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What will candidates do about the worst housing crisis in decades? · The Financial Exchange Show

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Speaker 2: Morgan. Welcome back to the Financial Exchange. As we come
1:18
into the eleven o'clock hour, We've got markets and mixed territory,
1:21
DOW off fifty points a little bit more than tenth
1:23
of a percent, S and B up eight points a
1:25
little bit more than tenth of a percent, and the
1:27
NAZAC leading the way up a little bit more four
1:30
tenths of a percent. As we as we come into
1:32
the eleven o'clock hour and head towards bottom half of
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the show here. So let's start with another big piece
1:40
that has been making the rounds in political debates and
1:45
pretty much every rally, which is housing costs. If you
1:50
went to sleep a decade ago and just woke up
1:53
from your coma, housing costs are crazy expensive these days
1:58
across the country we're experience and seeing this. They seemed
2:01
expensive in twenty nineteen. Turned out they weren't. Anybody that
2:05
thought haus in costs were expensive back in twenty nineteen.
2:07
It turns out you were wrong, because they're now a
2:10
good fifty percent higher in some parts of the country
2:13
than they were just in twenty nineteen, and it comes
2:16
with kind of a full shock to the overall system
2:21
because I can think of very few cultural things that
2:26
are more centric to being an American than owning your home.
2:30
That that white picket fence dream of a suburban home
2:34
is pretty central to the I don't know, just sense
2:38
of the American dream in my view, and I think
2:42
you could argue that maybe it shouldn't be, but nonetheless
2:45
that that's been the dream is Hey, we're a country
2:47
of suburban homeowners, and that dream has been kind of
2:53
crushed over the last few years. And so of course
2:55
you have policymakers coming out with ideas on how to
2:58
solve those problems. But certainly it is going to be
3:03
continue to talk about over the next several years in
3:06
terms of problems for the average American.
3:07
Speaker 3: I'm glad it's getting its proper due because it is
3:10
a really important issue all across the country. Mic you're
3:13
resolved to get supply back to a better level, that's
3:17
the only way that you're going to resolve this issue.
3:21
Is the simple supply and demand imbalance that we're in.
3:24
Dates back, as Mike mentioned, you know, fifteen plus years
3:27
of underbuilding So anything that can be done from a
3:30
policy perspective or a regulatory perspective to make things easier
3:36
for home builders to get out there and build it's
3:39
it would be fantastic. I'm really against the idea of
3:43
throwing money at the problem on the buyer side. You
3:45
know that it's been mentioned in some of Kamala Harris's
3:49
proposals that twenty five thousand and down payment assistance for
3:53
certain buyers. That to me, is the wrong way to
3:55
approach it. Throwing money at the problem is only going
3:58
to present the problem again that you're going to continue
4:01
to need a funnel out money for people who are
4:03
looking to buy. But if you can make it so
4:05
that there are builders who are incentivized to build starter homes,
4:08
you have my ear at that point. I'm willing to
4:11
listen if there's stuff that can be done there. It's
4:13
not an easy fix. I'll be the first to admit.
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Speaker 2: That I do wonder if just our expectation for that
4:18
American dream is just off. I mean, we are one
4:22
of very few countries in the world that is so
4:25
focused on that single family residence. Like you go anywhere
4:29
in Europe, you go anywhere in other developed countries, and
4:31
it is a focus on multi family living of different sorts,
4:34
you know, apartment complexes. And it's not to say that
4:37
doesn't exist in America, of course it does. But you
4:39
take a look at how our population is spread out
4:41
and it's just different. And that might have worked in
4:44
post World War two America, but as we've continued to grow,
4:47
I'm just not sure that, Well, it's gonna be a
4:50
trade off, I guess, is the point here?
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Speaker 3: Right?
4:52
Speaker 2: Like President Trump has proposed rules to allow for a
4:55
development excuse me, you know, housing development on federal lands,
5:00
and that I mean to me, that seems like a
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big trade off, right, Like how important is having that
5:05
next single family residence development? Is it important enough to say, yeah,
5:10
you know these former green spaces that were part of
5:13
national parks were doing away with those in order to
5:16
build more housing. And trust me, I get it, Like
5:18
if you've been burnt out of this housing market the
5:21
last several years, I get wanting to develop more housing.
