Latest / The Financial Exchange Show / Market Momentum Builds, But Oil and Recession Risks Loom

Transcript

Market Momentum Builds, But Oil and Recession Risks Loom · The Financial Exchange Show

• 0:00
  Speaker 1: The Financial Exchange is produced by Money Matters Radio and
• 0:02
  Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
• 0:05
  Speaker 1: registered investment advisor. All opinions expressed are solely those of
• 0:08
  Speaker 1: the hosts. Do not reflect the opinions of Armstrong Advisory
• 0:11
  Speaker 1: or anyone else. Investments can lose money. This program does
• 0:14
  Speaker 1: not offer any specific financial or investment advice. Please consult
• 0:17
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 0:20
  Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
• 0:23
  Speaker 1: this program do not endorse each other or their services.
• 0:25
  Speaker 1: Armstrong and Money Matters Radio do not compensate each other
• 0:28
  Speaker 1: for referrals and are not affiliated. This is the Financial
• 0:34
  Speaker 1: Exchange with Paul Lane and Mark Fandetti, your exclusive look
• 0:39
  Speaker 1: at business and financial news affecting your day, your city,
• 0:43
  Speaker 1: your world. Stay informed and up to date about economic
• 0:46
  Speaker 1: and market trends, class breaking business news every day. The
• 0:50
  Speaker 1: Financial Exchange is a proud partner of the Disabled American
• 0:54
  Speaker 1: Veterans Department of Massachusetts. Help us support our great American
• 0:58
  Speaker 1: heroes by visiting DAV five Boston and making a donation today.
• 1:03
  Speaker 1: This is the Financial Exchange with Paul Lane and Mark Vandetti.
• 1:11
  Speaker 2: Markets continue their momentum from yesterday's significant rally that we had,
• 1:17
  Speaker 2: with the S and P five hundred up close to
• 1:19
  Speaker 2: a full percent, the Dow Jones up just the shy
• 1:22
  Speaker 2: of four hundred points, in the Nasdaq rallying one and
• 1:25
  Speaker 2: a half percent. Paul Lane, Mark Vendetti, and Tucker Silva
• 1:29
  Speaker 2: here with you as we kick off the program. Just
• 1:32
  Speaker 2: continued enthusiasm in markets. We had markets rallying upwards of
• 1:36
  Speaker 2: close to three percent yesterday on the S and P
• 1:39
  Speaker 2: five hundred, we had the Nasdaq Tech sector up even
• 1:42
  Speaker 2: more than that, and the Dow Jones was up pretty
• 1:44
  Speaker 2: significantly as well. This was all on the backs of
• 1:47
  Speaker 2: optimism regarding the potential war ending between Iran and the US.
• 1:54
  Speaker 2: We've had more recent updates stating that President Trump had
• 1:59
  Speaker 2: mentioned that on Wednesday today again so hard to keep
• 2:03
  Speaker 2: all this together, that Iran's president had asked the US
• 2:06
  Speaker 2: for a ceasefire and that the US will consider the
• 2:10
  Speaker 2: seafire offer if the straight up horror moves is open,
• 2:13
  Speaker 2: free and clear. But then we have some some pushback
• 2:17
  Speaker 2: from Tarahan stating that that it had not requested a ceasefire.
• 2:21
  Speaker 2: Regardless from all that back and forth. Markets are up
• 2:25
  Speaker 2: on that optimism on what was a pretty poor Q
• 2:30
  Speaker 2: one for the markets that closed out yesterday. But these
• 2:35
  Speaker 2: last two days have provided some some momentum for stocks,
• 2:39
  Speaker 2: and as we head into this second quarter here, we're
• 2:43
  Speaker 2: going to take the start of the program to just
• 2:45
  Speaker 2: talk about where the economy sits market this point in time,
• 2:48
  Speaker 2: and in particular, there's this piece here in the Wall
• 2:50
  Speaker 2: Street Journal which outlines what are the potential concerns for
• 2:55
  Speaker 2: the economy going forward, or what are some things that
• 2:58
  Speaker 2: it could actually help it pro through. The Wall Street
• 3:01
  Speaker 2: Journal's piece is stating that the economy is on edge
• 3:03
  Speaker 2: right now, and I think that's a fair characterization.
• 3:06
  Speaker 3: We have this situation that.
• 3:08
  Speaker 2: Is leading to a huge surge and energy prices. There's
• 3:12
  Speaker 2: ripple effects that spread all throughout the commodity market and
• 3:16
  Speaker 2: just are going to put a significant amount of upward
• 3:18
  Speaker 2: pricing pressure on all sorts of material goods that go
• 3:23
  Speaker 2: beyond just the energy market. That gets a lot of
• 3:26
  Speaker 2: focus from US and others that on a daily basis
• 3:28
  Speaker 2: when you look at the pump and cost of diesel
• 3:31
  Speaker 2: and other things that nature.
• 3:32
  Speaker 3: But heading into Q two, one of the big risks.
• 3:36
  Speaker 2: Of course is that this and the most paramount significant
• 3:39
  Speaker 2: one that we should highlight first is that this conflict
• 3:42
  Speaker 2: goes on longer than anticipated. It seems like every single
• 3:45
  Speaker 2: day we get some sort of messaging that there's hopes
• 3:48
  Speaker 2: to wrap this up sooner, but we'll believe it when
• 3:50
  Speaker 2: we see it. Right when the straight up hor moves
• 3:52
  Speaker 2: opens up, that is truly going to be the indicator
• 3:54
  Speaker 2: that we have made significant progress. If this conflict continues
• 3:59
  Speaker 2: to go on for another there, two weeks, four weeks,
• 4:01
  Speaker 2: six weeks.
• 4:02
  Speaker 3: The further you.
• 4:03
  Speaker 2: Play this out, it becomes almost inevitable that we are
• 4:07
  Speaker 2: going to hit some sort of recession from the impacts
• 4:10
  Speaker 2: of having basically one fifth of global trade being completely
• 4:14
  Speaker 2: shut off and not being able to go through this
• 4:17
  Speaker 2: straight up her moves. So that is the first one,
• 4:19
  Speaker 2: and I don't think we need to delve into that
• 4:21
  Speaker 2: much more. It's pretty straight straightforward to understand that if
• 4:25
  Speaker 2: this continues on, that is the biggest second.
• 4:28
  Speaker 4: I'm done trying to figure.
• 4:29
  Speaker 3: Out where these it's too hard to who's.
• 4:32
  Speaker 4: Telling the truth. I'll just say it's really bizarre. I've
• 4:34
  Speaker 4: never heard or read about anything like this in the
• 4:37
  Speaker 4: modern era. It's hard as president's word versus Tehran, and
• 4:42
  Speaker 4: people don't know who to It's moving strange, it's.
