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Why is Trump fed up with Jerome Powell? · The Financial Exchange Show

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Speaker 1: Zada and Mike Armstrong, Chuck.
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Speaker 2: Mike and Chucker with you here on the last day of.
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Speaker 3: Trading for the week.
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Speaker 2: Markets will be closed in observance of Good Friday. Tomorrow.
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Speaker 2: We'll still be doing our show, but it won't be
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Speaker 2: you know, so much about breaking market news and stuff
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Speaker 2: like that and much more, you know, whatever else we
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Speaker 2: talk about. But in any case, we do have markets
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Speaker 2: related even you know, in terms of what's moving things
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Speaker 2: right now, but rather things are coming to a head
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Speaker 2: between Jay Powell and President Trump, and I suspect that
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Speaker 2: we are going to very likely see President Trump attempting
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Speaker 2: to remove Jay Powell from his post in the very
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Speaker 2: near future. What do I mean by very near future?
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Speaker 2: By Memorial Day six weeks? You know, somewhere in that
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Speaker 2: ballpark is kind of where I'm at.
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Speaker 4: Now when you say try to remove, Let's dive in there,
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Speaker 4: because there's probably a lack of understanding of, you know,
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Speaker 4: where the Fed's independence comes from and perspectives on can
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Speaker 4: he or can he not remove the sitting FED share
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Speaker 4: whom he appointed back in twenty sixteen.
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Speaker 2: Seventeen, I think it was eighteen. He was appointed guy whatever.
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Speaker 2: It was not really important. Maybe it was seventeen, I
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Speaker 2: don't even know. In any case, here is the lay
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Speaker 2: of the land on this is there is a long
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Speaker 2: standing precedent since nineteen thirty five. It's called Humphrey's Executor
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Speaker 2: and it's a case that was brought to the US
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Speaker 2: Supreme Court. FDR at the time was trying to remove
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Speaker 2: a bunch of people from appointed boards, appointed independent boards
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Speaker 2: that oversee kind of these quasi governmental institutions think the FED,
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Speaker 2: the FTC, the NLRB, things along those lines.
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Speaker 3: Not agencies, but you.
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Speaker 2: Know, just kind of pieces that are government not backed,
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Speaker 2: but government created in nature, government adjacent, yeah, but not
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Speaker 2: part of the executive branch based on how they were
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Speaker 2: actually created. And so they were created by Acts of
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Speaker 2: Congress and specified to be you know, separate from the
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Speaker 2: executive branch in certain ways. And one of the key
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Speaker 2: distinctions that was made there was because these are multi
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Speaker 2: member boards that run them, they the president did not
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Speaker 2: have the power to fire the members of those boards.
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Speaker 5: So that's a Supreme Court ruling from ninety years ago, Issue.
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Speaker 2: Nineteen thirty five, yep, exactly ninety years ago. And basically
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Speaker 2: that's why J. Powell went asked earlier this year during
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Speaker 2: the January FED meeting, he was asked, you know, what
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Speaker 2: would what would happen if President Trump tried to remove you?
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Speaker 2: Powell simply uttered, you know, a very short sentence, not
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Speaker 2: permitted under the law, five words like very clear, very
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Speaker 2: you know, decisive, and said you know. He was asked again,
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Speaker 2: you know what, but what if what if he tried
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Speaker 2: to not permitted under the law. That's what Powell said
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Speaker 2: multiple times. And here we talked about this a little
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Speaker 2: bit yesterday. But the reason why this is important for
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Speaker 2: the FED to be independent. I want to talk about
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Speaker 2: a few different things on this because there are a
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Speaker 2: couple of different talking points that come up fairly frequently.
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Speaker 2: The first one is you hear an awful lot. Hey,
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Speaker 2: you know that no one elected J. Powell, and so
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Speaker 2: you know that, like that's anti democratic, Like, you know,
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Speaker 2: you shouldn't have an unelected person running you know, the FED,
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Speaker 2: to which my my point is, well, the vast majority
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Speaker 2: of federal government employees are not elected. True, Like, we
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Speaker 2: don't go around electing two million federal government employees every one, two, four, six,
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Speaker 2: eight years. We just don't do that, because God, we
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Speaker 2: don't because like, quite honestly, it would freaking suck. And like, okay,
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Speaker 2: what why are you think about even your town? Do
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Speaker 2: you elect every municipal employee? No, you elect, you know,
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Speaker 2: probably depending on the town, a mayor or a governing
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Speaker 2: board or you know, something along those lines. Sure, and
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Speaker 2: then they go and they you know, appoint people to
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Speaker 2: you know, hire the rest of the people, because you
5:28
Speaker 2: don't need to vote on every single employee of every
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Speaker 2: single government. It's just not really how anyone does it
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Speaker 2: anywhere ever. Right, So that's that's point one. But the
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Speaker 2: second piece, and the one that I really want to
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Speaker 2: talk about is and this is a big one for me,
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Speaker 2: just in terms of what it actually means.
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Speaker 3: I want everyone listening.
