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AI Earnings, Labor Risks and the Cost of the Boom · The Financial Exchange Show

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Speaker 2: Good morning, Welcome back to the Financial Exchange. I started
1:15
Speaker 2: off the program exactly an hour ago. I'll see if
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Speaker 2: I can quote myself saying that the market was clawing
1:22
Speaker 2: back its losses from Friday of last week, where the
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Speaker 2: S and P five hundred closed down. We opened up
1:27
Speaker 2: the show with the S and P up. Was it
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Speaker 2: seven tenths of a percent? Or was that the NASDAC thereabouts?
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Speaker 2: We've now completely flipped the S and P five hundred
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Speaker 2: has gone through a full percentage point reversal. We started
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Speaker 2: the day up seven tenths we're now down a third
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Speaker 2: of a percent. NASDAK even more so, started up the
1:43
Speaker 2: day up one more over one yeah, and we're now
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Speaker 2: down eight tenths of a percent. All of this on
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Speaker 2: no news that I can detect.
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Speaker 3: So we was briefly down one percent.
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Speaker 2: Yeah, so it's improved a little bit, but a volatile
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Speaker 2: date day of trading, as we can kick off the
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Speaker 2: program here on again, no real news. We're getting the
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Speaker 2: inflation data out tomorrow morning yet, is that eight thirty
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Speaker 2: am the CPI data? Yes, so we'll be digesting that
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Speaker 2: on the program tomorrow. Next to hold on today is Tuesday. Yes,
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Speaker 2: next week we'll be getting a FED meeting first for
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Speaker 2: Kevin worsh to preside over, and I think a lot
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Speaker 2: of people will be you know, latching onto every word
2:24
Speaker 2: he says there. And we'll also be joined in the
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Speaker 2: next segment by Corey Adams from Robert Half done a
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Speaker 2: survey on just the role that AI is having in
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Speaker 2: the workforce, which has obviously been front and center for
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Speaker 2: a lot of people's minds, including especially new college grads.
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Speaker 2: So Corey will be joining us next on his results
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Speaker 2: from the survey, Tips for workers out there looking for
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Speaker 2: the job, et cetera. Want to start with this piece
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Speaker 2: from the Financial Times mark earnings, not valuations, are fueling
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Speaker 2: the US doc market. So the story that we've been
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Speaker 2: i think confirming or putting out there over the last
2:59
Speaker 2: several years years anyway, has been about this stock market
3:04
Speaker 2: getting more expensive. Right. It was not the result of
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Speaker 2: just hey, companies are doing really well and therefore stock
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Speaker 2: prices are going up, but rather people's willingness to pay
3:12
Speaker 2: for stocks and the price they're willing to pay had
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Speaker 2: been going up. The authors over the Financial Times make
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Speaker 2: the point that this year, well one as we know
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Speaker 2: earnings have been exceptional. If you set aside the megatap
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Speaker 2: megacap tech stocks, the median S and P five hundred
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Speaker 2: companies still reported growth of fourteen percent, which would make
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Speaker 2: it the strongest quarter in over a decade outside of
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Speaker 2: twenty eighteen tax cuts in the twenty twenty one COVID period.
3:40
Speaker 2: But the forward twelve month price to earnings ratio on
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Speaker 2: the S and P five hundred this year has actually
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Speaker 2: gone down compared to the same time last year. We're
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Speaker 2: now at twenty one times earnings compared to twenty two
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Speaker 2: times future earnings. According to the ft and.
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Speaker 4: Well, that's because analysts have increased their where expectations of
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Speaker 4: future earnings. That's a little bit circular. Okay, I'm not
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Speaker 4: gonna get hung up on that point.
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Speaker 2: Sorry, go ahead, please, That's all I had. So I
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Speaker 2: guess my points may shoot it down.
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Speaker 4: I don't want to shoot it down. I'll just make
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Speaker 4: the point that today's earnings aren't predictive of tomorrow's earnings
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Speaker 4: for the market as a whole. You can prove that
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Speaker 4: to yourself, very very simply. It's done graphically, or you
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Speaker 4: can if you prefer the statistics, you can do it
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Speaker 4: that way. Look, you would get excited about earnings past
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Speaker 4: twelve months if you thought that they said something about
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Speaker 4: future earnings. But in a statistical sense, they don't. That's
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Speaker 4: all I'm saying. I'm saying today's earnings are not predictive
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Speaker 4: of tomorrow's not at a company level. Sure, it can
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Speaker 4: convey valuable information. What corporate officers say in earnings conference
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Speaker 4: calls can convey valuable information. I'm talking about for the
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Speaker 4: market as a whole. So over the last four quarters
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Speaker 4: year earnings are up, I'm just going to call it
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Speaker 4: thirty percent.
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Speaker 2: Stocks at high twenties.
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Speaker 4: About thirty Oh, embarrassed, said, I don't know.
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Speaker 2: I think there's twenty eight point six for the S
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Speaker 2: and P five.
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Speaker 4: Earning S and p's up less than that. So by
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Speaker 4: one measure, the backward looking measure, stocks are more reasonably
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Speaker 4: priced today than a year ago. But if you think
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Speaker 4: the spectacular earnings of the past twelve months are a
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Speaker 4: bit of an abarition because they're driven in part by, say,
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Speaker 4: the realizations, as you've been pointing out, Mike, of certain
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Speaker 4: companies of their interests in privately held AI companies. So
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Speaker 4: if you think there's a lot of one offs. Then
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Speaker 4: forget about the statistical argument, though I find that convincing.
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Speaker 4: You don't need any convincing that the past twelve months
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Speaker 4: are somewhat of an anomally and nobody should be thinking
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Speaker 4: we're going to get i don't know, even high teens
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Speaker 4: from earnings over the next whatever period your forecast horizon is.