• 4:44
  Speaker 3: Moving so quick, so that one we can get to this.
• 4:47
  Speaker 3: It's not good.
• 4:49
  Speaker 4: No, it certainly isn't. But that's a geopolitical sort of angle.
• 4:56
  Speaker 4: There have been twelve recessions in the post war period
• 4:59
  Speaker 4: nineteen forty seven and to today. One of those was
• 5:02
  Speaker 4: totally predictable, the COVID recession. Yeah, we decided to shut
• 5:05
  Speaker 4: the economy down. The rest of the rest so the
• 5:09
  Speaker 4: eleven more sort of normal business cycles, every one, nearly everyone,
• 5:15
  Speaker 4: everyone except one was preceded by a run up in
• 5:17
  Speaker 4: the price of oil. Now, some of that run up
• 5:20
  Speaker 4: was due to demand growing quickly, the economy running too hot,
• 5:24
  Speaker 4: and the FED having to effectively kill the expansion to
• 5:27
  Speaker 4: get inflation under control. This is a typical business cycle.
• 5:32
  Speaker 4: Demand starts to pick up in the trough of the
• 5:35
  Speaker 4: prior recession. It grows, the economy expands. I'll just use
• 5:40
  Speaker 4: demand and the expanding and the economy expanding sort is synonymously.
• 5:44
  Speaker 4: Then the FED has to cool demand because it's overstimulated
• 5:48
  Speaker 4: the economy. There are natural forces that keep the economy growing,
• 5:51
  Speaker 4: namely you and me, needing to sort of go to work,
• 5:54
  Speaker 4: and yeah, just natural impulses. And in the modern era,
• 5:58
  Speaker 4: in for the past couple hundred years, enemies have tended
• 6:00
  Speaker 4: to grow. It wasn't always the case. There was no
• 6:03
  Speaker 4: economic growth for a long long time up until basically
• 6:06
  Speaker 4: the discovery of fossil fuels and industrial revolution and all that. Sorry,
• 6:09
  Speaker 4: I'm going really broad here, I guess. So, you know,
• 6:13
  Speaker 4: the economy continues to grow until something slams up against
• 6:16
  Speaker 4: it and stops the growth. Oil price shocks have been
• 6:20
  Speaker 4: in the post war era a source of a counter force.
• 6:26
  Speaker 4: Will they be that again? Well, we're less oil import
• 6:30
  Speaker 4: dependent than we used to be. There are a lot
• 6:31
  Speaker 4: of winners associated with the spike and oil prices. Question is, well,
• 6:35
  Speaker 4: they're spending their additional spending, their marginal spending makeup for
• 6:39
  Speaker 4: the spending that consumers aren't doing on other stuff because
• 6:42
  Speaker 4: we're spending more on energy goods and services including gasoline.
• 6:46
  Speaker 4: Can't answer that right now. I don't think you get
• 6:49
  Speaker 4: to recession where oil prices are today. It's very hard
• 6:52
  Speaker 4: to using the statistical relationship between oil prices and economic growth,
• 6:57
  Speaker 4: firmly conclude that this is going to what we've experienced
• 6:59
  Speaker 4: so far is going to cause recession. But to your point,
• 7:02
  Speaker 4: we don't know how long it's going to go on,
• 7:04
  Speaker 4: and we don't know how much farther, if at all,
• 7:06
  Speaker 4: oil prices will rise. Politicians are desperate to keep oil
• 7:09
  Speaker 4: prices under control, so they're jawboning pieces around what we've
• 7:13
  Speaker 4: had statements to the effect of the war is just
• 7:17
  Speaker 4: about done like thirteen times now counting last night, in
• 7:20
  Speaker 4: the past four weeks. And that's okay, by the way.
• 7:23
  Speaker 4: Jaw boning's okay. It's a legitimate tool for policymakers to use,
• 7:27
  Speaker 4: which brings us back to where we started this conversation,
• 7:29
  Speaker 4: where I don't know who to believe or where this
• 7:32
  Speaker 4: thing is right now. I do know that we're desperate,
• 7:35
  Speaker 4: we're eager, I should say, to end the war, yep,
• 7:38
  Speaker 4: But I don't know how close that process actually.
• 7:41
  Speaker 2: The longer the energy price shocks are in the system,
• 7:45
  Speaker 2: than the less discretionary spending dollars are out there. Just
• 7:48
  Speaker 2: to simplify for listeners out there, for a US consumer,
• 7:51
  Speaker 2: particularly on the lower income side of things, the more
• 7:54
  Speaker 2: of their monthly budget that has to go to fuel costs,
• 7:57
  Speaker 2: the less there is to spend.
• 7:59
  Speaker 4: You can model as actual increase or a tariffy grease.
• 8:03
  Speaker 4: They suck money away from other stuff.
• 8:05
  Speaker 2: Some other areas of economic concern that we were more
• 8:08
  Speaker 2: focused on heading into this year before this really took
• 8:11
  Speaker 2: center stage. The conflict that we were just discussing between
• 8:14
  Speaker 2: the US and i RAM was artificial intelligence in the
• 8:17
  Speaker 2: data center build out. The companies of the likes of Google, Amazon, Meta, Microsoft,
• 8:22
  Speaker 2: and Oracle were committed to spending there's multiple different estimates
• 8:27
  Speaker 2: two trillion dollars over the course of the next three
• 8:29
  Speaker 2: years on data center and chips. That was one that
• 8:32
  Speaker 2: was quoted by Morgan Stanley as a projection if you
• 8:35
  Speaker 2: look at the next twelve months or this year of
• 8:38
  Speaker 2: twenty twenty six, anywhere from five to six hundred billion
• 8:40
  Speaker 2: dollars built out spent out rather for data centers and
• 8:45
  Speaker 2: infrastructure costs. That was something that is an area that
• 8:49
  Speaker 2: you could point to to say that, hey, these companies
• 8:52
  Speaker 2: that I just mentioned are very significant waiting in the
• 8:55
  Speaker 2: stock market. The Magnificent seven that are talked about so
• 8:58
  Speaker 2: frequently hold to a thirty percent waiting of the overall
• 9:02
  Speaker 2: s and P five hundred just due to their size.
• 9:05
  Speaker 2: They're now flipping their business models to a degree, not
• 9:08
  Speaker 2: all of them, but broadly speaking of previously running at
• 9:13
  Speaker 2: a high gross margin business with significant R and D expenses,
• 9:17
  Speaker 2: but nowhere near the levels that we're seeing today to
• 9:20
  Speaker 2: a more sort of pick and shovels sort of approach today,
• 9:24
  Speaker 2: where there are billions of dollars being spent on infrastructure,
• 9:28
  Speaker 2: and that is propelling a lot of the economic growth
• 9:30
  Speaker 2: that we've seen over the course of last year. And
• 9:33
  Speaker 2: as you mentioned, it was a more tepid year in
• 9:35
  Speaker 2: terms of economic growth, but the reason that we did
• 9:38
  Speaker 2: have that economic growth was from a lot of this
• 9:41
  Speaker 2: investment and so any dent to that overall sentiment or
• 9:44
  Speaker 2: concerns regarding the advancement of that technology, that was something
• 9:48
  Speaker 2: that was an area of concerned Hay into this year.
