Latest / The Financial Exchange Show / How Can an Economy This Good Feel This Bad?

Transcript

How Can an Economy This Good Feel This Bad? · The Financial Exchange Show

• 0:00
  Speaker 1: The Financial Exchange is produced by Money Matters Radio and
• 0:03
  Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
• 0:05
  Speaker 1: registered investment advisor. All opinions expressed are solely those of
• 0:09
  Speaker 1: the hosts. Do not reflect the opinions of Armstrong Advisory
• 0:11
  Speaker 1: or anyone else. Investments can lose money. This program does
• 0:14
  Speaker 1: not offer any specific financial or investment advice. Please consult
• 0:17
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 0:20
  Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
• 0:23
  Speaker 1: this program do not endorse each other or their services.
• 0:26
  Speaker 1: Armstrong and Money Matters Radio do not compensate each other
• 0:28
  Speaker 1: for referrals and are not affiliated. This is the Financial
• 0:34
  Speaker 1: Exchange with Mike Armstrong and Paul Lane, your exclusive look
• 0:39
  Speaker 1: at business and financial news affecting your day, your city,
• 0:43
  Speaker 1: your world. Stay informed and up to date about economic
• 0:46
  Speaker 1: and market trends plus breaking business news every day. The
• 0:50
  Speaker 1: Financial Exchange is a proud partner of the Disabled American
• 0:53
  Speaker 1: Veterans Department of Massachusetts. Help us support our great American
• 0:58
  Speaker 1: heroes by visiting DAV five DOC Boston and making a
• 1:01
  Speaker 1: donation today. This is the Financial Exchange with Mike Armstrong
• 1:06
  Speaker 1: and Paul Lane.
• 1:11
  Speaker 2: Good morning, Welcome back to the Financial Exchange. It is
• 1:15
  Speaker 2: the uh first day of trading for the month of September,
• 1:18
  Speaker 2: the historically worst month for stocks out there, living up
• 1:21
  Speaker 2: to its name this morning, as we've got a broad
• 1:24
  Speaker 2: based risk off sell off today, with the NASDAC off
• 1:28
  Speaker 2: one point four percent, the S and P off one
• 1:31
  Speaker 2: point two in the Dow Jones Industrial average off nine
• 1:34
  Speaker 2: tenths of one percent in early trading here.
• 1:38
  Speaker 3: Bond yields moving up as well.
• 1:41
  Speaker 2: You've got the thirty year topping four point nine to
• 1:44
  Speaker 2: seven percent, of the ten year treasury yield up by
• 1:47
  Speaker 2: almost point zero five percent, so sitting now at four
• 1:52
  Speaker 2: point two seven to three percent. Oil prices are jumping
• 1:56
  Speaker 2: as well on something about Russia, probably one point eight
• 2:01
  Speaker 2: percent to the upside there, and gold moving up some
• 2:05
  Speaker 2: one point seven percent on probably some uncertainty news. The
• 2:09
  Speaker 2: big story of the day was Friday's federal court ruling
• 2:13
  Speaker 2: against the Trump administration's use of tariffs under AEPA. This
• 2:19
  Speaker 2: seven to four ruling sets things up for a likely
• 2:23
  Speaker 2: appeal to the United States Supreme Court. Perhaps the administration
• 2:25
  Speaker 2: already has appealed, I'm not certain, but seven justices ruling
• 2:31
  Speaker 2: against the White House and their use of emergency powers,
• 2:35
  Speaker 2: effectively calling into question the Trump administration's ability to implement
• 2:40
  Speaker 2: and maintain the majority of tariffs that they have put
• 2:44
  Speaker 2: out there. Does not call into question tariffs on things
• 2:47
  Speaker 2: like steel and aluminum or autos, but very much calls
• 2:51
  Speaker 2: into question country specific tariffs under the emergency powers of
• 2:55
  Speaker 2: fentanyl and trade imbalance. So, like we said, likely headed
• 3:00
  Speaker 2: for the Supreme Court. The federal appeals court that did
• 3:03
  Speaker 2: rule on this put a stay in here until October
• 3:06
  Speaker 2: fourteenth to allow time for that appeal. But we will
• 3:10
  Speaker 2: see what lands next. In the meantime, just a whole
• 3:13
  Speaker 2: bunch of uncertainty about what you do and really does
• 3:16
  Speaker 2: call into question a whole bunch of other things that
• 3:19
  Speaker 2: we will be facing down for this month of September.
• 3:22
  Speaker 2: You know, obviously we've got the jobs report coming Friday,
• 3:24
  Speaker 2: which is already baked, the inflation report coming the week after,
• 3:27
  Speaker 2: which is also already measured and taken care of. But
• 3:31
  Speaker 2: you think about the Federal Reserve meeting that you have
• 3:32
  Speaker 2: coming up. Okay, if I'm Jay Powell and trying to
• 3:35
  Speaker 2: orchestrate the next move, I probably don't move on my
• 3:39
  Speaker 2: stance that interest rates should be lower here, but you
• 3:41
  Speaker 2: do have to suddenly acknowledge that, Yeah, if the White House,
• 3:45
  Speaker 2: if the Treasury needs to reimburse how much has been
• 3:48
  Speaker 2: collected in tariff so far, it's.
• 3:50
  Speaker 4: Over hundreds of billions of dollars.
• 3:52
  Speaker 2: Yeah, if they have to suddenly reimburse two US companies
• 3:57
  Speaker 2: hundreds of billions of dollars, very much calls into question
• 4:02
  Speaker 2: what that inflation environment could look like. Well, you know
• 4:04
  Speaker 2: what the hiring environment would look like on the heels
• 4:06
  Speaker 2: of that. What do I do as a company if
• 4:09
  Speaker 2: I'm suddenly given billions of dollars that I thought was
• 4:12
  Speaker 2: previously tax out the door? Big big questions about how
• 4:17
  Speaker 2: all of this plays out. And I'm sure we'll be
• 4:19
  Speaker 2: discussed at that next FED meeting, but we will see
• 4:23
  Speaker 2: a lot of uncertainty now, both in terms of the
• 4:26
  Speaker 2: current tariffs that are being collected and will continue to
• 4:28
  Speaker 2: be collected for the time being, as well as future
• 4:31
  Speaker 2: negotiations that foreign countries will engage in with the trade
• 4:38
  Speaker 2: officials in the White House. You know, it's pretty tough.
• 4:42
  Speaker 2: It's pretty tough to drive a hard bargain with these
• 4:44
  Speaker 2: countries when you feel like you've got your hands tied
• 4:46
  Speaker 2: behind your back, and I'm sure that's how some of
• 4:48
  Speaker 2: the negotiators feels right feel right now is hey, Yeah,
• 4:51
  Speaker 2: let's put all these plans in place and just hope
• 4:54
  Speaker 2: the Supreme Court goes along with us on this, because
• 4:57
  Speaker 2: I don't know why you would. I don't know why
• 4:59
  Speaker 2: you would go siating good faith. If you're India right now,
• 5:02
  Speaker 2: I wouldn't.
