Latest / The Financial Exchange Show / AI Stock Frenzy, Market Narrowing, and Signs of Speculation

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AI Stock Frenzy, Market Narrowing, and Signs of Speculation · The Financial Exchange Show

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Speaker 1: donation today. This is the Financial Exchange with Chuck Zada,
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Speaker 1: and Mark Vandetti.
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Speaker 2: As you just heard it's Chuck, it's Mark, and as
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Speaker 2: you didn't hear Tucker's with us too. I don't know
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Speaker 2: why his name isn't on there because should be. Thanks
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Speaker 2: just saying, you know, no big deal. But in any case,
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Speaker 2: as we sit today, we've got markets mostly up, but
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Speaker 2: narrowly up, and so actually kind of mixed if that
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Speaker 2: makes sense, which it might. Here's what we've got going on.
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Speaker 2: The S and P five hundreds up twenty four points,
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Speaker 2: about a third of a percent. The Dow Jones Industrial Average,
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Speaker 2: doesn't have much technology exposure in it is down one
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Speaker 2: hundred and eighteen points, about a quarter percent. And the
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Speaker 2: Nasdaq Composite, which is well a lot of tech but
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Speaker 2: also stuff like Walmart that you know, people don't realize
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Speaker 2: it is in the NASDAK. The Nasdaq Composite is up
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Speaker 2: to hundred eleven points, or almost one percent, and the
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Speaker 2: Russell two thousand is basically flat on the day. So
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Speaker 2: it's kind of a narrow group of stocks leading the way.
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Speaker 2: Which remember I know that everyone likes to talking about, oh,
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Speaker 2: we want like market breadth, like we want you know,
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Speaker 2: wide participation, Like I get that, but look guys, I
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Speaker 2: gotta tell you. I gotta tell you, the last three
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Speaker 2: times we've tried the wide breadth thing, it's failed. Now.
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Speaker 2: Market tried it back in August of twenty twenty four.
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Speaker 2: We ended up with Jen mcgeddon, where like the yend
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Speaker 2: blew up and the Vicks went to sixty on a Monday,
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Speaker 2: and people are like, what the heck just happened? Market
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Speaker 2: tried to broaden out all through July. Failed, stocks fell
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Speaker 2: like seven eight percent in a couple of days. Didn't work.
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Speaker 2: We gave that up. Fast forward to Q one of
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Speaker 2: last year. I know everyone was focused on you know, oh,
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Speaker 2: you've got you know, tariffs being imposed, this that and whatever. Hey,
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Speaker 2: the market was trying to broaden out because tech wasn't.
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Speaker 2: What happened splat right into Liberation Day. I know that
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Speaker 2: there might have been you know, confounding factors and everything,
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Speaker 2: but all I'm saying is the market tried to broaden
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Speaker 2: out and it didn't work. And then you could play
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Speaker 2: back the tape from Q one of this year and
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Speaker 2: even late Q four of last year, where we were
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Speaker 2: talking about, look, guys, the market's trying to broaden out.
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Speaker 2: The last couple of times. This has happened. It didn't
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Speaker 2: work again. I know, mitigating factors and everything, like I
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Speaker 2: understand that, but the fact is the market tried to
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Speaker 2: broad out in Q one and fell flat on its
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Speaker 2: face again. I know there's other stuff going on, but
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Speaker 2: this is not a market the last few years that
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Speaker 2: has proven successful of making constructive gains when MAG seven
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Speaker 2: isn't working. So the last two and a half weeks,
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Speaker 2: what's been working mag seven? Now today it's more crap
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Speaker 2: that's working, quite honestly, Like, yes, like you still have
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Speaker 2: you know that the mags doing their thing, but you
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Speaker 2: got like all the stuff that was rallying in October
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Speaker 2: of life, like all the quantum computing crap and all
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Speaker 2: that stuff like that's going nutty. You got you got
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Speaker 2: freaking All Birds, y'all remember All Birds. They're the company
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Speaker 2: we made fun of like five years ago for being
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Speaker 2: like we're not just a shoe company, We're a way
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Speaker 2: of life. And it's true, like they're not just a
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Speaker 2: shoe company anymore because they sold off their shoe business
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Speaker 2: and are now pivoting to try to make AI data centers.
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Speaker 2: I'm not making this up. Like you can you can
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Speaker 2: google it, you can bing it. You can caught it.
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Speaker 2: You can whatever you want to do.
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Speaker 3: It would have been like a candidate for like an
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Speaker 3: April Fool's gag. Yes, I wrong, it very much real.
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Speaker 2: It very much feels like Long Island Iced Tea changing
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Speaker 2: their name to Long Island Blockchain back in twenty eighteen
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Speaker 2: or whatever it is. So they're not known as all
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Speaker 2: birds anymore. What are they known as now? New bird Ai?
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Speaker 2: That's right, New bird Ai, Mark I Mark. I'm telling you,
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Speaker 2: if you want your market cap to go up, all
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Speaker 2: you gotta do is rebrand yourself. You could be Mark Fandetai.
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Speaker 4: Yeah. Yeah, change my legal name and then I have
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Speaker 4: to go public. No revenue, no business plan, someone will
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Speaker 4: sack you. Yeah, so far, no taker.
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Speaker 2: You could like you could be a spack just like
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Speaker 2: you the physical.
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Speaker 4: But to your point, money's indiscriminately piling into markets. It's
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Speaker 4: benefited growth, small growth, in particular emerging markets, the most
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Speaker 4: risk sensitive, if you will, high beta. If you like
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Speaker 4: the jargon, Yeah, segments of the marketer are benefiting, and
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Speaker 4: it does. It does give you a little bit of pause.
