Latest / The Financial Exchange Show / AI’s Risks Are Getting Harder to Ignore

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AI’s Risks Are Getting Harder to Ignore · The Financial Exchange Show

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  Speaker 1: is The Financial Exchange with Chuck Zotta and Mike Armstrong.
• 1:10
  Speaker 2: It's Chuck, Mike, and Tucker with you.
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  Speaker 3: And we got equity indices modestly down today. Nothing crazy
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  Speaker 3: going on. S & P about a quarter percent down.
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  Speaker 3: Dow's off about a third of a percent. NASDAQ composite,
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  Speaker 3: half a percent. So garden variety Thursday. Nothing crazy going on. But, hey,
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  Speaker 3: you can't hit all-time highs every day as much as
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  Speaker 3: you'd like to. Bonds continuing to struggle to find their footing.
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  Speaker 3: Ten-year Treasury up another 2.8 basis points to 5.305%.
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  Speaker 1: Dollar.
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  Speaker 3: A little bit of weakness today, not very much. Off 0.05%
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  Speaker 3: to 101.96. Gold catching a little bit of a bid
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  Speaker 3: on that weakness after struggling the last month or so now.
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  Speaker 3: Gold up $ 9 an ounce to 41.49. Crude oil is
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  Speaker 3: finding its footing in a big way today.
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  Speaker 2: Up $ 4.
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  Speaker 3: 38 a barrel on West Texas Intermediate to 92.72. And
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  Speaker 3: AAA National Average for gas prices down... half a cent
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  Speaker 3: to $ 4. 36 and one-tenth. Diesel down two cents to $ 6. 28,
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  Speaker 3: but both gas and diesel futures up about 4.5%. And
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  Speaker 3: so we may, if those moves hold, start to see
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  Speaker 3: a little bit of a reversal in gas and diesel
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  Speaker 3: prices that have both come down. Gas about 10 cents
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  Speaker 3: over the last week, two weeks. Diesel about 25 cents
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  Speaker 3: in the past couple weeks. We may still have, you know,
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  Speaker 3: another run at all-time highs on diesel. Gas, I'm still
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  Speaker 3: not really sure. Again, the supply situation isn't quite as tight.
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  Speaker 3: But I got to tell you, based on the EIA
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  Speaker 3: data yesterday, there's nothing that's overly encouraging that's still happening.
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  Speaker 3: I know that Hormuz transits for last week were, you know,
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  Speaker 3: back up in a good spot. But there's no guarantee
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  Speaker 3: that those hold, and they're also much more expensive transits now.
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  Speaker 2: Than they were pre-war.
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  Speaker 4: Because I know you, Chuck, I'm guessing you've got a
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  Speaker 4: projection of the hurricane sitting on a screen in your
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  Speaker 4: office right now.
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  Speaker 5: I do.
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  Speaker 4: So what's the latest there? Because as we've talked about,
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  Speaker 4: depending on the shift of that, it could be.
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  Speaker 5: Pretty ugly for.
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  Speaker 4: Well, a hurricane striking anywhere is always ugly, in particular
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  Speaker 4: what we're concerned about. And this moment would be diesel
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  Speaker 4: refining capacity getting taken offline.
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  Speaker 3: Yeah, the latest runs, which again, this thing is probably hitting...
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  Speaker 3: It looks like sometime late Friday into early Saturday. Like
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  Speaker 3: landfall is going to be sometime just after 7 p.m.
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  Speaker 3: on Friday is what's projected right now. And basically right
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  Speaker 3: at the tip of the Florida panhandle, kind of towards Mobile, Alabama,
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  Speaker 3: is where things are projected now. So if that happens,
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  Speaker 3: the good news from an energy price perspective is is
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  Speaker 3: that the two to three million barrels a day of
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  Speaker 3: refinery capacity right around New Orleans and the exit of
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  Speaker 3: the Mississippi River, those are unlikely to be heavily hit.
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  Speaker 3: The rainfall projections there are down to only a couple
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  Speaker 3: of inches. The winds peak out around tropical storm in
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  Speaker 3: that range. So, you know, that's what you see in
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  Speaker 3: that really heavy area in New Orleans. The problem that
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  Speaker 3: you still have is there is around 350,000 to 400,000
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  Speaker 3: barrels of capacity that is basically right around Mobile. And
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  Speaker 3: so there's still a pretty good chance that some of
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  Speaker 3: that ends up offline for at least a portion of time.
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  Speaker 3: And so that could play into what happens with pricing
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  Speaker 3: in the short term. But the worst case scenario that,
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  Speaker 3: you know, I think was out there was this storm
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  Speaker 3: tracking maybe 150, 200 miles further west and hitting like
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  Speaker 3: maybe 30, 40 miles west of New Orleans so that
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  Speaker 3: the New Orleans refineries and some of the ones towards
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  Speaker 3: like Houston are impacted. That fortunately does not appear to
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  Speaker 3: be happening here. So from an energy perspective, it seems
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  Speaker 3: like we dodged a bullet here. It still is not
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  Speaker 3: going to be ideal.
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  Speaker 2: And obviously.
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  Speaker 3: there's more damage that's still going to happen because of
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  Speaker 3: the hurricane hitting even beyond the energy sector. So this
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  Speaker 3: still isn't good. I'm not rooting for this thing to
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  Speaker 3: hit the panhandle. It's like, no, you'd prefer it just
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  Speaker 3: dies out in the northern Gulf. But hey, from an
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  Speaker 3: energy perspective, this is not going to be as bad
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  Speaker 3: as it could have been based on where this thing
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  Speaker 3: may have tracked earlier in the week.
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  Speaker 6: Good.
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  Speaker 2: So that's good news.
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  Speaker 3: Let's talk a little bit about this piece from the
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  Speaker 3: Bloomberg editorial board. AI's risks are no reason for panic.
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  Speaker 2: Well, here's the thing.
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  Speaker 5: Well, I don't think anybody is panicking, but I think
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  Speaker 5: maybe they should be.
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  Speaker 7: Oh, people are panicking.
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  Speaker 5: Where?
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  Speaker 2: Show me the panickers. Anywhere. Here's the thing.
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  Speaker 3: I never think that panic is an appropriate response to
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  Speaker 3: anything because you can't do anything with panic.
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  Speaker 7: We can panic.