• 5:03
  Speaker 4: I wouldn't.
• 5:06
  Speaker 2: Alixon Schrager for Bloomberg writes, how can an economy this
• 5:09
  Speaker 2: good feel this bad? So Paul layout for me, why
• 5:12
  Speaker 2: is the economy good according to the numbers right now?
• 5:15
  Speaker 2: I would agree, like the numbers are proving pretty solid
• 5:19
  Speaker 2: for this economy right now.
• 5:20
  Speaker 3: But what arguments does she lay out?
• 5:22
  Speaker 4: This has been really the issue for the last five years.
• 5:25
  Speaker 4: And Mike think we've talked about where the S and
• 5:27
  Speaker 4: P five hundred is up more than one hundred and
• 5:28
  Speaker 4: forty percent from the end of the recession that we
• 5:31
  Speaker 4: saw during that COVID range. We've got unemployment that has
• 5:38
  Speaker 4: remained about four and a half percent since twenty twenty one.
• 5:41
  Speaker 4: You've had GDP growth for the Q one of this
• 5:44
  Speaker 4: year that just came in. Sorry, Q two of this
• 5:46
  Speaker 4: year that just came in at three point three percent.
• 5:49
  Speaker 4: You've had strong economic growth, you've stock market at stock
• 5:53
  Speaker 4: market at all time really really well, and you've had
• 5:56
  Speaker 4: a labor market that, particularly in twenty one twenty two
• 6:00
  Speaker 4: was the hottest it's ever been in terms of people
• 6:02
  Speaker 4: job hopping. The argument could be made that some of
• 6:05
  Speaker 4: wages were enoup by inflation. We'll get to that in
• 6:08
  Speaker 4: just a moment. But great labor market, great stock market,
• 6:11
  Speaker 4: and GDP growth that has been quite strong as well.
• 6:15
  Speaker 4: Those are all the positive economic indicators that you can
• 6:18
  Speaker 4: point to in what's been a pretty good period, though
• 6:22
  Speaker 4: it hasn't felt good the whole time.
• 6:24
  Speaker 2: Nonetheless, when you ask people via surveys how they feel
• 6:29
  Speaker 2: about the economy, the answers are pretty overwhelmingly negative. And
• 6:34
  Speaker 2: yes it's partisan, yes, but it's pretty negative regardless of
• 6:40
  Speaker 2: political affiliation. Also, you had one survey recently that was
• 6:46
  Speaker 2: ninety percent of Democrats responding negatively, fifty five percent of
• 6:50
  Speaker 2: Republicans responding negatively. And so to some degree, we've largely
• 6:55
  Speaker 2: taken a look at these surveys of the course the
• 6:56
  Speaker 2: last few years and just had to put our you know,
• 6:59
  Speaker 2: put our hands down, say I don't know if this
• 7:01
  Speaker 2: matters anymore. I don't know that these surveys really give
• 7:05
  Speaker 2: us a representation of It might give us a representation
• 7:09
  Speaker 2: of how people feel, but clearly over the last few
• 7:12
  Speaker 2: years has not given us any indication whatsoever of what
• 7:15
  Speaker 2: people do right.
• 7:17
  Speaker 3: And that's you know, if you're an investor, that's what
• 7:18
  Speaker 3: you care about.
• 7:19
  Speaker 4: Money talks.
• 7:20
  Speaker 2: Am I so dour and negative on the economy that
• 7:23
  Speaker 2: I'm gonna stop going to restaurants? Am I so negative
• 7:26
  Speaker 2: that I am going to save a much larger percentage
• 7:30
  Speaker 2: of my paycheck so that I don't get laid off?
• 7:33
  Speaker 2: Those would be really indicat, you know, indicative things about
• 7:36
  Speaker 2: where the economy is going to go. And in spite
• 7:38
  Speaker 2: of the way that everybody's responded to these things, it
• 7:40
  Speaker 2: has meant nothing. Whether it's the Michigan Sentiment Survey that's
• 7:43
  Speaker 2: been around since the sixties or a number of the
• 7:45
  Speaker 2: ones that are mentioned here on where was this one done?
• 7:49
  Speaker 2: The Conference Board was another one. The Wall Street Journal
• 7:54
  Speaker 2: just did another survey and again all of this finding Yeah,
• 7:59
  Speaker 2: just not a lot of hiring, not a lot of
• 8:01
  Speaker 2: outlook for the economy, and a real souring on the
• 8:04
  Speaker 2: idea that the American dream still exists, right, And that's
• 8:12
  Speaker 2: that's pretty that's pretty earth shattering to me, you know,
• 8:17
  Speaker 2: one way, in one specific way, I keep asking myself
• 8:20
  Speaker 2: with this question, and Chuck's brought it up before too,
• 8:24
  Speaker 2: if you could be born in any country in the
• 8:26
  Speaker 2: world right now, for solely the prospects of economic mobility,
• 8:33
  Speaker 2: right Like, you know, if I'm going to be born
• 8:35
  Speaker 2: into the lowest class of any country, where would I
• 8:39
  Speaker 2: be born? And I really do hesitate to come up
• 8:41
  Speaker 2: with a single country other than the United States.
• 8:42
  Speaker 3: That I would prefer too.
• 8:44
  Speaker 2: I would too, but clearly with things like the cost
• 8:48
  Speaker 2: of housing, clearly with job prospects for younger Americans, and
• 8:53
  Speaker 2: all sorts of other inflation. Over the last several years,
• 8:56
  Speaker 2: people are very very negative on this economy. My problem
• 8:59
  Speaker 2: is still is I don't know what to do with
• 9:02
  Speaker 2: that information.
• 9:03
  Speaker 4: No, ultimately, there has to be some proof that sentiment
• 9:06
  Speaker 4: matches behavior to your point earlier, and it hasn't. The
• 9:10
  Speaker 4: US consumer has continued to get out there and spend.
• 9:14
  Speaker 4: Maybe you can make the argument that it's really reflecting
• 9:17
  Speaker 4: the bifurcation and the economy that we've talked about the
• 9:20
  Speaker 4: stat before, more higher income Americans are more responsible for
• 9:23
  Speaker 4: the consumer spending across this country.
• 9:26
  Speaker 2: The specific statistic that we've referred to more than once,
• 9:29
  Speaker 2: and I should pull the source on it, but top
• 9:31
  Speaker 2: ten percent of income earners in the US right now
• 9:34
  Speaker 2: are counting for fifty percent of total spending right.
• 9:37
  Speaker 4: So perhaps it is more reflection that that the bigger
• 9:40
  Speaker 4: numbers point to the consumer still spending, but perhaps that
• 9:43
  Speaker 4: other ninety percent of income earners maybe they aren't feeling
• 9:48
  Speaker 4: as well or spending as well. But overall, the way
• 9:50
  Speaker 4: that companies have performed, it's hard to make that claim entirely.
