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Job market may be at a tipping point · The Financial Exchange Show

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Speaker 2: Chuck Mike Ducker with you here today.
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Speaker 3: And if you liked the first three days of this week,
1:16
Speaker 3: you probably don't like this one. It's the first three
1:19
Speaker 3: days what we had small number of stocks, predominantly the
1:22
Speaker 3: big tech stocks roaring ahead, and a lot of other
1:27
Speaker 3: stocks in the S and P five hundred and NASDAC
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Speaker 3: kind of lagging behind. Breadth, as it's called, was very,
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Speaker 3: very weak. In fact, I think it was I forget
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Speaker 3: which day it was. It was either Monday or Tuesday.
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Speaker 3: We had the worst day since nineteen ninety in terms
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Speaker 3: of breadth where stocks still went up. There were over
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Speaker 3: two hundred and ninety more stocks that traded down then
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Speaker 3: up on one of those days. Again, I can't remember
1:52
Speaker 3: if it was Monday or Tuesday, and yet we still
1:55
Speaker 3: finished positive. That is the worst breadth performance for a
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Speaker 3: positive sa P five hundred day.
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Speaker 2: Since nineteen ninety.
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Speaker 3: Today, on the other hand, you've got the SNP down
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Speaker 3: twenty two points right now, about a third of a percent.
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Speaker 3: But at the moment, you've got two hundred and thirty
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Speaker 3: three stocks up, two hundred and thirty three more stocks
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Speaker 3: up than down. And so what's dragging the index. It
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Speaker 3: is big tech. It is Meta down twelve percent, Oracle
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Speaker 3: down four, Broadcom down three, AMD down three, Microsoft down three,
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Speaker 3: and Video down two. And so because of the big
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Speaker 3: you know waiting in the S and P five hundred,
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Speaker 3: those stocks being down outweighs the fact that Bank of
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Speaker 3: America is up one and a half, Starbucks is up
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Speaker 3: one and a half, Marriot's up one point two, Walmart's
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Speaker 3: up you know, one percent. That's still just not enough
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Speaker 3: to drag the index higher. So the Dow is up
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Speaker 3: three hundred and thirty six points. SNP is down twenty
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Speaker 3: one nasdak can posit down to twenty six. Let we
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Speaker 3: take a look at the bond market. Still a modest cell
3:00
Speaker 3: happening there after J. Powell told folks yesterday, Hey, all
3:05
Speaker 3: you that thought it was a given that we're gonna
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Speaker 3: cut again in December, I don't know if we're gonna
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Speaker 3: do that. So the ten year Treasury is up two
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Speaker 3: point nine basis points to four point oh eight seven.
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Speaker 3: Mortgage rates have responded as well. Thirty or fixed rate mortgage,
3:19
Speaker 3: according to Mortgage News Daily, has moved from six point
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Speaker 3: one to three percent to six point twenty seven so
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Speaker 3: more than an eighth of a percent jump yesterday. There
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Speaker 3: gold not seeing a ton of volatility. It is up
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Speaker 3: seven dollars and twenty cents an ounce at four thousand,
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Speaker 3: seven dollars and twenty cents. And we've got crude oil
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Speaker 3: West Texas Intermediate down three cents a barrel to sixty
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Speaker 3: dollars and forty five cents, So not much movement on
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Speaker 3: that side. Big reason why a lot of those tech
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Speaker 3: stocks are moving. We had three big earnings reports yesterday
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Speaker 3: with Microsoft, Meta, and Alphabets. Today we're gonna have Apple
3:59
Speaker 3: and Amazon after that bell. We'll talk about them in
4:01
Speaker 3: just a minute, but we're gonna kick things off this hour.
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Speaker 3: The piece from Axios titled the job market may be
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Speaker 3: at a tipping point. This from Neil Irwin. Did Neil
4:10
Speaker 3: used to be Wall Street Journal or was he New
4:12
Speaker 3: York Times US? New York Times, New York Times? So
4:14
Speaker 3: he's with Axios now, Mike, what is this tipping point
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Speaker 3: that we are hearing about?
4:18
Speaker 2: What's What's the tip.
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Speaker 4: The same one that we've been talking about now for months,
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Speaker 4: which is that the pace of hiring has dramatically slowed.
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Speaker 4: There are not as many job openings as there were
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Speaker 4: for the last several years. The labor market appears to
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Speaker 4: be better in balance the same things that the FED
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Speaker 4: has talked about. The tipping point would be do you
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Speaker 4: continue this trend because the trend has been fewer companies hiring,
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Speaker 4: not huge layoffs, but some here and there. We've had
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Speaker 4: two big announcements just this week, and so were you
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Speaker 4: to follow the trend line, you would expect unemployment to rise,
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Speaker 4: You would expect this state of hiring to continue to
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Speaker 4: be weaker. But look, we've had several of these moments
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Speaker 4: where we get to this kind of uncomfortable level. One
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Speaker 4: of them was last summer when we were talking about
5:01
Speaker 4: the som rule. All the time unemployment rate was moving up.
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Speaker 4: We talked about it. Usually the unemployment rate doesn't start
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Speaker 4: moving up and then just stop there. It did, It
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Speaker 4: paused and kind of settled into a level that we
5:13
Speaker 4: are similarly at now. And so that is the potential
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Speaker 4: tipping point is do we head further in this direction
5:20
Speaker 4: where companies feel under pressure and reduce their workforce or
5:25
Speaker 4: are we just reaching a new equilibrium and it is well, Frankly,
5:29
Speaker 4: if the FED doesn't know, then I'm not willing to
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Speaker 4: say that I have any definitive idea.
