Latest / The Financial Exchange Show / Traders are making big bets ahead of Nvidia earnings

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Traders are making big bets ahead of Nvidia earnings · The Financial Exchange Show

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Speaker 2: Kicking things off to start the week. It's Chuck, Mike
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and Tucker with you. And the big one that everyone's
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gonna be watching this week is in Vidia earnings. They
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are due out after the bell on Wednesday, and so
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it's going to be one that people are focusing on
1:28
pretty closely just because other than that, while we have
1:32
some other stuff this week, nothing that's hugely important, but
1:35
we're gonna get some housing data tomorrow, permits and starts
1:39
for the month of October, the NAHB Housing Market Index.
1:43
We got some data there this morning, but again nothing
1:46
that's you know, overwhelmingly meaningful. We'll get weekly jobless claims
1:51
this week. In Nvidia, on the other hand, is something
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that has the potential to not just move US markets,
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but international markets as well, because the AI trade is
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something that has been one of the most powerful forces
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in the financial world over the last twenty four months now.
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Remember it was about two years ago that we first
2:15
got the public release of chat GPT at the end
2:18
of twenty twenty two, and everyone started asking it if
2:22
its refrigerator was running, and here we are two years later,
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and one of the prime beneficiaries of generative AI to
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this point has been in Nvidia, now with a market
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cap of three point five trillion dollars.
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Speaker 3: It's funny to talk about that in the context of
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these other companies that are also reporting earnings that are
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probably far more relevant to people's everyday lives, but also
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just don't really mean like Walmart, Yeah, like the largest
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private employer in the country, I think still or did
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Amazon overtake them? Ever, they always jockey for the number
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one role there. But Low's reporting earnings tomorrow morning alongside Walmart.
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Wee Walmart, so I Wednesday.
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Speaker 2: In addition to it, wait no, hang on, I've no.
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This is another example where AI is stupid. What do
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you got not on Google? I'm I've been doing this
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duck Duck go yeah thing for the last year. Just
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curious how it's been working. It has a feature called
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duck assist okay, which is similar to every search engine
3:23
that is implementing AI answers.
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Speaker 4: This is the quote from it.
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Speaker 2: The largest employer in the United States is Walmart, with
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approximately one point three million employee employees based in the US.
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Other major employers include Amazon with around one point five
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million employees based in the US.
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Speaker 4: You freaking idiot AI.
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Speaker 3: It has been noted that these artificial intelligence tools are
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not great at math.
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Speaker 4: What are we even doing here?
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Speaker 2: This is stupid at this point. And I'm someone who
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uses generative AI on an almost daily basis, but this
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is freaking stupid.
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Speaker 4: It's incredible happen it is.
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Speaker 3: Yeah, But in any case, in addition to Nvidia, you'll
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have TJX companies local Framingham, Massachusetts based company reporting on
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Wednesday before the Bell target as well reporting Wednesday mornings,
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so jampacked week in terms of retail earnings. In addition
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to all that, I think we have Deer reporting on
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Thursday as well. But nothing matters quite as much as
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the context of how does Nvidia do in comparison to
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their well, gangbuster expectations very lofty, expect to put it in.
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Speaker 2: Perspective, every other company reporting earnings this week, if you
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added up their market caps does not equal in Vidia.
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Speaker 4: Correct.
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Speaker 2: Yeah, So like that, when we talk about what matters,
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it's going to be in Vidia. And you got a
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piece in the Wall Street Journal that is not surprisingly
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lacking context, talking about traders are making bullish bets on
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Invidia ahead of earnings. And basically what it's talking about
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here is that if you look at the options market
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for Invidia, there are lots of Invidia options that are trading,
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and they're trading with you know, they're they're trading expecting
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that the stock is going to move quite a bit.
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Speaker 4: And would that be abnormal for a week in which
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the company reports earnings.
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Speaker 2: No, this is a stock that frequently has eight to
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ten percentage points swings on its earnings releases. And so
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the fact that this piece doesn't like actually explain how
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these options work or why someone's.
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Speaker 4: Doing this just you know, uniquely unsurprising.
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Speaker 2: Damon Nojak, a thirty four year old preloader for UPS
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and Oregon, recently bought in Vidio call options that would
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pay out if the stock reaches one seventy seven fifty.
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That's one way to explain it. Or you could actually
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talk about, hey, there's ways that you know, maybe he
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could make money otherwise, or hey, even if the stock
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reaches that, maybe he would find ways to lose money.