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Speaker 2: And by the way, so you know they're looking at
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Speaker 2: the forward price to earnings ratio, which again I think
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Speaker 2: I really want to do that.
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Speaker 4: You don't want to do that.
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Speaker 2: I think there's a reason why you look at forward
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Speaker 2: rather than trailing earnings.
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Speaker 4: But nonetheless, okay, excuse me, it depends on why I'm sorry,
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Speaker 4: keep interrupting you, please good.
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Speaker 2: I think there can be a reason why you look
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Speaker 2: at forward earnings as opposed to previous earnings or yeah,
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Speaker 2: realized earnings already. But even if you do, I want
6:11
Speaker 2: to make the points here that, yes, stocks might have
6:13
Speaker 2: fallen from a forward pe of twenty two down to
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Speaker 2: twenty one, which is still multiple percentage points higher than
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Speaker 2: we have been on a historical average basis for any
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Speaker 2: long term time period. Okay, the evaluations are still rich
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Speaker 2: at twenty one times future earnings, even if you believe
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Speaker 2: that they're going to come in.
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Speaker 4: It's good to keep in mind that PE is a ratio.
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Speaker 4: It's P over E, so you can say.
6:39
Speaker 2: Mind, that's why they call it that.
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Speaker 4: Actually, yeah, I have to Yeah, people may not know
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Speaker 4: that they hear pe sure, and they're giggling, because we
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Speaker 4: all giggle when we hear pe.
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Speaker 1: Yeah.
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Speaker 4: Always, but even internally, I can't say it without telling people, now,
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Speaker 4: please don't giggle, and then cracking up myself. Yeah, okay,
6:56
Speaker 4: p toe can be gained. You could just say, well,
6:59
Speaker 4: why E up so my p toe looks better. Just
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Speaker 4: keep that simple fact in mind. When you hear people
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Speaker 4: throw around this ratio or that ratio, you got to ask.
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Speaker 2: Or be aware of.
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Speaker 4: If you're not face to face or whatever what E
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Speaker 4: they're using, you can only add, there's only one P,
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Speaker 4: and that's the price of the index today. The E
7:20
Speaker 4: is where things can get more creative.
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Speaker 2: One that you like to cite mark is the Shiller
7:29
Speaker 2: PE ratio. And I'm looking at right now, the current
7:32
Speaker 2: Shiller PE ratio is sitting at forty one point sixty seven.
7:36
Speaker 4: That's astonishing.
7:37
Speaker 2: That's higher than it was in twenty twenty one when
7:39
Speaker 2: we were talking about the memestock mania. It's higher than
7:42
Speaker 2: it was in twenty twenty. The only time in history
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Speaker 2: that we have this data set, by the way, going
7:48
Speaker 2: back to eighteen seventy, so pretty substantial data set. The
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Speaker 2: only time that it was higher than where it is
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Speaker 2: now is and remains November of nineteen, Yeah, ninety.
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Speaker 4: I say astonishing because it's it's remarkable because it's rare,
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Speaker 4: not that I'm I find it jarring, although I do
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Speaker 4: a little bit. I guess it's quite I look, if you.
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Speaker 2: Think that we're in the one percent range of so
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Speaker 2: the E.
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Speaker 4: There, the P there is the P that we all use.
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Speaker 4: The E there is the last ten years worth of
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Speaker 4: It's like an average, and it's adjusted for inflation. The
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Speaker 4: argument for using that is that it smooths out business
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Speaker 4: cycle ups and downs.
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Speaker 2: Next smooths out boom in artificial intelligence.
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Speaker 4: It smooths out potentially the one offs like the one
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Speaker 4: we may have experienced over the last twelve months, first
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Speaker 4: quarter last year, the first quarter this year.
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Speaker 2: Let's take a quick break. When we come back, Corey
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Speaker 2: Adams from Robert Half joining us next on AI in
8:43
Speaker 2: the labor force.
8:45
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9:37
Speaker 2: Join us now. Is Corey Adams from Robert Half in
9:40
Speaker 2: their recent survey on the AI impact on the workforce.
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Speaker 2: Corey this this is a popular one, well timed. We're
9:48
Speaker 2: just getting out of college graduation season. I think people
9:51
Speaker 2: have probably seen the some of the highlight reels there
9:55
Speaker 2: and spoken to graduating seniors who are worried about the
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Speaker 2: labor market, let alone, you know folks later in their
10:01
Speaker 2: careers that are worried about upskilling. What did you find
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Speaker 2: in terms of employers expectations for how many people that
10:13
Speaker 2: are going to need to hire in this new age
10:15
Speaker 2: of artificial intelligence.
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Speaker 5: So let's just start with the research and grit to
10:20
Speaker 5: be with you this morning, Mike, and I'm preach it
10:21
Speaker 5: you always having me here. So the research we conducted
10:24
Speaker 5: showed that eighty eight percent of organizations are using AI
10:29
Speaker 5: and fifty seven percent are optimistic about being integrated into
10:32
Speaker 5: the current workflows. Fifty four percent of executives expect AI
10:37
Speaker 5: to lead job growth not contracted over the next couple
10:40
Speaker 5: of years, and that's compared to just twenty three percent
10:43
Speaker 5: to actually expect a net decrease. And then this is
10:46
Speaker 5: the big key finding here. More than three and ten
10:50
Speaker 5: employers eliminated positions after implementing AI, only to rehire those
10:56
Speaker 5: roles back. And so this has given rise to AI
10:59
Speaker 5: hire corrections, which certain rules were cut during a early
11:04
Speaker 5: AI adoption are now being later reinstated. And so that's
11:09
Speaker 5: our most recent research. What I would also just share
11:12
Speaker 5: to your original question in terms of what candidates can
11:16
Speaker 5: seek or college graduates, I mean, we're all looking at
11:19
Speaker 5: the same numbers. You're looking at them, I'm looking at them.