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Speaker 2: I want you to think of the politician out there
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Speaker 2: that you dislike the most. Don't care who it is,
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Speaker 2: but I want you to think the politician that you
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Speaker 2: dislike the most, and not just the one that you
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Speaker 2: dislike the most, but like the one that you dislike
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Speaker 2: the most and you're like, man, they got some dumb views. Like,
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Speaker 2: I want you to think of that person, and then
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Speaker 2: I want you to think about that person deciding what
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Speaker 2: interest rates are. And this is why it's not good
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Speaker 2: for politicians to have control over interest rates is because
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Speaker 2: politicians ay like they're not experts in monetary policy. One
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Speaker 2: maybe one may not be, but in general, I don't
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Speaker 2: think we look at members of congressmen we're like, yes,
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Speaker 2: they understand the complex relationship between interest rates and economic activity,
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Speaker 2: and I would completely trust them to do whatever they
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Speaker 2: wanted with you know, with that. But the reason that
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Speaker 2: you don't trust politicians with controlling interest rates is very simple.
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Speaker 2: They would always want them lower.
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Speaker 4: Yeah, there's really no circumstance sitting president wants interest rates higher.
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Speaker 2: No, it's I have never heard of a single instance
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Speaker 2: of a US president trying to job own the FED
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Speaker 2: to raise interest rate.
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Speaker 4: Forget about domestically. There are central banks in every country
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Speaker 4: across the globe. I have never heard a sitting politician
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Speaker 4: who is in power look for higher interest rates anywhere
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Speaker 4: in any central bank across the globe.
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Speaker 2: This gets to my third point, which is if you
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Speaker 2: ever study emerging markets and how things work with their
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Speaker 2: central banks, the number one mistake that emerging markets heads
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Speaker 2: of states make that eventually dooms them to you know,
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Speaker 2: being run out of office, is firing the head of
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Speaker 2: the central.
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Speaker 3: Bank like it.
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Speaker 2: It's as consistent as gravity. You see this, whether you're
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Speaker 2: talking about the history of Argentina, the history of Brazil,
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Speaker 2: Turkey like, you can go like yeah, Turkey like, you
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Speaker 2: can go down the list of emerging markets, and generally
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Speaker 2: the thing that gets them in the most trouble is
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Speaker 2: firing the head of the central bank, because it causes
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Speaker 2: investors to lose confidence in the currency of the country
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Speaker 2: simply because okay, if the currency is not going to
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Speaker 2: be run by a group that is separate from you know,
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Speaker 2: the person running the country, then how do we know
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Speaker 2: that the currency is going to have any value other
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Speaker 2: than what the head of state thinks is going to
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Speaker 2: be best for their own election chances?
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Speaker 4: Now, Chuck, this is normally where I chime in and say,
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Speaker 4: let's pump the brakes here, Chuck. The United States is
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Speaker 4: a lot different than Brazil and pretty much every way
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Speaker 4: economically possible. Yes, However, we are talking about this at
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Speaker 4: a time when more and more pressure is being exerted
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Speaker 4: on that dominance of the dollar and dominance of the
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Speaker 4: US Treasury. If you have been following the news over
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Speaker 4: the last week, the single motivating factor that appears was
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Speaker 4: the one that prompted the President to shift from his
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Speaker 4: tariff policy was pressure on the dollar, pressure on the
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Speaker 4: treasury bond because in all likelihood foreign actor, as we're
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Speaker 4: calling into question, it's reserve currency and risk free status.
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Speaker 4: So normally I would say, look, and it is absolutely
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Speaker 4: still true that the weight and power of the US
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Speaker 4: compared to that of any emerging country is completely different
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Speaker 4: and puts US on a completely different university. And the
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Speaker 4: same laws don't even apply to economics when you're talking
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Speaker 4: about the US versus Argentina. But that has changed a
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Speaker 4: little bit just over the last thirty days.
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Speaker 2: And again, I think the big thing that I come
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Speaker 2: back to on this is this isn't about any one
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Speaker 2: particular person. It's not about whether Donald Trump should have
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Speaker 2: the power to this not about whether you know Joe
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Speaker 2: Biden should have had the power to control interestrate. It's
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Speaker 2: not about whether you know, in some hypothetical world, Bernie
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Speaker 2: Sanders has the ability to control interest rates. It's about
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Speaker 2: whether you want anyone who could fall into that scene.
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Speaker 2: I always like to talk about this when we talk
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Speaker 2: about the exercise of government power. Imagine the person that
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Speaker 2: you least like in that position. Would you give them
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Speaker 2: the power to do what you want the person you
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Speaker 2: do like, you know, to have the power to do.
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Speaker 2: And that's where I think when we talk about like
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Speaker 2: the way that the FED is set up currently, I'm
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Speaker 2: not saying that you have to like what the FED
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Speaker 2: does like And anyone listening knows if you heard our
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Speaker 2: show back in you know, twenty twenty one, twenty two,
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Speaker 2: even the first half of twenty three, we're like, man,
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Speaker 2: these guys are not doing a great job right now,
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Speaker 2: Like this is bad with a capital bad.