5:23
But we're starting to have tougher decisions to make, and
5:27
you're seeing that in local places, right, That's where you're
5:32
seeing it the most. That's where you're seeing people get
5:34
the most heated when you go to towns across Massachusetts
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right now, for example, that are being faced with rules
5:41
saying hey, you have to develop multi family housing if
5:44
you're close to public transportation, and people are saying, hell, no,
5:49
we don't want to do it. We don't want to
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see any of that. We don't want more housing development,
5:53
and so I it's again this interesting dichotomy on housing
6:00
where clearly political candidates think that Americans are frustrated by it,
6:06
and they clearly are, but when proposed with solutions to
6:11
the problem, we seemingly hate them all.
6:14
Speaker 3: None in my backyard.
6:16
Speaker 2: Yeah, Like, the only solution that people seem to like
6:20
for housing is give me money so I can buy
6:23
a house, or give developers money so they'll build houses. Like,
6:28
there's just no seeming appetite for communities saying yeah, we
6:33
recognize that if we want to have a lower housing
6:35
or a lower housing price, we're going to have to
6:38
build more inventory because that means, oh, yeah, I got
6:41
a bunch of new neighbors and I don't want that.
6:43
So I don't know how you get around this other
6:46
than saying yeah, we are going to kind of change
6:48
the expectation on what it means for the American dream,
6:51
which that doesn't sound terribly appetizing either. I don't know,
6:56
there's no there's no magic bullet here. Guys keep looking
7:00
for one, and there's not. You have to build more houses.
7:04
You have to. That's the only way to bring down
7:05
housing costs. And that's why I keep going back, like,
7:08
I'm not sure that this is as big of a
7:12
campaign issue a voter issue as people are making it seem,
7:16
because it's not as though everybody feels the same way
7:20
on this.
7:21
Speaker 3: You feel as if some people feel that it is
7:23
not an issue.
7:24
Speaker 2: I think everybody acknowledges that housing prices are high, right,
7:28
But the problem is if if you're I guess what
7:30
you can do as a presidential Canada is just you know,
7:33
rail and pound your fist and say that prices are
7:35
too high without proposing anything in the way of a solution,
7:37
because all the solutions suck. Show me a solution that's
7:42
not going to be massively controversial to you know, fixing
7:47
the housing supply. You have to build more houses somewhere,
7:52
So what are you going to do? Take away control
7:55
from local housing authorities and say, yeah, you don't get
7:58
zoning rules anymore. We're seeing how that's coming in Massachusetts. Yeah,
8:02
are you going to subsidize first time home buyers and
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just make houses more expensive for all non first time
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home buyers? I guess you could go that route. Are
8:11
you going to you know, I don't know. I guess
8:14
give subsidies to home builders that build you know, starter homes. Okay,
8:20
go go for it. But once again, you're gonna need
8:22
to find a place to build all those Are you
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going to, you know, take federal lands away from national
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parks or other green spaces and say, yeah, we're going
8:31
to finally allow housing development in these spaces instead of
8:34
what they've been designed for. Are any of these sounding
8:38
popular to anybody?
8:40
Speaker 3: No, But there has to be an in between. I
8:41
don't know the land map of every single state in
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terms of what's available to build on and what's you know,
8:47
federal land, But there has to be some sort of
8:49
middle ground where there is real estate available to build
8:51
on within certain states that would not impeach on federal
8:54
land and still could be accessed where it wouldn't you know,
8:58
over congregeous area. But as a as a resident, you
9:03
can't have it both ways. You can't complain about housing
9:06
prices and then not allow more housing supply to enter
9:09
into your town, right.
9:10
Speaker 2: And you know, I'm making an exaggeration on the federal
9:13
land piece, but you know, building a bunch of homes
9:17
in Zion isn't going to solve the housing that's not
9:21
where people are trying to live now. Building a bunch
9:23
of homes there is not going to fix the you know,
9:26
housing crisis on Hawaii. So I just I don't know
9:29
how you get at this problem. The only way that
9:33
I can think of is requiring towns or strongly incentivizing
9:37
towns to say, yeah, we're willing to build more housing, right,
9:42
and that has just proven unpopular over and over, and
9:45
so I suspect that this is just an issue we're
9:47
going to continue to complain about, definitely. And you know,
9:51
the market based solution to it, by the way, is
9:54
that more housing will eventually get built, but only in
9:56
the areas that actually allow for it. And it's going
9:59
to be expensive because you've got agree.