• 9:55
  Speaker 4: And what we learned over the last five years is
• 9:57
  Speaker 4: with inflation rearing its head, it is true the one
• 10:01
  Speaker 4: thing that upsets sentiment the most. I feel like, yeah,
• 10:06
  Speaker 4: outside of job loss.
• 10:09
  Speaker 2: Probably we've talked about this before, but I'll make this
• 10:13
  Speaker 2: point that inflation affects these numbers really poorly, because everyone
• 10:18
  Speaker 2: responds to inflation in those worst unemployment scenarios that we
• 10:23
  Speaker 2: get like, yeah, certainly, if I lose my job, I'm
• 10:25
  Speaker 2: going to be way more negative on one of these
• 10:28
  Speaker 2: surveys than I would be with twenty twenty two inflation
• 10:30
  Speaker 2: if I were still working like you put yourself in
• 10:32
  Speaker 2: that position like, Okay, it really sucks that all my
• 10:35
  Speaker 2: prices have gone way up, but I do still have
• 10:36
  Speaker 2: a job and I'm able to put food on the
• 10:38
  Speaker 2: put food on the table from my family. The problem
• 10:42
  Speaker 2: with how that all works out is in the worst
• 10:45
  Speaker 2: recessions that we've been through, maybe one in ten people
• 10:49
  Speaker 2: has lost their job. So yeah, that is the way
• 10:53
  Speaker 2: that these surveys go. And frankly, it's just been a
• 10:56
  Speaker 2: very long time since we've experienced a time period like
• 10:59
  Speaker 2: this with price uncertainty like we've been delivered of the
• 11:03
  Speaker 2: last five years. Let's take quick break when we come back,
• 11:06
  Speaker 2: playing a little bit of trivia for you here next
• 11:08
  Speaker 2: on the Financial Exchange.
• 11:11
  Speaker 1: The Financial Exchange is now available every day from eleven
• 11:13
  Speaker 1: to noon on Serious XM's business radio channel one thirty two.
• 11:17
  Speaker 1: Stay informed about the latest from Wall Street, fiscal policy,
• 11:20
  Speaker 1: and breaking business news every day. The Financial Exchange is
• 11:24
  Speaker 1: life on Serious XM's Business radio channel one thirty two.
• 11:28
  Speaker 1: This is the Financial Exchange Radio Network. If you missed
• 11:32
  Speaker 1: any of today's show, catch up whenever you want on
• 11:35
  Speaker 1: our YouTube page. Find daily show segments and full shows.
• 11:38
  Speaker 1: Just go to YouTube dot com and search for the
• 11:40
  Speaker 1: Financial Exchange. This is your home for breaking business and
• 11:44
  Speaker 1: financial news. This is the Financial Exchange Radio Network.
• 11:51
  Speaker 5: It's sad for trivia here on the Financial Exchange and
• 11:54
  Speaker 5: we have a new trivia theme this week. We're gonna
• 11:57
  Speaker 5: go with Famous Bends Street here in our week long
• 12:02
  Speaker 5: look at Famous Ben's begins with Massachusetts native Ben Affleck.
• 12:08
  Speaker 4: Trivia question today.
• 12:10
  Speaker 5: What was the name of the twenty thirteen Best Picture
• 12:13
  Speaker 5: winner that Ben Affleck directed and starred in? Once again,
• 12:17
  Speaker 5: what was the name of the twenty thirteen Best Picture
• 12:20
  Speaker 5: winner that Ben Affleck directed and starred in? Be the
• 12:25
  Speaker 5: sixth person today to text us at six one seven
• 12:28
  Speaker 5: three six two thirteen eighty five with the correct answer.
• 12:31
  Speaker 3: You know when a.
• 12:31
  Speaker 5: Financial Exchange Show T shirt. Once again, The six correct
• 12:35
  Speaker 5: response to text us to the number six one seven
• 12:38
  Speaker 5: three six to two thirteen eighty five will win that
• 12:41
  Speaker 5: T shirt. See complete contest rules at Financial Exchange Show
• 12:44
  Speaker 5: dot com.
• 12:45
  Speaker 2: Paul, We've got a piece in the Wall Street Journal
• 12:47
  Speaker 2: today about stocks being the priceiest at least by one
• 12:50
  Speaker 2: measure that they have ever been fitting for a day
• 12:54
  Speaker 2: when the stocks are selling off by more than a
• 12:55
  Speaker 2: percentage point across the board, but we have made on
• 13:00
  Speaker 2: this show. We have made comparisons to this moment in
• 13:02
  Speaker 2: time and the dot com bubble, and the valuation piece
• 13:06
  Speaker 2: of it is just another part of that comparison to
• 13:11
  Speaker 2: the AI driven rally of today versus the dot com
• 13:16
  Speaker 2: driven rally of the past. And I just wonder at
• 13:22
  Speaker 2: how to read into this so specifically, the metric that
• 13:25
  Speaker 2: they're looking at here is not the price to earnings
• 13:27
  Speaker 2: ratio that is still not quite as high as it
• 13:31
  Speaker 2: was during the dot com era, but the price to
• 13:33
  Speaker 2: sales ratio today on the S and P five hundred
• 13:36
  Speaker 2: is higher than it has ever been. So what you're
• 13:37
  Speaker 2: talking about here is take a look at the price
• 13:39
  Speaker 2: of every stock compared to the total value of all
• 13:41
  Speaker 2: of their gross sales, and you are pricier right now
• 13:45
  Speaker 2: than you were during that dot com era. What is
• 13:49
  Speaker 2: one to make of all of this? Do you think
• 13:52
  Speaker 2: it goes.
• 13:52
  Speaker 4: Back to the usual conversation that we have with valuations
• 13:56
  Speaker 4: that over the longer term they are a better predictor
• 14:01
  Speaker 4: of not a bit, they can be a better predictor
• 14:04
  Speaker 4: of future returns, but over the shorter term you can't
• 14:06
  Speaker 4: really draw much from the fact that the S and
• 14:08
  Speaker 4: P five hundreds trading at a pricer level at this point.
• 14:12
  Speaker 4: In terms of the numbers here, there's no question if
• 14:16
  Speaker 4: you look at many different valuation metrics, the market's more expensive.
• 14:22
  Speaker 4: As a counter argument, you could perhaps say that maybe
• 14:24
  Speaker 4: the earnings growth in productivity that's going to be driven
• 14:27
  Speaker 4: by these technological advancements will bring those valuations down. That
• 14:31
  Speaker 4: would be the argument to be made. Or you could
• 14:34
  Speaker 4: make the argument that things have gotten over extended and
• 14:38
  Speaker 4: perhaps investors should brace for a decade where they'd owner
• 14:41
  Speaker 4: as strongly as they have over the past ten years.