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  Speaker 2: You can.
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  Speaker 3: But that's all you can do when you're panicking. Like,
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  Speaker 3: you can't do anything else. But, like, having said this,
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  Speaker 3: Sam Altman, over the weekend, said, hey, some bad things
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  Speaker 3: may happen, but I hope that people will do more
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  Speaker 3: good stuff than bad stuff.
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  Speaker 5: Great.
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  Speaker 2: Thanks, Sam.
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  Speaker 3: So here's the problem with that statement. And I say
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  Speaker 3: this as someone who, like, in particular, in the last
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  Speaker 3: week or two, I've started using AI more to just, like,
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  Speaker 3: build random stuff. I'll give you just an example, Mike.
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  Speaker 3: The other day now, I needed an internal rate of
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  Speaker 3: return calculator for something. Usually, it's like, okay, go on Google,
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  Speaker 3: find IRR calculator, then plug all your crap in.
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  Speaker 2: I was like, no, I don't want to do this.
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  Speaker 3: I was like, hey, just build me this and here's
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  Speaker 3: the other functionality that I want as well that these
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  Speaker 3: calculators don't usually have. It built me exactly what I
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  Speaker 3: needed without me having to code anything. And I was like, oh,
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  Speaker 3: this is nice.
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  Speaker 2: This is useful.
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  Speaker 3: I don't have to Google this stuff and then it
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  Speaker 3: bolts on like other pieces after. No, I can have
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  Speaker 3: everything that I want. So, look, I get that AI
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  Speaker 3: can be helpful. But here's why Altman's abstraction, and it's
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  Speaker 3: always abstraction that gets you in trouble in these situations.
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  Speaker 3: Here's why that abstraction is bad. Mike, when we say like, hey,
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  Speaker 3: some bad stuff may happen. that's a pretty like wide
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  Speaker 3: range of things. Like some bad stuff may happen could
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  Speaker 3: range from, Hey, like I woke up and I had
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  Speaker 3: a sniffle to my house fell down. I woke up
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  Speaker 3: and my head was sewn to the carpet.
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  Speaker 1: Right?
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  Speaker 3: Like both of those are bad stuff, but in different ways.
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  Speaker 3: And so until you get to like the specifics, like,
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  Speaker 3: can you ask Altman? Like, Hey, what do you mean
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  Speaker 3: by bad stuff? And no one, asked him this because
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  Speaker 3: like no one ever asks follow-up questions either anymore they're
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  Speaker 3: just like oh like more good stuff than bad that
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  Speaker 3: sounds nice and like the the problem then is look
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  Speaker 3: if you just say hey we'll have more good stuff
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  Speaker 3: than bad you can use that to justify anything like
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  Speaker 3: child labor well there's some bad stuff but think of
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  Speaker 3: all the good that comes out of that Well, no,
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  Speaker 3: that's ludicrous.
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  Speaker 2: Like, you can't just say that.
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  Speaker 3: Like, you can't just be like, well, like, if we
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  Speaker 3: get rid of, like, all, like, police, like, yeah, there'll
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  Speaker 3: be crime, but think about how free you'll be.
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  Speaker 2: Like, no, like, it doesn't work like that.
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  Speaker 3: Like, so you can't just say, well, some bad stuff
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  Speaker 3: will happen, but more good, hopefully.
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  Speaker 4: Yeah, I think the problem that I face with all
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  Speaker 4: this is we need some specifics. We need some specific rules.
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  Speaker 3: And no one provides them because they either don't know
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  Speaker 3: them or they're too scared to tell us.
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  Speaker 4: And that's where I think a little bit of panic
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  Speaker 4: can be a good thing. This is a completely different thing,
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  Speaker 4: but something we were going to probably.
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  Speaker 5: Talk about today.
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  Speaker 4: Was it last week or two weeks ago where there
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  Speaker 4: was the event over at the, what was the name
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  Speaker 4: of the British Air Force base?
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  Speaker 5: Fairford. Fairford base.
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  Speaker 4: And we still don't exactly know what happened there. No,
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  Speaker 4: it's seemingly a couple of vans were parked near the
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  Speaker 4: base and a bunch of people who may or may
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  Speaker 4: not have been funded by Iranians. All sorts of questions
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  Speaker 4: who have been released on bail.
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  Speaker 2: Right. By the way, like it's again, things are weird.
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  Speaker 4: And so in spite of that, which makes me very
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  Speaker 4: convinced that there is some national security concerns.
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  Speaker 7: The U.S.
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  Speaker 4: Military decided to pretty much take all of its bombers
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  Speaker 4: and fly them immediately to the United States without even
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  Speaker 4: knowing at the time how they were going to refuel them.
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  Speaker 4: And so I will make the statement that it appears
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  Speaker 4: that panic can cause you to take action that may
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  Speaker 4: or may not be necessary, but seemed like a good
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  Speaker 4: risk decision apparently by the U.S.
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  Speaker 5: Military at the time. And I think we need a
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  Speaker 5: little bit more of that.
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  Speaker 4: I think we need a little bit more of the hey,
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  Speaker 4: these people are telling us that this stuff could kill us,
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  Speaker 4: so maybe we should, even if they're the wrong rules,
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  Speaker 4: maybe we should establish something like, how is a company
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  Speaker 4: liable if one of its AI agents does something horribly
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  Speaker 4: illegal that leads.
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  Speaker 5: To harm to an individual?
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  Speaker 4: These are the types of things that I'm talking about
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  Speaker 4: that we seem completely just out to lunch on. And
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  Speaker 4: it's immensely frustrating to me. I'm not saying that we
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  Speaker 4: need to solve all the problems that this thing could cause.
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  Speaker 4: I'm not saying that we need to stop all data
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  Speaker 4: center construction. But some very basic stuff would be nice
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  Speaker 4: to know at this point in time.
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  Speaker 2: Mike, you familiar with Sherlock Holmes?
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  Speaker 5: Sure.
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  Speaker 2: The Adventure of Silver Blaze.
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  Speaker 1: The horse.
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  Speaker 6: Yeah?
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  Speaker 1: Maybe. Maybe.
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  Speaker 3: So basically you end up with this racehorse, Silver Blaze,
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  Speaker 3: that gets stolen and the horse's trainer is murdered and
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  Speaker 3: Holmes is trying to figure out who did it.
