Latest / The Financial Exchange Show / Semiconductor Surge Drives Stocks as Housing Slows Again

Transcript

Semiconductor Surge Drives Stocks as Housing Slows Again · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:03
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.
0:26
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 Chuck Zada and Mike Armstrong, your exclusive look
0:39
Speaker 1: at business and financial news affecting your day, your city,
0:42
Speaker 1: your world. Stay informed and up to date about economic
0:46
Speaker 1: and market trends, plus breaking business news every day. The
0:50
Speaker 1: Financial Exchange is a proud partner of the Disabled American
0:53
Speaker 1: Veterans Department of Massachusetts. Help us support our great American
0:57
Speaker 1: heroes by visiting dav five K DOC Boston and making
1:01
Speaker 1: a donation today. This is the Financial Exchange with Chuck
1:06
Speaker 1: Zada and Mike Armstrong.
1:18
Speaker 2: Chuck, Mike and Tucker with you here. And as we
1:24
Speaker 2: finish up the week, we got stocks rallying yet again,
1:29
Speaker 2: making new all time highs on the Nasdaq and S
1:31
Speaker 2: and P five hundred that cute little Dow Jones Industrial average,
1:35
Speaker 2: though still about one point seven one point eight percent
1:38
Speaker 2: off its all time high. And the big reason is
1:41
Speaker 2: that this rally, at least the last two weeks, has
1:44
Speaker 2: been driven by one thing, and that is Tucker. I
1:48
Speaker 2: wish I had had you pup a little sound for me,
1:51
Speaker 2: uh before the show. I should have talked to you
1:53
Speaker 2: about it.
1:54
Speaker 3: All of Cocker's computers are completely burnt in smoke. Oh yeah,
1:57
Speaker 3: you don't have any nothing. He can do sound effect.
2:00
Speaker 3: He's trying me.
2:01
Speaker 2: He's just like that guy from Can You Give Me
2:03
Speaker 2: Alec Baldwin and the Departed saying microprocesses.
2:06
Speaker 4: I gotta sift through all the f words through that clip.
2:10
Speaker 4: That's not gonna happen now.
2:12
Speaker 2: I know, But can you do it? Sure? MicroPort So
2:16
Speaker 2: that this is the deal is, if you take a
2:19
Speaker 2: look at the S and P five hundred semiconductor index.
2:26
Speaker 3: Can you just do your best friend Winslow and just
2:28
Speaker 3: kind of do up those voice impressions, you know, the
2:32
Speaker 3: guy from police Academy, all the funny voices.
2:35
Speaker 2: Okay, sure, sure, yeah. In any case, So the the
2:39
Speaker 2: Philadelphia Semiconductor Index has gone from seven thousand and eighty
2:45
Speaker 2: four up to ninety four eighty nine. So if you
2:50
Speaker 2: do the math on this, okay, what you end up
2:54
Speaker 2: with is a case where semiconductor stocks have rallied thirty
2:57
Speaker 2: four percent since March twenty seven, which is a lot,
3:02
Speaker 2: and that has been the driver of this rebound more
3:06
Speaker 2: than anything else. Now, obviously there's a ceasefire in there
3:09
Speaker 2: that has contributed, that's been part of this, but these
3:12
Speaker 2: started rallying even in advance of it, and they've been
3:16
Speaker 2: kind of the the major thing driving this market to
3:20
Speaker 2: this point. What we have this morning is the Iranian
3:25
Speaker 2: I forget who it was. There's so many different people involved.
3:28
Speaker 2: I think this was the Leader of the Parliament put
3:32
Speaker 2: out a tweet saying that the Straight of Hormuz is
3:35
Speaker 2: open for commercial vessels along you know, the pre established
3:38
Speaker 2: path for the duration of the ceasefire, not really anything
3:41
Speaker 2: different from what's been said previously by him, but markets
3:44
Speaker 2: are taking it and running with it. Foreign mister abbas
3:48
Speaker 2: foreign minister. Okay, yeah, Arachi is so he's the foreign minister.
3:52
Speaker 2: Pereshkin is the president, and then you've got Gallabaf is
3:58
Speaker 2: the leader of the parliament, so like, and then you've
4:01
Speaker 2: got the uh supreme leader, the new guy. Come any
4:05
Speaker 2: two point zero? There's no This is three point zero now,
4:07
Speaker 2: isn't it? Because you're asking.
4:10
Speaker 5: The wrong game? Okay?
4:11
Speaker 2: In any case, So where we stand right now, markets
4:15
Speaker 2: are continuing to price it in as they have for
4:17
Speaker 2: the last week and a half. Hey, horror moves remains closed.
4:22
Speaker 2: There are twelve point five million barrels a day that
4:24
Speaker 2: are not being produced by golf countries. But markets are
4:29
Speaker 2: saying that's fine because this is going to end, and
4:32
Speaker 2: specifically probably end in the next three to six weeks.
4:37
Speaker 1: Okay.
4:38
Speaker 2: Ultimately we're gonna find out our market's right or is
4:42
Speaker 2: the straight of hour moves right? Because you can't have
4:45
Speaker 2: a sustained rally if if the straight of hor moves
4:48
Speaker 2: remains closed. I think that much is a fact given
4:52
Speaker 2: just what we see and know about global energy stockpiles.
4:57
Speaker 5: I'm also just wondering, Chuck.
5:00
Speaker 3: You know, the Iranians are saying, hey, you know, we
5:03
Speaker 3: are opening the strait and there will be a specific
5:05
Speaker 3: path ships can take to get in and out of it.
5:10
Speaker 3: One of the fears had been, you know, unknown locations
5:12
Speaker 3: of underwater mines and the complexity involved in mind sweeping
5:16
Speaker 3: underwater and the ships involved in that. If ships do
5:21
Speaker 3: successfully navigate through the strait over the course of the
5:24
Speaker 3: next week, during all these negotiations and then they fall
5:26
Speaker 3: apart in around attempts to close it again, how successful
5:30
Speaker 3: or unsuccessful would they be? Given that one of the
5:32
Speaker 3: big fears was, hey, what path can we take without
5:35
Speaker 3: getting hit by a bunch of mines. Obviously you can
5:36
Speaker 3: still lay new minds, but it's a pretty closely watched
5:40
Speaker 3: area right now.