• 14:43
  Speaker 2: One of the big differences that has been pointed out
• 14:46
  Speaker 2: during this rally is precisely what this reflects, which is
• 14:50
  Speaker 2: in the dot com era, you had a bunch of
• 14:53
  Speaker 2: really unprofitable companies getting their stock prices bid up, and
• 14:56
  Speaker 2: maybe they were profitable, maybe they were unprofitable pets. Dot
• 14:59
  Speaker 2: Com gets referred to all the time, these companies that
• 15:01
  Speaker 2: barely were in existence and put dot com in their
• 15:04
  Speaker 2: name and got a big price boost. That's not what's
• 15:07
  Speaker 2: really happened in this rally. Instead, you've had some of
• 15:11
  Speaker 2: the most profitable and literally one of the most profitable
• 15:15
  Speaker 2: companies in the history of the world I believe that
• 15:19
  Speaker 2: being Google getting their stocks bid up, and so that
• 15:24
  Speaker 2: price to earnings ratio has not been back to where
• 15:26
  Speaker 2: it was during the dot com bubble, but the price
• 15:29
  Speaker 2: that you're paying for every dollar of revenue that these
• 15:30
  Speaker 2: companies generate is higher than it has ever been for
• 15:34
  Speaker 2: the S and P five hundred. We did get a
• 15:36
  Speaker 2: text a week ago that I never got to. I
• 15:38
  Speaker 2: don't know if you guys did, but somebody texted the
• 15:40
  Speaker 2: show said, have you guys discussed ever the impact of
• 15:43
  Speaker 2: an AI bubble burst on the economy? Just curious if
• 15:46
  Speaker 2: it holds enough weight to have a significant impact. My
• 15:49
  Speaker 2: answer would be if it resembled anything like the dot
• 15:53
  Speaker 2: com bubble burst, then yes, it would be enough to
• 15:55
  Speaker 2: have a significant impact on the economy. You have so
• 15:58
  Speaker 2: many people that are so leveraged right now when it
• 16:01
  Speaker 2: comes to their portfolios. You have so many people that
• 16:04
  Speaker 2: I think are continuing to spend and continuing to feel
• 16:10
  Speaker 2: wealthy because of the values of their stock portfolio. That yeah,
• 16:14
  Speaker 2: if you had an AI bubble burst and suddenly the
• 16:16
  Speaker 2: valuations of companies like Nvidia and Microsoft and others came
• 16:20
  Speaker 2: crashing down, would that be enough to result in a
• 16:23
  Speaker 2: genuine effect on the economy. Yes, And there's genuine economic
• 16:27
  Speaker 2: activity right now that's taking place because of the bets
• 16:31
  Speaker 2: on AI, right all the data center construction, all this
• 16:33
  Speaker 2: stuff that is second order to the stock prices, I
• 16:37
  Speaker 2: think could be affected by something.
• 16:39
  Speaker 4: It's fantastic question opposed, and it's right on the mark.
• 16:43
  Speaker 4: I undoubtedly agree with this proposition out there, because if
• 16:47
  Speaker 4: you look at the capital expenditures of some of these
• 16:50
  Speaker 4: big hyper skills, which are the names the Googles, the Microsofts,
• 16:54
  Speaker 4: these others, they're spending each upwards of one hundred billion
• 16:58
  Speaker 4: dollars eighty five to one hundred billion year on building
• 17:02
  Speaker 4: out data centers and developing their capabilities on AI. If
• 17:06
  Speaker 4: that gets pulled, you've got hundreds of billions of dollars
• 17:09
  Speaker 4: of CAPAX that's being trickled out through the economy that's
• 17:11
  Speaker 4: building pulled out. And then, oh, by the way, those
• 17:14
  Speaker 4: companies in terms of their waiting in the S and P.
• 17:16
  Speaker 4: Five hundred, not all of them are pure AI plays,
• 17:19
  Speaker 4: to be clear, but a lot of the enthusiasm around
• 17:22
  Speaker 4: the Magnificent seven, which makes up a waiting close to
• 17:26
  Speaker 4: a third of the S and P five hundred. If
• 17:28
  Speaker 4: that is taken away because there is some skepticism on
• 17:32
  Speaker 4: AI's future profitability. If there's some big hit that is
• 17:35
  Speaker 4: taken to AI between the lesser capax going forward and
• 17:40
  Speaker 4: just the valuation hit that these companies would take, yeah,
• 17:43
  Speaker 4: definitely it could result in a pullback. Not to mention,
• 17:47
  Speaker 4: a lot of smaller names that have been writing the
• 17:49
  Speaker 4: cotails of this momentum would probably go down with it.
• 17:52
  Speaker 4: But it would have to be a seismic shift in
• 17:55
  Speaker 4: the future optimism around AI that would cause that. But
• 17:58
  Speaker 4: a great question.
• 17:59
  Speaker 2: So this story on price to sales, as with many
• 18:03
  Speaker 2: others that we've covered, I think my conclusion is it
• 18:06
  Speaker 2: does not spell a great deal of optimism that I
• 18:09
  Speaker 2: would have for the next decade in the stock market.
• 18:12
  Speaker 2: It also tells me nothing about anything timing related. It
• 18:16
  Speaker 2: does not tell me whether or not we're in a
• 18:17
  Speaker 2: bubble right now. It does not tell I think anybody
• 18:20
  Speaker 2: anything discernible about what to do with their portfolio today.
• 18:24
  Speaker 2: I think it's just a story of, Hey, things have
• 18:27
  Speaker 2: to go really really well for companies to fit into
• 18:33
  Speaker 2: these very pricey valuations that they are being bid up
• 18:36
  Speaker 2: to right now, and so will we see will we
• 18:40
  Speaker 2: see that revolution? From AI that is being promised. Will
• 18:44
  Speaker 2: we see these companies able to genuinely save a lot
• 18:46
  Speaker 2: of costs and innovate new inventive products that nobody has
• 18:52
  Speaker 2: been able to dream of before on the heels of
• 18:54
  Speaker 2: AI like.
• 18:55
  Speaker 3: Was done with the Internet.
• 18:57
  Speaker 2: And even if it does happen, will we have a
• 18:59
  Speaker 2: bubble burst in between then and now?
• 19:01
  Speaker 4: Yeah, there's a great quote in one of these pieces.
• 19:02
  Speaker 4: I'm forgetting which one it was, but the economic relly
• 19:05
  Speaker 4: it doesn't die of old age, it dies by homicide.
• 19:08
  Speaker 4: I thought that was a good way of putting. It's
• 19:10
  Speaker 4: something that you don't anticipate that comes in and really
• 19:13
  Speaker 4: slashes valuations that we can't even foresee.
• 19:16
  Speaker 2: Today, we've got to take a quick break. When we
• 19:18
  Speaker 2: come back, we've got your trivia winner and a full
• 19:21
  Speaker 2: look at Wall Street today with the sell off that's
• 19:23
  Speaker 2: next on the Financial Exchange.
• 19:40
  Speaker 1: Bringing the latest financial news straight to your radio every day.
• 19:44
  Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
• 19:50
  Speaker 1: Time now for Wall Street. Watch a complete look at
• 19:54
  Speaker 1: what's moving market so far today right here on the
• 19:57
  Speaker 1: Financial Exchange Radio Network.
