Latest / The Financial Exchange Show / Intel Crashes 30%, Big Tech’s AI Spending Raises Alarms & Oil Profits Surge

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Intel Crashes 30%, Big Tech’s AI Spending Raises Alarms & Oil Profits Surge · The Financial Exchange Show

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  Speaker 4: It's Chuck Mike Tucker with you here on a Friday.
• 1:45
  Speaker 4: And it's a little gross out there in the major indices,
• 1:50
  Speaker 4: at least in a couple of them. Yesterday after the bell,
• 1:55
  Speaker 4: we received earnings from Amazon and the market. We also
• 2:01
  Speaker 4: got earnings from Amazon. not just Amazon, but Intel as
• 2:04
  Speaker 4: well in the tech sector. And the market didn't really
• 2:08
  Speaker 4: like Amazon's earnings. We'll get into some of the details
• 2:12
  Speaker 4: on that. And so Amazon stock today has actually rallied
• 2:18
  Speaker 4: off its lows by a few percentage points. It was
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  Speaker 4: down as much as five and a half. It's now
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  Speaker 4: down two and a quarter. So Amazon calling back some
• 2:25
  Speaker 4: of those losses. But Intel is is currently down just
• 2:31
  Speaker 4: under 29% and has been down as much as 30%
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  Speaker 4: today after an earnings report that was just not good
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  Speaker 4: and raises some real questions, again, about just execution from
• 2:45
  Speaker 4: the company when it comes to being able to build
• 2:50
  Speaker 4: and supply the products that are currently in demand. And
• 2:55
  Speaker 4: this is basically... the story of the last 10 to
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  Speaker 4: 15 years for Intel, which is just, hey, we're building
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  Speaker 4: the wrong stuff at the wrong time in the wrong quantities.
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  Speaker 4: And again, to be a semiconductor manufacturer in 2026 and
• 3:11
  Speaker 4: miss on your earnings is kind of hard to do.
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  Speaker 4: You know, what we've been seeing from a lot of
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  Speaker 4: companies in the semi.
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  Speaker 2: Space, by the way, if you're a semiconductor manufacturer, money
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  Speaker 2: is basically free right now.
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  Speaker 4: What we've been seeing from a lot of the companies
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  Speaker 4: in the semiconductor space is, hey, they beat on revenue,
• 3:28
  Speaker 4: they beat on earnings, and the stock still falls because
• 3:31
  Speaker 4: even earnings beats are getting punished. And so what that
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  Speaker 4: does tell you is, hey, if you have a semiconductor
• 3:36
  Speaker 4: manufacturer that misses on earnings and misses on revenue... Then
• 3:39
  Speaker 4: you're screwed. Well, you're going to get whacked to the
• 3:42
  Speaker 4: tune of 30% today, 28.43% right now. So Intel, at
• 3:43
  Speaker 4: this point.
• 3:51
  Speaker 4: Again, this is the story for Intel. They're back to
• 3:55
  Speaker 4: where they were last April before... I'm sorry, back to
• 3:59
  Speaker 4: this April. And look, it's not that they're going to
• 4:05
  Speaker 4: necessarily go back to where they were before the U.S.
• 4:08
  Speaker 4: government took a stake in them back last... What was it,
• 4:10
  Speaker 4: August or September?
• 4:11
  Speaker 2: Right.
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  Speaker 4: But... I mean, they've basically round-tripped the last six months now.
• 4:17
  Speaker 4: And given what I think is being signaled by the
• 4:20
  Speaker 4: hyperscalers in terms of the market's willingness to continue to
• 4:25
  Speaker 4: allow them to indulge their CapEx fantasies, I think there
• 4:30
  Speaker 4: are some questions as to whether Intel has just missed
• 4:32
  Speaker 4: the boat on this one. So this is the whole
• 4:35
  Speaker 4: story today is the NASDAQ is off. 2.6%. I'm sorry,
• 4:40
  Speaker 4: NASDAQ Composite's off 2.2%. The NASDAQ 100's off 2.6%. The
• 4:44
  Speaker 4: S & P is off 1.25%. And actually, we have
• 4:48
  Speaker 4: slightly more stocks positive in the S & P than
• 4:50
  Speaker 4: negative right now. And the Dow is off about 0.5%.
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  Speaker 4: So it very much is a tech-centric bludgeoning that is
• 4:58
  Speaker 4: happening today. Yeah.
• 5:00
  Speaker 2: Amazon, reminder, is a Dow component as well. It's one
• 5:03
  Speaker 2: of the 30 in there. And so contributing to that, again,
• 5:06
  Speaker 2: NASDAQ has gotten a little bit better since early market trading.
• 5:09
  Speaker 2: The Dow's gotten a little bit worse. When I was
• 5:11
  Speaker 2: looking at this at about 8 a.m., the Dow was
• 5:13
  Speaker 2: basically flat. The NASDAQ was down more than 2.5. Dow's
• 5:16
  Speaker 2: now down 0.5%. And I think the concerns for the
• 5:21
  Speaker 2: markets today are not too dissimilar from Alphabet's earnings from
• 5:27
  Speaker 2: earlier this week as well.
• 5:28
  Speaker 4: So I think that where we have arrived at now is,
• 5:33
  Speaker 4: and we talked about this a couple weeks ago, The
• 5:36
  Speaker 4: market is questioning whether all of this CapEx is going
• 5:40
  Speaker 4: to pay off.
• 5:42
  Speaker 2: And for how long it can continue.
• 5:44
  Speaker 4: Well, that's why it's tied in. It's tied in because, like,
• 5:48
  Speaker 4: and here's the thing. There are a lot of really,
• 5:52
  Speaker 4: really smart people I know that don't work for these
• 5:57
  Speaker 4: AI companies. But, you know, watch what's going on there closely. And, again,
• 6:03
  Speaker 4: we've been saying this all week now, that the questions
• 6:05
  Speaker 4: that need to be answered in the next year or two,
• 6:08
  Speaker 4: number one, how much longer can demand for tokens continue
• 6:13
  Speaker 4: to ratchet up exponentially? That's question one. Like, what's the
• 6:19
  Speaker 4: actual demand? You'll hear from people, it could be that
• 6:23
  Speaker 4: we need, you know, ten times as many tokens produced,
• 6:26
  Speaker 4: a hundred times, a thousand. Like, we're talking literal orders
• 6:28
  Speaker 4: of magnitude.
