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Bond Market Selloff Sends Mortgage Rates Toward 7.5% · The Financial Exchange Show

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  Speaker 1: is The Financial Exchange with Chuck Zotta and Mike Armstrong.
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  Speaker 2: Chuck, Mike and Tucker with you here. It's Friday and
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  Speaker 2: we're continuing to see bonds selling off. I got to say, Michael,
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  Speaker 2: it's getting spicy now. Yeah. And what I can tell you,
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  Speaker 2: like someone there are multiple someones that are blowing up
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  Speaker 2: with the scale. But more importantly, the pace of these
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  Speaker 2: moves in the bond market, the 10 year as of
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  Speaker 2: right now. It's 5.217%, up another 5.5 basis points. If
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  Speaker 2: we go back to just Monday, we're at 4.96%, so
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  Speaker 2: we are up 0.25% this week. If we go back
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  Speaker 2: to a month ago on 8-25, August 25th in America,
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  Speaker 2: 10-year yield was at 4.7%, so we're up over 0.5%
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  Speaker 2: since then. Mortgage News Daily has the national average for
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  Speaker 2: a 30-year fixed-rate mortgage at 7.45% now, as of yesterday afternoon.
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  Speaker 2: That is heading for 7.5% today, if this move holds,
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  Speaker 2: potentially a little bit higher even. And, again, things getting
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  Speaker 2: kind of spicy out there in bond land. Now, what
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  Speaker 2: I will say is this is also the time where, anecdotally...
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  Speaker 2: you know, the person that you know who doesn't pay
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  Speaker 2: any attention to markets or finance. He's talking about the deficit.
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  Speaker 2: You start hearing, not the deficit, but you hear someone
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  Speaker 2: being like, hey, I heard that bond yields are up.
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  Speaker 2: And you're like, I know you're not a moron, but
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  Speaker 2: you never ask me about money things, and so this
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  Speaker 2: means that the end is near. Usually.
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  Speaker 3: I have people asking me about bond markets. I'm like, dude,
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  Speaker 3: wrong person, listen to the show.
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  Speaker 2: It's getting to that point where the normies are starting
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  Speaker 2: to ask about things they don't normally ask about.
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  Speaker 3: Yeah.
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  Speaker 2: And, you know, you see this occasionally. It's like, oh, like,
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  Speaker 2: you know, I don't even know like what the highest
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  Speaker 2: like Bitcoin got to was. But, you know, at that point,
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  Speaker 2: you like you've got like, you know, you've got like
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  Speaker 2: the Uber drivers like, yeah, I'm thinking about quitting Ubering
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  Speaker 2: so that I can, you know, just make money on
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  Speaker 2: Bitcoin the whole time. And you're like, that was my Uber. Oh,
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  Speaker 2: what was it?
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  Speaker 4: It was.
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  Speaker 2: Summer of 2022 in Utah. Yeah. The Uber driver was
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  Speaker 2: talking me up about his Bitcoin wallet. Right. We all
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  Speaker 2: know it when we see it. It's in 1999, the
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  Speaker 2: cab driver talking about, hey, have you heard of Pets.com?
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  Speaker 2: And so it's starting to feel like that just in
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  Speaker 2: terms of, do you hear anyone at all talking constructively
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  Speaker 2: about bonds right now?
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  Speaker 1: No.
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  Speaker 2: No. You don't. And it's not to say that things
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  Speaker 2: can't get worse because we often hear like, hey, there's
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  Speaker 2: like a blow off top in equity markets. Blow off
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  Speaker 2: bottoms can happen, too. Yeah. And you need to be
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  Speaker 2: aware of that. So I think that where we stand
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  Speaker 2: right now, it's very clear that the Treasury and the
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  Speaker 2: White House do not want bond yields this high. True.
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  Speaker 2: It's unclear exactly what they can do outside of much
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  Speaker 2: larger interventions that might require the assistance of the Fed.
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  Speaker 2: And by the way, Kevin Warsh doesn't really talk like
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  Speaker 2: a guy who wants to be intervening in the bond
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  Speaker 2: market very much. Not right now. So it puts you
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  Speaker 2: in a place where you're kind of like.
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  Speaker 4: In fact, sorry, his entire tenure has been based on
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  Speaker 4: not interfering that much in the bond market.
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  Speaker 2: Yes. Like, his major.
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  Speaker 4: criticism of Bernanke coming out of the Great Recession was
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  Speaker 4: that they were intervening too much in the bond market.
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  Speaker 2: Which is a totally reasonable criticism. Yeah. It's not unreasonable.
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  Speaker 2: As much as we can talk about, hey, Warsh's press
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  Speaker 2: conference was bad, the idea of, hey, maybe the Fed
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  Speaker 2: shouldn't do as much is something we've talked about for
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  Speaker 2: an awful long time. Sure. So, I think that we're
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  Speaker 2: at this interesting... That insinuates that we're reasonable. Like you
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  Speaker 2: and me?
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  Speaker 1: Yeah.
