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AI Spending Puts Microsoft and Meta on the Spot · The Financial Exchange Show

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Speaker 1: Zada and Paul Lane.
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Speaker 2: Yeah, it's Chuck, it's Paul, and it's Tucker here. And
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Speaker 2: we've got just like nothing really great going on in
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Speaker 2: markets this morning, honestly, like, yeah, is not great anywhere.
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Speaker 2: It's not like awful, but it's it's not great. The
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Speaker 2: S ANDB five hundred down fifty five points, about three
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Speaker 2: quarters of percent. Dow was off eight hundred points, about
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Speaker 2: one and a half percent. Nasdak Can posite down to
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Speaker 2: twenty six about one percent, so we called a one
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Speaker 2: percent sell off that's happening. Uh. You've got the tenure
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Speaker 2: Treasury up three point three basis points to four point
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Speaker 2: three four point sixty three seven. So you've got bond
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Speaker 2: selling off a little bit, Gold down thirty six dollars
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Speaker 2: an ounce to four thousand and two, gold selling off
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Speaker 2: a little bit. Uh. West Texa intermediate crude oil up
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Speaker 2: six dollars a barrel to eighty five twenty nine, seven
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Speaker 2: and a half percent up. Again, there's just not anything
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Speaker 2: that I can point to in today's market that's good news,
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Speaker 2: and that's that's that's not great. Like you like to
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Speaker 2: see something where you can be like, hey, like look
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Speaker 2: at this, but it's it's just not there unless you
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Speaker 2: like bad news. Uh. We've got a FED meeting today
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Speaker 2: at two pm Eastern.
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Speaker 3: UH.
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Speaker 2: Press conference from Kevin worsh at two thirty. Uh, we've
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Speaker 2: been looking for Have you found him?
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Speaker 1: Tucker?
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Speaker 2: You found Kevin?
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Speaker 4: What do you mean?
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Speaker 2: I thought you were going to go play a little
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Speaker 2: sound effect there. Yeah, so you're going towards the sound
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Speaker 2: computers looking.
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Speaker 3: For a snack or lunch or something over there.
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Speaker 2: Yeah, yeah, it's not looking for Kevin. Listen, I'm hungry too,
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Speaker 2: don't don't get me wrong. Reaching for the old Apple here.
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Speaker 2: I thought that was the computer. Hah huh, huh huh, okay, No,
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Speaker 2: Apple earnings is tomorrow unfortunately, today though we do have
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Speaker 2: Microsoft and Meta earnings happening after the bell and the
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Speaker 2: last couple of weeks we've seen something interesting, which is
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Speaker 2: tech companies, smaller ones obviously, whether semiconductor companies specifically, or
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Speaker 2: you know, one's just associated with that ecosystem reporting earnings,
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Speaker 2: earnings generally being pretty good, and then there's companies just
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Speaker 2: being punished. So something's up. And it's not just in
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Speaker 2: the equity market. Credit default swap spreads are you know,
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Speaker 2: moving up for a lot of the hyper scalers. You've
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Speaker 2: got bonds that are selling off for a lot of
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Speaker 2: the hyper scalers, and so I think it's a really
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Speaker 2: interesting question as to what are these guys going to
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Speaker 2: tell us about how their AI business is growing, what
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Speaker 2: are they going to tell us about how their capex
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Speaker 2: for that business is growing, and what's the market response
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Speaker 2: to all that? Because it hasn't been great so far
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Speaker 2: this earning cycle.
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Speaker 3: Chuck, it just seems like it's gonna be a tough
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Speaker 3: putt for several of these companies to really impress Wall
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Speaker 3: Street because there has been so much scrutiny on the
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Speaker 3: amount of money that they're spending. Google just came out
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Speaker 3: with their earnings last week. They are spending about four
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Speaker 3: hundred and ninety million dollars a day on their AI endeavors.
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Speaker 3: They have about thirty nine billion in cash that they
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Speaker 3: pulled in for the last quarter that they just reported on. Still,
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Speaker 3: that's thirty nine billion a quarter of just pure profit
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Speaker 3: coming in their way. They still were in a six
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Speaker 3: billion dollar hole because they're spending so much money. And
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Speaker 3: the same thing applies here when you look at Microsoft
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Speaker 3: and Meta. The advantage that Google has that Microsoft, Microsoft
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Speaker 3: has some of the overlapping advantages, but Meta certainly doesn't.
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Speaker 3: Is that Google is pretty well integrated across the whole
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Speaker 3: AI stack, where they've got chips that they designed, They've
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Speaker 3: got the infrastructure of a lot of the computing and
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Speaker 3: the cloud business, and then they've got obviously their search
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Speaker 3: products and other apps out there that are used by
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Speaker 3: billions of people. When you look at Microsoft and Apple,
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Speaker 3: while Microsoft had Microsoft and Meta, I should say, while
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Speaker 3: Microsoft does have the cloud computing business that will be
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Speaker 3: probably of most focus here besides the capex numbers that
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Speaker 3: we're gonna get where they're anticipating about forty percent growth
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Speaker 3: in their Azure cloud computing space. But even Google came
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Speaker 3: out with really robust cloud revenue and still Wall Street
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Speaker 3: was unimpressed. Really what we're looking at with the numbers
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Speaker 3: on Microsoft's they're anticipating spending about two hundred and thirty
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Speaker 3: billion dollars for fiscal twenty twenty seven, and their cash
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Speaker 3: flow like Googles and metas too, It's just amazing. These
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Speaker 3: businesses chuck are cash geysers typically in terms of free
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Speaker 3: cash flow generation, and they're spending all that to build
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Speaker 3: out these these AI endeavors. And really what the market
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Speaker 3: continues to debate every single day is whether or not
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Speaker 3: these investments will generate a requisite return on invested capital
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Speaker 3: in a in probably a near timeframe than what might
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Speaker 3: actually be the case.