10:01
Speaker 3: And unfortunately the starter home markets aren't as profitable. So
10:04
you that's where you have such a huge issue, is
10:06
that people in the Needam Metropolitan or the Greater Boston
10:09
area want to build three million dollar homes, not five
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hundred thousand dollars.
10:13
Speaker 2: I mean, the starter home these days isn't necessarily tiny.
10:15
It's just decrepit. That's what the starter home looks like
10:18
to me now, is just a home that needs to
10:20
be knocked down.
10:21
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10:50
Speaker 2: I think I'm going to file this next story under
10:54
the growing list of companies that are doing away or
10:57
delaying their ev only plans. Here but General Motors and
11:01
Hyundai announcing that they are exploring a partnership to work
11:05
on some critical items for the future. That would include
11:09
cutting costs by teaming up on new models for electric
11:12
and hydrogen powered vehicles, and sounds to me like trying
11:17
to perhaps share production space and sourcing of materials for
11:22
these things as probably both are realizing that their commitments
11:26
to electric vehicle future is more expensive than they previously
11:31
thought and not being met with quite as much demand
11:33
as previously thought. So hey, maybe we can weather this
11:35
storm a little bit better together.
11:37
Speaker 3: Yeah, it seems like from a strategy perspective, GM's focus
11:40
here is to link up with outside of Tesla, probably
11:44
the I believe second highest you know, electric vehicle Salem
11:49
auto manufacturer or sales men in the United States. Here
11:54
ten percent of all evs sold through July were either
11:57
Tessa or Hyundai. And then on Honday side of things,
12:00
they're just trying to get more of a US presence
12:02
where there is some tax credits that they would be
12:05
eligible for if they were manufacturing their evs in the
12:08
United States rather than in it's South Korea, right that
12:11
they are, Yeah, South Korea. That is really the focus
12:15
of this endeavor here is to team up and benefit
12:18
from GM's presence in the US, and then GM to
12:21
get some assistance on the EV side of things, which
12:23
they to your point, Mike, greatly underestimate the cost of
12:27
going into this market.
12:28
Speaker 2: Pretty remarkable. Remarkable to me, the kind of reputation shift
12:33
that I feel like Hundai's overgone over the last decade, right,
12:36
I mean I've had I had previously mechanics telling me like,
12:41
do not buy that car. I don't want to work
12:44
on it for you. It is going to be such
12:45
a mess too. Point now where like like you said,
12:48
you know some of their electric vehicles, what is it
12:50
the what's the big EV that they have that's competed
12:54
with Yeah, the ionic yeah, yeah, yeah, which I mean
12:59
again not for everybody, but good looking card that is
13:01
competing with Tesla in a real way. And you know, frankly,
13:04
they are cars. I think. I don't know about you guys,
13:07
but like when I think of Hyundai, yeah, I still
13:09
because of its history, I kind of still associate with
13:12
that cheap brand, but I'm starting to hear it associated
13:16
more and more with quality.
13:17
Speaker 3: Particularly with their it's a partnership that they have with
13:21
or the partner in Kia that that tell you ride
13:24
has a real significant market share in the SUV space.
13:26
Speaker 2: There In another space of the auto market, jeep dealers
13:30
not terribly happy with some quote disastrous choices at the
13:34
executive level of stillantis So Jeep, Chrysler, Ram, all owned
13:39
by automaker Stilantis and the chief executive, Carlos Tavares, receiving
13:45
a pretty strongly worded letter from some of his dealership
13:49
advisors on the way things have been run over the
13:52
last few years. Your takeaways, Paul, on what the dealers
13:56
are unhappy with.