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  Speaker 2: We can move on. No, no, we're reasonable. reasonable people,
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  Speaker 2: reasonable people can disagree about that. But in any case,
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  Speaker 2: so you've got bond yields moving up. And I did
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  Speaker 2: have someone yesterday who I was talking to who asked me, hey,
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  Speaker 2: like our bonds yield or bond yields moving up just
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  Speaker 2: because like no one has any trust in like the
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  Speaker 2: US government. And I'm like, no, it's not that. And
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  Speaker 2: he was like, well, I think that's it. I'm like,
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  Speaker 2: Let's pause for a second. And again, I walked him
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  Speaker 2: through my standard things that I look at when you
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  Speaker 2: see bond yields rising, which are, is the currency rising
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  Speaker 2: along with the yields? If so, immediately you can say,
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  Speaker 2: this is not a question of lack of trust in
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  Speaker 2: the U.S. government. Because if the yields were rising and
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  Speaker 2: the currency were falling, it would indicate that. Sure. Hey,
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  Speaker 2: get me out of this currency is what that would
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  Speaker 2: be saying. If the yields are rising and the dollar
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  Speaker 2: is falling... You say, okay, now let's take a look
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  Speaker 2: at gold. If gold is rising as well, then you
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  Speaker 2: have some more ammunition there. If it's not, then it's
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  Speaker 2: kind of, hey, maybe it's just a rebalancing or corporate
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  Speaker 2: month end or something weird on the calendar. Come back
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  Speaker 2: another day. So you look at the move that we've
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  Speaker 2: seen this week. And up until today, okay, up until today,
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  Speaker 2: it was yields up, dollar up, gold down. Today, you've
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  Speaker 2: got yields up, dollar down, gold flat. Still doesn't really
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  Speaker 2: tell you anything. And again, it's been like two hours
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  Speaker 2: of trading, so let's not extrapolate too far. When the
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  Speaker 2: last five days were fine. What I will say, the
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  Speaker 2: pace of the move up is starting to become disorderly.
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  Speaker 2: And what I mean by that is, hey, if over
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  Speaker 2: the course of a year, the 10-year treasury goes from
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  Speaker 2: 4% to 5%, There's not a ton of volatility associated
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  Speaker 2: with that. It's generally fine. And yes, yields might be
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  Speaker 2: going up, but hey, the pace is fine. Like you
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  Speaker 2: aren't seeing hedge funds blowing up because of it. You're
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  Speaker 2: not seeing mortgage brokers with their hair on fire. You know,
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  Speaker 2: like it's fine. It might be uncomfortable, but it's fine.
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  Speaker 2: When you see in a span of two days a
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  Speaker 2: quarter percent rise in the 10-year treasury, and then this
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  Speaker 2: morning another half percent in a span of half an hour,
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  Speaker 2: you kind of look at it and you're like, okay,
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  Speaker 2: there's going to be some bodies floating to the surface
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  Speaker 2: because you know there are hedge funds that are blowing up.
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  Speaker 2: And part of this is them unwinding their positions that
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  Speaker 2: they blew up on because they were betting on things
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  Speaker 2: that were moving in the other direction. And so it
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  Speaker 2: starts to get a little disorderly. And the problem with
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  Speaker 2: a disorderly bond market is it hasn't happened yet, but
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  Speaker 2: eventually you get to a point where it spills over
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  Speaker 2: into other markets and potentially makes them disorderly. April of 2025.
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  Speaker 2: Things like that. Remember what was happening then, folks?
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  Speaker 4: It was the rollout of tariffs, and it quite literally
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  Speaker 4: forced the president and his advisors to change course because
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  Speaker 4: of the moves in the bond market and how disorderly
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  Speaker 4: they were.
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  Speaker 2: It was blowing up different shops. So they had to pivot.
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  Speaker 4: And we may start getting some of that pivot here
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  Speaker 4: based on how disorderly things look right now.
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  Speaker 2: And by the way, that was an example of the
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  Speaker 2: bad stuff happening as it relates to potential lack of
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  Speaker 2: trust in a currency. This was, okay, the 10-year went
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  Speaker 2: from 4.1 to 4.6 in a span of two days.
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  Speaker 2: So half a percent up. And the dollar went from
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  Speaker 2: 103 to 99. So currency got bludgeoned 4% and yields
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  Speaker 2: went up half a percent. That is what a proper
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  Speaker 2: panic looks like when people are saying like, hey, I
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  Speaker 2: don't trust this. What we are seeing now is very
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  Speaker 2: much not that, where, again, you look at the last,
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  Speaker 2: let's look at the last month. Like, the day-to-day you
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  Speaker 2: can get sucked into, and it's just, it's stupid. Which
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  Speaker 2: is why we do a show every day. The day-to-day
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  Speaker 2: is not where it is. If you look at the
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  Speaker 2: last month, 10 years gone from 4.8% up to 5.2%.
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  Speaker 2: Dollar has gone from 99% up to 101%. That is
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  Speaker 2: totally fine. Dollars, currency and yields moving in the same direction.
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  Speaker 2: There's no lack of trust there. And by the way,
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  Speaker 2: gold down over the last month as well. from like
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  Speaker 2: 4400 on the spot pricing down to like 4250 like
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  Speaker 2: okay like this is exactly what you want to see
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  Speaker 2: this this is a healthy move in cross asset markets
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  Speaker 2: telling you that yes something's happening in yields but it's
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  Speaker 2: not a lack of trust in the US government or
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  Speaker 2: a lack of trust in the currency What is happening
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  Speaker 2: is that the economic data has been pretty darn tootin'
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  Speaker 2: for the month of August. And so the market is
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  Speaker 2: looking at higher inflation, a set of labor data that's
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  Speaker 2: been better than people expected, retail sales that were better
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  Speaker 2: than expected, PMIs that were better than expected, and saying, hey,
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  Speaker 2: if you got inflation like this, you're going to have
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  Speaker 2: to hike in order to cover this because the economic
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  Speaker 2: growth is strong enough to that this isn't going away
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  Speaker 2: on its own otherwise?
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  Speaker 4: I know we need to take a break. I want
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  Speaker 4: to get to the context of higher rates for longer.
