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Government shutdown averted. What did we learn from spending bill? · The Financial Exchange Show

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Speaker 1: Zada and Paul Lane.
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Speaker 2: Kicking off a shortened week of Christmas trading. It is Chuck, Paul,
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Speaker 2: and Tucker with you here, and late on Friday, we
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Speaker 2: got the news that the government was able to pass
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Speaker 2: legislation to keep the federal government open, with a bill
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Speaker 2: passing the House Senate and heading on to Joe Biden
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Speaker 2: in order to keep the government operating for the next
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Speaker 2: three months. Here's what ended up happening on this You
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Speaker 2: ended up seeing the bill that passed. It did end
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Speaker 2: up including the disaster relief and farm aid that was
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Speaker 2: included in the original bill. It did not include either
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Speaker 2: an extension or removal of the debt ceiling, as incoming
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Speaker 2: President Trump wanted, and so that unfortunately means that we're
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Speaker 2: gonna have to talk about the debt ceiling again at
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Speaker 2: some point, because man, there's nothing that I love doing
2:12
Speaker 2: more on this show than talking debt ceiling. It's just riveting,
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Speaker 2: amazing stuff that we get to cover. And by and large,
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Speaker 2: there were a couple, you know, small things that were
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Speaker 2: stripped out of this bill and then ended up basically
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Speaker 2: passing Congress in subsequent measures. Anyways, so it's kind of like,
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Speaker 2: what did we really end up doing here for the
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Speaker 2: most part, it's not like there were some giant savings
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Speaker 2: that was reaped as a result of the negotiations that
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Speaker 2: went on.
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Speaker 3: No, what we did was put a bandit on until
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Speaker 3: March fourteenth, and then this will become an issue again.
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Speaker 3: It's really a spot check where you know, I can
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Speaker 3: go into the last time we went through a go
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Speaker 3: and shutdown historical presence twenty eighteen for about thirty five days.
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Speaker 3: We now have a situation where the government's going to
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Speaker 3: be running a two trillion dollar deficit. But nothing that
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Speaker 3: was done here most recently addresses any of that. You know,
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Speaker 3: a lot of these things were mentioned as to the
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Speaker 3: debt ceiling increase or suspending it, eliminating it. Nothing happened there.
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Speaker 3: The ideas around potential cuts going to next year, it's
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Speaker 3: really comes back to what we talk about so frequently
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Speaker 3: with the change in the White House.
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Speaker 2: It's we're going to have to wait and see.
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Speaker 3: This just resolves the here and now we will have,
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Speaker 3: of course, or Republican majority coming in next year at
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Speaker 3: two nineteen to two fifteen in the GOP. So it'll
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Speaker 3: be interesting to see what type of action occurs in
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Speaker 3: terms of a policy perspective. I do wonder it does
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Speaker 3: seem like from everything you've read the tax cut extension
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Speaker 3: that seems like full go ahead because they did mention
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Speaker 3: this piece, and that that's one thing of interest to us,
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Speaker 3: because you know, we do the finish of planning piece
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Speaker 3: that pragmatically would make a whole lot of sense from
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Speaker 3: a fiscal discipline standpoint to just say we're gonna let
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Speaker 3: its sunset. I know politically that's not going to likely happen,
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Speaker 3: but that was something that did caught my eye on
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Speaker 3: this piece.
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Speaker 2: Now, I mean, I think the challenge in looking at
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Speaker 2: potential legislation from next year for next year is look
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Speaker 2: for the better part of the last thirty years, now
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Speaker 2: twenty five years.
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Speaker 4: The.
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Speaker 2: Way that we have seen spending move in the US
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Speaker 2: as a percentage of GDP has been up. At the
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Speaker 2: same time, the revenue side of the equation has largely
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Speaker 2: stayed the same. And this is something that I come
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Speaker 2: back to pretty often because I've looked at this number
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Speaker 2: of times. If you look at federal revenue as a
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Speaker 2: percentage of GDP and you know, look at the long
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Speaker 2: term trends there, what we see is that for calendar
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Speaker 2: you're twenty twenty three, the federal government brought in about
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Speaker 2: sixteen percent of GDP and tax revenue. To put this
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Speaker 2: in perspective, back in nineteen forty six, year after World
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Speaker 2: War Two ended, federal government brought in seventeen percent of
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Speaker 2: GDP and tax revenue. Here's the chart, Paul, Is it
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Speaker 2: flat or is it flat? Very flat? It's flat. You
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Speaker 2: basically go between fifteen and eighteen percent of GDP gets
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Speaker 2: collected by the federal government in tax revenue in any year. Now,
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Speaker 2: if you will get federal outlays as a percentage of GDP,
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Speaker 2: the thing that you see there is that, for pretty
5:48
Speaker 2: much call it nineteen fifty three through I don't know
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Speaker 2: two thousand and eight, you had a slight upward trend,
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Speaker 2: but you were generally pretty flat. Nineteen fifty three, federal
5:59
Speaker 2: governments nineteen percent of GDP. By two thousand and seven
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Speaker 2: spent eighteen point eight percent of GDP. There were years
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Speaker 2: in which it was, you know, a little bit less,
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Speaker 2: like sixteen and a half. There were years where it
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Speaker 2: was a little higher. In nineteen eighty two during the recession,
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Speaker 2: it got up to twenty two. But for the most
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Speaker 2: part you were between like eighteen and a half and
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Speaker 2: twenty and a half percent of GDP in the last
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Speaker 2: you know, few years, fifteen years now, you've moved to
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Speaker 2: a point where the lowest deficit that we have had
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Speaker 2: since the financial crisis was nineteen point eight nine percent
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Speaker 2: of GDP and twenty eighteen and everything else has been higher.