5:34
Speaker 5: No.
5:34
Speaker 3: I mean, look, the FED has access to better data
5:37
Speaker 3: and they have better contacts than you and I do,
5:39
Speaker 3: and so yeah, I think that's a fair place to
5:42
Speaker 3: be the question on this. And Mark and I talked
5:46
Speaker 3: about this a little bit yesterday. You know, you've got
5:49
Speaker 3: some companies. Amazon just as an example, announced that they
5:51
Speaker 3: were going to be laying off fourteen to thirty thousand
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Speaker 3: people as part of a restructuring that they're doing. And
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Speaker 3: one of the things that I think is interesting to
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Speaker 3: think about is the context of labor supply and demand
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Speaker 3: over time, and how it's similar to the housing market
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Speaker 3: in this respect in that one of the things I
6:12
Speaker 3: wonder about are the people that are being laid off now,
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Speaker 3: the extra workers that were hired in twenty one and
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Speaker 3: twenty two when these companies thought they really had to
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Speaker 3: staff up, and remember how competitive it was for workers
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Speaker 3: then it was absolutely crazy, and so some of the
6:27
Speaker 3: compensation packages were just nuts. And part of what I
6:30
Speaker 3: wonder now is, hey, is this kind of time arbitrage
6:34
Speaker 3: from these companies where they say, yeah, we're gonna fire
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Speaker 3: these workers that were brought on in twenty two and
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Speaker 3: twenty one with these crazy comp packages, and then we're
6:45
Speaker 3: gonna let things sit for six months and the labor
6:47
Speaker 3: market isn't as robust now, and if we need to
6:48
Speaker 3: bring someone else on, we can do it with a
6:51
Speaker 3: far less competitive pay package today than.
6:53
Speaker 2: Was required with that person that we're letting go now.
6:56
Speaker 4: Right, Yeah, you do wonder, like how I wonder if
6:59
Speaker 4: I can pull this ups? This week announced what forty
7:01
Speaker 4: three thousand, eight thousand job cuts? How much did they
7:06
Speaker 4: have to ramp up back during twenty twenty when we
7:07
Speaker 4: were all sitting on our couches and ordering everything that
7:10
Speaker 4: we had in our homes online. Yeah, maybe this is
7:14
Speaker 4: just a return to normalization on the labor force. But
7:17
Speaker 4: I'll actually look it up after.
7:18
Speaker 5: The next break.
7:19
Speaker 4: But I don't know which direction we're headed on all this,
7:22
Speaker 4: and the FED is admitting the same look. We could
7:25
Speaker 4: be heading towards a much weaker labor market, or this
7:29
Speaker 4: just could be a normalization after a very strange few
7:32
Speaker 4: years and a come down from the sugar high.
7:36
Speaker 3: The counter to this is typically consumer spending leads, hiring
7:42
Speaker 3: or layoffs. We have still not seen any meaningful shift
7:46
Speaker 3: in consumer spending in the aggregate. You are seeing where
7:50
Speaker 3: it's going moving around, but we're still running four to
7:54
Speaker 3: six percent year over year and consumer spending. Yeah, remember
7:56
Speaker 3: three percent of that's inflation, so it's like one to
7:59
Speaker 3: three percent reels spending growth.
8:01
Speaker 2: And until that changes, it's.
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Speaker 3: Tough for me to see layoffs happening because companies don't
8:06
Speaker 3: just sit around and say, let's lay people off, you know,
8:10
Speaker 3: like they do it because they don't have the demand
8:12
Speaker 3: and they want to maintain margins. So demand leads hiring
8:16
Speaker 3: or layoffs. To this point, we haven't seen a meaningful
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Speaker 3: broad based shift in demand.
8:21
Speaker 2: Quick break here.
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Speaker 3: When we come back, we got Michael sand Totally from
8:25
Speaker 3: CNBC joining us. We're gonna do some trivia as well.
8:28
Speaker 3: That is coming up after the break.
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Speaker 3: As promised, we are now joined by Michael Santoli from
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Speaker 3: CNBC here to talk about what is going on in markets.
9:47
Speaker 2: Michael, thank you so much for joining us today.
9:49
Speaker 7: I'm glad to do it. Thank you.
9:51
Speaker 3: J Powell yesterday tried to pour a little bit of
9:53
Speaker 3: cold water on the idea of a December cut being
9:57
Speaker 3: a given. What do you make of the market response
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Speaker 3: to it? Over the kind of first day or so
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Speaker 3: Since then, Yeah.
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Speaker 7: It's just a little bit of a gut check for
10:08
Speaker 7: just the absolute certainty that the market had priced in
10:11
Speaker 7: about you know, at least another cut in December, maybe
10:14
Speaker 7: one beyond that. It hasn't had a tremendous effect in
10:18
Speaker 7: terms of where bond yields have gone, but I think
10:21
Speaker 7: it was an interesting injection of doubt into a very
10:26
Speaker 7: certain and somewhat complacent market. In fact, I see it
10:29
Speaker 7: as part of this whole thing we went through in
10:32
Speaker 7: the last twenty four hours, where you know, the assumption
10:34
Speaker 7: of hey, Fed's going to keep cutting rates into a
10:36
Speaker 7: decent economy, You've got AI momentum, and all of these
10:40
Speaker 7: tech stock earnings, and then of course maybe some progress
10:43
Speaker 7: on trade. Every one of those things, I would argue
10:45
Speaker 7: came up a little bit short of the bulls' best
10:47
Speaker 7: hopes for the for the outcomes, or just the recognition
10:51
Speaker 7: that the market are already priced in a lot. When
10:53
Speaker 7: it comes to Powell in particular, I always feel as
10:56
Speaker 7: if the FED cher wants to preserve a lot of optionality.