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  Speaker 4: What if they go higher than where they are now?
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  Speaker 4: But one other just backward-looking piece here that I think
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  Speaker 4: we need to cover on the other end is oil
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  Speaker 4: and bonds. Because, boy, have they been correlated. And since
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  Speaker 4: the 15th of September, they've gone in complete opposite directions.
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  Speaker 4: And I think that is a worthy story for us
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  Speaker 4: to look at here. because a lot has been written.
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  Speaker 4: In fact, we've got an article from the Wall Street
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  Speaker 4: Journal today about bond traders paying too much attention to
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  Speaker 4: oil prices when for the last week and a half
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  Speaker 4: that exact trend has broken.
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  Speaker 2: Quick break. We'll be right back with oil, bonds, and
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  Speaker 2: more next on The Financial Exchange.
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  Speaker 1: This is your home for the most comprehensive coverage of
• 11:47
  Speaker 1: the economy and the trends on Wall Street. This is
• 11:50
  Speaker 1: the Financial Exchange Radio Network.
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  Speaker 2: All right, Mike, you had something you wanted to talk
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  Speaker 2: about with bonds.
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  Speaker 4: Yeah, so there's this piece in the Wall Street Journal
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  Speaker 4: about bond traders saying, paying too much attention to oil prices.
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  Speaker 4: And you've brought this up a few times, but when
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  Speaker 4: you look at the interest rate on the 10-year treasury
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  Speaker 4: with the price of oil, they've been moving for how
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  Speaker 4: long just very closely in tandem? Is it since the
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  Speaker 4: outbreak of war? What are we looking at here in
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  Speaker 4: terms of their correlation?
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  Speaker 2: No, I mean, the big thing is it goes through
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  Speaker 2: these cycles where during the initial kind of spring outbreak
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  Speaker 2: of the Iran war, it was oil and bonds were
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  Speaker 2: tracking each other really tightly. That broke down over the
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  Speaker 2: course of the summer. And the thing that we've seen
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  Speaker 2: recently in the last two weeks now is oil and
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  Speaker 2: diesel prices. I'm sorry, diesel and bond prices tracking each
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  Speaker 2: other very closely over the last week or two now.
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  Speaker 2: And again, these things are not, it's not physics. So
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  Speaker 2: it's not like, oh, like once it happens, like that's
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  Speaker 2: how it always is. Correlations in markets come and go
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  Speaker 2: depending on what markets think are important at any particular
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  Speaker 2: point in time. You can have long periods where oil
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  Speaker 2: prices and bonds- Don't correlate in any meaningful fashion. Most
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  Speaker 2: of the 2000s were like that. Decent chunk of the
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  Speaker 2: 2010s were like that as well. Now, the trend for
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  Speaker 2: much of the last, you know, nine months has been
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  Speaker 2: closer correlations with a gap during the middle of the summer.
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  Speaker 4: So the argument from the author in the journal is
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  Speaker 4: that bond traders paying such close attention to this could
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  Speaker 4: be driving yields higher than they need to be. And,
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  Speaker 4: you know, nobody believes that the closure of the Strait
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  Speaker 4: of Hormuz is going to be a permanent thing, which
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  Speaker 4: I agree.
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  Speaker 2: I don't think it's going to be permanent.
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  Speaker 4: Would you call this moment in time between, you know,
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  Speaker 4: supply shutoffs from the war in Russia and Ukraine to Iran.
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  Speaker 2: To now the Houthi rebels in the Red Sea?
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  Speaker 4: I have a difficult time coming up with a single
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  Speaker 4: moment other than the 1970s that was more impactful on
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  Speaker 4: energy than right now.
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  Speaker 2: There isn't one, right? This is a once, maybe twice
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  Speaker 2: in a lifetime thing that you see.
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  Speaker 4: And so I'm pretty hesitant to draw any conclusion that
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  Speaker 4: bond investors are reacting too dramatically to the spike in
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  Speaker 4: energy prices. Because like I said, I don't think we've
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  Speaker 4: seen a moment like this in half a century.
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  Speaker 2: The other piece that I'll point out there... There's been
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  Speaker 2: this assumption since the start of the Iran war that, hey,
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  Speaker 2: once this is done, everything will just be fine. I
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  Speaker 2: do like to point out, like, what if it isn't?
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  Speaker 2: And I'm not saying that, like, flippantly, but there are
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  Speaker 2: two ways that it could not be fine. The first is, okay,
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  Speaker 2: what if, like, it takes a lot longer to get
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  Speaker 2: to a resolution than people think, which is... By the way,
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  Speaker 2: we're now closing in. It'll be seven months on Sunday
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  Speaker 2: since this thing kicked off.
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  Speaker 4: Chuck, we've never seen anything take longer than we expect
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  Speaker 4: in the Middle East, so I'm sure that.
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  Speaker 2: That won't be the case. The one thing that you
• 15:15
  Speaker 2: can say about the Middle East is anything that happens there,
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  Speaker 2: it's over very quickly. We never get mired down in problems. No,
• 15:22
  Speaker 2: the word quagmire has never been used in the Middle East, ever. So, look.
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  Speaker 2: I'm hopeful. I've been hopeful the entire time that you
• 15:32
  Speaker 2: can get some kind of resolution. But here's the thing.
