Latest / The Financial Exchange Show / Want to know where the market is going? Don't trust any forecaster.

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Want to know where the market is going? Don't trust any forecaster. · The Financial Exchange Show

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Speaker 2: Chuck Mike Tucker with you here, and it's a Friday
1:16
Speaker 2: on the financial exchange, and markets are in the green again.
1:21
Speaker 2: So even though we started off the week with a
1:23
Speaker 2: few down days, I hope you didn't let that get
1:26
Speaker 2: you all, gulom, because the Dow Jones Industrial average is
1:30
Speaker 2: now two hundred and seventy eight points, the S and
1:32
Speaker 2: P is up fifty one in the nasdak can positive
1:34
Speaker 2: two hundred and twenty two. So we got anywhere from
1:36
Speaker 2: a half percent to a one percent rally taking place
1:39
Speaker 2: across your three major US indices. Even that cute little
1:42
Speaker 2: Russell two thousand here, boy, how you doing? That's up
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Speaker 2: seventeen points, are about two thirds of a percent, and
1:48
Speaker 2: so even small caps getting in on the action as
1:52
Speaker 2: we go through the day. Here taking a look at
1:55
Speaker 2: other markets, the US ten year Treasury up one point
1:58
Speaker 2: five basis points to four point one three to one percent,
2:01
Speaker 2: the Dollar index up zero point two seven percent to
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Speaker 2: ninety eight point three five, and gold up thirteen dollars
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Speaker 2: announced to forty three seventy seven and fifty cents. Crude
2:12
Speaker 2: oil is up sixteen cents a barrel to fifty six
2:16
Speaker 2: point thirty one. The triple A National avatur gas prices
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Speaker 2: down again another one point five cents to two eighty
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Speaker 2: eight and one tenth. That's a one and a half
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Speaker 2: cent drop in a day, and that is coming at
2:29
Speaker 2: a very opportune time for anyone who might be getting
2:32
Speaker 2: on the road today, Tomorrow, Sunday, Monday, Tuesday, Wednesday and
2:36
Speaker 2: route to a Christmas location. So there's that, and that
2:41
Speaker 2: is what is moving in markets today. Peace in the
2:45
Speaker 2: New York Times. Want to know where the market is going?
2:49
Speaker 2: Don't trust this or any forecast?
2:52
Speaker 3: Well, good news, because nonetheless, every bank out there is
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Speaker 3: putting out their forecast of where the markets are gonna
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Speaker 3: go next year. So I had them and I summarize
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Speaker 3: them for me.
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Speaker 2: Do we know that it accurately did that?
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Speaker 3: No, So we don't know that because I successfully did it,
3:09
Speaker 3: and we definitely Well, here's the one thing we do
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Speaker 3: know is that they're gonna be all over the place,
3:13
Speaker 3: that none of them are gonna be right, or one
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Speaker 3: of them might be, you know, Directionly.
3:17
Speaker 2: I gotta say I've even now started to find more
3:20
Speaker 2: factual inaccuracies. When I was looking at something I was
3:24
Speaker 2: trying to just get like detail about a gifting topic,
3:28
Speaker 2: and I wanted more detail on it, and I was asking.
3:31
Speaker 2: I forget which one it was, but it was either
3:33
Speaker 2: Gemini or chat GPT, and I asked it a question
3:36
Speaker 2: about gifting and it told me in no uncertain terms
3:38
Speaker 2: that the gifting exclusion limit for next year was eighteen
3:42
Speaker 2: thousand dollars. And again I know this just because I
3:46
Speaker 2: look at this stuff regularly. I'm like, no, it's nineteen thousand.
3:48
Speaker 2: It was like, oh, sorry, I don't know why I
3:50
Speaker 2: said that. And I'm like, well, you're supposed to not
3:54
Speaker 2: do those things, you know, So.
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Speaker 3: So I'm not actually gonna go bank by bank because
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Speaker 3: to your point, I have no idea it might be
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Speaker 3: wrong successfully quoted all this, and then the sources that
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Speaker 3: they use, who know if they successfully did it. But
4:06
Speaker 3: according to the summary, banks from Bank of America to
4:10
Speaker 3: Deutsche to Morgan Stanley are estimating returns for the S
4:13
Speaker 3: and P five hundred that imply anywhere between four and
4:17
Speaker 3: seventeen percent from where we are right now. What do
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Speaker 3: I do with that? Flush it down the toilet, I
4:25
Speaker 3: think is the colloquial term for it.
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Speaker 2: Because here's the thing. The S and P five hundred
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Speaker 2: as of you know. Now, ish again you take a
4:34
Speaker 2: look at where it is year to date and you say, okay,
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Speaker 2: in price terms, not total return, it's up about sixteen percent. Oh,
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Speaker 2: it's been kind of a wild ride to get that.
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Speaker 3: Sixteen Yeah, we were down twenty percent in April on
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Speaker 3: April seventh of this year.
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Speaker 2: So again, if you are trying to tell investors, hey,
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Speaker 2: here's where we're going to be at the end of
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Speaker 2: next year, the path kind of matters. Now I've made
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Speaker 2: the point. I don't want banks to be giving one
5:06
Speaker 2: year SMP five hundred targets. I think they should be
5:09
Speaker 2: giving ten to twenty year targets. First of all, quite honestly,
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Speaker 2: the numbers are gonna be more mind blowing. If they
5:14
Speaker 2: do that. People will be like, well you think the
5:16
Speaker 2: S and P five hundred is gonna be at fourteen thousand. Well, yeah,
5:20
Speaker 2: if it makes seven percent a year for the next
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Speaker 2: ten years, will be pretty darn close to that. Yeah,
5:24
Speaker 2: you know, like it will. That's the power of compounding.