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Because it's not that simple with options, and so it
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really bothers me when you get I don't know it's
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probably generously eight hundred words or so on in Vidia
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options trade with the idea that hey, we're going to
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be able to explain this to people in a way
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that is coherent and actually, you know, getting the fundamentals across,
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and instead you get something that is just one of
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these pieces that always bothers me because it makes people
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look at this and be like, should I be doing that?
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Speaker 4: Damian?
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Speaker 3: No, Jack, a preloader at UPS is doing it? Then
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what does he know that I don't.
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Speaker 2: Is there a postloader?
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Speaker 4: No?
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Speaker 2: No, that's probably a driver, right, a loader and an unloader.
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I would figure that the driver's the postloader.
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Speaker 4: Yeah, but it's neither here nor there.
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Speaker 2: In any case, in video earnings, they typically see really
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big swings, and so this piece is talking about how
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some investors use stock options in order to bet on
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you know how those are going to turn out. If
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you're listening to us right now saying gee, I don't
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really know what an option is, it's probably not something
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that you should be trying to play around with before
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Wednesday's earnings.
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Speaker 3: Unless you are a big fan of gambling and don't
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mind losing money.
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Speaker 4: Correct.
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Speaker 2: And again, it's not saying that you would definitively lose money.
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It's just that it's basically a coin flip for you,
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possibly worse than that.
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Speaker 3: You are learning about options today and trying to bet
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by Wednesday, it's probably.
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Speaker 2: Worse than that. And so I think ultimately the story
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about in Vidia's earnings is going to be, hey, are
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they able to continue growing at you know, the clip
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that they've been accustomed to. But the fact is their
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earnings growth and their revenue growth have both been slowing
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down over the course of this year. I pulled this
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data last week just because I was curious about it.
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I pulled it on Friday, and video's revenues on a
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quarterly basis, not yearly, but hey, how much are they
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growing on a quarterly basis in terms of, you know,
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the the growth that they're seeing. And here's what we
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are seeing over the last Sorry I lost the number
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that I add. Here we go, Here's what they are
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seeing over you know, the last seven or eight quarters.
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Here last quarter they grew at a fifteen percent quarter
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over quarter rate for their revenue. Quarter before that was eighteen,
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The one before that was twenty one, The one before
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that was thirty four, The one before that was eighty seven.
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That's the bulk of where their their revenue growth has
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taken places. In the last five quarters. It's been slowing
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down each quarter sequentially. And so when you are a
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company that right now, again I'm not saying Video is
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going to go out of business or anything that's there's
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there's middle ground here in terms of what I'm trying
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to get at. When you are a company that's trading
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thirty five times sales and forty eight times forward earnings, okay,
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thirty five times sales, in your sales growth is slowing
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a couple percentage points each quarter. All right, That's that's
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something that you have to pay attention to. Now, let's
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take a look at the profit side of things again.
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It's it's one thing if you are seeing the revenue slowing,
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but what's happening with the actual profit growth? Because as
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Larry Cudlow always like to tell us, profits are the
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mother's milk of stocks. We really need to have that
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as a sound that we can play. I just think
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it would be useful to the show in general. Here
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is in Video's profit growth over the last six or
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seven quarters, up eleven percent, up twenty one percent, up
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thirty two percent, up forty nine up two hundred percent.
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This again, the last five quarters that I'm looking at,
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going in reverse order, profit growth has been slowing. And
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again this is quarter by quarter. So look, eleven percent
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quarter per quarter profit growth is nothing to sneeze at,
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but that's down from twenty one percent the previous one,
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thirty two the previous and so on and so forth.
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So ultimately, where this this gets to is, Look, it's
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not to say that in Vidia is going to go
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out of business, but if profit growth keeps slow, well,
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why do you want to be paying sixty times or
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forty times you know, earnings for a company that is
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getting closer to, you know, in terms of annual profit growth,
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you know, something in the twenty to thirty percent range,
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which is still a growing company and worth paying for.
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But man, like, how long can you even keep that up?
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Given that ultimately, you and I don't go out and
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buying video chips. It's been Microsoft, it's been Meta, it's
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been Google, it's been Amazon. These are the companies buying them.
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At some point they just say, look, we can't afford
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to continue to increase our spend the way you think we.
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Speaker 3: Can, presumably, and look there's plenty out there who would say, well,
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you know, this has been a slow down ahead of
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their release of the Blackwell chips, and those are going
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to be selling like wildfire. And I know that they've
10:45
also experienced some issues with those Blackwell chips.