10:59
Speaker 7: They don't I want to go six weeks with the
11:01
Speaker 7: market thinking they know what comes next. When you have
11:03
Speaker 7: a lot of things that are going to come in
11:05
Speaker 7: the middle of it. Plus he's got a divided committee,
11:07
Speaker 7: so he had a descent for doing nothing one descent
11:10
Speaker 7: for making a bigger cut, and I think he has
11:12
Speaker 7: to somewhat give voice to that in his commentary.
11:16
Speaker 3: I want to talk a little bit more about tech earnings.
11:19
Speaker 3: You mentioned them. What do you make of what we've
11:21
Speaker 3: seen so far and are we starting to see maybe
11:25
Speaker 3: the first signs that investors may be starting to care
11:28
Speaker 3: about how all this capex ends up impacting cash flow
11:32
Speaker 3: and earnings down the road or is that just my
11:34
Speaker 3: motivated reasoning at play here.
11:37
Speaker 7: No, you can definitely make the case that we are
11:40
Speaker 7: seeing some of those concerned surface now. It wouldn't be
11:43
Speaker 7: the first time, arguably, you know, Alphabet Google went through this.
11:48
Speaker 7: The people were very skeptical that it could make it work,
11:51
Speaker 7: you know, back a year year and a half ago,
11:53
Speaker 7: and it came back from that. So now Meta is
11:55
Speaker 7: the source of a lot of the doubt, and I
11:56
Speaker 7: think it makes sense that Meta sort of has a
11:59
Speaker 7: higher and proof here. They've really pivoted multiple times in
12:03
Speaker 7: their AI strategy. Nobody's quite sure why they want to
12:06
Speaker 7: build this so huge comprehensive model, like why do they
12:10
Speaker 7: need to be a host of a of an AI
12:13
Speaker 7: LLM or whatever they're going to do. Why can't they
12:15
Speaker 7: just be a beneficiary of the proliferation of AI and
12:18
Speaker 7: their advertising business. And you know they're doing it with
12:21
Speaker 7: some debt. They're raising another twenty five billion dollars in
12:23
Speaker 7: the corporate bomb market today that'll double their debt. So
12:27
Speaker 7: it's not that old story of hey, these guys are
12:29
Speaker 7: just kind of using the spare change their free cash
12:31
Speaker 7: flow to make these investments. Interestingly, Zuckerberg Mark Zuckerberg said
12:37
Speaker 7: that even if this ends up being kind of wasted
12:39
Speaker 7: in the initial effort, we still have the assets. It
12:41
Speaker 7: will still be worth something for, you know, the business
12:44
Speaker 7: down the road. I'm not sure that's sort of reassuring
12:46
Speaker 7: at this point, given how far the stocks have run.
12:49
Speaker 7: But I do think it shows that these companies are
12:51
Speaker 7: spending out of a sense of compulsion and urgency and
12:55
Speaker 7: not because and because they sort of see the demand
12:59
Speaker 7: and the moment. But it's it's sort of like, we'll
13:02
Speaker 7: figure out exactly what the returns on this are going
13:04
Speaker 7: to be down the road.
13:06
Speaker 3: We've had kind of a bumpy October but as we
13:09
Speaker 3: get towards the end of it, you still have indices
13:12
Speaker 3: that have risen meaningfully over the course of the month.
13:15
Speaker 3: A lot of chatter about, hey, this is going to
13:17
Speaker 3: continue as a year end rally. What ingredients typically need
13:22
Speaker 3: to be present in order for that year end rally
13:24
Speaker 3: to take shape and actually happen.
13:27
Speaker 7: I mean, it's kind of glib to say that mostly
13:30
Speaker 7: you just need the calendar to turn to November. I mean,
13:33
Speaker 7: that's not one hundred percent sury. There's like twenty percent
13:35
Speaker 7: of the time when you actually don't have markets up
13:38
Speaker 7: in the latter part of the year. Usually that's not
13:41
Speaker 7: in a year that has not been as strong as
13:43
Speaker 7: this one going into it. I do think you have
13:45
Speaker 7: to make sure though, that investors sentiment and positioning and
13:50
Speaker 7: speculative activity has not kind of gotten ahead of itself
13:54
Speaker 7: an overshot, and I would argue we've kind of kind
13:56
Speaker 7: of pressed up against that line over the last few weeks,
14:00
Speaker 7: been a low quality rally in terms of like junkier,
14:03
Speaker 7: more speculative companies leading. And then in the last few
14:06
Speaker 7: days when the S and P five hundred did finally
14:09
Speaker 7: break out of a two week range, which was no
14:11
Speaker 7: big deal, but a two week range to a new high.
14:14
Speaker 7: It was very narrow and it was the Semis and
14:16
Speaker 7: it was the same old MAC seven stocks today. Interestingly,
14:20
Speaker 7: you get to sell off in Meta. You have some
14:21
Speaker 7: pressure on Microsoft, so you have an anti Nasdaq one
14:25
Speaker 7: hundred day and it is rotating around. You have the
14:28
Speaker 7: average stock in the market up half a percent in
14:30
Speaker 7: the s top. So I guess it's trying to make
14:32
Speaker 7: it work and stay on decent footing here. So it's
14:35
Speaker 7: hard to fight the seasonal trends. But I always say
14:37
Speaker 7: it's also you know, you don't want to defer to it.
14:40
Speaker 7: That can't be the sum total of why you know
14:42
Speaker 7: you're interested in stocks here.