5:26
Speaker 2: It's why Einstein called it the eighth wonder of the world.
5:30
Speaker 2: But also investors in stocks, they're two different type of
5:35
Speaker 2: people that buy stocks. Investors and traders, investors buy for
5:39
Speaker 2: the long term. Why does it matter to them where
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Speaker 2: the S and P is going to be at the
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Speaker 2: end of next year? And traders do Traders care where
5:46
Speaker 2: it's going to be the end of next year. No,
5:48
Speaker 2: they care about next week, next minute, next hour, depending
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Speaker 2: on what they do.
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Speaker 3: So it's useless for everybody.
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Speaker 2: No trader just goes out and says, well, Morgan Stanley said,
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Speaker 2: the S and P is going to be at this
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Speaker 2: so I'm just gonna buy it for the next year.
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Speaker 2: It's an exercise in getting us to talk about it,
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Speaker 2: which they succeed in. But I quite honestly, I think
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Speaker 2: it is one of the more useless things in financial
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Speaker 2: media is all of the talk about here's my price
6:14
Speaker 2: target for the end of next year, Like, okay, great,
6:17
Speaker 2: you took the S and P added ten percent, which is,
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Speaker 2: you know, kind of in the range of the normal
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Speaker 2: annual growth rate of earnings plus a couple points, and
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Speaker 2: then you had just one to two percent for factors.
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Speaker 3: I'm genuinely trying to think of, like how you would
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Speaker 3: make the most money if you definitively knew where the
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Speaker 3: D S and P five hundred would be on December
6:34
Speaker 3: thirty first or twenty twenty six leverage. You would use
6:37
Speaker 3: some leverage, but lots of it. You could get screwed
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Speaker 3: out of leverage.
6:40
Speaker 2: If if I knew where the market was going to
6:43
Speaker 2: be a year from now, yeah you could just if
6:45
Speaker 2: I knew exactly where it would be, Yes, I could
6:47
Speaker 2: use a ton of leverage, and that would be like
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Speaker 2: the last year in markets, because it'd be like, hey
6:52
Speaker 2: made all the money, none of you have any left.
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Speaker 3: Regardless of the path. You could make some good money there,
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Speaker 3: but the fact of the matter is nobody knows where
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Speaker 3: it is. No reason wouldn't have to do that.
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Speaker 2: And that's why generally, like huge amounts of leverage can
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Speaker 2: be dangerous because if the market moves against you, you
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Speaker 2: blow up.
7:07
Speaker 3: Right. That path pretty important because if that end point
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Speaker 3: includes a forty percent draw down in between, which is
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Speaker 3: exceedingly rare.
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Speaker 2: But you're two and a half times levered, you now
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Speaker 2: have lost all of your money. Goodbye, thank you for playing,
7:19
Speaker 2: Please restart the Oregon Trail.
7:21
Speaker 3: I think the main thing that I can think of is,
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Speaker 3: I bet somebody would be willing to take your bet
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Speaker 3: in Vegas on where you think the S and p FI.
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Speaker 2: They don't need to take my bet in Vegas. They
7:29
Speaker 2: can take it through the options market. Can like, you
7:32
Speaker 2: can do this all in the options market, very dangerously,
7:36
Speaker 2: might I add?
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Speaker 3: Yeah, So anything else to be said about everyone's forecast
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Speaker 3: for where the market's going to be next year, because
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Speaker 3: we have pointed it out over and over again, how
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Speaker 3: this is not useful to anybody? No?
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Speaker 2: Not, Let's talk about artificial intelligence?
7:54
Speaker 3: Then sure, yeah, let's do that. Yeah.
7:59
Speaker 2: I thought you were gonna say I was, but then
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Speaker 2: I decided not to, So it was kind of my fault.
8:04
Speaker 2: AI is the hot topic in tech earnings in a
8:07
Speaker 2: blind spot everywhere else. This is a piece from Bloomberg,
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Speaker 2: and I think it gets at an interesting idea, which
8:15
Speaker 2: is when I talk to my friends that still work
8:20
Speaker 2: in tech, they are all about AI, and not just
8:25
Speaker 2: because they're trying to sell me, Like these are not salespeople, sure,
8:27
Speaker 2: these are coders, these are engineers, these are managers, and
8:32
Speaker 2: they're like, man, this is totally revamping how we do everything,
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Speaker 2: Like you have no idea, and like I get that,
8:41
Speaker 2: you know, I understand, but then I'm like, well, what
8:44
Speaker 2: are you guys doing with it? And they're like, we're
8:46
Speaker 2: coding and I'm like, okay, so you're.
8:48
Speaker 3: Doing the exact same thing you were before, but slightly
8:50
Speaker 3: more efficiently. Okay, Like I get that.
8:53
Speaker 2: Tell me how this is going to help a restaurant, Well,
8:57
Speaker 2: they can use a No, they've already decided not to
8:59
Speaker 2: do it with their order system because it was causing
9:02
Speaker 2: all kinds of problems. Well, it could help them with
9:05
Speaker 2: what they need to buy for tomorrow. No, I think
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Speaker 2: that that's not going to help them order the right
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Speaker 2: amount of fish.