11:21
Speaker 5: And you know, at the end of the day, where
11:23
Speaker 5: we are right now, is unemployment still remains really low,
11:27
Speaker 5: and the job openings are still above the historic norms,
11:31
Speaker 5: and so, you know, I think what I would say
11:33
Speaker 5: is that there are some signs of movement which would
11:37
Speaker 5: be encouraging for everybody. The hiring rate rows three point
11:40
Speaker 5: five percent in April, which is the highest it's been
11:43
Speaker 5: since May of twenty twenty four. And then listen, we
11:46
Speaker 5: saw from ADP that the private employers added one hundred
11:50
Speaker 5: and twenty two thousand jobs just last month, and we
11:53
Speaker 5: saw all employers of all sizes were hiring. And so
11:58
Speaker 5: the thing that jumped up to me is at eight
12:00
Speaker 5: out of ten sectors showed gains last month, including professional
12:04
Speaker 5: and business services and financial activities. So if you take
12:07
Speaker 5: all of this together, if I'm a hiring manager or
12:11
Speaker 5: I'm a college graduate about to enter the workforce, for me,
12:14
Speaker 5: all of this is pointing into some gradual improvement for everybody.
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Speaker 2: Yeah, I was gonna say that. You know, it's nice
12:20
Speaker 2: when the data lines up perfectly with the theory here.
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Speaker 2: But you know, last year the pace of job creation
12:25
Speaker 2: was basically nothing. It was a very slow pace of
12:28
Speaker 2: job creation for twenty twenty five. So far in twenty
12:31
Speaker 2: twenty six, we've seen that rebound substantially, not just last month,
12:34
Speaker 2: but I'm guessing now we've averaged over one hundred thousand
12:37
Speaker 2: jobs created per month compared to almost nothing last year.
12:42
Speaker 2: And that does line up with what you're saying here
12:44
Speaker 2: if that's part of the cause. Now, what I mean
12:48
Speaker 2: as an employee, right like? What should I take away
12:51
Speaker 2: from this? You know, I speak to people frequently, especially
12:55
Speaker 2: in high tech roles, that are really worried about their
12:57
Speaker 2: job security. They're worried about upscale and learning this new
13:01
Speaker 2: technology and implementing it in their day to day. What
13:04
Speaker 2: are you hearing from employers now that they seem to
13:07
Speaker 2: have a firmer grasp on these tools.
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Speaker 5: So I think from an employee standpoint, what I would
13:13
Speaker 5: say is I would take the following away. Number One,
13:15
Speaker 5: AI is more likely to change what you do than
13:18
Speaker 5: actually eliminate your role Entirely, workers who embrace technology and
13:23
Speaker 5: focus on learning or better position to stay relevant, whether
13:26
Speaker 5: it's in your current job or looking for a future job.
13:29
Speaker 5: And then listen, human skills such as communication, collaboration, problem
13:33
Speaker 5: solving are becoming more and more valuable. If you want
13:36
Speaker 5: to go step further, let's talk about how to future
13:39
Speaker 5: prove yourself. You're going to want to build AI literacy
13:42
Speaker 5: without overstating experience, which means that authenticity matters more than ever.
13:47
Speaker 5: So you're going to want to focus on real transferable
13:49
Speaker 5: skills and concrete examples of your actual impact. And so
13:53
Speaker 5: you want to lean into continuous learning and be able
13:56
Speaker 5: to demonstrate that you're adaptable.
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Speaker 2: Do you have some specifics. I'm really curious about those
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Speaker 2: companies that laid people off and then are finding themselves rehiring.
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Speaker 2: I don't know how many companies you spoke to, but
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Speaker 2: were there some themes there as to how that happened?
14:12
Speaker 2: And you know why they ended up? I guess over
14:15
Speaker 2: guessing what the technology could do. Ultimately, yeah, I do,
14:19
Speaker 2: And so let's just start with this.
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Speaker 5: The early A adoption helps some companies automate routine tasks,
14:24
Speaker 5: but many organizations ultimately underestimated how much human judgment, context
14:29
Speaker 5: and decision making these roles actually required. So I think,
14:33
Speaker 5: for the most part, maybe hopefully we can all agree,
14:35
Speaker 5: but AI works best as a productivity tool and not
14:39
Speaker 5: a full replacement. And so companies in this moment are recalibrating,
14:43
Speaker 5: basically after seeing gaps in quality, execution, and oversight, and
14:48
Speaker 5: like past technology shifts, this is less about elimination and
14:51
Speaker 5: more about reshaping work and reshaping roles. And so the
14:54
Speaker 5: data that supports this are kind of the responses that
14:58
Speaker 5: were given in terms of why these roles were hired back.
15:00
Speaker 5: And there's a lot. I won't go through all of them,
15:02
Speaker 5: but I will start with this. They're all, for the
15:04
Speaker 5: most part, in equal measure. So the first is that
15:08
Speaker 5: the role required institutional knowledge or context that AI couldn't replace.
15:13
Speaker 5: The role involved relationship management that AI couldn't replicates. AI
15:18
Speaker 5: required more human oversight and quality controlled than expected. AI
15:22
Speaker 5: tools weren't fully inconsistently adopted across every single team. And
15:26
Speaker 5: then finally, risk in compliance concerns emerge without a human
15:30
Speaker 5: and the actual role itself.