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Speaker 2: We're getting kind of into silly season now again. You
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Speaker 2: can yeah, I can understand the last two weeks of Hey,
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Speaker 2: markets are trying to look through a short term disruption
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Speaker 2: because they're hopeful of, you know, a long term sure
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Speaker 2: solution to the horror moves crisis. Okay, fine, I understand
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Speaker 2: why you might bid up beating up Microsoft or beating
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Speaker 2: up in video based on that. When you got All
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Speaker 2: Birds being bid up by was it three hundred and
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Speaker 2: seventy three percent today?
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Speaker 3: Let me double check.
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Speaker 2: Now it changes by the minute and I'm out of date.
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Speaker 3: Huh, four hundred and seventy one percent.
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Speaker 2: Okay, so All All Birds you've almost got a five
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Speaker 2: bagger for a single day because they took out a
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Speaker 2: fifty million dollar line to try to do something with
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Speaker 2: data centers now for seventy four I do want to
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Speaker 2: point out that despite this move, All Birds is still
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Speaker 2: ninety seven point five percent off its all time high. Granted,
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Speaker 2: before this move, it was ninety nine point five percent
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Speaker 2: off its all time high. But I'm just saying, okay,
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Speaker 2: now I want to discuss this a little further out. Actually,
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Speaker 2: go for it. Here's the thing. Let's say that you
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Speaker 2: believe that there needs to be more AI data center capacity,
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Speaker 2: which is a completely reasonable thing to believe. What makes
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Speaker 2: you think these are gonna be the guys who did it,
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Speaker 2: who are gonna do it? Who are gonna be like.
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Speaker 3: Comfy shoe.
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Speaker 2: I'm sorry, guys, they make shoes. Quite honestly, I've bought
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Speaker 2: a couple pairs of them in my life. They're perfectly
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Speaker 2: cromulent footwear. Yeah, they're nice, They're they're fine, They're they're
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Speaker 2: they're comfortable, they're nice. You can throw them in the
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Speaker 2: washing machine like it's it's good. But there is literally
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Speaker 2: nothing that translates from hey, like, let's make shoes out
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Speaker 2: of wool, to hey, do you think we should build
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Speaker 2: data centers for AI? Like I this is a little
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Speaker 2: This is not the kind of stuff that you want
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Speaker 2: to see in healthy markets. This is the kind of
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Speaker 2: stuff where you're like, makes me feel a little bit. Now,
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Speaker 2: these feel more.
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Speaker 4: Like Spas the President comes out, he says, we're very
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Speaker 4: very close to ending this war. It's happened several times
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Speaker 4: in the past six weeks. Market spasm, they go up.
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Speaker 4: This one's beenful, which I understand, like gues it is irrational,
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Speaker 4: might be like I'm not, I don't buy it, but
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Speaker 4: like you can understand make more sense. I'm not mocking it.
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Speaker 4: I'm not questioning it. This is just sort of a
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Speaker 4: prolonged version of the pattern of the past several weeks.
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Speaker 4: Money flows, floods indiscriminately into risk assets, pushes up silly
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Speaker 4: pushes up stuff in a fashion that is sort of
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Speaker 4: inexplicable and silly. And we'll see where we are. And
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Speaker 4: I guess six to eight weeks.
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Speaker 2: Yeah, I think that's that's reasonable. Ten Yere Treasury is
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Speaker 2: up two basis points to four point two seven eight percent,
8:41
Speaker 2: Dollar Index down point zero three percent to ninety seven
8:44
Speaker 2: eighty eight. Gold is off fourteen seventy and ounce to
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Speaker 2: forty eight thirty five. And we got crude oil West
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Speaker 2: Text Intermediate up a dollar a barrel to ninety two
8:52
Speaker 2: to twenty eight triple a. Average national average for gas
8:55
Speaker 2: prices down another sent overnight to four ten and eighteen vents.
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Speaker 2: Diesels still hanging in pretty close to the recent highs
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Speaker 2: at five sixty three and five tenths of a cent.
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Speaker 2: Peace from the Actually, let's take a quick break here,
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Speaker 2: quick break trivia, and then we're talking about what we're
9:14
Speaker 2: seeing from this year's tax refund season. Next.
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Speaker 2: It's time for trivia.
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Speaker 3: Here on the Financial Exchange. On this day in twenty nineteen,
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Speaker 3: one of Europe's most famous landmarks caught fire, toppling Expire
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Speaker 3: and destroying its roof. It took five years for US
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Speaker 3: twenty twenty four. So our trivia question today, which famous
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10:44
Speaker 2: Mark. We are right in the middle of tax season.
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Speaker 2: In fact, today is the deadline for filing, or at
10:51
Speaker 2: least for filing an extension if you happen to be
10:53
Speaker 2: one of those people. And what are we seeing in
10:57
Speaker 2: terms of the data surrounding tax refunds and you know
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Speaker 2: the potential impact on the US economy? The sense that
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Speaker 2: I've gotten anecdotally is not as robust as expected. But
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Speaker 2: what are we seeing actually, well.
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Speaker 4: To summarize the Bloomberg piece, refunds are bigger as a
11:17
Speaker 4: result of changes in law. That's what you would expect.
11:20
Speaker 4: They cite an average of three hundred and fifty dollars,
11:24
Speaker 4: and that's going to be skewed by higher earners with
11:27
Speaker 4: bigger deductions obviously for property tax.