14:44
Speaker 3: So you mentioned that, you know, markets have gotten a
14:47
Speaker 3: little bit exuberant over the last you know, a couple
14:50
Speaker 3: of weeks in particular, how do we reconcile that exuberance
14:55
Speaker 3: with you know, we've been getting layoff announcements here and there.
14:58
Speaker 3: Housing hasn't been particularly strong, We've got labor market concerns.
15:03
Speaker 2: How does all this fit together?
15:04
Speaker 3: Because I know a lot of our listeners are sitting
15:06
Speaker 3: there like help make this make sense.
15:08
Speaker 2: What are your thoughts on it?
15:10
Speaker 7: Well, the exuberance is actually in parts of the market
15:14
Speaker 7: that are pretty well removed from the here and now
15:18
Speaker 7: US economy, I think you could argue, so you know,
15:20
Speaker 7: I'm talking about not just the whole AI food chain,
15:23
Speaker 7: which has got a life of its own, but really
15:26
Speaker 7: long shot bets like quantum computing and you know, drone
15:32
Speaker 7: technology and all of these things that feel like there's
15:35
Speaker 7: a thing in the future, but they don't have earnings now,
15:37
Speaker 7: so we don't have to worry about the actual economy.
15:40
Speaker 7: I do think that you've seen some evidence though, within
15:42
Speaker 7: the market, of some concern about the pace of growth.
15:46
Speaker 7: Right so, consumer cycical stocks have suffered. You're seeing restaurant
15:49
Speaker 7: stocks get hurt. You seeing the restaurant companies blame a
15:51
Speaker 7: pullback and spending by certain consumers, younger and those making
15:56
Speaker 7: less than one hundred thousand dollars. That's what Chipotle said today.
15:59
Speaker 7: You've seen the home builder stocks and housing related really
16:02
Speaker 7: struggle because there's really been no response to some downticks
16:06
Speaker 7: and mortgage rates. So I think the market is kind
16:08
Speaker 7: of registering those concerns. It's not panicking about them. It's
16:12
Speaker 7: not pricing in a genuine downturn yet, but those parts
16:16
Speaker 7: of the market did suffer after Powell tried to kind
16:19
Speaker 7: of take away some of the certainty about a December
16:22
Speaker 7: rate cut, So there might be a push pull there
16:24
Speaker 7: in the story.
16:26
Speaker 3: Very good, Michael, appreciate the time today. Thank you so
16:28
Speaker 3: much for the information, and we will talk to you soon.
16:32
Speaker 6: Great.
16:32
Speaker 7: Thank you.
16:33
Speaker 3: That is Michael santotally from CNBC talking about what we've
16:37
Speaker 3: been seeing in markets in the last several weeks.
16:40
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Speaker 3: Mike, I want to get to previewing Apple earnings in
17:51
Speaker 3: a little bit, but I want to cover one story first,
17:54
Speaker 3: just because Tucker tossed it all the way at the
17:56
Speaker 3: end of the stack, and this one I actually wanted
17:59
Speaker 3: to pull up just because I think it's awesome.
18:01
Speaker 2: So it's potatoes. Occasionally you see.
18:04
Speaker 3: A world that is just completely no, it's not the
18:08
Speaker 3: potato one.
18:09
Speaker 5: Okay, I'll get there later.
18:10
Speaker 2: Then.
18:10
Speaker 3: Yes, occasionally you see a world that's just like completely
18:13
Speaker 3: divorced from what you understand.
18:15
Speaker 2: And today I saw that.
18:16
Speaker 3: So apparently in New York now it is sample sale week,
18:22
Speaker 3: which I didn't even know was a thing, to be honest,
18:25
Speaker 3: I didn't even really know what a sample sale was
18:28
Speaker 3: before today. For those of you wondering, I guess it's
18:31
Speaker 3: a time when high end, like luxury goods, retailers put
18:36
Speaker 3: out their new stuff and sell it really cheaply for
18:38
Speaker 3: like a very limited time so that you know, average
18:41
Speaker 3: people can potentially afford it, but it's it's very limited supply.
18:45
Speaker 3: So these huge lines develop as a result of it,
18:48
Speaker 3: and you know, these are people that are you know,
18:51
Speaker 3: again like waiting for the ability to potentially buy these things.
18:54
Speaker 3: You're talking like hundreds of people in line here. And
18:58
Speaker 3: there are companies that have started up in New York.
19:00
Speaker 3: Specifically their job is to stand in line for other
19:04
Speaker 3: people for hours on end.
19:05
Speaker 2: How much do you make for that?
19:06
Speaker 3: So there's a guy by the name of Robert Samuel.
19:09
Speaker 3: Samuel who runs a company called Same Old Line Dudes,
19:12
Speaker 3: and he had sixty one clients on opening day for
19:16
Speaker 3: sample sales. Each standard is getting twenty five dollars an hour.
19:21
Speaker 2: Woo.
19:21
Speaker 3: So you do the math out, okay, and his business
19:26
Speaker 3: is doing fifteen hundred dollars an hour.
19:28
Speaker 2: If you do that just for a day, it's thirty
19:30
Speaker 2: six thousand dollars.
19:31
Speaker 3: In a day in revenue. Quick break here we got
19:35
Speaker 3: trivia answer.
19:36
Speaker 1: Next bringing the latest financial news straight to your radio
19:43
Speaker 1: every day. It's the Financial Exchange on the Financial Exchange
19:47
Speaker 1: Radio Network. Time now for Wall Street. Watch a complete
19:53
Speaker 1: look at what's moving market so far today right here
19:56
Speaker 1: on the Financial Exchange Radio Network.
