Latest / The Financial Exchange Show / How to fix the home affordability crisis

Transcript

How to fix the home affordability crisis · The Financial Exchange Show

• 0:00
  Speaker 1: The Financial Exchange is produced by Money Matters Radio and
• 0:03
  Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
• 0:05
  Speaker 1: registered investment advisor. All opinions expressed are solely those of
• 0:08
  Speaker 1: the hosts, do not reflect the opinions of Armstrong Advisory
• 0:11
  Speaker 1: or anyone else. Investments can lose money. This program does
• 0:14
  Speaker 1: not offer any specific financial or investment advice. Please consult
• 0:17
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 0:20
  Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
• 0:23
  Speaker 1: this program do not endorse each other or their services.
• 0:26
  Speaker 1: Armstrong and Money Matters Radio do not compensate each other
• 0:28
  Speaker 1: for referrals and are not affiliated. This is the Financial
• 0:34
  Speaker 1: Exchange with Chuck Zada and Mark Fandetty, your exclusive look
• 0:39
  Speaker 1: at business and financial news affecting your day, your city,
• 0:43
  Speaker 1: your world. Stay informed and up to date about economic
• 0:46
  Speaker 1: and market trends, plus breaking business news every day. The
• 0:50
  Speaker 1: Financial Exchange is a proud partner of the Disabled American
• 0:53
  Speaker 1: Veterans Department of Massachusetts. Help us support our great American
• 0:57
  Speaker 1: heroes by visiting DAV five dot Boston and making a
• 1:01
  Speaker 1: donation today. This is the Financial Exchange with Chuck Zada
• 1:06
  Speaker 1: and Mark Vandetti, Chuck.
• 1:11
  Speaker 2: Mark and Tucker with you.
• 1:12
  Speaker 3: And as we kick things off here, the S and
• 1:15
  Speaker 3: P five hundreds up eleven points, the Dow is up
• 1:18
  Speaker 3: one hundred and eighty points, and.
• 1:19
  Speaker 2: The NASDAK up nine points.
• 1:21
  Speaker 3: So you got a modest move upward indices that is
• 1:26
  Speaker 3: happening at the moment here again nothing too significant, and
• 1:31
  Speaker 3: look especially into the end of the year, things tend
• 1:34
  Speaker 3: to be pretty quiet with some modest upward drift, and
• 1:37
  Speaker 3: that appears to be what is taking place today in
• 1:40
  Speaker 3: equity markets. US ten year Treasury is down one point
• 1:43
  Speaker 3: one basis points to four point oh seven seven percent,
• 1:47
  Speaker 3: the Dollar index down point thirty nine percent to ninety
• 1:50
  Speaker 3: eight and point nine oh five. Gold is up thirty
• 1:54
  Speaker 3: one ten and ounce to forty two to fifty one
• 1:56
  Speaker 3: and ninety cents, and crude oil up eighty one cents
• 2:00
  Speaker 3: barrel on West Texas Intermediate to fifty nine to forty
• 2:03
  Speaker 3: five TRIPA National avatur gas prices as expected under three
• 2:08
  Speaker 3: dollars a gallon finally at two dollars ninety nine cents
• 2:12
  Speaker 3: and nine tenths of a cent. So we'll see if
• 2:15
  Speaker 3: we can hang out under three dollars a gallon nationally
• 2:18
  Speaker 3: for a little bit here by the way, the other
• 2:21
  Speaker 3: side of this, what is happening right now, not gas prices.
• 2:25
  Speaker 3: Don't know if anyone's been paying attention there. The answer
• 2:29
  Speaker 3: is probably no, because well, no one even knows how
• 2:33
  Speaker 3: that gas is priced, quite honestly. But we did clear
• 2:37
  Speaker 3: five dollars on the not gas futures contract today, first
• 2:43
  Speaker 3: time we have cleared that mark in trying to think
• 2:47
  Speaker 3: if we got there, yeah, back in twenty twenty two,
• 2:50
  Speaker 3: we were there, and this represents relative to where we
• 2:54
  Speaker 3: were last year, about a thirty five percent jump in
• 2:59
  Speaker 3: that gas price is why this matters. Not gas, big
• 3:03
  Speaker 3: electricity supply for the United States. Very likely, if we
• 3:08
  Speaker 3: continue to see this kind of pricing moving through the winter,
• 3:12
  Speaker 3: it is something that very likely gets us towards even
• 3:16
  Speaker 3: higher electricity prices in twenty twenty six as a result.
• 3:23
  Speaker 3: So just something to be aware of on that side
• 3:27
  Speaker 3: of things. Mark, let's see, I want to kick things
• 3:32
  Speaker 3: off this hour. I didn't talk to either of you
• 3:34
  Speaker 3: about this, but I want to talk about housing for
• 3:36
  Speaker 3: next year, because I think housing in twenty twenty six
• 3:39
  Speaker 3: is going to be one of the two or three
• 3:42
  Speaker 3: most important stories in the economy, and this is something
• 3:48
  Speaker 3: that we've been talking about all year, but we're now
• 3:50
  Speaker 3: at the point where very likely in Q one of
• 3:54
  Speaker 3: next year, at the very latest, by Q two, nationally
• 3:58
  Speaker 3: average home prices are are likely to be negative year
• 4:01
  Speaker 3: over year in a number of metros. We're already seeing
• 4:05
  Speaker 3: that that is the case when you look at the
• 4:09
  Speaker 3: case shill or Home Price Index, and specifically they're twenty
• 4:12
  Speaker 3: city index that they have out there. A number of
• 4:15
  Speaker 3: those major metros are already seeing year over year declines
• 4:19
  Speaker 3: in pricing. Atlanta, is, Dallas's Denver, Vegas, Miami, Phoenix, Portland,
• 4:27
  Speaker 3: San Diego, San Francisco, Seattle, and Tampa. All those are
• 4:30
  Speaker 3: negative year over year. The remaining ones in the twenty
• 4:34
  Speaker 3: city index, Boston, Charlotte, Chicago, Cleveland, Detroit, LA, Minneapolis, New York,
• 4:39
  Speaker 3: and DC are not negative. They're still positive. Several of
• 4:44
  Speaker 3: those likely to go negative in the next month or two.
• 4:46
  Speaker 3: And you've got a few markets that are holding up better,
• 4:50
  Speaker 3: Minneapolis and Boston kind of being the two best at
• 4:54
  Speaker 3: holding up to this point in terms of year over
• 4:56
  Speaker 3: year price growth. But where we are heading next year
• 5:00
  Speaker 3: is very likely lower prices, but higher volume because of
• 5:05
  Speaker 3: those lower prices, and it means a couple different things.