11:34
Speaker 1: Expenses.
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Speaker 4: Most taxpayers I don't know exactly what their sources for
11:39
Speaker 4: this but say they haven't noticed a difference. So either
11:42
Speaker 4: they didn't know what to expect, or there is no
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Speaker 4: difference for most and most of the benefits are accruing
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Speaker 4: to higher earners. I don't really know which of those
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Speaker 4: two things is the case.
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Speaker 2: I think the big thing remember, tax refunds in general
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Speaker 2: tend to go up most years. Last year, the average
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Speaker 2: refund was about one hundred and fifteen dollars bigger than
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Speaker 2: the UH previous year. So this year, if you're talking
12:07
Speaker 2: about you know, three fifty, yes, it's bigger. But if
12:10
Speaker 2: it's being eaten into by gas, you know, prices and
12:12
Speaker 2: things like that, it's.
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Speaker 4: Oh you think that's what they mean. But I didn't notice,
12:16
Speaker 4: like not literally just like, oh, I'm still spending more
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Speaker 4: because of gas, Like I'm not feeling the benefits.
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Speaker 2: I think it might be that, but the other thing
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Speaker 2: quite honestly, And look, I don't know. Yeah, do you
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Speaker 2: remember like what you got back for a refor like,
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Speaker 2: do you remember what happened when you filed your taxes
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Speaker 2: last year?
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Speaker 1: Well?
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Speaker 4: Yeah, because I generally I pay.
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Speaker 2: I know you're a nerd.
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Speaker 4: No I'm not. Well no, I'm not like a tax nerd.
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Speaker 2: No no, no, but like like you you like.
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Speaker 4: The nomine I sort of remember, like oh, not light
12:47
Speaker 4: to the dollar, no, but ballpark Yeah, because I write
12:49
Speaker 4: a check.
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Speaker 2: I just don't know, Like if you asked me, like, Chuck,
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Speaker 2: did you have to pay? Like I couldn't even tell
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Speaker 2: you if I had to pay or got a refund
12:57
Speaker 2: last year. You do your own TAXI track, I do,
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Speaker 2: and I still couldn't tell you what I got last year. Yeah,
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Speaker 2: you know, it's like I I, I don't know what
13:05
Speaker 2: the actual outcome was.
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Speaker 4: So you think this is more people just aren't feeling,
13:12
Speaker 4: say wealthier because of it, because the increased expenditures on
13:15
Speaker 4: maybe fuel maybe I.
13:17
Speaker 2: Don't I have. Yeah, you know, it's like I can't
13:20
Speaker 2: really make heads or tails of it. We can, oh, sorry, no, no, no,
13:24
Speaker 2: but I can't say though that here for the next hour.
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Speaker 4: The benefits of the benefits surrounding up things I meant, like,
13:30
Speaker 4: I don't know some program think.
13:32
Speaker 2: It's only thirty nine after that exchange.
13:35
Speaker 4: Yeah, now I'm a great time killer. The it's it's
13:38
Speaker 4: it's not disputable that any benefit any stimulus to demand,
13:43
Speaker 4: any fis so called fiscal stimulus resulting from UH changes
13:47
Speaker 4: in tax law have probably been neutralized by the what
13:51
Speaker 4: I'll call the oil tax increase. Now, that's not an
13:54
Speaker 4: entirely complete assessment of what's happened, because there are winners
13:58
Speaker 4: as well as losers when oil price goes up at
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Speaker 4: the average consumer, all things considered, is worse off. Maybe
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Speaker 4: that's what they need.
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Speaker 2: So this brings us now to a kind of tangentially
14:09
Speaker 2: related piece which is in Bloomberg opinion, why aren't Americans
14:15
Speaker 2: working as hard as they used to? And to get
14:21
Speaker 2: it this, you know, I wanted to see okay, like
14:24
Speaker 2: show me the data that we are seeing here, like
14:28
Speaker 2: what's what's going on? And in fact, the interesting thing
14:33
Speaker 2: is that there is no data that's presented in this piece.
14:37
Speaker 2: Like I look through it, and I went through the
14:41
Speaker 2: whole thing, and basically the message that I got from
14:46
Speaker 2: it was, hey, like, we think Americans are working less,
14:51
Speaker 2: but we don't have the data to back that up.
14:55
Speaker 2: And so like I I like, I couldn't even add
15:00
Speaker 2: because there's just nothing in here. Quite honestly, we.
15:03
Speaker 4: Don't working hours And they actually say this, right, working
15:06
Speaker 4: hours have gone down. We know that.
15:09
Speaker 2: They don't. They don't tell us how much, they don't
15:10
Speaker 2: tell us over what time period. So it's like what
15:13
Speaker 2: am I looking at?
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Speaker 4: Yeah, And it's it's not really ours. It's productivity that
15:17
Speaker 4: matters for wages.
15:18
Speaker 2: Right. If you could run the world by pressing one
15:21
Speaker 2: button at the beginning of the day and everything gets done,
15:25
Speaker 2: do we complain, well, you're not working enough. No, the
15:29
Speaker 2: cows got fed, then they got turned into beef, and
15:32
Speaker 2: then they made it to your plate. That's a good day.
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Speaker 4: Yeah, yeah, we would call that productivity.
15:37
Speaker 2: Correct.
15:37
Speaker 4: You can have been a robot to do it, or
15:39
Speaker 4: you can find better ways to do it. Either way,
15:41
Speaker 4: productivity total factor in a total factor sense to use
15:44
Speaker 4: like a research term, goes up. That's not a bad thing.