5:41
Speaker 5: So I do understand.
5:43
Speaker 3: I guess why investors seem particularly positive right now. Obviously
5:47
Speaker 3: all of it takes is a couple you know, shoulder
5:50
Speaker 3: launched rockets to close it again. But you would think
5:55
Speaker 3: that if ships do navigate it over the course of
5:57
Speaker 3: the next few days, closing it again maybe tremendou It's
6:00
Speaker 3: like difficult for around sure.
6:01
Speaker 2: And look, I've said all along, I have no idea
6:05
Speaker 2: how negotiations are going, like, I have no edge. I
6:08
Speaker 2: don't know anyone in the Trump administration. I don't know
6:12
Speaker 2: anyone in the Iranian government like this is just not
6:17
Speaker 2: It's not something where I have any edge where I
6:19
Speaker 2: can be like, oh, like, here's what's actually happening. What
6:22
Speaker 2: I can tell you is what is going on. And
6:25
Speaker 2: to this point, there still has been no meaningful uptick
6:29
Speaker 2: in traffic through HORRM Moves YEP, despite that market's are rallying,
6:33
Speaker 2: which is telling you that markets are saying again, markets
6:35
Speaker 2: are saying look through that and assume that Horror Moves
6:38
Speaker 2: reopens in the near future and if they do again.
6:42
Speaker 2: We talked about this starting at the beginning of this week,
6:44
Speaker 2: where hey, if you look at this from a valuation perspective,
6:50
Speaker 2: if you were comfortable buying stocks last year with the
6:52
Speaker 2: S and P five hundred and twenty two times forward earnings,
6:55
Speaker 2: to get there today, you got to get up to
6:57
Speaker 2: S and P five hundred at like seventy five hundred,
6:59
Speaker 2: seventy six hundred based on today's forward earnings estimates, and
7:04
Speaker 2: so there still is room to run in this market.
7:08
Speaker 2: If you were comfortable paying that multiple last year and
7:10
Speaker 2: think stocks should get the same multiple this year, you
7:13
Speaker 2: could even make a case, hey, because stocks are trading
7:16
Speaker 2: seven eight percent off of that number right now. Hey,
7:20
Speaker 2: stocks are pricing in that there is a chance things
7:22
Speaker 2: don't get there, and so that's some of the downside
7:26
Speaker 2: that is being priced in. Is it all of it? No,
7:29
Speaker 2: if you saw like a resumption of hostilities or further escalation,
7:33
Speaker 2: don't get me wrong, like things could get worse. But
7:36
Speaker 2: I've been saying all week, Hey, if you think stocks
7:39
Speaker 2: are expensive just because they're at all time highs, you're
7:42
Speaker 2: missing the uptick in earnings projections that has happened over
7:45
Speaker 2: the last six months, and so there is more upside
7:49
Speaker 2: in this market if you get a resolution here. This
7:53
Speaker 2: is also one of those situations. And I want to
7:56
Speaker 2: talk like through like just general thoughts on like managing
8:02
Speaker 2: a market like this, because this is one of those
8:05
Speaker 2: where quite honestly, you can have misgivings about what may
8:11
Speaker 2: or may not happen, but you still have to listen
8:15
Speaker 2: to the market explain personal view. I might think that
8:21
Speaker 2: there still are a bunch of hurdles that need to
8:23
Speaker 2: be overcome, but if you simply wait for those hurdles
8:28
Speaker 2: to be overcome before doing anything, like if you're actually
8:31
Speaker 2: looking at this market from a trading and investing perspective,
8:35
Speaker 2: then you can get left behind by markets that move
8:38
Speaker 2: more rapidly. Then you're willing to take on risk and
8:42
Speaker 2: you could be one of those people. I still remember
8:44
Speaker 2: these people from you know, back in twenty eleven, where
8:48
Speaker 2: again this is gonna seem like really quaint when I
8:51
Speaker 2: talk about this.
8:52
Speaker 5: Double dip recession.
8:53
Speaker 2: No no, no, Mike, go high the S and P
8:56
Speaker 2: five hundred? Was it like twelve hundred? And I I
9:00
Speaker 2: still remember people coming in that I was talking to
9:02
Speaker 2: that are like, it just feels like it's rallied so quickly.
9:05
Speaker 2: I just want to wait for that pullback back below
9:09
Speaker 2: a thousand before I decide to get back in. And
9:13
Speaker 2: the fact is not of only have you never gotten there,
9:15
Speaker 2: but the S and P's at like seven thousand right now,
9:16
Speaker 2: Like I still wonder at least once a year, like
9:19
Speaker 2: are these people still just sitting outside the market waiting
9:23
Speaker 2: for that pullback? Because that's how things can go. Like
9:26
Speaker 2: the rallies that are hated tend to be the ones
9:31
Speaker 2: that are the hardest to get back into because you're
9:33
Speaker 2: waiting for that pullback. You're waiting for it, and it
9:36
Speaker 2: never comes. Like last summer, just as an example, and
9:39
Speaker 2: I'm not saying that you'll see the same thing that
9:41
Speaker 2: you saw last year. You might, you might not like again,
9:45
Speaker 2: this could all fall apart in the S and P
9:47
Speaker 2: falls twenty five percent over the next two months. I
9:50
Speaker 2: have no clue, but I think it's reasonable right now
9:55
Speaker 2: if you're a market participant to understand that there is
9:58
Speaker 2: a path to the S and P getting into the
10:00
Speaker 2: high sevens, and there's a path to the S and
10:03
Speaker 2: P getting into the low fives. What you have to
10:06
Speaker 2: weigh are the probabilities of each, and right now, the
10:09
Speaker 2: market is pricing in like a ninety percent probability of
10:12
Speaker 2: getting into the high sevens and maybe a ten percent
10:14
Speaker 2: probability of it going to the low fives. Right If
10:18
Speaker 2: you disagree with that, that's a beauty of markets. Place
10:23
Speaker 2: your bets, figure out how you want to express that,
10:26
Speaker 2: and place your bets. So ultimately, this is where we
10:29
Speaker 2: stand right now, and we'll have to see how the
10:33
Speaker 2: next couple months play out, because this is very much
10:36
Speaker 2: a binary event. You're seeing the fuel shortage just popping
10:40
Speaker 2: up in Asia. You're seeing sporadic things in Europe. Now
10:43
Speaker 2: they will spread if you go you know, if this
10:48
Speaker 2: continues here. So let's see how things go and let's
10:52
Speaker 2: take a quick break, and when we come back, let's
10:54
Speaker 2: talk a little bit about Netflix, the reported earnings yesterday.