15:31
Speaker 2: Yeah, sure, where I guess it's the low hanging fruit, right,
15:36
Speaker 2: Like you know, if I'm in a specific type of role,
15:39
Speaker 2: you know which ones do you think are still fairly
15:42
Speaker 2: well insulated and which ones do humans just not? Are
15:47
Speaker 2: humans just not all that important anymore in terms of
15:51
Speaker 2: their future in those roles?
15:53
Speaker 5: So we know and hopefully recognize that AI lacks unique
15:58
Speaker 5: human traits include critical thinking, collaboration, creativity, and applying insights
16:04
Speaker 5: in nuanced rail world situations, all of which, as we know,
16:08
Speaker 5: are really critical and crucial to running a business. And
16:12
Speaker 5: so we've heard from hiring managers that they say that
16:14
Speaker 5: soft skills that most comment most complimentary to AI usage
16:18
Speaker 5: is that critical thinking is a problem solving, its adaptability,
16:21
Speaker 5: it's continuous learning, and it's creativity and innovation. And so
16:25
Speaker 5: within this research and the data that we show in
16:28
Speaker 5: terms of like what's you know, the most resilience, it's
16:31
Speaker 5: more about look to see who who needed to hire
16:33
Speaker 5: back because they made some cuts that were probably a
16:36
Speaker 5: little to premature, and so we have it listed out
16:39
Speaker 5: by percentages by industry, and so our legal respondents hired
16:44
Speaker 5: back forty percent of them, so they had to hire back.
16:46
Speaker 5: You then had sort of the big three all around
16:48
Speaker 5: thirty percent, which is healthcare, marketing and creative, and then
16:51
Speaker 5: finance and accounting. And then from there you had human
16:54
Speaker 5: resources at twenty eight percent, the tech spase of twenty
16:57
Speaker 5: four percent, and the administrative and customer support twenty five percent.
17:01
Speaker 2: Corey Adams from Robert Half join us today talk about
17:05
Speaker 2: their UH survey on the impact of AI and the
17:09
Speaker 2: perhaps not surprising, perhaps surprising to some the pace at
17:12
Speaker 2: which employers need to go back and rehire those that
17:15
Speaker 2: they laid off with the new technology. Corey, thanks so
17:17
Speaker 2: much for joining us. Appreciate it and we will talk
17:19
Speaker 2: again soon.
17:20
Speaker 5: Thank you, sir, Talk soon.
17:22
Speaker 3: Another day of World Cup trivia here on the Financial Exchange.
17:26
Speaker 3: The twenty twenty six World Cup is the first to
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Speaker 3: feature three host nations, the US, Mexico, and Canada. The
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Speaker 3: USA and Mexico have both previously served as host nations
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Speaker 3: for the World Cup. Mexico last hosted in nineteen eighty six.
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Speaker 3: So trivia question today, what year did the US host
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Speaker 3: their first World Cup?
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Speaker 2: Once again?
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Speaker 3: What year did the US host their first World Cup?
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18:19
Speaker 2: While equity markets are deteriorating, we are also seeing oil
18:23
Speaker 2: prices fall substantially. They're down now four percent. After the
18:26
Speaker 2: US Energy Secretary said that Horrormu's ship traffic is increasing.
18:31
Speaker 2: We will see again. That's you know, one press release here.
18:35
Speaker 2: But the oil market generally just continues to defy I
18:40
Speaker 2: think my own expectations anyway, And more and more people
18:43
Speaker 2: are now looking at China and what they have been doing. Roughly,
18:47
Speaker 2: they have cut their imports of oil by about five
18:51
Speaker 2: million barrels a day. That's equivalent to almost half of
18:54
Speaker 2: the supply deficit that was coming out of the Strait
18:57
Speaker 2: of Hormoes. Some of that is also being plugged by
19:00
Speaker 2: US exports which are winding down and getting to critically
19:03
Speaker 2: low levels of reserves here. So we will see how
19:05
Speaker 2: much longer that can continue. But more and more when
19:09
Speaker 2: people are talking about the surprise to oil markets and
19:12
Speaker 2: why trying to come up with an explanation as to
19:14
Speaker 2: why they are so prices remain so low here, believe
19:17
Speaker 2: it or not, at four dollars gas in eighty seven
19:20
Speaker 2: bucks a barrel. More and more it's being pointed at
19:22
Speaker 2: China and the curbing of imports that they have seen.
19:26
Speaker 2: We're gonna take a quick break full market recap, which
19:29
Speaker 2: has completely reversed itself from early trading. Is next.
19:38
Speaker 1: Bringing the latest financial news straight to your radio every day.
19:43
Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
19:49
Speaker 1: Tell you no full whoa street watch treking, the stocks,
19:52
Speaker 1: the dato and the headlines driving markets so far today
19:55
Speaker 1: right here on the Financial Exchange Radio Network.
19:58
Speaker 3: Well after a strong rebound to begin in the day,
20:00
Speaker 3: markets have now completely reverse course and are selling off
20:04
Speaker 3: oil prices pulling back also after President Trump said that
20:09
Speaker 3: a deal with Iran was only days away. Right now,
20:12
Speaker 3: the Dow is down about six tenths of a percent
20:15
Speaker 3: or two hundred and eighty nine points lower. S and
20:17
Speaker 3: P five hundred down one point one percent or eighty
20:20
Speaker 3: three points lower. Nasdaq selling off nearly two percent or
20:24
Speaker 3: four hundred and ninety five points. RUSS two thousand is
20:28
Speaker 3: up about a third of a percent. Tenure treasureeled is
20:30
Speaker 3: flat at four point five five percent. In Oil down
20:34
Speaker 3: nearly four percent, trading right around eighty seven dollars at barrel.