• 5:08
  Speaker 3: The first is if if you're on the financial side
• 5:13
  Speaker 3: for housing, meaning you're a mortgage originator or you know,
• 5:19
  Speaker 3: someone along those lines, probably more activity next year is
• 5:22
  Speaker 3: what you would expect to see. On the other hand,
• 5:26
  Speaker 3: if you are a builder or someone on the construction side,
• 5:29
  Speaker 3: lower pricing for housing typically means you're going to struggle
• 5:34
  Speaker 3: to see you know, new construction numbers moving in the
• 5:36
  Speaker 3: right direction, and there could be some pain on that side.
• 5:39
  Speaker 3: There to kind of a tail of you know, the
• 5:41
  Speaker 3: two sides of the housing industry. But ultimately, I think
• 5:45
  Speaker 3: this is where we are heading next year, which is
• 5:49
  Speaker 3: lower volumes. But this is the first time that I'll
• 5:52
  Speaker 3: go out there and say I think that we're probably
• 5:55
  Speaker 3: I'm sorry, higher volumes, lower prices. I think we're probably
• 5:58
  Speaker 3: gonna see higher volumes next year. Maybe by again, we'll
• 6:02
  Speaker 3: have to see how this develops. But you've got a
• 6:04
  Speaker 3: potential for you know, ten to fifteen percent volume growth,
• 6:08
  Speaker 3: and that is good towards restoring an overall healthy market,
• 6:12
  Speaker 3: even if it comes at the cost of lower prices
• 6:16
  Speaker 3: for sellers in the short time.
• 6:17
  Speaker 4: That's probably the key point restoring I'll just say balance
• 6:21
  Speaker 4: in some generic sense because this I'm not a housing economist.
• 6:25
  Speaker 4: There are specialists in this area who I'm sure have
• 6:27
  Speaker 4: studied this, studied this sort of phenomenon. The phenomenon being
• 6:34
  Speaker 4: we have had unsustainably high growth in home prices over
• 6:38
  Speaker 4: the past five years, about fifty percent growth in home prices.
• 6:42
  Speaker 4: Using the case Shiller index that you talked about, I'm
• 6:44
  Speaker 4: using the national as opposed to the twenty city but
• 6:48
  Speaker 4: the results the story is similar. So fifty percent over
• 6:51
  Speaker 4: the last five is opposed to about half that rate,
• 6:54
  Speaker 4: and that's that's obviously cumulative in the five years before that.
• 6:58
  Speaker 4: That's abnormal, that's sustainable. You think about unemployment, we got
• 7:03
  Speaker 4: to three point what four percent, That is probably i'll
• 7:06
  Speaker 4: just say unnaturally low below the certainly below the rate
• 7:10
  Speaker 4: which does not put upward pressure on inflation. The economy
• 7:14
  Speaker 4: said differently, was running too hot. After COVID, we over stimulated.
• 7:19
  Speaker 4: This one very tangible result was inflation. There was also
• 7:24
  Speaker 4: inflation and asset prices, home prices, stock prices the next
• 7:29
  Speaker 4: several years. And I don't want to oversimplify here because
• 7:32
  Speaker 4: there will be shocks that come from unforeseeable events that
• 7:37
  Speaker 4: maybe a favorable shock like AI productivity enhancing the productivity
• 7:42
  Speaker 4: enhancing adoption of AI boosting growth more than was anticipated,
• 7:47
  Speaker 4: or some unfavorable shock sapping growth. The point is growth
• 7:52
  Speaker 4: was probably unsustainably high for several quarters, maybe even a
• 7:56
  Speaker 4: few years, following COVID, and what we're seeing in different
• 8:00
  Speaker 4: markets now, with the exception of stocks which are still
• 8:02
  Speaker 4: kind of on a rampage, is maybe some kind of normalization.
• 8:05
  Speaker 4: And I don't want to overstate the way the overstate
• 8:09
  Speaker 4: that notion of the economy settling down, because it never does.
• 8:14
  Speaker 4: It's fluid, its structure is always changing. But we may
• 8:17
  Speaker 4: be in for a period. I guess what I should
• 8:19
  Speaker 4: just say in quick summary is we may be in
• 8:21
  Speaker 4: for a period of disappointing relative to recent experience a
• 8:25
  Speaker 4: growth in all areas.
• 8:27
  Speaker 2: Yeah, it's look.
• 8:31
  Speaker 3: I know everyone always wants the economy to be able
• 8:33
  Speaker 3: to move only in one direction, but the fact is
• 8:37
  Speaker 3: that economies they're they're living breathing things. Because they are
• 8:41
  Speaker 3: made up of living breathing things, they can't just go
• 8:44
  Speaker 3: at one speed forever. They have these ebbs and flows
• 8:47
  Speaker 3: that happen. We call it, you know, the business cycle.
• 8:50
  Speaker 3: There's a reason why those cycles tend to work the
• 8:53
  Speaker 3: way they do. This one since twenty twenty has been
• 8:56
  Speaker 3: very different just because it had, you know, a completely
• 8:59
  Speaker 3: different launch than any other business cycle starting in March
• 9:02
  Speaker 3: of twenty twenty and kind of going from there. But ultimately,
• 9:07
  Speaker 3: you the reason why everyone is talking about specifically as
• 9:12
  Speaker 3: it relates to housing affordability being a problem is because
• 9:16
  Speaker 3: things are broken on the affordability side of things right now,
• 9:19
  Speaker 3: and there are different ways that that can happen. What
• 9:22
  Speaker 3: we're seeing right now is, look, home prices and specifically
• 9:26
  Speaker 3: monthly payments are too high relative to incomes to support
• 9:30
  Speaker 3: normal transaction volume in housing, and so housing prices either
• 9:34
  Speaker 3: have to fall in you know, nominal terms you know,
• 9:39
  Speaker 3: actually come down, or incomes have to catch up. In
• 9:42
  Speaker 3: housing you know has to stay flat while incomes grow.
• 9:45
  Speaker 3: There are two ways that you can get to normalization.
• 9:47
  Speaker 1: There.
• 9:48
  Speaker 3: It seems like we're heading towards you know, home price
• 9:51
  Speaker 3: is falling modestly. I don't think that this is anything
• 9:55
  Speaker 3: that's necessarily huge from a national perspective, but you do
• 9:58
  Speaker 3: already have individual markets that have fallen fifteen to twenty percent.