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Speaker 2: So federal revenue. For all of the talk about, oh,
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Speaker 2: tax cuts, tax hikes, this federal revenue has not budged
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Speaker 2: in a meaningful fashion in eighty years. In eighty years, yes,
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Speaker 2: I know that the actual dollar values have gone up
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Speaker 2: because you know, inflation in this and that, but by
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Speaker 2: and large, the federal government has not changed what it's
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Speaker 2: taken in on as a percentage of GDP in eighty years.
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Speaker 2: It's we change where it comes from. You know, we've
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Speaker 2: altered the tax brackets and tax rates, but ultimately the
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Speaker 2: federal government says, no, like this is what we need
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Speaker 2: to bring in order to operate. The place that we
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Speaker 2: have run into issues in the last fifteen years is
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Speaker 2: spending's gone up, and pretty meaningfully. I mean you're running
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Speaker 2: you know, two to three percent higher each year as
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Speaker 2: a percentage of GDP, and that means instead of running
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Speaker 2: two to three percent deficits are running five to six
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Speaker 2: percent ones, right, and that's probably pretty challenging and not
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Speaker 2: sustainable in the long run. So when we look at
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Speaker 2: the math for next year, and this is the piece
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Speaker 2: that I'm trying to figure out. You got these tax
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Speaker 2: cuts that you want to extend, but the current state
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Speaker 2: of play is that, hey, if you just extend them
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Speaker 2: and do nothing else, you're going to be running five
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Speaker 2: to six percent deficits that are likely to expand to
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Speaker 2: seven to eight as your entitlement programs have larger expenses
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Speaker 2: and slower growth on inputs, so on revenues. So I'm
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Speaker 2: trying to figure out how you get everything that you
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Speaker 2: want out of next year. And I keep coming back
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Speaker 2: to this, and I've said it over and over and over.
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Speaker 2: I don't think this is Trump one point zero in
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Speaker 2: terms of, hey, press the tax cut button and everything
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Speaker 2: goes and you're good. I think this is different for
8:31
Speaker 2: a couple of reasons, the first being the setups different.
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Speaker 2: The other piece, you look through the nominees that we
8:38
Speaker 2: are seeing for different positions. I don't know if you
8:40
Speaker 2: saw over the weekend Stephen Merrin was nominated to be
8:43
Speaker 2: the head of the President's Council of Economic Advisors, Steven
8:47
Speaker 2: someone who I've followed on Twitter in various places for
8:50
Speaker 2: the last you know, three four five years. Smart freaking dude,
8:53
Speaker 2: Smart smart dude, but also someone who has spent a
8:58
Speaker 2: lot of time the last several years talking about tariffs
9:01
Speaker 2: and making fair trade and things like that. And these
9:04
Speaker 2: are things that do come with costs. I'm not saying
9:06
Speaker 2: that that's bad. I'm saying, hey, if we're trying to
9:08
Speaker 2: rectify these things, that there's gonna be some costs associated
9:12
Speaker 2: with them. So all this to me, when when we
9:15
Speaker 2: look at this and what I pull out of this
9:18
Speaker 2: the signing of this three month budget bill, which doesn't
9:21
Speaker 2: really mean anything because it's a three month budget bill,
9:24
Speaker 2: not even a budget bill, it's a continuing resolution, I
9:28
Speaker 2: kind of get to, hey, we we might need to
9:31
Speaker 2: be prepared for next year to go a little bit
9:33
Speaker 2: differently than the first year of Trump's first term. And
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Speaker 2: I'm not saying that's bad. In the long run, if
9:37
Speaker 2: you can address some of these long standing problems, that's
9:39
Speaker 2: a good and worthwhile goal. But I don't think it's
9:45
Speaker 2: just gonna be Yeah, let's cut taxes and call it
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Speaker 2: a year.
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Speaker 3: Yeah, I mean even extending existing taxes. Does you know
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Speaker 3: that's no benefits more money in my knocket or your pocket.
9:54
Speaker 2: It's just the same. Yeah. Correct. So let's take a
9:56
Speaker 2: quick break here. When we come back, let's talk a
9:59
Speaker 2: little bit more about the pending merger between Honda and Nissan.
10:03
Speaker 2: Some more details coming out, some more news. We'll discuss
10:06
Speaker 2: that when we're back.
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Speaker 2: Paul. We got a text that Tucker forwarded onto us
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Speaker 2: during the break or maybe it was an email. I
11:03
Speaker 2: don't know where it came from. Text text there you go.
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Speaker 2: And the text was asking about social security because there
11:10
Speaker 2: was a bill that was winding its way through Congress
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Speaker 2: to potentially remove the windfall tax for certain people who
11:19
Speaker 2: you know, I have public pensions that then end up
11:22
Speaker 2: seeing their social security reduced. I believe something did pass
11:26
Speaker 2: late Friday or maybe early Saturday.