10:48
Speaker 2: Look, there's plenty of over the weekend, I forget who
10:51
it was reported that the Blackwell chips might have some
10:55
overheating issues, and so that's why in video stock is
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down a couple percentage points today.
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Speaker 3: Not great if you're trying to, you know, power a
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bunch of supercomputers on them. But sure, look, it's anybody's
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guests out there. I recognize there are plenty that are
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so bullish and artificial intelligence that see any sort of
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slow down as purely temporary in nature until the true
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power of AI comes to be harnessed.
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Speaker 2: And they might be right.
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Speaker 3: They could be, but if they're not, then you know,
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that's what you need to be aware of about the
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slowdown in earnings growth.
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Speaker 2: Let's take a quick break here. When we come back,
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we'll talk about Morgan Stanley coming out with their price
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targets for the S and P five hundred for the
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next couple of years. Nothing makes us more cynical than this,
11:36
and so we'll be discussing Morgan Stanley's S and P
11:39
five hundred price targets right after this.
11:42
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Speaker 2: Mike, We've got you know. As we approach the end
12:43
of the year, all the big investment banks out there
12:46
start to say, hey, here's what we think is going
12:49
to happen next year. And Morgan Stanley is no different
12:53
there out with their numbers for the S and P
12:56
five hundred for twenty twenty five and and their new
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price targets. Their base price target is a continued growth
13:05
in stocks, with the S and P five hundred getting
13:07
up to sixty five hundred. Their bowl case has the
13:10
S and P five hundred rising twenty four percent next
13:13
year up to seventy four hundred, and their bare case
13:15
has the SMP losing twenty three percent down to forty
13:18
six hundred.
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Speaker 3: So then they get this right. Stocks are going to
13:21
perform somewhere in like I had eighty percent range. What
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does one do with this?
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Speaker 2: It's like, so you tell me, if things go well,
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I could make twenty five percent. If things go badly,
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I could lose twenty five percent. Why is this? Why
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is this useful to anyone? Isn't isn't generally the idea
13:39
with equities? Just knowing what I know about the stock market, Hey,
13:44
typically long term stocks were turned somewhere between like eight
13:49
and twelve percent, depending on the market in the timeframe
13:52
that you're looking at, but their significant intra year volatility,
13:56
and so you could see anywhere from plus twenty to
13:59
minus twenty as a normal range of outcomes. What did
14:03
Morgan Stanley.
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Speaker 4: Tell us here?
14:05
Speaker 2: Is there any useful signal in this or is it
14:08
just crap? My answer is crap?
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Speaker 4: By the way.
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Speaker 3: Yeah, I'm really racking my brain trying to think of
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how anyone might be able to put this to use,
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And yeah, I'm with you.
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Speaker 4: I can't come up with anything.
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Speaker 3: I find more use out of the bank's long term
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Like you know, when they could put out their like
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ten year projections on what the S and P is
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going to do, they're twenty years.
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Speaker 4: Which are also pretty useless.
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Speaker 3: I find more value out of those than giving me
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a forty What did they just give us, like a
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forty five percent range of outcomes for a stock performance
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and twenty seven percent?
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Speaker 4: Yes? Completely? But what do I do with that? Nothing?
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How you do nothing?
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Speaker 2: How is that in any way useful for me?
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Speaker 4: Can I bring up another thing from a large bank
14:49
that is pretty useless? Yeah?
14:52
Speaker 3: So super micro computer that's in our stack for a
14:55
little bit later today has had a pretty tremendous fall
15:00
from from grace. Their stock reached its twenty twenty four
15:03
closing high back on March thirteenth, when it was up
15:06
three hundred eighteen percent for the year. Soon after, analysts
15:10
over at JP Morgan began covering the stock and put
15:12
out an overweight rating in March, calling super Micro the
15:15
leading company in the AI computing market. Now, I'm not
15:20
going to put all of this at JP Morgan's feet.
15:21
They you know, they were just looking at the company and.
15:24
Speaker 2: Michael and can Here's the thing, this is the business
15:30
they've chosen. If they didn't want to be held accountable
15:33
for it. No one made them do what they did
15:36
in March, so you're today they did not. Nobody forced
15:40
JP Morgan to begin covering this stock, or to note
15:43
it is overweight, or to say that it is the
15:46
leading company in the AI computing market based on I
15:50
don't know what. But here's what happened after that. On
15:52
August sixth, super Micro reported its fourth quarter adjusted gross
15:55
profit margin came into eleven point three percent versus seventeen
15:59
percent the year before. Stock got sent lower based on
16:03
poor performance then, but then the real stuff started coming
16:06
to blow. August twenty seventh, Hindenberg Research published a report
16:10
on super Micro, alleging it found glaring accounting red flags,
16:13
evidence of undisclosed related party transactions, sanctions, and export control failures.