• 10:02
  Speaker 3: You take a look at southeast South sorry, Southwest Florida,
• 10:06
  Speaker 3: kind of that Fort Myers region, and you've got home
• 10:09
  Speaker 3: prices off like fifteen to twenty percent from the peak
• 10:12
  Speaker 3: there at this point already. You're not going to see
• 10:16
  Speaker 3: that in Burlington, Vermont because things didn't get nutty in
• 10:20
  Speaker 3: Burlington Vermont over the last you know, fifteen years. But yeah,
• 10:25
  Speaker 3: like you're going to have this normalization that needs to happen,
• 10:29
  Speaker 3: and this is how you have this ebb and flow
• 10:32
  Speaker 3: that happens in housing from time to time. The inverse
• 10:34
  Speaker 3: of this is what we saw in twenty ten and
• 10:36
  Speaker 3: twenty eleven, where home prices had crashed following the Great Recession,
• 10:42
  Speaker 3: and if you were lucky enough to be able to
• 10:44
  Speaker 3: scoop up deals there like you could and you were
• 10:46
  Speaker 3: able to buy very cheaply, and that in turn normalized
• 10:50
  Speaker 3: over you know, a five to seven year period where
• 10:52
  Speaker 3: I think you could realistically look at like twenty fifteen
• 10:56
  Speaker 3: through twenty eighteen and say, yeah, those are pretty normal
• 10:59
  Speaker 3: level of affordability based on historical trends and things like that.
• 11:04
  Speaker 3: So we've got this thing to sort through now, and
• 11:08
  Speaker 3: I want to take a quick break here when we
• 11:10
  Speaker 3: come back.
• 11:10
  Speaker 2: What's what's the Oh, well, maybe on the other side.
• 11:13
  Speaker 2: On the other side. Wow, what a great ease on
• 11:16
  Speaker 2: the other side. What is it? Are you having a
• 11:17
  Speaker 2: heart attack? More? When we come back quite day two.
• 11:21
  Speaker 1: We're going to Financial Exchange every day from eleven to
• 11:23
  Speaker 1: noon Non Serious XM's business radio channel one thirty two.
• 11:27
  Speaker 1: Keep it here for the latest business and financial news
• 11:30
  Speaker 1: and the trends on Wall Street. The Financial Exchange is
• 11:33
  Speaker 1: now life on Serious XM's business radio channel one thirty two.
• 11:37
  Speaker 1: Face He's the Financial Exchange Radio Network.
• 11:40
  Speaker 5: We're proud to announce that circle K is now the
• 11:43
  Speaker 5: official convenience store of the dav Department of Massachusetts at
• 11:46
  Speaker 5: circle K. Supporting those who bravely served our country isn't
• 11:50
  Speaker 5: just a commitment, it's a heartfelt mission. Circle K is
• 11:53
  Speaker 5: honored to stand with the dav Department of Massachusetts to
• 11:56
  Speaker 5: ensure that veterans receive the care and recognition they deserve.
• 12:00
  Speaker 5: You'd like to do your part, please visit DAVMA dot org.
• 12:03
  Speaker 5: Thank you for standing with circle K and the dav
• 12:05
  Speaker 5: Department of Massachusetts, and thank you veterans for all you've done.
• 12:12
  Speaker 1: The Financial Exchange streams live on YouTube. Subscribe to our
• 12:15
  Speaker 1: page and stay up to date on breaking business news.
• 12:18
  Speaker 1: All morning. Long Face is the Financial Exchange Radio network.
• 12:24
  Speaker 6: The Financial Exchange is incredibly proud to be a partner
• 12:28
  Speaker 6: of the Disabled American Veterans Department of Massachusetts. If you
• 12:31
  Speaker 6: didn't have a chance to participate in this year's race,
• 12:34
  Speaker 6: but would still like to support our great American heroes,
• 12:37
  Speaker 6: please visit DAV fivek dot Boston. Your gifts help fund
• 12:41
  Speaker 6: free rides to medical appointments for veterans and the nation's
• 12:45
  Speaker 6: first dav ledhousing initiative providing homes for single veterans and
• 12:49
  Speaker 6: veteran families. Go to DAV fivek dot Boston and make
• 12:53
  Speaker 6: your donation today. That's DAV five k dot Boston. Time
• 12:58
  Speaker 6: for trire you here on the Financial Looks Change In.
• 13:00
  Speaker 6: Today is Brendan Fraser's fifty seventh birthday. Fraser made his
• 13:06
  Speaker 6: breakthrough in nineteen ninety two with starring roles in School
• 13:09
  Speaker 6: Ties and in Ceno Man. After years in Hollywood purgatory,
• 13:14
  Speaker 6: Fraser reclaimed his stardom by winning Best Actor at the
• 13:18
  Speaker 6: Academy Awards in twenty twenty three. So Trivia question today
• 13:23
  Speaker 6: Brendan Fraser's performance in which movie earned him his Oscar
• 13:28
  Speaker 6: for Best Actor once again. Brendan Fraser's performance in which
• 13:32
  Speaker 6: movie earned him his Oscar for Best Actor. Be the
• 13:37
  Speaker 6: fourth person today to text us at six one seven
• 13:40
  Speaker 6: three six two thirteen eighty five with the correct answer
• 13:43
  Speaker 6: along with the keyword trivia, and you'll win a Financial
• 13:47
  Speaker 6: Exchange Show T shirt.
• 13:48
  Speaker 2: Once again.
• 13:49
  Speaker 6: The fourth correct response to text us to the number
• 13:52
  Speaker 6: six one seven three six two thirteen eighty five with
• 13:55
  Speaker 6: the keyword trivia will win that T shirt. See complete
• 13:58
  Speaker 6: contest rules at Financial Looks Shane Show dot com.
• 14:02
  Speaker 2: Was it George of the Jungle?
• 14:04
  Speaker 6: No, that was not twenty twenty three? No, it wasn't
• 14:06
  Speaker 6: that he's actually really good the bummy he wonted for?
• 14:10
  Speaker 2: No, No, no, okay.
• 14:12
  Speaker 3: Anyways, last segment, we were discussing housing and specifically affordability
• 14:18
  Speaker 3: of housing relative to long term trends, and Mark said, ooh,
• 14:23
  Speaker 3: as he was looking at his computer and we didn't
• 14:27
  Speaker 3: know what he was looking at.
• 14:28
  Speaker 2: It was concerned.
• 14:30
  Speaker 6: Now Cyber Monday deal extended to today.
• 14:32
  Speaker 2: Mark Y.
• 14:33
  Speaker 3: So now we're going to see Alexander of Etchkin's nine
• 14:36
  Speaker 3: hundred and fifth goal.
• 14:38
  Speaker 2: No, what do he got for us? Mark?