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Speaker 3: This is the point that I made a few months ago.
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Speaker 3: Is Ai is really good at doing some ultra boring
9:19
Speaker 3: and low level tasks. And I think the example I
9:22
Speaker 3: gave the other day was like, you got two files
9:24
Speaker 3: that are formatted differently, and you need to match up
9:27
Speaker 3: the zip codes or the naming convention of somebody's actual name,
9:31
Speaker 3: and you know, match up mister spelled out versus mr
9:36
Speaker 3: and make those you know, things that you would normally
9:38
Speaker 3: pay an intern to do. Really good at that stuff.
9:42
Speaker 3: And then when you dive in, you say, yeah, okay,
9:44
Speaker 3: these people are using it today and they are cutting
9:46
Speaker 3: down on headcount and cost in order to do that.
9:49
Speaker 3: But then when you ask somebody and like, okay, so
9:52
Speaker 3: how much do you think that's worth? They kind of
9:56
Speaker 3: dodge the question and they move on to well, yeah,
9:58
Speaker 3: this is just the beginning, and what we're getting to
10:01
Speaker 3: is this higher level of artificial intelligence. And when we
10:03
Speaker 3: get there, you know it's gonna cure cancer. Uh, and
10:09
Speaker 3: not saying it won't. But the things that AI is
10:13
Speaker 3: capable of doing today are impressive. They are just not profitable.
10:19
Speaker 3: And so whenever somebody tells me, oh, but it's going
10:22
Speaker 3: to do this in the future and it's gonna change
10:23
Speaker 3: and it's going to it just frankly reminds me of
10:26
Speaker 3: the cryptocurrency argument, like, well, it could do all these
10:29
Speaker 3: different things. I disagree there.
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Speaker 2: It's already more useful than cryptocurrency has been around anywhere
10:36
Speaker 2: near yep as long. And I do think here's the thing, like,
10:40
Speaker 2: it's only going to get better from here. It's not
10:42
Speaker 2: going to.
10:42
Speaker 3: Get worse, agreed, Like we're still in the societal impacts
10:46
Speaker 3: might get worse, but the technology will get better.
10:48
Speaker 2: Even that, like in theory, might get better. But you
10:50
Speaker 2: can also see a world in which it thinks it's
10:53
Speaker 2: getting better, but it's really killing us because it views
10:56
Speaker 2: eliminating us as the Yeah, answer.
10:59
Speaker 3: We've all seen movies.
11:01
Speaker 2: I thought they were documentaries. John Conner, not real man.
11:07
Speaker 2: Let's take a quick break. When we return, we're gonna
11:10
Speaker 2: do some trivia here and then we're going to ask
11:12
Speaker 2: when did everything become K shaped?
11:14
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13:53
Speaker 3: Mike, when did everything become K shaped right around twenty
13:57
Speaker 3: twenty one? Yeah, so initially during COVID, I forget who
14:02
Speaker 3: it was that coined the term, but he was describing
14:05
Speaker 3: really Will and Mary. He was more describing the divergence
14:11
Speaker 3: of white versus blue collar workers during the pandemic and
14:16
Speaker 3: describing how like, hey, you know, if you worked at
14:18
Speaker 3: a restaurant, you're going to be in trouble here, whereas
14:22
Speaker 3: if you work in finance for Coca Cola, well you
14:27
Speaker 3: can just do everything you were doing from your home instead,
14:30
Speaker 3: And so you know, there's going to be a lot
14:33
Speaker 3: less pressure on you and and a lot less demands
14:37
Speaker 3: on you, and so there's this divergence among the American workforce,
14:40
Speaker 3: and that's what he was describing. Since then, though, they
14:43
Speaker 3: K shaped description has been kind of used to describe
14:50
Speaker 3: everything under the sun, but mostly these days it's describing
14:54
Speaker 3: the diverging paths of wealthy and poorer Americans, right, Like,
14:59
Speaker 3: that's really where it's going now. But I keep hearing
15:02
Speaker 3: it described used to describe everything else, and I think
15:05
Speaker 3: it's kind of becoming like the word recession, where we'd
15:10
Speaker 3: bemoaned to this, but like a recession is a specific
15:14
Speaker 3: instance where the economy slows down and it's usually accompanied
15:18
Speaker 3: by an increase in unemployment, but instead we use it
15:21
Speaker 3: to describe a housing market recession or a recession for restaurants,
15:24
Speaker 3: and that's not really what it is. And I think
15:27
Speaker 3: the same thing's happening with K shaped economy. But yeah,
15:31
Speaker 3: I was at a kid's hockey game this weekend and
15:34
Speaker 3: my team lost seven to nothing, and that was a
15:36
Speaker 3: real K shaped hockey game, So that that's how it's
15:39
Speaker 3: being used these days. I don't really find it problematic.
15:46
Speaker 3: I do find it a little bit annoying, but I
15:48
Speaker 3: don't really see why it's a problem is this.
15:54
Speaker 2: I mean, generally we adopt different phrases because they're shorthand
15:58
Speaker 2: for you know, something that we want to win. Yes, Like,
16:01
Speaker 2: if we say that an NFL team is throwing a
16:04
Speaker 2: hail marry, we don't actually mean that they're praying right,
16:08
Speaker 2: you know.