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Speaker 4: Mark Vendetti called him a failure and Tucker really the
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Speaker 4: clip every thirty seconds, So this is this.
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Speaker 2: Is much more Okay, do you want to concentrate the
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Speaker 2: power of setting interest rates in every other monetary policy
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Speaker 2: in one seat that may or may not at some
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Speaker 2: point in time be some that you actually think he's
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Speaker 2: going to do a good.
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Speaker 4: Job, right because rest assured if there is a removal
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Speaker 4: of Jerome Powell, which I think Chuck's fair to say
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Speaker 4: you and I do not know whether the Supreme Court,
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Speaker 4: which is would you know, would rule in favor of
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Speaker 4: President Trump or in favor of Jerome Powell if this
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Speaker 4: made it to the Supreme Court, But that's probably where
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Speaker 4: it would end up. And remember what that means. Whatever
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Speaker 4: the Supreme Court decides is going to be the president
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Speaker 4: for every future president when it comes, precedent for presidents
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Speaker 4: for every future Federal Reserve chair to come. And I
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Speaker 4: don't know, but if anything about history of the United
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Speaker 4: States holds true, it's that probably Republicans will not be
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Speaker 4: in control of the White House forever. That's that's my guess.
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Speaker 4: A little bit of background. By the way, Federal Reserve
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Speaker 4: chairs serve four year term. So Jerome Powell was appointed
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Speaker 4: in twenty eighteen, he was reappointed by President Biden in
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Speaker 4: twenty twenty two. His term comes up in twenty twenty six,
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Speaker 4: at which point the president has the full power to
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Speaker 4: remove him.
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Speaker 3: And there's no real.
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Speaker 2: Well, it doesn't even need to remove him. It's just okay, like,
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Speaker 2: I'm not renewing you for another term.
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Speaker 4: Right, yeah, So it is not controversial for a president
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Speaker 4: to do that, although new presidents typically reappoint the sitting
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Speaker 4: Federal Reserve chair. But nonetheless, in twenty twenty six, all
12:21
Speaker 4: things are off here and we probably will have a
12:23
Speaker 4: new Federal Reserve chair. The question is do we have
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Speaker 4: a new one Prior to that, who you know answers
12:30
Speaker 4: more directly to the president and how does that change
12:33
Speaker 4: capital market structure is their main question out there.
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Speaker 3: So this is a big one.
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Speaker 2: And again I want to talk a little bit more
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Speaker 2: about this in the next segment, just because there's there's
12:43
Speaker 2: some some stuff to dig into a little bit further.
12:45
Speaker 2: Let's take a quick break and then we'll talk more
12:48
Speaker 2: Jay Powell right after this.
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Speaker 3: So let's segment. We were talking about J.
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Speaker 2: Powell and I made the comment, look, I think there's
13:50
Speaker 2: a pretty good chance that President Trump tries to remove
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Speaker 2: him in the next you know, six weeks or so.
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Speaker 2: And basically like where this comes from? Is this all started?
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Speaker 2: You know, to pick up yesterday where J. Powell was
14:05
Speaker 2: giving a speech.
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Speaker 3: At Economic Club of Chicago.
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Speaker 2: Yeah, the Economic Club of Chicago, And basically what he
14:14
Speaker 2: said during that speech he said a couple of things.
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Speaker 2: The first is he said he was, you know, significantly
14:19
Speaker 2: concerned about risks to both sides of the FEDS dual mandate,
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Speaker 2: so saying, hey, I'm nervous that inflation may be higher
14:27
Speaker 2: and you know, unemployment may go up more than we anticipated,
14:31
Speaker 2: specifically saying, look, the the tariff scenarios that are now
14:34
Speaker 2: in place are you know, more significant than we had
14:37
Speaker 2: you know, planned for.
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Speaker 3: And the second thing that he said that was.
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Speaker 2: As definitive a statement as J Powell will ever say,
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Speaker 2: Because Mike, would you agree that some of Powell's communications
14:50
Speaker 2: are kind of like wishy washy, don't rock the boat,
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Speaker 2: Like let's just you know, play it cool and hang out.
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Speaker 4: Yeah, that's like the defining characteristic of his communications. He
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Speaker 4: does sometimes kind of screw up that that yes stuff
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Speaker 4: he does because I think in part because he's not
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Speaker 4: a PhD economist. Quite honestly, he's largely mastered the art
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Speaker 4: of saying nothing though yes, yes, And so it was
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Speaker 4: interesting they asked him decisively yesterday, they said, is there
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Speaker 4: a FED.
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Speaker 3: Put on the stock market? And what you I got it.
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Speaker 5: Michael, I have always and will always come the.