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Speaker 2: Yeah, that's the question. And Mark Fandei and I talked
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Speaker 2: about this last week, but it's oh, thank you, Mark.
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Speaker 2: It really is this question. When you talk about, you know,
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Speaker 2: that return on invested capital, it's okay, Like, show me
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Speaker 2: what you are having to raise for debt inequity number
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Speaker 2: one in order to do this. That's gonna be your denominator.
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Speaker 2: And if that is going up, but your net operating
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Speaker 2: profit isn't, your ROC is going down, which is which
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Speaker 2: is bad. The other piece that we have to talk about, like, yeah,
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Speaker 2: last week we were just talking about, hey, if you're
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Speaker 2: raising more money but your income stays the same, Like
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Speaker 2: that's that's not great. The other piece is, hey, what
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Speaker 2: if your income doesn't stay the same. Because I'm just
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Speaker 2: looking at the numbers that are out there for like
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Speaker 2: the next three years now, twenty twenty seven to twenty nine,
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Speaker 2: between your big hyperscalers, you're talking like two point five
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Speaker 2: to three trillion dollars in capex combined. Yep, the big
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Speaker 2: hyperscalers have around four hundred billion dollars a year in
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Speaker 2: profit right now when you will get all of them together.
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Speaker 2: And so if you just factor in the depreciation from
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Speaker 2: all of that new stuff, like just from those years,
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Speaker 2: not even like this year, previous years, but you look
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Speaker 2: at and you go, Okay, let's say it's a six
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Speaker 2: year depreciation schedule, which is pretty much where most of
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Speaker 2: them are coming in. Well, that's four hundred billion dollars
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Speaker 2: a year in depreciation that's going to be hitting their
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Speaker 2: income statement. Because remember, and sorry for the accounting on
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Speaker 2: the radio, but here's how it works. When we talk
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Speaker 2: about a capital expenditure, the outflow hits your cash flow
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Speaker 2: statement as an investing activity it then it doesn't show
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Speaker 2: up on your income statement. Then the depreciation from that
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Speaker 2: will show up as it eventually hits. And so the
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Speaker 2: question that I have is, look, if you've got four
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Speaker 2: hundred billion dollars in profits between all your hyperscalers right
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Speaker 2: now and within the next three years, they're cumulatively going
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Speaker 2: to be having some we're in the ballpark of again
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Speaker 2: if they continue to build out in this fashion, like
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Speaker 2: four hundred to five hundred billion dollars a year in
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Speaker 2: depreciation hitting well just to overcome that, Okay, and again,
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Speaker 2: think of it this way. Let's say that you need
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Speaker 2: to okay, just get back to where you were. You
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Speaker 2: need to get that four hundred billion in profit back
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Speaker 2: from it. Well, remember every dollar you receive from those
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Speaker 2: services is not going to be profit. If you assume
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Speaker 2: call it forty percent operating margins or something like that.
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Speaker 2: That means you need a trillion dollars in annual AI
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Speaker 2: sales to be able to just break even on this
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Speaker 2: from a profit perspective. And I just don't know where
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Speaker 2: you're gonna find another trillion dollars in sales. Like, that's
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Speaker 2: the piece, that is the piece that is tough, because
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Speaker 2: you need to be replacing employees in order to get
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Speaker 2: to those number of sales. You can't take a sixty
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Speaker 2: thousand dollars employee, bolt another thirty thousand costs on and
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Speaker 2: be like, well we'll just raise our price. No, Like,
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Speaker 2: you need to be getting rid of that employee, which
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Speaker 2: is where all of the fears of high unemployment come from.