• 15:35
  Speaker 2: When we finally do get the lasting resolution to this conflict,
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  Speaker 2: none of us are going to know. What I mean
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  Speaker 2: by that is we've had so many false starts. Do
• 15:47
  Speaker 2: you think we're all just going to be like, ooh,
• 15:49
  Speaker 2: this is the one that sticks? No. We're going to
• 15:51
  Speaker 2: be like, okay, we're skeptical and we'll see how it
• 15:54
  Speaker 2: develops and so we'll see what happens. We're in the
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  Speaker 2: midst of one right now. But the other thing that
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  Speaker 2: I can tell you conclusively is the world that existed
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  Speaker 2: on February 26th, as far as how oil and other
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  Speaker 2: things would transit the Middle East, no longer exists. That
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  Speaker 2: is not coming back. It will not be the same
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  Speaker 2: as it was before. I've said this a few other times,
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  Speaker 2: by the way. You can look back over the last
• 16:23
  Speaker 2: several years and hey, the world that existed before the pandemic,
• 16:28
  Speaker 2: not coming back. And that's true. It's not the same
• 16:30
  Speaker 2: as it was during the pandemic, but things are fundamentally
• 16:33
  Speaker 2: altered from what they were in 2019. We're never getting
• 16:37
  Speaker 2: back to that. Likewise, once all this inflation broke out
• 16:41
  Speaker 2: back in 21 and 22, you were never getting back
• 16:46
  Speaker 2: to what came before. This is the same in the
• 16:50
  Speaker 2: Middle East. Things are never going to be what they
• 16:53
  Speaker 2: were before this conflict. I'm not saying they're going to
• 16:56
  Speaker 2: be worse or better. I'm just saying they're not going
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  Speaker 2: to be what they were, where ships just went through
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  Speaker 2: Hormuz without thinking about it, and that was how all
• 17:06
  Speaker 2: oil exited the Middle East. That will not be the
• 17:09
  Speaker 2: status quo after this. Status quo is the wrong word,
• 17:12
  Speaker 2: but that will not be the standard procedure after this. So, yeah,
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  Speaker 2: I guess I would disagree.
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  Speaker 4: I don't, not with you, with the article, the premise
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  Speaker 4: that bond traders are paying too close attention to oil markets.
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  Speaker 4: I think they, it's not to say that rates won't
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  Speaker 4: come down, but given the inherent risk in what we're
• 17:31
  Speaker 4: seeing here, given the especially effects on diesel prices and
• 17:36
  Speaker 4: potential for inflation there, I think bond investors may be
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  Speaker 4: appropriately assessing the risk for really dramatic dislocations in energy
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  Speaker 4: markets and pricing that into bond markets.
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  Speaker 2: Yeah, it's the, again, I'm not saying that you're going
• 17:53
  Speaker 2: to have, you know, 650 diesel forever, but I am saying, hey,
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  Speaker 2: the reason why anything energy related was the price that
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  Speaker 2: it was before this conflict was was because while there
• 18:07
  Speaker 2: was always this risk in the background of disruptions to
• 18:10
  Speaker 2: oil transit through the Middle East, there never was anything
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  Speaker 2: that meaningfully developed in the last 50 years. There just wasn't.
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  Speaker 2: You know, you had, again, even with all this, think
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  Speaker 2: about like last year, just as an example. There were, again,
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  Speaker 2: you had a set of strikes on Iranian nuclear facilities
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  Speaker 2: in 2025.
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  Speaker 1: Right.
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  Speaker 2: Did anything change in the Middle East as far as
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  Speaker 2: the transit of... No, it didn't. I'm not saying that
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  Speaker 2: the Middle East was peaceful. It's been far from that
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  Speaker 2: over the last 50 years. What I am saying is
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  Speaker 2: that the picture as far as transportation of energy through
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  Speaker 2: there is now fundamentally changed from what it was seven
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  Speaker 2: months ago. And you have to approach what comes next
• 18:56
  Speaker 2: with that in mind, in that the way things were,
• 19:02
  Speaker 2: That was the cheapest that you're ever going to be
• 19:04
  Speaker 2: able to get any of this stuff from point A
• 19:05
  Speaker 2: to point B. It was done that way because it
• 19:09
  Speaker 2: was the cheapest. Anything that you are working from from
• 19:12
  Speaker 2: here is inherently going to be less efficient and more
• 19:15
  Speaker 2: expensive because otherwise they would have already made those improvements.
• 19:19
  Speaker 2: So just keep that in the back of your mind
• 19:21
  Speaker 2: as you try to think about what comes next. Let's
• 19:24
  Speaker 2: take a quick break. When we return, we've got Wall
• 19:28
  Speaker 2: Street Watch coming up.
• 19:38
  Speaker 1: Like us on Facebook and follow us on Twitter at TFEShow.
• 19:43
  Speaker 1: Breaking business news is always first, right here on the
• 19:46
  Speaker 1: Financial Exchange Radio Network. Time now for Wall Street Watch.
• 19:52
  Speaker 1: Tracking the stocks, the data, and the headlines driving markets
• 19:55
  Speaker 1: so far today. Right here on the Financial Exchange Radio Network.
• 19:59
  Speaker 3: Well, after a volatile week due to concerns swirling around
• 20:02
  Speaker 3: the bond market, markets today are mostly quiet. Right now
• 20:06
  Speaker 3: the Dow is up about a third of a percent
• 20:09
  Speaker 3: or 145 points up.
• 20:10
  Speaker 1: S & P 500 is up.
• 20:14
  Speaker 3: Edging two points higher. NASDAQ is up merely three points.
• 20:19
  Speaker 3: Russell 2000 is down about a third of a percent.
• 20:23
  Speaker 3: The 10-year Treasury yield is up five basis points at 5.221%.