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Speaker 2: The the the idea of a FED put. It stems
15:32
Speaker 2: from the the options market, where it's the idea that, hey,
15:35
Speaker 2: is there a certain price in the stock market, where
15:39
Speaker 2: the FED steps in and says, hey, things have gone
15:41
Speaker 2: too far down and we're gonna step in. And it's
15:44
Speaker 2: it's been, you know, kind of theorized in general. And
15:47
Speaker 2: Powell came out and was like, no, there is not
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Speaker 2: a FED put. I I will, you know, define this
15:52
Speaker 2: very clearly. And really I think what we're getting at
15:55
Speaker 2: is kind of what we saw in the last week,
15:57
Speaker 2: where to be honest, there is there's never a FED
15:59
Speaker 2: put on the stock market, and that the FED never
16:02
Speaker 2: looks at like the stock market and says, this is
16:05
Speaker 2: when we need to step into stop stocks from falling.
16:08
Speaker 2: It's much more a FED put on the bond market, right,
16:12
Speaker 2: which is when bonds are selling off, and when you're
16:15
Speaker 2: seeing credit markets sees up that prevent the functioning of
16:19
Speaker 2: financial markets. That usually coincides with stock selling off pretty
16:23
Speaker 2: harshly and significantly in a short period of time. And
16:26
Speaker 2: that is when the FED will step in because they
16:31
Speaker 2: need to.
16:31
Speaker 3: Ensure functioning markets. Yeah.
16:34
Speaker 2: So this all then culminated in a President Trump post
16:38
Speaker 2: this morning, and I'll quote the whole thing here. The ECB,
16:41
Speaker 2: the European Central Bank, is expected to cut interest rates
16:44
Speaker 2: for the seventh time and yet too late. Jerome Powell
16:47
Speaker 2: of the Fed, who is always too late and wrong,
16:50
Speaker 2: yesterday issued a report which was another and typical complete mess.
16:54
Speaker 2: Oil prices are down, groceries even eggs are down, and
16:57
Speaker 2: the USA is getting rich on tariffs.
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Speaker 3: Too late.
16:59
Speaker 2: Should have lowered interest like the ECB long ago, but
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Speaker 2: he should certainly lower them now. Powell's termination cannot come
17:06
Speaker 2: fast enough. So again you don't really need to read
17:09
Speaker 2: between the lines. The last sentence is the one that matters,
17:12
Speaker 2: the fact that he said Powell's termination and not the
17:15
Speaker 2: end of Powell's term notable?
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Speaker 3: Am I wrong? No, It's very notable, because very.
17:21
Speaker 2: Easily could have just been, like, you know, May twenty
17:23
Speaker 2: twenty six can't come quickly enough because that's when Powell's
17:26
Speaker 2: term is up. But it was Powell's termination.
17:28
Speaker 3: So I don't know.
17:31
Speaker 2: Maybe maybe I'm reading too much into it, but it
17:34
Speaker 2: sure feels like he's the president is going to try
17:37
Speaker 2: to terminate J. Powell as the head of the Federal Reserve.
17:40
Speaker 2: Am Am I wrong? There, No, it does feel that way.
17:43
Speaker 2: That's definitely what I took from from the message. There
17:46
Speaker 2: are parts of this, by the way, that I think
17:48
Speaker 2: you and I would agree on. He was very much
17:52
Speaker 2: too late to the game in We talked about this
17:54
Speaker 2: for years. Only The biggest fault that that Federal Reserve
17:58
Speaker 2: has had is they kept calling in lation transitory during COVID,
18:02
Speaker 2: and it very clearly ended up not being so, and
18:05
Speaker 2: so President Trump's writing like they did make a pretty
18:08
Speaker 2: big mistake. The bigger part of that message, though, is
18:15
Speaker 2: if you go and push for a removal, which maybe
18:18
Speaker 2: it happens, maybe the Supreme Court shots it down. Do
18:21
Speaker 2: you know, Chuck, I don't have any I have no
18:24
Speaker 2: clue which direction the Supreme Court would go on that. No,
18:26
Speaker 2: there's we talked about this. I can't remember when, but
18:30
Speaker 2: there's a case that is making its way. It's it's
18:33
Speaker 2: at the Supreme Court right now for President Trump trying
18:36
Speaker 2: to remove. I believe it's members of the NLRB and FTC.
18:42
Speaker 4: I think it is is far more close to the
18:45
Speaker 4: executive branch than Federal Reservists, which.
18:47
Speaker 2: Are similar types of you know, independent boards like appointed
18:51
Speaker 2: by the president, but with you know, dictated independence as
18:55
Speaker 2: specified by the congressional acts that created them. Right, And
18:59
Speaker 2: so the people are watching this one, like this case
19:03
Speaker 2: pretty closely to see, Okay, what does the Supreme Court
19:06
Speaker 2: rule in this, because it could give some clues as
19:08
Speaker 2: to how they would potentially rule as it relates to
19:11
Speaker 2: the FED. But I am not a legal scholar. I
19:15
Speaker 2: have no idea how it's going to turn out. And
19:19
Speaker 2: I'm not going to pretend that I know anything more
19:22
Speaker 2: than what I just said, because I don't.
19:26
Speaker 3: Let's take a quick break here.