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Speaker 3: Yeah, So what we have had happened over the weekend, Chuck,
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Speaker 3: is the Senate did pass what's called the Social Security
11:33
Speaker 3: Fairness Act in the favor of seventy six to twenty
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Speaker 3: on Saturday. It now heads to President Joe Biden's desk
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Speaker 3: for signature. To step back for a moment, As Chuck
11:43
Speaker 3: alluded to, there are two provisions out there which is
11:47
Speaker 3: said to impact two point four million people out there. However,
11:50
Speaker 3: I seem like I've bumped into a lot of people
11:52
Speaker 3: who are impacted this, so I feel like the number
11:54
Speaker 3: should be higher relative to the population of the country.
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Speaker 3: But it's the windfall elimination provision and the government pension offset.
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Speaker 3: So to sort of understand what those two pieces are,
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Speaker 3: the windfall elimination provision could be in a situation where
12:09
Speaker 3: you worked a public job for a municipality but also
12:13
Speaker 3: worked a little bit in the private sector as well.
12:15
Speaker 3: If you were to cover collect a government pension, the
12:18
Speaker 3: earnings that you derived from the government pension would offset
12:22
Speaker 3: any of the social security benefits that you were entitled to,
12:25
Speaker 3: or I shouldn't say offset, but could greatly reduce those benefits.
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Speaker 3: The other provision, the government pension offset, is specific to
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Speaker 3: those who are public pension collectors and their impact as
12:37
Speaker 3: a surviving spouse collecting their spousal benefits or their widow
12:41
Speaker 3: benefits from their spouse who may have worked in the
12:45
Speaker 3: private sector. So those are really the two biggest areas
12:51
Speaker 3: that they've been trying to target this for about forty
12:53
Speaker 3: years or so. Now it does appear that they would
12:57
Speaker 3: be eliminating both of these provisions. Have you know, exact
13:01
Speaker 3: hard and fast? When is this going to go into
13:04
Speaker 3: a fact? When should I start collecting my higher benefits?
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Speaker 3: All of this is to be determined, but certainly a
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Speaker 3: really impactful bill for those people who are you know,
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Speaker 3: subject to this.
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Speaker 2: And I want to also just go through something just
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Speaker 2: that I think is sad. I have here a list
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Speaker 2: of ALSOI security legislation that has ever passed the United
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Speaker 2: States Congress and been signed into law. These are the
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Speaker 2: dates of when different bills were passed related to social Security,
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Speaker 2: the first one being the Social Security Act in nineteen
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Speaker 2: thirty five. From there, nineteen thirty nine, nineteen forty two, two,
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Speaker 2: in nineteen forty three, two, in nineteen forty five, forty six,
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Speaker 2: forty seven, two and forty eight, fifty fifty two, fifty four,
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Speaker 2: fifty six, fifty eight, sixty sixty one, sixty five, sixty six,
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Speaker 2: sixty seven, sixty nine, seventy one, seventy two, seventy two,
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Speaker 2: seventy seven, two, I'm sorry, three in nineteen eighty two,
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Speaker 2: in nineteen eighty one, two, in nineteen eighty three, nineteen
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Speaker 2: eighty four, eighty five, eighty six, eighty seven, eighty eight,
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Speaker 2: eighty nine, ninety, ninety three, ninety four, another, ninety four,
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Speaker 2: ninety six, ninety nine, two thousand, Paul, It's been twenty
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Speaker 2: four years since any legislation has been passed at all
14:19
Speaker 2: relating to social security except for this. And what's remarkable
14:23
Speaker 2: about this is the way that we talk about social
14:26
Speaker 2: security these days is like it's this this third rail like, oh,
14:29
Speaker 2: like you know, you never touched Social Security or you know,
14:32
Speaker 2: are you're gonna get like thrown off a cliff or
14:35
Speaker 2: something like that, which is different from a third rail.
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Speaker 2: That's like getting thrown off a cliff. Social Security for
14:42
Speaker 2: the first sixty five years of its operation was routinely
14:46
Speaker 2: updated with small little changes every year too. Now these
14:49
Speaker 2: weren't big ones, like it wasn't like every year they
14:51
Speaker 2: were changing the retirement age and doing that. But there
14:55
Speaker 2: were constant adjustments to the program because we were figuring out,
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Speaker 2: oh this works, this doesn't work, We need to update this,
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Speaker 2: We need to update that. The windfall elimination provision. By
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Speaker 2: the way, do you know when it went into effect originally?
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Speaker 2: I want to say mid eighties, nineteen eighty three. It's
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Speaker 2: not like it was this original thing that existed. It was, no.
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Speaker 2: We decided to do that part of you know, trying
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Speaker 2: to reform Social Security in the nineteen eighties to make
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Speaker 2: it more sustainable. This was one of the things that
15:24
Speaker 2: we did. It's now being repealed, and look, it is
15:28
Speaker 2: what it is. I'm not saying it's good, bad, or
15:30
Speaker 2: anything else. My point is I think that we let
15:38
Speaker 2: Congress off the hook a little bit too easily on
15:40
Speaker 2: this stuff. Even though we complain about it and this
15:43
Speaker 2: and that. Congress for sixty five years would deal with
15:47
Speaker 2: issues related to Social Security on a regular basis, and
15:52
Speaker 2: now they just won't touch it because oop, it's too hard.