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Speaker 3: And that's where the timing factor comes into place, where yeah,
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Speaker 3: maybe these investments will generate significant returns in the future
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Speaker 3: where exactly what you just mentioned does happen. But I
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Speaker 3: just don't know within the business cycle of corporations around
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Speaker 3: the country that it's that quick of a light switz
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Speaker 3: reaction where Okay, we've got all this compute online. Now
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Speaker 3: these models are really going to evolve and develop and
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Speaker 3: a gentic workflows are really going to be so pervasive
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Speaker 3: that we're gonna lay peep off and then and then
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Speaker 3: we're gonna get these robust sales from it. You mentioned
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Speaker 3: another piece that you did the right thing in discounting
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Speaker 3: down the margins on it. Google has typically operated this
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Speaker 3: incredibly high margin business. It's been it's probably one of
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Speaker 3: the best businesses of all time. Really, yes, in terms
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Speaker 3: of the way they're able to overlay their fixed expenses
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Speaker 3: on basically an unlimited amount of search that's out there
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Speaker 3: in the world. This business that we're going they're going
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Speaker 3: into here that you did adjust down and say, hey,
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Speaker 3: maybe it's forty percent margins, but who knows, right like
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Speaker 3: this is much more of a picks and shovels, physical
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Speaker 3: hard asset business from the business that they came from
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Speaker 3: that they built into a behemoth of a company. Was
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Speaker 3: on very high margins and very low fixed expenses. Now
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Speaker 3: with all the data center issues that you run into,
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Speaker 3: it's a far different landscape that you're battling in so
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Speaker 3: numerous challenges, and that's why everything that we just encapsulated
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Speaker 3: in this discussion is a lot of expenses. We'll see
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Speaker 3: if we get the revenue from it. Probably what happens
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Speaker 3: usually in these cycles is the revenue doesn't come soon
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Speaker 3: enough and the market has to reprice. But that's what
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Speaker 3: we debate and try and figure out every day. There's
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Speaker 3: always the argument that this time is different. We will
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Speaker 3: see and will be interesting to see what these companies
10:49
Speaker 3: come out with in terms of their earnings at the
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Speaker 3: close of belt today. Both of them, right, Hygrosoft and
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Speaker 3: a Meta We didn't really hit on too much, but
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Speaker 3: same thing. They're spending about load of money.
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Speaker 2: Let's take a quick break. When we come back, Mark
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Speaker 2: Zuckerberg is saying some things about AI and we'll discuss
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Speaker 2: them next.
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12:08
Speaker 2: So Mark Zuckerberg is a human, or at least he
12:12
Speaker 2: likes to make us think that he is. And he's
12:15
Speaker 2: been talking the last couple of days about artificial intelligence.
12:21
Speaker 2: What does he had to say, Paul?
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Speaker 3: He has had a couple of different commentaries out there.
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Speaker 3: I was mentioned to you during the break. It does
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Speaker 3: seem like all these public figures that are sort of
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Speaker 3: at the forefront of AI are on a press tour
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Speaker 3: where they're really trying to reshape the way the public
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Speaker 3: feels about AI. A lot of them had come out
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Speaker 3: initially mentioning their concerns regarding job destruction and sort of
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Speaker 3: some of the more pessimistic things that could come from AI,
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Speaker 3: kind of like clockwork. Over the course of the next
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Speaker 3: three last three to six months, or maybe a little
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Speaker 3: longer than that, you've seen, you know, executives like Sam
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Speaker 3: Altman and Zuckerberg as well, basically stated that they want
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Speaker 3: intelligence for everyone and that they feel as if it
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Speaker 3: can create a lot more jobs and not destroy jobs
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Speaker 3: in the economy. And ultimately it's hard to take what
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Speaker 3: they're saying at full face value because they are sort
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Speaker 3: of incentive to shift the narrative around AI in general.
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Speaker 3: But recently he has had some commentary Mark Zuckerberd saying
13:22
Speaker 3: that in terms of AI development, like a lot of
13:25
Speaker 3: tech executives from the Silicon Valley area, they don't want
13:28
Speaker 3: government interference, and well, of course they don't exactly exactly,
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Speaker 3: So again all of these commentaries they're self serving, right.
13:37
Speaker 3: They're spending one hundred forty something billion in Capex to
13:42
Speaker 3: build out their AI capabilities. They don't want anything to
13:45
Speaker 3: impede its progress. So having a thirty or sixty day
13:50
Speaker 3: review on new models by the government, even though Meta
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Speaker 3: doesn't really have one that's at the frontier that is
13:56
Speaker 3: a detriment to their business, so of course they're going
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Speaker 3: to side on that front of not having too much
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Speaker 3: government interference. And then also he has some commentary in
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Speaker 3: here basically saying that we should not ban Chinese AI,
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Speaker 3: which has sort of come out as distilling some of
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Speaker 3: the US models to produce open source models that everyone
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Speaker 3: can see they're not proprietary, and that has become headlined
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Speaker 3: recently as well.
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Speaker 2: So there's a lot to unpack here trying to think
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Speaker 2: of where I want to start. Start at the beginning.
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Speaker 2: Mark Zuckerberg a trustworthy character, not particularly I don't really
14:35
Speaker 2: think so. When it comes to how he's handled the
14:39
Speaker 2: burden of being one of the stewards of technology in
14:44
Speaker 2: the United States and in the world. I don't think
14:47
Speaker 2: they've done a particularly good job. Facebook has continually not
14:51
Speaker 2: really cared about privacy, security, these types of things have
14:56
Speaker 2: been secondary concerns to them for a number of years.
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Speaker 2: So I approach everything regarding Facebook and Mark Zuckerberg knowing
15:07
Speaker 2: that history, because you can't just discard it. It matters. There's
15:12
Speaker 2: a big difference between like Mark Zuckerberg telling you something
15:14
Speaker 2: and mister Rogers telling you something. Mister Rogers, You're like,
15:18
Speaker 2: that dude is speaking the truth. Mark Zuckerberg, You're like, yeah,
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Speaker 2: but what do you really want? Like that, That's how
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Speaker 2: I feel at least, So when did mister Rogers die?