15:47
Speaker 4: Americans still work many more hours ten to twenty percent
15:50
Speaker 4: depending on the country, than say Europeans do. Thus the
15:54
Speaker 4: difference in standard of living. We're wealthier because we work more.
15:57
Speaker 2: We don't take August off every year. Yeah right, right,
15:59
Speaker 2: you don't shut down the whole country for a month.
16:02
Speaker 4: But our average is about eighteen hundred hours. Russia's average
16:07
Speaker 4: is a lot more, but they're less productive. Russia's averages
16:09
Speaker 4: two thousand hours France's average. Just to pull some just
16:12
Speaker 4: to pull a random European country sort of welfare state
16:16
Speaker 4: and use it as an example, fifteen hundred hours again
16:19
Speaker 4: as opposed to eighteen hundred for the US.
16:21
Speaker 2: So I think ultimately the amount of time that someone
16:27
Speaker 2: spends working, or that a population spends working, isn't the
16:30
Speaker 2: piece that actually matters. It's what do you produce during
16:34
Speaker 2: this part of time. It's part of it, yes, but
16:37
Speaker 2: it's what do you produce during that time. It's ultimately
16:39
Speaker 2: the whole thing that matters is ours work times productivity.
16:42
Speaker 4: Yeah, but develop world productivity rates are similar because technology
16:45
Speaker 4: is similar. So if you comparent, like the US to
16:47
Speaker 4: France and looking at our higher GDP per kappa, you'd say, well,
16:51
Speaker 4: we work longer, you know, But to Russia or a
16:54
Speaker 4: developing country, well, they're not as productive and their institutions suck.
17:00
Speaker 2: So I'm glad that we got that squared away. In
17:02
Speaker 2: any case, I just found this piece kind of underwhelming
17:05
Speaker 2: because it doesn't I'm not sure what question it's trying
17:10
Speaker 2: to answer. And there's nothing wrong with being able to
17:16
Speaker 2: be more productive such that you can get more done
17:19
Speaker 2: in a shorter period of time. Am I wrong about that?
17:25
Speaker 4: No, That's the name of the game is productivity. You know,
17:30
Speaker 4: before the modern era, people worked a lot. They had
17:33
Speaker 4: odd schedules, you know, taking twenty days a year off
17:37
Speaker 4: to worship saints and stuff that we don't do that anymore.
17:40
Speaker 4: But the productivity didn't go anywhere until like the Industrial
17:45
Speaker 4: Revolution basically, so economic growth went nowhere for like fifteen hundred.
17:50
Speaker 2: Subsistence level. If you had a kid, it ate up.
17:53
Speaker 4: Whatever you whatever gains in income you were you were
17:59
Speaker 4: able to realize. So yeah, subsistence living right in a nutshell.
18:02
Speaker 3: Well happened to the full four day work week thing.
18:05
Speaker 3: Remember that. It was like three years, three or four years,
18:08
Speaker 3: maybe longer than I'll goo than that. It was like
18:10
Speaker 3: all this four day work week experiment keeps popping up,
18:13
Speaker 3: and oh, we're going to four day work week.
18:14
Speaker 2: And it's gone. The four day work week has been
18:18
Speaker 2: rumored for the last one hundred and twenty years. It's
18:20
Speaker 2: basically the four four day work week is the employee
18:25
Speaker 2: version of fusion power. It's always twenty years away.
18:29
Speaker 1: You know.
18:30
Speaker 2: It's like, hey, in nineteen twenty, if we keep seeing
18:33
Speaker 2: these productivity gains, by nineteen forty, you only need to
18:36
Speaker 2: work four days a week, and then the same thing
18:39
Speaker 2: in nineteen fifty. Yeah, by nineteen seventy, you'll only need
18:41
Speaker 2: to And here's the thing. There's always more work to
18:44
Speaker 2: be done, actually, because anytime you solve one problem, you
18:47
Speaker 2: create another, and it's just the nature of work keeps evolving.
18:51
Speaker 2: So this is one of the reasons why, even with
18:53
Speaker 2: all of this AI hype and everything, I'm still not
18:58
Speaker 2: convinced it ends up resulting in a net loss of jobs.
19:00
Speaker 2: It may result in a massive net transformation of jobs
19:04
Speaker 2: from doing what you used to do to something completely
19:06
Speaker 2: do new. But there's always new work to do. And
19:13
Speaker 2: the piece that is interesting what I will say, if
19:15
Speaker 2: you look at the jobs that are being selected for
19:20
Speaker 2: by what the labor market's telling you right now, it
19:23
Speaker 2: is saying, hey, we basically need people to help take
19:26
Speaker 2: care of each other healthcare and teachers and stuff like that.
19:30
Speaker 2: We don't need a lot of the other stuff. And
19:32
Speaker 2: that's interesting. We can discuss more when we come back.
19:41
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19:45
Speaker 1: it's the Financial Exchange on the Financial Exchange Radio Network.
19:51
Speaker 1: Tell you out full whoa Street watch tracking the stocks,
19:54
Speaker 1: the data, and the headlines driving markets so far today
19:58
Speaker 1: right here on the Financial Exchange do your network.