• 14:40
  Speaker 4: Well, one way to think about how overvalued, assuming you
• 14:43
  Speaker 4: think they are. How's the very phrase overvalued implies that
• 14:47
  Speaker 4: you think there's a fair value, or that there's been
• 14:50
  Speaker 4: some departure from I'll just call it trend growth, which
• 14:52
  Speaker 4: is a reasonable way to look at it if you
• 14:55
  Speaker 4: define trend very generously, like including the last five years,
• 15:00
  Speaker 4: which is problematic because it may be in anormally. But
• 15:02
  Speaker 4: if I include that home prices, you just, based on
• 15:06
  Speaker 4: this very simple trend fitting curve fitting, so to speak, exercise,
• 15:11
  Speaker 4: you could conclude that home prices are between ten and
• 15:13
  Speaker 4: fifteen percent too high relative to their relative to the
• 15:19
  Speaker 4: long sort of sweep of history. Actually, this database only
• 15:22
  Speaker 4: goes back to nineteen eighty nine, so it could take
• 15:25
  Speaker 4: at the pace that includes the last the growth of
• 15:28
  Speaker 4: the last five years. I'm assuming that's a normal thing,
• 15:31
  Speaker 4: which is dubious. Potentially it could take a few years
• 15:35
  Speaker 4: of flat and this is, by the way, would be
• 15:37
  Speaker 4: an orderly resolution to the excesses of the last five years.
• 15:40
  Speaker 4: If you accept that there've been excesses, could take a
• 15:43
  Speaker 4: few years of flat prices to get back to trend,
• 15:46
  Speaker 4: which is not like disastrous, it's just not what we're
• 15:49
  Speaker 4: accustomed to.
• 15:49
  Speaker 2: It's one of the past that you could take. It's yeah,
• 15:51
  Speaker 2: thank you.
• 15:52
  Speaker 3: And so I think ultimately the path that it seems
• 15:55
  Speaker 3: like we're heading down at this point. Again, things can
• 15:59
  Speaker 3: change next year, but we're likely heading towards home prices
• 16:04
  Speaker 3: falling modestly nationwide, more sharply in some specific markets. And
• 16:10
  Speaker 3: with that, here here's the implication, Like, let's I want
• 16:13
  Speaker 3: everyone right now who's listening. I want you to put
• 16:18
  Speaker 3: on your your home builder hat, which is you know,
• 16:21
  Speaker 3: sitting in the passenger seat right next to you, and
• 16:23
  Speaker 3: you're you're a homebuilder right now, and you're trying to
• 16:26
  Speaker 3: sell the average American home today four hundred thousand dollars.
• 16:31
  Speaker 3: And you say, okay, I'm selling these houses for four
• 16:33
  Speaker 3: hundred thousand dollars. Good I can make you know, if
• 16:38
  Speaker 3: after I get through all my costs, I can make
• 16:41
  Speaker 3: twenty five thousand dollars on that, you know, about a
• 16:43
  Speaker 3: six percent margin selling these homes, and and and that's fine.
• 16:49
  Speaker 3: So now let's look at this from the perspective of, Okay,
• 16:52
  Speaker 3: you're trying to sell that home, and right now you're
• 16:55
  Speaker 3: competing against an existing home that's priced at three hundred
• 16:59
  Speaker 3: and eighty it's cheaper because it's used, someone's lived in it,
• 17:03
  Speaker 3: someone's used the plumbing, they've used the electricity, the roof
• 17:07
  Speaker 3: might be a few years older, so it's five percent
• 17:10
  Speaker 3: cheaper than the new home that you're selling. Now, imagine
• 17:15
  Speaker 3: a world in which that home that you're competing against,
• 17:18
  Speaker 3: but there's still someone who's willing to pay that extra
• 17:20
  Speaker 3: twenty thousand because they want it new when they want,
• 17:23
  Speaker 3: you know what they want. But now imagine that home
• 17:26
  Speaker 3: that you're competing against falls from being worth three hundred
• 17:30
  Speaker 3: and eighty thousand on the open market to three hundred
• 17:33
  Speaker 3: and sixty thousand, again a modest four to five percent decline. There,
• 17:38
  Speaker 3: you are now trying to sell your home and the
• 17:40
  Speaker 3: person who you know previously would have bought your home says,
• 17:43
  Speaker 3: you know what, I really like this house, but it's
• 17:47
  Speaker 3: it's four hundred thousand, and there's one in that neighborhood
• 17:50
  Speaker 3: over there. I know it's ten years old, but it's
• 17:53
  Speaker 3: forty thousand dollars cheaper. It's gonna cut my monthly payment
• 17:57
  Speaker 3: from you know, two thousand a month down to eighteen
• 17:59
  Speaker 3: hundred a month. And that's a big enough difference for me.
• 18:02
  Speaker 3: I'm gonna go with that other one, and you do
• 18:04
  Speaker 3: the only thing that you can do because you've you've
• 18:07
  Speaker 3: spent your money building this house.
• 18:09
  Speaker 2: You say, you know what, fine, I'll let this go
• 18:12
  Speaker 2: for three eighty.
• 18:14
  Speaker 3: The issue is, after you've done that, you're sitting there
• 18:17
  Speaker 3: and you go, well, I was gonna have a twenty
• 18:18
  Speaker 3: five thousand dollars profit on this house. Now I just
• 18:22
  Speaker 3: made five grand building a three hundred and eighty thousand
• 18:24
  Speaker 3: dollars home. That's not really great for me. So the
• 18:29
  Speaker 3: first thing that you do is you go and you
• 18:30
  Speaker 3: start squeezing your subcontractors. You say, hey, can you do
• 18:34
  Speaker 3: anything cheaper than you know what we were just you
• 18:38
  Speaker 3: know doing, And they might have a little bit of
• 18:39
  Speaker 3: a wiggle room, but there's only so much that you
• 18:41
  Speaker 3: can do because you know, your subs have to pay
• 18:43
  Speaker 3: their people and it's just how it is. And so
• 18:46
  Speaker 3: where you eventually get to as a GC who's building
• 18:49
  Speaker 3: these homes is you say, you know what, I can't
• 18:53
  Speaker 3: have my profits eaten into by eighty percent. I'm just
• 18:57
  Speaker 3: not going to build as many homes because I can
• 19:01
  Speaker 3: still sell the four hundred thousand dollars home, but I
• 19:04
  Speaker 3: might only be able to sell two of them next
• 19:06
  Speaker 3: year because of where demand is instead of the four
• 19:09
  Speaker 3: I thought I was going to. And then the ripple
• 19:11
  Speaker 3: effect is, hey, your subs now don't need as many
• 19:14
  Speaker 3: people employed because they don't have as much work. You
• 19:17
  Speaker 3: have layoffs that happen there. And this is why housing
• 19:20
  Speaker 3: tends to be kind of that that driver of marginal
• 19:23
  Speaker 3: economic activity.
• 19:25
  Speaker 2: And this is.
• 19:25
  Speaker 3: Why I'm personally a little bit nervous about where it
• 19:28
  Speaker 3: could go next year, is because lower home prices very
• 19:32
  Speaker 3: likely means a further drop in new construction, which means
• 19:35
  Speaker 3: we start to have employment issues in the trades.