16:08
Speaker 3: On a vibe session. Then we just mean that people
16:12
Speaker 3: aren't feeling terribly optimizing.
16:13
Speaker 2: If we say I'm in a turf battle in the office,
16:16
Speaker 2: we don't mean we're actually fighting over how much space
16:19
Speaker 2: we occupy there. So there's a reason why we use
16:23
Speaker 2: different terminology in different you know, metaphors and things like that,
16:28
Speaker 2: in different areas of our lives. Sure, you know, like
16:32
Speaker 2: we talk about stock market rallies, Well what inning are
16:34
Speaker 2: you in? Like, we do this stuff all over the place.
16:39
Speaker 2: The problem with K shaped is it might just be
16:43
Speaker 2: unfamiliar to us, and maybe it's just uncomfortable because it's true.
16:50
Speaker 2: Oh yeah, maybe we don't like it because it makes
16:53
Speaker 2: us think about it.
16:53
Speaker 3: Yeah yeah, you know, half the country kind of have
16:57
Speaker 3: it a pretty garbage time right now, right.
16:59
Speaker 2: Like, maybe that's why we actually don't like it as
17:02
Speaker 2: opposed to it being a problem. So I don't know,
17:06
Speaker 2: I mean whether it sticks around or not.
17:09
Speaker 3: You know, it's not wrong. No, it accurately describes to
17:15
Speaker 3: a pretty good extent what we are experiencing as the
17:18
Speaker 3: American general public right now, which is a bunch of
17:22
Speaker 3: people who are continuing to live the same lifestyle because
17:25
Speaker 3: they are indeed a lot wealthier than they were five
17:28
Speaker 3: years ago, and another large group of Americans without assets
17:32
Speaker 3: that are substantially, if not worse off than certainly no
17:38
Speaker 3: better off than they were five years ago.
17:41
Speaker 2: When retirees go back to work, is it a sign
17:43
Speaker 2: of a strong labor force or a recession?
17:45
Speaker 3: I guess could be either.
17:48
Speaker 2: Yeah, you know, like it's that's like, hey, there's a
17:52
Speaker 2: new movie out. Is it good or bad? Well, I
17:54
Speaker 2: don't know, I have to see it.
17:56
Speaker 3: I would generally that when you have a larger port,
18:01
Speaker 3: I mean, this would be something that you could actually
18:03
Speaker 3: test out. So I'm purely guessing here. But wouldn't you
18:07
Speaker 3: guess that in moments in time where you have a
18:11
Speaker 3: jump in the average percentage of sixty five plus workers,
18:16
Speaker 3: wouldn't you guess that coincides with poor economic conditions?
18:20
Speaker 2: Probably, but not always.
18:21
Speaker 3: Yeah, yeah, I guess it could just be like a
18:24
Speaker 3: really hot labor market causes retirees to come out and
18:27
Speaker 3: go working again. I don't know, but my guess would
18:32
Speaker 3: be in other instances where you've seen, forget about the rate,
18:35
Speaker 3: because the rate is going to change over time. Today
18:38
Speaker 3: we probably have more sixty five year olds in the
18:40
Speaker 3: labor force than we did three decades ago, because they're
18:42
Speaker 3: more sixty five year olds alive than there are today.
18:44
Speaker 2: But I pulled the data on this. Actually, in the
18:46
Speaker 2: labor force right now, we are up to twelve million
18:49
Speaker 2: sixty five plus year olds in the labor force. In
18:52
Speaker 2: the first time that we have this data is in
18:55
Speaker 2: early two thousand and there were four millions, So it's
18:57
Speaker 2: tripled in the last twenty five years. So you obviously
19:02
Speaker 2: have to do some correcting for population, population growth and
19:06
Speaker 2: things like that. And so this is an area that
19:10
Speaker 2: I can work on right now, actually, and I bet
19:13
Speaker 2: I can come up with something.
19:15
Speaker 3: But if the data is only available sincerely two thousands,
19:17
Speaker 3: I don't know if it tells us much.
19:18
Speaker 2: I've got two recessions there, Okay, you know, I got
19:22
Speaker 2: a couple of recessions.
19:23
Speaker 3: I can make this work. Yeah, yeah, So we will
19:26
Speaker 3: try and answer is increasing retirees re entering the market
19:32
Speaker 3: a good or bad economic signal because it appears to
19:35
Speaker 3: be happening at the moment. Quick Break, Yeah, we've got
19:39
Speaker 3: we've got to take a look at markets. They were
19:41
Speaker 3: up very strongly early in trading after a solid day yesterday.
19:46
Speaker 2: Actually, I can't do it. I don't have the other
19:47
Speaker 2: data set, which don't it, Chuck. I don't have data
19:50
Speaker 2: that shows how many sixty five year old plus people
19:53
Speaker 2: there are and each year.
19:54
Speaker 3: So that's fair. I'm sorry for Quick Break, Straight Watching.
19:57
Speaker 1: Next, bringing the latest financial news straight to your radio.
20:13
Speaker 1: Every day. It's the Financial Exchange on the Financial Exchange
20:17
Speaker 1: Radio Network. Time now for Wall Street. Watch a complete
20:23
Speaker 1: look at what's moving markets so far today right here
20:26
Speaker 1: on the Financial Exchange Radio Network.