10:57
Speaker 2: We'll discuss after.
10:58
Speaker 1: This market insight, retirement strategies, real talk about Wall Street
11:03
Speaker 1: and economic trends. All live every day on our YouTube channel.
11:07
Speaker 1: Go to YouTube dot com slash the Financial Exchange Show.
11:10
Speaker 1: This is the Financial Exchange. Text us at six one
11:14
Speaker 1: seven three, six two one three eight five with your
11:16
Speaker 1: comments and questions about today's show, and let us know
11:19
Speaker 1: what you think about the stories we are covering. This
11:21
Speaker 1: is the Financial Exchange Radio Network.
11:45
Speaker 2: All Right, So yesterday after the bell, Netflix reported earnings.
11:51
Speaker 2: And here's what I can tell you is the S
11:54
Speaker 2: and P five hundred is up, you know, call it
11:58
Speaker 2: one percent today And aside from the energy and utility sector,
12:03
Speaker 2: basically the only major read that I see on the
12:05
Speaker 2: board is Netflix, which is down nine and a half
12:08
Speaker 2: percent today. So a couple things. First, read Hastings, who
12:13
Speaker 2: is the co founder of Netflix and the chairman of
12:16
Speaker 2: the board. He's gonna be stepping down from the board
12:18
Speaker 2: after his term expires in June, and.
12:21
Speaker 3: Some have written this as pretty surprising. His statements on
12:25
Speaker 3: the subject were pretty short, and doesn't seem that anybody
12:29
Speaker 3: knew this was coming ahead of time, So I'll acknowledge
12:33
Speaker 3: that for a moment. I don't know that that's relevant
12:35
Speaker 3: to it, but it came as a surprise, seemingly quite honestly.
12:40
Speaker 2: Good for Reid. He's sixty five years old. Sure, go
12:44
Speaker 2: have a little bit of fun. He's worth like seven
12:46
Speaker 2: eight billion dollars. Go out and chill, live your life. Now,
12:51
Speaker 2: you can make a case you probably will. He could
12:53
Speaker 2: Netflix and chill exactly. Actually he might be more of
12:57
Speaker 2: a what is it called now is at HBO Max
13:00
Speaker 2: HBO Again? I forget he could do whatever that thing
13:03
Speaker 2: is and chill. So here, you know, I see so
13:07
Speaker 2: many CEOs that just hang on, hang on, hang on
13:11
Speaker 2: until they're eighty and it's like it's clear they can't
13:13
Speaker 2: do the job anymore. Or how many politicians do we
13:16
Speaker 2: see that they hang on, the hang on, the hang on,
13:18
Speaker 2: and it's clear they can't do the job anymore. Good
13:21
Speaker 2: for you, like get out, like don't don't leave your
13:25
Speaker 2: legacy as being like someone who hung on too long
13:28
Speaker 2: and it was obvious you were there when you shouldn't
13:30
Speaker 2: have been.
13:30
Speaker 5: There anymore.
13:31
Speaker 2: So I don't think that this dip that you're seeing
13:36
Speaker 2: here is because Hastings is leaving the company's.
13:41
Speaker 5: Board, don't. I don't either. I wouldn't buy that, but
13:45
Speaker 5: it did come abruptly.
13:46
Speaker 2: It did. But he's not the CEO anymore. You've got
13:50
Speaker 2: co CEOs Ted Sarandas and Greg Peters who have been
13:52
Speaker 2: running the show for quite a while now. Actually Ted
13:55
Speaker 2: has been the CEO since I think twenty and I
14:01
Speaker 2: think Greg might have been. No, Greg became a co
14:04
Speaker 2: CEO in twenty twenty three.
14:06
Speaker 3: So I can't wait to explain to my kids. They're
14:09
Speaker 3: not you know, they don't watch Netflix. They're they're too
14:13
Speaker 3: young now, but like in five years, I'm really excited
14:16
Speaker 3: to explain to my kids what Netflix started as and
14:20
Speaker 3: what their big competition was.
14:21
Speaker 2: Still won't to understand. No, they're like, what, what? What
14:24
Speaker 2: are discs? They mailed you?
14:26
Speaker 4: What?
14:27
Speaker 2: They why they do this? So excited to explain it
14:30
Speaker 2: to them. So again, I don't think he's been particularly
14:34
Speaker 2: involved in He hasn't been involved in any way, shape
14:37
Speaker 2: or form in day to day operations in quite a while.
14:40
Speaker 2: And I'm sure that strategically he's been you know consulted
14:42
Speaker 2: on a number of issues. But I'm willing to bet
14:46
Speaker 2: that if something big comes up, I'm guessing that Ted
14:49
Speaker 2: Sarandas still has Redhasting cell phone number true and can
14:53
Speaker 2: give him a call.
14:54
Speaker 3: He serves on a couple other boards. He's yeah, he
14:58
Speaker 3: has other interests.
15:00
Speaker 2: I think they're going to be able to figure it out.
15:02
Speaker 2: What is interesting to me is that their guidance for
15:06
Speaker 2: the upcoming quarter came in about six seven percent short.
15:10
Speaker 2: And so this is thank you, Mike, I appreciate you.
15:14
Speaker 2: And so this is the question that I think is
15:18
Speaker 2: out there is okay? Is this representing something that is
15:22
Speaker 2: a problem with entertainment budgets? Is this something where they're
15:27
Speaker 2: finding they have to spend more on content than they expected?