• 6:29
  Speaker 5: Yep.
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  Speaker 4: And no one has any idea because the people that
• 6:33
  Speaker 4: are using AI to this point heavily, like when you
• 6:38
  Speaker 4: go and ask AI, hey, what's a cool restaurant to
• 6:41
  Speaker 4: go to or make me a recipe with these foods,
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  Speaker 4: you're not using any meaningful power. Like that's just not contributing.
• 6:51
  Speaker 4: When someone is saying, hey, I need you to build
• 6:55
  Speaker 4: a program X that does Y, that's using a lot more.
• 6:58
  Speaker 4: And when they're doing that with hundreds of agents that
• 7:01
  Speaker 4: they have, you know, orchestrating these things, it adds up
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  Speaker 4: very quickly. So, you know, the question is like, how
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  Speaker 4: much does the average person use AI in their life
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  Speaker 4: going forward in terms of not just like on a
• 7:13
  Speaker 4: daily basis, but like, what's the magnitude of the power
• 7:16
  Speaker 4: of things that they start asking it to do? How
• 7:18
  Speaker 4: much of that gets done and how much more room
• 7:21
  Speaker 4: is there for the power users who are currently the
• 7:23
  Speaker 4: heaviest users to to grow their use. And so it's
• 7:27
  Speaker 4: a combination of what's that demand look like and over
• 7:29
  Speaker 4: what time frame? Because here's the thing, depending on how
• 7:34
  Speaker 4: you want to look at this, there's a case that
• 7:37
  Speaker 4: building $ 4 trillion in data centers the next three years
• 7:41
  Speaker 4: is way too much, or maybe way too little. And
• 7:45
  Speaker 4: I say this not like, not picking sides on this,
• 7:49
  Speaker 4: because I just don't know. And no one can know.
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  Speaker 4: This is an entirely new product.
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  Speaker 2: So you're not convinced that they're going to get the
• 8:00
  Speaker 2: Goldilocks build out of AI data centers? No.
• 8:04
  Speaker 4: Yes, here's what I do know. They are not going
• 8:06
  Speaker 4: to build the exact right number of data centers. It's
• 8:10
  Speaker 4: either going to be way too low or way too high.
• 8:13
  Speaker 4: And I don't know which direction that skews in because, again,
• 8:17
  Speaker 4: to take this back to the previous tech bubble, And
• 8:20
  Speaker 4: this is not an original thought for me. I forget
• 8:22
  Speaker 4: who I was listening to. I've listened to, like, 50
• 8:24
  Speaker 4: different AI podcasts in the last two weeks just because, like,
• 8:28
  Speaker 4: this is... Whole ballgame. You ever watch Margin Call?
• 8:33
  Speaker 2: Yeah.
• 8:34
  Speaker 4: Jeremy Irons, you know, he's saying to Kevin Spacey a
• 8:37
  Speaker 4: few times and they're trying to get him to sell
• 8:39
  Speaker 4: all the mortgage-backed securities and he's going, this is it. Like,
• 8:42
  Speaker 4: this is it. And that's how I feel about this.
• 8:44
  Speaker 4: Not in terms of, like, oh, the financial world's going
• 8:46
  Speaker 4: to collapse, but just... Everything rests on whether or not
• 8:50
  Speaker 4: this breaks one way or another.
• 8:52
  Speaker 2: Yep.
• 8:53
  Speaker 4: And I don't know what it is, so I'm just
• 8:54
  Speaker 4: trying to absorb as much information as possible. So take
• 8:57
  Speaker 4: this back to my large amount of podcast listening this week.
• 9:03
  Speaker 4: I don't even remember the point I was going to make.
• 9:05
  Speaker 4: What were we talking about before?
• 9:07
  Speaker 2: Spending breaking or.
• 9:09
  Speaker 4: Oh, yes, okay. Tech bubble. Okay, you go back there.
• 9:13
  Speaker 4: The big thing heading into the tech bubble is that
• 9:16
  Speaker 4: prior to it, humans simply couldn't consume enough information because
• 9:22
  Speaker 4: there wasn't enough information out there. We had an information
• 9:26
  Speaker 4: dearth on a personal level. The way that we got
• 9:29
  Speaker 4: information was you got a newspaper delivered in the morning
• 9:32
  Speaker 4: and you watched the evening news at night. That was
• 9:34
  Speaker 4: how you got information.
• 9:36
  Speaker 2: Maybe you went to a library.
• 9:37
  Speaker 4: Maybe you went to a library but probably not on
• 9:39
  Speaker 4: a daily basis yeah you got two pieces of information
• 9:42
  Speaker 4: a piece of paper in the morning and a tv
• 9:44
  Speaker 4: program at night that was it by and large unless
• 9:47
  Speaker 4: you were listening to like our show 30 years ago
• 9:49
  Speaker 4: which you weren't because didn't exist i was like 12
• 9:52
  Speaker 4: or whatever you know like would have been pretty bad
• 9:56
  Speaker 4: so we've had this huge explosion in the availability of information.
• 10:01
  Speaker 4: And yet the companies that actually transmit that information around
• 10:05
  Speaker 4: the globe, they don't have any value. There's no value
• 10:10
  Speaker 4: in that. Do you even know, like, who, like, lays
• 10:16
  Speaker 4: and operates undersea cables? Like, there's no value in that.
• 10:20
  Speaker 4: You know, like, the companies... Does anyone look at, like,
• 10:25
  Speaker 4: Cisco on a more relatable note and be like, wow,
• 10:28
  Speaker 4: there's so much information that goes over Cisco routers. They
• 10:31
  Speaker 4: must be worth trillions.
• 10:33
  Speaker 2: No.
• 10:33
  Speaker 4: No, they're not worth anything because it's been commoditized.
• 10:35
  Speaker 3: Yep.
• 10:36
  Speaker 4: And so... It's very possible that we, 10 years from now,
• 10:42
  Speaker 4: consume hundreds of times more AI than we do today,
• 10:46
  Speaker 4: but it's been so commoditized that the cost is next
• 10:49
  Speaker 4: to nothing. Just like phone companies printed money for years.