• 19:38
  Speaker 4: Is that baked into the cake given the exit what
• 19:40
  Speaker 4: I'll call the accesses the last several years, like baked
• 19:43
  Speaker 4: into any way to avoid it, any way to avoid
• 19:45
  Speaker 4: this outcome that you're referring to.
• 19:47
  Speaker 2: Yes, maybe we should talk about that on the other side,
• 19:50
  Speaker 2: another great teast that.
• 19:52
  Speaker 1: Yeah.
• 19:53
  Speaker 3: Today, let's take a quick break, and when we return,
• 19:58
  Speaker 3: mister T's is back.
• 20:10
  Speaker 1: Bringing the latest financial news straight to your radio. Every day.
• 20:14
  Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
• 20:20
  Speaker 1: Time Now for Wall Street watch a complete look at
• 20:23
  Speaker 1: what's moving market so far today. Right here on the
• 20:26
  Speaker 1: Financial Exchange Radio Network.
• 20:29
  Speaker 6: Markets A trading modestly hires. Wall Street reacts to the
• 20:33
  Speaker 6: ADP private payroll report for November, which fell thirty two thousand,
• 20:37
  Speaker 6: worse than forecasts of an increase of ten thousand. At
• 20:41
  Speaker 6: the moment, the Dow is up by just over half
• 20:43
  Speaker 6: a percent, s and P five hundred is up a
• 20:45
  Speaker 6: quarter percent, NASDAC up a tenth of a percent, Russell
• 20:49
  Speaker 6: two thousand is up just over one percent higher ten Youre,
• 20:51
  Speaker 6: treasure Field is flat at four point zero seven nine percent,
• 20:55
  Speaker 6: and crude oil up one on a third percent, trading
• 20:59
  Speaker 6: at fifty nine dollars forty two cents a barrel. Macy's
• 21:03
  Speaker 6: posted its highest quarterly sales in more than three years,
• 21:05
  Speaker 6: says the department store chain's turnaround strategy showed signs of momentum. Furthermore,
• 21:10
  Speaker 6: the company raised its full year sales in earnings outlook
• 21:13
  Speaker 6: for a second consecutive quarter. However, Macy's outlook anticipates challenges
• 21:18
  Speaker 6: in the holiday quarter, including selective spending by consumers and
• 21:22
  Speaker 6: higher TIFFs. Macy stock is edging higher. Meanwhile, shares an
• 21:26
  Speaker 6: American Eagle surging fourteen percent after the retailer beat third
• 21:30
  Speaker 6: quarter earnings and revenue forecasts, and also raised its same
• 21:33
  Speaker 6: store sales guidance as it is seeing a strong start
• 21:37
  Speaker 6: to the holiday shopping period elsewhere. Microsoft down by two
• 21:41
  Speaker 6: percent after The Information reported that the company has lowered
• 21:45
  Speaker 6: quotas for AI software as sales after many of its
• 21:48
  Speaker 6: salespeople missed growth goals in the last fiscal year, and
• 21:53
  Speaker 6: chipmaker Marvel Technology agreed to by Celestial Ai and three
• 21:57
  Speaker 6: point twenty five billion dollar deal. Arvel also posted robust
• 22:01
  Speaker 6: quarterly results in forecasts, sending shares jumping over four percent higher.
• 22:07
  Speaker 6: I'm Tucker Silva and that is Wall Street Watch and
• 22:09
  Speaker 6: in the previous segment we asked her the question Brendan
• 22:12
  Speaker 6: Fraser's performance in which movie earned him his Oscar for
• 22:17
  Speaker 6: Best Actor? That would be the wail. Nick and Weston
• 22:21
  Speaker 6: mass Is are winner today taking on the Financial Eks
• 22:24
  Speaker 6: Shane Show t shirt. Congrats to Nick and we played
• 22:27
  Speaker 6: trivia every day here on the Financial Looks Shane. See
• 22:30
  Speaker 6: complete contest rules at Financial Exchange Show dot com.
• 22:33
  Speaker 2: Mark, what was the latest thing that you teased last segment?
• 22:37
  Speaker 2: What were we talking about? I forgot?
• 22:40
  Speaker 6: Oh jeez, I'm asking you no, no, because Mark forgot too.
• 22:45
  Speaker 4: Sorry I only remember how related making noises.
• 22:49
  Speaker 2: No, it wasn't a noise last time, Tucker. Do you
• 22:53
  Speaker 2: remember what it was?
• 22:54
  Speaker 6: I don't know because he did the old tongue roll
• 22:57
  Speaker 6: thing that I can't do.
• 22:59
  Speaker 4: It's like all that's all we all remember is but
• 23:03
  Speaker 4: it was something that a light went off in your
• 23:06
  Speaker 4: head and you're like, oh, I got something else.
• 23:08
  Speaker 2: Does Ben remember?
• 23:10
  Speaker 6: No? I don't think he does.
• 23:12
  Speaker 2: Only the only person who should fix how to fix
• 23:19
  Speaker 2: the problem with home builders doesn't.
• 23:21
  Speaker 4: I was here for that.
• 23:22
  Speaker 2: I don't think we talked about that either.
• 23:24
  Speaker 6: Okay, So Mark asked the question is it already baked in?
• 23:27
  Speaker 6: And is there still time any way to this fate
• 23:31
  Speaker 6: the home building? That question to you, Chuck, is there
• 23:33
  Speaker 6: any way to avoid this fate?
• 23:35
  Speaker 2: And then that is that's what we were going to talk.
• 23:36
  Speaker 4: Has the die been cast? Yeah, it's not actually that
• 23:39
  Speaker 4: exciting in.
• 23:39
  Speaker 2: Retrospect, but no, it sounds exciting.
• 23:41
  Speaker 1: Okay.
• 23:42
  Speaker 4: You you were pointing out that a lot of that
• 23:44
  Speaker 4: quick summary the die is cast.
• 23:47
  Speaker 2: So it's going to be.
• 23:50
  Speaker 3: It's it's tough to avoid because here's what's happening is
• 23:53
  Speaker 3: as home prices start to go down, the first thing
• 23:56
  Speaker 3: that you get is a large your number of potential
• 24:01
  Speaker 3: sellers saying one of two things, No I'm not going
• 24:05
  Speaker 3: to sell, I'm going to wait and see if it
• 24:07
  Speaker 3: gets better, or people pulling listings off the market because
• 24:10
  Speaker 3: they say, no, I'm not going to take less than
• 24:12
  Speaker 3: I think my home is worth. Eventually you get to
• 24:16
  Speaker 3: a point where those non forced sellers become forced sellers
• 24:21
  Speaker 3: where instead of saying, hey, we'd like to sell, but
• 24:24
  Speaker 3: only if we can get X, Y or z, eventually
• 24:27
  Speaker 3: they become, hey, you know what, it's time for us
• 24:30
  Speaker 3: to move because of these reasons, we gotta list the place.