19:28
Speaker 2: When we come back, let's do a little bit of
19:32
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Speaker 6: Following yesterday's sell off, Marcus today our negative territory with
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Speaker 6: United Health weighing on the Dow, this Wall Street continues
20:10
Speaker 6: to navigate through trade war developments traders yesterday fifty through
20:14
Speaker 6: commentary from FED Chairman Jerome Powell, who said tariffs could
20:17
Speaker 6: drive up inflation in the near term. At the moment,
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Speaker 6: the Dow is down by over one and a half percent,
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Speaker 6: or six hundred and ten points. S and P five
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Speaker 6: hundred is down by nearly two tens of a percent
20:29
Speaker 6: or nine points, and the Nasdaq is down just over
20:32
Speaker 6: half a percent, lower eighty nine points. Russell two thousand
20:35
Speaker 6: actually up by a third of a percent so far today,
20:39
Speaker 6: Tenure Treasure reeled up by one basis point and is
20:41
Speaker 6: now a four point twenty nine percent, and crude oil
20:45
Speaker 6: up one on a third percent, trading just above sixty
20:48
Speaker 6: three dollars a barrel. United Health sinking by over twenty
20:52
Speaker 6: percent after the health insurans first quarter results missed analysts estimates.
20:57
Speaker 6: The company also cut its full year guide it in
21:00
Speaker 6: anticipation of higher than expected medical costs. Meanwhile, Eli Lilly
21:05
Speaker 6: is among the biggest winners on the day after the
21:07
Speaker 6: pharmaceutical giants phase three trial results for a pill to
21:11
Speaker 6: treat weight loss in diabetes showed positive results. ELI Lilly
21:16
Speaker 6: up by thirteen percent. Elsewhere, Taiwan Semiconductor beat first quarter expectations.
21:22
Speaker 6: The chip maker also maintained its twenty twenty five revenue
21:25
Speaker 6: forecasts as a note that it has not seen any
21:28
Speaker 6: changes in customer behavior despite there being uncertainties in risks
21:34
Speaker 6: from the potential impact of tariff policies. Taiwan Semiconductor shares
21:38
Speaker 6: are up by a quarter percent. Al CoA down by
21:41
Speaker 6: over six percent after the aluminum company said it incurred
21:45
Speaker 6: about twenty million dollars in teriff related costs in the
21:48
Speaker 6: first quarter, where the charge is expected to rise to
21:51
Speaker 6: ninety million dollars in the current quarter. After surging fifty
21:55
Speaker 6: six percent yesterday, hurts up another twenty seven percent today
22:00
Speaker 6: following news that Bill Ackman's Perishing Square disclose it had
22:04
Speaker 6: taken a sizable steak in the rental car company, and
22:08
Speaker 6: after today's closing Bell. We'll see first quarter earnings from
22:12
Speaker 6: Netflix on Tucker Silva and that's Wall Street Watch.
22:16
Speaker 2: Let's see, Mike. I actually want to uh, just hop
22:20
Speaker 2: kind of ahead. And I know Tucker mentioned that the
22:23
Speaker 2: Dow is getting hammered worse than every other index.
22:25
Speaker 3: Yep, and so I think that's company.
22:27
Speaker 2: It's a good time for our semi annual discussion of
22:32
Speaker 2: why the DOO is the worst stock index.
22:35
Speaker 3: Yeah.
22:36
Speaker 4: I get asked about that every once in a while,
22:38
Speaker 4: like what should I be looking at when I'm trying
22:40
Speaker 4: to get a sense for what the stock market's doing and.
22:42
Speaker 3: Not the Dow? My answer is always not the Dow.
22:44
Speaker 2: So here here's the deal. The Dow has two problems
22:48
Speaker 2: with it. The first is it only has thirty companies
22:50
Speaker 2: in it, and so that's just not really many companies.
22:55
Speaker 2: It's thirty of them. And obviously you've got you know,
22:59
Speaker 2: thousands of even publicly traded companies, but it's it's thirty companies.
23:04
Speaker 2: And the second problem is that it is not a
23:09
Speaker 2: market cap weighted index, but rather it is a price
23:11
Speaker 2: weighted index.
23:12
Speaker 3: And here's why this is particularly dumb.
23:15
Speaker 2: So as an example right now, United Health, which is
23:20
Speaker 2: causing this They're down twenty one percent in trading today
23:24
Speaker 2: basically because they guided that their profits are going to
23:30
Speaker 2: be much lower than anticipated this year because of their
23:34
Speaker 2: Medicare business not being as profitable as it used to be,
23:39
Speaker 2: and they're basically saying, hey, we expect higher than you know,
23:42
Speaker 2: expected medical costs and so that's gonna, you know, weigh
23:44
Speaker 2: on the profitability there. So United Health is down twenty percent.
23:51
Speaker 2: United Health, before today, was trading at about five hundred
23:55
Speaker 2: and eighty five dollars a share. Microsoft, which is one
23:59
Speaker 2: of the three biggest companies in the world at any
24:01
Speaker 2: particular point in time, is currently trading at three hundred
24:05
Speaker 2: and sixty nine dollars to share, which means that despite
24:08
Speaker 2: Microsoft having far more economic activity and being more valuable
24:13
Speaker 2: by you know, five x than United Health, has a
24:18
Speaker 2: waiting in the DOW that, prior to today was about
24:22
Speaker 2: sixty percent of what United Health is. This is dumb, Yes,
24:28
Speaker 2: like the the TAO is an index for people who
24:33
Speaker 2: don't understand math, because that's who built it. I think, like,
24:37
Speaker 2: I don't know why you would build an index this way.