19:58
Speaker 6: On one of Wall Street's the busiest days of the year,
20:01
Speaker 6: markets are nixed territories it Investors react to the year
20:05
Speaker 6: long trade truce between the US and China, comments from
20:08
Speaker 6: FED treman Jerome Powell about future rate cuts, and of course,
20:11
Speaker 6: big tech earnings from Alphabet, Microsoft and Meta. Right now,
20:17
Speaker 6: the Dow is up by six tenths or one percent,
20:20
Speaker 6: or two hundred and eighty one points higher. S and
20:22
Speaker 6: P five hundreds down nearly four tenths of one percent
20:25
Speaker 6: or twenty six points lower, Nasdaq down nearly one percent
20:29
Speaker 6: or two hundred and twenty nine points. Russell two thousand
20:32
Speaker 6: is up about a third of a percent, Tenure Treasure
20:34
Speaker 6: reeled up two basis points at four point zero eight percent,
20:38
Speaker 6: and crude oil is flat edging higher, trading at sixty
20:41
Speaker 6: dollars in fifty two cents a barrel. Alphabet jumping by
20:45
Speaker 6: five percent after the search Grant posted strong third quarter
20:49
Speaker 6: results driven by revenue from Google Cloud and YouTube advertising.
20:54
Speaker 6: Microsoft b quarterly expectations, where revenue from its Azeri cloud
20:58
Speaker 6: business jumped forty percent. The company's finance chief did note
21:02
Speaker 6: that capital spending will accelerate this fiscal year. Microsoft down
21:06
Speaker 6: by three percent, Meta shares plunging twelve percent after the
21:10
Speaker 6: Facebook parent reported stronger than expected third quarter earnings and revenue. However,
21:15
Speaker 6: Meta raised its capital expenditures outlook to invest more in
21:19
Speaker 6: artificial intelligence. Apple and Amazon are on deck later today
21:23
Speaker 6: when they post their results after the closing bell. Outside
21:27
Speaker 6: of big tech, Comcast beat earnings and revenue estimates for
21:31
Speaker 6: the third quarter. However, the company said had lost one
21:33
Speaker 6: hundred and four thousand broadband customers the fourth quarter in
21:37
Speaker 6: a row. It failed to grow its broadband subscriber base.
21:41
Speaker 6: Comcast shares of pulling back three percent. Starbucks posted weaker
21:45
Speaker 6: than expected earnings, but posted same store sales growth for
21:48
Speaker 6: the first time in nearly two years. Starbucks is edging
21:52
Speaker 6: higher and Chipotle is sinking above fifteen percent after the
21:55
Speaker 6: burrito chain posted a drop in net income while it's
21:58
Speaker 6: quarterly revenue missed estimates. The restaurant group cited economic strains
22:04
Speaker 6: were turning customers away from its stores. I'm Tucker Silvan,
22:09
Speaker 6: that is Wall Street Watch and in the previous segment,
22:11
Speaker 6: we asked the trivia question, what year did It's the
22:14
Speaker 6: Great Pumpkin? Charlie Brown first air on TV, That would
22:19
Speaker 6: be nineteen sixty six and from North Berwick, Maine is
22:23
Speaker 6: our winner today, taking them a Financial Exchange Show T shirt.
22:26
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22:32
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22:34
Speaker 2: Mike, let's talk a little bit about Apple.
22:36
Speaker 5: Yeah, let's do that.
22:37
Speaker 4: They stand in pretty stark contrast to me when we
22:40
Speaker 4: talked about Meta earlier, Right, Meta feeling this need to
22:44
Speaker 4: invest on the promise of future growth on artificial intelligence,
22:48
Speaker 4: and Apple I think at least taking the same lessons
22:53
Speaker 4: out of their previous playbooks, which is we don't need
22:56
Speaker 4: to be first to the market on this.
22:58
Speaker 2: Yeah, I think the the question.
23:01
Speaker 3: You know, I've compared Apple over the last year or
23:04
Speaker 3: so to Toyota, who back in twenty twenty one and
23:07
Speaker 3: twenty two, when everyone else was getting all EV happy
23:11
Speaker 3: and saying, hey, we're gonna make nothing but EV's. By
23:15
Speaker 3: twenty thirty, you know, we're gonna just you know, we're
23:18
Speaker 3: gonna turn into evs because we're not even gonna be
23:20
Speaker 3: people anymore. Toyota said, no, like, we're gonna, you know,
23:23
Speaker 3: keep making hybrids and keep making internal combustion engine vehicles,
23:27
Speaker 3: and yeah, we're gonna research evs and maybe we'll even
23:29
Speaker 3: roll a couple out, but that's not gonna be us.
23:32
Speaker 3: And and that approach turned out to be right. Apple's
23:35
Speaker 3: kind of been doing that where look, all the other
23:37
Speaker 3: big tech companies are going to spend like five six
23:42
Speaker 3: hundred billion dollars next year trying to build out data
23:46
Speaker 3: centers for artificial intelligence, and Apple's kind of sitting there, going,
23:50
Speaker 3: We've got some ideas on AI. Here's like a little
23:52
Speaker 3: Apple Intelligence thing on a phone that does bad summaries
23:56
Speaker 3: of emails and conversations, and yeah, we'll get open AI
24:00
Speaker 3: to maybe you know, plug their model into one of
24:02
Speaker 3: our things.
24:03
Speaker 2: And but it's it's not really us.