• 10:55
  Speaker 4: You know, you remember like when you were a kid
• 10:56
  Speaker 4: and you had to pay long distance fees and everything
• 10:59
  Speaker 4: and like toll-free 800 numbers mattered because, gosh, I don't
• 11:02
  Speaker 4: want to get hit with those permanent charges.
• 11:04
  Speaker 2: I used to call collect and just tell my parents
• 11:06
  Speaker 2: to pick me up at the... The high school.
• 11:08
  Speaker 4: Hey, it's Mike. I need you to pick me up
• 11:09
  Speaker 4: right now. Thanks. Like, exactly.
• 11:10
  Speaker 2: Yeah.
• 11:12
  Speaker 4: Today, does anyone think about... No, like, it's basically like
• 11:16
  Speaker 4: you pay a fixed amount. It doesn't matter if you
• 11:18
  Speaker 4: talk for 10 hours a day or text a million
• 11:20
  Speaker 4: times in a day. Like, there's no additional cost because
• 11:23
  Speaker 4: the marginal cost is nothing.
• 11:24
  Speaker 5: Yeah.
• 11:25
  Speaker 4: Phone companies, like, does anyone look at AT & T
• 11:27
  Speaker 4: and Verizon now and are like, wow, like... No, it's
• 11:30
  Speaker 4: like those are stodgy old businesses that they're profitable, but
• 11:33
  Speaker 4: they're boring and occasionally they do dumb stuff with acquisitions
• 11:35
  Speaker 4: that hurts them.
• 11:36
  Speaker 5: Mm-hmm.
• 11:37
  Speaker 4: Who's to say that can't be what AI turns into
• 11:39
  Speaker 4: 10 years from now? You just don't know. Or it
• 11:42
  Speaker 4: could continue to be this crazily dynamic space. And so
• 11:47
  Speaker 4: the market's trying to sort this out now. And this
• 11:48
  Speaker 4: is why stocks are moving up 10% one day, down
• 11:51
  Speaker 4: 25% the next, is because the dirty secret right now
• 11:54
  Speaker 4: is that no one has any clue. No one has
• 11:58
  Speaker 4: any clue on this.
• 12:00
  Speaker 2: So let's take a quick break. When we come back,
• 12:01
  Speaker 2: I want to... I guess, sift through the clues that
• 12:04
  Speaker 2: we got from Alphabet, Microsoft, and most recently, Amazon, where
• 12:08
  Speaker 2: they are spending all their money and where they are
• 12:11
  Speaker 2: starting to see some revenue hits as well. We're going
• 12:14
  Speaker 2: to do that next here on The Financial Exchange.
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• 13:16
  Speaker 4: So, Mike, what else do we want to get to?
• 13:18
  Speaker 4: Just kind of. Circling back to what we were covering
• 13:20
  Speaker 4: in the first segment.
• 13:21
  Speaker 2: Yeah, so the big earnings from this week that have
• 13:25
  Speaker 2: moved markets quite a bit have been Microsoft, Amazon, and Alphabet.
• 13:29
  Speaker 2: I suppose Microsoft not so much because their stock actually
• 13:31
  Speaker 2: didn't move a whole lot once the day was over.
• 13:34
  Speaker 2: But both Alphabet, Google's parent company, and Amazon are taking hits.
• 13:40
  Speaker 2: Alphabet's was far worse than what Amazon saw. I think
• 13:43
  Speaker 2: Alphabet's currently having the worst month since the Great Recession
• 13:46
  Speaker 2: of 2008. It's not great, Bob. Both of them are,
• 13:50
  Speaker 2: I think both of them are reacting the exact same
• 13:54
  Speaker 2: way to this new technology. Each of them see big
• 13:57
  Speaker 2: threats to their business. Alphabet is, Google's a lot easier
• 14:00
  Speaker 2: to see this, right? I mean, go do a Google
• 14:02
  Speaker 2: search now and you just do not click through the
• 14:05
  Speaker 2: sponsored links in the way that you used to. So,
• 14:09
  Speaker 2: you know, that part's pretty easy to see and their
• 14:11
  Speaker 2: revenue growth from advertising slowed down considerably. And that's what
• 14:15
  Speaker 2: investors were mostly concerned about is, hey, Are you even
• 14:19
  Speaker 2: going to be able to continue to pour money into
• 14:21
  Speaker 2: this this quickly? And where are you going to finally
• 14:24
  Speaker 2: monetize this spending that you are doing? Because we're seeing,
• 14:28
  Speaker 2: what is it, half of your revenue? They're advertising, maybe
• 14:31
  Speaker 2: even more than that comes from advertising and it's slowing.
• 14:35
  Speaker 2: Amazon has a pretty similar problem. They also make a
• 14:38
  Speaker 2: bunch of money from advertising and e-commerce. And I think
• 14:43
  Speaker 2: it's a little bit less concrete on Amazon's side, but
• 14:45
  Speaker 2: they are seeing a slowdown in revenue growth. from advertising.
• 14:49
  Speaker 2: And I think they have some specific concerns about AI
• 14:53
  Speaker 2: agents like Meta's Muse, who are going to be able
• 14:57
  Speaker 2: to price differentiate a lot more for customers than previously.
• 15:01
  Speaker 2: And so I think Amazon actually took the step of
• 15:03
  Speaker 2: fully blocking Meta Muse from their platform for now. But
• 15:08
  Speaker 2: I see it as, you know, two sides of the
• 15:11
  Speaker 2: same coin here in terms of their concerns, investors' concerns
• 15:14
  Speaker 2: about these companies.
• 15:16
  Speaker 4: Yeah, it makes sense because, again, here's the problem with
• 15:23
  Speaker 4: both of these companies is the threats, not both. Again,
• 15:27
  Speaker 4: include Google in there as well. All these companies, they
• 15:30
  Speaker 4: have clear threats to their business from AI. I think
• 15:35
  Speaker 4: some are clearer than others. Today, I'm seeing a threat
• 15:38
  Speaker 4: for Google.
• 15:39
  Speaker 2: Microsoft... I can understand where that threat comes from. You're
• 15:43
  Speaker 2: a software provider, and AI is pretty darn good at
• 15:46
  Speaker 2: building software rather quickly. But I'm not seeing anybody canceling
• 15:50
  Speaker 2: their office subscriptions yet.