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Speaker 3: Is that they ad customer issues. I mean, what doesn't
16:22
that cover?
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Speaker 2: That's bad you alleged Probably fine.
16:27
Speaker 3: Yeah, you're you're facing alleged sanctions and export control failures.
16:33
You have accounting red flags.
16:36
Speaker 2: They still have not submitted a formal plan to file
16:39
their annual report. They're expected to today, but that's just
16:43
a plan to be able to file it so they
16:45
won't be delisted from the Nasdaq. Right their their outside
16:49
accountant dropped them as a customer.
16:51
Speaker 4: Yes, uh so again.
16:55
Speaker 3: I brought this up in the context of JP Morgan
16:57
beginning analyst coverage, which they apparent felt that they needed
17:00
to because the stock traded up by three.
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Speaker 4: Hundred and eighteen percent.
17:03
Speaker 3: But you know what's pretty useless to me is a
17:06
bank deciding to cover a company that clearly doesn't know
17:09
anything about their business and hasn't done enough research to
17:12
look at it and say, humm, what could these accounting
17:15
red flags be? Why don't we just start covering it
17:17
and put a bullish rating on it.
17:20
Speaker 2: It's this kind of stuff that I think just bothers me.
17:23
And look, I get why all of these companies do them.
17:27
It's a five lettered word called money, like that's why.
17:31
Speaker 3: And there's no downside for JPM Morgan by doing this. No,
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it's not as though anybody's going to sue them for saying, hey,
17:37
you were bullish on a stock that was had accounting
17:39
your regularities. Nor is it going to hit JP Morgan's
17:43
reputation badly enough to do anything about it. But I'm
17:46
here to say maybe it should, folks well.
17:48
Speaker 2: And this is even before you get to the potential
17:50
conflict of interest within investment banks in terms of hey,
17:53
we're competing for things like IPOs and bond deals, and
17:57
so we need to be able to create a port
18:00
of environment for companies that we want to attract there.
18:02
Speaker 3: Oh but no, check there's there's a firewall, a Chinese wall,
18:05
between those two divisions of the bank.
18:07
Speaker 4: They don't talk to each other. Don't worry about that.
18:09
Speaker 2: It's fine. This is all just fine. So again, this
18:13
is a listen the run up to you know, Christmas
18:17
and Honk and the ends. It's one of the great
18:19
times of the year, because you can be so festive,
18:22
but it's also when you have the most crap thrown
18:24
at you buy big banks, and it's just I always
18:27
like to bring it back. What does one do with
18:29
all of this information that we just provided on these
18:32
two big banks that in one case provided pretty useless
18:35
information another case, ended up providing, perhaps unbeknownst to them,
18:39
harmful information to people following their analyst coverage. I think
18:43
ultimately it comes back to learning how to read and
18:47
pay attention to financial media and understand that the incentives
18:51
for certain pieces to be published or discussed are not
18:56
necessarily aligned with helping you.
19:02
Speaker 3: And if you fell for the super micro story back
19:05
in March of this year because the analyst went on
19:08
CNBC and then Bloomberg and God all hyped up about
19:11
the story, and I'm sorry, but shame on you.
19:15
Speaker 2: And I'm not saying that these banks are inherently evil
19:18
or anything like that. Don't don't get me wrong, it's
19:20
not that. It's just look, they're in the business of
19:23
making money and that's what they do. When you understand that,
19:28
you can look at these things a little bit more critically.
19:30
Let's take a quick break here when we come back.
19:33
We got Wall Street Watch after this, and then we're
19:34
talking spirit airlines.
19:42
Speaker 1: Like us on Facebook and follow us on Twitter. As
19:44
TFE show. Breaking business news is always first right here
19:49
on the Financial Exchange Radio Network. Time now for Wall
19:54
Street Watch. A complete look at what's moving markets so
19:57
far today, right here on the Financial Exchange Radio Network.