24:05
Speaker 3: And so I don't think this quarter is going to
24:08
Speaker 3: be like justification for that approach. That justification, if it
24:11
Speaker 3: ends up, you know, coming to fruition, is going to
24:14
Speaker 3: be over the next two to three years when they're
24:16
Speaker 3: proven right or proven wrong this quarter. The question that
24:21
Speaker 3: has been looming out there is, hey, you raised prices
24:24
Speaker 3: on iPhones you got questions about demand in China. Are
24:28
Speaker 3: you going to be able to hit those numbers and
24:29
Speaker 3: show that you can still deliver the revenue if you're not,
24:34
Speaker 3: you know, making AI the focus right now.
24:36
Speaker 5: Yeah, that is the question. And I mentioned I don't
24:39
Speaker 5: think you're on the problem.
24:39
Speaker 4: But I my wife has an iPhone, I have a
24:42
Speaker 4: Google Phone, and I've noticed, you know, a fairly big
24:44
Speaker 4: difference in the usefulness of the AI powered assistance between
24:48
Speaker 4: the two of them. But again, I don't think any
24:49
Speaker 4: of that's risen to the point where somebody's about to
24:52
Speaker 4: jump ship and you know, abandon their family who all
24:56
Speaker 4: uses iPhones to go use a Google phone instead.
24:59
Speaker 5: So it it hasn't. It has not reached that crescendo yet.
25:02
Speaker 4: I really doubt it will in terms of differentiation for
25:06
Speaker 4: Apple versus other products.
25:07
Speaker 5: Folks, it's nearing the end of the month.
25:09
Speaker 4: Want to talk to you about our annual new guide
25:12
Speaker 4: on required minimum distributions. We do put one of these
25:15
Speaker 4: out every year, but the rules have been changing. That's
25:17
Speaker 4: such a fast pace that we've needed to update it
25:19
Speaker 4: every single year. As we approach year end here, you've
25:22
Speaker 4: got about sixty days left before the year end, and
25:27
Speaker 4: the need to satisfy that IRS rule on ourmds. But
25:32
Speaker 4: there's a lot to learn about the subject, and specifically,
25:36
Speaker 4: the IRS has given additional time for folks to satisfy
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Speaker 4: those rmds. It started at seventy and a half and
25:43
Speaker 4: moved to seventy three. It is now seventy five for
25:46
Speaker 4: a lot of people before those rmds start. But you
25:48
Speaker 4: always whenever the IRS creates more leniency around a rule,
25:53
Speaker 4: or when Congress really creates that leniency, you always know
25:56
Speaker 4: there's going to be an offset, and there isn't this
25:58
Speaker 4: case too, there's the threat of higher taxes later when
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Speaker 4: you start withdrawing those funds or when you leave those
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Speaker 4: funds to a loved one after you are gone. If
26:08
Speaker 4: you want to learn more about this subject, if you
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Speaker 4: are approaching RMD age, or if you have a parent
26:14
Speaker 4: who's already there and you're trying to understand what the
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Speaker 4: implications will be for you, request our October guide on
26:20
Speaker 4: Understanding Required minimum Distributions. Not only will we explain the rules,
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Speaker 4: eight hundred three nine three for zero zero one. You
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27:06
Speaker 3: Got a couple of earnings reports in the food space today,
27:12
Speaker 3: both with a well, I guess both kind of with
27:14
Speaker 3: a Chipotle twist. Chipotle was one of them, but Starbucks
27:17
Speaker 3: the other. Starbucks now has Brian Nickel, who formerly was
27:21
Speaker 3: the CEO at Chipotle until when did he take the
27:25
Speaker 3: Starbucks gig?
27:26
Speaker 2: Was it about a year and a half ago?
27:27
Speaker 1: Yeah?
27:27
Speaker 5: Thereabouts?
27:28
Speaker 2: Do you remember where he was before Chipotle?
27:31
Speaker 6: Oh, Taco Bell?
27:32
Speaker 2: Yeah, there we go.
27:33
Speaker 3: Look at that, full circle to my one of my favorites.
27:37
Speaker 3: But so Starbucks up about one percent today and big
27:41
Speaker 3: thing is global same store sales up one percent for
27:44
Speaker 3: the quarter. They were expecting to see both global and
27:47
Speaker 3: US ones with marginal declines, and so maybe starting to
27:51
Speaker 3: turn the corner a little bit for Starbucks. I tend
27:54
Speaker 3: to trust Brian Nickel because he just was a fantastic
27:58
Speaker 3: operator both at Taco Bell and Chipotle. So maybe starting
28:02
Speaker 3: to bear some fruit there. Chipotle, on the other hand,
28:06
Speaker 3: they've got all kinds of problems. Yeah, stocks down fifteen
28:09
Speaker 3: percent today. They're now guiding that their same store sales
28:12
Speaker 3: are going to be down low single digits this year.
28:14
Speaker 3: In February, they thought they were getting going to be
28:16
Speaker 3: up mid to low single digits. So a big reversal there.
28:20
Speaker 3: Foot traffic down point eight percent for the quarter, the
28:23
Speaker 3: third straight quarter of declines. And in particular, they're saying
28:27
Speaker 3: that consumers making less than one hundred thousand and between
28:30
Speaker 3: the ages of twenty five and thirty five are seeing
28:33
Speaker 3: particular challenges. They are not the only ones calling out
28:36
Speaker 3: that age twenty five to thirty five demo, and so
28:39
Speaker 3: I think there is some meat on that bone that
28:41
Speaker 3: that demo is really struggling at the moment, and to.
28:44
Speaker 4: Turn that around, you have to deliver value to that consumer.
28:47
Speaker 4: And I don't know how Chipotle does that given what
28:51
Speaker 4: they've built their brand around, which is fresh ingredients and.