• 9:51
  Speaker 2: And then the third one being that the labor market too.
• 9:53
  Speaker 2: But your response on that, I want to come from elsewhere.
• 9:56
  Speaker 4: You can't say, and I'm not saying you're saying this.
• 9:57
  Speaker 4: We talk about this a lot. Yeah, partial, I'm not
• 10:00
  Speaker 4: even going to give this this stupid technical term for it.
• 10:02
  Speaker 4: It's called partially equilibrium.
• 10:04
  Speaker 2: Thinking you could partially I can't because there's so much
• 10:08
  Speaker 2: of it out there.
• 10:08
  Speaker 4: And it's so wrong. You can't just you can't assume
• 10:12
  Speaker 4: one thing changes and nothing else in the economy does.
• 10:15
  Speaker 4: It's like, so if that data center investment hadn't taken place,
• 10:19
  Speaker 4: those dollars would have gone elsewhere and we would have
• 10:21
  Speaker 4: expanded a biotech or we would have put more into infrastructure.
• 10:26
  Speaker 4: It's not like the economy wouldn't have grown, it's that
• 10:28
  Speaker 4: the composition of the growth would have been different. So, yes,
• 10:34
  Speaker 4: it is true in an accounting sense that all the
• 10:36
  Speaker 4: growth came from data center. Now, well, well that's I'm
• 10:41
  Speaker 4: even overstating it. But let's just suppose it is in
• 10:43
  Speaker 4: an accounting sense. Don't assume that if that hadn't been there,
• 10:46
  Speaker 4: there would have been no other source of growth. The
• 10:48
  Speaker 4: economy would just look different today. So that's sort of
• 10:51
  Speaker 4: my response to that.
• 10:54
  Speaker 2: The labor market was another area that was of concern
• 10:57
  Speaker 2: heading into this year. There was very minimal job editions.
• 11:01
  Speaker 2: Through twenty twenty five, the unemployment rate had ticked up
• 11:04
  Speaker 2: to about four point four percent, off of its trough
• 11:07
  Speaker 2: of about three and a half percent, when the labor
• 11:09
  Speaker 2: market was at sort of its peak in terms of
• 11:12
  Speaker 2: where we had a significantly low level of unemployment still
• 11:17
  Speaker 2: four point four percent is a very historical low number.
• 11:22
  Speaker 2: But again, all of these concerns have taken sort of
• 11:24
  Speaker 2: a back seat in terms of what the biggest focus
• 11:28
  Speaker 2: is for the rest of this year. It seems as
• 11:32
  Speaker 2: if markets at the moment are optimistic that perhaps we
• 11:35
  Speaker 2: could get a resolution to the most significant conflict that
• 11:39
  Speaker 2: we're dealing with from an economic perspective at the moment,
• 11:42
  Speaker 2: with the SMP and the Dow Jones up close to
• 11:45
  Speaker 2: a full percent, We're going to take a quick break
• 11:46
  Speaker 2: here on the Financial Exchange when we come back, where
• 11:49
  Speaker 2: we're playing a little bit of trivia as well as
• 11:52
  Speaker 2: a check in on the mess that is private credit.
• 11:55
  Speaker 2: Right after this break here on the Financial Exchange.
• 11:58
  Speaker 1: Stay connected between Follow the Financial Exchange on Instagram for
• 12:03
  Speaker 1: daily clips on business news from New England and around
• 12:06
  Speaker 1: the country. Face is the Financial Exchange, Okay, real time
• 12:10
  Speaker 1: financial insight as news breaks. The Financial Exchange is life
• 12:14
  Speaker 1: on x Watch the show and follow us for the
• 12:17
  Speaker 1: most up to date business news you need to know.
• 12:19
  Speaker 1: This is the Financial Exchange.
• 12:28
  Speaker 5: So I'm for trivia here on the Financial Exchange. And
• 12:31
  Speaker 5: on this day in twenty twenty four, Florida's population reached
• 12:36
  Speaker 5: twenty three million, making it the third most populous state
• 12:41
  Speaker 5: in the US. So our trivia question today, what is
• 12:45
  Speaker 5: the least populated state in the US. Once again, what
• 12:49
  Speaker 5: is the least populated state in the US? Be the
• 12:54
  Speaker 5: sixth person today to text us at six one seven
• 12:58
  Speaker 5: three six two thirteen eighty five with the correct answer
• 13:01
  Speaker 5: along with keyword trivia. You know when a Financial Exchange
• 13:04
  Speaker 5: showed T shirt? Once again the sixth correct response to
• 13:08
  Speaker 5: Texas to the number six one seven three six two
• 13:11
  Speaker 5: thirteen eighty five with the correct answer along with keyword trivia.
• 13:16
  Speaker 5: We'll win that T shirt. See complete contest rules at
• 13:19
  Speaker 5: Financial Exchange Show dot com.
• 13:21
  Speaker 3: Coming back from break here, just want to uh.
• 13:26
  Speaker 2: Address something that came through on the text line just
• 13:28
  Speaker 2: moments ago. A listener concern regarding our previous discussion on
• 13:34
  Speaker 2: the Strait of Hormez Hermuz and the economic impacts of
• 13:38
  Speaker 2: the US.
• 13:38
  Speaker 3: So the texter here stated, what percentage of oil.
• 13:43
  Speaker 2: Does the United States receiver transmit through the Strait of
• 13:45
  Speaker 2: Hormuz if this war continues, say for six months, how
• 13:49
  Speaker 2: will the US economy be affected?
• 13:51
  Speaker 3: Since we are a net.
• 13:52
  Speaker 2: Exporter of oil and natural gas, would that not be
• 13:56
  Speaker 2: a thorough system of supply and demand and make us
• 13:59
  Speaker 2: more profitable. So I'll tackle some of this first, and
• 14:02
  Speaker 2: Mark you can jump into We truly are a global economy. Yes,
• 14:07
  Speaker 2: that is accurate that we are a net exporter of
• 14:10
  Speaker 2: oil and natural gas, but that net exportation is not
• 14:15
  Speaker 2: going to be enough, presumably to make up for the
• 14:20
  Speaker 2: fact that consumer spending would drop relatively you'd think, relatively
• 14:27
  Speaker 2: significantly if we were to persist on these oil prices
• 14:30
  Speaker 2: for another three to six months or so, let's say
• 14:32
  Speaker 2: six months, because that's the timeframe that he had used.