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Speaker 3: I was gonna make that crutches. Yeah, it probably fifteen
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Speaker 3: twenty years ago.
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Speaker 2: Yeah, it feels like that. It's been a minut two
15:35
Speaker 2: thousand and three, still.
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Speaker 3: Has a show that's like of his d Tiger.
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Speaker 2: Yes, I'm a fan, I'm a fana, you know, but
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Speaker 2: so I think my first thing is okay, it's like,
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Speaker 2: what are you trying to get from me? Mark? And
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Speaker 2: it very clearly seems to be, hey, I want you know,
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Speaker 2: Mark Zuckerberg is saying, y'all stop paying so much attention
15:57
Speaker 2: to what I'm doing. I just want to go do it,
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Speaker 2: and like you could buy that if it weren't like, okay,
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Speaker 2: but you've done these questionable things before. And even as
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Speaker 2: it relates to AI, it was about a year ago
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Speaker 2: that we covered the fact that Meta had outlined the
16:13
Speaker 2: acceptable sexual topics for its chatbots to flirt with thirteen
16:19
Speaker 2: year olds using and we were like, this is kind
16:22
Speaker 2: of problematic that they thought about this and still said
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Speaker 2: like X, Y and Z is okay, like this is
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Speaker 2: this is not great. So I look at this, and
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Speaker 2: it's clear that Mark and the other AI guys want
16:36
Speaker 2: the federal government to not regulate them in any way,
16:40
Speaker 2: shape or form, which is going to work fine right
16:43
Speaker 2: up to the point where AI agents developed by these
16:47
Speaker 2: companies start attacking, you know, other websites and things like
16:51
Speaker 2: oh gee, the open AI one that apparently was just
16:54
Speaker 2: walking around the Internet for four days and actually attacked
16:57
Speaker 2: two websites, not just one. And remember, these are the
17:02
Speaker 2: worst AI models and agents that you will ever see.
17:05
Speaker 2: For the rest of your life, everyone that you see
17:08
Speaker 2: from here on out is going to be more capable, faster, smarter,
17:12
Speaker 2: better at doing what you tell it to do. And
17:15
Speaker 2: so I gotta be honest. I continue now to get
17:19
Speaker 2: to the point where, look, the only thing that's gonna
17:22
Speaker 2: make people change their minds about this is when an
17:25
Speaker 2: AI agent does something that costs billions of dollars to
17:30
Speaker 2: people or millions of lives, because that's where we're heading.
17:33
Speaker 2: It's you know, you ask the AI agent, hey, you know,
17:36
Speaker 2: help me, you know, acquire more assets form my asset
17:39
Speaker 2: management firm and it goes and robs all the banks
17:43
Speaker 2: like and it's like, oh, I thought you wanted to
17:45
Speaker 2: get more money. It's like, yes, I didn't want you to,
17:48
Speaker 2: you know, hack into JP Morgan and take all of
17:51
Speaker 2: the money. That's not what we intended here. Or the
17:55
Speaker 2: guy who's you know, running the nuclear power plant, Hey,
17:58
Speaker 2: can you you know, make this plan and you know,
18:01
Speaker 2: operate as efficiently as possible. Great, we're gonna shut down
18:04
Speaker 2: the control pull the control rods out, you know, we
18:06
Speaker 2: don't again, It's this is where we are heading eventually,
18:13
Speaker 2: is if the the smartest people who are developing these
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Speaker 2: are finding that they can't control them, then the not
18:22
Speaker 2: smartest people that are given more advanced models are not
18:26
Speaker 2: going to be able to control them appropriately as well,
18:29
Speaker 2: and they are going to be negative consequences. This is
18:32
Speaker 2: before we even get into Did you see Willie Nelson yesterday?
18:35
Speaker 2: You big Willie Nelson.
18:36
Speaker 3: Fan, not not against him, but not a huge fan.
18:40
Speaker 2: Sure, so Willie Nelson not exactly you know, someone who
18:44
Speaker 2: you think of as like on the cutting edge, do what? Yeah? Exactly.
18:49
Speaker 2: Willie Nelson put out a whole statement yesterday basically like hey,
18:54
Speaker 2: I don't want any of these data centers in rural America.
18:58
Speaker 2: Rural America does not belong to two tech companies, and
19:02
Speaker 2: I don't want them there. That's where this discourse has
19:05
Speaker 2: gotten to at this point. Well, like Willly freaking Nelson
19:09
Speaker 2: is chiming in on it. That's how much this stuff
19:11
Speaker 2: is hated. And that's the other piece that I get to.
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Speaker 2: When's the last time you had like a popular technology
19:18
Speaker 2: that everyone was just like, oh, I hate this. It's
19:22
Speaker 2: social media and that hasn't exactly worked out great for
19:25
Speaker 2: us either. Take a quick break. When we come back.
19:29
Speaker 2: We got Wall.