• 20:28
  Speaker 3: Crude oil down about 1%, trading at $ 93 a barrel,
• 20:31
  Speaker 3: while Brent is down two-thirds of a percent, trading at
• 20:35
  Speaker 3: $ 105 a barrel. Shares in Akamai Technologies are surging 7%
• 20:39
  Speaker 3: after the cloud computing company agreed to a cloud services
• 20:42
  Speaker 3: deal with Anthropic for $ 11. 6 billion. Meanwhile, Costco is up
• 20:48
  Speaker 3: over 2% after the wholesale company reported a higher profit
• 20:51
  Speaker 3: and rising sales in its fiscal fourth quarter, citing continued
• 20:55
  Speaker 3: spending from consumers despite sticky inflation. Elsewhere, the Wall Street
• 20:59
  Speaker 3: Journal is reporting that MGM Resorts is discussing making a
• 21:03
  Speaker 3: bid to purchase Barry Diller's People Incorporated, which owns a
• 21:06
  Speaker 3: roughly 27% stake in MGM. This comes after after people
• 21:11
  Speaker 3: withdrew its own bid to buy the casino operator earlier
• 21:14
  Speaker 3: this week. MGM Resorts shares are down 1%, and Nike
• 21:19
  Speaker 3: is down over half a percent after Bank of America
• 21:22
  Speaker 3: downgraded it to underperform, expecting sales declines from the second
• 21:26
  Speaker 3: quarter through the rest of fiscal 2027. I'm Tucker Silva,
• 21:32
  Speaker 3: and that is Wall Street Watch.
• 21:36
  Speaker 2: Mike, we got a piece here from the Wall Street Journal.
• 21:40
  Speaker 2: That just depresses me. It's titled Sports Betting. It can't
• 21:45
  Speaker 2: be that depressing. Everything about sports betting is depressing. That's true.
• 21:49
  Speaker 2: I'm sorry. This is where it's getting to. And as
• 21:51
  Speaker 2: someone who has bet on sports, again, I can hold
• 21:55
  Speaker 2: two distinct views, which are, hey, if you want to
• 21:58
  Speaker 2: go to a casino and bet on sports, that's fine.
• 22:01
  Speaker 2: But having the ability to bet, you know, five cents
• 22:04
  Speaker 2: on every pitch from every baseball game is fundamentally stupid
• 22:08
  Speaker 2: and bad for society. Mm-hmm. So, Kalshi's embrace of sports
• 22:13
  Speaker 2: betting tests rules for prediction markets, and it's talking about, like, hey,
• 22:16
  Speaker 2: is this gambling or are these actually, like, futures contracts
• 22:20
  Speaker 2: like Kalshi and how they have them set up? Hint,
• 22:23
  Speaker 2: it's gambling. The answer is it's gambling. Like, I know
• 22:25
  Speaker 2: that the law doesn't say that yet, but, like, if
• 22:28
  Speaker 2: you're able to bet on sports and it just happens
• 22:31
  Speaker 2: to be through a futures contract, it still is sports betting. So, like, let's...
• 22:37
  Speaker 2: get rid of all of the dystopian language and everything.
• 22:41
  Speaker 4: Remember that brief period of time where it wasn't terribly
• 22:44
  Speaker 4: clear whether or not you could vape on an airplane?
• 22:47
  Speaker 2: No, because I don't vape, so I didn't really pay
• 22:49
  Speaker 2: attention to it.
• 22:50
  Speaker 4: I remember this nine-month window where people were whipping out
• 22:54
  Speaker 4: vapes on airplanes and successfully arguing with flight attendants. Feels
• 23:01
  Speaker 4: a bit like that with sports betting right now.
• 23:03
  Speaker 2: So the other thing I've got to say... There's an
• 23:06
  Speaker 2: ad that, and I don't have TikTok or Instagram or
• 23:10
  Speaker 2: whatever the heck this appeared on, but I'm just going
• 23:13
  Speaker 2: to play the ad. You guys won't be able to
• 23:16
  Speaker 2: hear it because you're not plugged into my computer, but
• 23:19
  Speaker 2: I'll read the text of it to you. Okay. It's
• 23:21
  Speaker 2: a Calci ad. Don't play it. Well, I have to
• 23:23
  Speaker 2: in order to see the stuff. I can't read the
• 23:26
  Speaker 2: words otherwise. Get the transcript. But here's how bad it's
• 23:31
  Speaker 2: gotten with the advertising now. My girlfriend was cheating on me.
• 23:37
  Speaker 2: Three years together and I thought she had somebody. Still going.
• 23:42
  Speaker 2: Every month I'd send her money for groceries. Every month
• 23:45
  Speaker 2: she'd send it right back. And our food money never
• 23:47
  Speaker 2: moved a dollar. Same number all year. While that store
• 23:50
  Speaker 2: went up on everything. She's up at six with her
• 23:53
  Speaker 2: phone in the kitchen. For two months I didn't ask.
• 23:56
  Speaker 2: Sunday I finally did. She laughed so hard she sat
• 24:00
  Speaker 2: down on the floor. Then she turned the phone around.
• 24:06
  Speaker 2: She said, there's a market right here on my phone
• 24:08
  Speaker 2: called Kalshi. One question, do egg prices go up this month?
• 24:12
  Speaker 2: 12 cents to say yes, and everybody said no. She said,
• 24:17
  Speaker 2: I work the morning shift at a bakery. I see
• 24:19
  Speaker 2: the egg invoice every day, so I said yes. Eggs
• 24:23
  Speaker 2: went up, and each egg paid a dollar. Quote me
• 24:26
  Speaker 2: on that. She wasn't hiding a guy. She was hedging
• 24:30
  Speaker 2: on Kalshi. It's, it's like the most dystopian ad fused.