• 15:52
  Speaker 4: Well, you can't. Here's the thing. Let's be honest. I
• 15:58
  Speaker 4: have vibe-coded a mortgage calculator.
• 16:01
  Speaker 2: You're not going to vibe-code it?
• 16:02
  Speaker 4: I'm not going to vibe-code an operating system for my company.
• 16:07
  Speaker 2: So that's my point. There are different threats to these
• 16:10
  Speaker 2: different business models. Satya's going to be fine.
• 16:13
  Speaker 4: Satya Nadella is going to run Microsoft, and they're going
• 16:16
  Speaker 4: to be fine because they operate pretty conservatively, actually. And again,
• 16:20
  Speaker 4: when push comes to shove, he'll be the first one
• 16:22
  Speaker 4: to cancel CapEx. He'll be the first one to do it.
• 16:25
  Speaker 4: If you are... Again, you look at Google and Meta
• 16:29
  Speaker 4: and you see the clear threats that are present there.
• 16:31
  Speaker 4: So you understand why them and Amazon are saying, hey,
• 16:35
  Speaker 4: we need to build the thing that might kill us
• 16:39
  Speaker 4: because it could also help us survive. You get that
• 16:42
  Speaker 4: for all three of those companies. The piece that I
• 16:48
  Speaker 4: don't think we do enough thinking about or talking about,
• 16:52
  Speaker 4: and again, I know that we get so wrapped up
• 16:53
  Speaker 4: in what the market's doing today and this and.
• 16:55
  Speaker 2: That, Heavy pause.
• 17:01
  Speaker 4: Well, this is a big one. The big problem that
• 17:05
  Speaker 4: I noted in prior to the internet was that humans
• 17:09
  Speaker 4: have not had enough information. And now we have too much.
• 17:14
  Speaker 4: This is why you get the stories that pop up
• 17:17
  Speaker 4: about we can't tell what's real and fake anymore is
• 17:19
  Speaker 4: because there's too much information for our brains to handle.
• 17:23
  Speaker 4: We're still kind of prehistoric. Ooh, see antelope, kill antelope.
• 17:27
  Speaker 4: And then it turns out to be like, you know,
• 17:29
  Speaker 4: a lion dressed up as an antelope, and you're like, oh,
• 17:31
  Speaker 4: I'm dead. Like, that's what we do on the internet,
• 17:34
  Speaker 4: kind of. And, like, we just have too much information
• 17:38
  Speaker 4: bombarding us, and that's why it's, like, kind of hard
• 17:40
  Speaker 4: to tell, like, what's real and what's fake on the internet,
• 17:43
  Speaker 4: which is why we tell everyone, hey, don't trust what
• 17:44
  Speaker 4: you see on the internet. The bottleneck that is now
• 17:50
  Speaker 4: clearing is, for all of human history, we haven't had
• 17:54
  Speaker 4: enough intelligence. Like, let's be honest. We all do stupid stuff.
• 17:59
  Speaker 4: And it's not just because of it. Like, we make
• 18:01
  Speaker 4: bad decisions even if we have good information.
• 18:03
  Speaker 2: Right.
• 18:03
  Speaker 4: You know, we can be like, oh, like, sure, I
• 18:06
  Speaker 4: know that, like, the roulette wheel isn't going to be
• 18:09
  Speaker 4: black just because it's been read the last three times.
• 18:11
  Speaker 4: But I'm going to put it all on black because this, like, no,
• 18:14
  Speaker 4: that's bad intelligence, not bad information. We're now heading into
• 18:19
  Speaker 4: a world where rather than information becoming commoditized, intelligence is
• 18:22
  Speaker 4: going to be commoditized, which doesn't mean that intelligence has
• 18:26
  Speaker 4: no value because you still have to like understand what
• 18:30
  Speaker 4: other intelligence may be telling you. But if every business
• 18:35
  Speaker 4: has intelligence going forward, then how do you differentiate between
• 18:38
  Speaker 4: who the real winners and losers are?
• 18:40
  Speaker 2: Right.
• 18:41
  Speaker 4: It still is going to be by what they can
• 18:43
  Speaker 4: actually execute on a brick-and-mortar perspective, because as much as technology,
• 18:47
  Speaker 4: as much as intelligence is going to be commoditized, the
• 18:52
  Speaker 4: ability to actually extract oil from the ground or, you know,
• 19:00
  Speaker 4: cook oil, lunch or whatever is not going to be
• 19:03
  Speaker 4: commoditized in the same way because there are finite amounts
• 19:06
  Speaker 4: of resources. Like we can create intelligence through electricity now,
• 19:11
  Speaker 4: which is wild. Like, like think about what I just said,
• 19:16
  Speaker 4: but you can't make copper through like there still are.
• 19:20
  Speaker 4: So even if you believe that intelligence is this huge flywheel,
• 19:24
  Speaker 4: that's going to like give us superpowers on that side,
• 19:27
  Speaker 4: The reason that I get away from like, oh, we're
• 19:29
  Speaker 4: going to have like 20% GDP growth. How are you
• 19:33
  Speaker 4: going to increase the production of like everything needed in
• 19:35
  Speaker 4: the physical world to actually get there? And so that's
• 19:39
  Speaker 4: where the value is going to be is in identifying
• 19:42
  Speaker 4: once intelligence is commoditized, hey, how do businesses differentiate themselves?
• 19:49
  Speaker 4: And there are still ways that that's going to happen because,
• 19:52
  Speaker 4: believe me, it's not just going to be like everything
• 19:54
  Speaker 4: is equal, but intelligence is going to be a more
• 19:58
  Speaker 4: level playing field, and now we've got to figure that out.
• 20:01
  Speaker 4: Let's take a quick break. Wall Street Watch is next.
• 20:09
  Speaker 3: Like us on Facebook and follow us on Twitter at TFEShow.
• 20:13
  Speaker 3: Breaking business news is always first, right here on the
• 20:16
  Speaker 3: Financial Exchange Radio Network. Time now for Wall Street Watch.
• 20:22
  Speaker 3: Tracking the stocks, the data, and the headlines driving markets
• 20:25
  Speaker 3: so far today. Right here on the Financial Exchange Radio Network.