20:00
Speaker 5: Well after last week's pulled back and paused from the
20:03
Trump rally, Marcus today our in mixed territory as investors
20:06
await key third quarter earnings from tech gine Nvidia on
20:10
Wednesday afternoon. At the moment, Dow is off by seventy
20:14
eight points, SMP five hundreds up over a third of
20:16
a percent or twenty one points, the Nasdaq is up
20:19
by over three quarters of a percent, or one hundred
20:22
and fifty one points. Russell two thousand is up by
20:24
a quarter of a percent, Tenure Treasure reeled up by
20:27
two basis points at four point four to five percent,
20:30
and crude oil is up nearly three percent higher, trading
20:34
just below sixty nine dollars a barrel. Tesla stock is
20:38
extending its rally today on the heels of a report
20:41
from Bloomberg that President elect Donald Trump's transition team is
20:45
planning to make a national regulatory framework for self driving
20:49
driving vehicles a top priority for the US Transportation Department.
20:54
Tesla shares are up by eight percent. Meanwhile, Spirit Airlines
20:57
officially filed for bankruptcy protection, seeking to restructure its debts
21:02
as the discount airliner combats more intense competition from larger airline.
21:08
Spirit stock is down more than ninety percent this year
21:12
and today down another eighteen percent. Chuck and Michael have
21:15
more in Spirit here come up in a matter of
21:17
moments ahead of its earnings and Video shares down by
21:20
one percent after The Information reported that the chip maker's
21:24
Blackwell AI chip has overheating issues, raising concerns about delays
21:29
to its customers. According to Barons, this past Friday, super
21:32
micro Computer is expected to file a plan for its
21:36
delayed annual report by today to avoid being delisted from
21:40
the Nasdaq. That stock is up by eight percent and
21:43
shares in Warner Brothers Discovery up over three and a
21:46
half percent after The Wall Street Journal reported over the
21:49
weekend that the media giant has settled its breach of
21:52
contract lawsuit against the National Basketball Association, where the agreement
21:57
will keep the company in business with the lead league
22:00
for at least the next decade. Now, the deal was
22:03
actually announced two hours ago officially, and that will give
22:06
Warner Brothers the ability to develop new shows with NBA
22:10
content in the US and abroad. I'm Tucker Silvan Mass
22:14
Wall Street.
22:14
Speaker 4: Watch Micha.
22:15
Speaker 2: Let's talk a little bit about the announcement that came out.
22:18
I think it was yesterday afternoon. I thought it was
22:23
this morning, but nonetheless, maybe it was this morning. Maybe
22:25
I just get my news faster than you.
22:26
Speaker 3: It might be, you know, something like that, that'll crystal ball,
22:30
that gives you a six hour lead.
22:32
Speaker 4: It's great.
22:33
Speaker 2: Spirit Airlines filing four, Chapter eleven bankruptcy. Chapter eleven differs
22:37
from chapter seven and that it's not a liquidation but
22:39
rather a reorganization. So Spirit planes continue to fly, the
22:43
company continues to operate. If you are planning on flying
22:47
Spirit at any point basically until the reorg is complete,
22:51
do be aware they can change flight schedules and things
22:54
like that, so you might have to pay attention on
22:56
that side of things. But Spirit here basically saying, look,
23:01
we've got too much debt outstanding. We have you know,
23:04
a bunch of unprofitable routes, so at some point they
23:07
are likely to be selling off some planes and reducing
23:09
some routes in the future as they try to compete.
23:13
But ultimately, what this comes back to is Spirit has had,
23:20
you know, multiple attempts to merge with other companies. First
23:22
they tried to merge with Frontier, but then Jet Blue
23:24
came in with and over the top offer. But then
23:26
that offer was shot down by a judge who said, no,
23:31
this would be anti competitive. And now we're seeing the
23:34
results of that, which is, Hey, if you don't let
23:36
too small airlines merge to fight the big guys, they
23:40
go bankrupt and where did your competition go? Anyways, And
23:44
this is the whole problem with the way that the
23:45
US airline industry is set up today, and that, Yeah,
23:50
in a perfect world, I'd love to be able to say, sure,
23:53
we don't want Jet Blue to merge with Spirit because
23:55
it would reduce competition. But when you already are allowed
23:58
Delta to merge with Northwest, when you already allowed United
24:01
to merge with Continental, and when you already allowed American
24:04
to merge with US Air, you can't compete against that
24:09
at a third or a quarter of the size. And
24:11
that's what we are ultimately seeing here. I want to
24:14
talk about why.
