2: the less of an ability you have to actually delay
• 36:41
  Speaker 2: delay delay, And especially now with these universal tariffs again,
• 36:47
  Speaker 2: items that are subject to the what's the NAFTA replacement
• 36:51
  Speaker 2: that was put in place under President Trump, the whatever
• 36:55
  Speaker 2: the free trade agreement is that we have with US
• 36:57
  Speaker 2: and Mexico and Canada, the new tariff's exempt products that
• 37:01
  Speaker 2: are compliant with that. So I'm not saying that this
• 37:04
  Speaker 2: will be immediate. But the real point here is that
• 37:08
  Speaker 2: as time goes on, the likelihood that car makers can
• 37:11
  Speaker 2: keep prices where they are seems pretty unlikely to most
• 37:16
  Speaker 2: experts that are out there.
• 37:18
  Speaker 4: I agree that eventually something will break with that. I
• 37:21
  Speaker 4: just wonder you're in the face of a pretty weak
• 37:24
  Speaker 4: auto market. Really, I believe that the projections for this
• 37:27
  Speaker 4: year in terms of vehicle sales were pretty bleak in
• 37:30
  Speaker 4: terms of what we've seen from prior years.
• 37:33
  Speaker 2: And if there were to be one item that I
• 37:36
  Speaker 2: could see this administration pivoting on, it would be something
• 37:40
  Speaker 2: as big ticket in front and center as car affordability. Right,
• 37:44
  Speaker 2: they've already taken steps to weaken emission standards and a
• 37:48
  Speaker 2: bunch of other things to try and make it easier
• 37:50
  Speaker 2: for auto manufacturers. If the auto manufacturers all come out
• 37:53
  Speaker 2: and say they have to jack up prices by seven percent,
• 37:55
  Speaker 2: I would think that that's going to be one of
• 37:57
  Speaker 2: the first areas that the administration says, Okay, maybe this
• 38:00
  Speaker 2: isn't quite worth the cost. That's all the time we
• 38:03
  Speaker 2: have for today's edition. To the financial exchange markets in
• 38:06
  Speaker 2: recovery mode with the NASDAC leading the way up nearly
• 38:09
  Speaker 2: a full percentage point two hundred, one hundred and fifteen points.
• 38:12
  Speaker 3: We will be back at it tomorrow. Folks.
• 38:14
  Speaker 2: Have a great rest of your day, and good luck
• 38:17
  Speaker 2: still digging out from the storm.