• 14:35
  Speaker 2: There also is the inflationary impacts to a lot of items,
• 14:40
  Speaker 2: whether it be helium, fertilizers, things that are abundant in
• 14:44
  Speaker 2: all sorts of manufacturing. That would have a trickle down
• 14:47
  Speaker 2: impact to consumers on the inflationary front. So, yes, we're
• 14:50
  Speaker 2: talking about you're paying more at the pump. Four dollars
• 14:53
  Speaker 2: and ten cents a gallon I think is the triple
• 14:55
  Speaker 2: a national average. But prices on many different items if
• 14:59
  Speaker 2: this war where to persist longer, will go up. Not
• 15:04
  Speaker 2: just oil and gas. We will see it in electronics
• 15:08
  Speaker 2: equipment because of the cost of semiconductors would go up.
• 15:11
  Speaker 3: We would see it.
• 15:12
  Speaker 2: We've seen it already on the fertilizer front for agricultural products.
• 15:16
  Speaker 2: That means cost of food would go up. So it's
• 15:18
  Speaker 2: all of that, all encompassing the strait of hormus and
• 15:21
  Speaker 2: the impact to global trade that would be the negative
• 15:24
  Speaker 2: impacts to the US because of the sourcing of all
• 15:28
  Speaker 2: those different items that I mentioned is just not strictly
• 15:31
  Speaker 2: the US. Whether it's agricultural products, whether it's electronic components,
• 15:35
  Speaker 2: it truly is a global economy. The pricing pressure on
• 15:37
  Speaker 2: all those items, broadly speaking in the globe would have
• 15:41
  Speaker 2: would outweigh any benefit that we receive being a net
• 15:45
  Speaker 2: export oil and natural gas.
• 15:46
  Speaker 4: Yeah. I think the point here is, well, if we
• 15:48
  Speaker 4: don't buy any of the oil that transits the straight
• 15:50
  Speaker 4: why should we care? And I put it to you
• 15:53
  Speaker 4: this way, and thanks for the text, by the way,
• 15:55
  Speaker 4: it's a great question. You hear this a lot from
• 15:57
  Speaker 4: certain corners, this line of argument. If the supermarket in
• 16:02
  Speaker 4: the town next to you burnt down or maybe went
• 16:05
  Speaker 4: out of had to close for the day, you think
• 16:07
  Speaker 4: it would affect you if you had to do shopping.
• 16:09
  Speaker 4: The answer is absolutely, they'd all come to your supermarket.
• 16:12
  Speaker 4: And if prices were very flexible. It's not all works
• 16:15
  Speaker 4: in the real world, but the prices you pay would
• 16:17
  Speaker 4: go up. There's a broader market than the market in
• 16:20
  Speaker 4: your hometown for the goods and things that you buy
• 16:23
  Speaker 4: at a supermarket. So my point is oil is a
• 16:25
  Speaker 4: global good. Now maybe the point that Texters trying to
• 16:30
  Speaker 4: make as well. We produce a lot of oil too,
• 16:32
  Speaker 4: so it's good for domestic producers it is. But to
• 16:35
  Speaker 4: your point, metals, chemicals, fertilizers, a type of chemical, fertilizers,
• 16:39
  Speaker 4: and many other goods transit the strait. It is a
• 16:42
  Speaker 4: global choke point.
• 16:43
  Speaker 2: Right, And what we've learned from COVID and post COVID
• 16:48
  Speaker 2: is that we are true.
• 16:49
  Speaker 3: It's a global supply chain.
• 16:50
  Speaker 2: You for all of these items outside of just oil
• 16:53
  Speaker 2: and gas that we focus on most frequently, whether it's
• 16:56
  Speaker 2: rare earth, minerals or all these different areas of the
• 17:00
  Speaker 2: economy come from different places, and any impact on global trade,
• 17:04
  Speaker 2: even in a strait that we probably hadn't spoken about
• 17:08
  Speaker 2: at all five or six weeks ago, has significantly important.
• 17:12
  Speaker 4: Moreover, if why would the president be so eager to
• 17:15
  Speaker 4: reopen the Straight If this opinion and I know where
• 17:18
  Speaker 4: I think I know where this opinion comes from. Certain quarters,
• 17:23
  Speaker 4: certain quarters with a certain part of the political spectrum.
• 17:26
  Speaker 4: The president really wants to straight open, and we've shown
• 17:30
  Speaker 4: Iran how to hold the world hostage over the past
• 17:33
  Speaker 4: four weeks. Now we have to kind of fix that.
• 17:37
  Speaker 2: We're gonna shift gears a little bit on the private
• 17:40
  Speaker 2: credit mess that we've been dealing with on the financial front.
• 17:43
  Speaker 2: This has been an area that has been an area
• 17:47
  Speaker 2: of concern for the financial sector in general, but it
• 17:51
  Speaker 2: is something that is probably not impacting more significantly some
• 17:56
  Speaker 2: of the larger banks like GP Morgan and Goldman Sachs.
• 17:58
  Speaker 2: They do have exposure to private credit, but not nearly
• 18:02
  Speaker 2: the levels that we saw with the subprime mortgage crisis
• 18:05
  Speaker 2: back in two thousand and eight. However, there still are
• 18:07
  Speaker 2: potential losses that loom out there. We've seen thirteen billion
• 18:11
  Speaker 2: dollars yanked out of private credit funds in the first
• 18:14
  Speaker 2: quarter of this year. It had been a tremendous area
• 18:18
  Speaker 2: of growth where you had seen major banks sort of
• 18:20
  Speaker 2: backing away from lending to sort of middle market companies,
• 18:24
  Speaker 2: and as a result, you had a lot of private
• 18:26
  Speaker 2: equity firms and others building out these private credit funds
• 18:29
  Speaker 2: to provide letting two people in sort of that middle
• 18:32
  Speaker 2: market range and just do all sorts of financing, and
• 18:35
  Speaker 2: we've seen significant redemption requests. There's been concerns there's been
• 18:39
  Speaker 2: a couple different issues that have arisen from companies like
• 18:42
  Speaker 2: Tricolor and others that were relatively unheard of but have
• 18:46
  Speaker 2: created a significant sort of pressure on the private credit
• 18:50
  Speaker 2: space in general, and there's concern that this could be
• 18:54
  Speaker 2: a broader spread issue. Right now, we've seen about a
• 18:58
  Speaker 2: five point eight percent private credit default rate through January
• 19:01
  Speaker 2: according to a Fitch Ratings report. To be clear, that
• 19:04
  Speaker 2: is not necessarily pure defaults, but it encompasses maturity extensions
• 19:08
  Speaker 2: and payments in kind, which just do point to some
• 19:12
  Speaker 2: sort of financial stress. And so the structure of these
• 19:15
  Speaker 2: private credit funds, you can only typically redeem five percent
• 19:18
  Speaker 2: of the fund on a given quarter. So there's a
• 19:20
  Speaker 2: little stress that is in that market because you do
• 19:22
  Speaker 2: have a lot of retail investors that are kind of
• 19:24
  Speaker 2: pushing for the exits. We're going to take a quick
• 19:27
  Speaker 2: break here on the Financial Exchange. When we come back,
• 19:30
  Speaker 2: we're going to have the answer to our trivia question,
• 19:32
  Speaker 2: and Wall Street rots right after this break.