13:57
Speaker 3: The two biggest takeaways here is that Stillant is benefited
14:00
significantly from the post pandemic auto market, where profit margins
14:05
for all of these major auto manufacturers absolutely swelled significantly
14:09
because of all the supply chain snarl ups. Once those
14:12
started to get unwound, Stillantis was extremely late to the
14:16
game to start offering incentives to bolster its sales numbers,
14:21
whether that be through financing deals or rebates. And that's
14:24
the crux of the frustration from all of these dealers here,
14:27
is that they just were kind of sitting back and
14:31
collecting these high profit margins and really benefiting from the
14:35
significant stock rise, but they were really slow to react
14:38
to change to the environment that they sit in today.
14:41
And as a result of that, Stalantis has bloated inventories
14:44
and their market share has taken a significant hit in
14:47
the US, where they were sitting at about ten and
14:49
a half percent in terms of the amount of market
14:52
share that they had in the United States over the
14:54
first half of last year. This year, over the first
14:57
half of the year, that number dropped down to eight
14:59
and a half. That's the largest drop of any car
15:03
manufacturer over that period of time.
15:05
Speaker 2: Let's just compare these two for a minute. So Hyundai
15:08
and Jeep. You're just talking about these two brands here,
15:10
and you know, you mentioned Jeep is losing market share,
15:14
but you know clearly still occupies a very important space
15:18
in the US car market. I mean seen as that
15:21
outdoor brand. You see wranklers all over the place, and
15:24
and you know, clearly a big brand. But I want
15:28
to kind of compare the last decade in terms of
15:31
your Do you drive a Jeep, yes, yeah, So I
15:34
mean what's been your changing opinion on the brand itself? Like,
15:37
how would you describe it ten years ago in today?
15:40
Because I just said, like Hyundai ten years ago, I
15:42
would have considered the cheap, somewhat unreliable and poorly made
15:47
brand a decade ago, but ultra low cost and now
15:50
kind of occupying a different space in my psyche. In
15:53
my mind, Jeep again a decade ago, was the car
15:57
that everybody wanted to drive and I think still maintains
16:01
that space. But I don't know. I've heard more and
16:05
more from people about cost, repair, and reliability issues when
16:09
it comes to Jeep, and that's started to occupy more
16:11
of my mind.
16:11
Speaker 3: I haven't experienced those, but I definitely have overheard the
16:15
price and crunch that has hit a lot of people
16:18
who are looking to buy Jeeps, where it's gotten significantly
16:22
more expensive to get that Grand Cherokee or to get
16:27
any of their other vehicle models out there. And so
16:30
that's been the biggest thing that I've heard. The reliability
16:33
side of things on my end, have had no issues
16:35
with it. Now I'm in a whole different ballpark where
16:39
it's not the most kid friendly. I thought it would
16:41
be a little bit more kid friendly, but that's a
16:43
whole nother conversation. That's not what they're aiming for when
16:46
they put those Jeeps out on the market.
16:48
Speaker 2: Yeah, Tucker, I mean, I don't know, do you have
16:50
a different thought on all that. My general sense is
16:54
my opinion of Jeep has degraded over the last decade,
16:56
and my opinion of Hyundai has gotten better of the
16:58
last decade. No.
16:59
Speaker 4: I mean, my wife drives a Jeep Compass and yeah,
17:02
like Paul was saying, it's definitely can be tight quarters
17:05
with two kids. But other than that, I mean it's fine. Yeah,
17:10
I mean I definitely think there's a premium on the
17:12
Jeep brand, Like you're definitely paying for that extra And
17:16
we were looking into leases actually in the least pricing
17:19
like six months ago.
17:20
Speaker 3: It was just awful.
17:21
Speaker 4: So we had to buy the used car, the previous lease.
17:25
We had to buy it out. But yeah, there's definitely
17:27
a premium on the Jeep name, I'd.
17:29
Speaker 1: Say, yeah.
17:29
Speaker 2: I mean the biggest shock factor to me is just
17:32
if you bought your car five years ago and now
17:34
you're in that re up stage. I mean, car prices
17:38
across the country, that's where I'm at.
17:40
Speaker 3: I just can't imagine the new car market being so resilient.
17:44
It's just hard. I feel like the US would benefit significantly.
17:47
It's so expensive.