24:40
Speaker 4: Yeah, it doesn't make really any sense in today's environment.
24:44
Speaker 4: The biggest example of this would be so Berkshire Hathway
24:47
Speaker 4: is currently I think the seventh largest company in the
24:51
Speaker 4: S and P five hundred. They are about a one
24:53
Speaker 4: trillion dollar company. Yeah, Apple's about three times their size
24:57
Speaker 4: in terms of market capitalization, which is, take the number
25:00
Speaker 4: of shares that are out there, multiply by the share praise.
25:03
Speaker 4: There you have the market cap. Berkshire Hathaway's A shares
25:08
Speaker 4: currently go for seven hundred and seventy five thousand dollars.
25:11
Speaker 3: That's a lot of money.
25:12
Speaker 4: So were you to build a stock price weighted index
25:18
Speaker 4: with this, it would be like eighty percent Berkshire Hathaway.
25:24
Speaker 4: If you were to like price weight the shares of
25:25
Speaker 4: the S and P five hundred, I can't even imagine
25:28
Speaker 4: trying to do this, but it would be something ludicrous
25:30
Speaker 4: where Bay seventy five percent Berkshire Hathaway and and and
25:37
Speaker 4: nothing anything else, which I think is probably not what
25:41
Speaker 4: anybody would intend to design, which is also why the
25:43
Speaker 4: Dow has to do all these silly things like constantly
25:46
Speaker 4: adding and removing different companies from their index, because if
25:51
Speaker 4: there's a stock split or reverse split, it completely precludes
25:55
Speaker 4: somebody from being in the Dow. Jones Industrial average in
25:57
Speaker 4: the first place.
25:58
Speaker 2: Other things that you see just like you when you
26:00
Speaker 2: talk about you know, how this you know, the construction
26:05
Speaker 2: of the Dow and companies moving in and moving out.
26:08
Speaker 2: So one of the companies that was added to the
26:14
Speaker 2: Dow in recent years was Salesforce. They were added back
26:19
Speaker 2: in August of twenty twenty. I think it was like
26:23
Speaker 2: August twenty fourth, I believe it was. Do you know
26:26
Speaker 2: the company that they replaced. No, they replaced x On Mobile, okay,
26:31
Speaker 2: which is again, like you think about it, like Exon Mobil,
26:34
Speaker 2: like kind of a big company, you know, like everyone
26:36
Speaker 2: knows them. I'm sure everyone fills up, you know, and
26:38
Speaker 2: it's like, oh, like the price of gas is too high,
26:40
Speaker 2: like YadA, YadA.
26:41
Speaker 3: Most people who are.
26:43
Speaker 2: Not you know, working in Corporate America corporate America, probably
26:48
Speaker 2: have no idea what Salesforce actually does. It's a customer
26:51
Speaker 2: relationship management software that has against like big company like
26:54
Speaker 2: does some really impressive stuff and everything, but just not
26:57
Speaker 2: as well known generally. So here's the interesting thing is
27:02
Speaker 2: that when you look over the last almost five years,
27:08
Speaker 2: we'll call it, uh, the interesting thing is since Exon
27:12
Speaker 2: Mobil was removed from the Dow, and.
27:14
Speaker 3: Salesforce was added.
27:16
Speaker 2: Salesforce's stock is up eighteen percent, Okay, Exon Mobiles is
27:22
Speaker 2: up one hundred and fifty two. Like, I'm not saying
27:26
Speaker 2: that this is like good, bad or anything. Like I
27:28
Speaker 2: don't know if Exon should have still been in or not.
27:31
Speaker 2: But you know, sometimes we get the people who text
27:34
Speaker 2: in and they're like, hey, this company's being you know,
27:37
Speaker 2: added to an index. Does that mean like things are
27:39
Speaker 2: going to be like great for them? You have no idea? Eh,
27:42
Speaker 2: you have no idea? Like sometimes yes, sometimes no, Like
27:44
Speaker 2: it's all over the board, but it's also something where
27:48
Speaker 2: you sit here and you go, okay, if Exon Mobile
27:50
Speaker 2: were still in here, if it were still in the Dow,
27:54
Speaker 2: the Dow would obviously be higher than if it were
27:56
Speaker 2: removed as it is today.
27:59
Speaker 3: What does that tell you about?
28:00
Speaker 2: Like how how does this actually make this a meaningful index?
28:05
Speaker 3: Right?
28:05
Speaker 4: So, I think the continued message. I know we quote
28:08
Speaker 4: the Dow on our program when we're talking about the markets,
28:12
Speaker 4: but you probably shouldn't pay attention to it. Especially you
28:16
Speaker 4: should not pay attention to the Dow when it is
28:18
Speaker 4: doing right now, off one in two thirds of percent,
28:22
Speaker 4: when the S and P is down one tenth of
28:23
Speaker 4: one percent.