28:56
Speaker 5: Not taco bell.
28:57
Speaker 3: Frankly, there here is my advice to Chipotle as someone
29:01
Speaker 3: who has has never worked for like a chain food place.
29:07
Speaker 3: Chain restaurant. Yeah, that's the one ye food place. Chain
29:11
Speaker 3: food place is the technical term. Uh, don't devalue your product,
29:16
Speaker 3: right y'all. Remember Quizno's sure to guest the subs out
29:22
Speaker 3: there like miles better than Subway. Yeah, but they decided
29:25
Speaker 3: after they got private equity and everything, they decided they
29:29
Speaker 3: were going to try to compete with Subway, and they
29:31
Speaker 3: went down market and they got absolutely bludgeoned because that
29:34
Speaker 3: wasn't where they lived. They had a great business and
29:37
Speaker 3: they ruined it because they tried to be something that
29:39
Speaker 3: they're not. If Chipotle tries to go down market, they
29:42
Speaker 3: are going to get wrecked because the customers that like
29:45
Speaker 3: them today will abandon them, and the customers they don't
29:50
Speaker 3: have that they want are going to be able to
29:52
Speaker 3: find cheaper stuff elsewhere because they can't go down market
29:54
Speaker 3: far enough.
29:55
Speaker 4: It's all well and good, Chuck, but when your stock's
29:57
Speaker 4: down forty four percent for the year, questions are getting asked.
30:01
Speaker 2: I think it's an execution problem.
30:04
Speaker 3: Like I mean, I don't like to, you know, say
30:07
Speaker 3: that everything is you know, causation. But Brian Nickel left
30:11
Speaker 3: and this company has not done well since then. Yeah,
30:14
Speaker 3: like it has that feel more than anything else. And again,
30:20
Speaker 3: there are companies that are succeeding in this space and figuring.
30:24
Speaker 2: Out how to make it work. They are not right now.
30:28
Speaker 3: And this I'm not saying like that whole you know,
30:31
Speaker 3: restaurant space has questions, but this scale of decline feels
30:35
Speaker 3: more like a Chipotle problem than.
30:38
Speaker 2: A restaurant in general problem to me. I don't know.
30:44
Speaker 5: No, yeah, I don't know.
30:47
Speaker 4: I'm not sure where I land on it. Obviously, there
30:50
Speaker 4: is a consumer base that is struggling. I'm not sure
30:53
Speaker 4: if it's an execution problem or just a moment in
30:56
Speaker 4: time problem.
30:57
Speaker 3: Let's take a quick break. When we come back, we'll
30:59
Speaker 3: do a little bit of stack roulette.
31:03
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32:16
Speaker 2: Mike, what do you got for me for stack Roulett?
32:18
Speaker 4: I've got potatoes, as I a little potatoes. So tomorrow
32:23
Speaker 4: the big day in my household for trick or treaders
32:26
Speaker 4: making the rounds.
32:27
Speaker 5: And some.
32:30
Speaker 4: Guy had a funny idea a few years ago of
32:33
Speaker 4: putting just potatoes along with other options in his you
32:38
Speaker 4: know bowl for people to grab at a instead of candy.
32:42
Speaker 4: And it's kind of sparked a phenomena where people are
32:45
Speaker 4: actually doing this and kids are finding it funny, and
32:48
Speaker 4: you know, go out there looking to maybe take a
32:50
Speaker 4: potato home instead of big candy bars. And I've got
32:54
Speaker 4: an interesting twist on this that I'm hoping to get
32:56
Speaker 4: your take on. I'm thinking just a giant bowl of
33:00
Speaker 4: mashed potatoes for this Halloween season, horrible idea. Just yeah,
33:05
Speaker 4: the kid reaches and real I'm not talking about some
33:08
Speaker 4: dry from the mixed mashed potato. I'm talking about some
33:11
Speaker 4: hand mixed, buttery mashed potatoes because I I just imagine
33:15
Speaker 4: the look of disappointment on this child's face reach in
33:19
Speaker 4: for a candy bar and just come back with a
33:22
Speaker 4: greasy potato filled hand.
33:24
Speaker 6: You just hear the slap in their bag.
33:26
Speaker 3: That's potatoes funny. The mashed potatoes, not the mashed potato,
33:31
Speaker 3: is cruel.
33:31
Speaker 4: I did have GEMI for me create an image of
33:34
Speaker 4: a disappointed child reaching in expecting Halloween candy and getting
33:39
Speaker 4: mashed potatoes instead, and it did a did a phenomenal job.
33:43
Speaker 4: So I probably won't create this because my wife won't approve.
33:47
Speaker 6: Not to mention the effort of the idea. Mashed potatoes
33:50
Speaker 6: don't take you know, yeah, quick potatoes.
33:54
Speaker 2: They're not that long.
33:57
Speaker 6: Of potatoes you're making.
33:58
Speaker 4: And especially if nobody's eating it, I'm gonna toss those
34:00
Speaker 4: I'm tossing those steamed or boiled potatoes right into the
34:03
Speaker 4: kitchen aid for this.
34:04
Speaker 5: You know, I'm not gonna hand mash these things.
34:08
Speaker 6: Mash.
34:09
Speaker 2: Yeah.
34:09
Speaker 3: The only way to do it is through No, I'm
34:11
Speaker 3: a big believer. The only way to do it is
34:13
Speaker 3: through the kitchen aaid. Oh really Yeah, extra whip, oh yeah,
34:18
Speaker 3: just that that's smoothness that you get there, fluffy, Oh yeah,
34:23
Speaker 3: just it's as good as it gets.