• 20:00
  Speaker 5: Markets are starting off the month of September by selling
• 20:04
  Speaker 5: off amid more tariff confusion after an appeals court struck
• 20:08
  Speaker 5: down the administration's reciprocal tariffs late last week. Investors are
• 20:13
  Speaker 5: also waiting a court ruling on whether Trump's bid to
• 20:16
  Speaker 5: fire FED Governor Lisa Cook is legitimate. And on top
• 20:20
  Speaker 5: of all of that, we'll have a jobs report on
• 20:22
  Speaker 5: Friday this week. Right now, the Dow is down by
• 20:26
  Speaker 5: over one percent, or four hundred and eighty five points,
• 20:29
  Speaker 5: SMP five hundreds down one point three percent or eighty
• 20:32
  Speaker 5: five points in the NASDAC down one point six percenter,
• 20:36
  Speaker 5: three hundred and fifty four points, RUSS two thousand is
• 20:39
  Speaker 5: down just over one percent. Tenure Treasure wheeled up five
• 20:42
  Speaker 5: basis points now at four point two seven nine percent,
• 20:46
  Speaker 5: and crude oil is jumping two percent higher excuse me,
• 20:51
  Speaker 5: trading at sixty five dollars and thirty two cents a barrel.
• 20:54
  Speaker 5: According to The Wall Street Journal, Activist investor Elliott Management
• 20:58
  Speaker 5: has built a roughly four billion dollar steak in Pepsi
• 21:02
  Speaker 5: and plans to push the beverage and snack's company to
• 21:04
  Speaker 5: make changes to boost its sagging share price. Meanwhile, craft
• 21:08
  Speaker 5: Hins confirmed earlier reports that it would split into two
• 21:12
  Speaker 5: publicly traded companies through tax free spinoff Berkshire. Hathaway's born
• 21:17
  Speaker 5: Buffett told CNBC this morning that he is disappointed in
• 21:20
  Speaker 5: the Craft hind split, as Berkshire was behind the merger
• 21:24
  Speaker 5: back in twenty fifteen. Kraft Hinds shares are down now
• 21:27
  Speaker 5: by over six percent. Elsewhere, shares in Signet Jewelers up
• 21:31
  Speaker 5: nearly one percent after it reported better than expected second
• 21:35
  Speaker 5: quarter results and also up to its full year earnings guidance.
• 21:39
  Speaker 5: Constellation Brands down now over seven percent after the maker
• 21:44
  Speaker 5: of Modella and Modello in Corona cut its full year guidance,
• 21:50
  Speaker 5: and Goldmeyer New Neumont is up by about two percent
• 21:54
  Speaker 5: after the precious metal hit a fresh record high. Out
• 21:58
  Speaker 5: Tucker Silva and that is Wall Street. And in the
• 22:01
  Speaker 5: previous segment, we asked you the trivia question, what was
• 22:04
  Speaker 5: the name of the twenty thirteen Best Picture winner that
• 22:08
  Speaker 5: Ben Affleck directed and starred in. That would be our
• 22:12
  Speaker 5: go Brian from Addleborough, Mass or Brian from Addleborough Mass. Yes,
• 22:16
  Speaker 5: there's our winner today taking home a Financial Exchange showed
• 22:19
  Speaker 5: t shirt. Congrats to Brian and we play trivia every
• 22:22
  Speaker 5: day here in the Financial Exchange. See complete contest rules
• 22:26
  Speaker 5: at Financial Exchange show dot com.
• 22:28
  Speaker 2: We had an other text earlier during the show about
• 22:30
  Speaker 2: tariffs that I think it is worth rady. If you
• 22:32
  Speaker 2: want to text the show, you can do that too
• 22:34
  Speaker 2: by texting six one seven three six two thirteen eighty five,
• 22:38
  Speaker 2: or you can have Tucker's personal cell phone out Tiger.
• 22:40
  Speaker 3: What's that number again? Oh? Sure? Yeah, I almost got him.
• 22:43
  Speaker 3: I felt like I almost had him.
• 22:44
  Speaker 4: There.
• 22:45
  Speaker 3: Get my social social too, please.
• 22:47
  Speaker 2: Problem from the earlier text to the point behind the
• 22:51
  Speaker 2: tariffs is that ultimately it's better for the American people. Yes,
• 22:54
  Speaker 2: people will be unhappy in the short term. However, businesses
• 22:57
  Speaker 2: and business people are constantly changing their models to adapt
• 23:00
  Speaker 2: to the economy and new opportunities and changes. They will
• 23:04
  Speaker 2: do that in this case. First they will make their
• 23:06
  Speaker 2: suppliers eat the cost then they will eat some of
• 23:09
  Speaker 2: the costs. Then they will change the business model and
• 23:11
  Speaker 2: find suppliers in different countries. In the meantime, they will
• 23:14
  Speaker 2: complain about it. I think some of those things are accurate,
• 23:17
  Speaker 2: and what it comes back down to for me is
• 23:22
  Speaker 2: the ultimate goal of these tariffs. And that's where I'm
• 23:25
  Speaker 2: a little bit confused from this text message too, because
• 23:28
  Speaker 2: I've heard a few things about the ultimate goal of
• 23:31
  Speaker 2: the tariffs. One of them has been to bring a
• 23:34
  Speaker 2: majority of the manufacturing that we do of goods back
• 23:37
  Speaker 2: into the United States. And no, India is not good
• 23:40
  Speaker 2: enough in that case, Canada, Mexico is not good enough
• 23:42
  Speaker 2: in that case.
• 23:42
  Speaker 3: We want it done here.
• 23:46
  Speaker 2: The text or acknowledges in this case that yeah, they're
• 23:48
  Speaker 2: going to go to different countries, not necessarily the United
• 23:51
  Speaker 2: States in this case, and that does that ultimately end
• 23:55
  Speaker 2: up being better for Americans if it moves from China
• 23:59
  Speaker 2: to Vietnam, for example, or Malaysia to India. I don't
• 24:04
  Speaker 2: have a good answer to those questions. Is it instead
• 24:08
  Speaker 2: the real end goal to raise revenues that we can
• 24:10
  Speaker 2: cut income taxes. We're seeing some of that year this year.
• 24:13
  Speaker 2: The tariffs have raised a lot of revenue, they haven't
• 24:16
  Speaker 2: really brought a ton of jobs back, And I don't
• 24:18
  Speaker 2: think most companies are ready to do that in this case,
• 24:22
  Speaker 2: both because of uncertainty and just because of the level
• 24:25
  Speaker 2: of the tariffs rates themselves. Right, you can probably pay
• 24:28
  Speaker 2: a thirty percent tariff on Chinese made products and still
• 24:31
  Speaker 2: produce it cheaper in China than you can in the
• 24:33
  Speaker 2: United States.
• 24:34
  Speaker 3: So to me. I guess my personal opinion doesn't matter.