15:56
Speaker 2: The only time that they are touching it right now
15:59
Speaker 2: is granted it end up being the right thing to do.
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Speaker 2: I'm not saying it's not. But it's at thirty six
16:04
Speaker 2: billion next ten years. Here's here's an extra twenty billion
16:08
Speaker 2: dollars a year going out for something that's gonna be
16:10
Speaker 2: projected to being solved in nine years. Correct. I'm not
16:13
Speaker 2: saying don't do it. I'm just saying, if this is
16:17
Speaker 2: all that we're going to do, we are not serious
16:20
Speaker 2: human beings.
16:21
Speaker 3: You can't only deliver positive news, unfortunately.
16:24
Speaker 2: No, it's Look, here's the deal. My four year old
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Speaker 2: we talk about this a lot. Sometimes we do. I
16:33
Speaker 2: tell her, sweetie, you gotta watch out for the Social
16:36
Speaker 2: Security winfall elimination provision. It's it's gonna be something you
16:40
Speaker 2: need to worry about as you get older. Look, my
16:43
Speaker 2: four year old understands that you can't only have good
16:45
Speaker 2: things and she'll tell me, hey, look, you get what
16:48
Speaker 2: you get and you can't get upset about like that's
16:51
Speaker 2: that's what it is. Like, you just got to deal
16:53
Speaker 2: with it. Congress needs to talk to us like we're
16:56
Speaker 2: a bunch of four year olds. Hey, this is the deal.
16:59
Speaker 2: You're gonna get what you're gonna get. And I'm not
17:01
Speaker 2: saying that I want to do like some drastic cut
17:04
Speaker 2: to Social Security. I don't want to do anything that
17:07
Speaker 2: makes anyone uncomfortable, but sometimes you have to because that's life.
17:11
Speaker 2: And here's the thing.
17:12
Speaker 3: If you address it now, you're much better off than
17:14
Speaker 3: doing this seven years from now.
17:15
Speaker 2: We could have fixed this twenty years ago, and the
17:17
Speaker 2: fixed twenty years ago would have been like, Okay, you
17:21
Speaker 2: end up raising the retirement age by six months, you
17:25
Speaker 2: raise the Social Security tax by a quarter percent, and
17:29
Speaker 2: you I don't know, raise the you know amount that
17:33
Speaker 2: your taxing cap, right, raise sixty double the income cap
17:36
Speaker 2: or something like that, and now it's gonna be No,
17:39
Speaker 2: you've got to raise the retirement age by three years.
17:42
Speaker 2: You've got to eliminate the income cap entirely. You might
17:45
Speaker 2: need to raise tax. It becomes just so much harder.
17:49
Speaker 2: And look, none of us ever want to do the
17:50
Speaker 2: uncomfortable stuff. I get it. We all want to just
17:55
Speaker 2: be Tom Brady after the super Bowl. But Tom Brady'll
17:59
Speaker 2: tell you, man, there's a lot of days when I'm
18:01
Speaker 2: working in the summer, when the kids are off goofing off,
18:03
Speaker 2: and I'd love to be having fun, but I gotta
18:05
Speaker 2: be working. We all got to be working. And so
18:10
Speaker 2: like we're doing ourselves a disservice if this is how
18:14
Speaker 2: we handle it. Is hey, we have like fifty different
18:17
Speaker 2: Social Security bills in the first sixty five years of
18:20
Speaker 2: the program and one since then because we're.
18:23
Speaker 6: Just too afraid to touch it in Congress. I just
18:28
Speaker 6: I don't know if I might lose my little Congress seat,
18:31
Speaker 6: I might have to go back to work somewhere else
18:33
Speaker 6: or maybe you know, I mean, come on, what are
18:36
Speaker 6: we doing here?
18:38
Speaker 2: That's the job you've chosen. If you don't want to
18:42
Speaker 2: have to deal with Social Security, go be a ski instructor.
18:47
Speaker 2: You'll never have to vote on social security legislation. You
18:50
Speaker 2: don't want to vote on social security legislation, fine, go
18:53
Speaker 2: be you know, the mayor of your town. Like you
18:57
Speaker 2: can still be in politics without having to deal with that.
19:00
Speaker 2: But is the job you've chosen, and it's just cowardly,
19:04
Speaker 2: cowardly stuff. Sorry this. I know that we did Festivus
19:10
Speaker 2: on Friday, but today's the official day of Festivus, so
19:12
Speaker 2: I just had to get that out there. Quick break.
19:15
Speaker 2: When we come back, it's Wall Street Watching, then Honda
19:17
Speaker 2: and Nissan.
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19:52
Speaker 4: Well.
19:52
Speaker 5: With a shortened holiday trading week ahead, markets today are
19:56
Speaker 5: mostly quiet and a mixed territory. As a remind us,
20:00
Speaker 5: markets will be closed early tomorrow at one o'clock and
20:03
Speaker 5: closed completely on Wednesday for Christmas. Right now, the Dow
20:07
Speaker 5: is down by about a half a percent, or two
20:10
Speaker 5: hundred and eleven points, SMP five hundred is down by
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Speaker 5: about a quarter percent or thirteen points, and the Nasdaq
20:18
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Speaker 5: up by four basis points. At four point five six percent,
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Speaker 5: the company clinched a four billion dollar deal to take
20:44
Speaker 5: the struggling department store chain private. The deal is expected
20:49
Speaker 5: to close in the first half of next year, subject
20:51
Speaker 5: to approval from regulators and two thirds of nords from shareholders,
20:56
Speaker 5: including debt. The company said the deal had an enterprise
20:59
Speaker 5: value of six point two five billion dollars. Nordstrom stock
21:03
Speaker 5: is down by one percent. More developments out of Honda
21:07
Speaker 5: and Nissan, where both companies agree to pursue merger talks
21:11
Speaker 5: with the aim of combining in twenty twenty six, which
21:15
Speaker 5: would create the world's third largest automaker. Chuck and Paul
21:19
Speaker 5: will have more on that in a matter of moments.