15:31
Speaker 2: You know, what's driving that projected underperformance relative to Wall
15:36
Speaker 2: Street estimates? And is it something that's going to continue?
15:39
Speaker 2: So I don't think it's crazy that you see a
15:41
Speaker 2: company pull back in this fashion when they give that
15:44
Speaker 2: kind of guidance, particularly when you look at how the
15:50
Speaker 2: company is value. Again, Netflix is not a company that
15:53
Speaker 2: you look at and you say, wow, they're cheap. Their
15:55
Speaker 2: forward pe ratio is thirty one. Their price to sales
15:58
Speaker 2: ratio is nine and a half. This is not a
16:00
Speaker 2: company that is cheap by any means, and it's in
16:02
Speaker 2: a very competitive media marketplace where they've been able to
16:06
Speaker 2: be one of the few companies that really has been
16:08
Speaker 2: successful for the last decade. But ultimately, there is so
16:13
Speaker 2: much competition for eyeballs that if you value that steeply
16:16
Speaker 2: and you start showing some signs of slowing down, yeah
16:18
Speaker 2: you're gonna fall ten percent in a day. It doesn't
16:20
Speaker 2: mean Netflix is finished. They've had these before, but okay,
16:24
Speaker 2: what do you need to do in order to execute better?
16:26
Speaker 2: And maybe this is even just a weird you know, Okay,
16:28
Speaker 2: we had a bad quarter and they bounce back. That
16:30
Speaker 2: stuff happens too.
16:32
Speaker 3: It's a very mature company now, and like you know,
16:36
Speaker 3: they've talked about other ideas like introducing gaming into their
16:40
Speaker 3: platform and other things that might move on needles too,
16:43
Speaker 3: And you know, I don't see any of it as
16:46
Speaker 3: having hit. I don't think you can say that anybody
16:49
Speaker 3: is better at creating content than Netflix right now. I'm
16:52
Speaker 3: not willing to say that any other company out there
16:56
Speaker 3: today is better at creating content than what Netflix has
16:59
Speaker 3: in the last five years. But I'm sure you could
17:02
Speaker 3: come up with arguments.
17:04
Speaker 2: Can I make those arguments? Just this is an interesting
17:06
Speaker 2: jumping off. Sure, if we're talking just breadth of content,
17:11
Speaker 2: i'd agree with you.
17:12
Speaker 5: Yeah.
17:13
Speaker 2: Netflix also makes a lot of crap. It's crap that
17:15
Speaker 2: I also enjoy. Yep, every single season of Love Is Blind.
17:20
Speaker 2: I gotta watch.
17:21
Speaker 3: Yeah, I mean I can make an argument that Apple's
17:22
Speaker 3: content has been more limited and higher quality.
17:25
Speaker 2: That's where I'm gonna go. Is I think that if
17:27
Speaker 2: you're looking for you know, for the for the two
17:30
Speaker 2: thousands and even I'll say for the twenty tens, HBO
17:35
Speaker 2: was that peak TV spot along with who wasn't that
17:40
Speaker 2: like Breaking Bad and all that stuff?
17:41
Speaker 1: Right?
17:42
Speaker 2: Yeah, So like those two I thought were kind of
17:45
Speaker 2: you know one two and today HBO has fallen off
17:51
Speaker 2: pretty considerably though they still do have like some better
17:53
Speaker 2: stuff than people give them credit for sure. But I
17:57
Speaker 2: think Apple in terms of, like, you're the stuff that
18:00
Speaker 2: like people actually talk about after it comes out, it's
18:04
Speaker 2: been more Apple in the last few years.
18:06
Speaker 5: Yeah.
18:08
Speaker 2: Again, the other guys still have you know, some sporadic
18:10
Speaker 2: hits and things like that. But what like, what's the
18:14
Speaker 2: last Netflix show that was a giant hit squid Game,
18:19
Speaker 2: and that was what six years ago that the first
18:21
Speaker 2: season came out.
18:22
Speaker 5: I don't know.
18:23
Speaker 2: Was that pandemic or was that just after I can't remember.
18:27
Speaker 2: The most recent season came out the recent but it
18:30
Speaker 2: didn't have nearly the hype that those first season.
18:33
Speaker 3: For my first thought was pivot to theme parks like
18:35
Speaker 3: Disney and Universal. But I just can't imagine myself going
18:39
Speaker 3: to a squid Game theme park. Doesn't seem like it
18:41
Speaker 3: would have mass.
18:41
Speaker 2: Appeal about death. Yeah.
18:46
Speaker 3: I was looking through the top hants too, like, yeah,
18:48
Speaker 3: I don't don't. I don't know that a Wednesday Adams
18:51
Speaker 3: theme park, and they don't own the content to do that.
18:54
Speaker 3: But like going through the list here, not a ton
18:57
Speaker 3: of them that I think would make a really good
19:00
Speaker 3: in person experience, like those other two.
19:03
Speaker 2: Stranger Things they have a play. Stranger Things was huge. Yeah,
19:07
Speaker 2: Stranger Things they got to play. Yeah, yeah, okay, I
19:12
Speaker 2: could see a Bridgerton Yeah, you know area in a
19:15
Speaker 2: theme park. House of cards, hard hard pass, the Queen's Gambit,
19:23
Speaker 2: you could do like chess chess. Don't get me wrong,
19:27
Speaker 2: I love chess, but not in the park.
19:30
Speaker 5: What do you do with the Jeffrey Domin story Sit.
19:32
Speaker 2: Down and be quiet. We'll be back in a minute.
19:40
Speaker 1: Like us on Facebook and follow us on Twitter. Act
19:43
Speaker 1: tf E show. Breaking business news is always first right
19:47
Speaker 1: here on the Financial Exchange Radio Network. Tell you no
19:52
Speaker 1: full woll Street Watch treking the stocks and the headlines
19:56
Speaker 1: driving markets so far today right here on the Financial
19:59
Speaker 1: Extrame Radio Network.