20:02
Speaker 3: All markets are mixed, but traders are witnessing another rally
20:05
Speaker 3: from the NASDAK today as traders sift through more first
20:10
Speaker 3: quarter bank earnings. Right now, the Dow is down four
20:13
Speaker 3: tenths of a percent, or two hundred and three points
20:16
Speaker 3: SMP five hundred, up over third of a percent, or
20:19
Speaker 3: twenty five points. NASDAK up over nine tenths of a
20:22
Speaker 3: percent or two hundred and seventeen points. Russe the two
20:25
Speaker 3: thousand edging higher ten Youre Treasure realed up two basis
20:28
Speaker 3: points at four point two to eighty five percent. In
20:30
Speaker 3: Oil up one and a half percent, now trading a
20:34
Speaker 3: ninety two dollars a barrel. Bank of America reported better
20:37
Speaker 3: than expected first quarter results, lifted by equity sales and trading.
20:41
Speaker 3: CEO Brian moynihan said the bank saw a healthy client activity,
20:44
Speaker 3: including solid consumer spending that stock up one and a
20:48
Speaker 3: half percent. Meanwhile, Morgan Stanley up over four percent after
20:51
Speaker 3: the firm also posted impressive first quarter results. Elsewhere, Broadcom
20:56
Speaker 3: announced an expanded partnership with Meta to provide the Facebook
21:00
Speaker 3: parent company with more custom AI chips, sending shares in
21:05
Speaker 3: Broadcom up by three percent. Snap shares are up eight
21:09
Speaker 3: percent after the Snapchat parent company announced plans to lay
21:13
Speaker 3: off up to sixteen percent of its workforce, citing AI
21:17
Speaker 3: driven efficiencies, and in a strange move, struggling footwear company
21:22
Speaker 3: all Birds announced this morning it is pivoting to artificial intelligence.
21:28
Speaker 3: The new company expects to be called new Bird AI.
21:33
Speaker 3: That stock checking in now is surging seven hundred and
21:38
Speaker 3: seventy nine percent higher. Yeah, I'm Tucker Silvan. That is
21:44
Speaker 3: Wall Street Watching. On the previous segment, we asked you
21:46
Speaker 3: the trivia question which famous European landmark caught fire on
21:50
Speaker 3: this day in twenty nineteen. That would be the Notre
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22:08
Speaker 2: Did you say seven hundred and seventy.
22:11
Speaker 3: Seven hundred and seventy nine. I don't know what we're
22:14
Speaker 3: doing here.
22:16
Speaker 2: Uh, it's kind of why eight hundred and seven, eight
22:19
Speaker 2: hundred and seven? What are we doing? What are we doing? Yeah,
22:23
Speaker 2: this is just they're gonna put the AI in your
22:26
Speaker 2: shoes so your feet are gonna be smarter. Yeah, yeah,
22:31
Speaker 2: it's it's gonna be like a brain for your big toe.
22:34
Speaker 3: What's gonna happen with all those shoes?
22:36
Speaker 2: They're gonna they're gonna become smat shoes. I don't get
22:39
Speaker 2: that they're gonna make them. It's your feet are gonna
22:43
Speaker 2: be able to pick themselves up and then put themselves down.
22:49
Speaker 4: But I'm interested, you have my attention eight hundred percent.
22:54
Speaker 2: I mean, here's the thing, Like, here's the part that
22:58
Speaker 2: is like kind of funny. And then I'm sure like
23:00
Speaker 2: a lot of you know, human beings go through this thought.
23:03
Speaker 2: If you've spent any time like looking at markets, you're like, oh,
23:07
Speaker 2: I spent all this time like reading this and reading
23:10
Speaker 2: that and doing this and doing that, and then some
23:12
Speaker 2: Dumbo comes along and just puts an AI on the
23:15
Speaker 2: back of a stock ticker and it goes up eight
23:17
Speaker 2: hundred percent a day. It makes you a little frustrated,
23:21
Speaker 2: Like if you're being honest about it, right, like you know,
23:25
Speaker 2: it's like, oh, like you can learn about, like you know,
23:28
Speaker 2: different strategies and here's you know, acid allocation and this,
23:31
Speaker 2: and that doesn't matter. Stocks up eight hundred percent a
23:34
Speaker 2: day because they wrote AI at the end of their
23:36
Speaker 2: name bird AI. Is that what Yeah, it should give.
23:42
Speaker 2: Let's be honest, it's a little frustrating.
23:43
Speaker 4: It should give Proponents of efficient market the idea that
23:49
Speaker 4: on average, prices reflect and I'm gonna I'm watching this
23:53
Speaker 4: a little bit, but I'm gonna go with it. Anywhere,
23:55
Speaker 4: on average, prices reflect all available information. I'm oversimplifying, and
23:58
Speaker 4: the hope is that that is somehow rational calculation that's
24:01
Speaker 4: not rationality is not part of efficient markets.
24:04
Speaker 2: So I'm no, because the participants are inherently irrational.
24:09
Speaker 4: Efficient markets just say, yeah, you know, prices impound impound
24:13
Speaker 4: available info. So if somebody expected good earnings tomorrow, the
24:17
Speaker 4: price would go up today. There's really no way to
24:19
Speaker 4: beat the market. The corol areas. You can't beat the
24:22
Speaker 4: market consistently. That's every day. Every day's price change is
24:28
Speaker 4: not predictable based on the last price change. This so
24:32
Speaker 4: efficient markets in rationality are not the same thing. But
24:35
Speaker 4: you can't have the former without the ladder. I'm stretching
24:38
Speaker 4: things a little bit here, but again, I'm just going
24:40
Speaker 4: to go with it. This does, I mean, it does
24:43
Speaker 4: sort of give you pause if you're a practitioner, and
24:46
Speaker 4: makes your question, jeez, are these things even rational and
24:49
Speaker 4: on average over long periods of time? Yeah, So, I
24:52
Speaker 4: mean it makes sense if you look at the growth
24:53
Speaker 4: of the style market and.