• 20:29
  Speaker 5: The tech sell-off is accelerating following more tech earnings that
• 20:32
  Speaker 5: stirred worries in the sector. Right now, the Dow down
• 20:35
  Speaker 5: two-thirds of a percent or 350 points off. S &
• 20:37
  Speaker 5: P 500 down about 1.5% to 113 points lower.
• 20:38
  Speaker 3: Tech-heavy NASDAQ.
• 20:44
  Speaker 5: Selling off 2.4% or 631 points lower. Russell 2000 is
• 20:46
  Speaker 5: off about 1.5%. 10-year treasury yield is down 5 basis
• 20:47
  Speaker 5: points at 4.937%. Crude oil up 2.5% at $ 104 a barrel,
• 20:49
  Speaker 5: while Brent up over 2% trading at $ 117 a barrel.
• 20:50
  Speaker 5: After its 12% plunge yesterday, its biggest A drop in
• 21:09
  Speaker 5: the company's history. Alphabet shares are down another 1% today.
• 21:13
  Speaker 5: As for Amazon, the e-commerce and tech giant reported earnings
• 21:16
  Speaker 5: that disappointed. The company's aggressive AI spending also led to
• 21:20
  Speaker 5: negative free cash flow of $ 42. 4 billion. Amazon clawing back
• 21:25
  Speaker 5: earlier losses and now off over 2%. Meanwhile, Intel sinking
• 21:29
  Speaker 5: 28% now after the chipmaker logged a lower profit in
• 21:32
  Speaker 5: the previous quarter. and offered weaker-than-expected guidance for the fourth quarter. Elsewhere,
• 21:37
  Speaker 5: Reddit posted a jump in third-quarter sales, but slower-than-expected growth
• 21:41
  Speaker 5: in its user base. The company also announced it will
• 21:44
  Speaker 5: require users to create official accounts to access its platform.
• 21:49
  Speaker 5: Reddit tumbling 26%, and both Chevron and ExxonMobil are up
• 21:54
  Speaker 5: over 1% after the energy giants posted better-than-expected revenue in
• 21:58
  Speaker 5: the third quarter due to higher fuel prices. I'm Tucker Sylvan.
• 22:02
  Speaker 5: That is Wall Street Watch.
• 22:04
  Speaker 2: I'm going to be seeing Brent later tonight.
• 22:07
  Speaker 4: What's that?
• 22:07
  Speaker 2: I'm going to be seeing Brent later tonight. Oh, you are? Yeah.
• 22:10
  Speaker 2: Going to the same Halloween party.
• 22:11
  Speaker 4: Say hi for me.
• 22:12
  Speaker 2: Yep. Will do. What?
• 22:14
  Speaker 4: He's not very refined.
• 22:17
  Speaker 2: I have a friend named Brent, and I told him
• 22:20
  Speaker 2: the other day that I've been thinking about him a lot.
• 22:21
  Speaker 2: Because every time we talk about oil, I get this
• 22:25
  Speaker 2: picture of my friend named Brent in my mind.
• 22:28
  Speaker 4: If he isn't dressing up.
• 22:29
  Speaker 2: And I giggle a little bit every time you talk
• 22:31
  Speaker 2: about Brent.
• 22:31
  Speaker 4: If he isn't dressing up as a barrel of oil
• 22:33
  Speaker 4: for Halloween this year.
• 22:34
  Speaker 2: You know, he should.
• 22:35
  Speaker 4: I mean, is there anything scarier than Brent Crude in 2026?
• 22:38
  Speaker 2: It's actually a pretty. And he is like a kind
• 22:42
  Speaker 2: of math actuary type nerd who would love that type
• 22:45
  Speaker 2: of joke.
• 22:46
  Speaker 4: I thought you were going to say like barrel chested. So,
• 22:49
  Speaker 4: you know.
• 22:49
  Speaker 2: Yeah, that would that would be easier. Okay. Okay.
• 22:52
  Speaker 4: Let's talk a little bit about what happened to Binance yesterday.
• 22:56
  Speaker 4: If you're not familiar with Binance, it is a crypto
• 22:59
  Speaker 4: exchange that has had some questionable run-ins with the law
• 23:09
  Speaker 4: since its founding. I think that's the best way to
• 23:12
  Speaker 4: put it. They may or may not have had all
• 23:15
  Speaker 4: kinds of problems at various different points. Yesterday, and I'll
• 23:20
  Speaker 4: quote here from Bloomberg, Hackers siphoned off $ 6. 3 billion from
• 23:24
  Speaker 4: crypto exchange Binance in the biggest heist of the digital
• 23:27
  Speaker 4: asset industry and the latest in a slew of security
• 23:31
  Speaker 4: incidents afflicting the financial sector. The world's largest crypto trading
• 23:34
  Speaker 4: platform suspended withdrawals on Friday and pledged to cover all losses.
• 23:37
  Speaker 4: Binance said in a post on X that about $ 3
• 23:40
  Speaker 4: billion in assets had been frozen on blockchain networks. In
• 23:43
  Speaker 4: another post, co-founder Yi He said that withdrawals were expected
• 23:46
  Speaker 4: to resume by Sunday.
• 23:49
  Speaker 2: So let's just ask an honest question. How are you
• 23:52
  Speaker 2: going to cover $ 3 billion of losses there, Binance? Don't know. Okay.
• 23:57
  Speaker 4: Don't know. The other question that I have, and again,
• 24:01
  Speaker 4: I don't know anything. I don't own any crypto. I'm
• 24:07
  Speaker 4: not on Binance. I've never used the platform. But I
• 24:13
  Speaker 4: do get a weird feeling in my stomach when I hear, hey,
• 24:19
  Speaker 4: we're expecting to resume withdrawals by Sunday. Okay. I mean, look,
• 24:24
  Speaker 4: in the crypto world, five minutes is a lifetime. Three
• 24:28
  Speaker 4: days is an eternity. And I got to be honest,
• 24:34
  Speaker 4: there's one question that's going through my head, which is,
• 24:36
  Speaker 4: what if they never reopened? because here's the thing about
• 24:41
  Speaker 4: Binance that you got to know. Number one, Binance is
• 24:45
  Speaker 4: not a U.S.
• 24:48
  Speaker 2: Company.