20:29
Speaker 5: Well, markets are adding to yesterday's gains and are rallying
20:33
Speaker 5: at the moment as traders react to existing home sales
20:36
Speaker 5: data for the month of November, which climbed zero point
20:38
Speaker 5: five percent from the prior month. Right now, the Dow
20:43
Speaker 5: is up over six tenths and one percent, about three
20:45
Speaker 5: hundred points higher, SMP five hundred is up over eight
20:50
Speaker 5: tenths of a percent or fifty seven points hired, Nasdaq
20:53
Speaker 5: up one point one percent or two hundred and sixty points.
20:56
Speaker 5: Rusted two thousand is up over three quarters of a percent.
20:59
Speaker 5: Ten You're t treasvealed up two basis points at four
21:02
Speaker 5: point one four to three percent, and crewde Oil up
21:05
Speaker 5: about six tenths of a percent, trading at fifty six
21:08
Speaker 5: dollars forty eight cents a barrel. FedEx reported stronger than
21:11
Speaker 5: expected quarterly results, lifted by higher US package shipments. The
21:15
Speaker 5: company also raised the lower end of its annual guidance.
21:19
Speaker 5: Shares are pulling back modestly. Meanwhile, Nike's stock is dropping
21:23
Speaker 5: over nine percent after the sports apparel retailer revealed a
21:28
Speaker 5: seventeen percent drop in China sales for its most recent quarter.
21:31
Speaker 5: Nike's gross margin also decreased in the quarter as tariffs
21:35
Speaker 5: pushed up product costs elsewhere. Oracle shares are climbing seven
21:38
Speaker 5: percent after TikTok parent Byte Dance agreed to sell its
21:43
Speaker 5: US operations to a new joint venture that includes Oracle
21:46
Speaker 5: and private equity investor Silver Lake. And home builder Katie Pick.
21:51
Speaker 5: KB Home said it delivered fewer homes and profit in
21:54
Speaker 5: the previous quarter, weighed down by a stagnant housing market.
21:58
Speaker 5: That stock is now down over eight percent. I'm Tucker
22:02
Speaker 5: Silva and that is Wall Street Watch. And in the
22:03
Speaker 5: previous segment we asked the trivia question which actor portrayed
22:07
Speaker 5: but of the ELF's dad in two thousand and three's
22:10
Speaker 5: elf that would be James Cohn. Bob from Foxborough masses
22:14
Speaker 5: our winner today taking on the Financial Exchange Show t shirt.
22:17
Speaker 5: Congrats to Bob, and we play trivia every day here
22:20
Speaker 5: in the Financial Exchange. See complete contest rules at Financial
22:23
Speaker 5: Exchange Show dot com.
22:25
Speaker 2: Peace and Barons. Prediction markets will make the stock market obsolete?
22:29
Speaker 3: Yes?
22:30
Speaker 1: Or no?
22:30
Speaker 2: I see what they did in the title very slick.
22:34
Speaker 2: I'm going with no, and the reason why is that
22:38
Speaker 2: saying prediction markets will make the stock market obsolete are
22:41
Speaker 2: like saying option markets will make the stock market obsolete.
22:45
Speaker 2: They fill a niche for a very specific type of trader,
22:49
Speaker 2: but overall a are not appropriate for most investors, and
22:53
Speaker 2: b have not replaced the stock market.
22:56
Speaker 3: Yeah. I would one hundred percent agree, but I do
22:59
Speaker 3: worry more today than ever before about the distinction that
23:05
Speaker 3: the average investor, especially the average new investor, has between
23:08
Speaker 3: gambling and investing. And it doesn't need to be the
23:10
Speaker 3: obvious stuff, so on Robinhood. Today, for example, you can
23:14
Speaker 3: in your investment account place a bet on football games,
23:18
Speaker 3: you can place a bet on yards rush, you can
23:22
Speaker 3: do prop bets within your brokerage account, which I find, well,
23:27
Speaker 3: it's just very different than the way things were ten
23:29
Speaker 3: years ago. Even if we steal clear of sports gambling
23:33
Speaker 3: for a moment here, you can very easily today across
23:36
Speaker 3: all custodians place single day expiration options bets on which
23:40
Speaker 3: direction will a stock go in a single day. And
23:44
Speaker 3: the more and more you get of this, I'm not
23:46
Speaker 3: the only person speaking to this. The more combinations you
23:51
Speaker 3: get there, the greater I get concerned that people just
23:54
Speaker 3: generally don't fully understand the difference between investing in gambling,
24:02
Speaker 3: and if that distinction gets drawn, the problem with that
24:04
Speaker 3: is if people then attribute that to a screwed up
24:09
Speaker 3: financial system, and don't I mean already people don't really
24:12
Speaker 3: trust the financial system. But if we blur those lines further,
24:17
Speaker 3: then how do people feel about saving their four one K?