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  Speaker 6: Okay.
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  Speaker 3: And this is the classic one where the dog that
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  Speaker 3: is supposed to guard the place didn't bark and the
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  Speaker 3: absence of the dog barking is what led them to say, oh,
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  Speaker 3: it must be like someone familiar.
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  Speaker 2: Hence the phrase like the dog that didn't bark.
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  Speaker 6: Yeah.
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  Speaker 3: Whenever AI people stop talking about something, it makes me nervous.
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  Speaker 3: And you just pay attention to what they're not talking about.
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  Speaker 2: And it makes me nervous.
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  Speaker 3: Because if they were talking about it, you'd say, okay,
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  Speaker 3: they really think there's nothing to fear. And so when
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  Speaker 3: you don't hear anything about.
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  Speaker 3: You know, okay, like, what's going on as far as,
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  Speaker 3: you know, breaking, you know, cryptography and stuff like that, like,
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  Speaker 3: some of these things that are potentially, like, upending, like,
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  Speaker 3: security of the entire internet, that makes me nervous, just
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  Speaker 3: as an example, because, like, the banking system doesn't work
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  Speaker 3: without modern cryptography. When you don't hear anything from them, except, like, hey,
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  Speaker 3: we're investing a bunch of money into, like, maybe, like,
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  Speaker 3: healthcare developments, but, like, no specifics.
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  Speaker 3: Okay, like, that makes me a little bit nervous. So, like,
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  Speaker 3: forgive me for not trusting these guys, because A, they're
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  Speaker 3: not trustworthy based on how they've behaved just for the
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  Speaker 3: last two years, let alone the last, like, couple decades.
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  Speaker 3: And B, they're starting to stop talking about some things,
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  Speaker 3: and that makes me wonder what they now know.
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  Speaker 2: So we'll see.
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  Speaker 3: Let's take a quick break, because, like, if we're being honest, like,
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  Speaker 3: the two biggest risks that AI has, it's not, like, actually, like, commandeering, like,
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  Speaker 3: planes and blowing us all up, it's basically ruining the
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  Speaker 3: financial system or something bad happening from a healthcare perspective.
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  Speaker 2: Yeah, I think it would be destabilizing. You die or
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  Speaker 2: you have no money.
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  Speaker 5: Yeah, destabilizing some of our critical infrastructure.
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  Speaker 1: Yes.
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  Speaker 2: Let's take a quick break.
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  Speaker 3: And when we return, let's talk a little bit about, oh,
• 13:23
  Speaker 3: these big debt deals from AI companies. This is going
• 13:25
  Speaker 3: to be a fun one.
• 13:27
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• 14:01
  Speaker 3: Mike, we got a Wall Street Journal exclusive here. Oracle, Broadcom,
• 14:05
  Speaker 3: and SpaceX seek blockbuster debt deals to pay for AI chips.
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  Speaker 3: This talks about, this gets into some of that idea of,
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  Speaker 3: you know, crowding out. Hey, there's so much debt that's
• 14:14
  Speaker 3: needed here. And I know who pays the highest interest rate. Yes,
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  Speaker 3: I would imagine it's probably, I would say probably Oracle.
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  Speaker 5: I don't know.
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  Speaker 3: I haven't looked at anything in terms of SpaceX's borrowing costs,
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  Speaker 3: but I would imagine it's Oracle.
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  Speaker 5: I would think so, yeah.
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  Speaker 1: I don't know.
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  Speaker 3: I mean, like, neither of them really have, like, classic
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  Speaker 3: core businesses that are big enough to support the amount
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  Speaker 3: of borrowing they need to do.
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  Speaker 5: True.
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  Speaker 2: Yeah.
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  Speaker 3: But in any case, you're talking about, like, you know, again,
• 14:44
  Speaker 3: SpaceX talking about a $ 40 billion chip financing deal for
• 14:49
  Speaker 3: NVIDIA chips.
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  Speaker 2: Oracle's talking about a big chip purchase. And again, there's
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  Speaker 2: two ways to look at this.
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  Speaker 3: The first is, hey, these guys know the future and
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  Speaker 3: they know they're going to be able to pay for this.
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  Speaker 3: The second is, hey, they know the future and it
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  Speaker 3: doesn't look good, but they just got to keep the
• 15:07
  Speaker 3: plate spinning because they got to do it. And this
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  Speaker 3: is one of those where they.
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  Speaker 4: Don't know the future and they're wrong about the future
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  Speaker 4: and they're going to be completely off sides.
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  Speaker 6: I don't know.
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  Speaker 5: There is that option, too.
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  Speaker 2: I don't think so.
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  Speaker 3: I think like at this point in the cycle, like
• 15:24
  Speaker 3: it's not 2023 anymore.
• 15:27
  Speaker 2: You know, like it's like we're.
• 15:29
  Speaker 3: We're fairly well along now to where the revenue is
• 15:32
  Speaker 3: going to have to start showing up soon. And so, again,
• 15:37
  Speaker 3: the next 12 to 18 months are put up or
• 15:38
  Speaker 3: shut up time.
• 15:39
  Speaker 5: Yeah.
• 15:39
  Speaker 3: Like, when you're taking out a $ 40 billion loan, probably
• 15:44
  Speaker 3: it's somewhere between like 8% to 10% interest, so you're
• 15:46
  Speaker 3: paying like $ 4 billion a year on that interest. Okay,
• 15:50
  Speaker 3: the revenue's got to show up. Like, it can't just
• 15:54
  Speaker 3: be not there anymore.
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  Speaker 2: This is... The scale.
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  Speaker 3: And just the urgency of this is going to change
• 16:02
  Speaker 3: in the next 12 to 18 months. And so I
• 16:06
  Speaker 3: don't know what the answer is. I don't think there's
• 16:08
  Speaker 3: a middle ground here. I don't think AI firms are
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  Speaker 3: just going to muddle through. This is either going to
• 16:15
  Speaker 3: work or it's not.