• 24:38
  Speaker 2: My personal opinion, though, is that it's just unclear to
• 24:41
  Speaker 2: me how much tariffs do or don't benefit the United
• 24:44
  Speaker 2: States in the long term. I think others are much
• 24:46
  Speaker 2: more convinced of that, and I'm open to that argument.
• 24:48
  Speaker 2: What I think the texture and I can't agree on
• 24:50
  Speaker 2: is the president's powers. Of these tariffs now being largely
• 24:55
  Speaker 2: in question as to whether or not they will still
• 24:57
  Speaker 2: be out there leads to a whole ton of uncertainty.
• 25:01
  Speaker 4: Sure, I agree with the sentiment about businesses changing and adapting.
• 25:06
  Speaker 4: Of course they always that's it's always, that's always the case,
• 25:09
  Speaker 4: and I would never disagree with that notion at all.
• 25:11
  Speaker 2: You have to It's the same argument I would use
• 25:14
  Speaker 2: for you know, when people tell me, oh, you know,
• 25:16
  Speaker 2: Trump got elected, I can't be in the stock market,
• 25:18
  Speaker 2: or Biden got elected or Obama got elected.
• 25:20
  Speaker 3: You got to get me out of My.
• 25:21
  Speaker 2: Argument is always, Look, companies are very good at navigating
• 25:25
  Speaker 2: all sorts of changes to administrations and businesses and policy.
• 25:29
  Speaker 2: Don't worry about who the prison president is, right, that's
• 25:32
  Speaker 2: not relevant. And that's the same argument I make with tariffs.
• 25:34
  Speaker 2: Companies find ways to succeed.
• 25:36
  Speaker 4: What we can all agree on is that we need
• 25:38
  Speaker 4: certainty going forward as to what the economic playing field
• 25:41
  Speaker 4: is going to look like. And we sit here today
• 25:43
  Speaker 4: five months in and I know less about where tarraffs
• 25:46
  Speaker 4: are going to be than I did on April second.
• 25:49
  Speaker 4: You know, it's just so hard.
• 25:51
  Speaker 3: That's I'm being maybe an exaggeration, but you know what
• 25:53
  Speaker 3: I mean.
• 25:54
  Speaker 4: Like, if this gets reversed, then I really will have
• 25:57
  Speaker 4: no clue at all. But the point being that, ultimately
• 26:02
  Speaker 4: there's two reasons that have been mentioned as to why
• 26:05
  Speaker 4: these tariffs will be unofficial for the economy, bring back
• 26:08
  Speaker 4: manufacturing to the United States and raising revenue. And to me,
• 26:12
  Speaker 4: on the raising revenue side, I'm all for that. If
• 26:15
  Speaker 4: it's going to be utilized to offset the spending pattern
• 26:17
  Speaker 4: that we're on as a country, I'm there. I'm with it,
• 26:21
  Speaker 4: But you have to look at the numbers in terms
• 26:23
  Speaker 4: of the recent tax bill being passed. It it's not
• 26:25
  Speaker 4: going to be a dollar for dollar offset on the
• 26:27
  Speaker 4: increase spending on the tax side of things. There that
• 26:30
  Speaker 4: the tariffs will cover all of the potential debt that's
• 26:35
  Speaker 4: going to be added from these lower tax rates going forward,
• 26:37
  Speaker 4: I would have rather seen we move in the same direction. Okay,
• 26:41
  Speaker 4: raise revenue from tariffs, but then cut expenses at the
• 26:43
  Speaker 4: same time. Then to me, you have a compelling argument
• 26:46
  Speaker 4: from a budgetary standpoint that hey, you're dropping down the
• 26:49
  Speaker 4: cost of things. On the manufacturing side. We're not going
• 26:52
  Speaker 4: to know the answers to that for years as to
• 26:54
  Speaker 4: whether or not this is going to bring more manufacturers
• 26:56
  Speaker 4: to the United States, and people just have to be
• 27:00
  Speaker 4: aware that with bringing things to the United States, the
• 27:04
  Speaker 4: manufacturing the cost of goods will go up, and there's
• 27:07
  Speaker 4: a lot of specialization that goes into manufacturing that I
• 27:09
  Speaker 4: don't think everyone is aware of on a sector sector basis.
• 27:14
  Speaker 2: All said and done, we can all have an intelligent
• 27:16
  Speaker 2: debate about whether or not tariffs will or won't be good.
• 27:19
  Speaker 2: What I think is probably not good is the uncertainty
• 27:23
  Speaker 2: around where they're going to land. And we just got
• 27:24
  Speaker 2: a big dose of that on Friday afternoon when this
• 27:28
  Speaker 2: court ruled against the White House. So we will see
• 27:31
  Speaker 2: where things go in the second half of the last
• 27:34
  Speaker 2: four months of this year and when it comes to
• 27:36
  Speaker 2: these tariffs. But I think what we're seeing in markets
• 27:39
  Speaker 2: today is an admission of more uncertainty. If you are
• 27:45
  Speaker 2: staring down this market right now and we're heading into
• 27:48
  Speaker 2: September with a sellof and you're trying to formulate what
• 27:52
  Speaker 2: your investment strategy looks like for the rest of this year.
• 27:54
  Speaker 2: Maybe you are at a big turning point in life.
• 27:57
  Speaker 2: Maybe you've started a new job, job, a career, heading
• 28:01
  Speaker 2: down to that retirement path, and you have questions about
• 28:04
  Speaker 2: your investment and financial strategy for the future. Give the
• 28:08
  Speaker 2: folks at Armstrong Advisory Group a call so we can
• 28:10
  Speaker 2: lend you some degree of certainty when it comes to
• 28:13
  Speaker 2: your strategy. The numbers eight hundred three nine three for
• 28:16
  Speaker 2: zero zero one. Again, that's the number for the Armstrong
• 28:19
  Speaker 2: Advisory Group. You can reach us at eight hundred three
• 28:22
  Speaker 2: nine three four zero zero one.
• 28:24
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 28:27
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 28:29
  Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
• 28:33
  Speaker 1: your own financial tax into state planning advisors before making
• 28:35
  Speaker 1: any investment decisions. Armstrong make contact you to offer investment
• 28:38
  Speaker 1: advisory services.
• 28:40
  Speaker 2: Band of retail investors powered the Memestock rally and now
• 28:43
  Speaker 2: they're taking different steps here and I just have to
• 28:47
  Speaker 2: say this is reason one thousand why small companies and
• 28:51
  Speaker 2: any companies prefer to stay private rather than going public
• 28:55
  Speaker 2: these days, and why there are so few publicly traded
• 28:58
  Speaker 2: companies out there, which is a phenomenalon we talked about before.
• 29:01
  Speaker 2: But a company called open Door Technologies got looped into
• 29:04
  Speaker 2: the Memestock rally earlier this year. Stock went up ten x.