20:01
Speaker 4: Markets are gaining steam after Iran announced that the Straight
20:04
Speaker 4: of four Moves is now completely open for commercial traffic,
20:08
Speaker 4: the price of oil tumbling further as a result of
20:11
Speaker 4: that news. Right now, the Dow is up two percent
20:14
Speaker 4: or nine hundred and seventy eight points, SMP five hundred
20:17
Speaker 4: up one point one percent or eighty three points higher,
20:20
Speaker 4: Nasdaq up one and a third of a percent or
20:23
Speaker 4: three hundred and thirty two points, Russell two thousands up
20:26
Speaker 4: one point eight percent, ten year Treasure Real down seven
20:30
Speaker 4: basis points at four point two three four percent, and
20:33
Speaker 4: oil plunging twelve percent to trade a eighty three dollars
20:37
Speaker 4: a barrel. Netflix shares thinking about ten percent after the
20:41
Speaker 4: streaming giant reported guidance that disappointed. But the big news
20:44
Speaker 4: weighing on the stock is that co founder and chairman
20:47
Speaker 4: Reed Hastings announced he plans to leave the board in
20:50
Speaker 4: June when his term expires. Meanwhile, aluminum producer Alcoa posted
20:55
Speaker 4: lower sales in the first quarter as the conflict in
20:58
Speaker 4: Iran forced the company to reroute millions of tons of
21:01
Speaker 4: refining capacity from the Middle East. All co OF shares
21:04
Speaker 4: are down by five percent. Elsewhere, Morgan Stanley named by
21:08
Speaker 4: Now pay Later company a firm stock a top Picks
21:11
Speaker 4: citing potential for earnings, Upside a firm shares rallying eight percent.
21:17
Speaker 2: And TV and video retailer QVC.
21:20
Speaker 4: Commenced a voluntary Chapter eleven bankruptcy as part of a
21:23
Speaker 4: restructuring agreement with creditors. QBC shares down another sixteen percent
21:30
Speaker 4: today after sinking nearly seventy percent yesterday. I'm Tucker Silla,
21:36
Speaker 4: and that is Wall Street Watch, Mike.
21:39
Speaker 2: Let's talk a little bit about what we're seeing in
21:41
Speaker 2: the spring housing season, which were now I'd say about
21:47
Speaker 2: fifty eight and a half percent the way through. In
21:50
Speaker 2: my opinion, spring housing season starts at the Super Bowl,
21:54
Speaker 2: now end's Memorial Day.
21:58
Speaker 3: I will are argue that this year it got shifted
22:01
Speaker 3: a little bit. But I suppose if you're trying to
22:03
Speaker 3: define it for every year, then that's that's how I
22:06
Speaker 3: would do it.
22:06
Speaker 2: I think the problem is it can't really shift, like
22:09
Speaker 2: there's people have like plans, like kids get out from school, great,
22:14
Speaker 2: They're not going home shopping around fourth of July, you know,
22:17
Speaker 2: like they just can't. They're not there to.
22:20
Speaker 3: Do so I think around the Northeast you could argue
22:22
Speaker 3: it's till mid June.
22:24
Speaker 2: Sure, either way, most of the stuff is done before then.
22:28
Speaker 1: Ye.
22:29
Speaker 2: So the spring housing season, what happened. Interest rates went up,
22:34
Speaker 2: people got concerned about war, and so transaction volumes aren't
22:37
Speaker 2: looking great based on the pending data that we have
22:39
Speaker 2: from the last four to six weeks.
22:41
Speaker 5: Yeah, if you're a call.
22:41
Speaker 3: A few weeks ago, mortgage rate's top six point six
22:44
Speaker 3: percent after being below six prior to the war in Iran.
22:47
Speaker 2: Now they have come back down, but there still might
22:50
Speaker 2: be changes psychologically where people are like, well, I'm not
22:52
Speaker 2: willing to list right now because of it. You know,
22:55
Speaker 2: it's too late in the season. So pretty much what
22:58
Speaker 2: you have here is this housing season. It's not like
23:02
Speaker 2: it's gonna be like terrible, it's just gonna probably look
23:04
Speaker 2: a lot like last year, which was still pretty darn sluggish,
23:07
Speaker 2: which looked a lot like the year before, which was
23:10
Speaker 2: pretty darn sluggish, which looked like a lot a lot
23:12
Speaker 2: like the year before, which was say it with me, Mike, sluggish,
23:15
Speaker 2: pretty darn sluggish, even in.
23:17
Speaker 5: Places like Florida, though. But I find interesting.
23:19
Speaker 3: So last March you had one hundred and seventy seven
23:21
Speaker 3: thousand listings. Yeah, you're now down to one sixty two as.
23:26
Speaker 5: Of March this year.
23:27
Speaker 2: And this is the problem, Michael, Right, you don't have.
23:30
Speaker 3: Those gains in those Sun Belt markets and they're certainly
23:33
Speaker 3: not happening up here. No, so you just don't have
23:38
Speaker 3: I'm interested to hear your take on why you're not
23:40
Speaker 3: seeing the gain still in those Sun Belt markets. Is
23:42
Speaker 3: it just because they weren't getting the prices they wanted
23:44
Speaker 3: and they delisted?
23:46
Speaker 5: Is did the volume actually move? And there we are.
23:49
Speaker 2: Look at the chart that you're looking at, yeap, which
23:52
Speaker 2: everybody look at Mike's chart, yep. And Mike, is the
23:55
Speaker 2: point that you are act, that is the po is
24:00
Speaker 2: the point that you're at for Farida inventory higher or
24:03
Speaker 2: lower than it was pre pandemic.
24:05
Speaker 5: It's just about the same, a little bit higher. It's
24:09
Speaker 5: like a whole line higher.
24:10
Speaker 2: You're like one sixty something right now, what were you
24:12
Speaker 2: pre pandemic from a set.
24:14
Speaker 5: Time March of nineteen, you were no.
24:16
Speaker 3: Give me one month, give me like the big fly
24:18
Speaker 3: line there, you're in like the one for fifty range.
24:21
Speaker 2: So you're ten to fifteen percent above pre pandemic inventory.