• 24:33
  Speaker 3: And that's when you see inventory continue to build it
• 24:37
  Speaker 3: a faster clip, which means lower prices again needed to
• 24:40
  Speaker 3: clear that inventory. So I think that there was a
• 24:46
  Speaker 3: path where you could have gone through the next three
• 24:50
  Speaker 3: to four years and just said, yeah, maybe home prices just.
• 24:52
  Speaker 2: Don't go anywhere that would be ideal, and.
• 24:55
  Speaker 3: Wages continue to grow at two to four percent a year,
• 25:00
  Speaker 3: and you normalize that ten to fifteen percent gap in
• 25:04
  Speaker 3: historical affordability through wages growing while home prices don't. The
• 25:09
  Speaker 3: path that it looks like we are heading down now
• 25:12
  Speaker 3: that we are seeing, you know, continued inventory growth year
• 25:17
  Speaker 3: over year. At least right now, we're seeing inventory about
• 25:20
  Speaker 3: sixteen percent above last year and only about five percent
• 25:23
  Speaker 3: below twenty nineteen levels for this time in the year.
• 25:27
  Speaker 3: You're seeing inventory continuing to grow on a relative basis,
• 25:31
  Speaker 3: and with that you are seeing an uptick in new
• 25:34
  Speaker 3: mortgage applications as well. But if you look at the
• 25:38
  Speaker 3: size of the mortgage applications, it's declining, which also matches
• 25:43
  Speaker 3: the decline that we are seeing in price per square
• 25:45
  Speaker 3: foot four listings. So basically, what we are getting the
• 25:49
  Speaker 3: message that the market is sending us, and again this
• 25:52
  Speaker 3: is just you're interpreting what the data is saying. The
• 25:55
  Speaker 3: market is saying, Hey, people are more willing to list
• 25:59
  Speaker 3: now and take lower prices on a square per square
• 26:03
  Speaker 3: foot basis than a year ago rather than trying to
• 26:07
  Speaker 3: wait for better pricing in the future to sell their home.
• 26:11
  Speaker 3: And as long as more people are continuing to do that,
• 26:14
  Speaker 3: home prices are going to continue to decline in those markets,
• 26:18
  Speaker 3: and price gains and other markets are likely to become
• 26:21
  Speaker 3: more muted and eventually start declining as well. That's kind
• 26:26
  Speaker 3: of where we're heading in terms of is like our
• 26:31
  Speaker 3: equity markets pricing This in I don't think they are now.
• 26:34
  Speaker 4: They think the Fed's gonna save the day. They think
• 26:36
  Speaker 4: we have a demand problem that they can fix.
• 26:38
  Speaker 3: And we do have a demand problem, it's just not
• 26:40
  Speaker 3: one that the Fed can fix without the level of
• 26:43
  Speaker 3: rate cuts needed that are typically signaled by a recession.
• 26:49
  Speaker 2: You know, It's like, I see what you're saying.
• 26:50
  Speaker 3: Yeah, if if you get FED funds rate down to
• 26:54
  Speaker 3: one and a half to two percent, sure that probably
• 26:57
  Speaker 3: takes the long end down far enough that mortgage rates
• 27:00
  Speaker 3: come down in the housing mar.
• 27:01
  Speaker 4: Certain prices moving versely to that, shouldn't that send price
• 27:03
  Speaker 4: of skyrocketing again? Isn't that precisely the predicament. Isn't that
• 27:07
  Speaker 4: precisely how we got into this predicament.
• 27:09
  Speaker 3: That's assuming that you think that we're at equilibrium for
• 27:11
  Speaker 3: pricing now, which I don't think we are. So, like,
• 27:13
  Speaker 3: let's let's play out the string here. Just as an example.
• 27:16
  Speaker 3: Let's say that you have prices that are fifteen percent.
• 27:20
  Speaker 2: Above where they should be ten.
• 27:22
  Speaker 3: Your treasury is at four right now, thirty year fixed
• 27:26
  Speaker 3: rate mortgages at six and a third. If you get
• 27:29
  Speaker 3: a recession, the first thing that happens, demand's going to
• 27:33
  Speaker 3: come down further because demand does come down in a
• 27:35
  Speaker 3: recession four housing, so that's going to widen that afford
• 27:38
  Speaker 3: it like that affordability gap for what you need is
• 27:41
  Speaker 3: going to end up widening there. The other piece is
• 27:44
  Speaker 3: that the long end, even if the FED cuts by
• 27:47
  Speaker 3: let's say they cut by another one hundred and fifty
• 27:49
  Speaker 3: BIPs and they get us down to two and a
• 27:51
  Speaker 3: half on the on the FED funds rate, tenures not
• 27:54
  Speaker 3: coming down by that much, you know, the tenures not
• 27:57
  Speaker 3: coming down.
• 27:58
  Speaker 2: To two one for one.
• 28:00
  Speaker 3: So maybe you pick up like five to seven percent
• 28:03
  Speaker 3: on the affordability gap there, but prices still have to
• 28:05
  Speaker 3: fall another seven to ten percent from there to close
• 28:09
  Speaker 3: the rest of the gap. So again like it's it's
• 28:12
  Speaker 3: a really hard path for me to see anything other
• 28:17
  Speaker 3: now than price. The combination of pricing and wages probably
• 28:22
  Speaker 3: over a two year period now where wages, you know,
• 28:24
  Speaker 3: they'll go five percent, prices nationally it'll come down eight
• 28:27
  Speaker 3: to ten. That kind of gets you where you need
• 28:29
  Speaker 3: to be, and housing is ready to crank in twenty
• 28:33
  Speaker 3: twenty eight, again from a construction perspective, but like twenty
• 28:37
  Speaker 3: six and twenty seven might be really hard for home builders.
• 28:43
  Speaker 4: They should be. I hate to say it, they should
• 28:45
  Speaker 4: be if you think there's validity to looking at the
• 28:48
  Speaker 4: long term trend and the departure from long term trend
• 28:51
  Speaker 4: that the last five years resulted in, and assuming that
• 28:55
  Speaker 4: GAP's got to close your view. Maybe not you, but
• 28:58
  Speaker 4: people listening well, its structs the economy has changed. I
• 29:01
  Speaker 4: think that housing should continue to grow at I'm gonna
• 29:06
  Speaker 4: say four percent, which includes the past five years, so
• 29:08
  Speaker 4: that might be. That's conservative, that's fair. I think four
• 29:11
  Speaker 4: to seven percent for housing is fair based on my
• 29:14
  Speaker 4: little model, my mental model for the structure of the economy,
• 29:18
  Speaker 4: in which case you don't need a dramatic pullback.