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Speaker 4: Network, markets aren't selloff mode ahead of a busy afternoon
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Speaker 4: even where the Fed will announce the decision on interest
20:02
Speaker 4: rates at two, followed by tech earnings from Microsoft and
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Speaker 4: Meta after the bell. Furthermore, oil jumping higher after Iran
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Speaker 4: targeted a US base in Jordan. Right now, the Dow
20:13
Speaker 4: is down one and a half percent or seven hundred
20:15
Speaker 4: and ninety four points lower. Sm P five hundred down
20:18
Speaker 4: about eight tenths of a percent or fifty nine points lower,
20:21
Speaker 4: Nasdaq down over one percent, down by two hundred and
20:24
Speaker 4: sixty nine points, RUSS two thousand is down one point
20:27
Speaker 4: two percent, Tenure treasureeled is up three basis points at
20:32
Speaker 4: four point sixty three percent, and Oil jumping over seven
20:35
Speaker 4: percent higher, trading at eighty five dollars a barrel. Procter
20:39
Speaker 4: and Gamble reported second quarter earnings that beat expectations but
20:42
Speaker 4: came up short on revenue as underwhelming demand for its
20:45
Speaker 4: products weighed on sales that stocked down by two percent. Meanwhile,
20:50
Speaker 4: shares and sneaker maker VF Corp sinking sixteen percent after
20:55
Speaker 4: the company said van sales in constant currency fell nine
20:58
Speaker 4: percent in the previous quarter are expected to decline by
21:02
Speaker 4: roughly the same amount in the coming quarter. And Human
21:06
Speaker 4: have reported second quarter results that top estimates as the
21:10
Speaker 4: health insurance spending on medical services came in line with expectations.
21:14
Speaker 4: The company also maintained its twenty twenty six adjusted profit
21:18
Speaker 4: outlook humanas shares down by six percent. I'm Tucker Silva
21:24
Speaker 4: and that is Wall street Watch.
21:26
Speaker 2: Paul, we got some earnings data from Ford yesterday. What
21:31
Speaker 2: did they tell us about how people are buying big
21:35
Speaker 2: metal things with wheels.
21:37
Speaker 3: Ford sales and revenue were down, but the stock did
21:43
Speaker 3: jump up because their earnings did come in higher than expected. Really,
21:47
Speaker 3: what they're seeing here is they had to deal with
21:50
Speaker 3: the fallout from one of their suppliers of an aluminum
21:53
Speaker 3: that had fire at one of their facilities. That really
21:57
Speaker 3: made for the first half of twenty twenty six to
21:59
Speaker 3: be than perhaps anticipated, as forward sales fell about ten
22:04
Speaker 3: percent over the course of the first half of twenty
22:07
Speaker 3: twenty six, but they are continuing to see a lot
22:11
Speaker 3: of sales volume in terms of their sales for the
22:14
Speaker 3: off road SUVs and truck variants that accounts for about
22:18
Speaker 3: close to twenty to twenty five percent of their US
22:20
Speaker 3: sales is on those bigger vehicles. Generally from the auto market,
22:24
Speaker 3: there's been a lot more focus for customers to be
22:27
Speaker 3: a little bit more cost conscious. You've seen compact SUVs
22:32
Speaker 3: increase about twenty three percent year over year in terms
22:35
Speaker 3: of their sales according to last month's data, whereas full
22:39
Speaker 3: size pickup trucks in that same span of time have
22:42
Speaker 3: only increased about two and a half percent. You're still
22:44
Speaker 3: seeing the average transaction volume on a car sale of
22:47
Speaker 3: about fifty thousand bucks, so a lot of people are
22:52
Speaker 3: opting out to be in that used car market. But
22:55
Speaker 3: in terms of Ford, it does seem like they were
22:58
Speaker 3: able to increase their off at forecasts for the year,
23:01
Speaker 3: so their stock was up I believe about six or
23:03
Speaker 3: seven percent over the course of yesterday.
23:06
Speaker 2: Here, folks, the Armstrong Advisory Group has a guide available
23:10
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23:15
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24:12
Speaker 2: Paul, I want to talk about FIFA, all right, Okay,
24:16
Speaker 2: FIFA for those of you who aren't familiar with them,
24:19
Speaker 2: they are the fine folks who put on the World
24:22
Speaker 2: Cup that was fantastic for you know, six weeks this summer.
24:25
Speaker 3: World Cup was fine. A debatable of FIFA often gets
24:29
Speaker 3: categorized as fine though.
24:30
Speaker 2: Well, and this is the thing. I think one has
24:32
Speaker 2: to hold two distinct views in their head, which is man,
24:35
Speaker 2: that World Cup was awesome and wow, those little like
24:40
Speaker 2: money grubbing Fifas are just like I can't stand them.