24:15
Speaker 3: But quick message from the CEO quote, the most important
24:18
thing to know is that you can continue to book
24:20
and fly now and in the future. I went on
24:22
to say in a letter to customers that customers can
24:25
use tickets, credits, and loyalty points normally. Obviously any of
24:29
that could change, but important contacts and obviously desperate contacts
24:32
from the CEO who does not want to see this
24:35
thing spiral, which it easily could. Right You could see
24:37
a number of customers saying I'm not confident booking a
24:41
flight or using anything on an airline that's in bankruptcy,
24:45
and if they don't have those bookings coming in, then
24:48
the situation could get worse quickly. But I want to
24:52
get back to that question, Chuck, which is why doesn't
24:55
the Spirit Airlines model seem to work today?
25:00
Speaker 2: Well?
25:00
Speaker 3: Which part of it I guess a regional low cost
25:04
carrier because there's no money to be made and doing
25:09
so with fuel and labor costs where they are, and
25:11
so the places that airlines are succeeding is at scale
25:16
with high end tickets that they can sell for three, four,
25:21
five x what you pay to fly in economy seats.
25:25
It's it's completely flipped the industry on its head in
25:28
the last decade where hey, a lot of the big
25:31
airlines the reason that they were trying to consolidate back
25:34
in two thousand and five through twenty fifteen was because
25:40
they were getting out muscled by these low cost regional players.
25:44
That was where the money was to be made, based
25:46
on Americans travel habits and how you know, fuel prices
25:50
and all that. That that's where the money was today.
25:55
Post you know, twenty twenty, it's a world in which
25:59
you can't really make make money unless you have unless
26:02
you have premium seats and large enough scale. And so
26:07
it's not going to be like this forever. Again, the
26:09
pendulum does swing back and forth. But in today's world
26:13
where hey, the baby boomers are retiring and they're flying
26:17
to Europe and want to fly business class, will you
26:20
make the money selling a five thousand dollars business class seat,
26:24
not shuttling people back and forth between you know.
26:27
Speaker 4: Myrtle Beach and Boston.
26:29
Speaker 2: Yeah, you know, want to get away? Yes, Southwest does
26:32
right now?
26:32
Speaker 3: You know, is that surprising to you in the context
26:36
of what we kind of knew as a truism in
26:39
the airline industry, which was, people don't care.
26:41
Speaker 4: About the extra fees.
26:42
Speaker 3: They don't care about the quality of the flight, they
26:43
don't care about the airline, They just care about price.
26:46
That was the That was the seeming like truism to
26:49
the entire industry. It's why Delta and all these other
26:52
airlines had to scrap services and come out with budget tickets.
26:57
And you know, you think about Delta or American these days,
27:00
you can go out and buy a ticket that does
27:03
not include Sorry, we're all distracted, Beau.
27:05
Speaker 4: The dog just.
27:06
Speaker 3: Walked into the office here outside the studio, so we
27:08
might not be able to continue this conversation.
27:11
Speaker 4: But nonetheless, to go pet it does it? Does it
27:16
surprise you?
27:16
Speaker 3: I guess you know, these companies like Delta had to
27:18
completely roll out a new line of product to compete
27:24
with Spirit, and now I guess that's the answer is
27:27
they did, and now Spirit's going out of business.
27:29
Speaker 2: Well, the other thing that's kind of interesting on this,
27:32
I think it's twofold. The first is there still are
27:37
a ton of people in the United States that have
27:39
a ton of money.
27:40
Speaker 4: True, and the.
27:42
Speaker 2: Quality of service if you are sitting in an economy
27:46
cabin these days is not great. I flew down to
27:50
Baton Rouge, Louisiana, back in October and I can't I
27:56
don't even know what airline it was on. I think
27:57
it might have been Jet Blue. And those of you listening,
28:02
I'm five foot seven on a good day, actually most days. Yes,
28:06
occasionally I slumped a five sex, but that's you know,
28:09
neither here nor there.
28:11
Speaker 4: I could barely.
28:12
Speaker 2: Fit my knees in the seat that I was in.
28:15
I've never been on a Jet Blue flight that has
28:17
been this tightly, like packed in terms of the pitch
28:20
of the seats. And the guy sitting next to me
28:22
is six ' five and I'm talking to him. I'm like, man,
28:26
this has got to be rough for you. And part
28:28
of me wonders has the economy product gotten so bad
28:33
that there are just a bunch of people that are like,
28:35
you know what, fine, I will pay for the first
28:38
class seat to get out of that. And that combined
28:42
with the fact that, look, you got a bunch of
28:44
baby boomers that are retiring that by and large have
28:47
a ton of wealth. I'm not saying every baby boomer
28:49
is wealthy, but there's enough of them that you can
28:53
make your money being like, hey, you could be treated
28:56
like cattle getting into the plane this way, or here's
29:01
your seat with you know a little bit more space,
29:04
and people are willing to pay for it because the
29:05
rest of the product has gotten so bad.