17:57
Speaker 1: Bringing the latest financial news. It's right to your radio
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Radio Network, breaking business news as it happens only here
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on the Financial Exchange Radio Network.
18:14
Speaker 2: Well, I think everybody's been feeling the pinch of higher
18:16
food prices, especially at the grocery store, although over the
18:20
last twelve months that piece of increase of the grocery
18:22
store has been slowing down. A Toast, which if you're
18:26
not familiar with, if you've ever walked into one of
18:28
those quick service restaurants and they have the little white
18:31
iPad looking thing there and then they flip it over
18:34
to you, a lot of those are made by a
18:35
company called Toast, actually based here in Boston, that you know,
18:40
designs those and sets up those payment systems. What they
18:45
did here is they took a look at trends in
18:46
quick service restaurants, which was just an interesting take, and
18:51
just you know, found that the average price across the
18:55
country paid for a number of different menu items than
18:58
the year of a year increases, So sandwiches and wraps
19:01
coming in eleven twenty six, twelve ninety eight for bowls
19:06
of one sort or another, eleven forty five for burgers,
19:08
eleven forty two for salads, ten seventy four for burritos,
19:12
six dollars for an order of fries, and three dollars
19:15
for a soda. And those dollars themselves, I don't know,
19:19
they ring pretty true to what I've seen around here.
19:22
Maybe a little bit low to what I've been seeing
19:25
for lunch items around here. But that pace of increase
19:28
that they're mentioning, I think is the interesting part. And
19:31
this is where the inflation has slowed down less is
19:33
on the meals away from home category. All of these
19:37
pretty much across the board seeing year over year increases
19:40
in price of over four and a half percent.
19:43
Speaker 3: Yeah, it's pretty significant across the country. And I thought
19:46
that Massachusetts would come in on the top five for
19:49
the most expensive sandwiches and wraps out there, but it
19:52
failed to crack the top five. None of the New
19:54
England states really are hit here. Hawaii is like a
19:58
whole thing unto itself. Obviously it's number one in you know,
20:01
most of these most expensive categories. But that piece was interesting,
20:06
that increase year over year around four and a half
20:08
percent for a lot of those different items that you mentioned, Mike,
20:11
as well as the traffic that they're seeing, and they're
20:14
seeing a little bit more shift towards people buying breakfasts out.
20:18
Speaker 2: Is that just people returning to the office, you think.
20:20
Speaker 3: I think it's got to be those coffee orders, right that.
20:23
Speaker 2: Yeah, coffee order. I was talking about maybe getting a
20:25
breakfast sandwich this morning. I'm regretting not having done so
20:28
now I just had to eat a pair instead. Didn't
20:30
really hit the spot a pair. Oh, I had a pair.
20:33
Speaker 3: During our break. That's that's quick too, really.
20:35
Speaker 2: A quick take dispair instead of the bagel breakfast sandwich
20:39
that I was looking for. But yeah, these trends make
20:42
sense to me. The one that I was maybe a
20:46
little bit surprised is that you really have not seen
20:49
the full impact of the California fast food pay changes yet.
20:54
Speaker 1: Now.
20:55
Speaker 2: This toast made the point that some quick service restaurants
20:59
are not subject to the fast food minimum wage rules,
21:02
which I don't really understand how that makes sense, because
21:06
I'm trying to think of a quick service restaurant that
21:08
wouldn't be categorized as fast food because Panera got classified
21:11
as fast food, a bunch of other big chains did,
21:13
so I'm unclear about how that works. But they are
21:17
seeing in California that if we take a look at
21:20
January of twenty twenty action. Now, let's go, let's go
21:22
more recently. Let's say the latest data they had with
21:24
June of twenty twenty four, when the median hourly based
21:30
wage for cashiers at QSRs was sixteen dollars and ninety
21:34
eight cents per hour. If we take a look at
21:36
June of twenty twenty three, according to their same data,
21:40
it was only sixteen oh five. It's not that far away.
21:43
And so clearly the full full effect of that new
21:48
California minimum wage law has not been felt at these
21:51
at these restaurants yet and which probably means that more
21:56
damage to come to those fast food restaurants and higher
21:59
prices for California diners in particular.