21:21
Speaker 5: US listed shares of Honda jumping by twelve percent on
21:26
Speaker 5: the news. Meanwhile, Xerox struck a one and a half
21:29
Speaker 5: billion dollars deal to buy printer maker Lexmark International. Xerox
21:34
Speaker 5: shares are up by over three percent after dropping nearly
21:37
Speaker 5: eighteen percent on Friday. Shares a Nova Nordisk, rebounding nearly
21:41
Speaker 5: three percent today. Wall Street was disappointed in the pharmaceutical
21:44
Speaker 5: giant's late stage trial results for its experimental weight loss drug.
21:49
Speaker 5: Sticking with the health space, where shares of Eli Lilly
21:51
Speaker 5: up are over one percent after the FDA approved zep Bound,
21:55
Speaker 5: another obesity drug for some sleep apnea patients, and shares
22:00
Speaker 5: Occidental Petroleum, Sirius XM, and VeriSign continue to see gains today.
22:04
Speaker 5: After Warren Buffet's Berkshire Hathaway disclosed last week it had
22:09
Speaker 5: added to its stake in each company. I'm Tucker Silva
22:13
Speaker 5: and that's Wall Street Watch.
22:14
Speaker 2: So as we discussed I think about I think it
22:17
Speaker 2: was Wednesday when this came to light originally last week.
22:19
Speaker 2: Honda and Nissan are planning now on merging in twenty
22:24
Speaker 2: twenty six. The rumors started popping up last week, but
22:27
Speaker 2: this now seems to be official confirmation from the companies
22:31
Speaker 2: and really kind of three things driving this in my opinion.
22:37
Speaker 2: The first, Nissan sales are in a free fall in
22:40
Speaker 2: the United States, the down about fifty percent plus since
22:43
Speaker 2: their peak in I think twenty seventeen or twenty eighteen.
22:46
Speaker 2: So that's number one. Number two all car companies, not
22:50
Speaker 2: just Nissan, that operate in China are having their lunch
22:54
Speaker 2: eaten by Chinese upstarts in that market. And number three,
22:59
Speaker 2: in order to get to a economies of scale to
23:00
Speaker 2: compete with the Toyotas and Volkswagons of the years of
23:04
Speaker 2: the world that sell ten million vehicles a year, if
23:07
Speaker 2: you're a company that's selling three million a year, you
23:10
Speaker 2: need to merge in order to be competitive there. So
23:13
Speaker 2: I think that's kind of what's pointing in this direction,
23:15
Speaker 2: what's gotten Nissan to this point, and they need to
23:21
Speaker 2: merge at this point in order to survive.
23:23
Speaker 3: I'll add a fourth one there where it does seem
23:26
Speaker 3: like reading some of the tea leaves here that the
23:28
Speaker 3: Japanese government has a little bit of exerted a perhaps
23:31
Speaker 3: a little bit of influence on this proposed merger, not
23:35
Speaker 3: necessarily forcing hand, but perhaps suggesting that it makes sense
23:39
Speaker 3: that the two companies merge. It does seem like that Honda,
23:44
Speaker 3: while you know, saying all the right things publicly, there
23:46
Speaker 3: are some mentions that perhaps this from a merger perspective,
23:51
Speaker 3: the thing is that Honda may not be crazy about
23:54
Speaker 3: just because they are so duplicative in nature. It's not
23:57
Speaker 3: as if Chuck. These two companies merging together, there's a
24:00
Speaker 3: tremendous amount of synergies. They play in the same sort
24:02
Speaker 3: of space in terms of the vehicle models that they have.
24:05
Speaker 3: They both sell a lot of cars to the United States.
24:08
Speaker 3: So that is another part of this here, is that
24:12
Speaker 3: the eight percent of the working population in China works
24:16
Speaker 3: in the automotive trade. It is a symbol of pride
24:19
Speaker 3: in Japan. It's car making prowess. So to see a
24:23
Speaker 3: company like Nissan struggling so tremendously as they have really
24:27
Speaker 3: since twenty eighteen when their CEO was ousted.
24:31
Speaker 2: Do you guys remember that whole saga.
24:33
Speaker 3: So I just was relearning it today. Oh, Carlos gown going.
24:38
Speaker 3: I had looked up the pronounces before the So Carlos
24:40
Speaker 3: Going had to fly out of the country in a
24:43
Speaker 3: private jet in a box.