20:38
Speaker 3: The National Association of reeal To Reelders said sales of
20:42
Speaker 3: existing holmes rose three point two percent in May over
20:45
Speaker 3: the previous month to a seasonally adjusted rate annual rate
20:49
Speaker 3: of four point one seven million, the biggest increase since December. Meanwhile,
20:55
Speaker 3: shares in US drugmaker and New Valance are surging thirty
20:58
Speaker 3: nine percent after u Can biopharmaceutical company GSK announced to
21:03
Speaker 3: ten point six billion dollar agreement to acquire the Boston
21:07
Speaker 3: based cancer drug developer. Elsewhere, Ski Operator veiled resorts cut
21:12
Speaker 3: its full year forecast, where a low snowfall weight on
21:16
Speaker 3: visits and revenue thatstock down by five percent and Apple
21:20
Speaker 3: dropping over three percent. Following the Tech Giants Worldwide Developers
21:24
Speaker 3: Conference yesterday, Apple unveiled its new AI powered version of
21:30
Speaker 3: its Serie digital assistance.
21:33
Speaker 2: I'm Tucker Silvan.
21:34
Speaker 3: That is Wall Street Watch And on the previous segment,
21:36
Speaker 3: we asked you the trivia question what year did the
21:39
Speaker 3: US host their first World Cup? That will be nineteen
21:43
Speaker 3: ninety four and Don and Nashville, New Hampshire is our
21:45
Speaker 3: winner today taking on a Financial Exchange Show t shirt.
21:49
Speaker 3: Congrats to Don and we played trivia every day here
21:52
Speaker 3: on the Financial Exchange See complete contest rules at Financial
21:57
Speaker 3: Exchange Show dot com.
21:58
Speaker 2: Congrats Don be Before we move on, Tucker, I want
22:00
Speaker 2: to just talk about the upcoming event we have from
22:02
Speaker 2: Armstrong that work for you. Yeah, June twenty fifth, we
22:07
Speaker 2: are planning a retirement planning seminar. Specifically, what we're planning
22:11
Speaker 2: on is a discussion of social Security and Medicare essentials.
22:15
Speaker 2: Did one of these a couple months ago, very well received,
22:18
Speaker 2: and people have a lot of questions about these two programs.
22:22
Speaker 2: Can't tell you when either of them are going to
22:24
Speaker 2: go belly up, because I think that Congress is likely
22:27
Speaker 2: to fix that problem the last second. But everyone has
22:30
Speaker 2: questions about what is the right claiming strategy for their
22:33
Speaker 2: own social security and what type of health insurance plan
22:37
Speaker 2: they're going to need to fit their family's needs. And
22:40
Speaker 2: we're going to be joined by two who have really
22:43
Speaker 2: a lot of expertise on these two subjects. Susan Powers
22:45
Speaker 2: will be talking about social security. If you have questions
22:49
Speaker 2: about how it's going to interact with your pension, what
22:51
Speaker 2: to do if you have a spouse that's younger than you,
22:55
Speaker 2: if you are divorced or widowed and facing down those
22:58
Speaker 2: social security benefits. She's got all the answers. When it
23:02
Speaker 2: comes to all of this, it is a complex subject
23:05
Speaker 2: with a number of different strategies, some of which have
23:07
Speaker 2: been phased out due to rule changes over the years,
23:10
Speaker 2: some of which are still very much intact and important.
23:13
Speaker 2: Effie Vesulis is going to be talking about medicare the
23:17
Speaker 2: essential questions that you have answering them, how the programs
23:20
Speaker 2: work state by state, and what to consider if you
23:23
Speaker 2: are planning on, say, relocating in retirement or traveling a
23:28
Speaker 2: lot versus staying home a lot in retirement. What you
23:30
Speaker 2: need to focus on in terms of getting registered for
23:33
Speaker 2: medicare the key dates into Essentials. If you'd like to attend,
23:37
Speaker 2: it is free to attend. The next one is on
23:39
Speaker 2: June twenty fifth in Quincy at the Marriott Quincy. You
23:44
Speaker 2: can register at Armstrong Advisory dot com. If you have questions,
23:48
Speaker 2: you can call Armstrong at eight hundred three nine three
23:51
Speaker 2: four zero zero one, but again free event June twenty
23:56
Speaker 2: fifth at five pm and Quincy free to attend Armstrong
23:59
Speaker 2: Advisory dot com or eight hundred three nine three for
24:03
Speaker 2: zero zero one.
24:04
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
24:07
Speaker 1: registered investment advisor. Nothing in the ad or in any
24:09
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
24:13
Speaker 1: your own financial tax into state planning advisors before making
24:15
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
24:18
Speaker 1: advisory services.
24:20
Speaker 2: I'm worried here that block in Bloomberg block is the
24:23
Speaker 2: owner of cash app, a payment system, maybe misinterpreting some
24:29
Speaker 2: of their some of their user bias that they have here.
24:33
Speaker 2: But what they're saying is that gen Z is redefining
24:35
Speaker 2: how Americans earn a living, and based on data from
24:39
Speaker 2: their app, they are finding that a larger portion of
24:42
Speaker 2: gen Z than any other demographic is pulling in income
24:47
Speaker 2: from multiple jobs and they are using the cash app
24:51
Speaker 2: to receive that income. If you use Venmo, this is
24:55
Speaker 2: a similar type of application to that one. And what
24:59
Speaker 2: they're finding is that, Yeah, across cash App's customer base,
25:02
Speaker 2: fifty seven percent generate income from freelancing, entrepreneurship, content creation,
25:06
Speaker 2: et cetera. And a lot of those come from younger Americans.