• 29:08
  Speaker 2: And then these investors, as they've done on a number
• 29:11
  Speaker 2: of different occasions, when that CEO did something that did
• 29:14
  Speaker 2: not sit well with them, pretty successfully forced out that
• 29:18
  Speaker 2: CEO effectively. In one of the earnings calls. They were
• 29:22
  Speaker 2: looking for the CEO to announce some big hope for
• 29:26
  Speaker 2: a strategy turnaround, perhaps a pivot to artificial intelligence. For
• 29:29
  Speaker 2: those that aren't familiar, open Door is a company that
• 29:31
  Speaker 2: buys houses, so I'm not sure how the turn to
• 29:34
  Speaker 2: AI was going to be successful for them. She did
• 29:37
  Speaker 2: not commit to any big turn there, and so there's
• 29:39
  Speaker 2: a big movement to fire the CEO carry Wheeler. The
• 29:43
  Speaker 2: board ended up doing so, and I guess I don't
• 29:47
  Speaker 2: know where I really land on this. To one degree,
• 29:50
  Speaker 2: this is one of the points of markets is to
• 29:53
  Speaker 2: have investors buy and sell companies with an intent of
• 29:56
  Speaker 2: making change. That's activist investor one oh one. On the
• 30:02
  Speaker 2: other hand, it does seem like investors are digging in,
• 30:06
  Speaker 2: some investors anyway, really digging in on issues that don't
• 30:10
  Speaker 2: really seem core to a lot of these businesses. And
• 30:14
  Speaker 2: they're walking a delicate game now of you know, hurting
• 30:18
  Speaker 2: investors' feelings about decisions that CEOs are making. That the
• 30:21
  Speaker 2: cracker barrel example is another way. And look, I don't
• 30:24
  Speaker 2: think it was a good idea to change the cracker
• 30:26
  Speaker 2: barrel logo, but I also didn't expect investors to get
• 30:29
  Speaker 2: as upset about it as they did and move that
• 30:32
  Speaker 2: stock price around. And maybe this is just the lesson
• 30:35
  Speaker 2: of twenty twenty is you know, you suddenly now have
• 30:38
  Speaker 2: a whole bunch of investors who have opinions and previously
• 30:42
  Speaker 2: didn't have investor experience, and they got a whole lot
• 30:45
  Speaker 2: of it back in twenty twenty and twenty twenty one
• 30:47
  Speaker 2: when there wasn't any gambling to be done or other
• 30:49
  Speaker 2: forms of entertainment.
• 30:50
  Speaker 4: The last five years the retail Trader Frenzy has been
• 30:54
  Speaker 4: has produced wonderful content for the show, first of all,
• 30:57
  Speaker 4: and sorry, thank you. In terms of all the means off.
• 31:00
  Speaker 4: I'll never forget the GameStop days and nothing like it
• 31:04
  Speaker 4: today obviously, but still there's pockets of the market that
• 31:07
  Speaker 4: have this out there, the amount of retail trading and
• 31:10
  Speaker 4: just how accessible it is for everyone to be participants
• 31:13
  Speaker 4: in the markets. This is some of the buy products
• 31:16
  Speaker 4: of that, and there's going to be success stories and
• 31:20
  Speaker 4: there's probably gonna be a lot of failures come from
• 31:22
  Speaker 4: this too. But ultimately, for what we talk about on
• 31:27
  Speaker 4: a daily basis, which is largely the S and P
• 31:29
  Speaker 4: five hundred companies, you have such large sizes that if
• 31:34
  Speaker 4: they want to do this hypothetically with Apple, these retail
• 31:36
  Speaker 4: investors know you can't move the needle there. So it
• 31:41
  Speaker 4: remains a fascinating subplot of the market.
• 31:43
  Speaker 2: Let buyer beware with this as an investment strategy, because
• 31:46
  Speaker 2: it does seem to me like a lot of these
• 31:47
  Speaker 2: people are not oftentimes not doing it to make any
• 31:50
  Speaker 2: sort of long term money. Yes, it might be to
• 31:53
  Speaker 2: make short term money, it might be to make short
• 31:55
  Speaker 2: term bets, but oftentimes it seems the strategy is much
• 31:57
  Speaker 2: more about short term and that's very different from a
• 32:01
  Speaker 2: lot of investors' overall strategy. Let's take a quick break
• 32:04
  Speaker 2: when we come back. Stack Roulette.
• 32:06
  Speaker 3: Here on the Financial Exchange.
• 32:08
  Speaker 1: The Financial Exchange is life on Series XM's Business Radio
• 32:12
  Speaker 1: Channel one thirty two weekdays from eleven to noon. Get
• 32:15
  Speaker 1: the latest business and financial news from across the country
• 32:18
  Speaker 1: and around the world, and keep up to date on
• 32:20
  Speaker 1: how it might affect your wallet. That's the Financial Exchange,
• 32:24
  Speaker 1: weekdays from eleven to noon on Series XM's Business Radio
• 32:27
  Speaker 1: Channel one thirty two. This is the Financial Exchange Radio Network.
• 32:33
  Speaker 1: Find daily interviews and full shows of the Financial Exchange
• 32:36
  Speaker 1: on our YouTube page. Subscribe to our page and get
• 32:39
  Speaker 1: caught up on anything and everything you might have missed.
• 32:42
  Speaker 1: This is the Financial Exchange Radio Network.
• 32:47
  Speaker 5: This segment of The Financial Exchange is brought to you
• 32:50
  Speaker 5: by the US Virgin Islands Department of Tourism. Looking for
• 32:55
  Speaker 5: a getaway that's easy, warm, and unforgettable, Discover the magic
• 32:59
  Speaker 5: of the US Virgin Islands. Saint Croix, Saint Thomas and
• 33:02
  Speaker 5: Saint John just a short flight from New England, with
• 33:06
  Speaker 5: no passport needed and no money to exchange. Soak up
• 33:09
  Speaker 5: the sun, stroll along white sand beaches and feel the
• 33:13
  Speaker 5: rhythm of the heartbeat of the islands. The USBI is
• 33:17
  Speaker 5: America's Caribbean paradise. Plan your fallscape now at visit USVII
• 33:22
  Speaker 5: dot com. That's visit USVII dot com.
• 33:25
  Speaker 2: I would kick things off for our stack roulette here, Paul,
• 33:29
  Speaker 2: We've got a columnist based in Bloomberg. Stable coins are
• 33:33
  Speaker 2: coming from for your rewards points. And I would really
• 33:36
  Speaker 2: genuinely like if anybody's listening right now and feels like
• 33:39
  Speaker 2: they have a really good grasp on stable coins, to
• 33:43
  Speaker 2: tell me where I'm wrong here. But here's my brief
• 33:46
  Speaker 2: understanding of the direction that stable coins seem to be going.
• 33:50
  Speaker 3: A number of different.
• 33:52
  Speaker 2: Retailers are considering rolling out stable coins. Credit card companies
• 33:57
  Speaker 2: are doing the same as well. And here is the promise.
