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Should Amazon list the cost of tariffs as part of the price? · The Financial Exchange Show

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Speaker 1: a donation today. This is the Financial Exchange with Chuck
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Speaker 1: Zada and Paul Lane.
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Speaker 2: Chuck, Paul and talker with you here as we kick
1:11
Speaker 2: off the second hour of the show, and markets are
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Speaker 2: selling off on the equity side, though not as bad
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Speaker 2: as they were a little bit earlier in the morning.
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Speaker 2: The Dow is currently down three hundred and forty five
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Speaker 2: points at the moment about point eighty five percent, SMP
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Speaker 2: down sixty five points about one point two percent, and
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Speaker 2: the Nasdaq is off two hundred and eighty one points
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Speaker 2: are about one point six percent. All three of those
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Speaker 2: indices were down about an additional one percent around ten
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Speaker 2: am this morning and have subsequently come back made up,
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Speaker 2: you know, anywhere from about forty to sixty percent of
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Speaker 2: their losses. So a little bit of positive movement over
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Speaker 2: the last hour, but still off fairly, you know, meaningfully
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Speaker 2: so far today. Taking a look at the tenure Treasury
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Speaker 2: not really moving at all, sitting pretty steady at four
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Speaker 2: point one seven percent, that's down four tenths of a
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Speaker 2: basis point over the last day. You've got oil continuing
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Speaker 2: to sell off. This is something that I do want
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Speaker 2: to come back to, so remind me to touch on this.
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Speaker 2: Oil down a dollar and six cents a barrel to
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Speaker 2: fifty nine to thirty six right now. And we've also
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Speaker 2: got the triple A national average for gas prices moving
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Speaker 2: back up a little bit, probably just some price cycling
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Speaker 2: happening in parts of the country, but triple A national
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Speaker 2: average gas price is up two point two cents overnight
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Speaker 2: actually to three eighteen and two tenths of a cent.
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Speaker 2: But still we've just been in this three ten to
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Speaker 2: three twenty range over the last month or so. No
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Speaker 2: real signs that we are breaking out in either direction there.
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Speaker 2: And we've got gold off fourteen dollars and seventy cents
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Speaker 2: an ounce, currently sitting at thir three thousand, three hundred
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Speaker 2: and eighteen dollars and ninety cents. Paul, let's talk a
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Speaker 2: little bit about you know, one of the classic nursery rhymes,
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Speaker 2: sell and may and go away. What age did you
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Speaker 2: start getting your kids up to speed on this one?
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Speaker 3: Within the next year or so, I'll have my son
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Speaker 3: privy to the seasonal trading patterns that there's what's there's
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Speaker 3: there's celling, may go away, there's the Santa Claus rally
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Speaker 3: that we talk about a lot around your end as
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Speaker 3: a focus. What are some of the other ones that
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Speaker 3: I may be.
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Speaker 2: The other one that people like to talk about is October,
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Speaker 2: where because September tends to be a month for sell offs,
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Speaker 2: October tends to be rebranded as October. So that's one
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Speaker 2: that is always popular out there. But you got this
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Speaker 2: piece here, it's titled selling may don't get taken in
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Speaker 2: by seasonal trading patterns.
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Speaker 4: And I think that, look, here's here's.
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Speaker 2: The deal, quite honestly, on any of these pieces, like
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Speaker 2: seasonality is a real thing, like it's it's not something
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Speaker 2: that just doesn't exist. But it's also something where you
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Speaker 2: have to remember that seasonality is an average of what
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Speaker 2: we have seen at different points in the year historically,
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Speaker 2: and that doesn't mean that it inherently follows that same
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Speaker 2: path every year. And so I think seasonality can certainly have,
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Speaker 2: you know, some interesting explanations for why certain things happen
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Speaker 2: at certain times of the year, but they're not It's
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Speaker 2: not something that you can inherently base a plan around,
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Speaker 2: and there can certainly be other things going on in
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Speaker 2: the short term in the economy that can override it,
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Speaker 2: which is why it's not something that is in.
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Speaker 4: Any way, shape or form reliable.
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Speaker 2: If someone were to be considering trying to make it
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Speaker 2: you know the basis of how they are going to invest.