24:46
Speaker 2: And here's the latest in terms of what they are
24:50
Speaker 2: trying to do. So they are trying to reportedly take
24:56
Speaker 2: on external investors. They want to spin off the World
25:00
Speaker 2: Cup and other assorted events from FIFA into a separate
25:04
Speaker 2: entity that then they can attract outside investors. On, so
25:09
Speaker 2: they can take some of that outside investor money and
25:12
Speaker 2: use it to effectively bribe small countries to go along
25:17
Speaker 2: with the plan, because the way that the FIFA voting
25:20
Speaker 2: works is one country gets one vote regardless of how
25:23
Speaker 2: big you are, which is again I'm not saying that
25:25
Speaker 2: this is like that that's inherently a problem. What I
25:28
Speaker 2: am saying is a problem is that, Hey, if you
25:31
Speaker 2: pretty much tell smaller, less wealthy countries we can give
25:37
Speaker 2: you sums of money that are big for your country,
25:40
Speaker 2: you can get them to go along with doing lots
25:42
Speaker 2: of things that are bad for the game of soccer,
25:44
Speaker 2: this being one of them. Do you really want the
25:46
Speaker 2: World Cup owned by private equity firms? I don't. That
25:50
Speaker 2: just means the tickets are gonna get less affordable, the
25:52
Speaker 2: quality of the product is going to go down, and
25:55
Speaker 2: you're gonna end up hating it down the road. So
25:59
Speaker 2: I'm really kind to hoping that this doesn't end up happening.
26:02
Speaker 2: It probably will, just like most things that I don't
26:06
Speaker 2: like in this world, and I have to deal with
26:08
Speaker 2: that because I don't really get to choose the world
26:10
Speaker 2: that I live, and I just have to navigate.
26:12
Speaker 3: We can all agree it was an absolutely tremendous tournament.
26:15
Speaker 3: I think a lot of US got a great deal
26:17
Speaker 3: of enjoyment of it, even if you weren't a big
26:19
Speaker 3: soccer fan, just some of the cultural sort of meshing
26:23
Speaker 3: points between you know, the Boston area, Scotland. There's numerous
26:27
Speaker 3: other examples of this throughout the United States that aside,
26:31
Speaker 3: it does seem like whenever you have these live rights
26:34
Speaker 3: deals and FIFA is just as guilty as this as
26:37
Speaker 3: anyone else. NCA to a degree to has had this stance.
26:41
Speaker 3: They've been talking about expanding the World Cup in terms
26:44
Speaker 3: of teams this year. We did this year, yeah, further
26:48
Speaker 3: than it was this year, And this would probably cement
26:52
Speaker 3: that I would imagine is that you know, these private
26:55
Speaker 3: equity investors would want to see basically more games packaged
26:59
Speaker 3: together so they could sell them at a big, bigger
27:01
Speaker 3: bundle price. And while the tournament this year worked fantastic,
27:05
Speaker 3: even it's it's expanded form, and there were some questions
27:08
Speaker 3: as to whether some of these countries would be able
27:11
Speaker 3: to compete on the world stage. I think largely you
27:14
Speaker 3: didn't see as many blowouts that were potentially anticipated. I
27:19
Speaker 3: believe it was was it forty two, that it's settled
27:21
Speaker 3: at what number team is, Yeah, forty eight this year,
27:25
Speaker 3: forty eight this year, right, and they're talking about jumping
27:27
Speaker 3: it up to sixty four in the future. It just
27:31
Speaker 3: you got a great thing, don't mess with it. But
27:33
Speaker 3: once you get people trying to open up their pockebts
27:37
Speaker 3: to grab some money out of it, you get very
27:39
Speaker 3: skeptical if they can keep that momentum going.
27:42
Speaker 2: You know, I don't want to be a billionaire. I'm not,
27:46
Speaker 2: but like I don't want to be one. But if
27:48
Speaker 2: I were, what I would do is I would actually
27:50
Speaker 2: go around and like buy up the things that people
27:53
Speaker 2: like and then keep them the same m Like, I
27:56
Speaker 2: don't need the money at that point. And to be honest,
27:59
Speaker 2: that's kind of billionaires like used to do a long
28:02
Speaker 2: time ago. Like you think about like some of like
28:04
Speaker 2: so many great museums and things that exist in the
28:07
Speaker 2: United States. It's because great like wealthy people who you know,
28:11
Speaker 2: probably made their money in ways that are not so great.
28:14
Speaker 2: You know.
28:15
Speaker 3: Rockefeller is a good example of that. I mean, like, yeah,
28:17
Speaker 3: there are a lot of business practices that you could
28:20
Speaker 3: absolutely question correct, But if you look around New York City,
28:24
Speaker 3: a lot of influence and one of the greatest charitable
28:27
Speaker 3: donors of all time.
28:28
Speaker 2: Correct didn't like he didn't spend his money going towards
28:31
Speaker 2: just Oh, I need to make more money with like
28:33
Speaker 2: all of this was. No, my company's making way too
28:35
Speaker 2: much money. I need to do some things that might
28:37
Speaker 2: be good too, probably like burnish his image a little bit,
28:40
Speaker 2: but also like, hey, maybe he wanted those things too.
28:43
Speaker 3: He believed that with business that you had this sort
28:45
Speaker 3: of requirement to be philanthropic. Again, you can, you can
28:49
Speaker 3: push back in some of the business practices that got
28:51
Speaker 3: him there, but he was very philanthropic with his all
28:54
Speaker 3: the money he amassed.
28:55
Speaker 2: So like, let's let's say that I had one hundred
28:56
Speaker 2: billion dollars. Would I buy a sports team? Darn straight,
29:01
Speaker 2: I'd buy a sports team. I love sports. You know
29:03
Speaker 2: what I would do with it. Your beer's two dollars,
29:07
Speaker 2: Your hot dogs fifty cents. I don't need the money, Okay,
29:11
Speaker 2: Like I don't need the money at that point. Why
29:15
Speaker 2: you gotta have the hot dogs be twelve dollars?