24:45
Speaker 2: Not flyout. He had to be flown out in a
24:47
Speaker 2: like literally in a cargo box that I think was
24:50
Speaker 2: built for carrying guitars. He was flown out in order
24:55
Speaker 2: to be smuggled out of the country because he kept
24:57
Speaker 2: just he was just being held because having been you know,
25:03
Speaker 2: had a few years to look at this now, the story,
25:06
Speaker 2: I think what it ultimately ends up being is gone
25:09
Speaker 2: ran Renault and Renaul and Nissan had developed a partnership
25:13
Speaker 2: over those you know, previous fifteen twenty years as a
25:15
Speaker 2: result of Gohan's influence, and the sense I've gotten is
25:19
Speaker 2: that Gon really wanted to end up having Nissan merge
25:23
Speaker 2: with Renault. And look, whether there was malfeasance or not,
25:27
Speaker 2: I have no idea, It's kind of hard to tell
25:29
Speaker 2: at this point, but it's very apparent to me that
25:33
Speaker 2: there was a pretty big push, as you noted, like
25:35
Speaker 2: in Japan that the automakers are somewhat revered as you know,
25:38
Speaker 2: kind of the pinnacle of industry there, and I think
25:41
Speaker 2: there was a pretty big push in Japan to not
25:44
Speaker 2: have one of those companies Nissan, end up under foreign control. Right.
25:48
Speaker 2: But yeah, man, that was a wild story.
25:51
Speaker 3: Really really is looking back on it. So what do
25:53
Speaker 3: we have you know today? This would potentially create the
25:56
Speaker 3: third large largest auto manufacturer if these two companies were
25:59
Speaker 3: to merge. Twenty twenty six is talked about. It's perhaps
26:03
Speaker 3: mentioned that the government of Japan would subsidize some of
26:05
Speaker 3: the technology research that's gonna go into these two firms,
26:08
Speaker 3: and that seems to be truly the underlying premise of
26:11
Speaker 3: this movie. You know, they mentioned this idea of synergies
26:14
Speaker 3: and buying parts in bulk, but really it's the research
26:17
Speaker 3: and development projects that are ultimately going to dictate whether
26:20
Speaker 3: this is successful or not, if they're able to invest
26:24
Speaker 3: in autonomous vehicles and all the other spaces that Nissan
26:28
Speaker 3: has quite candily fallen quite behind in over the last
26:31
Speaker 3: you know, five six years.
26:33
Speaker 2: The autonomous vehicle one is one where I continue to
26:36
Speaker 2: look at it and just go, It's not gonna happen
26:40
Speaker 2: for most of these guys. Oh sure, Yeah, I agree,
26:42
Speaker 2: it's just not And I'm trying to figure out if
26:46
Speaker 2: that's a problem or not, because ultimately, I think where
26:50
Speaker 2: I end up getting to is, Look, if you're a
26:54
Speaker 2: major automaker, you can pour billions of dollars into something
26:58
Speaker 2: that you have no skill at, no proficiency at, and
27:01
Speaker 2: ultimately like aren't very good at, whether by like buying
27:04
Speaker 2: a company or trying to develop it yourself. The only
27:09
Speaker 2: company that seems to really be getting somewhere is Google
27:14
Speaker 2: Way Mom, yeah, because like they're actually rolling out autonomous
27:17
Speaker 2: taxis even there, it's in like three cities in limited
27:22
Speaker 2: you know, service areas. You can't just go and do
27:25
Speaker 2: it wherever.
27:26
Speaker 3: And oh, by the way, they've been doing it for
27:27
Speaker 3: probably fifteen years. The whole endeavor, like this is not
27:30
Speaker 3: just because we're talking about the taxis doesn't mean they
27:32
Speaker 3: haven't spent a decade and billions of dollars researching this.
27:36
Speaker 2: I still remember, and I'm kind of embarrassed. If you
27:37
Speaker 2: went back and listened to like our twenty seventeen or
27:40
Speaker 2: twenty eighteen shows, it was probably me saying, oh yeah,
27:43
Speaker 2: like in five years, like we're no, like everyone's been
27:46
Speaker 2: off on this line. I know, but I got Charlie
27:48
Speaker 2: Brown really hard, and so I've I granted him probably
27:52
Speaker 2: biased the other way now where I'm like, no one's
27:54
Speaker 2: gonna do this is kind of my default position there.
27:57
Speaker 2: But the places where I do think that you need
28:00
Speaker 2: to be investing as an automaker, there's two that I
28:03
Speaker 2: think are actually worthwhile. The first is your drive trains
28:07
Speaker 2: and figuring out how to build something that is not
28:11
Speaker 2: necessarily pure ev but that is better from a mileage perspective,
28:17
Speaker 2: because I do think that's important to people at this
28:19
Speaker 2: point as far as hey, gas prices are not going
28:21
Speaker 2: back down to you know, dollar fifty two dollars a gallon,
28:24
Speaker 2: at least for any extended period of time. The second
28:28
Speaker 2: one is automaker's got to spend some money on their
28:32
Speaker 2: overall user experience in cars, because there's a lot of
28:37
Speaker 2: junk out there these days, and it's it's represented, in
28:41
Speaker 2: my opinion, in a couple different ways. The first is
28:43
Speaker 2: just too many touchscreens. It's I'm not someone who's it is.
28:49
Speaker 3: I'm not saying I do find that sometimes you're trying
28:51
Speaker 3: to flick through stuff. You're like, it's almost better if
28:53
Speaker 3: this would be a button. Because I'm driving right now.
28:56
Speaker 5: I'm sorry, truck, No, no, my touchscreen. I have a twenty seventeen.