22:01
Speaker 3: Yeah, that started in April first, where California increased that
22:04
minimum waste to twenty bucks an hour.
22:06
Speaker 4: By the way, New Hampshire was number four on the
22:09
list for highest tips in the country at twenty point
22:11
four percent.
22:12
Speaker 3: So shout out in New Hampshire.
22:14
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23:28
Got it just shutting my mic off.
23:30
Speaker 2: Monday of this week, new CEO of Starbucks, Brian Nickel,
23:34
reported for work and already has a multipart strategy for
23:40
revitalizing the chains core businesses in the United States, apparently
23:43
just ignoring the fact that their business is just cratering
23:47
in China for the for the time being. Here but
23:50
us first, What is the strategy here for Brian Nickel
23:55
to turn around this company? And is he gonna get
23:58
it done?
23:58
Speaker 1: Paul?
23:58
Speaker 3: Sometimes these missions use corporate jogging. That's such bs that
24:02
I don't even know what that really means, like reinforcing
24:05
its brand, Like I don't know, I get what starb
24:08
experiend is, but I just don't know how you do
24:11
How are you going to do that?
24:13
Speaker 4: Well, No, he meant as a coffee house, a community
24:15
coffee house. I thought that was pretty significant to say
24:18
that that.
24:19
Speaker 2: What does that mean?
24:19
Speaker 3: What does that mean?
24:20
Speaker 4: Because people go to community coffee houses and sit down,
24:24
they linger, they have meetings. It's a place to have
24:28
an interview or catch up with a friend or something.
24:30
That's really gone away from Starbucks. It's just become a
24:33
mobile order h pick up.
24:36
Speaker 3: Can you be both?
24:38
Speaker 4: You have to be if you're Starbucks. And that's his challenge.
24:42
Speaker 3: Yeah, I find it hard with the they're going to
24:45
revamp the whole h online mobile ordering side of things.
24:48
There's been a lot of issues that have come up
24:50
on that side of things, and I just I just
24:54
find it hard if you can strike that balance between
24:57
focused on high volume churning out drinks quickly for mobile ordering,
25:01
but also maintaining that sort of coffee house appeal if
25:05
you can.
25:05
Speaker 2: Now you're point, Tucker, I think I hadn't really concerted
25:10
it until you just brought it up. Because you're absolutely
25:12
right that I go ahead.
25:14
Speaker 4: No, I was going to say that I used to
25:16
once in a while get out of the house and
25:18
go to Starbucks and do some work back way back
25:21
in the day. Now like I have no desire to
25:24
do that at all, and I have two kids.
25:27
Speaker 3: And I'm thinking about I'd love to get the hell
25:29
out of the house.
25:31
Speaker 4: Pick up takeout for.
25:32
Speaker 2: You longer is aimlessly around home depot now attacking to
25:34
other dads. It's a weird new trend.
25:37
Speaker 3: But that's a good point.
25:38
Speaker 2: I yeah, I hadn't thought about until right now, but
25:40
now that I consider it, sitting there in a Starbucks
25:43
coffee house and getting some work done when there's a
25:46
crowd of ten people waiting for their drinks and just
25:49
staring over your shoulder is not a great experience. But
25:52
my problem is the only way to fix that is
25:55
to put those people.
25:56
Speaker 4: Elsewhere got the stores.
25:59
Speaker 2: You got to completely they got the store, and re
26:01
reorganize them with separate entrances. I think if you're going
26:03
to fix that, and that's not a cheap, cheap proposal.
26:07
Speaker 4: I don't know about separate entrances, but maybe you could
26:10
have a split entrance like left as mobile orders and
26:13
right as the coffee.
26:14
Speaker 2: Yes, something like that, because because yeah, I don't know
26:17
how you get that done otherwise, Because even if they
26:19
were much faster about filling orders, which is another goal
26:23
of Starbucks CEO is to you know, get these orders
26:25
in and out faster than they currently are, even then
26:28
you still have the door swinging open every you know,
26:30
every five minutes, and in lar part of the country,
26:32
it's not only distracting, but you know, changes the environment
26:36
and just isn't that small coffee house vibe anymore?