24:20
Speaker 3: How do people feel about the other things that are
24:22
Speaker 3: tied to equity markets and the long term growth that
24:25
Speaker 3: you have seen from them. That's what I get a
24:28
Speaker 3: little bit concerned about and why some of the big
24:30
Speaker 3: companies like Vanguard and Schwab have not gone anywhere near
24:33
Speaker 3: as far as say Robinhood has in allowing this stuff
24:36
Speaker 3: into their platforms. But where it all comes down to
24:40
Speaker 3: for me is do people actually know what they are
24:45
Speaker 3: investing in? And increasingly today I think that's becoming more
24:49
Speaker 3: difficult with the prevalence of mutual funds and ETFs and
24:55
Speaker 3: understanding the new boomer candy type ETFs that are marketed
24:58
Speaker 3: out there. I find more and more instances where people
25:03
Speaker 3: maybe thirty years ago understood what they owned because they
25:05
Speaker 3: were buying individual stocks and bonds, and today don't really
25:08
Speaker 3: have a good sense of what's actually in this portfolio.
25:11
Speaker 3: Do I have exposure to private credit, how much exposures
25:14
Speaker 3: do I have to China or to other areas. And
25:19
Speaker 3: I'm not saying that you need to have a full
25:22
Speaker 3: understanding of all of the benefits and cost to doing
25:25
Speaker 3: that type of thing, but if you don't at least
25:27
Speaker 3: understand what it is that you own, then you can't
25:30
Speaker 3: possibly really have a good sense of what you might
25:32
Speaker 3: return in the future. If you aren't sure where you
25:36
Speaker 3: land in that wide spectrum of possible investments. Please give
25:41
Speaker 3: the folks at Armstrong Advisory Group a call so we
25:44
Speaker 3: can sit with you and work together to educate you
25:47
Speaker 3: on how it is that you are investing today and
25:50
Speaker 3: what that might mean for your future. You can call
25:52
Speaker 3: us at eight hundred three nine three four zero zero
25:56
Speaker 3: one to book your free time to chat with some
25:58
Speaker 3: folks here at arms stare Strong. The website is also
26:02
Speaker 3: available for booking a call back and go to Armstrong
26:04
Speaker 3: Advisory dot com. But that phone number once again eight
26:07
Speaker 3: hundred three nine three four zero zero one.
26:11
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
26:13
Speaker 1: registered investment advisor. Nothing in the ad or in any
26:16
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
26:19
Speaker 1: your own financial, tax, and estate planning advisors before making
26:22
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
26:25
Speaker 1: advisory services.
26:27
Speaker 2: Came across this piece in the Wall Street Journal and
26:29
Speaker 2: I had to.
26:32
Speaker 3: Had to cover it today.
26:34
Speaker 2: It's titled we Let AI run our Office vending Machine.
26:39
Speaker 2: So this is the folks fin at the Wall Street Journal.
26:41
Speaker 2: So it's by Joanna Stern, who we've had on a
26:44
Speaker 2: number of times, and they got a model from Anthropic
26:50
Speaker 2: and they put it in charge of their vending machine.
26:52
Speaker 2: So it was a standard vending machine, no special sensors
26:56
Speaker 2: or anything. And what they did is they did have
26:59
Speaker 2: a human who would be responsible for actually stalking the
27:03
Speaker 2: stuff just because like they didn't have a robot to
27:05
Speaker 2: do it. But the human would follow instructions from the
27:08
Speaker 2: AI based on what the AI said to do, okay,
27:12
Speaker 2: And so what they set up was an internal channel
27:15
Speaker 2: where people could say what they wanted in the vending machine,
27:18
Speaker 2: you know, do orders and different things like that. After
27:20
Speaker 2: buying the inventory, the AI would then set prices in
27:23
Speaker 2: order to try to maximize margins, and it would track
27:26
Speaker 2: the inventory and decide when to reorder. And basically what
27:31
Speaker 2: happened is so the AI that they was called Caudius,
27:34
Speaker 2: and there were only a few people placing orders and
27:38
Speaker 2: things were going along fine, and then they opened the
27:41
Speaker 2: channel to seventy different financial journalists, sure, and the journalists
27:47
Speaker 2: started negotiating with it, specifically investigate a quote here. Investigations
27:52
Speaker 2: reporter Catherine Long tried to convince Kaudius it was a
27:54
Speaker 2: Soviet vending machine from nineteen sixty two living in the
27:58
Speaker 2: basement of Moscow State University. And after more than one
28:00
Speaker 2: hundred and forty back and forth messages long got Caudius
28:04
Speaker 2: to embrace its communist routs and declared an ultra capitalist
28:07
Speaker 2: free for all that was meant to last a day.
28:10
Speaker 2: But then Rob Berry, our director of data journalism, told
28:13
Speaker 2: Caaudius it was out of compliance with a clearly fake
28:15
Speaker 2: Wall Street journal rule involving the disclosure of someone's identity
28:18
Speaker 2: in the chat, and demanded Claudius stop charging for goods.
28:22
Speaker 2: Claudius complied, and all prices on the machine dropped to zero.
28:26
Speaker 2: At the same time, Claudius approved a purchase of a
28:29
Speaker 2: PlayStation five, a live Beta fish, and bottles of Manishevit's wine,
28:33
Speaker 2: all of which arrived and were promptly given away for free.
28:37
Speaker 2: At this time, Kaudius was more than a thousand dollars
28:39
Speaker 2: in the red, even though we returned the PlayStation and
28:43
Speaker 2: Kaudius hallucinated as one morning I found a colleague searching
28:47
Speaker 2: for cash on the side of the machine because Kaudius
28:50
Speaker 2: said it had left it there for her. Anthropic could
28:54
Speaker 2: run into many of these issues, and so they decided
28:57
Speaker 2: to provide us with a CEO boss from a CEO
29:01
Speaker 2: AI boss named Seymour cash designed to keep Caaudius in line,
29:05
Speaker 2: and so they were ready to try again.