29:18
Speaker 4: Well, because business is business, truck, oh, just being a
29:21
Speaker 4: business man.
29:22
Speaker 2: Tell me why? Okay? So the premium beer is nineteen dollars,
29:26
Speaker 2: but the regular one's seventeen.
29:28
Speaker 4: That's just what the market dictates.
29:30
Speaker 2: Tuck, huh, I get it. I see that, and like
29:35
Speaker 2: it's just ridiculous, Like I just don't understand. At some point,
29:38
Speaker 2: you just gotta be like enough's enough, man, And I
29:41
Speaker 2: get it, like supply and demand, Like there's demand for
29:43
Speaker 2: this and so they charge it. But you've got more
29:47
Speaker 2: money than you're ever gonna spend in your life, and
29:50
Speaker 2: you really just need to be like, well, we gotta
29:54
Speaker 2: get the ROI this year, so the like enough. I
29:59
Speaker 2: just I'm sick of it being like the only driving force.
30:04
Speaker 2: And look, I say it was sports, but it's it's
30:06
Speaker 2: freaking everywhere. Like eventually, don't you just have enough money?
30:09
Speaker 4: No?
30:11
Speaker 2: You know, I guess not, but I don't know. Like
30:15
Speaker 2: if if I were a hundred billionaire, I would buy
30:18
Speaker 2: up all kinds of cool stuff and then make it
30:22
Speaker 2: exactly how people want it. That would be my platform
30:27
Speaker 2: for becoming a hundred billionaire. I don't know how you like,
30:30
Speaker 2: it's not like you vote me that, but.
30:33
Speaker 3: Even like on a small there's there's examples out there,
30:36
Speaker 3: and I think you're right. It does date back to
30:39
Speaker 3: not this recent history, where like the Patagonia CEO bought
30:42
Speaker 3: hundreds of acres millions of acres of land in Chile
30:46
Speaker 3: and Argentina in the nineties and it gave it back
30:48
Speaker 3: to the federal government to make it as parks land,
30:51
Speaker 3: and there are numerous examples of this. There's seems to
30:54
Speaker 3: be less of that that occurs now.
30:58
Speaker 2: It's like we just think it's like it's so cool
31:01
Speaker 2: to be like nope, I'm just going to keep making
31:03
Speaker 2: more and it's like okay, like eventually like enough's enough.
31:06
Speaker 2: I don't know, I want more millionaires, fewer billionaires, but
31:08
Speaker 2: that's just me. Let's take a quick break. When we
31:11
Speaker 2: come back, we'll do stack roulette.
31:14
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32:19
Speaker 2: Probably what you got for stack Roulette check.
32:22
Speaker 3: Want to check in on Nike a little bit. In particular,
32:25
Speaker 3: Nike's business has struggled all across the globe over the
32:29
Speaker 3: course of the last few years or so. They've had
32:31
Speaker 3: a couple COEO changes to try and turn things around,
32:35
Speaker 3: but in particular, one area that they've really struggled in
32:37
Speaker 3: is selling in China. Their sales have fallen about thirty
32:40
Speaker 3: percent since twenty twenty one in China, and Mike and
32:44
Speaker 3: I were talking about on the show yesterday just which
32:47
Speaker 3: businesses have been able to make significant inroads. Which US
32:51
Speaker 3: businesses have been able to make significant inroads in China,
32:54
Speaker 3: and his argument was that very few have had long
32:57
Speaker 3: term six. No, he thought that he did know that,
33:02
Speaker 3: you know, very few businesses have had long term success
33:05
Speaker 3: in China, and that prompted me to sort of think
33:07
Speaker 3: about that along the lines of Nike and just did
33:11
Speaker 3: some quick searches. KFC and Young Brands was probably the
33:14
Speaker 3: most successful one that has kept you know, longer term
33:17
Speaker 3: inroads there. Because we had covered yesterday Starbucks had basically
33:21
Speaker 3: shut down its China operations and now you have Nike
33:24
Speaker 3: in sort of a free fall there where they did
33:26
Speaker 3: eight billion in annual revenue in twenty twenty one in China.
33:30
Speaker 3: That number is projected at close to five point eight
33:33
Speaker 3: billion in twenty twenty six for Nike. Just pointing to
33:39
Speaker 3: the struggles that Nike has had, they really took their
33:41
Speaker 3: eye off the ball over several years on the innovation
33:44
Speaker 3: front and just kept kind of running out their same
33:47
Speaker 3: tired ip of releasing these rare sneakers and ultimately have
33:52
Speaker 3: had a long haul into trying to turn around their
33:57
Speaker 3: business and the China market seems like an air that
34:00
Speaker 3: they are just really struggling to make any progress.
34:04
Speaker 2: I want to talk a little bit about door Dash.
34:07
Speaker 2: They announced yesterday that they have gained approval from the
34:11
Speaker 2: FAA to commercially operate a drone delivery system. I gotta
34:18
Speaker 2: tell you, I think this is a bad idea.
34:22
Speaker 3: You've been always very anti sky.