29:00
Speaker 5: It's like very on the much on the fritz right now,
29:03
Speaker 5: like he used to reboot the radio every time I'm
29:06
Speaker 5: in the car now.
29:07
Speaker 2: Totally, and I think between I'm not someone who says
29:11
Speaker 2: you can't have any of them. But the reason why
29:14
Speaker 2: automakers are moving to touch screens is not because they
29:16
Speaker 2: think we like them. It's because it's cheaper for them.
29:19
Speaker 2: They don't have to build all the dials and buttons.
29:21
Speaker 2: It's just one screen with you know whatever you need,
29:24
Speaker 2: and then okay, you do the wiring behind it and
29:25
Speaker 2: there's less issue on that side. But for some stuff, hey,
29:33
Speaker 2: do you really want to be fiddling, you know, looking
29:36
Speaker 2: down away from the road if you're trying to do X,
29:41
Speaker 2: Y or Z, Because with a touchscreen you have to
29:43
Speaker 2: because you don't have that tactile feel. You can't just
29:46
Speaker 2: twist the knob and be like, oh yeah, I feel
29:48
Speaker 2: the you know, ac going up this way or that way.
29:52
Speaker 2: And the other thing that I don't want is forty
29:53
Speaker 2: eight different buttons on my steering wheel. I'm I made
29:57
Speaker 2: a decision as a child to not be an F
29:59
Speaker 2: one drive. It is a lot on the steering wool.
30:02
Speaker 5: Now, I think it's just it's it's too many cruise control, radio, dial, Bluetooth's.
30:11
Speaker 2: There's too much on the steering wheel.
30:13
Speaker 1: Call.
30:14
Speaker 2: I don't need to be an F one driver. I
30:18
Speaker 2: never really had a chance, but I like, that's just
30:21
Speaker 2: let's let's simplify things a little bit from a user
30:24
Speaker 2: experience perspective, and I think people will enjoy your cars
30:28
Speaker 2: a lot more. The other one that honestly really just
30:31
Speaker 2: bothers me. Stop giving me panoramic moon roofs. I don't
30:36
Speaker 2: need the whole roof to be glass, Like you're not
30:40
Speaker 2: looking at it at all. I'm looking straight ahead. What
30:43
Speaker 2: do I get out of the roof being glass, Like, oh,
30:46
Speaker 2: it's a brighter and lighter greenhouse for you when you're driving.
30:49
Speaker 2: If I want to go to a greenhouse, so go
30:50
Speaker 2: get some plants and like, go to one.
30:52
Speaker 3: They're trying to sell us the suner if I'm like
30:54
Speaker 3: my wife and I have three kids, there's absolutely no
30:57
Speaker 3: way this is ever getting old like this.
30:59
Speaker 5: I do like a sunroof, but the massive, massive one
31:02
Speaker 5: that Chuck's referring to.
31:03
Speaker 2: No, you don't need that. You know what. The sunroof
31:04
Speaker 2: gets used for my daughter when I'm dropping her off
31:07
Speaker 2: at preschool. She sticks her head out of it. Yeah.
31:10
Speaker 5: Well no, I like a summer which is nice, like
31:12
Speaker 5: it's fine, Like she has a great time with it.
31:14
Speaker 5: But you're sitting in traffic. You're getting some sun, you know.
31:17
Speaker 2: Oh yeah if it's right, Yeah, you're getting a lot
31:19
Speaker 2: of sun this time of year when it barely gets
31:21
Speaker 2: above the hills. You know, it's like, oh, I saw
31:24
Speaker 2: three minutes of sun after it came out from behind
31:27
Speaker 2: an oak tree at noon, like not not today.
31:30
Speaker 5: I'm talking like the summer, it's nice.
31:33
Speaker 2: I like a sunroof, it's fine. But like these giant
31:37
Speaker 2: double with they're like, oh, you got a front seat
31:39
Speaker 2: sunroof in the rear seats, Why does the rear seat
31:41
Speaker 2: need its own sunroof for the kids? Don't have any roof?
31:45
Speaker 2: You know, no roof. I believe they call that a convertible.
31:48
Speaker 1: That's right.
31:49
Speaker 2: But you know this whole thing, Oh, the whole roof
31:52
Speaker 2: is God. I don't need the whole roof to be glass.
31:55
Speaker 2: It's it's fine as metal and felt or whatever they
31:58
Speaker 2: put up there. It's take a quick break when we
32:01
Speaker 2: come back. Let's see should we do more car talk?
32:05
Speaker 2: After years of going big American car buyers down, guys,
32:08
Speaker 2: we can hit that. Let's touch on that. We'll stick
32:09
Speaker 2: with the cars right after this.
32:11
Speaker 1: The Financial Exchange streams live on YouTube. Like our page
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32:18
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33:44
Speaker 2: High Love Jamie. So, something interesting is happening. And what
33:53
Speaker 2: we're seeing in the auto will market these days is
33:55
Speaker 2: that smaller super vehicles are seeing some pretty good sales growth.