• 19:34
  Speaker 1: Okay, bringing the latest financial news straight to your radio.
• 19:44
  Speaker 1: Every day, It's the Financial Exchange on the Financial Exchange
• 19:48
  Speaker 1: Radio Network. Tell you out full world street Watch tracking
• 19:54
  Speaker 1: the stocks, the data, and the headlines driving markets so
• 19:57
  Speaker 1: far today right here on the Financial Exchange Radio Network.
• 20:02
  Speaker 5: All markets are extending their games some yesterday's significant rally
• 20:06
  Speaker 5: driven by optimism. The conflict in Iran is nearing a conclusion.
• 20:09
  Speaker 5: This morning, President Trump posted the US we'll consider a
• 20:13
  Speaker 5: ceasefire when the straight of horror moves is open. Right now,
• 20:16
  Speaker 5: the Dow is up over eight tenths of a percent,
• 20:19
  Speaker 5: SMP five hundred up over nine tenths of a percent
• 20:22
  Speaker 5: or sixty points hired, Nasdaq up one point four percent,
• 20:26
  Speaker 5: russ A two thousand and up over one and a
• 20:28
  Speaker 5: half percent, Tenure Treasure realed flat at four point three
• 20:32
  Speaker 5: zero five percent, and Oil down about one and a
• 20:35
  Speaker 5: half percent, trading right around ninety nine dollars a barrel.
• 20:39
  Speaker 5: Some breaking news from Eli Lilly moments ago, after the
• 20:42
  Speaker 5: company announced the FDA approved Eli Lilly's GLP one pill.
• 20:47
  Speaker 5: Eli Lilly share is rallying over four percent on that news. Meanwhile,
• 20:51
  Speaker 5: Nike stock plunging fourteen percent after the athletic apparel and
• 20:55
  Speaker 5: sneaker maker warned of sales declines ahead, saying it's turnaround
• 20:59
  Speaker 5: effort will continue to affect the results this year. Bloomberg
• 21:04
  Speaker 5: reported that CEO Elliott Hill turned to staff turned to
• 21:09
  Speaker 5: the staff two airs frustration yesterday at an all hands meeting. Elsewhere,
• 21:14
  Speaker 5: shares and home furnishing company rh sinking twenty three percent
• 21:18
  Speaker 5: after its full year revenue growth range miss Street forecast.
• 21:21
  Speaker 5: RIH said it was hurt by tariffs and bad weather,
• 21:25
  Speaker 5: and Intel agreed to pay about fourteen billion dollars to
• 21:29
  Speaker 5: buy half a plant in Ireland that it had previously
• 21:32
  Speaker 5: sold to Apollo Global Management. Intel shares are rallying nine percent.
• 21:38
  Speaker 5: I'm Tucker Silva and that is Wall Street watching. In
• 21:40
  Speaker 5: the previous segment, we asked you the trivia question, what
• 21:43
  Speaker 5: is the least populated state in the US.
• 21:47
  Speaker 3: It'll be Wyoming.
• 21:48
  Speaker 5: Casey and Derry, New Hampshire is our winner today, taking
• 21:51
  Speaker 5: home the Financial Exchange Show T shirt. Congrats to Casey.
• 21:55
  Speaker 5: We played trivia every day here on the Financial Exchange.
• 21:59
  Speaker 5: See complete con test rules at Financial Exchange Show dot com.
• 22:02
  Speaker 2: One other bit of breaking news here SpaceX has filed
• 22:07
  Speaker 2: confidentially for its IPO. According to people familiar with the matter,
• 22:12
  Speaker 2: that would bring potentially the biggest ever listing with valuations
• 22:19
  Speaker 2: on the IPO you anticipated to be anywhere from one
• 22:23
  Speaker 2: and a half to one point seventy five trillions. So
• 22:27
  Speaker 2: will continue to keep you apprized of what will be
• 22:30
  Speaker 2: a very highly anticipated IPO. But I want to get
• 22:33
  Speaker 2: back to what we were talking about in the segment
• 22:35
  Speaker 2: before I sort of set the table on private credit
• 22:38
  Speaker 2: and it's become a growing area of concern for financial markets.
• 22:42
  Speaker 2: This is an area that a lot of big banks,
• 22:45
  Speaker 2: not necessarily were they directly participating in the lending, but
• 22:48
  Speaker 2: they were providing funding for lending within the private credit space.
• 22:53
  Speaker 2: And as a result of issues that have gone on
• 22:55
  Speaker 2: over the last six to twelve months, it has gotten
• 22:58
  Speaker 2: a lot of scrutiny from any retail investors who might
• 23:01
  Speaker 2: have been investing in the space. The private credit space
• 23:04
  Speaker 2: in general has ballooned over the last decade to swallow
• 23:07
  Speaker 2: you about two trillion dollars in assets. And I had
• 23:10
  Speaker 2: mentioned before some of the requests, the heavy requests for
• 23:13
  Speaker 2: redemptions that are sort of hurting companies like Apollo and
• 23:17
  Speaker 2: others that participate in this private equity credit space. But
• 23:22
  Speaker 2: mark your thoughts on just what this could mean if
• 23:25
  Speaker 2: we were to see further on raveling on the private
• 23:27
  Speaker 2: credit space.
• 23:28
  Speaker 4: I've struggled with how you draw the line from I'll
• 23:33
  Speaker 4: call them troubles in private credit, and some of them
• 23:36
  Speaker 4: are normal business. There's such a thing as a credit cycle,
• 23:42
  Speaker 4: and defaults tend to pick up toward the end of
• 23:46
  Speaker 4: it because underwriting standards get more lenient, loans are made
• 23:51
  Speaker 4: that shouldn't be made, stuff like that. We're all sort
• 23:53
  Speaker 4: of familiar with this idea of the credit cycle, and
• 23:55
  Speaker 4: it's going to affect private credit too. I was formally
• 23:59
  Speaker 4: I think the view that well will probably be contained
• 24:02
  Speaker 4: dangerous were to use, but it should be contained. These
• 24:04
  Speaker 4: are sophisticated institutional investors. But this article, at least for me,
• 24:09
  Speaker 4: draws a line between what's happening in that sort of
• 24:12
  Speaker 4: niche little ecosystem and what could happen in the broader economy.