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  Speaker 4: Can I tell you something that's completely unrelated here, but
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  Speaker 4: AI related, that I have to say I think one
• 16:24
  Speaker 4: of the most surprising thing that's happened in the AI
• 16:27
  Speaker 4: space over the course of the last year or so
• 16:31
  Speaker 4: is that Meta was the one that came to market
• 16:35
  Speaker 4: with a usable AI assistant. Again, a lot of misgivings
• 16:40
  Speaker 4: about it, but I cannot believe that Meta beat Google
• 16:44
  Speaker 4: to market with that. You just think about the massive
• 16:48
  Speaker 4: head start that Google has in providing an AI assistant
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  Speaker 4: to that is familiar with your emails, your search history
• 16:56
  Speaker 4: and everything else compared to what Meta had to do
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  Speaker 4: to get you to give it all that stuff. Like
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  Speaker 4: Google already had it all and they did not get
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  Speaker 4: to market before Meta did. And now Meta has a
• 17:09
  Speaker 4: product that has been downloaded 5 million times in the
• 17:11
  Speaker 4: app store. Again, I wouldn't use it, but I am
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  Speaker 4: just really impressed that that happened.
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  Speaker 2: Yeah, it's, It is wild that they got there first.
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  Speaker 5: Right?
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  Speaker 1: It is.
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  Speaker 5: I would not have bet on them for that.
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  Speaker 6: No.
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  Speaker 4: Their recent history shows me that they do not have
• 17:32
  Speaker 4: much expertise in building products that consumers want, and they
• 17:37
  Speaker 4: really did here.
• 17:39
  Speaker 3: Mike, I want to get to a story that we
• 17:40
  Speaker 3: weren't able to cover in hour one. NFL tells Supreme
• 17:47
  Speaker 3: Court that prediction markets are gambling and should be regulated
• 17:50
  Speaker 3: by the states.
• 17:51
  Speaker 4: Because then we would feel better about taking their ad revenue.
• 17:56
  Speaker 3: Yeah, so this is the thing that I just struggle with. Look,
• 18:01
  Speaker 3: on one level, I completely agree with the NFL on this,
• 18:04
  Speaker 3: which those of you who have listened to our show,
• 18:06
  Speaker 3: I don't agree with the NFL often. But when I do,
• 18:08
  Speaker 3: it's on this part of sports gambling. Prediction markets are
• 18:12
  Speaker 3: sports gambling.
• 18:15
  Speaker 2: Yes.
• 18:16
  Speaker 3: It doesn't pass this. Well, no, I'm making a prediction,
• 18:20
  Speaker 3: and so I'm investing in a futures contract. No, you're not.
• 18:23
  Speaker 3: You're gambling on sports. Call a spade a spade. But
• 18:28
  Speaker 3: here's the thing. The NFL, and this is not just
• 18:31
  Speaker 3: the NFL. All the sports leagues are so broken on this.
• 18:34
  Speaker 3: at this point, you listen to any of the players
• 18:37
  Speaker 3: from these leagues talk and they they'll tell you about
• 18:40
  Speaker 3: like the threats that they get after a game because
• 18:43
  Speaker 3: like a bet didn't pay off or this and that.
• 18:46
  Speaker 3: And people be like, well, that's like, that's the business
• 18:49
  Speaker 3: they chose. And I'm like, no, like a lot of
• 18:51
  Speaker 3: these guys, like when they went into sports, like a
• 18:54
  Speaker 3: sports betting wasn't legal. Uh, and B like there are
• 18:57
  Speaker 3: bad parts of like businesses that we try to regulate
• 19:01
  Speaker 3: out of them. Like, hey, you can't run a Ponzi scheme,
• 19:04
  Speaker 3: and hey, like, you can't, like, make up, like, medical information. Like,
• 19:10
  Speaker 3: there's stuff that we say you can't do, and I
• 19:13
  Speaker 3: gotta tell you, these sports leagues, I see how bad
• 19:16
  Speaker 3: it is with young men who gamble now, and, like,
• 19:18
  Speaker 3: it's just, it's, they are going to kill the golden
• 19:22
  Speaker 3: goose by going too far down this rabbit hole, regardless
• 19:25
  Speaker 3: of what they're trying.
• 19:25
  Speaker 2: To protect here now.
• 19:26
  Speaker 3: Let's take a quick break. When we return, we got
• 19:29
  Speaker 3: Wall Street Watch next.
• 19:39
  Speaker 1: Bringing the latest financial news straight to your radio every day.
• 19:44
  Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
• 19:49
  Speaker 6: Time now.
• 19:50
  Speaker 1: For Wall Street Watch. Tracking the stocks, the data, and
• 19:53
  Speaker 1: the headlines driving markets so far today. Right here on
• 19:56
  Speaker 1: the Financial Exchange Radio Network.
• 19:58
  Speaker 7: Markets extending their losses with rising treasury yields still in
• 20:03
  Speaker 7: focus and oil prices jumping higher on increased tensions with Iran.
• 20:07
  Speaker 7: Right now the Dow is down Nearly half a percent
• 20:11
  Speaker 7: or 212 points lower. S & P 500 down about
• 20:15
  Speaker 7: four-tenths of a percent or 30 points off. NASDAQ is
• 20:19
  Speaker 7: down nearly two-thirds of a percent or 160 points lower.
• 20:23
  Speaker 7: Rust 2000 selling off by about 1%. 10-year treasury yield
• 20:27
  Speaker 7: is up two basis points at 5.303%. Crude oil jumping
• 20:30
  Speaker 7: 5% higher at $ 92 a barrel, while Brent is also
• 20:32
  Speaker 7: up 5% trading.
• 20:32
  Speaker 2: At $ 105 a barrel.
• 20:39
  Speaker 7: Well, in case you missed it, the Financial Times reported
• 20:41
  Speaker 7: earlier that Starbucks has explored a takeover of Chipotle that
• 20:46
  Speaker 7: would ultimately reunite Brian Nickel with Chipotle, who previously served
• 20:51
  Speaker 7: as the Bredio chain's CEO. Starbucks shares are down 3%,
• 20:54
  Speaker 7: while Chipotle's stock is rising about 7%. Meanwhile, third quarter
• 20:59
  Speaker 7: earnings are starting to trickle in. After Pepsi reported better
• 21:03
  Speaker 7: than expected earnings and revenue, however, the Food and beverage
• 21:06
  Speaker 7: giant cut its full-year earnings forecast. Pepsi stock is up
• 21:10
  Speaker 7: nearly 1%. Elsewhere, Levi Strauss falling 3% after the G-Maker
• 21:15
  Speaker 7: missed third-quarter revenue forecast. Broadcom is down 1% after The
• 21:19
  Speaker 7: Wall Street Journal reported it has been working to arrange
• 21:22
  Speaker 7: more than $ 50 billion in financing for OpenAI's custom AI chip.