24:25
Speaker 2: It just can't build much more here. The problem is
24:28
Speaker 2: that most of the rest of the country outside the
24:30
Speaker 2: southeast and southwest I guess that would be the south,
24:34
Speaker 2: is still below pre pandemic inventory levels and not really
24:38
Speaker 2: growing mass. Jason's is half. So this is where we
24:42
Speaker 2: stand right now. Is remember inventory lead sales. You can't
24:45
Speaker 2: sell a house if it's not listed for sale. You
24:48
Speaker 2: can if someone comes in and blows you away with
24:50
Speaker 2: a crazy offer, but generally listing's lead transaction volume. So
24:56
Speaker 2: you've been for the last three years now. This will
24:58
Speaker 2: be the fourth year in a row that you end
25:00
Speaker 2: up with transaction volume somewhere around four million units on
25:04
Speaker 2: existing home sales for the year. The hope was this
25:07
Speaker 2: year you were gonna get to like four five to
25:09
Speaker 2: four seven, five, maybe ten to fifteen percent improvement. Pre
25:12
Speaker 2: pandemic you were talking five and a half million home
25:15
Speaker 2: sales a year, so you were gonna get like maybe
25:17
Speaker 2: a third to a halfway there where it stands right now.
25:22
Speaker 2: Housing probably still a small net drag on the economy,
25:26
Speaker 2: not because of the existing home sales component that's gonna
25:30
Speaker 2: be in line with last year, but builders are all
25:33
Speaker 2: kinds of spooked because of higher rates, higher commodity prices,
25:36
Speaker 2: and things like that, and so they are not starting
25:39
Speaker 2: construction at the same level they were as last year
25:42
Speaker 2: and not getting permits the same way they were this
25:45
Speaker 2: time last year either. So ultimately, housing this year maybe
25:50
Speaker 2: a very modest drag on the economy, but can It's
25:54
Speaker 2: the question is how many years can you say this, Hey,
25:56
Speaker 2: we're setting up for as soon as things look good
25:58
Speaker 2: like housing's ready to Yep, there's gonna be a time
26:02
Speaker 2: where it's ready. It's probably twenty seven or twenty eight.
26:06
Speaker 3: The only hope I was holding out for housing, which
26:09
Speaker 3: just seems unlikely to me now, was that, yeah, we
26:13
Speaker 3: saw the mortgage rate impact and maybe there was just
26:17
Speaker 3: this delay across a large swath of the country that
26:20
Speaker 3: had especially bad weather in January and February. Because I
26:23
Speaker 3: was talking to somebody, you know, actually about their plan
26:25
Speaker 3: to sell their home, and they're like, yeah, we were
26:27
Speaker 3: waiting to put a pod in our yard and we
26:29
Speaker 3: couldn't put it in there until late March to clean
26:31
Speaker 3: out our house, and we eventually want to list it,
26:33
Speaker 3: but we're gonna have to delay the listing now because
26:35
Speaker 3: we just we couldn't do this stuff when our driveway
26:38
Speaker 3: was full of snow and ice for most of January, February,
26:42
Speaker 3: and a good portion of March. And so maybe in
26:46
Speaker 3: some parts of the country there's a delayed set of
26:49
Speaker 3: listings that are gonna come up, But that doesn't affect Florida,
26:52
Speaker 3: doesn't touch Texas, you know, it doesn't affect Louisiana listings.
26:56
Speaker 3: We're talking about, you know, parts of the Midwest and
26:59
Speaker 3: Northeast that maybe could see those.
27:01
Speaker 5: Delayed listings, and I just don't think it's gonna be
27:03
Speaker 5: enough to move the needle.
27:04
Speaker 2: Speaking of Louisiana, do you know what part of Louisiana
27:08
Speaker 2: Bubba from Forrest Gump is from? Not New Orleans, Actually
27:13
Speaker 2: he was not from Louisiana. Take that back, He's from Alabama.
27:18
Speaker 2: What part No clue? Bayou La Battery.
27:24
Speaker 5: Didn't even know as a place there.
27:25
Speaker 2: You go, now you do. Let's talk a little bit
27:27
Speaker 2: about gas prices. Speaking of Louisiana, Surgeon, gas prices have
27:32
Speaker 2: hit these US cities the hardest, Are any of them
27:35
Speaker 2: in Louisiana.
27:37
Speaker 3: No, they are in places that people drive a whole lot.
27:40
Speaker 3: So they're not saying this is where gas prices have
27:42
Speaker 3: risen the most. This is they're saying, this is where
27:45
Speaker 3: it has the biggest impact on the drivers there. Nashville,
27:48
Speaker 3: Indiana is one of those places where people just drive
27:50
Speaker 3: everywhere they go.
27:51
Speaker 2: Nashville, Indiana.
27:52
Speaker 5: Sorry, I'm thinking.
27:53
Speaker 3: About Indiana because there's something I want to say about
27:55
Speaker 3: that Nashville, Tennessee. There is in Nashville and India.
27:58
Speaker 2: Time is there really?
28:01
Speaker 3: But in Indiana when you do stupid things like passing laws.
28:06
Speaker 2: In Nashville, Indiana told you.
28:08
Speaker 3: When you do stupid things in places like banning the
28:12
Speaker 3: use of light rail or bus lanes, then guess what
28:16
Speaker 3: you have to drive everywhere you go, and when gas
28:18
Speaker 3: prices spike, then that happens. Indiana has the only nationwide
28:23
Speaker 3: law banning light rail in their state.
28:27
Speaker 2: What's the technical definition that separates light rail from heavy rail?
28:35
Speaker 4: Light Rail is a flexible, lower capacity, and cheaper system
28:39
Speaker 4: often operating on surface streets with smaller trains suitable for
28:43
Speaker 4: medium density areas. Heavy rail is high capacity, fully graded,
28:47
Speaker 4: a fully grade, separated and expensive system designed for rapid
28:50
Speaker 4: transit in high density areas.
28:52
Speaker 3: Okay, so they restricted it primarily for the Indianapolis region
28:55
Speaker 3: back in twenty fourteen. I'm guessing because lawmakers are getting
29:00
Speaker 3: their paychecks from a.
29:00
Speaker 5: Bunch of auto dealers or something like that.