28:24
Speaker 2: Right, the Russell two thousand is up today still now
28:28
Speaker 2: granted again completely different index, but snaither here nor there.
28:32
Speaker 2: Let's talk a little bit about Japan. President Trump noted
28:35
Speaker 2: in a social media post this morning that he met
28:39
Speaker 2: with the Japanese delegation on trade and that they are,
28:45
Speaker 2: you know, making progress on potential deals. The lead Japanese negotiator,
28:51
Speaker 2: Rios Akazawa, met with President Trump for fifty minutes and
28:56
Speaker 2: then with negotiators from the Treasury and Commerce departments for
28:59
Speaker 2: seven five minutes. So again, you've got some talks that
29:03
Speaker 2: are ongoing here. To be honest, I'm a little surprised
29:06
Speaker 2: that you're not getting things announced a little bit quicker
29:09
Speaker 2: in you know, a couple of places again, Japan's one
29:12
Speaker 2: of them, South Korea, India, Vietnam potentially, like those are
29:16
Speaker 2: places where I kind of think you'll still get you know,
29:20
Speaker 2: some more meaningful progress than this over the next week
29:23
Speaker 2: or two. But again, some discussions ongoing here, and I
29:28
Speaker 2: think that is the hope for most people in markets,
29:32
Speaker 2: is hey, if you can get some progress on some
29:35
Speaker 2: of these areas, at least it can mitigate you know,
29:37
Speaker 2: some of the cost of other tariffs. The big one
29:40
Speaker 2: that still matters more than anything else is that, you know,
29:43
Speaker 2: one hundred and forty five percent on China.
29:45
Speaker 4: Though I'll also say, if you can't make something happen
29:48
Speaker 4: with Japan, that's a really negative indication for how these
29:53
Speaker 4: future conversations will go with other countries. Right, I mean
29:56
Speaker 4: our ties with Japan, both on trade as well as
29:59
Speaker 4: investment into the United States. You think about Masioshi Shan Moss,
30:04
Speaker 4: can you pronounce it for me? Masio Si Sean No,
30:07
Speaker 4: that's not right, uh Son and SoftBank's investments into the
30:11
Speaker 4: United States and Nvidia, as well as the massive investments
30:15
Speaker 4: that many Japanese car makers have made. I don't know
30:18
Speaker 4: what terriffs look like in Japan on American goods, but
30:22
Speaker 4: I suspect that they are relatively minimal, and so should
30:25
Speaker 4: we not be able to get something done here, that
30:28
Speaker 4: would be a pretty negative indicator for me in terms
30:31
Speaker 4: of how I would expect European negotiations, for instance, to go.
30:34
Speaker 2: Let's take a quick break here. When we come back,
30:37
Speaker 2: let's talk in Nvidia after this, Tara's.
30:40
Speaker 1: Fears continue to grip markets. Get the latest straight from
30:44
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31:04
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31:11
Speaker 2: Let's talk a little bit about in Video just because
31:14
Speaker 2: markets today are basically being dragged by two stocks. We
31:16
Speaker 2: covered United Health down twenty percent, in Vidia down about
31:19
Speaker 2: three and three quarters today after sliding about six percent yesterday.
31:25
Speaker 2: And this basically on the back of the US government
31:30
Speaker 2: opening an investigation into whether in Video violated rules in
31:34
Speaker 2: its sales to China, and in Video basically guided, hey,
31:38
Speaker 2: we're gonna have to like take a big revenue hit
31:40
Speaker 2: because we can't sell certain products to China.
31:43
Speaker 3: But the CEO of in Vidia, Jensen.
31:46
Speaker 2: Huang, was in Beijing meeting with a number of Chinese
31:52
Speaker 2: officials and probably again like trying to figure out, Hey,
31:56
Speaker 2: what can I sell into the Chinese market so that
31:59
Speaker 2: I have something that I can sell there is what
32:02
Speaker 2: I think he's trying to answer.
32:04
Speaker 4: Yeah, and I think you know, also seeing reported a
32:07
Speaker 4: bit of a lesson for American CEOs who have been
32:09
Speaker 4: attempting to cozy up to the Trump administration. And I
32:12
Speaker 4: think you can definitely say that of Nvidia, they've made
32:15
Speaker 4: big investments, they have been front and center in terms
32:18
Speaker 4: of attempting to court the Trump administration and nonetheless seeing
32:21
Speaker 4: some potential penalties here and some potential big hit to
32:25
Speaker 4: their business as they face not only these sanctions, but
32:29
Speaker 4: potential loss of business from Chinese buyers if they're unable
32:33
Speaker 4: to export.
32:34
Speaker 2: We talk an awful lot about how there are certain
32:38
Speaker 2: things that need to trump what is the best economic
32:46
Speaker 2: you know, decision, And from a national security perspective, there's
32:50
Speaker 2: a there's a really clear line where you can say, hey,
32:54
Speaker 2: American companies that make like high end semiconductors and things
32:59
Speaker 2: along those lines probably should not be able to sell
33:03
Speaker 2: them into China.