25:12
Speaker 2: I think my point would be that one, younger Americans
25:18
Speaker 2: do tend to work in multiple jobs more than others,
25:22
Speaker 2: and today they use the technology that's available to them,
25:25
Speaker 2: which is something like cash app or Venmo. Whereas when
25:29
Speaker 2: my father was twenty two years old and got a
25:33
Speaker 2: second gig lifeguarding for the summer, he probably didn't get
25:37
Speaker 2: paid via a mobile app because the mobile phone didn't exist,
25:40
Speaker 2: and instead he got handed some cash. So we don't
25:44
Speaker 2: have really great data as to whether or not working
25:46
Speaker 2: multiple jobs is a newer phenomenon. To some degree, it
25:50
Speaker 2: is certainly easier to do. So you can go and
25:54
Speaker 2: sign up for Uber within a number of hours and
25:56
Speaker 2: start working multiple jobs and quote unquote free lancing. But
26:01
Speaker 2: I don't have any reliable data market. I don't know
26:03
Speaker 2: if you're looking some up right now to try and
26:05
Speaker 2: get at it. But I'm just not convinced that you
26:10
Speaker 2: know cash apps data on which generation is using it
26:14
Speaker 2: most for second jobs tells us much about structural changes
26:18
Speaker 2: to the labor force.
26:20
Speaker 4: I think you pointed out the main issue with generalizing
26:25
Speaker 4: from this early on in your comments. It's not a
26:27
Speaker 4: random sample.
26:28
Speaker 2: Yeah, you're only pulling your customers. It's comfortable using a
26:32
Speaker 2: new technic.
26:32
Speaker 4: It's like going into church and saying, oh, ninety percent
26:34
Speaker 4: of people oppose abortion. Well, yeah, you asked the people
26:37
Speaker 4: at Mass on Sunday. Yeah, I say Mass. It's a
26:40
Speaker 4: Catholic name for a service, Oh it is, Well, I
26:42
Speaker 4: don't notice everybody some people call it a service, right,
26:44
Speaker 4: the mass is like a weird Catholic thing. Anyway, it's
26:47
Speaker 4: not weird. I just mean to some people it might
26:49
Speaker 4: be all right. I'm going to stop right there and
26:51
Speaker 4: just move on to my main point, which is it's
26:53
Speaker 4: not be careful. When you're reading something like this and
26:56
Speaker 4: people are generalizing. Ask about the sample. Did they even employee?
27:00
Speaker 4: Did they try to obtain a random sample even among
27:03
Speaker 4: their customers. It doesn't sound like they did. It's like
27:05
Speaker 4: one a four to one K record Keeper says, oh,
27:08
Speaker 4: twenty percent of people took out hardships, you know, hardship
27:11
Speaker 4: loans for foreclosure, medical expenses that aren't insured, stuff like that. Yeah,
27:16
Speaker 4: that's of the population. They happen to record keeps. You know,
27:19
Speaker 4: you got to be careful.
27:21
Speaker 2: So long story short here. I do think there's probably
27:24
Speaker 2: a business opportunity for companies like this who can provide
27:28
Speaker 2: new services because so much of these payments are coming
27:30
Speaker 2: through these apps and help them, you know, do better
27:33
Speaker 2: at filing their taxes and you know, qualifying for mortgages
27:37
Speaker 2: and offering more banking related services because again these services
27:42
Speaker 2: cash app venmo they are not run via a traditional bank.
27:46
Speaker 2: But again leaping to the conclusion, that Hey, now teenagers
27:51
Speaker 2: are working multiple jobs more than baby boomers. Well, of
27:56
Speaker 2: course they are, but I'm not sure you can conclude
27:59
Speaker 2: that that is going to be a permanent transition. In fact,
28:01
Speaker 2: I suspect that it's very much not going to be
28:04
Speaker 2: anything permanent. As they get into more serious, higher paying
28:07
Speaker 2: jobs that demand more, they're not going to be able
28:09
Speaker 2: to hold down multiple jobs.
28:12
Speaker 4: There was some research done on this about ten years
28:14
Speaker 4: ago at the BLSBO of Labor Statistics by one of
28:16
Speaker 4: the researchers there, and they concluded that the rate of
28:20
Speaker 4: multiple job holders fell I'll just say, by in half,
28:24
Speaker 4: even though it's not quite that dramatic over the twenty
28:27
Speaker 4: years ending about ten years ago. So there was a
28:30
Speaker 4: trend in place as of about ten years ago. This
28:32
Speaker 4: trend could have reversed. It's not dramatic, it was dramatic
28:36
Speaker 4: in the nineties good economic times. Fewer multiple job holders
28:39
Speaker 4: could also be demographic baby boom getting older, hitting their
28:43
Speaker 4: peak years and needing to work fewer. Jay, I guess
28:46
Speaker 4: that's basically the same thing. But you know, like you said,
28:48
Speaker 4: younger people are more likely to work multiple jobs.
28:51
Speaker 2: I will acknowledge that it is way easier to find
28:53
Speaker 2: a second job. Now that it is, you can do
28:55
Speaker 2: it online from Yeah, you can sign up online to
28:58
Speaker 2: deliver food via or any of these applications, and is
29:02
Speaker 2: quite possibly easier to do that today. But you know,
29:08
Speaker 2: I don't know that that states much about how the
29:10
Speaker 2: labor force needs to be reshaped. Let's take quick break.
29:13
Speaker 2: When we come back, need to update you on markets
29:16
Speaker 2: because it's gotten worse, not better, and we're going to
29:19
Speaker 2: play a little bit of stack roulette next.