• 21:28
  Speaker 7: And tomorrow morning, ahead of the opening bell, we'll see
• 21:31
  Speaker 7: third-quarter earnings from Delta. I'm Tucker Silva, and that is
• 21:35
  Speaker 7: Wall Street Watch.
• 21:36
  Speaker 2: Mike, what do you want to cover now?
• 21:40
  Speaker 4: How about the family gifting strategies that are out there?
• 21:43
  Speaker 2: Yeah, yeah. Let's go through it.
• 21:45
  Speaker 4: So there's this piece from the Wall Street Journal about
• 21:48
  Speaker 4: how families can beat 7% mortgage rates and lower their
• 21:51
  Speaker 4: tax bills at the same time.
• 21:55
  Speaker 5: Which is great for families who can do so.
• 21:58
  Speaker 4: And I suppose the Wall Street Journal does know its
• 22:00
  Speaker 4: audience here.
• 22:01
  Speaker 5: But what they're referring to is the fact that.
• 22:05
  Speaker 3: Something that's not available for the vast majority of Americans.
• 22:08
  Speaker 5: Right, yeah.
• 22:08
  Speaker 4: I mean, this is very much a, what do you think,
• 22:11
  Speaker 4: 5%-er article?
• 22:14
  Speaker 6: Yeah.
• 22:15
  Speaker 5: You know, that's probably where this demo lives.
• 22:18
  Speaker 4: But they point out that if you do have, you know,
• 22:21
  Speaker 4: if grandma's got a bunch of money sitting in cash
• 22:24
  Speaker 4: because grandma loves cash and wants to help her family...
• 22:28
  Speaker 4: instead of just giving the money away, she could extend
• 22:31
  Speaker 4: a loan to that family. And you need to be
• 22:33
  Speaker 4: aware in that case that the IRS actually publishes stated
• 22:36
  Speaker 4: minimum interest rates that you must collect on a loan
• 22:39
  Speaker 4: to a family member or anybody else for it to
• 22:42
  Speaker 4: not be considered a gift. I have seen this work
• 22:45
  Speaker 4: out in a positive fashion, and I think it is
• 22:49
  Speaker 4: something that people are generally unaware of. But... I can
• 22:54
  Speaker 4: actually see it being a useful strategy in some cases
• 22:57
  Speaker 4: where you say, yes, grandma or grandpa has all of
• 23:02
  Speaker 4: this money sitting aside in a money market account. It's
• 23:05
  Speaker 4: earning very little. Her grandkids are buying their first home.
• 23:10
  Speaker 4: And hey, grandma's going to finance that thing and be
• 23:14
  Speaker 4: collecting 6% interest, which is a point and a half
• 23:19
  Speaker 4: lower than you would get from a 30-year mortgage. And
• 23:22
  Speaker 4: a heck of a lot better than they're getting from
• 23:24
  Speaker 4: the bank. And is everybody happy in that scenario? Broadly speaking,
• 23:30
  Speaker 4: maybe yes, but there's also a lot of potential for
• 23:33
  Speaker 4: screw ups and problems down the road.
• 23:36
  Speaker 5: If, say, grandma needs to go into a nursing home
• 23:38
  Speaker 5: or something like that.
• 23:40
  Speaker 2: And again, it's just.
• 23:43
  Speaker 3: Like, yeah, if you can get a family member to
• 23:45
  Speaker 3: lend you the money for a house, like, I'm sure
• 23:49
  Speaker 3: it's easier. most families can't like, they just can't do that.
• 23:53
  Speaker 2: Like it's, it's, it's just not realistic.
• 23:57
  Speaker 5: Yeah. Yeah.
• 23:59
  Speaker 4: So, I mean, great for families that can, and if
• 24:00
  Speaker 4: you can, uh, and this is a scenario that you're
• 24:03
  Speaker 4: looking at, then absolutely go take a look at gifting
• 24:06
  Speaker 4: and all sorts of things that you can do to
• 24:08
  Speaker 4: help your family. But to your point, Chuck, uh, this
• 24:11
  Speaker 4: is very much a story tailored for the top 5%
• 24:15
  Speaker 4: of asset and income households in the United States.
• 24:17
  Speaker 5: Then the rest of the 95% of.
• 24:19
  Speaker 4: Us would struggle very much with the ability to provide
• 24:23
  Speaker 4: that sort of thing for our families. I want to
• 24:26
  Speaker 4: talk to folks about our brand new guide from the
• 24:28
  Speaker 4: Armstrong Advisory Group. Chuck, we do actually spend a lot
• 24:31
  Speaker 4: of time talking about this subject of emergency funds, mainly
• 24:36
  Speaker 4: because I think we get a lot of questions from
• 24:38
  Speaker 4: people such as, hey, I'm setting aside money for a
• 24:42
  Speaker 4: house that I want to buy 18 months from now.
• 24:45
  Speaker 4: Sure would be great to make a whole bunch of
• 24:47
  Speaker 4: money in the stock market.
• 24:49
  Speaker 5: What do you think?
• 24:50
  Speaker 4: And our response has been, you know, typically, well, you know,
• 24:54
  Speaker 4: the S & P 500 on any 12 to 18
• 24:57
  Speaker 4: month rolling time period is down a good third of
• 25:00
  Speaker 4: the time. So be really, really careful with what you're
• 25:03
  Speaker 4: talking about here. But how does one approach, you know,
• 25:07
  Speaker 4: deciding how to fund and how much to fund of
• 25:11
  Speaker 4: an emergency fund? Because it changes a lot depending on
• 25:16
  Speaker 4: your family situation, how old you are and what type
• 25:19
  Speaker 4: of assets you have.
• 25:20
  Speaker 1: Yeah.
• 25:20
  Speaker 3: And I think it's something where, look, as you noted,
• 25:23
  Speaker 3: like there's, there's different ways to approach it depending on
• 25:26
  Speaker 3: where you are in life. A retiree has a completely
• 25:28
  Speaker 3: different need for an emergency fund relative to, uh, you know,
• 25:33
  Speaker 3: a single parent with two kids. Like those are very
• 25:36
  Speaker 3: different situations. So you don't just sit there and be like, well,
• 25:39
  Speaker 3: six months of living expenses. Like, no, like it's, it's different.