• 29:21
  Speaker 2: I just don't know.
• 29:23
  Speaker 6: When the holidays roll in and the cold settles over
• 29:25
  Speaker 6: New England, find your escape in the US Virgin Islands.
• 29:29
  Speaker 6: Trade the freezing tempts and gray skies for warm sun,
• 29:32
  Speaker 6: turquoise water, and that easy island energy you can feel
• 29:36
  Speaker 6: the second you land. This December through early January, Saint
• 29:40
  Speaker 6: Croix ignites with the Krucian Christmas Festival, a celebration over
• 29:44
  Speaker 6: a century old. Frederick Stead comes alive with colorful parades,
• 29:49
  Speaker 6: live reggae in streets filled with the sites and flavors
• 29:53
  Speaker 6: of real Caribbean culture. It's the holiday season with the
• 29:56
  Speaker 6: tropical beats from there. Explores Saint Thomas with its duty
• 30:00
  Speaker 6: free shopping in the legendary views at Megan's Bay, or
• 30:03
  Speaker 6: slow down on Saint John, where quiet beaches and National
• 30:06
  Speaker 6: Park trails make every day feel like your own private adventure.
• 30:11
  Speaker 6: Getting there could not be easier. No passport is needed,
• 30:14
  Speaker 6: and there's no money to exchange. Just pack light and
• 30:18
  Speaker 6: step out of the cold into pure sunshine. This holiday season,
• 30:22
  Speaker 6: let yourself fall naturally in rhythm with the heartbeat of
• 30:25
  Speaker 6: the islands. Visit America's Caribbean paradise, the US Virgin Islands.
• 30:29
  Speaker 6: Go to visit USVI dot com. Book your trip today.
• 30:33
  Speaker 6: That's visit USVI dot com.
• 30:37
  Speaker 3: Let's see, we got a few other things to talk
• 30:40
  Speaker 3: about here. Anthropic one of the companies that is on
• 30:46
  Speaker 3: the forefront of large language models artificial intelligence generative AIRE.
• 30:53
  Speaker 3: They've apparently hired a law firm to begin working on
• 30:57
  Speaker 3: a potential IPO for next year them and open AI,
• 31:01
  Speaker 3: potentially both ipoing in twenty six. Is something that is
• 31:06
  Speaker 3: interesting from a number of different perspectives. One that I
• 31:10
  Speaker 3: look at it would be really cool to be able
• 31:13
  Speaker 3: to actually see their financials on a regular basis and see,
• 31:16
  Speaker 3: you know, what's actually going on in terms of revenue
• 31:20
  Speaker 3: and expenses, you know, aside from these you know, random
• 31:24
  Speaker 3: reports that we get out from private sales and things
• 31:26
  Speaker 3: like that.
• 31:27
  Speaker 2: So that'd be kind of interesting. The other thing that I've.
• 31:29
  Speaker 3: Touched on a few different occasions, sometimes when you get
• 31:35
  Speaker 3: like the big white whale in a specific industry that
• 31:38
  Speaker 3: goes through an IPO, it can represent a local top
• 31:42
  Speaker 3: for that industry. We covered it back in twenty twenty
• 31:44
  Speaker 3: one when Coinbase and Robinhood both went public and it
• 31:50
  Speaker 3: was kind of the top of the meme stock and crypto.
• 31:52
  Speaker 2: Trading, you know era at that point.
• 31:55
  Speaker 3: You know, twenty twenty two was very bad for both
• 31:57
  Speaker 3: of those businesses, and then they've subsequently recovered. We've also
• 32:01
  Speaker 3: had earlier this year, Core we've went public, had a
• 32:05
  Speaker 3: ton of trouble, you know, kind of getting things off
• 32:07
  Speaker 3: the ground, and we saw kind of other AI companies
• 32:10
  Speaker 3: really struggling heading into April before you got a flurry
• 32:14
  Speaker 3: of announcements that change the game heading into the summer then.
• 32:18
  Speaker 3: And so this is kind of interesting to me in that,
• 32:21
  Speaker 3: you know, it always just raised the question for me,
• 32:23
  Speaker 3: could it represent a local top for that, you know,
• 32:25
  Speaker 3: particular industry. Maybe I don't know, but it's something that's
• 32:29
  Speaker 3: always on my mind when we hear about these big idos.
• 32:32
  Speaker 4: Yeah, almost by definition, it would kind of have to.
• 32:35
  Speaker 4: They want to strike while the iron is hot, and
• 32:37
  Speaker 4: they think it won't always be this hot. For personal reasons,
• 32:39
  Speaker 4: they want to cash out.
• 32:40
  Speaker 2: There's a reason why they want share.
• 32:41
  Speaker 4: Valued at pennies on the public dollar, on the public
• 32:44
  Speaker 4: valuation dollar. So you're highly motivated. And their people presumably
• 32:49
  Speaker 4: have all been paid, not in substantially anyway, paid in stock.
• 32:53
  Speaker 4: So this is their opportunity to cash in and earn
• 32:58
  Speaker 4: earn money that will keep their family comfortable for generations.
• 33:01
  Speaker 2: I guess just look at.
• 33:02
  Speaker 1: It that way.
• 33:03
  Speaker 4: The other I guess they're voracious appetite for a need
• 33:07
  Speaker 4: for capital. That's why you go public. It's not all cynical,
• 33:12
  Speaker 4: it's not all about cashing and it's sure raising money.
• 33:15
  Speaker 2: Just take a quick break when we come back.
• 33:17
  Speaker 1: Stack rulets find daily interviews and full shows of the
• 33:21
  Speaker 1: financial exchange on our YouTube page. Subscribe to our page
• 33:25
  Speaker 1: and get caught up on anything and everything you might
• 33:27
  Speaker 1: have missed. This is the Financial Exchange Radio Network. The
• 33:33
  Speaker 1: Financial Exchange is life on Series XM's Business radio channel
• 33:36
  Speaker 1: one thirty two weekdays from eleven to noon. Get the
• 33:39
  Speaker 1: latest business and financial news from across the country and
• 33:42
  Speaker 1: around the world, and keep up to date on how
• 33:45
  Speaker 1: it might affect your wallet. That's the Financial Exchange weekdays
• 33:49
  Speaker 1: from eleven to noon on Series XM's Business Radio Channel
• 33:52
  Speaker 1: one thirty two. This is the Financial Exchange Radio Network.