29:22
Speaker 1: Okay, real time financial insight as news breaks. The Financial
29:26
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29:29
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29:58
Speaker 2: First over to markets. We've got now a full on
30:02
Speaker 2: sell off happening inequities. The now is currently off two
30:05
Speaker 2: hundred and fifty points half percent. Sm P five hundred
30:08
Speaker 2: down seventy five points or one percent. NASDAK off four
30:11
Speaker 2: hundred and fifty points about one point seven percent. This
30:14
Speaker 2: is especially of note because all three indices started the
30:17
Speaker 2: day positive, and so we've now seen on the Nasdaq
30:21
Speaker 2: close to a three percent swing, S and P about
30:25
Speaker 2: a two percent swing in trading since opening up the program.
30:29
Speaker 2: So we will see where things go in the afternoon.
30:32
Speaker 2: But so far investor is taking another step back on
30:35
Speaker 2: US equities.
30:36
Speaker 4: It's the flip side of those high multiples we were
30:38
Speaker 4: talking about earlier. High p too, e. Those are reflective
30:42
Speaker 4: of a buoyant sentiment. They tend to go up when
30:45
Speaker 4: people get excited about the possibility of current high earnings
30:48
Speaker 4: repeating into the future. When that sentiment changes, people's forecast
30:52
Speaker 4: change for whatever reason, and it can happen on a dime.
30:55
Speaker 4: You hit these air pocket. This isn't an air pocket.
30:57
Speaker 4: This is a normal We're just not used to it.
31:00
Speaker 2: But his markets go down. To believe it or not,
31:02
Speaker 2: it does actually way to put it, Mark, you seem
31:05
Speaker 2: very confident about stack rout lad your your stack of
31:08
Speaker 2: stories is now in the trash. So I'm going to
31:10
Speaker 2: kick things off to you as to what we're talking
31:13
Speaker 2: about next on stack Reulge.
31:14
Speaker 4: Just cleaning Chuck's desk for tomorrow. A story from Bloomberg
31:18
Speaker 4: NYC Pensions Boss, the Comptroller of New York City, says
31:22
Speaker 4: SpaceX's disregard for shareholder has shareholders has no precedent. What
31:27
Speaker 4: he means there is that SpaceX's governance structure gives eighty
31:31
Speaker 4: percent of the voting rights to Musk. He's also chief executive,
31:34
Speaker 4: he's chief technical officer as well as chair of the board.
31:37
Speaker 4: It's basically a dictatorship, yep. And that probably appeals to
31:41
Speaker 4: some people who trust his judgment, like implicitly, who have
31:44
Speaker 4: kind of a blind faith.
31:45
Speaker 2: If you're looking for a company with checks and balances,
31:47
Speaker 2: SpaceX does not appear that it will be the one.
31:50
Speaker 4: And it's over. What we talked about this in the
31:52
Speaker 4: last hour. We were talking about where's the capital going
31:54
Speaker 4: to come from. They want to raise seventy five billion
31:56
Speaker 4: by selling five hundred and sixty million roughly shares. That's
32:00
Speaker 4: less than five percent of the company, though most of
32:02
Speaker 4: it will remain with Musk and private some other investors,
32:07
Speaker 4: venture capitalists, other early investors. So it's going to be
32:12
Speaker 4: opaque and to an extent, it's a leap of faith.
32:16
Speaker 2: Yeah, you're along for the ride.
32:17
Speaker 4: Unfortunately.
32:18
Speaker 2: Now, I will also say that most retail investors don't
32:20
Speaker 2: buy shares and companies to influence the board and change
32:23
Speaker 2: the direction.
32:24
Speaker 4: Of and many retail investors and sophisticated institutional investors like
32:28
Speaker 4: New York City's pension aren't going to have a choice
32:30
Speaker 4: because they may have assets invested in an index tracking fund.
32:35
Speaker 4: We all use them through our four one K plans
32:38
Speaker 4: and other vehicles other structures, but these pension funds do
32:43
Speaker 4: it in large amounts, hundreds of millions of dollars at
32:46
Speaker 4: a time, and they're going to be compelled to buy
32:48
Speaker 4: some SpaceX. It's small as a percentage of overall assets
32:52
Speaker 4: invested in an index tracker, and it's not.
32:54
Speaker 2: Being It's not universally either.
32:58
Speaker 4: Yeah, Nasdaq is, Footsie, Russell is, although it'll be capped
33:01
Speaker 4: at a lower rate than Nasdaq SNP, not at all
33:05
Speaker 4: until it's profitable.
33:06
Speaker 2: Yeah, and what a year after IPO. There's also the
33:09
Speaker 2: public float rule that I don't know they'll ever get well,
33:12
Speaker 2: I'm sure they'll get around at some point, but.
33:14
Speaker 4: Yeah, I forget what their float rule is. I know
33:17
Speaker 4: NASDAK liberalized theirs for this, right they're going to let
33:19
Speaker 4: in three times is seventy five billion times three or
33:23
Speaker 4: two twenty five, making it about as big as I
33:26
Speaker 4: think Qualcomm is the closest in that Mazdak composite.
33:29
Speaker 2: So Meta is launching a workforce academy to train workers.
33:36
Speaker 2: It's not coding, it is not website design, it is
33:39
Speaker 2: not social media expertise. They are training workers to build
33:44
Speaker 2: data centers because apparently they cannot find enough of them.
33:47
Speaker 2: They've launched or committed to spend one hundred and fifteen
33:50
Speaker 2: million dollars on the program this year, piloting it in Louisiana, Ohio, Indiana,
33:56
Speaker 2: and Texas. They will be skilling up work in the
34:00
Speaker 2: areas of electricians, HVAC technicians, and many other you know,
34:08
Speaker 2: blue collar traditional roles here, guaranteeing those who graduate the
34:13
Speaker 2: academy a job building these data centers in these locations.