• 25:43
  Speaker 3: It's also really hard to build an emergency fund. It's
• 25:46
  Speaker 3: intimidating if you hear like, oh, gee, I need like,
• 25:49
  Speaker 3: you know, three months or nine months, depending on my situation.
• 25:53
  Speaker 2: You don't have to get there right away.
• 25:54
  Speaker 3: You can start with five dollars and then put another
• 25:57
  Speaker 3: five away and put another five and gradually get somewhere
• 26:00
  Speaker 3: with it. So I think the big things are, hey,
• 26:04
  Speaker 3: you got to understand where you are in life and
• 26:06
  Speaker 3: that affects how much you end up needing an emergency fund.
• 26:10
  Speaker 3: You need to work at your own pace. Obviously, quicker
• 26:13
  Speaker 3: is better, but you can't always do as fast as
• 26:16
  Speaker 3: you want. And it's got to be somewhere safe. It
• 26:19
  Speaker 3: has to be somewhere safe because if the money's not
• 26:22
  Speaker 3: there when you need it to be.
• 26:26
  Speaker 2: That's a problem too. Like you haven't really built an
• 26:27
  Speaker 2: emergency fund then.
• 26:28
  Speaker 4: Yeah, we cover a number of subjects in this guide,
• 26:30
  Speaker 4: including how to assess when that emergency fund might be
• 26:33
  Speaker 4: too large.
• 26:33
  Speaker 5: And hey, now inflation's eating me away.
• 26:36
  Speaker 4: If you have questions like this and you're working towards
• 26:39
  Speaker 4: building that bucket, give us a ring at 800-393-4001 to
• 26:43
  Speaker 4: request your free copy of our guide this month, Building
• 26:48
  Speaker 4: and Sizing Your Emergency Fund. We all know somebody that
• 26:52
  Speaker 4: could use a little bit of advice and work on
• 26:54
  Speaker 4: this subject. You can request the guide at armstrongadvisory.com or
• 26:59
  Speaker 4: give us a ring for your free copy at 800-393-4001.
• 27:04
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 27:07
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 27:09
  Speaker 1: Armstrong guide is specific financial, legal, or tax advice. Consult
• 27:13
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 27:15
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 27:18
  Speaker 1: advisory services.
• 27:21
  Speaker 2: Let's see.
• 27:21
  Speaker 3: My quick one here. There's a piece from the New
• 27:23
  Speaker 3: York Times. This photo is an AI fake. Can you tell?
• 27:28
  Speaker 3: And the answer is no, I can't.
• 27:30
  Speaker 4: The only hint that I got It pointed out a
• 27:34
  Speaker 4: bunch of things that were wrong with the photo that
• 27:35
  Speaker 4: I did not notice. The only one that I got
• 27:37
  Speaker 4: is it was a FedEx worker wearing a badge and
• 27:42
  Speaker 4: his hands were white and his badge was a black person.
• 27:47
  Speaker 4: That was like the only hint out there that you
• 27:49
  Speaker 4: could visibly see. Everything else to me looked like a
• 27:52
  Speaker 4: very genuine photo. And the reality is that like all
• 27:56
  Speaker 4: of our other concerns about AI, this stuff is getting
• 27:58
  Speaker 4: really good and there is, It used to be you'd
• 28:01
  Speaker 4: post one of these things and the dude would have
• 28:03
  Speaker 4: seven fingers and the text would all be garbled.
• 28:06
  Speaker 5: It's just not the case now.
• 28:08
  Speaker 3: Again, one of the things they cite here, it's a guy,
• 28:12
  Speaker 3: pretend like FedEx office, a guy with a box. And
• 28:15
  Speaker 3: one of the things is like, It says, context clues.
• 28:19
  Speaker 3: Some errors might require specialized knowledge. The symbols on the
• 28:21
  Speaker 3: side of the box are mostly accurate. The first means
• 28:24
  Speaker 3: this side up, the second means fragile, but there's no
• 28:27
  Speaker 3: standard symbol that matches what's depicted in the third square.
• 28:32
  Speaker 2: What am I going to be? I got to be
• 28:33
  Speaker 2: a cardboard box expert now?
• 28:35
  Speaker 4: Well, and then it draws these lines on the floor
• 28:38
  Speaker 4: and tells me that the flooring looks like it's.
• 28:41
  Speaker 3: The vanishing point is not consistent. I'm like, okay, that's
• 28:48
  Speaker 3: fine that it's not, but.
• 28:52
  Speaker 2: What am I going to do?
• 28:52
  Speaker 3: I'm going to get out a protractor every time I
• 28:54
  Speaker 3: look at a picture online?
• 28:56
  Speaker 1: Yeah.
• 28:57
  Speaker 4: I mean, again, you've brought this up more than I have, Chuck,
• 29:01
  Speaker 4: but we keep hurtling to this pace where nobody can
• 29:03
  Speaker 4: trust anything they see online.
• 29:05
  Speaker 2: The internet's going to die.
• 29:06
  Speaker 7: I mean, I'm pretty good at this stuff, and without
• 29:09
  Speaker 7: the New York Times pointing out all the You know,
• 29:12
  Speaker 7: circling in and zooming in and be like, hey, this
• 29:14
  Speaker 7: is wrong, this is wrong.
• 29:15
  Speaker 2: If I just looked at this photo, no. I really
• 29:18
  Speaker 2: did this test and looked at it for a while.
• 29:21
  Speaker 4: And like I said, the only one I got was
• 29:23
  Speaker 4: the badge skin color issue.
• 29:25
  Speaker 7: I mean, looking at it now, yeah, the flooring is
• 29:27
  Speaker 7: a little warped at the bottom right there.
• 29:31
  Speaker 2: But maybe, like, the FedEx building's just warped.
• 29:33
  Speaker 7: But, like, I'm looking at this photo and I'm digesting
• 29:35
  Speaker 7: it in five seconds. I'm like, yeah, that's a real photo.
• 29:38
  Speaker 6: Yep.
• 29:39
  Speaker 5: There's no telling.