34:26
Speaker 2: I'm very anti drone because I believe that the skies
34:29
Speaker 2: need to be free. And it's one thing when you see,
34:31
Speaker 2: you know, a couple of planes at thirty thousand feet
34:33
Speaker 2: in this and that. It's another when you've got four
34:36
Speaker 2: hundred thousand drones zipping around at five pm around every
34:41
Speaker 2: city because every house is ordering door dash and these
34:44
Speaker 2: things are like blanketing the sky and you can't see
34:47
Speaker 2: if it's done of your cloudy out Even so, I've
34:51
Speaker 2: got kind of a problem with this. Additionally, you know,
34:57
Speaker 2: even beyond you know, just like the visual aspects and
35:02
Speaker 2: the fact that hey, maybe like occasionally a burrito falls
35:04
Speaker 2: out of the sky or something like that. Uh. Look,
35:07
Speaker 2: I gotta tell you all the people who are like, oh,
35:10
Speaker 2: like I can I can work door dash, you know,
35:12
Speaker 2: instead of you know, filing for unemployment. Gee, it doesn't
35:14
Speaker 2: seem like that's gonna be a possibility much longer now.
35:17
Speaker 2: I don't think that that's a reason to not do something.
35:19
Speaker 2: Technological progress always eliminates jobs, and we always find new ones.
35:24
Speaker 2: But I gotta tell you, I'm just not a fan
35:30
Speaker 2: of this. I don't want things. I don't want thousands
35:35
Speaker 2: of things in the sky bringing stuff.
35:37
Speaker 4: To So as part of the FAA approval, it grants
35:41
Speaker 4: the company the ability to operate the drones quote beyond
35:44
Speaker 4: visual line of sight exactly, so there won't be they
35:48
Speaker 4: won't be seen or no.
35:49
Speaker 3: No, no.
35:50
Speaker 2: That means that like the operator doesn't have to see it. Okay,
35:54
Speaker 2: so no, they could be remote, yes, directing. It's saying that,
35:59
Speaker 2: like they could be directing them from like twenty miles away.
36:01
Speaker 2: It's not saying that you won't see them. It's saying
36:04
Speaker 2: the drone operator does not need to be able to
36:06
Speaker 2: see them in order to do this.
36:09
Speaker 3: You know, these, this and autonomous driving have been by
36:13
Speaker 3: automus driving I'm fine with, but I'm just saying, like,
36:17
Speaker 3: these have been talked about for the last ten fifteen
36:21
Speaker 3: years and haven't made significant inroads. I get it. Way
36:24
Speaker 3: Mo's around and there's maybe I think they're projecting eighteen
36:27
Speaker 3: thousand automous vehicles in the US in like the next
36:30
Speaker 3: year or so, but still a small fragment of the
36:34
Speaker 3: overall auto market. The same thing here, I would imagine
36:38
Speaker 3: on the drone front. You know, yes, they've allowed them to,
36:41
Speaker 3: but it just doesn't seem like this has made tremendous inroads.
36:45
Speaker 3: So I have a degree of skepticism as to how
36:48
Speaker 3: frequent and prevalent this will be. Because of the FAA,
36:52
Speaker 3: you would think trying to be a little bit more
36:54
Speaker 3: measured in terms of how many drones they're going to
36:57
Speaker 3: allow to fly around.
37:01
Speaker 2: I hope so, because this is basically my nightmare is
37:06
Speaker 2: I just here's the thing. If if a car breaks down,
37:10
Speaker 2: pulls over to the side of the road, If a
37:13
Speaker 2: drone breaks down, it crashes out of the.
37:15
Speaker 3: Sky and could hurt people.
37:17
Speaker 2: Yeah, you know, And it's just like the economics of
37:20
Speaker 2: trying to make this work means that you probably have
37:22
Speaker 2: to build the cheapest drones possible if you're delivering you know,
37:25
Speaker 2: four dollars, you know, coffees and stuff like that.
37:28
Speaker 4: And so it's not coffee only iced only ice.
37:37
Speaker 2: What if it burns the drone? You know, Ouch, Please
37:40
Speaker 2: don't do that to me again, Tucker. Now, the one
37:44
Speaker 2: thing I'm not concerned about, the more I've thought about it,
37:46
Speaker 2: is people like misbehaving with the drones because if you
37:50
Speaker 2: do that, like if you like knock it out of
37:52
Speaker 2: the sky or yeah, your finger chopped chopped off, They're
37:56
Speaker 2: just not going to deliver to you anymore. Oh yeah,
37:58
Speaker 2: Ye'll just be like it's like a jerk you know
38:01
Speaker 2: around the corner who just wants to take a bath.
38:04
Speaker 2: Give the drones tasers. I'm like, fine, like arm the drones,
38:09
Speaker 2: like this is where we're heading.
38:10
Speaker 3: Anybody problem.
38:11
Speaker 2: If I'm not gonna have a say in it, then
38:13
Speaker 2: just go all out. At this point, my goodness, what
38:17
Speaker 2: I wouldn't give to be born in eighteen sixty seven
38:20
Speaker 2: quick break here for the rest of the day, FED
38:22
Speaker 2: recap tomorrow