• 24:48
  Speaker 4: They have, you know, a U.S. subsidiary, but they're not
• 24:51
  Speaker 4: a U.S.
• 24:52
  Speaker 2: Company.
• 24:54
  Speaker 4: Even again, so back in 2023, they pled guilty to
• 24:57
  Speaker 4: violating U.S. anti-money laundering rules, and they paid a $ 4
• 25:01
  Speaker 4: billion plus fine. And the head actually ended up getting
• 25:08
  Speaker 4: a pardon from President Trump, I think two years later,
• 25:12
  Speaker 4: somewhere in that ballpark. But they basically had a lot
• 25:17
  Speaker 4: of illicit activity going on on their platform, and they're
• 25:19
  Speaker 4: not a U.S. domiciled company.
• 25:21
  Speaker 2: Which, no kidding, this is how crypto is primarily used today.
• 25:27
  Speaker 4: I've got to be honest, in the crypto world, you've
• 25:29
  Speaker 4: always got to be asking, what if I just never
• 25:31
  Speaker 4: get my money back? Because there is no FDIC, there
• 25:34
  Speaker 4: is no SIPC, jurisdictionally, the money's not in the U.S.
• 25:39
  Speaker 4: It's not like a Madoff situation where you can have
• 25:41
  Speaker 4: a bankruptcy court call this back. This is not an
• 25:45
  Speaker 4: FTX situation. This is fundamentally different because it's not a U.S. company.
• 25:54
  Speaker 4: By the way, you read the Wikipedia page? It has
• 25:56
  Speaker 4: no official company headquarters. The last country that it was
• 25:59
  Speaker 4: officially headquartered in was Malta.
• 26:02
  Speaker 2: So.
• 26:04
  Speaker 4: I really got to be honest here. This is one
• 26:07
  Speaker 4: where you ask, okay, like, is there any recourse if
• 26:09
  Speaker 4: they just decide to, like, close it down, which I
• 26:13
  Speaker 4: don't think they will because, like, assuming that they can
• 26:16
  Speaker 4: make this work again, because who knows what was actually
• 26:18
  Speaker 4: compromised here. And this leads me to the next piece,
• 26:21
  Speaker 4: which is, have you noticed over the last month or
• 26:29
  Speaker 4: so that OpenAI and Anthropic are releasing all these things about, like,
• 26:34
  Speaker 4: great mathematical proofs they think they're solving in this and that.
• 26:37
  Speaker 2: Yeah, they just released one, I think it was yesterday,
• 26:39
  Speaker 2: on this, like, 30-year unsolvable computer science and engineering problem, and.
• 26:45
  Speaker 4: Exponential time hypothesis, which I could spend some time talking
• 26:48
  Speaker 4: about if anyone wants to hear, but I won't.
• 26:50
  Speaker 2: But actually, no. We don't have exponential time.
• 26:52
  Speaker 4: No, we actually do have to talk about this, because
• 26:56
  Speaker 4: it does matter for this. And I can't believe I'm
• 26:58
  Speaker 4: actually talking about this in front of humans. Like, it's...
• 27:03
  Speaker 4: A little embarrassing. So the exponential time hypothesis is basically
• 27:07
  Speaker 4: saying that, long story short, the more complex an algorithm
• 27:13
  Speaker 4: or cryptography gets, the more time is needed in exponential
• 27:17
  Speaker 4: fashion in order to be able to solve it, is
• 27:19
  Speaker 4: basically what it says. And it forms the basis for
• 27:24
  Speaker 4: cryptography actually working, because if you have like a 256-bit cipher,
• 27:28
  Speaker 4: you have to go through, like, all of the different
• 27:30
  Speaker 4: permutations in order to solve that. It's a lot harder
• 27:33
  Speaker 4: than just, like, oh, here's, like, a two-digit number, and
• 27:36
  Speaker 4: I can plug in the hundred things there. Like, no,
• 27:38
  Speaker 4: it's exponentially harder every zero that you add, and every digit,
• 27:41
  Speaker 4: and so on and so forth. So, all of these, uh,
• 27:46
  Speaker 4: all of these AI companies have been, you know, saying, Oh,
• 27:49
  Speaker 4: we've solved like this matter, mathematical thing. And look, the
• 27:51
  Speaker 4: math is way too advanced for me. Like, I don't even,
• 27:54
  Speaker 4: I don't even understand.
• 27:54
  Speaker 2: It's way too advanced for humans. They've had to hire
• 27:57
  Speaker 2: PhD mathematicians to study the papers that they, that the
• 28:00
  Speaker 2: AI is right. And to verify it and then be
• 28:03
  Speaker 2: able to explain it back into English. Yeah.
• 28:05
  Speaker 4: Like I read about, I read about one of them
• 28:08
  Speaker 4: that was, that was solved called Navier Stokes. And again, like,
• 28:13
  Speaker 4: I'm just going to read the Wikipedia thing on it.
• 28:15
  Speaker 4: The Navier-Stokes equation described the motion of viscous fluids in
• 28:18
  Speaker 4: a system of partial differential equations. Okay, so it's like
• 28:22
  Speaker 4: fluid dynamics and multivariable calculus. No idea if they've actually
• 28:27
  Speaker 4: done it or not, but they're saying they have, so fine.
• 28:31
  Speaker 4: Have you noticed that there's been one area that they
• 28:32
  Speaker 4: have not mentioned any breakthroughs in?
• 28:36
  Speaker 2: I can think of a few, but... Healthcare is a
• 28:39
  Speaker 2: big one that comes to mind.
• 28:40
  Speaker 4: Healthcare, they've got all kinds of announcements they've made. Like,
• 28:42
  Speaker 4: you know, Anthropic just announced they were launching a separate
• 28:45
  Speaker 4: health division and funding it a bunch of money. The
• 28:49
  Speaker 4: one place that you haven't heard anything on is cryptography.
• 28:53
  Speaker 4: And if there's one thing I know about cryptography is
• 28:55
  Speaker 4: you can't spell cryptography without crypto. And the whole basis
• 28:59
  Speaker 4: for cryptocurrencies is that, again, it's this cryptographically signed signature that...