• 29:39
  Speaker 3: And this is why I mean, like, the internet's going
• 29:42
  Speaker 3: to die, is if you have to look at it
• 29:44
  Speaker 3: for longer than five seconds, it's no longer useful.
• 29:46
  Speaker 7: It's like, where's Waldo, like, staring at that?
• 29:49
  Speaker 4: And you've seen probably the videos from, like, Zoom interviews
• 29:52
  Speaker 4: these days where... They just don't trust candidates, so they're
• 29:55
  Speaker 4: making them do all sorts of things that an AI
• 29:58
  Speaker 4: would not be able to do or you would not
• 30:00
  Speaker 4: be able to answer questions in this way because, again,
• 30:03
  Speaker 4: nobody trusts anybody on the Internet anymore.
• 30:06
  Speaker 3: Did you see the one of the Airbnb host that
• 30:09
  Speaker 3: submitted a claim for $ 1, 700 in repairs because they said
• 30:15
  Speaker 3: someone flushed something unauthorized down the toilet and it was
• 30:21
  Speaker 3: a picture of a toilet with a bunch of water
• 30:23
  Speaker 3: around it?
• 30:23
  Speaker 5: And it was just AI.
• 30:24
  Speaker 3: It was just AI, and the person was like, I
• 30:26
  Speaker 3: didn't even go to the bathroom in this house.
• 30:28
  Speaker 5: Oh, my God.
• 30:29
  Speaker 3: And it had an AI watermark, so Airbnb rejected it,
• 30:32
  Speaker 3: but it's like.
• 30:34
  Speaker 5: People suck.
• 30:36
  Speaker 3: Again, this is going to push us away from the internet.
• 30:40
  Speaker 2: People are like, oh, agents will make things easier. It's like, no,
• 30:43
  Speaker 2: you're going to kill the internet. You stay in an Airbnb.
• 30:46
  Speaker 2: You didn't use the bathroom?
• 30:47
  Speaker 1: What?
• 30:48
  Speaker 2: That's a whole other story here. That's my bigger question.
• 30:51
  Speaker 2: I only go outside.
• 30:52
  Speaker 1: Right.
• 30:53
  Speaker 2: Paying off the deck. Sorry, neighbors. Let's take a.
• 30:58
  Speaker 3: Quick break, and when we come back, Paul LaMonica from
• 31:01
  Speaker 3: Barron's joins us next.
• 31:04
  Speaker 1: Markets, money, business. The Financial Exchange brings it together every
• 31:09
  Speaker 1: day on YouTube. Watch live, join the live chat, or
• 31:12
  Speaker 1: catch up with video highlights and shorts at youtube.com slash
• 31:16
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• 31:21
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• 31:24
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• 31:27
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• 31:31
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• 31:41
  Speaker 3: As promised, we're now joined by Paul and Monica from Barron's,
• 31:46
  Speaker 3: and we're going to be talking a little bit about stocks.
• 31:50
  Speaker 2: Paul, how are you doing today?
• 31:52
  Speaker 6: Good, thanks. I'd rather talk about that than baseball.
• 31:56
  Speaker 2: Listen, we haven't been able to talk about baseball here
• 31:57
  Speaker 2: for a couple weeks. Fair enough.
• 32:01
  Speaker 3: As Bart Giamatti once said, it's designed to break your heart.
• 32:07
  Speaker 6: Exactly.
• 32:08
  Speaker 2: So, you've got a piece here. It's titled, The.
• 32:11
  Speaker 3: Other Trillion Dollar Stocks Have Some Catching Up To Do.
• 32:15
  Speaker 3: What trillion dollar stocks? Who have they got to catch
• 32:17
  Speaker 3: up to, Paul?
• 32:19
  Speaker 6: Yeah, no, it is a very good question.
• 32:24
  Speaker 8: When you look at the market this year, the chip sector, obviously,
• 32:28
  Speaker 8: Micron and AMD, they have done extremely well.
• 32:32
  Speaker 6: NVIDIA has been catching up lately.
• 32:35
  Speaker 8: And Apple has also, not a chip company, of course,
• 32:38
  Speaker 8: outperformed the market. But That's it with regards to the
• 32:43
  Speaker 8: trillion-dollar companies beating the S & P 500.
• 32:47
  Speaker 6: They're the only four.
• 32:49
  Speaker 8: The other seven, technically six, we'll get to that in
• 32:53
  Speaker 8: a sec, are all lagging the broader market.
• 32:55
  Speaker 6: SpaceX is the 11th trillion-dollar company.
• 32:59
  Speaker 8: It is doing better than the S & P 500
• 33:01
  Speaker 8: since its IPO, but obviously, it hasn't been public for
• 33:05
  Speaker 8: a full year. Only four trillion-dollar companies are are beating
• 33:09
  Speaker 8: the broader market for the full year.
• 33:12
  Speaker 3: Paul, when we look at this market this year, we
• 33:15
  Speaker 3: were talking about this yesterday, it really has been kind
• 33:17
  Speaker 3: of a tale of two markets where Q1, very broad,
• 33:22
  Speaker 3: very widespread gains in this market, technology stocks struggling. And
• 33:27
  Speaker 3: then basically since April 1st, it's been tech on a
• 33:31
  Speaker 3: roll and everything else either treading water or not really
• 33:35
  Speaker 3: doing much of anything. How do you assess what things
• 33:38
  Speaker 3: look like heading into the last three months of the
• 33:40
  Speaker 3: year since we're only a week into October now?
• 33:43
  Speaker 8: Yeah, it does look, and I've got a story that'll
• 33:46
  Speaker 8: be going up later today at Barron's about this, that
• 33:49
  Speaker 8: investors have resumed their love affair with tech. I think
• 33:55
  Speaker 8: it's mainly, though, the big chip companies. So you do
• 34:00
  Speaker 8: see that NVIDIA is once again beating the market. As
• 34:04
  Speaker 8: we mentioned, Micron and AMD doing extremely well. But Intel
• 34:08
  Speaker 8: is another company that that investors have realized is gaining
• 34:14
  Speaker 8: and benefiting from AI spending also. And then the hyperscalers
• 34:20
  Speaker 8: are clearly doing well also. Your Microsofts and Metas of
• 34:25
  Speaker 8: the world, Meta getting a big boost with news. And
• 34:28
  Speaker 8: then there's SpaceX, as we point out. SpaceX has done
• 34:32
  Speaker 8: well since its.