• 34:02
  Speaker 2: You will have a let's use Amazon as an example
• 34:05
  Speaker 2: because it's the easiest. You will have a Amazon issued
• 34:10
  Speaker 2: stable coin that is pegged to the US dollar, that
• 34:13
  Speaker 2: is easy transfer easily transferable between your Amazon stable coin
• 34:17
  Speaker 2: and dollars, is backed by something at Amazon, and you
• 34:21
  Speaker 2: will be able to use those stable coins to make purchases,
• 34:24
  Speaker 2: receive purchases if you're a vendor on there, and do
• 34:28
  Speaker 2: so without Amazon needing to pay exorbitant credit card fees
• 34:34
  Speaker 2: and processing times with money movement and all sorts of
• 34:37
  Speaker 2: stuff like that, to which I say great and yeah,
• 34:41
  Speaker 2: that could be really disruptive to a bunch of banks
• 34:43
  Speaker 2: and visa and payment networks and hopefully bring down cost
• 34:46
  Speaker 2: of transactions for people. But isn't it just a slightly
• 34:51
  Speaker 2: more technologically advanced gift card in that case?
• 34:56
  Speaker 3: Yes? I mean, like what is different here?
• 34:59
  Speaker 4: Yeah, I'll go further with that. Yes, that's part of it,
• 35:03
  Speaker 4: And it's important for listeners to understand every time that
• 35:05
  Speaker 4: you're swiping a card at these vendors out there, Visa
• 35:10
  Speaker 4: and MasterCard are making money from what's called interchange fees.
• 35:12
  Speaker 4: That basically the merchant if I pay one hundred dollars
• 35:15
  Speaker 4: at a store for some item, they're not getting all
• 35:17
  Speaker 4: one hundred dollars of that. Visa and MasterCard for the
• 35:20
  Speaker 4: network they provide, are taking a cut in between. Now
• 35:23
  Speaker 4: that can be anywhere from one and a half to
• 35:25
  Speaker 4: three percent, depending on how it's negotiated. They don't get
• 35:28
  Speaker 4: all that money, A lot of it gets offered back
• 35:30
  Speaker 4: to me and for rewards points. So if you have
• 35:32
  Speaker 4: a credit card out there, a Chase, Sapphire, or whatever
• 35:35
  Speaker 4: the case may be and you get two percent cash
• 35:37
  Speaker 4: back or whatever the offer is. They're giving some of
• 35:39
  Speaker 4: it back to you there, and usually they're taking maybe
• 35:42
  Speaker 4: a quarter of a percent on all transaction volume, the
• 35:44
  Speaker 4: big on anything that you spend using these cards. Obviously,
• 35:48
  Speaker 4: Amazon and Walmart and all these other would love a
• 35:51
  Speaker 4: boost of two or three percent on their margins to
• 35:53
  Speaker 4: not have to pay that.
• 35:55
  Speaker 3: You can be sure that Amazon's not paying two to
• 35:56
  Speaker 3: three percent, you know what I mean? Again?
• 35:58
  Speaker 4: Yeah, yeah, they're way too big. But how do you
• 36:01
  Speaker 4: convince me, Paul Lane, who is a big his family
• 36:04
  Speaker 4: is a big Amazon shopper. The five percent cash back
• 36:06
  Speaker 4: that I get on our Amazon card, where does that
• 36:10
  Speaker 4: fit into the stable coins here? Because right now you
• 36:12
  Speaker 4: have to you have to convince me that it's better
• 36:15
  Speaker 4: to go with stable coins than the current way of
• 36:18
  Speaker 4: getting my three to five percent cash back in different
• 36:21
  Speaker 4: varying offs.
• 36:21
  Speaker 3: I just I feel like I'm missing some piece of this.
• 36:24
  Speaker 2: But the more it gets explained to me, they're like, yeah,
• 36:27
  Speaker 2: that's it.
• 36:28
  Speaker 4: Someone make the argument. And the only way that they're
• 36:30
  Speaker 4: going to be able to get people to do this
• 36:32
  Speaker 4: is you're gonna have to. As the retailers really offer
• 36:36
  Speaker 4: some incentives to get me on the platform to.
• 36:38
  Speaker 2: Do it, and you have to be big enough that
• 36:39
  Speaker 2: I trust you, right, right, right, Like I have to
• 36:42
  Speaker 2: trust that my Amazon stable coin is still going to
• 36:44
  Speaker 2: be worth a dollar three years from now.
• 36:46
  Speaker 4: Yeah, and they're going to have to give the three
• 36:48
  Speaker 4: to that percentage back is going to have to be
• 36:51
  Speaker 4: a real lucrative, a war to the end consumer.
• 36:53
  Speaker 2: So I guess if you're Amazon, you can invest the
• 36:57
  Speaker 2: funds like a treasury and make money like a bank does. Right,
• 37:01
  Speaker 2: And then all of a sudden, all of this I
• 37:04
  Speaker 2: see is basically Amazon realizing that, Okay, now I have
• 37:06
  Speaker 2: to get regulated like a bank, and I'm not sure
• 37:09
  Speaker 2: I want to do that.
• 37:09
  Speaker 4: The other great point that's made in this Bloomberg piece
• 37:11
  Speaker 4: is that, yeah, that sounds great when interest rates on
• 37:13
  Speaker 4: money markets are four percent, but if they come back
• 37:16
  Speaker 4: down to zero, then you have an either more of
• 37:18
  Speaker 4: an uphill battle. Tesla will derive eighty percent of its
• 37:22
  Speaker 4: value from optimists, according to Elon Musk, very strategically de
• 37:27
  Speaker 4: emphasizing his Tesla car business and saying that in the future,
• 37:32
  Speaker 4: the company will derive eighty percent of its value from optimists.
• 37:35
  Speaker 4: The robot initiative must predicted that I'm going.
• 37:38
  Speaker 3: To be six three by next year.
• 37:39
  Speaker 4: Paul, did you know that that's tremendous. Yeah, that's tremendous.
• 37:44
  Speaker 3: It's gonna be really impressive.
• 37:45
  Speaker 4: It's gonna help your hockey game. Yeah, it's It's a
• 37:49
  Speaker 4: classic strategic move by Musk of emphasizing things that are
• 37:55
  Speaker 4: on longer timelines. And I don't want to just garage
• 37:59
  Speaker 4: it because he's made some tremendous inrods and some businesses
• 38:02
  Speaker 4: out there.
• 38:02
  Speaker 3: But stock is down one point eight percent today, so.
• 38:05
  Speaker 4: Selling cars has been their business.
• 38:07
  Speaker 2: My question is can Elon still move his company stock
• 38:11
  Speaker 2: given everyone he's pissed off in the same way that
• 38:13
  Speaker 2: he used to be able to. That's all the time
• 38:14
  Speaker 2: we have for today, folks, but we will be right
• 38:17
  Speaker 2: back at it tomorrow here on the Financial Exchange.
• 38:19
  Speaker 3: I have a great afternoon. We'll see you then.