29:03
Speaker 3: And yeah, so there's no public transit in some of
29:05
Speaker 3: these cities, so of course you have to drive everywhere,
29:08
Speaker 3: and therefore when gas prices go up, you take a
29:10
Speaker 3: particularly hard hit.
29:12
Speaker 2: There you go take a quick break. When we return,
29:16
Speaker 2: Le's talk a little bit about some automakers GM and
29:18
Speaker 2: Ford with a little bit of news, so we'll discuss
29:20
Speaker 2: them after this.
29:22
Speaker 1: Subscribe now to our YouTube page, where you'll find daily
29:25
Speaker 1: interviews and full shows of the Financial Exchange. Missed one
29:28
Speaker 1: of our shows. Catch up anytime by asking your Alexis
29:31
Speaker 1: Smart speaker to play the Financial Exchange. This is the
29:34
Speaker 1: Financial Exchange Radio Network.
29:41
Speaker 4: Well, in about an hour, we got the old Moneymatters
29:44
Speaker 4: mailbag that we do every Friday around eleven thirty five,
29:48
Speaker 4: And if you have any questions, just shoot us an
29:51
Speaker 4: email to TFE Show at gmail dot com. Once again,
29:54
Speaker 4: the email for the Moneymatters mail bag is TFE Show
29:57
Speaker 4: at gmail dot com. If you have questions for Chuck
30:00
Speaker 4: or Mike, and we'll do that in the next hour.
30:05
Speaker 2: Tucker was kind enough to forward on a text about
30:09
Speaker 2: light rail, light rail, think the Green Line in Boston,
30:13
Speaker 2: heavy rail, think subway, and commuter rail, because remember, the
30:18
Speaker 2: Green Line is not really a subway. It's you know,
30:21
Speaker 2: kind of that small little thing that's half above in
30:23
Speaker 2: a little tiny track.
30:25
Speaker 3: And you know, by the way, my point was not
30:27
Speaker 3: that I believe that Indianapolis has to have light rail.
30:31
Speaker 3: My point about them passing a stupid law was that
30:33
Speaker 3: the state legislature banned anyone from using light rail or
30:38
Speaker 3: installing light rail in the entire state.
30:40
Speaker 5: That was the piece that I thought was a little
30:42
Speaker 5: bit over the top.
30:44
Speaker 2: Why is there no medium rail or is that the
30:47
Speaker 2: third rail?
30:48
Speaker 5: That's a great question, Chuck, Yeah, yeah.
30:50
Speaker 2: Let's talk a little bit about the auto industry, since
30:52
Speaker 2: we've run our course with our railroad knowledge for the
30:55
Speaker 2: time being. General motors headline from the Wall Street Journal
30:59
Speaker 2: still making car for the US halfway around the world.
31:01
Speaker 2: No kidding. Yeah, they figured out it's still even with tariffs,
31:04
Speaker 2: it's still cheaper for them to do it. Okay, like
31:07
Speaker 2: that's the story. Yeah, if they thought it was cheaper
31:12
Speaker 2: to bring the production back to the US, they probably
31:15
Speaker 2: would have done it.
31:16
Speaker 5: Yeah.
31:17
Speaker 3: Meanwhile, Ford CEO, who has been, in my mind, the
31:21
Speaker 3: most outspoken person about Chinese auto manufacturing. Ford's CEO is
31:28
Speaker 3: Jim Farley. He does not live in an F one
31:30
Speaker 3: fifty down by the river, but he has been very
31:33
Speaker 3: outspoken about the Chinese auto industry basically well both being
31:41
Speaker 3: unfairly subsidized by the government and also well beyond what
31:46
Speaker 3: the US industry seems to be capable of right now.
31:49
Speaker 3: And this seems misunderstand. I was talking to Jim Polito
31:51
Speaker 3: about this the other day because his perception was, who
31:55
Speaker 3: would ever buy a Chinese car? They must be, you know,
31:57
Speaker 3: garbage vehicles. They're going to break down every few miles.
32:00
Speaker 3: And my point was, you know, Jim, I don't actually
32:03
Speaker 3: think that that's the case. The insinuation seems to be
32:06
Speaker 3: they are building very high quality vehicles at a very
32:10
Speaker 3: low price point in new and interesting areas that customers want.
32:14
Speaker 3: The problem is that one I would not trust any
32:17
Speaker 3: of the software that goes into one of these vehicles,
32:19
Speaker 3: and two that the reason they're able to advance so
32:23
Speaker 3: far in this is because their entire industry is heavily
32:25
Speaker 3: subsidized by the Chinese government.
32:28
Speaker 2: So I read through this piece, I still don't know
32:31
Speaker 2: what Ford's actually doing. It just says Ford to expand
32:34
Speaker 2: partnerships with Chinese companies outside the US because we want
32:37
Speaker 2: to bring the best vehicles to market wherever it makes sense.
32:40
Speaker 2: I think it's clear that he rebranded Chinese vehicles as Fords.
32:46
Speaker 2: Are they going to sell Chinese vehicles through four dealers internationally?
32:49
Speaker 2: Like what's happening.
32:51
Speaker 5: I don't know what's happening.
32:53
Speaker 3: I know what his endgame is is to learn something
32:55
Speaker 3: about the Chinese manufacturing process and the technology going into
32:59
Speaker 3: the cars, because he thinks that there's something there that
33:02
Speaker 3: could better his own company's manufacturing process, which is just
33:07
Speaker 3: kind of ironic to me, because that's how all of
33:09
Speaker 3: these Chinese automakers got ahead in the first place, was
33:12
Speaker 3: by ripping off Ford, Tesla, General Motors, and all these
33:15
Speaker 3: companies that wanted to do business in China in.
33:17
Speaker 5: The first place.
33:18
Speaker 2: Now Ford does have their their skunk Works that they
33:21
Speaker 2: rolled out last year, the skunk Works.
33:26
Speaker 5: Like Pepe lipew Well, they've got.