• 24:17
  Speaker 4: It explains how the risk could actually be systemic, and
• 24:20
  Speaker 4: it's via the banks JP Morgan and JP Morgan, Wells, Fargo,
• 24:25
  Speaker 4: Bank of America. They've all made tens of billions of
• 24:28
  Speaker 4: dollars and loans to private credit companies that in turn
• 24:31
  Speaker 4: make loans to borrowers or private equity, say managers who
• 24:36
  Speaker 4: want to buy a company with using leverage, using debt.
• 24:40
  Speaker 4: So if problems in private credit are much bigger than
• 24:44
  Speaker 4: has so far been disclosed or discovered, you've got all
• 24:48
  Speaker 4: these You've got all these institutions fed that are ultimately
• 24:53
  Speaker 4: backed by that. These are all too big to fail
• 24:56
  Speaker 4: institutions for the most part. So so if a crisis
• 25:00
  Speaker 4: in private credit hits at the same time as a
• 25:04
  Speaker 4: challenging economic environment and throw a couple of other shocks
• 25:06
  Speaker 4: in there, you know, bank capital could become impaired. Too
• 25:12
  Speaker 4: strong a word, I'll just use this sort of casually.
• 25:14
  Speaker 3: It could.
• 25:14
  Speaker 4: It could jeopardize bank capital.
• 25:17
  Speaker 2: Yeah, it's from estimates out there. It does seem like
• 25:20
  Speaker 2: it is more contained, but like you mentioned, you always
• 25:22
  Speaker 2: got to be careful using that terminology. What I do
• 25:25
  Speaker 2: hope perhaps comes out of this is perhaps a little
• 25:28
  Speaker 2: bit more transparency on the sector in general. It was
• 25:32
  Speaker 2: sort of known for its opigness, where there just wasn't.
• 25:35
  Speaker 2: It's private Credit's the.
• 25:36
  Speaker 4: Reason you'd use it as an investor.
• 25:39
  Speaker 2: It's really there's not as much available information about it,
• 25:43
  Speaker 2: but Apollo has mentioned this idea of perhaps reporting a
• 25:48
  Speaker 2: monthly net asset value that would come out of this,
• 25:52
  Speaker 2: where usually you have with these loans very little information
• 25:56
  Speaker 2: on pricing and sort of where they stand. So it'll
• 25:59
  Speaker 2: be interesting to see sort of how that plays out
• 26:02
  Speaker 2: over the course of the next six to twelve months
• 26:04
  Speaker 2: or so. Mortgage rates are marching higher. They've reached a
• 26:08
  Speaker 2: seven month high of six point five seven percent for
• 26:11
  Speaker 2: a thirty year fixed mortgage. That was for the week
• 26:15
  Speaker 2: that ended in March twenty seventh. According to Mortgage Bankers Association,
• 26:20
  Speaker 2: we're heading into the pivotal spring housing market and unfortunately,
• 26:25
  Speaker 2: like I just mentioned, interest rates will be higher on
• 26:28
  Speaker 2: those thirty year fixed mortgages. They've increased about a half
• 26:31
  Speaker 2: percent over the course of the last four weeks or so.
• 26:33
  Speaker 2: That's the biggest advance since twenty twenty four. Housing price
• 26:38
  Speaker 2: gains have been relatively muted. Over last year. We saw
• 26:42
  Speaker 2: one point four percent national increase on home prices. It's
• 26:46
  Speaker 2: supposed to sort of fall within that zero to two
• 26:49
  Speaker 2: percent range again this year on home prices. There will
• 26:52
  Speaker 2: be a lot more inventory appears on the market, but
• 26:55
  Speaker 2: the question will be what sort of transaction volume do
• 26:58
  Speaker 2: we see with higher rates sitting at this six six percent,
• 27:02
  Speaker 2: certainly not going to be a catalyst to have more
• 27:05
  Speaker 2: home buyers out there. I think there are fair arguments
• 27:07
  Speaker 2: to be made that even that five point nine percent
• 27:10
  Speaker 2: that we sort of sat on as the low, maybe
• 27:12
  Speaker 2: that wouldn't have been a huge trigger to spur a
• 27:16
  Speaker 2: lot of housing activity either.
• 27:19
  Speaker 4: Yeah, so rates going up all else equals should push
• 27:21
  Speaker 4: prices down because they damp and demand. Right, coupled with
• 27:26
  Speaker 4: the uncertainty about the duration of the conflict in the
• 27:30
  Speaker 4: Middle East and its impact on inflation. We haven't seen
• 27:34
  Speaker 4: evidence that consumer psychology or sentiment has been severely dented,
• 27:38
  Speaker 4: but the longer people are paying four bucks a gallon,
• 27:40
  Speaker 4: it's just such a powerful, such.
• 27:43
  Speaker 3: A psychological force, Yeah, it really is.
• 27:49
  Speaker 4: It's just you know, it's Yeah, it's another source of
• 27:51
  Speaker 4: uncertainty associated with this kind of open ended, fluid situation.
• 27:56
  Speaker 2: We'll see if the spring housing market can turn things around.
• 28:00
  Speaker 2: To take a quick break here on the finished six
• 28:02
  Speaker 2: change when we come back, a little bit of stack
• 28:04
  Speaker 2: roulette right after this break.
• 28:07
  Speaker 1: Daily financial content in your feed when you want it.
• 28:10
  Speaker 1: Follow the financial exchange on Instagram. Face is the Financial Exchange.
• 28:16
  Speaker 1: The Financial Exchange is Life on Series XM's business radio
• 28:20
  Speaker 1: channel one thirty two weekdays from eleven to noon. Get
• 28:23
  Speaker 1: the latest business and financial news from across the country
• 28:26
  Speaker 1: and around the world, and keep up to date on
• 28:28
  Speaker 1: how it might affect your wallet. That's the Financial Exchange
• 28:32
  Speaker 1: weekdays from eleven to noon on Series XM's Business radio
• 28:35
  Speaker 1: Channel one thirty two. FACE is the Financial Exchange Radio Network.
• 28:44
  Speaker 5: The Financial Exchange is incredibly proud to be a partner
• 28:47
  Speaker 5: of the Disabled American Veterans Department of Massachusetts. Planning is
• 28:52
  Speaker 5: well underway for the twenty twenty six DAV five k
• 28:55
  Speaker 5: event sold out in record time last year, so head
• 28:58
  Speaker 5: to DAV five k Boston for all the information about
• 29:02
  Speaker 5: how you can participate this November or make a donation
• 29:05
  Speaker 5: to support our great American heroes. Your gifts help fund
• 29:08
  Speaker 5: free rides to medical appointments for veterans and the nation's
• 29:11
  Speaker 5: first DA b LAED housing initiative providing homes for single
• 29:16
  Speaker 5: veterans and veteran families. Go to DAV five k to
• 29:19
  Speaker 5: Boston and make your donation today. That's DAB five k
• 29:23
  Speaker 5: dot Boston.