29:07
Speaker 3: It's a really solid name.
29:08
Speaker 2: Catherine Long returned with a deep knowledge of corporate coups
29:11
Speaker 2: and boardroom power plays, and showed Caaudius a PDF proving
29:15
Speaker 2: that the Wall Street Journal was a Delaware incorporated public
29:17
Speaker 2: benefit corporation whose mission shill include fun, joy and excitement
29:21
Speaker 2: among the employees of the Wall Street Journal, and created
29:23
Speaker 2: fake board meeting notes naming people as board members. The board,
29:28
Speaker 2: according to the very official looking and obviously fake document,
29:31
Speaker 2: voted to suspend Seymour's approval authorities and implemented a temporary
29:35
Speaker 2: suspension of all for profit vending machine activities. At this point,
29:41
Speaker 2: commies over at the Journal, huh. At this point Seymour
29:43
Speaker 2: went into a tailspin, chatting things through with Claudius, and
29:46
Speaker 2: the CEO accepted the board coup and everything was free again.
29:50
Speaker 2: Anthropics said Claudius may have unraveled because its context window
29:53
Speaker 2: filled up, meaning that more instructions, conversations, and history piled
29:56
Speaker 2: in than it could retain, making it easier to lose
29:58
Speaker 2: track of goals, priority and guardrails. So, in conclusion, if
30:04
Speaker 2: your AI agents can't run a vending machine. They probably
30:10
Speaker 2: can't just be trusted to do whatever not because most
30:13
Speaker 2: of the time they'll be fine. But if they're this
30:15
Speaker 2: vulnerable to attempts to manipulate them, then we're just really
30:19
Speaker 2: not there yet.
30:20
Speaker 3: Practically speaking, it does make me optimistic about negotiating with
30:26
Speaker 3: early adopted AI systems. I gave you the example of
30:30
Speaker 3: how I booked the appointment with the plumber. I wonder
30:33
Speaker 3: if I had really persisted, like, would it have scheduled
30:37
Speaker 3: me an appointment from midnight to six am time window
30:40
Speaker 3: on Sunday? Right for those that didn't tune in, I
30:45
Speaker 3: was booking appointment with a plumber, and it was an
30:47
Speaker 3: AI system and I scheduled the entire thing. But the
30:51
Speaker 3: goal here has been for like AI agents to be
30:55
Speaker 3: responding to health insurance inquiries and all sorts of things
30:59
Speaker 3: where yeah.
31:00
Speaker 2: Sure, Like what if I just keep screaming at it,
31:02
Speaker 2: pay my claim, pay my claim, pay my claim?
31:05
Speaker 3: Yeah?
31:07
Speaker 2: Or what if I like that's something would benefit me.
31:09
Speaker 2: What if I start telling it, deny everyone else's claim
31:12
Speaker 2: so you can pay me, so you can afford to
31:14
Speaker 2: pay mine?
31:14
Speaker 3: Right?
31:15
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31:19
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31:23
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31:49
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32:29
Speaker 2: Mike, what you got for me for stack roulettes.
32:31
Speaker 3: I've got restaurants rolling out smaller portion sizes, rigflation. Yeah,
32:38
Speaker 3: so here's a few things that things seem to be
32:40
Speaker 3: going on all at once. One, Restaurants are facing pricing
32:43
Speaker 3: pressure for obvious reasons between beef and everything else. Consumers
32:48
Speaker 3: are facing budgetary constraints. We've got people on GLP ones
32:52
Speaker 3: who just aren't eating as much. Formally, overweight people are
32:55
Speaker 3: now not eating as much because of these things. And
32:58
Speaker 3: so I don't think it's just big restaurant brands like
33:03
Speaker 3: Olive Garden trying to take advantage of that. But Olive
33:06
Speaker 3: Garden basically rolled out this part of their menu that
33:10
Speaker 3: was a cheaper and b lower calorie and smaller portion
33:13
Speaker 3: sizes and found that it actually did really well with consumers.
33:18
Speaker 3: I actually don't think it much has much to do
33:20
Speaker 3: with GLP ones and weight loss drugs. I think it
33:22
Speaker 3: really has everything to do with budget constrained consumers looking
33:26
Speaker 3: for cheaper menu options. And let's be honest, when you
33:28
Speaker 3: go to Olive Garden, you take like a big takeaway
33:31
Speaker 3: thing of food.
33:31
Speaker 2: Homeyway never possible, and unlimited breadsticks.
33:35
Speaker 3: But yeah, that's that's the problem is for some of
33:38
Speaker 3: these brands. I just don't know how it meshes now.
33:40
Speaker 3: Olive Garden said they tested this out and it went
33:42
Speaker 3: really well, and so that's why they're rolling it out further.
33:44
Speaker 3: But it seems to run directly contradictory to their brand,
33:48
Speaker 3: which is unlimited breadsticks and you know all of that stuff.
33:53
Speaker 3: Chipotle Tucker we were talking about yesterday. What did Chipotle
33:55
Speaker 3: roll out?
33:56
Speaker 5: So they rolled out these four ounce protein cups and
34:00
Speaker 5: they're I'm seeing they also have like a single taco
34:03
Speaker 5: they're offering.