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Speaker 3: No, the major takeaway I had from this piece and
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Speaker 3: like you mentioned, the season ali stuff is fun to
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Speaker 3: talk about, but never should be an investment thesis for
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Speaker 3: anyone out there, just because the unpredictability of market returns.
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Speaker 3: But there was in this CNBC piece a hypothetical growth
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Speaker 3: of one thousand bucks invested in the SMP five hundred
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Speaker 3: and nineteen seventy and this comes from Dimensional Funds. They
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Speaker 3: did this this study that if you were to invest
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Speaker 3: one thousand bucks in the SMP five hundred back in
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Speaker 3: nineteen seventy through twenty nineteen, that one thousand dollars would
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Speaker 3: grow to one hundred and thirty eight thousand bucks, almost
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Speaker 3: one hundred thirty nine thousand dollars. However, if you had
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Speaker 3: missed the five best days of the s and P
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Speaker 3: five hundred during that period from nineteen seventy to twenty nineteen,
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Speaker 3: you're one thousand bucks would be ninety thousand bucks. So
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Speaker 3: almost a differential there of about fifty thousand dollars between
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Speaker 3: the one thousand that grew to one thirty nine twenty
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Speaker 3: nineteen one hundred thirty nine k versus the one where
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Speaker 3: you missed out on the five best days, and it
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Speaker 3: just reiterates the point I think it's helpful, Chuck, to
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Speaker 3: look at these types of things amidst market uncertainty and turmoil,
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Speaker 3: the long term nature of investments, and also in else
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Speaker 3: reiterate the idea of not trying to time markets, because
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Speaker 3: missing out on significant up days really can hurt your
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Speaker 3: returns over the longer time. So that's the main takeaway
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Speaker 3: that had these piece. It's nice to look at these
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Speaker 3: numbers over a wide period of time when you're sort
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Speaker 3: of in the throw of things, when things are uncertain.
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Speaker 4: All well and good.
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Speaker 2: Can I tell you why I really dislike the numbers
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Speaker 2: that you just read. Actually why so here's the thing.
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Speaker 2: So if you miss the so let's just use that
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Speaker 2: one there that you miss the best five days every
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Speaker 2: year for fifty five years. Actually this is through August
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Speaker 2: twenty nineteen, so it's really through forty nine years. First
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Speaker 2: question that I have, Paul, what are the odds that
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Speaker 2: the if you make changes to your investments, what are
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Speaker 2: the odds that the two hundred and forty five days
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Speaker 2: that you pick to be out of the market are
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Speaker 2: the worst are the best two hundred and forty five
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Speaker 2: days in that forty nine year period extremely slim, so
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Speaker 2: like that's not realistic.
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Speaker 4: Number One.
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Speaker 2: The other piece is that typically, as we've seen this month,
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Speaker 2: I think April of twenty twenty five is a great
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Speaker 2: example of this, the best five days and the worst
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Speaker 2: five days of any given year usually occur in pretty
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Speaker 2: close proximity. You know, It's it's not an all ways situation,
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Speaker 2: but it's generally something that we talk about where, Look,
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Speaker 2: volatility doesn't usually just move in one direction, it can
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Speaker 2: move in both, and golly g Willakers, we've seen that
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Speaker 2: this month simply because you had, you know, one of
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Speaker 2: the worst two and three day stretches that we've ever
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Speaker 2: seen in the S and P five hundred at the
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Speaker 2: beginning of the month, and towards the middle of the
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Speaker 2: month you saw one of the biggest single day upward
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Speaker 2: moves in the S and P in its history as well.
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Speaker 2: So I guess what I'm getting at is, you know,
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Speaker 2: sure if someone if we really believe that it's a
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Speaker 2: coin flip from day to day, which I think is
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Speaker 2: where I land, is that, Look, I have no idea
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Speaker 2: if the market's going to go up, down or sideways tomorrow,
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Speaker 2: like it's a coin flip. And that's, by the way,
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Speaker 2: what the data shows is basically that from day to
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Speaker 2: day it's pretty close to a fifty to fifty chance
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Speaker 2: as to whether or not the stock market is going
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Speaker 2: to be up or down in any given day. It's
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Speaker 2: a slight, slight bias towards up, but it's it's it's
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Speaker 2: very small. If one believes that, then why why would
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Speaker 2: the data about missing the best five days be relevant?