24:54
Speaker 2: Just all birds of the company, like hey, when they iPod,
24:57
Speaker 2: everyone was like, oh, this is like a transformative company,
24:59
Speaker 2: and then last ninety nin percent of its value over
25:01
Speaker 2: the next five years because it wasn't This could very
25:04
Speaker 2: much have the exact same outcome, or this could be
25:07
Speaker 2: you know, some crazy like maybe maybe they are really
25:10
Speaker 2: good at buying in video chips and renting them out.
25:12
Speaker 2: I don't know why they'd be better than anyone else
25:14
Speaker 2: who has greater scale than a fifty million dollar you know,
25:18
Speaker 2: offering to buy like, you know, a couple hundred of
25:21
Speaker 2: these chips. But it's like, hey, if if you guys
25:24
Speaker 2: want to shoot your shot, go for it. But why
25:28
Speaker 2: are the guys who couldn't make money making shoes gonna
25:30
Speaker 2: be able to make money renting out chips?
25:33
Speaker 4: Yeah, I mean this is a This is a good
25:35
Speaker 4: example of a bubble. Often you use that term, you
25:39
Speaker 4: qualify it, you say, well, you don't really know till
25:41
Speaker 4: after the fact. No, No, this is stupid. This is
25:42
Speaker 4: a bubble. This is people buying solely because they expect
25:45
Speaker 4: somebody to buy in the near future, buy their shares
25:48
Speaker 4: at a higher price. That's one way to think.
25:49
Speaker 1: About a bubble.
25:50
Speaker 2: This is clearly a bubble.
25:52
Speaker 4: It's probably gonna pop dramatically and it'll sink right back
25:55
Speaker 4: down to wherever this started. We said we went up
25:58
Speaker 4: eight hundred so called percent, So.
25:59
Speaker 2: That's a nine factor is it nine hundred? Now that
26:02
Speaker 2: that's a.
26:02
Speaker 4: Factor of nine. So it went from two to eighteen.
26:05
Speaker 2: Six forty two, So it just pulled back twenty percent
26:08
Speaker 2: since we started talking about it.
26:10
Speaker 3: Yeah, that's accurate six ninety now.
26:12
Speaker 4: So yeah, I mean this is this is a textbook
26:14
Speaker 4: I think bubble because there's nothing sort of rational or
26:17
Speaker 4: fundamental underpinning it.
26:19
Speaker 2: What are you gonna do with your fifty million dollars? Like,
26:22
Speaker 2: you're gonna go out these Nvidia chips, like just the
26:25
Speaker 2: chips alone, not even the servers you're talking to, like
26:27
Speaker 2: fifty grand for them. So I just want to make
26:29
Speaker 2: sure I'm not missing a decimal point. Yeah, so you're
26:32
Speaker 2: gonna buy a thousand of these chips at most, with
26:35
Speaker 2: like nothing else, and then you're gonna be able to
26:38
Speaker 2: rent them out better than all of the giant guys
26:41
Speaker 2: who've got hundreds of thousands of these Like what why
26:45
Speaker 2: are you gonna be able to acquire them more cheaply
26:47
Speaker 2: or better than anyone else?
26:49
Speaker 4: You've already asked more questions than anybody who's bought this stock.
26:52
Speaker 4: I mean, good for them, by the way, but where
26:55
Speaker 4: you know that would be the what? And I know
26:57
Speaker 4: you're not being serious, but that you're that would be
27:00
Speaker 4: thinking too hard about it.
27:01
Speaker 2: It's just kind of wild to me. It's just kind
27:05
Speaker 2: of wild to me. I want to talk about these
27:07
Speaker 2: pieces on the housing market right now. These I do
27:11
Speaker 2: think are really interesting. One from Bloomberg Opinion and inflation
27:15
Speaker 2: time bomb is hiding in home insurance. And look, I've
27:19
Speaker 2: spent some time looking at this, and yes, I do
27:22
Speaker 2: tend to agree that home insurance, as much as the
27:27
Speaker 2: price has gone up in many parts of the country,
27:30
Speaker 2: there still is a problem that is lurking out there
27:36
Speaker 2: in a couple different forms. The first is that when
27:39
Speaker 2: you look at how inflation for homeowners insurance has been measured,
27:43
Speaker 2: the piece of e is measured that it's risen thirty
27:45
Speaker 2: five percent over the last five years, but the actual
27:49
Speaker 2: rise in homeownership homeowner's insurance rates during that time is
27:53
Speaker 2: sixty two percent, So the data on the inflation side
27:56
Speaker 2: is not matching up with what's actually been observed by
27:59
Speaker 2: pay The other piece is in many parts of the country.
28:03
Speaker 2: I don't think it's done. You talk to anyone who
28:07
Speaker 2: works in this business and they will tell you there
28:09
Speaker 2: are still problems in trying to actually get insurers to
28:13
Speaker 2: cover anything near replacement cost given out cost structures have moved,
28:17
Speaker 2: and so you still have a problem where the liabilities
28:22
Speaker 2: and the assets are not matching up clearly. And so
28:24
Speaker 2: there's still probably room to run in a lot of markets,
28:27
Speaker 2: not named Florida, which is finally showing some stability in
28:30
Speaker 2: its insurance market after years of double digit price increases.