33:59
Speaker 2: And that is kind of thing that tends to happen
34:01
Speaker 2: when people see the sticker shock of you know, one
34:03
Speaker 2: thousand dollars monthly payment on other vehicles, they say, no,
34:07
Speaker 2: that's not for me anymore. And so smaller entry level
34:11
Speaker 2: models such as the Honda Civic and Nissan CenTra are
34:13
Speaker 2: up twenty three percent through November according to Motor Intelligence. Meanwhile,
34:19
Speaker 2: pickup truck sales have actually slid one point nine percent
34:22
Speaker 2: year over year, and mid size SUVs are down two
34:25
Speaker 2: point three percent as well. And I think this is
34:29
Speaker 2: the logical response to hey, these you know, these vehicles
34:33
Speaker 2: are just too expensive and people are looking for more
34:36
Speaker 2: value and they're finding it in smaller vehicles. Yeah.
34:39
Speaker 3: I thought this piece did a good job of breaking
34:41
Speaker 3: down the average prices for a small, mid size, and
34:43
Speaker 3: large sized suv. So a large suv on average seventy
34:46
Speaker 3: six thousand bucks, a small one twenty nine thousand, and
34:50
Speaker 3: a mid size one a mid size suv forty ak. Obviously,
34:54
Speaker 3: when you get up to those numbers from a pricing perspective,
34:57
Speaker 3: the participants in the market are going to look for
34:59
Speaker 3: alternative solution. And as a result of that, even though
35:01
Speaker 3: the trend had been very much so that ditching the
35:05
Speaker 3: kind of hatchbacks, Ford focuses and smaller vehicles of the
35:08
Speaker 3: past prior to the last couple of years of inflation,
35:11
Speaker 3: it does seem like there is being a bit of
35:13
Speaker 3: a return to some of these smaller vehicles just because,
35:16
Speaker 3: like you said, you can buy them for a whole
35:18
Speaker 3: heck of luck cheaper and get them for a more
35:20
Speaker 3: reasonable monthly price monthly payment. Rather, it will be interested
35:25
Speaker 3: to see how long this persists for Perhaps if we
35:28
Speaker 3: have you know, several years of mild inflation conditions, does
35:32
Speaker 3: it you know, revert back the other way. But is
35:34
Speaker 3: an interesting trend to note that the compact car sales
35:37
Speaker 3: have ticked up over the last year or so.
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36:40
Speaker 2: Piece of The New York Times, Why is it so
36:42
Speaker 2: hard to make a robot chef? So, Tucker, you're a
36:49
Speaker 2: big cooking dude, I saw, yeah, Why do you think
36:53
Speaker 2: it's so hard to make a robot chef.
36:56
Speaker 5: Well, I don't know, it's just a lot of steps
36:59
Speaker 5: to cooking right, And then how are you gonna teach
37:01
Speaker 5: a robot to do all that?
37:02
Speaker 2: So the first thing is that, and this is gonna
37:06
Speaker 2: sound weird, but the first issue is physics in that
37:09
Speaker 2: if you're asking a robot to do basically anything other
37:12
Speaker 2: than like flip a burger or jiggle some fries in
37:15
Speaker 2: a deep fryer, that's easy. They just they don't have
37:18
Speaker 2: the dexterity to be able to actually do that. They
37:23
Speaker 2: try watching the video. One of the toughest things for
37:25
Speaker 2: robots to do is they're trying to program them to
37:27
Speaker 2: do like household chores is folding clothes. They just can't
37:31
Speaker 2: do it as fast as a human because it's a
37:34
Speaker 2: it's folding close is actually a really complicated process to
37:38
Speaker 2: do well. It's it's not something that you can do
37:42
Speaker 2: like slowly and methodically, because the way to do it
37:45
Speaker 2: right is to actually rely on gravity and move quickly
37:48
Speaker 2: like that's that's how it works. And robots they can't
37:53
Speaker 2: sense like a three dimensional soft object moving that way,
37:56
Speaker 2: which is why cooking is also hard because everything is
38:01
Speaker 2: just hey, flip this burger this way and that it's
38:05
Speaker 2: you guys, remember Salt Bay of course, you guys. What
38:09
Speaker 2: was the name of the restaurants that he had? I
38:10
Speaker 2: can't I don't know, I don't know, but y overpriced.
38:14
Speaker 2: I've never been to one. But yeah, it looks ridiculous
38:17
Speaker 2: trying to get a robot to just, you know, sprinkle
38:19
Speaker 2: some salt down its forearm. It's easy. This the the
38:24
Speaker 2: like the forearm part is. But even the sprinkling, you
38:27
Speaker 2: can't get a robot to sprinkle. Well, there's an element
38:31
Speaker 2: of randomness to it. There's there's an element of like
38:34
Speaker 2: humanity to it. I know that sounds kind of weird,
38:37
Speaker 2: but ultimately where I land on this, the reason why
38:40
Speaker 2: you can't have robots running kitchens is just because it's
38:44
Speaker 2: too hard to program them to actually react to what's
38:48
Speaker 2: going on with the food that they're touching.
38:49
Speaker 5: And the timing too, the timing of everything. Yeah, like
38:53
Speaker 5: if one thing gets a step behind, like, how is
38:56
Speaker 5: the robot gonna catch up like a human would? Can't
38:59
Speaker 5: can't not to mention cross contamination Like, I don't know
39:02
Speaker 5: how that is played out with robots.
39:04
Speaker 2: Yeah, this episode was made in a robot facility that
39:08
Speaker 2: handles eggs. I don't know. Let's take a quick break.
39:12
Speaker 2: We got our two coming up in a little bit