• 29:06
  Speaker 4: you pretty much can't fake and you can't break because
• 29:08
  Speaker 4: the keys are so complex that there's no computer that
• 29:12
  Speaker 4: can solve them. The big concern that we've had out
• 29:14
  Speaker 4: there has been, okay, if you get to quantum computing
• 29:17
  Speaker 4: where you can try all these things simultaneously, does that
• 29:21
  Speaker 4: present like a problem for crypto? And.
• 29:26
  Speaker 4: Just the fact that this exchange now has been hacked
• 29:31
  Speaker 4: and you had the exponential time hypothesis potentially disproven and
• 29:36
  Speaker 4: none of the major guys are talking about anything related
• 29:39
  Speaker 4: to cryptography.
• 29:40
  Speaker 2: Makes me think that crypto might be dead.
• 29:42
  Speaker 4: Makes me wonder if crypto is dead and no one
• 29:45
  Speaker 4: knows it yet. I'm not saying that it is or isn't,
• 29:50
  Speaker 4: but these are the thoughts that I have at 4 a.m.
• 29:53
  Speaker 4: on a Friday when I wake up.
• 29:56
  Speaker 5: Um.
• 29:57
  Speaker 2: Well, crypto, Bitcoin's down about 5% today. It's been as
• 30:01
  Speaker 2: low as $ 50, 000, as high as $ 100, 000 this year.
• 30:02
  Speaker 4: To be fair, this is a sell-everything day.
• 30:05
  Speaker 2: It is, yeah.
• 30:06
  Speaker 4: At least broadly speaking, again, you've got some stocks that
• 30:09
  Speaker 4: are up, but broadly speaking, this is one where, hey,
• 30:12
  Speaker 4: when markets sell off, correlations go to one, and the
• 30:16
  Speaker 4: only stuff that isn't getting sold today is basically oil-related.
• 30:23
  Speaker 4: That's basically it. I mean, even like, again, you get
• 30:26
  Speaker 4: interest rates moving down again today and home builders can't,
• 30:29
  Speaker 4: can barely get off the mat. So it's, uh, any
• 30:32
  Speaker 4: day that you have, you know, your biggest losers are semiconductors, Bitcoin, uranium,
• 30:38
  Speaker 4: precious metals. Uh, again, these are not things that have
• 30:42
  Speaker 4: like a ton in common other than like, Hey, when
• 30:45
  Speaker 4: they all go down together, it usually means something sizable
• 30:48
  Speaker 4: is happening. And that's what's going on today. Let's take
• 30:51
  Speaker 4: a quick break and get away from talking about the
• 30:54
  Speaker 4: exponential time hypothesis.
• 30:56
  Speaker 2: It was fun, though. Thank you for bringing us down
• 30:58
  Speaker 2: that rabbit hole.
• 31:00
  Speaker 4: We didn't even go anywhere close to down it, Michael.
• 31:03
  Speaker 4: We saw it. We looked at it. It was like
• 31:05
  Speaker 4: looking out the window of a 767. We said it's
• 31:08
  Speaker 4: there on the ground, and then we kept on flying.
• 31:11
  Speaker 4: Let's come back with a little bit of chatter about oil,
• 31:14
  Speaker 4: which is something we're all much more comfortable talking about.
• 31:17
  Speaker 3: Put the Financial Exchange on your daily watch list. We're
• 31:20
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• 31:23
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• 31:26
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• 31:29
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• 31:34
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• 31:37
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• 31:42
  Speaker 2: One, two, three. Chuck, tomorrow is Halloween, so it is
• 31:59
  Speaker 2: the end of the month here.
• 32:01
  Speaker 4: This is Halloween. This is Halloween.
• 32:04
  Speaker 2: And so it is the last time of the month
• 32:06
  Speaker 2: to get your copy of our brand new guide from
• 32:09
  Speaker 2: the Armstrong Advisory Group, and it is one that quite
• 32:12
  Speaker 2: literally should apply to every American household, all about your
• 32:16
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• 32:19
  Speaker 2: be saved. Different stages of life require all different amounts
• 32:24
  Speaker 2: and formats of your rainy day fund, right? There is
• 32:28
  Speaker 2: just a far cry difference from a 62 year old
• 32:32
  Speaker 2: couple that has access to their retirement funds and a
• 32:34
  Speaker 2: bunch of equity in their home with an established home
• 32:37
  Speaker 2: equity line of credit compared to a single father of
• 32:41
  Speaker 2: two kids that rents an apartment, right? Just a big,
• 32:44
  Speaker 2: big difference in terms of what portion of their expenses
• 32:48
  Speaker 2: need to be saved in liquid safe assets. If you
• 32:52
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• 32:56
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• 33:00
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• 33:06
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• 33:09
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• 33:13
  Speaker 2: once again is 800-393-4001.
• 33:17
  Speaker 3: The proceeding was paid for by Armstrong Advisory Group, a
• 33:20
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• 33:22
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• 33:26
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• 33:31
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• 33:33
  Speaker 4: Mike, we got a piece in the Wall Street Journal.
• 33:35
  Speaker 4: American oil giants see profits soar as wars crimp energy supplies. Yes,
• 33:41
  Speaker 4: they did. Quote here, the fuel-making divisions at ExxonMobil and
• 33:44
  Speaker 4: Chevron turned in their highest quarterly earnings ever. ever while
• 33:48
  Speaker 4: churning out fuel for a global market buffeted by supply disruptions.
• 33:53
  Speaker 2: So not only the barrel of oil price, but obviously
• 33:55
  Speaker 2: we've talked about the margins on refining stuff.
• 33:58
  Speaker 4: And that's what they're talking about is the refining side
• 34:00
  Speaker 4: of those businesses are crazy. The Exxon earnings are still
• 34:03
  Speaker 4: up 104% in the last year. but only their high
• 34:06
  Speaker 4: since 2022, not all time highs for the company as
• 34:09
  Speaker 4: a whole.
• 34:09
  Speaker 2: I know everyone's looking for good news on energy markets.
• 34:12
  Speaker 2: And frankly, I just don't think anyone's got any, including
• 34:15
  Speaker 2: the energy companies here who are taking those profits and
• 34:19
  Speaker 2: really being conservative with them. BP talked about paying down
• 34:23
  Speaker 2: a whole bunch of their debt. Exxon Chevron talking about
• 34:25
  Speaker 2: the same of just improving their fiscal situation as opposed to, hey,
• 34:31
  Speaker 2: we're taking these profits and pouring them into new wells.