33:29
Speaker 2: The it's a facility. I forget where it is, but
33:31
Speaker 2: they're trying to develop that like thirty thousand dollars next
33:34
Speaker 2: generation ev Ah. Yes, okay, you know where skunk Works
33:38
Speaker 2: originally comes from? No, I believe it was Lockheed Martin,
33:43
Speaker 2: but it might. I think it was Lockheed Martin. Back
33:46
Speaker 2: during World War Two, they were doing all kinds of
33:49
Speaker 2: and even after they were doing all kinds of aerospace research,
33:52
Speaker 2: and the stuff that they were producing there smelled very
33:56
Speaker 2: bad because of a lot of the chemicals being used,
33:58
Speaker 2: and so it was like kind of their tops secret
34:01
Speaker 2: you know, place where they were developing all the cutting
34:04
Speaker 2: edge stuff, and it got known as the skunk Works
34:07
Speaker 2: because of the smell.
34:10
Speaker 3: So back to the state of American car manufacturing. What
34:16
Speaker 3: do Let's pave a path forward here that I hope
34:20
Speaker 3: doesn't occur, but seems to be happening. Europe letting Chinese
34:24
Speaker 3: cars in destroying their own auto industry, Canada seemingly signing
34:28
Speaker 3: a deal to do the same. Mexico and most of
34:30
Speaker 3: South America seem to be willing to allow their citizens
34:34
Speaker 3: to buy citizens to buy these cars, so long as
34:36
Speaker 3: the government gets some portion of tariff revenue off of it,
34:39
Speaker 3: and maybe some jobs in manufacturing. That leaves the US
34:42
Speaker 3: auto industry where I don't know who they sell to
34:44
Speaker 3: other than Americans. What do those car companies look like
34:49
Speaker 3: if all they can sell are American cars to Americans?
34:52
Speaker 2: Right, Like, you could sell a million f one fifties
34:54
Speaker 2: a year. But if that's what you're selling, what you
34:58
Speaker 2: don't have the scale gets you to where you want
35:01
Speaker 2: to be.
35:01
Speaker 1: Right.
35:02
Speaker 3: We can talk about, you know, the the fame and
35:05
Speaker 3: excellence of American auto manufacturing all we want, but the
35:09
Speaker 3: CEO of you know, one of the two most famous
35:11
Speaker 3: auto manufacturers in the country, is telling you that he
35:15
Speaker 3: can't compete with Chinese car manufacturers. And if every you know,
35:21
Speaker 3: there was a point where you could sell these things
35:23
Speaker 3: in Europe because they blocked the Chinese cars, they're not
35:25
Speaker 3: doing that anymore. Canada doesn't seem to be doing that
35:27
Speaker 3: anymore either, And so it leaves these auto manufacturers, which
35:32
Speaker 3: we do rely upon for a large degree in the
35:35
Speaker 3: event that they need to be repurposed for defense.
35:39
Speaker 5: In a pretty precarious position. In my iae, some of them.
35:41
Speaker 2: I mean, we talked last week about how the only
35:42
Speaker 2: vehicle Chrysler sells now is a minivan? Right, what do
35:46
Speaker 2: you do with that?
35:47
Speaker 5: Yeah, I don't know exactly how that all looks in
35:51
Speaker 5: a few years.
35:52
Speaker 4: When it comes to leaving assets to your family, simplicity
35:55
Speaker 4: isn't always the best approach because you canendole. In our
35:58
Speaker 4: experts in elder law and their new guys, it is
36:00
Speaker 4: called how to Leave Assets to Beneficiaries. Adding children as
36:04
Speaker 4: joint owners on accounts or property doesn't guarantee you can
36:07
Speaker 4: avoid probate, and it may create serious unintended consequences. In
36:12
Speaker 4: this guide, you'll learn why leaving assets to your children
36:15
Speaker 4: may not always be the best plan. The guide also
36:18
Speaker 4: explains how trust can be used to stagger distributions over time,
36:22
Speaker 4: help protect assets from creditors or divorce, and ensure your
36:26
Speaker 4: family receives your inheritance in a way that makes sense
36:29
Speaker 4: for your personal situation. Called eight six six eight four
36:33
Speaker 4: eight five six nine nine right now, And as for
36:36
Speaker 4: your free guide how to Leave Assets two Beneficiaries, that's
36:39
Speaker 4: eight sixty six eight four eight five six nine nine,
36:43
Speaker 4: or you can request the guide from their website Legal
36:46
Speaker 4: Exchange show dot com.
36:48
Speaker 1: The proceeding was paid for, and the views expressed are
36:50
Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
36:52
Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
36:56
Speaker 1: Cushing and Armstrong do not endorse each other and are
36:58
Speaker 1: not affiliated.
36:59
Speaker 2: I want to talk just about this piece from Bloomberg.
37:01
Speaker 2: Billionaire investor Warren's sports prediction markets harmed men. This is
37:05
Speaker 2: from John Arnold, who's made a billion dollars trading energy,
37:10
Speaker 2: is basically saying, look, these prediction markets are hot garbage
37:14
Speaker 2: and it is causing a lot of men to run
37:18
Speaker 2: into financial problems. This is something that I've been talking
37:21
Speaker 2: about on the show for the last couple of years,
37:23
Speaker 2: and I'll quote you from Bloomberg rather than outright ban
37:26
Speaker 2: Arnold is calling for guardrails and referred to early research
37:28
Speaker 2: showing that sports betting can lead users to sink into
37:30
Speaker 2: debt and face mental health challenges. Exactly what those guard
37:35
Speaker 2: rails would be again, I think that's, you know, kind
37:39
Speaker 2: of and open question. But look, this is something I've
37:44
Speaker 2: talked about.
37:44
Speaker 5: For a while.
37:45
Speaker 2: You go talk to any man who's in their twenties,
37:49
Speaker 2: fifty percent chance there in gambling debt like that. That's
37:54
Speaker 2: not healthy for society. You can agree, Let's take a
37:59
Speaker 2: quick break, and when we come back, we got a
38:02
Speaker 2: lot more, including we got Wall Street wats, we got
38:05
Speaker 2: the Money Matter's mail bag, we got Paul Lamonica from Barons,
38:09
Speaker 2: and a bunch more coming up an hour two