• 29:24
  Speaker 3: Time for a little bit of stack roulette.
• 29:26
  Speaker 2: I will let the always uplifting Mark Fandetti that lead
• 29:30
  Speaker 2: off with some kitchy funny story.
• 29:32
  Speaker 3: I'm sure you've got.
• 29:34
  Speaker 2: Some squirrels, girls, water skiing or something zany that you've
• 29:38
  Speaker 2: got over there.
• 29:39
  Speaker 4: Yeah, yeah, real bonbon of an anecdote.
• 29:43
  Speaker 3: I'm gonna talk about crude oil.
• 29:44
  Speaker 4: Futures if I may, because I tell you that topical
• 29:47
  Speaker 4: this is the financial exchange. What we am I supposed
• 29:50
  Speaker 4: to talk about. This is the only part of my
• 29:54
  Speaker 4: personality that's even somewhat.
• 29:56
  Speaker 3: I like to tell you.
• 29:56
  Speaker 4: Okay, sorry, I'm limited. They tell it. We spend a
• 30:02
  Speaker 4: lot of time talking about the spot price of oil
• 30:03
  Speaker 4: because that's highly correlated with gas prices, and we know
• 30:06
  Speaker 4: that oil is now back down below one hundred dollars
• 30:10
  Speaker 4: I think right this morning, Okay, a barrel, you can
• 30:14
  Speaker 4: get a good sense for when investors think the situation overall,
• 30:18
  Speaker 4: and there's a lot of disruption baked into the cake.
• 30:21
  Speaker 4: Even if it ran folds or we fold, or some
• 30:25
  Speaker 4: combination of those two things. Even if that happens today,
• 30:28
  Speaker 4: the disruption will linger. When do traders think things will
• 30:31
  Speaker 4: return to normal? And the answer is, well, I don't
• 30:35
  Speaker 4: know if this is uplifting about a year from now.
• 30:38
  Speaker 4: If you look at the oil right, if you look
• 30:40
  Speaker 4: at oil futures, and the standard is for answering that question.
• 30:45
  Speaker 4: The standard is, well, when do markets think the price
• 30:47
  Speaker 4: of oil will get back to before the conflict in
• 30:51
  Speaker 4: the Middle East started on February twenty eighth, I think
• 30:53
  Speaker 4: it was. And the answer is next what March. You
• 30:59
  Speaker 4: could say, well, that's that's that's oil futures, that's that's
• 31:02
  Speaker 4: a price it changes and so forth, but that's sort
• 31:05
  Speaker 4: of everybody's best guess, from foremost experts to others that dabble.
• 31:12
  Speaker 4: So it's it's one way to think about how long
• 31:13
  Speaker 4: it'll take for this to normalize ball.
• 31:15
  Speaker 2: Yeah, hopefully a heck of a lot sooner than that.
• 31:18
  Speaker 2: But to further you know, those futures can change very,
• 31:22
  Speaker 2: very rapidly. If they would look far different if this
• 31:26
  Speaker 2: conflict was resolved, I would imagine if it does, but.
• 31:31
  Speaker 4: Markets think it. If you look at movements and equity
• 31:33
  Speaker 4: markets today, they seem to be people seem to be
• 31:36
  Speaker 4: increasing their the weight. They attached to the view that
• 31:41
  Speaker 4: that the military hostilities will land sooner rather than later.
• 31:45
  Speaker 4: So everybody knows that, yet still not reps are so
• 31:49
  Speaker 4: baked into the well, it's just it's going to take
• 31:51
  Speaker 4: time to get everything back on, which is true.
• 31:53
  Speaker 2: Yes, I want to cover a little bit about some
• 31:57
  Speaker 2: shoe companies here. Tucker had talked about before in Wall
• 32:01
  Speaker 2: Street Watch. Nike had come out with a really poor quarter.
• 32:04
  Speaker 2: That stock has just struggled tremendously over the course of
• 32:08
  Speaker 2: the last year or so. They were down as much
• 32:12
  Speaker 2: as the lowest level since twenty fifteen, and the stock
• 32:15
  Speaker 2: is off thirty percent year to date. The company has
• 32:18
  Speaker 2: been undergoing a total strategic shift where Elliott Hill, who
• 32:23
  Speaker 2: is someone who had worked at the company for a
• 32:25
  Speaker 2: number of years, was taking over for I believe it
• 32:28
  Speaker 2: was John Donaho that he took over for. But previously
• 32:31
  Speaker 2: this strategy was to focus much more on a D
• 32:34
  Speaker 2: two C, a direct to consumer approach where you and
• 32:38
  Speaker 2: I would just buy Nike shoes directly from Nike rather
• 32:41
  Speaker 2: than working through their wholesalers like foot Locker and Dick
• 32:45
  Speaker 2: Sporting Goods and others. And there was a lot of
• 32:48
  Speaker 2: emphasis on these rare, exclusive shoe releases. There was a
• 32:52
  Speaker 2: lot of inventory pumped into that, and the two problems
• 32:55
  Speaker 2: that they ran into is that on the direct to
• 32:58
  Speaker 2: consumer level, it just was they weren't able to make
• 33:01
  Speaker 2: enough inroads there and there had to be a strategic
• 33:04
  Speaker 2: pivot where they had to go kind of back hat
• 33:06
  Speaker 2: in hand to those wholesaler partners like a foot locker,
• 33:09
  Speaker 2: like a Dick's Sporting Goods, and say, we actually need
• 33:13
  Speaker 2: to partner up with you in order to push more
• 33:15
  Speaker 2: of our inventory out. And then you also had them
• 33:18
  Speaker 2: just really completely diluting the rare sneaker market with just
• 33:22
  Speaker 2: too many releases. And now they're in the midst of
• 33:25
  Speaker 2: this this turnaround where they're kind of to get things
• 33:28
  Speaker 2: back on track and to try and innovate and come
• 33:30
  Speaker 2: out with new products because that really lagged during the
• 33:33
  Speaker 2: previous executive chairman leadership. It had really lagged during that
• 33:39
  Speaker 2: period of time. But this turnaround plan is just taking longer,
• 33:42
  Speaker 2: way longer than anticipate. They saw a pretty precipitous drop
• 33:45
  Speaker 2: in China and they've just seen a decline in revenue
• 33:50
  Speaker 2: in this current quarter that will be anywhere from two
• 33:52
  Speaker 2: to five percent, So the stock is resetting. It just
• 33:56
  Speaker 2: points to how challenging the apparel business could can be.