29:07
Speaker 1: Yeah.
29:07
Speaker 3: I think the point is that there is now choice,
29:10
right like Delta Airlines. You can choose the equivalent of
29:14
the crappy spirit chicken if you so choose, And if
29:17
you're five foot five and a half like me, you
29:19
probably will. But you know, my friend who is six
29:23
foot nine, three twenty and we call Bubba, ain't gonna
29:25
make that happen. Yeah, he's going to He's gonna pay
29:28
that extra bare minimum fifty dollars for the extra leg
29:31
room seat because Bubba is not gonna fit into the
29:33
same seat.
29:34
Speaker 4: That Mike does.
29:35
Speaker 3: And spirit without that choice, I don't think is ever
29:40
going to attract the Bubba's.
29:43
Speaker 2: Spirit won't attract the Bubba's That's a sentence that deserves
29:46
to live.
29:47
Speaker 4: Yeah for a while.
29:48
Speaker 2: Yeah, Man, that I got goosebumps just hearing that come
29:52
out of your mouth.
29:53
Speaker 4: Mike.
29:53
Speaker 2: That was uh, you know, everyone remembers those big moments.
29:57
This was one of them that I'm gonna remember for
30:00
quite a while. Let's take a quick break here when
30:02
we come back. We're now almost two weeks out from
30:05
the election of Donald Trump as the next president. We
30:09
still don't have his pick for what is arguably probably
30:14
one of the three or four most important cabinet positions
30:16
out there, in Treasury Secretary. We'll talk about the latest
30:20
on who may be filling that role when we return.
30:25
Speaker 1: Miss any of the show, catch up at your convenience
30:27
by visiting Financial Exchange Show dot com and clicking the
30:30
on demand icon, where you'll find all of our interviews
30:33
in full shows. This is your home for the latest
30:36
business and financial news in New England and around the country.
30:40
This is the Financial Exchange Radio Network, breaking business and
30:45
financial news first throughout the day, only here on the
30:49
Financial Exchange Radio Network.
30:58
Speaker 2: All right, so we are still the pick from the
31:03
Trump transition team for Treasury secretary, and this appears to
31:08
have gotten kind of messy over the last few days. Now,
31:12
heading into last week, the consensus was you were probably
31:16
going to see either Scott Besson or John Paulson named
31:21
the Treasury secretary. Paulson dropped out last week, and so
31:25
it was okay, Besson's probably gonna be the guy. Howard Lutnick,
31:29
who is running Trump's transition team, appears to have used
31:34
the last week to insert himself into the discussion, which
31:39
now has the transition team saying, Hey, maybe we just
31:42
need to look for someone else entirely because this is
31:44
getting a little bit too heated here. And so now
31:48
Kevin Walsh and you also have is it? Yeah, Mark
31:55
Rowan are being discussed as potential Treasury secretaries as well.
31:59
Larry Bulow's name was also thrown out there once. I
32:05
saw that briefly, but I.
32:07
Speaker 4: Yeah, what was his role in the previous administration?
32:10
Speaker 2: Economic He was on the Council of Economic Advisors, I believe.
32:12
I don't know that he had a cabinet level role.
32:16
I can't remember offhand. So I think part of me
32:20
is like, hey, do you call them manushap and try
32:22
to get Steve manushanback? Is Quite honestly, I thought Steve
32:24
Manus did a pretty darn good job when he was
32:27
there Trump's first term, especially towards the end when you
32:31
were running into the COVID crisis. I thought he and J.
32:34
Powell were fantastic during that time.
32:37
Speaker 4: So again.
32:38
Speaker 2: I know Steve said that he wasn't going to serve
32:41
in this administration, but this is one that you'd like
32:44
to have figured out sooner rather than later, and the
32:46
market certainly would want to have it figured out as well,
32:49
because there are, you know, definitely degrees of competence when
32:55
you look at the different candidates being discussed now.
32:57
Speaker 3: I was gonna say, if markets were showing signs of
33:00
fragility and falling apart a little bit, I bet Monusian's
33:03
name would be more to the front. Given that they are.
33:07
Speaker 2: He already pulled himself out, yourself back yet.
33:10
Speaker 3: But given that they are not, I don't suspect that
33:13
he's going to be. I suspect that's part of the
33:15
reason he's not really in contention.