26:40
Speaker 4: No, not at all.
26:41
Speaker 3: You do have to be more efficient with the mobile
26:44
and online orders. That's what creates that glot of people
26:46
just standing around there waiting. If you think about like
26:48
a Dunkin Donuts by comparison, I know they're not the
26:51
same vibe at all, but they are very efficient on
26:53
the mobile ordering sort of thing. So when you do
26:55
walk in there, oftentimes you see mobile orders lined up,
26:59
but you don't many cables.
27:01
Speaker 4: Yeah, they've accepted the fact that Duncan's accepted the fact
27:05
they're not a meet up destination unless you're like in Florida.
27:08
Speaker 3: But they do process them officially enough that if you
27:10
did want to sit in a Dunkin Donuts, you don't
27:13
feel overwhelmed by the amount of people lingering.
27:16
Speaker 2: Maybe the solution is just more of the more of
27:19
the almost highwayside Starbucks location ideas where there just isn't
27:23
a coffee house. Part of it just hey, you know
27:25
the next the next thousand stores we're going to open,
27:28
or don't really have a sit down space.
27:30
Speaker 4: Or just designate a certain store as a Starbucks Express
27:33
and it's strictly pick up right, Whereas if it's just
27:37
a Starbucks, then you have the coffee coffee house vibe.
27:40
Speaker 2: Well, clearly we just did your job for you, Brian.
27:43
I expect one one hundreds of your pay thank you.
27:46
I don't think figured it all out, figured it all out,
27:50
thank you. Let's take a quick break when we come back.
27:52
Stack Rougletts. Next.
27:54
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Speaker 4: The Financial Exchange is built in Crediblebord partnership with the
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K Boston is presented by Veterans Development Corporation. And I
29:15
was laughing because I don't know what the hell is
29:17
going on in Bloomberg. Just that guy was wearing like
29:20
a couch suit in a giant mullet.
29:24
Speaker 2: Yeah, to be fair, he had a giant mullet, a
29:26
billy goat goatee, and a suit that it does look
29:31
like it came from your grandma's nineteen seventies couch in
29:34
New York.
29:34
Speaker 4: It looks like he was just wearing drapes, ye, a
29:38
pattern of drapes.
29:40
Speaker 3: And he's also talking about cruise missiles, so it's not
29:43
like he's some like Dancing with the Stars correspondent or
29:46
something like that. He's supposedly behind cruise missiles. And he
29:51
looks like Michael Jackson with like that grandmother's couch jacket.
29:56
Vice yest we digress, Yeah, for sacrament for us, Paul,
30:01
I don't know how I can even pivot to something
30:03
so serious after that. But anyway, Intel is really just sailing,
30:07
sucking wind in all capacities. They recently came out with
30:11
one of their worst quarters to date, where their revenue
30:15
has shrunk seventy percent from back in twenty twenty one
30:19
to where it stands today about fifty two billion in
30:22
revenue for twenty twenty four. Intel was undergoing this huge
30:26
shift where they were going to focus much more on manufacturing.
30:29
In fact, they are the biggest bet behind the Biden
30:33
Administration's Chips Act, where there's a much more bigger focus
30:37
on having semiconductor manufacturing done domestically. Now the majority of
30:42
the manufacturing is done in Taiwan and South Korea with
30:45
all the geopolitical issues that can surround those countries, there
30:49
was a focus on bringing some of the back to
30:52
the United States, and it's questionable as to whether Intel
30:56
is going to kind of keep itself propped up enough
30:58
with its existing business operations to be able to take
31:02
the time and money to get its manufacturing up to
31:05
stuff over the next couple of years.
31:07
Speaker 2: Yeah. I mean, the big disappointment to me would be
31:09
this is the company that the United States has thrown
31:13
its support behind to be best in class at semic
31:16
nector manufacturing and seems to be. I mean, the facts
31:19
are in the evidence. Their sales are about seventy percent
31:22
of what they were a few years ago across their products, and.