• 33:59
  Speaker 6: This segment of the Financial Exchange is powered by circle
• 34:02
  Speaker 6: K Convenience Stores. Circle K is now the official convenience
• 34:06
  Speaker 6: store of the dav Department of Massachusetts. On behalf of
• 34:10
  Speaker 6: circle K. Thank you veterans for all you've done, and
• 34:14
  Speaker 6: remember you can watch the Financial Exchange Show live every
• 34:17
  Speaker 6: day on YouTube. We'll have breaking business news and all
• 34:20
  Speaker 6: of our content is also archived, so if you want
• 34:23
  Speaker 6: to go back and see an interview or discussion about
• 34:25
  Speaker 6: a specific topic, it's all there with the click of
• 34:28
  Speaker 6: a button. Just search the Financial Exchange on YouTube and
• 34:32
  Speaker 6: hit that subscribe button.
• 34:35
  Speaker 2: Mark what do you got for me for stack Roulette?
• 34:37
  Speaker 4: Kind of a funny story, maybe a little bit alarming too.
• 34:40
  Speaker 4: I don't know. Waimo's from the Wall Street Journal. Weimo's
• 34:42
  Speaker 4: self driving cars are suddenly behaving like cabbies. So apparently
• 34:47
  Speaker 4: I've never ridden in a Weaimo. You guys autonomous? No, OK,
• 34:51
  Speaker 4: So these are self driving taxis for those that don't know.
• 34:54
  Speaker 4: They're known for being cautious. They'll sit behind a driver
• 34:58
  Speaker 4: that's stopped with their hazards on. They won't pass when
• 35:02
  Speaker 4: most of us probably would. That kind of stuff. They'll
• 35:05
  Speaker 4: stop like at a yellow light. Most of us might
• 35:09
  Speaker 4: might kind of assertively drive through a yellow light, so
• 35:12
  Speaker 4: kind of annoying stuff if you've hired hailed gab maybe
• 35:14
  Speaker 4: or in a hurry. So they're changing their programming to
• 35:18
  Speaker 4: make them more quote human like in their driving behavior,
• 35:20
  Speaker 4: including more aggressive maneuvers, rushing pedestrians along. I don't know
• 35:25
  Speaker 4: exactly how you do that, Maybe by not slowing down
• 35:28
  Speaker 4: and occasionally bending traffic rules, which is I guess a
• 35:31
  Speaker 4: euphemism because they're actually making illegal U turns. Many people
• 35:34
  Speaker 4: are documenting this, recording this behavior. So next step in
• 35:38
  Speaker 4: the evolution of self driving cars, making them more like us, but.
• 35:43
  Speaker 2: Hopefully in ways that don't cause problems.
• 35:45
  Speaker 3: Because again, here's the thing that I come back to
• 35:48
  Speaker 3: on self driving vehicles. I'm both pro and anti self
• 35:53
  Speaker 3: driving vehicle, which is why I think I'm generally in
• 35:56
  Speaker 3: the right spot. We do need to get past, you know,
• 36:02
  Speaker 3: commenting on every last thing that a self driving car does,
• 36:05
  Speaker 3: because if we're gonna be intellectually honest with ourselves, we
• 36:09
  Speaker 3: don't do that when we're talking about how humans drive.
• 36:12
  Speaker 3: Of course, we never report on, you know, the one
• 36:14
  Speaker 3: hundred deaths that happen every day from cars driving around
• 36:19
  Speaker 3: the United States, which which happens again, we could do
• 36:21
  Speaker 3: an entire show on. It would be horribly depressing because
• 36:25
  Speaker 3: all of these people should still be alive with self
• 36:29
  Speaker 3: driving vehicles, provided that you have, you know, proper disclosures
• 36:33
  Speaker 3: about you know, how they're operating, what their safety record is,
• 36:36
  Speaker 3: and that you know you have you know, the right
• 36:38
  Speaker 3: information out there. Look way Moo for you know, any
• 36:43
  Speaker 3: concerns that people have about him, has never been involved
• 36:47
  Speaker 3: in an at fault fatality, like never, and they've they've
• 36:50
  Speaker 3: driven millions of minds pretty miraculate, which is pretty amazing.
• 36:54
  Speaker 2: You know.
• 36:55
  Speaker 3: So again this is not to say like every self
• 36:58
  Speaker 3: driving vehicle is good, but hey, they've they've got a
• 37:01
  Speaker 3: really good safety record and they're making these changes to
• 37:05
  Speaker 3: make the driving experience more like what you normally get
• 37:10
  Speaker 3: and to save time. Like the example, one of the
• 37:12
  Speaker 3: examples they give is like, hey, if you're on a
• 37:13
  Speaker 3: two lane road with double yellow lines and there's a
• 37:16
  Speaker 3: big Amazon truck stopped in front of you, does the
• 37:19
  Speaker 3: human driver just stop and wait for the Amazon driver
• 37:22
  Speaker 3: to get out and no, they look see if anyone's coming,
• 37:24
  Speaker 3: and then.
• 37:25
  Speaker 2: You pull around on the double yellow line road.
• 37:28
  Speaker 3: WEIMO is now starting to allow its vehicles to do
• 37:31
  Speaker 3: similar things. So again, I think that provided that we
• 37:37
  Speaker 3: you know, do the research that's needed and have you know,
• 37:39
  Speaker 3: appropriate controls in place and accurate data that's coming out
• 37:43
  Speaker 3: about you know, any accidents or issues that occur. Yeah,
• 37:47
  Speaker 3: let's continue to develop this. It is going to potentially
• 37:51
  Speaker 3: impact employment, like we have to know that as well.
• 37:55
  Speaker 3: But remember productivity growth comes from being able to do
• 38:00
  Speaker 3: more with fewer inputs, and typically those inputs are labor.
• 38:03
  Speaker 3: Look at farming in the United States. The number of
• 38:06
  Speaker 3: pharmacies drop by eighty five percent in the last hundred years,
• 38:09
  Speaker 3: and yet yields are up so much that we are
• 38:11
  Speaker 3: continuing to be able to feed the population. So we
• 38:14
  Speaker 3: have to you know, work to try to support people
• 38:16
  Speaker 3: who might be displaced by automation where it comes. And
• 38:20
  Speaker 3: quite honestly, I think a lot of us are unfortunately
• 38:23
  Speaker 3: in a position where we may be displaced over the
• 38:25
  Speaker 3: next five to ten years if these technologies pan out
• 38:27
  Speaker 3: the way some people think they can be. So we're
• 38:30
  Speaker 3: all gonna have to kind of support each other on
• 38:32
  Speaker 3: this stuff. But I do like to see, you know,
• 38:37
  Speaker 3: that we can, you know, maybe get there in some
• 38:39
  Speaker 3: of these areas too. Market's broadly positive now, with the
• 38:42
  Speaker 3: Dow and S and P in the green actually negative
• 38:45
  Speaker 3: and Nasdaq just turn negative again. But we'll be back
• 38:49
  Speaker 3: tomorrow with more financial exchange