33:17
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34:34
Speaker 2: The New England Revolution, the Boston area's MLS team. They
34:38
currently play at Gillette Stadium, home of the New England Patriots,
34:42
and their attendance this year average about twenty nine thousand people,
34:46
which is pretty good. Clip What do you got to I.
34:48
Speaker 5: Was wondering if that was inflated because of the messy game.
34:53
Speaker 2: It is, but even if you take that out, it's
34:54
still coming in at like twenty seven thousand change, So again,
34:58
still a decent clip. Last week, the Massachusetts state Legislature
35:02
passed a I forget the exact term, it is an
35:07
economic development bill, and as part of that, as a
35:11
carve out for you know, potential future Revolution stadium, they
35:15
designated a forty three acre site right in near right,
35:20
basically right across the street from the Encore Hotel and
35:23
casino as a it's no longer going to be as
35:27
a designated port area, which means it can actually be
35:30
developed into something, it's not just reserved for port activity.
35:34
The plans that are being drawn up by the Craft
35:36
group reportedly aiming towards a smaller stadium somewhere in the
35:39
twenty two to twenty four thousand seat range. And so
35:41
the question is, look, if you're drawing more than that, now,
35:44
why would you not build a larger stadium there? And
35:48
the first thing is, look, you ultimately get a better
35:51
game experience when you are part of a sellout crowd
35:54
than when you are part of an eighty percent full
35:56
crowd at to let you were, you know, a fifty
35:58
or thirty percent full crowd. But the other piece is, look,
36:02
if you can create you know, kind of this scarcity
36:04
and demand, then you get people wanting to tune in
36:06
via uh, you know, TV and things like that, and
36:09
you can grow revenue streams through that as well. The
36:12
other problem that the Everett site does have, Man, it's
36:16
gonna be hard to get twenty thousand people in or
36:18
out of there.
36:19
Speaker 4: Gonna say, you can't get there from here?
36:20
Speaker 5: Do you see the parking spots by the way, what
36:22
parking spots you were? Then one hundred?
36:25
Speaker 2: It's not a feasible location all public transportation, and the
36:29
only public transit that you have is across the river.
36:31
So you're gonna have to figure out some way to
36:33
get people from the Is there a commuter stop there
36:38
as well?
36:38
Speaker 3: Or is it just the the commuter ail it goes
36:41
through there, but the closest stop is in Chelsea.
36:44
Speaker 4: Okay?
36:44
Speaker 2: So yeah, so your two stops are either Assembly Row
36:47
or Sullivan Square, both of.
36:48
Speaker 3: Which I don't even think. No, you cannot get from Assembly.
36:52
You're gonna have to build a bridge, Yeah, I don't.
36:55
It's gonna be the Craft Bridge or something like. They'll
36:58
figure out a way to do it, because you can
37:00
you're not having about your drunken people falling into the
37:02
Mystic River. I think is you're gonna have that anyways.
37:05
It's Boston. Yeah, you know, like we call that Tuesday.
37:07
You already do and you don't have a stadium built there.
37:12
But yeah, but ultimately.
37:14
Speaker 2: Look, I think it's great that you are trying to
37:16
get this into a better spot. They'll figure out the
37:19
transportation issues, but it's gonna be messy at first. But
37:22
I have to think that's a big reason why you're
37:24
not also doing a thirty thousand seat stadium. There is
37:29
trying to get thirty thousand people to and from there
37:33
not easy, not easy. But this overall has the potential
37:37
to be something that's great. Ultimately, this is a stadium.
37:40
My guess is the earliest that you can have it
37:42
done twenty twenty nine, maybe twenty thirty.
37:45
Speaker 3: You know you can you can have Encore pay a
37:48
lot of money. They're saying twenty twenty seven. It won't
37:50
be ready for twenty twenty sevens how much would OnCore
37:52
pe to have a station inside their casino attached to
37:57
the casino. Attached to the casino is these station where
38:00
you get on and off for the games.
38:02
Speaker 2: I'm trying to think if they'd like that or not
38:04
because from a security personal problem.
38:07
Speaker 3: Yeah, but you know, you have it connected in a way.
38:09
They're like, Okay, there's the escalator to the to the thing.
38:13
Speaker 4: To the what thing.
38:14
Speaker 1: I know.
38:14
Speaker 2: Ye, I think they'd preferred across the street. But we'll
38:19
see quick break here. We got our two coming up
38:21
in a little bit.