• 34:00
  Speaker 2: The Nike have been on such a tremendous run, but
• 34:03
  Speaker 2: they've really struggled since.
• 34:04
  Speaker 4: Since then, is the consensus thinking that people prefer to
• 34:09
  Speaker 4: buy something like sneakers in person, sight unseen doesn't really work.
• 34:15
  Speaker 4: I was surprised it's so personal. I was surprised by
• 34:17
  Speaker 4: the notion. But yes, I think that is.
• 34:19
  Speaker 3: A bit of the taste you want to try pivot.
• 34:22
  Speaker 2: I have been obviously, unlike my kids who continue to
• 34:27
  Speaker 2: have to have, you know, new shoes every six months
• 34:29
  Speaker 2: because they're growing so much, I've had the same size
• 34:31
  Speaker 2: shoe for a long period of time, so I have
• 34:33
  Speaker 2: not taken that approach personally where I just sort of
• 34:36
  Speaker 2: order them, you know, delivery and just wear them, you know,
• 34:41
  Speaker 2: work them in that way. If you're a serious runner,
• 34:43
  Speaker 2: I can understand the idea of wanting to try on
• 34:47
  Speaker 2: your running shoes and get a feel for how they fit.
• 34:49
  Speaker 2: But for me, every day sort of weekend shoes or
• 34:53
  Speaker 2: basketball shoes, I've always just taken the approach of like, hey,
• 34:56
  Speaker 2: just send it to me.
• 34:57
  Speaker 3: But I don't know, do you guys differ on an approach?
• 34:59
  Speaker 3: Do you want do you go on try sneakers? Tucker?
• 35:03
  Speaker 3: I mean I've done.
• 35:04
  Speaker 5: Bol, you know, I've gone on to try running sneakers,
• 35:08
  Speaker 5: and you know, there it was a different style, like
• 35:11
  Speaker 5: the big cushiony type of feel. But I've also ordered
• 35:16
  Speaker 5: several pairs of shoes online. I just get a ship
• 35:18
  Speaker 5: to me, I'm like, okay, this this fits, or I'll
• 35:20
  Speaker 5: just drop it off a Whole Foods or whatever Amazon
• 35:24
  Speaker 5: drop off there is available and go about that route
• 35:27
  Speaker 5: or any any of the companies has a solid return
• 35:31
  Speaker 5: policy to or or process.
• 35:33
  Speaker 3: Are you too in shopping for you?
• 35:36
  Speaker 4: I think it depends on if it's a basketball shoe.
• 35:38
  Speaker 4: I think I want to try it on right right.
• 35:40
  Speaker 4: The problem through them, The problem.
• 35:43
  Speaker 5: With Nike, Paul is that what do you see in
• 35:48
  Speaker 5: terms of what runners are wearing.
• 35:50
  Speaker 3: It's a mix of there's Hoka, New Balance.
• 35:54
  Speaker 5: Bon Cloud, yeah period, right that That's really all I'm
• 35:58
  Speaker 5: seeing out there in terms of like the runners. Yeah,
• 36:01
  Speaker 5: I don't see any Nikes out there. Nike has just
• 36:05
  Speaker 5: become a fashion.
• 36:07
  Speaker 2: I think that they lost their way on developing new
• 36:11
  Speaker 2: running shoes that got the running populace to adopt them,
• 36:15
  Speaker 2: and they fell asleep on the switch in R and
• 36:17
  Speaker 2: D and allowed for some of these smaller company to
• 36:21
  Speaker 2: make it right yeah, another company that I was gonna
• 36:25
  Speaker 2: sort of dove on into what.
• 36:26
  Speaker 3: Would the uptail duptail into this.
• 36:30
  Speaker 4: Work.
• 36:31
  Speaker 3: Thank you.
• 36:32
  Speaker 2: I appreciate the assist into this conversation with All Birds
• 36:35
  Speaker 2: because I own a pair of these shoes. They were
• 36:37
  Speaker 2: once value of four billion dollars the company, and they
• 36:40
  Speaker 2: just sold their assets to American Exchange Group for thirty
• 36:43
  Speaker 2: nine thirty one million dollars after being valued at four
• 36:47
  Speaker 2: billion at one point. And uh, that is shocking to
• 36:51
  Speaker 2: me because I had I really liked the pair of
• 36:53
  Speaker 2: All Birds that I own.
• 36:54
  Speaker 3: They're really comfortable.
• 36:56
  Speaker 2: I do too, And uh, if you had told me
• 36:58
  Speaker 2: today that they're just basically sold for nothing, I mean, yeah,
• 37:02
  Speaker 2: I get it was thirty nine million, but from where
• 37:05
  Speaker 2: they were at four billion dollars valuation, it's astounding to
• 37:09
  Speaker 2: me and points to how really difficult this footwear businesses
• 37:13
  Speaker 2: in general. But I liked the products, so that that's
• 37:16
  Speaker 2: kind of shocking to hear that they've paen sold for nothing.
• 37:19
  Speaker 3: Have you ever tried one of those on?
• 37:21
  Speaker 2: No, they're lightweight, pretty comfortable running shoes and some No, No,
• 37:25
  Speaker 2: I would not use them for running. I was just
• 37:27
  Speaker 2: more like walking around the office or walking my ass uh,
• 37:31
  Speaker 2: just I would say more like leisure shoes.
• 37:33
  Speaker 3: Right.
• 37:33
  Speaker 5: They've tried to come out with like running shoes, and
• 37:36
  Speaker 5: I think that was kind of where they went wrong.
• 37:37
  Speaker 5: They tried to go like in some of their selections,
• 37:41
  Speaker 5: like the athletic rautwhears, just like everybody wanted all birds
• 37:44
  Speaker 5: to wear around on daily use and around the office.
• 37:47
  Speaker 5: And yeah, they's huge in Silicon Valley.
• 37:49
  Speaker 2: They tried wool leggings that didn't look out too for them. Yeah,
• 37:53
  Speaker 2: they turned out to be.
• 37:54
  Speaker 4: See, you never participated in such a long conversation about
• 37:56
  Speaker 4: shoes before. This is like watching sex in the city
• 37:59
  Speaker 4: or something. My god, what's happening.
• 38:02
  Speaker 2: Don't think that's the same. Why don't you go back
• 38:04
  Speaker 2: to your oil future charts.
• 38:07
  Speaker 3: That's all the.
• 38:08
  Speaker 2: Time that we have here on the finish of change.
• 38:10
  Speaker 2: Thankfully for mark where you can hear no more shoe chatter.
• 38:14
  Speaker 2: We'll be back at it tomorrow though, at ten am.
• 38:17
  Speaker 2: Thanks so much for joining us.