31:25
Speaker 3: Their the second worst performing stock in the S and
31:28
P five hundred this year, down sixty percent. They missed
31:30
the boat on all of this AI boom that has
31:33
gone on over the last couple of years. They missed
31:35
the boat on Mobile a decade plus back. It's just
31:38
been a series of missteps for Microsoft and not Microsoft
31:43
Intel rather, and you just have to wonder the stability
31:46
that Pat Gelslinger is going to have as CEO since
31:49
he took over in twenty one, just things have not
31:51
not been working out for him.
31:53
Speaker 2: We have two different stories here about how being an
31:56
investment banker just sucks for people unfamiliar with that lifestyle. Yeah,
32:03
you got a starting wage coming out of some of
32:05
these schools of about two hundred thousand dollars to work
32:08
as an investment banker in New York City, and you
32:12
work a good eighty plus hours a week. Eighty hours
32:15
a week is the standard schedule for an investment banker
32:18
in New York these days. Getting particular attention because earlier
32:22
this year, a thirty five year old ibanker from Bank
32:24
of America died on the job after autopsy founding that
32:28
he had a blood clot and that formed in a
32:30
coronary artery. But had been working one hundred something hours
32:34
was it one hundred and thirty hours or something like
32:36
that that week, And so now JP Morgan and Bank
32:40
of America saying that we're going to be backing off
32:42
the hours. And you know, there's a lot of stuff
32:44
that came out to at Bank of American, particular, finding
32:47
that bosses were telling people to improperly fill out their
32:50
time cards to you know, give management the false sense
32:53
that they weren't working quite as much as they were.
32:56
So that's the American side of investment banking. I did
32:59
want to take a minute two to talk about why
33:01
it sucks to be a Chinese investment banker. In this case,
33:05
the government has started taking passports and arresting some investment bankers,
33:11
as well as telling all of them that they needed
33:14
to pre clear their travel plans overseas with the government
33:18
and give notice if you plan on resigning anytime in
33:21
the future as an investment banker. So obviously very different
33:27
stories here, but the life as an investment banker globally
33:32
right now, I think it might be hitting some new
33:34
lows in China. My only guests here. So they're calling
33:37
it a corruption sweep, which you know, clearly just means
33:41
that investment bankers are doing something that the government disagrees with,
33:45
rather than actually being corrupt in all likelihood, And so
33:50
what could it be. I mean, you could have had
33:53
some stock prices pumped up over the last few years
33:56
from investment banks. You also could have just the Chinese
34:00
government unhappy with the state of the IPO market in China,
34:04
with you know, no one, no global investors being terribly
34:07
excited about pumping new money into initial public offerings in
34:11
China at the moment. And I have to say that
34:15
arresting said investment bankers and prohibiting them from traveling overseas
34:19
to attract new investor attention doesn't seem like it's going
34:23
to be a winning strategy to fixing your public markets problem.
34:26
Speaker 3: I can't imagine that morale would be particularly high at
34:30
any of those companies where you have to fear for
34:34
kind of your life, you know, on a day to
34:36
day basis.
34:37
Speaker 2: One hundred percent. Yeah, that's what you're in fear for.
34:39
It's not your job, it's not your financial wellbeing. Three
34:43
separate top investment bankers from different securities firms have all
34:46
been detained by Chinese authorities since August, one of them
34:51
tried to flee the country and was sent on back
34:54
and uh, yeah, that's just a day in the life
34:57
of trying to you know, do your work China.
35:00
Speaker 3: These stories always reemphasize the point that as many complaints
35:03
as you can have about the United States, it sure
35:06
is a lot better than some of the other Yeah.
35:08
Speaker 2: I mean, I don't want to go work for Bank
35:11
of America as an investment banker. I know that, you know,
35:14
had a lot of sex appeal for a lot of
35:17
grads getting out of there, making you know, a couple
35:19
hundred thousand dollars in your first ever job. But nobody's
35:23
going to force me to do it. And if I
35:25
choose to do it, no one's going to tell me
35:26
that they have to keep my passport. So, you know,
35:30
trade offs. That's all the time we have for today's
35:33
financial exchange. Markets are well. The S and P actually
35:36
exactly flat at the moment, NASDAK still up, but only
35:39
about a fifth of a percent dowed down by about
35:42
the same percentage wise. We'll cover all that and more
35:45
tomorrow to wrap up the week on the financial exchange