• 34:33
  Speaker 6: IPO, but that's led to some concerns. that maybe the
• 34:36
  Speaker 6: stock is overbought.
• 34:38
  Speaker 8: And that's what some of the people that I talked
• 34:42
  Speaker 8: about from a bespoke investment research in my recent story
• 34:47
  Speaker 8: on the trillion-dollar tech companies, they argued that SpaceX is
• 34:50
  Speaker 8: overbought right now.
• 34:52
  Speaker 3: Paul, the other piece that you have here, it's a
• 34:54
  Speaker 3: tale of two markets. Mega caps keep climbing, but rate
• 34:56
  Speaker 3: fears hit many other stocks. Kind of feels like the
• 34:59
  Speaker 3: story of the U.S.
• 35:00
  Speaker 2: Economy.
• 35:00
  Speaker 3: It's that, okay, like, yeah, the stock market's at all-time highs,
• 35:04
  Speaker 3: you know, unemployment's low, GDP's fine, but so many industries
• 35:08
  Speaker 3: are just struggling, and it's masked.
• 35:10
  Speaker 2: By the fact that that AI trade is still so powerful.
• 35:13
  Speaker 8: Yeah, when you look at, you know, consumers, I mean,
• 35:16
  Speaker 8: what's interesting is that both consumer discretionary stocks and consumer
• 35:21
  Speaker 8: staples you know, the more stodgy kind of dividend paying
• 35:24
  Speaker 8: consumer companies, they have really both struggled. And I think
• 35:30
  Speaker 8: there is this growing sense that even though higher end
• 35:34
  Speaker 8: consumers are spending still on luxury items and other goods,
• 35:40
  Speaker 8: a lot of that is propped up by that wealth
• 35:42
  Speaker 8: effect because the, you know, the stock market has done
• 35:46
  Speaker 8: as well as it has, you know, at record highs
• 35:48
  Speaker 8: for the.
• 35:48
  Speaker 6: S & P and NASDAQ. But is that sustainable?
• 35:51
  Speaker 8: That's going to be the big question, I think, going
• 35:53
  Speaker 8: into to the end of the year, whether or not
• 35:55
  Speaker 8: other sectors start lagging just as consumer stocks have done.
• 36:01
  Speaker 2: Very good.
• 36:01
  Speaker 3: Paul, we appreciate you joining us and I hope you
• 36:04
  Speaker 3: have a fantastic rest of the week.
• 36:06
  Speaker 1: Yep.
• 36:07
  Speaker 6: Thanks a lot. Same to you guys.
• 36:08
  Speaker 3: That is Paul and Monica from Barron's talking about what
• 36:12
  Speaker 3: we've been seeing in equity markets recently.
• 36:15
  Speaker 2: Mike, what do we want to get to?
• 36:17
  Speaker 4: I want to talk about medical billing. Influencers all over
• 36:21
  Speaker 4: social media are... on a mission to stop people from
• 36:24
  Speaker 4: paying medical bills, and like with anything else.
• 36:29
  Speaker 2: Let me tell you why this is not good.
• 36:31
  Speaker 5: Yeah, so, okay, here's what is good.
• 36:33
  Speaker 4: Example, my three daughters had pediatrician appointments earlier this year.
• 36:39
  Speaker 5: We got bills for those.
• 36:39
  Speaker 4: Pediatrician appointments, and on all three of them, they assessed
• 36:42
  Speaker 4: a $ 200 psychological evaluation. My wife and I looked at
• 36:45
  Speaker 4: each other, and fortunately, when you have young children, you're
• 36:48
  Speaker 4: in the office with the pediatrician, and both of us
• 36:50
  Speaker 4: were like, I don't seem to remember any psychological evaluation
• 36:54
  Speaker 4: that was requested or done.
• 36:56
  Speaker 2: What's the story here?
• 36:57
  Speaker 4: And after five phone calls and three weeks, they realized
• 37:01
  Speaker 4: it was a billing error and they removed it from
• 37:03
  Speaker 4: our bill.
• 37:04
  Speaker 6: Right.
• 37:04
  Speaker 2: You like you should say, like, go through your bill
• 37:07
  Speaker 2: and make sure it's accurate.
• 37:08
  Speaker 4: Request an itemized list to do all those things. That
• 37:10
  Speaker 4: is important because for some reason, the medical industry just
• 37:13
  Speaker 4: finds it acceptable to misbill you for crap that never
• 37:16
  Speaker 4: happened all the time.
• 37:18
  Speaker 2: And to be fair, it's a pain to deal with.
• 37:19
  Speaker 4: Like I said, it was five calls, and this was
• 37:23
  Speaker 4: a small pediatrician's office, but their medical billing is done
• 37:25
  Speaker 4: by somewhere else, and it was a giant pain.
• 37:27
  Speaker 5: Like, not acceptable.
• 37:29
  Speaker 2: This would be a great use case for AI agents.
• 37:31
  Speaker 5: Agreed.
• 37:32
  Speaker 4: On the other hand, you know, people saying, hey, just
• 37:36
  Speaker 4: don't pay your bill because it'll eventually go to collections,
• 37:39
  Speaker 4: and then those collectors will negotiate with you.
• 37:41
  Speaker 1: Well.
• 37:43
  Speaker 5: Yeah, great.
• 37:44
  Speaker 4: You knocked off $ 2, 300 off your medical debt.
• 37:48
  Speaker 2: Your credit's ruined.
• 37:49
  Speaker 4: But you're never going to be able to borrow money
• 37:51
  Speaker 4: again in your life. So was it worth it? Good
• 37:53
  Speaker 4: luck getting a mortgage, a lease, a car loan, or
• 37:57
  Speaker 4: any of those things again.
• 37:58
  Speaker 5: So, yeah, it just, you know.
• 38:01
  Speaker 3: The other piece, just like anything else, the people who
• 38:04
  Speaker 3: don't pay raise the prices for everyone else.
• 38:06
  Speaker 2: Right, yes, they do.
• 38:09
  Speaker 3: Don't be that person. Let's take a quick break for
• 38:12
  Speaker 3: the rest of the day. Stocks remain in negative territory.
• 38:14
  Speaker 3: We'll see what they look like tomorrow as we head
• 38:16
  Speaker 3: towards the weekend.