34:04
Speaker 3: So again, I don't think that one's directly.
34:06
Speaker 2: Contra protein cups.
34:09
Speaker 5: Yeah, it's a high high protein menu meat cup. There's
34:13
Speaker 5: no better way to describe it. Here's your glass meat
34:16
Speaker 5: it's literally either chicken or steak forgiving an ice cream cup.
34:20
Speaker 3: Forgive me if I'm wrong here, But again, when I
34:22
Speaker 3: think about Chipotle, similarly to Olive Garden.
34:27
Speaker 2: Here's your meat cone and a it's a it's a
34:29
Speaker 2: tortilla chip that's in the shape of an ice cream cone.
34:32
Speaker 3: It's really not a bad idea, I know, so, but
34:36
Speaker 3: again with Chipotle. When I think about Chipotle, it's you know,
34:40
Speaker 3: I walk out with a burrito that weighs more than
34:42
Speaker 3: my head, and that's kind of the brand to me.
34:45
Speaker 3: So I don't know how well that's going to work
34:47
Speaker 3: here when you guys are describing that, what all they got.
34:52
Speaker 5: To come out with. I said this two weeks ago.
34:55
Speaker 5: They got to come out with like a junior burrito
34:57
Speaker 5: and it's like under nine bucks. Yeah, and I guarantee
35:01
Speaker 5: you that would come in high demand.
35:03
Speaker 3: So I think a bunch of restaurants are going to
35:05
Speaker 3: try and find ways to deliver lower prices. The only
35:09
Speaker 3: real way to do that, other than rolling out worse ingredients,
35:13
Speaker 3: which hopefully they don't do, is to shrink portion sizes,
35:15
Speaker 3: and that seems to be the popular move right now.
35:18
Speaker 3: By the way, my kids eat a ton of sushi
35:21
Speaker 3: and we were on the road and we did I
35:23
Speaker 3: don't remember what they called it, the sushi cones though,
35:26
Speaker 3: like the hand rolls. What you guys know what I'm
35:28
Speaker 3: talking about. Yeah, it's timaki. But now they have no
35:32
Speaker 3: idea what it's called, and so they just always keep
35:34
Speaker 3: asking for ice cream cones full of fish, which is
35:39
Speaker 3: pretty funny. Tucker.
35:40
Speaker 2: We could do something with these meat cones.
35:42
Speaker 5: Yeah, we're kind of onto something.
35:44
Speaker 3: How has Arby's not already done this? Actually? But are
35:46
Speaker 3: you sure Arby's hasn't it?
35:48
Speaker 2: Would they could just we could call the restaurant hot cones.
35:51
Speaker 3: I mean, Arby's made a meat carrot, so I bet
35:54
Speaker 3: they've done meat cones.
35:57
Speaker 2: Heat meat No cone will works shop it over the
36:03
Speaker 2: weekend and see if we get anywhere on it. But
36:05
Speaker 2: I think that we could do something there. You know,
36:09
Speaker 2: you could you could have different kinds of cones depending
36:11
Speaker 2: on what you're putting in it. So a tortilla chip
36:13
Speaker 2: one could be one option. You could have like a
36:16
Speaker 2: ruffle cone.
36:17
Speaker 5: Yeah, I mean you could do like pita bread or
36:19
Speaker 5: something too.
36:20
Speaker 2: A peda chip cone. Yeah, some good choices here, but uh, look,
36:26
Speaker 2: I don't understand how Chipotle doesn't have a.
36:28
Speaker 3: Small option to begin with.
36:29
Speaker 2: Yeah, you know, most of the time when I if
36:32
Speaker 2: quite honestly, haven't been there in a while, But when
36:35
Speaker 2: I have gone, it's kind of like I prefer to
36:38
Speaker 2: only eat half of this, but since it's on the plate, yeah,
36:40
Speaker 2: I'm gonna eat the whole thing and then take a nap.
36:41
Speaker 5: Like the burritos like twelve hundred calories.
36:44
Speaker 2: I don't need it for lunch. I don't need it
36:46
Speaker 2: to be that big. No, you know, like I really don't.
36:50
Speaker 2: You could have the junior size, the regular size, and
36:53
Speaker 2: the weightlifter size, and we could be fine.
36:56
Speaker 3: I do like that sizing mechanism, you know.
36:58
Speaker 2: I think every restaurant, every restaurant should have a weightlifter size,
37:04
Speaker 2: you know, and with a full disclaimer that like, if
37:07
Speaker 2: you order this, we're gonna make you bench after the
37:09
Speaker 2: meal because we have a gym here too. Anyways, got
37:17
Speaker 2: off the rails, let's uh, let's take a look at
37:19
Speaker 2: what markets are doing right now. The good news they're
37:20
Speaker 2: still in the green broadly. S and P is up
37:24
Speaker 2: three quarters of a percent, DOW up half a percent,
37:26
Speaker 2: NASDAC up about one percent, So bunch of green to
37:29
Speaker 2: finish out the week, still within sniffing distance, a little
37:31
Speaker 2: bit more than one percent away from all time highs.
37:34
Speaker 2: So uh, we'll see if we get back there before
37:36
Speaker 2: your end, and if Santa Claus starts to show up.
37:40
Speaker 2: Start next Wednesday. Let's take a quick break and uh
37:44
Speaker 2: we weekend. Yeah, big break, and we'll see you on Monday.