• 34:34
  Speaker 2: We're doing discovery. That's That's really not the objective of
• 34:36
  Speaker 2: these companies right now.
• 34:37
  Speaker 4: And here's why. You might be like, that sucks. I
• 34:41
  Speaker 4: don't like those companies. And that's fine. You can have
• 34:44
  Speaker 4: that view.
• 34:44
  Speaker 3: Sure.
• 34:45
  Speaker 4: But the reason why is if you were an energy
• 34:47
  Speaker 4: investor in the 2010s, if I say the year 2015
• 34:50
  Speaker 4: to you, like a little shiver goes down your spine
• 34:52
  Speaker 4: because you blew up most likely. Energy stocks in the
• 34:57
  Speaker 4: 2010s got killed for basically the entire latter half of
• 35:00
  Speaker 4: the decade because Russia in 2015 decided, hey, you know what?
• 35:05
  Speaker 4: We're just going to pump as much oil as we
• 35:06
  Speaker 4: want and put all these shale companies out of business.
• 35:08
  Speaker 4: And they put a ton of them out of business
• 35:09
  Speaker 4: because they had all overextended themselves. And now you've got
• 35:14
  Speaker 4: a situation where because the current leaders of these energy
• 35:17
  Speaker 4: companies cut their teeth during the 2010s, they all look
• 35:20
  Speaker 4: at that and they say, well, we don't want to
• 35:22
  Speaker 4: do that again. So they're very nervous about expanding deployment
• 35:26
  Speaker 4: because they don't want to put themselves out of business.
• 35:30
  Speaker 4: it's a natural reaction. If you get burned by a stove,
• 35:33
  Speaker 4: you're not going to make the same mistake twice. Like,
• 35:34
  Speaker 4: you might make entirely different ones, but you won't do that.
• 35:38
  Speaker 4: So if you're someone out there who's like, oh, these
• 35:41
  Speaker 4: are like windfall profits, like we should tax them or
• 35:44
  Speaker 4: we should do something about this or we should lower
• 35:45
  Speaker 4: the price of gas, the question that I'll ask is,
• 35:48
  Speaker 4: if you want to say that now, are you willing
• 35:51
  Speaker 4: to bail out these companies when they inevitably have problems
• 35:55
  Speaker 4: because of overproduction, like in 2015? And my answer is, no,
• 35:59
  Speaker 4: I don't really want to do either of those things
• 36:00
  Speaker 4: then because you can't have just one side of it.
• 36:02
  Speaker 4: Like it's you can't have just the good things that
• 36:05
  Speaker 4: you want in life. You have to deal with how
• 36:07
  Speaker 4: that affects, you know, the overall risk in other ways.
• 36:11
  Speaker 4: And so it's a case now where, look, if you
• 36:14
  Speaker 4: can tell me how the situations in the Strait of
• 36:17
  Speaker 4: Hormuz and really the rest of the Middle East now,
• 36:20
  Speaker 4: as well as between Russia and Ukraine are going to
• 36:22
  Speaker 4: resolve on what timeline, I can tell you where oil
• 36:24
  Speaker 4: is going to go then. Generally. not to the dollar,
• 36:27
  Speaker 4: but I can tell you the first digit at least,
• 36:30
  Speaker 4: and it's a number. But beyond that, if you can't
• 36:34
  Speaker 4: tell me when those situations are going to resolve and
• 36:36
  Speaker 4: how they will, I've got no idea near as anyone else.
• 36:41
  Speaker 2: The other piece on energy markets, Chuck, that we spoke
• 36:43
  Speaker 2: a lot about during the summer months this year was
• 36:46
  Speaker 2: China kind of coming to the rescue of energy markets.
• 36:50
  Speaker 2: We talked about this phenomenon quite a bit where they
• 36:52
  Speaker 2: were really curtailing their purchases of crude oil and either,
• 36:57
  Speaker 2: you know, living off of the, uh, reserves of distilled, uh,
• 37:00
  Speaker 2: distillates that they already had distilled spirits, distilled, distilled oil, uh, or,
• 37:07
  Speaker 2: you know, they had enough reserves of crude that they
• 37:08
  Speaker 2: could just refine that. But they, you know, they took
• 37:10
  Speaker 2: down refineries. They were, they were slowing things down. They
• 37:13
  Speaker 2: banned exports. Um, the recent data, you know, over the
• 37:17
  Speaker 2: course of the last several weeks, um, and really since
• 37:22
  Speaker 2: the June lows that they hit, is that China has
• 37:25
  Speaker 2: begun to once again raise imports. And so we talk
• 37:30
  Speaker 2: a lot about how ships are making their way through
• 37:33
  Speaker 2: the Middle East, and we are seeing more supply come online, again,
• 37:37
  Speaker 2: with strikes and mines here and there. But it's just
• 37:42
  Speaker 2: incrementally not enough to move the needle here when you've
• 37:45
  Speaker 2: got every country in the world trying to restock their supplies.
• 37:51
  Speaker 4: Yeah, it's, again, there's no easy way out of this.
• 37:55
  Speaker 4: I've been saying this all year. Like, it's just going
• 37:59
  Speaker 4: to be messy for a while. What are you looking
• 38:03
  Speaker 4: at Tucker like that for?
• 38:03
  Speaker 2: There's somebody in a costume in our lobby and I'm
• 38:05
  Speaker 2: just very, I'm very interested to figure out what's going on.
• 38:08
  Speaker 4: What are they wearing?
• 38:10
  Speaker 2: I don't know. I only saw half of it.
• 38:11
  Speaker 4: Which half?
• 38:12
  Speaker 2: It came in with a dress that I would not
• 38:15
  Speaker 2: have anticipated somebody normally wearing.
• 38:17
  Speaker 5: I want to say she was trying to be olive
• 38:19
  Speaker 5: oil for Popeye.
• 38:21
  Speaker 4: I think that's what it was. Call me on that.
• 38:23
  Speaker 3: Sure.
• 38:24
  Speaker 2: Call me on that.
• 38:24
  Speaker 4: Let's take a quick break here, and we've got our
• 38:31
  Speaker 4: two coming up in a little bit. Still a bunch
• 38:33
  Speaker 4: to get to, so stick around.