33:04
Speaker 4: Oh yeah, I completely agree with the idea. You know,
33:07
Speaker 4: the policy itself is right long overdue.
33:10
Speaker 3: This is something that.
33:11
Speaker 2: Like you really shouldn't have up for negotiations. So I
33:15
Speaker 2: think it's a positive step that you know, you're looking
33:18
Speaker 2: at this saying Okay, maybe you're going to get you know,
33:21
Speaker 2: some more concrete action in preventing some of this high
33:25
Speaker 2: end stuff from flowing into China, even if it costs
33:30
Speaker 2: American stockholders, There's a clear justification, and it makes total
33:34
Speaker 2: sense to me as far as you know why the
33:37
Speaker 2: US government would not want these chips to be able
33:40
Speaker 2: to be used to be easily bought by.
33:44
Speaker 3: You know, Chinese companies. It makes a ton of sense
33:46
Speaker 3: to me.
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34:53
Speaker 3: Mike.
34:53
Speaker 2: We have a little bit of breaking news here as
34:55
Speaker 2: it relates to Alphabet, the company formerly known as Google. They,
35:01
Speaker 2: according to a federal judge today, they have illegally dominated
35:07
Speaker 2: two different markets for online advertising technology. This a ruling
35:12
Speaker 2: by US District Judge Leoni bring kemma in Virginia could
35:18
Speaker 2: potentially allow for prosecutors to argue to break up the
35:22
Speaker 2: company in some way, shape or form. This is now
35:25
Speaker 2: the second anti trust case that Google has lost in
35:29
Speaker 2: the last eighteen months, and so you've got real questions
35:35
Speaker 2: as to what Google potentially looks like depending on how
35:39
Speaker 2: these different trials into playing out from a resolution perspective,
35:45
Speaker 2: what's the remedy and how is that going to be
35:48
Speaker 2: overseen and executed. So this is fairly major news. I
35:53
Speaker 2: would say again, this is still going to take most
35:57
Speaker 2: likely like two to five years to actually play out.
36:00
Speaker 2: As far as the resolution because of appeals and the
36:04
Speaker 2: timeline on this stuff. But Google stock or Alphabet stock
36:09
Speaker 2: down two percent on this news. So not a huge move,
36:13
Speaker 2: but certainly something that I think is notable in that
36:18
Speaker 2: Now you've got two cases that have been brought by
36:21
Speaker 2: the federal government in which the company has been found
36:24
Speaker 2: to be using anti competitive practices.
36:26
Speaker 3: Yeah.
36:26
Speaker 4: So the last one back in August of twenty twenty four,
36:29
Speaker 4: which again to your point, I don't know.
36:31
Speaker 3: I thought it was twenty three for some reason. Yeah.
36:32
Speaker 4: So August twenty twenty four, DC Federal Court, District Court
36:35
Speaker 4: judge ruled that Google violated federal antitrust laws by illegally
36:38
Speaker 4: maintaining a monopoly an online search and search text ads.
36:42
Speaker 4: I don't really understand how this other case that is
36:45
Speaker 4: new breaking is different than this one. Maybe it was,
36:49
Speaker 4: I don't know where it's different. But the proposed final
36:51
Speaker 4: judgment that the court was seeking to end Google's monopolistic
36:56
Speaker 4: power included ending Google Search distribution contract and revenue sharing agreements,
37:02
Speaker 4: thereby prohibiting Google from paying to be the initial default
37:06
Speaker 4: search engine on any phone, search access point, device, or browser.
37:10
Speaker 4: They would also require Google to sell Chrome as part
37:13
Speaker 4: of this, So we're not talking about insignificant remedies that
37:17
Speaker 4: the government was looking for out of Google. Obviously, these
37:22
Speaker 4: are proposed to judgments, not anything that a court has
37:25
Speaker 4: ruled on to this point, and like you mentioned, may
37:28
Speaker 4: take months, if not years before any of this stuff
37:31
Speaker 4: is settled and sold off.
37:33
Speaker 2: This also happening against the backdrop of an anti trust
37:37
Speaker 2: case against Meta that's been going on since the beginning
37:40
Speaker 2: of this week. So you've got some domino's in motion
37:44
Speaker 2: as far as big tech and what it could look
37:49
Speaker 2: like as we head, you know, through the rest of
37:51
Speaker 2: this decade.
37:52
Speaker 3: But it's I caution people like you.
37:54
Speaker 2: You're not gonna wake up a week from now being like, hey,
37:57
Speaker 2: Google's broken up.
37:59
Speaker 3: This this is going to be a minute.
38:01
Speaker 4: But it's also encouraging confirmation that we don't have a
38:03
Speaker 4: complete shift in policy seemingly from a new administration on
38:06
Speaker 4: tech documents.
38:07
Speaker 2: True, that's all the time we have on this hour.
38:10
Speaker 2: Let's take a quick break. We got a ton to
38:12
Speaker 2: get to still in our two here, make sure you
38:14
Speaker 2: stick around on the Financial Exchange