34:18
Speaker 2: And I guess doing what they believe needs to be
34:23
Speaker 2: done in order to get this stuff off the ground.
34:27
Speaker 2: I'm sure it's a bit of a pr push to right.
34:29
Speaker 2: This looks good for Meta. Hey, you know you've been
34:31
Speaker 2: accused of wanting to kill jobs. Here we are creating
34:35
Speaker 2: a bunch of new jobs. So you know, I don't
34:36
Speaker 2: like to discount the public relations aspect all of this,
34:40
Speaker 2: of all of this, But I guess I would just
34:42
Speaker 2: ask one question, does any of that sound disinflationary to you?
34:48
Speaker 2: You know, we keep I know we've kind of covered
34:50
Speaker 2: this already, but you know, Meta is basically telling you
34:55
Speaker 2: we cannot find the labor needed in the public market
34:59
Speaker 2: in order to to build what we want to build.
35:02
Speaker 2: So we are going to spend one hundred plus million
35:04
Speaker 2: dollars training those people ourselves and shelling out the dough
35:09
Speaker 2: to go do this. I do not, I fundamentally do
35:11
Speaker 2: not believe that they would do this if they founded
35:13
Speaker 2: they could find HVAC technicians and electricians at a resort.
35:17
Speaker 4: Or they don't want you, they don't want to use
35:18
Speaker 4: union labor. I mean, why not go to the trades
35:20
Speaker 4: and say we'll give you the money. They already have
35:23
Speaker 4: the apparatus the trades. Do you go to the New
35:26
Speaker 4: England carpenters, for example, we're going to build it. We
35:28
Speaker 4: have only a third of the.
35:30
Speaker 2: Their answer is they believe they can do it cheaper
35:32
Speaker 2: by training them.
35:33
Speaker 4: Well, that's just it. Yes, So I wonder how the
35:34
Speaker 4: trades feel about this, and I wonder what they're going
35:37
Speaker 4: to be. I'm not advocating necessarily for I personally would,
35:41
Speaker 4: but whatever, And why don't existing institutions and structures provide
35:48
Speaker 4: them with the means to pull this off? And will
35:50
Speaker 4: these people be captive in any sense? Are they signing
35:53
Speaker 4: a green compete? You get trained in exchange, you work
35:56
Speaker 4: exclusively for us. Part of me says, hey, at the
36:00
Speaker 4: market work here. Part of me also says.
36:02
Speaker 2: This is weird.
36:03
Speaker 4: Uh, maybe I'm maybe I shouldn't look at gift horse
36:05
Speaker 4: in them mouth people. Yeah, jobs, they're gonna get good skills. Yeah,
36:09
Speaker 4: and they can do whatever they want with.
36:10
Speaker 2: Them later so long as But I don't trust Facebook.
36:12
Speaker 2: I guess that's I don't trust Facebook.
36:14
Speaker 4: I don't trust Uckerberg.
36:15
Speaker 2: Yeah, yeah, that's actually trust good.
36:17
Speaker 4: Sorry, but I have no basis By the way, I
36:19
Speaker 4: don't know the guy.
36:20
Speaker 2: Do I do look at all of this and say, okay, yeah,
36:24
Speaker 2: why are they doing this instead of going to the unions. Well, one,
36:27
Speaker 2: they think they can get the labor for cheaper training
36:30
Speaker 2: it up themselves, and they have enough scale that they
36:33
Speaker 2: believe they can train these workers up themselves, have them
36:35
Speaker 2: signed some sort of noncompete, and that will be less
36:39
Speaker 2: expensive than going and hiring an existing expert in the
36:42
Speaker 2: same field.
36:43
Speaker 4: Who's going to do the training to what standards will
36:45
Speaker 4: they be trained? Are they going to try to mimic
36:47
Speaker 4: the construction trade standards? Are we talking about an alternative
36:51
Speaker 4: like type certification? It's just it's weird. We've got it's
36:54
Speaker 4: like a parallel training structure for the construction trades.
37:00
Speaker 2: And if I were, it's weird and so far as yeah,
37:03
Speaker 2: we've never seen anything quite.
37:05
Speaker 4: Like well, probably did something like it, but of course.
37:10
Speaker 2: But I guess that's the point is we do have
37:12
Speaker 2: to go back pretty far to see programs like this,
37:18
Speaker 2: and I kind of doubt this is the last one
37:21
Speaker 2: we've seen it. I guess a little bit from like TSMC,
37:24
Speaker 2: who has been sponsoring these types of job training programs.
37:27
Speaker 2: But those aren't you know, these are skill sets that
37:31
Speaker 2: presumably can use elsewhere, whereas you know, building semiconductors was
37:34
Speaker 2: pretty specified. Uh, this is Hey, we're going to train
37:37
Speaker 2: you to be an HVAC technician. I've never heard of
37:40
Speaker 2: a technology company, dude, this is this is pretty new
37:43
Speaker 2: ground that we are breaking right now. It's going to
37:46
Speaker 2: be very expensive and uh, we will see where. My
37:51
Speaker 2: guess is it leaves us over supplied with a whole
37:53
Speaker 2: bunch of things, probably not h fact technicians, but a
37:55
Speaker 2: whole bunch of things related to AI. But the boom
37:59
Speaker 2: continues for the time. I'm being not in stocks though,
38:02
Speaker 2: Nasdaq closing the show down five hundred nearly twenty points,
38:06
Speaker 2: or close to two percent. We'll have a full market
38:09
Speaker 2: recap for you tomorrow, in addition to May inflation data
38:13
Speaker 2: coming out tomorrow morning. Have a great rest of the day, folks,