• 24:38
  Speaker 2: It's basically like, so this guy thought that his girlfriend
• 24:40
  Speaker 2: was cheating on her and it turned out that she
• 24:42
  Speaker 2: was making bets on the egg prices and they didn't
• 24:44
  Speaker 2: have to spend any of their grocery money because she
• 24:46
  Speaker 2: was right. And this is how you apparently get ahead
• 24:50
  Speaker 2: in life is by making bets on the price of groceries.
• 24:55
  Speaker 2: That's not even the worst one.
• 24:57
  Speaker 4: Like how she had an ad that aired on Tik TOK, uh,
• 25:02
  Speaker 4: I think it was last year. The exact text, according
• 25:06
  Speaker 4: to The Independent, was, quote, I was about to be
• 25:10
  Speaker 4: unable to pay my rent, but I got two years
• 25:12
  Speaker 4: of rent through Kalshi's predictions. And look, what world do
• 25:18
  Speaker 4: we live in where we think that is an acceptable
• 25:21
  Speaker 4: message for any sort of gambling or investment platform to
• 25:25
  Speaker 4: deliver to users?
• 25:27
  Speaker 2: And before y'all think that I'm, like, some, like, holier-than-thou,
• 25:31
  Speaker 2: how could anyone do this? I've told this story before.
• 25:34
  Speaker 2: There was a time when I was 22, 23 years old.
• 25:36
  Speaker 2: I was down at Foxwoods. I literally ran out of
• 25:39
  Speaker 2: money and had to take out a cash advance at
• 25:42
  Speaker 2: the blackjack table in order to continue playing so I
• 25:46
  Speaker 2: could pay my rent the following month. So, like, I've
• 25:49
  Speaker 2: been there. Like, I know of what I speak in
• 25:52
  Speaker 2: that I see how it gets when you get to
• 25:55
  Speaker 2: this point. My point is, I had to go all
• 26:00
  Speaker 2: the way to Foxwoods in order to lose that money,
• 26:02
  Speaker 2: and so there was something that fundamentally prevented me from
• 26:05
  Speaker 2: doing that 168 hours out of every week. On the
• 26:10
  Speaker 2: other hand, if you can just be laying in bed
• 26:13
  Speaker 2: being like, eggs go up, eggs go down, Chuck says...
• 26:18
  Speaker 2: this Chuck says that's like, it's, it's just fundamentally destructive
• 26:25
  Speaker 2: because you can't get away from that impulse and talk
• 26:29
  Speaker 2: to any young men in their twenties. And they will
• 26:32
  Speaker 2: tell you that either they or the majority of their
• 26:34
  Speaker 2: friends have some kind of problem with gambling at this point.
• 26:38
  Speaker 1: Yeah.
• 26:40
  Speaker 4: I think all of this stuff is probably gone too
• 26:44
  Speaker 4: far in the wrong direction. And the fact that Cal,
• 26:47
  Speaker 4: she then, offers almost the exact same thing as, what
• 26:52
  Speaker 4: are the sports betting apps that I.
• 26:54
  Speaker 2: DraftKings, FanDuel.
• 26:56
  Speaker 4: So you effectively have an unregulated, unregistered, and untaxed version
• 27:02
  Speaker 4: of those same platforms now operating in every U.S. state
• 27:06
  Speaker 4: without any oversight. And look, I'm generally not a fan
• 27:11
  Speaker 4: of a whole bunch more regulation, but at the very least,
• 27:16
  Speaker 4: these companies need to be.
• 27:20
  Speaker 4: Held to a standard of how they advertise and putting
• 27:23
  Speaker 4: money towards all of the gambling addiction treatment that you
• 27:26
  Speaker 4: know states are going to need to face over the
• 27:27
  Speaker 4: next few years because these 18 to 25 year olds
• 27:31
  Speaker 4: are going bust on these stupid.
• 27:33
  Speaker 2: Apps the other piece uh is like as long as
• 27:40
  Speaker 2: if we're talking about like things getting even worse did
• 27:41
  Speaker 2: you see about a month ago that there were two
• 27:47
  Speaker 2: different companies, actually, sorry, three different companies that filed for
• 27:53
  Speaker 2: ETFs that track the CME, Chicago Mercantile Exchange, is now
• 27:58
  Speaker 2: having NHL indexes and futures. So here's the thing about
• 28:04
  Speaker 2: futures contracts. There are reasons why you might want futures
• 28:09
  Speaker 2: contracts for oil or gas or cattle or wheat or
• 28:15
  Speaker 2: whatever because, hey, you run a business and you need
• 28:17
  Speaker 2: to hedge your costs or you want to sell out
• 28:19
  Speaker 2: in the future. You get it. There's no fundamental reason
• 28:23
  Speaker 2: why you need a futures index that, through whatever the
• 28:29
  Speaker 2: calculation is, I don't want to get too in the
• 28:31
  Speaker 2: weeds on it, is telling you, hey, here's how much
• 28:34
  Speaker 2: this NHL team's performance has been worth this year. You
• 28:37
  Speaker 2: don't need to No. There's no world in which you
• 28:41
  Speaker 2: need to do that. And certainly, there's no world in
• 28:43
  Speaker 2: which you need an exchange-traded fund coming into your portfolio
• 28:48
  Speaker 2: that is based on how many goals the Boston Bruins
• 28:51
  Speaker 2: scored last night. Yeah.