28:34
Speaker 4: Yeah, PC will event PC excuse me, and other inflation
28:37
Speaker 4: measures will eventually capture this. They just haven't done so yet.
28:41
Speaker 2: Yeap. The other piece on this, remember, ultimately, when we
28:44
Speaker 2: talk about homeown's insurance cost, it's okay, what does it
28:47
Speaker 2: cost to either repair rebuild like what was damaged? And
28:51
Speaker 2: one of the ways that builders are trying to cut
28:53
Speaker 2: costs in order to keep homes as affordable as possible
28:57
Speaker 2: for buyers, they're cutting out the expensive Think about the
29:02
Speaker 2: stuff that actually costs like a lot of money in
29:05
Speaker 2: a home. And I know everything you know has a cost,
29:08
Speaker 2: but you talk about the stuff that doesn't take up
29:10
Speaker 2: a lot of space, But does take up a lot
29:12
Speaker 2: of budget, and you're talking windows, you're talking plumbing, you're
29:17
Speaker 2: talking cabinetry, these kinds of things, and so around the
29:21
Speaker 2: margins you're seeing changes that from builders saying, Okay, how
29:27
Speaker 2: can I make this as cheap as possible. So it
29:31
Speaker 2: might be Hey, we figured out, you know, a way
29:34
Speaker 2: to get rid of two windows in this unit that
29:37
Speaker 2: we normally build. And sure it's not going to be
29:39
Speaker 2: quite as bright as it was, but we think people
29:41
Speaker 2: will be happy to buy it if they can pay
29:43
Speaker 2: less than they would have otherwise. Or hey, the kitchen,
29:47
Speaker 2: we're going to downsize this space occupied by cabinets from
29:53
Speaker 2: you know, twenty five feet of wall space down to
29:56
Speaker 2: twenty two feet because that'll help save three thousand dollars
30:00
Speaker 2: on our cost and we can pass that on to
30:03
Speaker 2: lower prices for offerings. So these are the kinds of
30:07
Speaker 2: things that you are seeing builders trying to do. But
30:13
Speaker 2: even beyond that, it's stuff that's more drastic. So DR. Horton,
30:16
Speaker 2: who is again you will get like the big publicly
30:19
Speaker 2: traded homemakers home builders, d R. Horton tends to be
30:24
Speaker 2: towards kind of the lower end of the spectrum and
30:27
Speaker 2: I'll quote here from the Wall Street Journal Warren Bran
30:31
Speaker 2: last fallbon and no frills, Dr Horton built house in Tallahassee, Florida.
30:35
Speaker 2: Unable to sell it for months, the builder cut the
30:36
Speaker 2: price by fourteen thousand, offered Brian a three point nine
30:39
Speaker 2: to nine percent mortgage rate. But the home had vinyl
30:42
Speaker 2: flooring and skippier than typical three fourths of an inch
30:45
Speaker 2: granite countertop, so again making like the counters thinner than normal.
30:49
Speaker 2: And this is the part where you get kind of ridiculous.
30:51
Speaker 2: Horton also didn't put up gutters, or install a tower
30:55
Speaker 2: towel rack in the bathroom wall, or screw a door
30:58
Speaker 2: knob in that promptly fell off after Brian moved in.
31:02
Speaker 2: Now the doorknob, okay whatever, Like not a big deal.
31:04
Speaker 2: But you just like, no, we don't need gutters. We're
31:09
Speaker 2: just gonna we're just gonna wing it. Oh you get
31:13
Speaker 2: where do I hang my towel when I take a shower?
31:17
Speaker 3: You don't the doorknob?
31:18
Speaker 2: Yeah, the doorknob, it's on the floor. Oh like, well
31:22
Speaker 2: just put it on the floor. It'll be fine. So again,
31:25
Speaker 2: like you get to a point where people will push
31:27
Speaker 2: back on these things, But for right now, it's still
31:30
Speaker 2: as people are so desperate to find some kind of
31:33
Speaker 2: housing that is relatively affordable that they're willing to put
31:37
Speaker 2: up with this stuff. Let's take a quick break. When
31:40
Speaker 2: we return Stack Roulette.
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32:51
Speaker 2: Mark. What do you got for stack roulettes?
32:53
Speaker 4: Gallup asked a random sample of Americans in the past
32:57
Speaker 4: thirty days, have you used an AI tool or chat
33:00
Speaker 4: for health related information or advice? The majority said yes,
33:06
Speaker 4: And the majority said yes because they wanted answers quickly,
33:09
Speaker 4: or wanted to be have some concern allaid, or we're
33:14
Speaker 4: doing some research prior to a visit with an actual doctor.
33:19
Speaker 4: So the upshot in Gallipasta series an additional series of
33:22
Speaker 4: questions along the same sort of thread. The upshot is
33:25
Speaker 4: an increasing number of people are turning to chat, GPT
33:29
Speaker 4: or Gemini or whatever with basic health questions, but it
33:33
Speaker 4: doesn't appear that they're at this point anyway substituting that
33:37
Speaker 4: for say, a professional opinion. So alike with many of
33:42
Speaker 4: the surveys we cover, it's unclear exactly what to make
33:44
Speaker 4: of it, except for the obvious, which is that people
33:46
Speaker 4: are turning to AI chat bots for reassurance or clarity
33:53
Speaker 4: or something. Would you do that if you had a
33:56
Speaker 4: serious question.
33:58
Speaker 2: Like it's like like I'm.