34:24
Speaker 2: I don't know.
34:25
Speaker 4: I mean, I'm always a big fan of a good prank,
34:28
Speaker 4: and this this seems like a good one to me.
34:31
Speaker 5: No one, no one's gonna get harmed from this.
34:33
Speaker 3: No. And I also don't think that you can improve
34:35
Speaker 3: on it. Like I was trying to think, like, is
34:37
Speaker 3: there something else that would be like as funny, and
34:41
Speaker 3: I don't think so, because it's like it's a potato,
34:45
Speaker 3: you know, it's not just.
34:46
Speaker 6: A candy alternative like, I'm trying to think of like
34:48
Speaker 6: a cool alternative to candy. We always give it so
34:51
Speaker 6: much candy.
34:52
Speaker 4: We always give out some garbage little toys just in
34:54
Speaker 4: case kids are allergic to, you know, all sorts of
34:57
Speaker 4: Halloween candy. But I feel bad about that too, because
35:00
Speaker 4: nobody wants toys stupid things. So I think just I
35:03
Speaker 4: like the idea of a potato.
35:05
Speaker 6: How about money? Just hand out money, just a dollar.
35:09
Speaker 5: Adams Adams Sandler.
35:10
Speaker 6: Movie, Big Daddy, Big Daddy? What else you got the watch?
35:14
Speaker 5: Give him the watch?
35:16
Speaker 6: It just robs them.
35:20
Speaker 5: What do you have for us?
35:21
Speaker 2: Jock? What about what.
35:22
Speaker 3: About like a shrimp? You know, like, what have you
35:25
Speaker 3: got like shrimp cocktail?
35:26
Speaker 5: It depends how cold out it is.
35:28
Speaker 2: You know it's Halloween.
35:29
Speaker 4: It's cold now, there's sixty degree Halloween. Then that that
35:32
Speaker 4: shrimp's not going to make it home.
35:34
Speaker 3: Hey listen, it's you got this nor'easter coming through and everything,
35:38
Speaker 3: so we'll see. I want to talk a little bit
35:41
Speaker 3: about Comcast earnings. So Comcast, do they have any Yes, okay,
35:49
Speaker 3: but they're continuing to lose broadband subscribers, down one hundred
35:52
Speaker 3: and four thousand. They also lost two hundred and fifty
35:55
Speaker 3: seven thousand video subscribers.
35:57
Speaker 2: Not good.
35:58
Speaker 3: And this stocks down about four percent on this news.
36:03
Speaker 3: It was worse earlier in the day. At one point
36:07
Speaker 3: they were down north of ten percent. But the stock
36:12
Speaker 3: is trying its best to rally here. But I think
36:15
Speaker 3: it's important to just to like look at Comcast and
36:19
Speaker 3: kind of where things have gone from them, because the
36:22
Speaker 3: stock is now valued.
36:23
Speaker 2: It's dropped in value about fifty.
36:25
Speaker 3: Percent since it's twenty twenty one peak, and especially in
36:29
Speaker 3: the last two years, it's just been kind of this
36:31
Speaker 3: consistent slide and it's it's tough for me to see,
36:35
Speaker 3: you know, how they reverse these trends given what we're
36:40
Speaker 3: seeing from continued cord cutting. Uh. And when we look
36:45
Speaker 3: at the you know, the broadband business, other alternatives that
36:50
Speaker 3: have popped up, whether it's more competitive pricing from Verizon,
36:53
Speaker 3: people using satellite based stuff like Starlink, whatever it might be.
36:57
Speaker 3: You know that there's just some questions to you know,
37:00
Speaker 3: what the business looks like in the future. Revenue was
37:04
Speaker 3: down two point seven percent year over year. Their free
37:08
Speaker 3: cash flow is better, which just means, hey, you're not
37:10
Speaker 3: spending as much to maintain your network probably, but I
37:14
Speaker 3: don't really know what the future looks like for the
37:17
Speaker 3: company here. It's just what they're doing has not been
37:19
Speaker 3: working for quite some time now.
37:20
Speaker 5: I'll take the opposite side of that one.
37:22
Speaker 4: I think that we are reaching a bottom for cord
37:25
Speaker 4: cutting because quite frankly, the alternative, the the fubos and
37:29
Speaker 4: the YouTube TVs of the world, have gotten so expensive
37:33
Speaker 4: and have so many networks that they don't offer that
37:37
Speaker 4: more and more people are turning back to the corded option.
37:40
Speaker 3: So I looked at it just because I was curious
37:42
Speaker 3: when YouTube TV went through with their recent price increase,
37:45
Speaker 3: and I still couldn't get the math to work. And
37:48
Speaker 3: like the biggest problem with Comcast Verizon, you got to
37:51
Speaker 3: pay for each freaking set top box.
37:54
Speaker 4: They're starting to provide options where you don't. But I agree, like,
37:57
Speaker 4: I'm still not switching back, but I'll be honest, it's
38:00
Speaker 4: a giant pain because I don't get TNT and I
38:02
Speaker 4: do get nesson, and I have to cobble together.
38:04
Speaker 5: To watch what I want to watch.
38:05
Speaker 2: Your big TNT guy, If I want to watch playoff hockey, I.
38:08
Speaker 6: Am Brazolian isles. Yeah, the what Brazilian aisles come on? TNT.
38:13
Speaker 2: You know, Law and Order, that's the show. Okay, yeah,
38:16
Speaker 2: got it, Okay, quick break here.
38:17
Speaker 3: We're going to be back in about twenty four hours
38:20
Speaker 3: and we'll see you tomorrow to finish up the week