• 28:55
  Speaker 4: I have a big enough problem with this stuff where
• 28:57
  Speaker 4: it is today. The more that it starts seeping into
• 29:03
  Speaker 4: financial markets that are relied upon heavily for the U.S.
• 29:07
  Speaker 4: retirement system and, frankly, are... are one of the major
• 29:12
  Speaker 4: drivers of the U.S. economy is the fact that the
• 29:16
  Speaker 4: globe looks to the U.S. equity markets and financial markets
• 29:19
  Speaker 4: generally as the place to be. If we're going to
• 29:23
  Speaker 4: weaken that through gambling, then we are in some serious trouble.
• 29:26
  Speaker 2: These CME sports futures indices, by the way, they launch
• 29:30
  Speaker 2: next Monday. The ETFs do not, but the CME is
• 29:33
  Speaker 2: moving ahead with this. And again, like there's really no
• 29:37
  Speaker 2: reason for these to exist well yes there is.
• 29:41
  Speaker 4: Money because they can make money on gamblers yes but
• 29:44
  Speaker 4: the like but like compared to wheat or you know
• 29:47
  Speaker 4: corn futures yes i'm.
• 29:48
  Speaker 2: With you like these should not exist at a most
• 29:52
  Speaker 2: basic level And I know that I'm the old fuddy-duddy
• 29:55
  Speaker 2: being like, hey, you shouldn't have gambling products in your
• 29:59
  Speaker 2: investment account. I'm sorry, but you shouldn't have gambling products
• 30:03
  Speaker 2: in your investment account. Let's take a quick break when
• 30:06
  Speaker 2: we return. Let's see. Let's talk a little bit about,
• 30:10
  Speaker 2: do we want to do Iran or China? Or both?
• 30:16
  Speaker 2: We'll discuss next.
• 30:18
  Speaker 1: Find daily interviews and full shows of the Financial Exchange
• 30:21
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• 31:13
  Speaker 2: Got a piece in the Wall Street Journal, five takeaways
• 31:15
  Speaker 2: from Trump's Washington summit with Xi. They found five? Well, listen.
• 31:22
  Speaker 2: Does it include what kind of wine they drank? Actually, yes.
• 31:25
  Speaker 2: The president doesn't drink. Sorry. They did a toast, though.
• 31:28
  Speaker 2: Here's the deal. The United States received two pandas. Yep,
• 31:34
  Speaker 2: I heard about that. We did get two pandas. Yep.
• 31:36
  Speaker 2: So that's a big plus.
• 31:37
  Speaker 1: Mm-hmm.
• 31:38
  Speaker 2: Beyond that, there's really not much that's concrete. One of
• 31:41
  Speaker 2: the takeaways is, hey, not many concrete answers. They both
• 31:45
  Speaker 2: have chlamydia. What? That was the trick. Sorry. Anyways, several
• 31:56
  Speaker 2: Republican senators weren't happy with the spectacle. John Kennedy of
• 31:59
  Speaker 2: Louisiana said, quote, I think President Xi is a reptile.
• 32:04
  Speaker 2: I never thought I'd see that quote from a sitting U.S.
• 32:07
  Speaker 2: senator in the Wall Street Journal, but here we are.
• 32:09
  Speaker 4: Is this part of the Denver Airport conspiracy theory reptile,
• 32:12
  Speaker 4: or is that just that he can change his colors?
• 32:16
  Speaker 2: Again, I'm reading the piece, and I'm like, oh, this
• 32:18
  Speaker 2: is interesting. Xi privately warns U.S. support for Taiwan could
• 32:22
  Speaker 2: complicate future relations. No surprise there. That's been the status
• 32:26
  Speaker 2: quo for years. Xi says China is able to keep
• 32:30
  Speaker 2: AI under human control. Good luck with that. and the
• 32:35
  Speaker 2: two global powers are inching forward on trade. I did
• 32:38
  Speaker 2: see that Jameson Greer, the U.S. trade representative, did say
• 32:42
  Speaker 2: that they would have something for us on Monday as
• 32:44
  Speaker 2: it relates to trade. It's obviously not going to be
• 32:47
  Speaker 2: like some giant new deal or anything, but I'm interested
• 32:50
  Speaker 2: to see what they have that might be a little
• 32:52
  Speaker 2: bit more concrete there. And so we'll see kind of
• 32:57
  Speaker 2: what goes on. But overall, look, I'm not surprised. Low expectations,
• 33:01
  Speaker 2: low results. Yeah. Yeah, it's just not, there was nothing
• 33:07
  Speaker 2: heading into this that suggested it was going to produce anything,
• 33:11
  Speaker 2: you know, large scale and tangible there. This is just
• 33:15
  Speaker 2: kind of what it is. Sorry, go ahead. Wanted to
• 33:19
  Speaker 2: talk to folks briefly.
• 33:20
  Speaker 4: We have an event coming up next Thursday, so less
• 33:23
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• 33:26
  Speaker 4: retirement planning seminar, the last edition of this that we
• 33:29
  Speaker 4: are putting on, so get your seat while you can.
• 33:32
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• 33:36
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• 33:59
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• 34:01
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  Speaker 1: advisory services.
• 34:11
  Speaker 4: I just have this image of the pandas flying in
• 34:15
  Speaker 4: the cabin with the Chinese delegation of the private jet.
• 34:19
  Speaker 4: I don't think they do that. I'm sure they don't,
• 34:22
  Speaker 4: but I really like the image. Just she next to
• 34:26
  Speaker 4: a couple of pandas.