34:00
Speaker 4: Having a like you you know, I'm having a pain
34:03
Speaker 4: lower right hand size, describing symptoms or something and getting
34:06
Speaker 4: as specific as possible and then getting a sort of
34:09
Speaker 4: what could it be type opinion.
34:12
Speaker 2: Not for any like actionable thing, you know again, like
34:17
Speaker 2: even for something like that, like sure, like I'll I
34:19
Speaker 2: have put stuff in there, just like curious to see
34:22
Speaker 2: what it says. Not in terms of Okay, do I
34:26
Speaker 2: take this to my doctor? And should I like try
34:28
Speaker 2: to figure out treatments for it? Basically I say yes, no,
34:33
Speaker 2: but like sure, like how many of us go around
34:35
Speaker 2: googling symptoms? Is it like any different from that? Really? Yep? No,
34:39
Speaker 2: and naturally and here's the problem with any of this,
34:43
Speaker 2: And look, we've all been through it. The second that
34:45
Speaker 2: you get whatever it spits out back, you are immediately
34:49
Speaker 2: convinced you're dying. Like it it's no de Like you
34:53
Speaker 2: visit web md, you like, oh, I've got like stomach pain.
34:55
Speaker 2: Immediately it's like you're dying. Oh I've got chest pain,
34:59
Speaker 2: You're dying. I've got foot pain, dying. Like no one
35:03
Speaker 2: has ever gone to web md and come away being like,
35:06
Speaker 2: I feel better, I'm glad I read that. It's just
35:09
Speaker 2: like you always get attracted to the worst case possibility.
35:14
Speaker 2: Even when you have like a symptom, even if you
35:15
Speaker 2: don't google it immediately you're like, hm, I feel something
35:20
Speaker 2: in my chest. That's kind of hard. I'm a little nervous.
35:22
Speaker 2: And then like you go to your doctor, You're like
35:24
Speaker 2: that's your rib, you know. Like again, like this is
35:28
Speaker 2: just what our brains do. We always look for day.
35:30
Speaker 4: We always gravitate toward the toward the explanation that will
35:33
Speaker 4: require me do the least work or worrying.
35:35
Speaker 2: Well, yes, no, here's the thing. Most often, more often
35:38
Speaker 2: than not, we notice the worrying symptom, we get freaked
35:42
Speaker 2: out about it, but then choose not to go to
35:43
Speaker 2: the doctor anyways, Like that's what the average person tends
35:47
Speaker 2: to do. It's like, well, I guess you know, if
35:49
Speaker 2: I am dying, I probably shouldn't get it checked out.
35:53
Speaker 2: Like that's what we tend to do in a lot
35:55
Speaker 2: of cases. I want to talk about this piece from Bloomberg.
35:58
Speaker 2: It's titled late Payments Rising for buy now, Pay later
36:01
Speaker 2: survey says, first of all, you'll notice that it's a
36:04
Speaker 2: survey that's done in not any actual market data, so
36:07
Speaker 2: we don't know how accurate it is. Second, if I
36:10
Speaker 2: had a dime for every time in the last three
36:12
Speaker 2: years I heard that Americans were, you know, getting close
36:15
Speaker 2: to the breaking point on loan bills of you know,
36:19
Speaker 2: one kind or another, I'd be a very rich man.
36:23
Speaker 2: Because we see these stories published just all the time
36:25
Speaker 2: about like, oh, record credit card debt levels and auto
36:29
Speaker 2: loans are becoming more problematic. And I'm not saying that
36:32
Speaker 2: these aren't for like some people, but what I am
36:34
Speaker 2: saying is it hasn't affected the US economy in any
36:38
Speaker 2: tangible way that we can measure. It has not resulted
36:44
Speaker 2: in any kind of significant uptick in default rates or
36:47
Speaker 2: anything along those lines. And given the fact that Americans
36:52
Speaker 2: spending remains remarkably consistent, it hasn't even changed spending patterns
36:56
Speaker 2: that much. So, yes, I know that these headlines can
36:59
Speaker 2: be kind of scary. I'm not saying that like this
37:03
Speaker 2: isn't like this isn't definitively a problem, But what I
37:05
Speaker 2: am saying is, Guys, we see headlines like this every
37:09
Speaker 2: couple of weeks, quite honestly, and I just am not
37:16
Speaker 2: buying that there's anything here until we actually see changes
37:20
Speaker 2: in default rates and changes in spending which have not
37:23
Speaker 2: been present in any way, shape or form. Basically, since
37:27
Speaker 2: twenty twenty.
37:28
Speaker 4: Balances do trend up, credit usage trends up, so you
37:30
Speaker 4: would expect they're always going to be a record high
37:32
Speaker 4: until the recession hits and a lot of people default
37:36
Speaker 4: and try to or try to have their sure debt
37:38
Speaker 4: wiped out.
37:39
Speaker 2: Taking a look at markets as we head towards the
37:41
Speaker 2: top of the hour, the SMP remains up about four
37:44
Speaker 2: tenths of a percent, nasdak composes up over one percent now,
37:47
Speaker 2: but the Dow still down about half percent actually, so
37:50
Speaker 2: a divergence between your major indices. Russell two thousand also down,
37:54
Speaker 2: and so tech is leading the way. It's a lot
37:58
Speaker 2: of those big AI names. They're kind of chugging ahead.
38:01
Speaker 2: And that is what we're seeing in markets today. Quick
38:05
Speaker 2: break for the next twenty four hours, but after that,
38:09
Speaker 2: the good news we're back tomorrow. You can tune in
38:11
Speaker 2: and we'll have a great time. See you then,