• 34:30
  Speaker 2: They're going to the Atlanta Zoo, right? I don't know. Pandas.
• 34:35
  Speaker 2: I think it's the Atlanta Zoo is where they said
• 34:37
  Speaker 2: that they were getting to do tricks and stuff. Yes.
• 34:41
  Speaker 2: The two giant pandas are going to the Atlanta Zoo.
• 34:45
  Speaker 4: Tucker, can you have AI take care of that for us?
• 34:47
  Speaker 4: Is that what you're doing right now is generating an image?
• 34:50
  Speaker 4: You're smirking and giggling back there, so I'm assuming that's.
• 34:53
  Speaker 2: What you're doing.
• 35:01
  Speaker 1: Oh, no.
• 35:02
  Speaker 2: Zoo Atlanta's original giant panda agreement with China began in
• 35:05
  Speaker 2: 1999 with the arrival of Yang Yang and Lun Lun.
• 35:08
  Speaker 2: The pair quickly became two of the zoo's most popular
• 35:11
  Speaker 2: residents and helped make Atlanta one of the nation's leading
• 35:13
  Speaker 2: panda destinations.
• 35:16
  Speaker 4: She would actually never let that happen because of all
• 35:18
  Speaker 4: the comparisons between him and Winnie the Pooh.
• 35:21
  Speaker 2: It's too close. But Yang Yang and Lun Lun return
• 35:24
  Speaker 2: to China with their two cubs in October 2024, ending
• 35:27
  Speaker 2: Zoo Atlanta's giant panda era and leaving the zoo without
• 35:31
  Speaker 2: pandas for the first time in decades. But six-year-old Ping
• 35:36
  Speaker 2: Ping and Fu Shuang are arriving at the zoo soon.
• 35:40
  Speaker 2: Fu Shuang is turning seven. I'm sorry, six in a
• 35:44
  Speaker 2: few weeks as well. So the pandas should be getting
• 35:46
  Speaker 2: here pretty soon. I mean... Hey, you know what?
• 35:49
  Speaker 4: If pandas are the thing that is needed to repair
• 35:53
  Speaker 4: relations with China and move things forward, then on board.
• 35:57
  Speaker 2: What do we send? If you were trying to send
• 36:00
  Speaker 2: a U.S. animal to a Chinese zoo, what animal do
• 36:04
  Speaker 2: you send?
• 36:05
  Speaker 1: Eagle.
• 36:07
  Speaker 2: Yeah, I guess it has to be an eagle. I'll
• 36:08
  Speaker 2: tell you. I got some great pictures of a bald
• 36:12
  Speaker 2: eagle from last week. Golden retriever.
• 36:17
  Speaker 4: I know that doesn't belong in a zoo, but if
• 36:19
  Speaker 4: you really want to impress people, it's a golden retriever.
• 36:23
  Speaker 2: I was thinking something a little bit more. The eagle,
• 36:26
  Speaker 2: I think, is in the right direction. Turkeys? Grizzly bear.
• 36:33
  Speaker 2: Grizzly could be a good one. What about just a
• 36:36
  Speaker 2: big old bison? Boring. Boring? Did you see the guy
• 36:41
  Speaker 2: that got run over by the bison this summer? It works...
• 36:48
  Speaker 2: With the pandas, because they're very cute and cuddly looking. Yeah.
• 36:52
  Speaker 4: I don't think the bison gives it to you in
• 36:55
  Speaker 4: the way the eagle or the bear does. Not that
• 36:58
  Speaker 4: those are cute, cuddly animals, but just in terms of
• 37:00
  Speaker 4: their impression.
• 37:01
  Speaker 2: What about like a big cat? They got plenty of those.
• 37:05
  Speaker 4: Yeah.
• 37:06
  Speaker 2: Yep.
• 37:07
  Speaker 4: You get into Western China with the mountains, there's lots
• 37:10
  Speaker 4: of good cats out there.
• 37:11
  Speaker 2: Bald eagle might be the answer. That was a good one.
• 37:14
  Speaker 2: Maybe just like a whole bunch of different falcons in general.
• 37:17
  Speaker 2: Some New York City rats.
• 37:22
  Speaker 3: Kill two birds with one stone. Get rid of the rats,
• 37:24
  Speaker 3: you know?
• 37:25
  Speaker 2: That's a huge problem. They always come back. Yeah, there's
• 37:28
  Speaker 2: no getting rid of the rats. I still remember the
• 37:31
  Speaker 2: first time that I moved into a place of my own,
• 37:36
  Speaker 2: and I heard mice in the walls, and I'm like, well,
• 37:39
  Speaker 2: how do you get rid of them? And it's like, well,
• 37:40
  Speaker 2: you can't actually ever get rid of them. You just
• 37:42
  Speaker 2: got to hope that you can kill them faster than
• 37:44
  Speaker 2: they keep coming in. Yeah, correct.
• 37:47
  Speaker 4: Some good Somerville-sized rats the size of a small dog.
• 37:51
  Speaker 2: You want to talk about the size of a golden retriever.
• 37:54
  Speaker 2: I mean, I'll tell you, the first time I saw
• 37:55
  Speaker 2: one of those things at night in the driveway, I
• 37:57
  Speaker 2: was like, oh, not sure it's a good idea to
• 38:00
  Speaker 2: live here in a basement apartment.
• 38:02
  Speaker 4: That was not the sound of the noise I made
• 38:04
  Speaker 4: the first time I saw it. Much higher pitched.
• 38:06
  Speaker 2: No. Let's take a quick break. We've got Hour 2
• 38:09
  Speaker 2: coming up in just a little bit.