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Speaker 2: Because if someone were to try to trade the market,
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Speaker 2: it's more of a coin flip than anything else, like
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Speaker 2: and and furthermore, even if it is a coin flip,
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Speaker 2: why would the days they miss specifically be the best ones?
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Speaker 4: You know, it's.
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Speaker 3: Just you know, I don't take it to the exact
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Speaker 3: extremes of the the absolute dollar return. It's more for
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Speaker 3: illustrative purposes, for the recurring theme of like investing over
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Speaker 3: a longer period of time. But yeah, absolutely point taking
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Speaker 3: it is it would be unbelievable serendipity that this would
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Speaker 3: ever ever occur for anyone. But we know you've experienced
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Speaker 3: with clients. There are some out there that you just
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Speaker 3: couldn't talk of selling out, and the problem with them
9:15
Speaker 3: in general, whether it be two thousand and eight or
9:17
Speaker 3: March twenty twenty, whatever difficult times is they were slow
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Speaker 3: to get back in and they missed up on missed
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Speaker 3: not necessarily the best five days or anything like that,
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Speaker 3: but missed a significant rally back from what was a
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Speaker 3: very difficult time in the market.
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Speaker 2: What I can tell you is if you do happen
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Speaker 2: to find the person who always misses the best five
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Speaker 2: days in markets, I'm interested in meeting them as a
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Speaker 2: contra signal. I'm interested in that I would love days
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Speaker 2: every single year for forty nine years running.
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Speaker 4: Let's take a quick break here.
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Speaker 2: When we come back, we've got a little bit of
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Speaker 2: trivia that we're gonna be doing here, and then I
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Speaker 2: want to talk about Amazon yesterday and specifically the decision
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Speaker 2: around whether or not to list the tariff up charge
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Speaker 2: on their prices. We'll talk about Hey, is that something
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Speaker 2: that would have been a good move, bad move, or neither.
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Speaker 1: Right after this, tariffs fears continue to grip markets. Get
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11:39
Speaker 2: Well, yesterday morning we had in a span of an hour,
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Speaker 2: just a pretty remarkable reversal from Amazon. So there was
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Speaker 2: a report from punch Bowl News. I think it was
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Speaker 2: maybe at like eight, like seven forty five, eight fifteen
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Speaker 2: in the morning that Amazon was going to display the
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Speaker 2: cost of tear tariffs on their products. The White House
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Speaker 2: Press Secretary then came out and said that this would
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Speaker 2: be a hostile and political action, and within the hour
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Speaker 2: Amazon said, Hey, we had discussed doing this, but it
12:14
Speaker 2: was in a very narrow subset of our business and
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Speaker 2: the idea was quote never approved and is not going
12:20
Speaker 2: to happen. So there's a piece in Bloomberg today and
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Speaker 2: it's from Alison Schrager, and it says Amazon should list
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Speaker 2: the cost of tariffs as part of the price. And
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Speaker 2: I'm just going to read a couple of quotes Schmidt,
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Speaker 2: just to outline the thinking on this.
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Speaker 4: It says, that's too bad.
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Speaker 2: The idea is a good one that's catching on with
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Speaker 2: other retailers, and Amazon itself already lists state sales taxes
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Speaker 2: separately a checkout, so why not include a tariff, which
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Speaker 2: is just another form of taxation. It goes on to say,
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Speaker 2: I'm a fan of pricing transparency, even though most people
12:53
Speaker 2: hate it. Europeans who shop in the US always complained
12:55
Speaker 2: that the price they end up paying at the register
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Speaker 2: is higher due to taxes than the one that they
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Speaker 2: see on the tag. Uh and basically saying, look, I
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Speaker 2: want this to you know, not be a surprise and
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Speaker 2: want to know where the cost is coming from.
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Speaker 4: So I was thinking.
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Speaker 2: About this and just trying to kind of like work
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Speaker 2: through like the mechanics and just like what this means.
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Speaker 2: And I came across something that I thought would have
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Speaker 2: actually been really interesting. If if Amazon said, look like
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Speaker 2: we want to you know, be able to do this
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Speaker 2: but still throw a bone to the Trump administration. What
13:32
Speaker 2: if Paul and I'm just spitballing here, this is kind
13:35
Speaker 2: of in real time. So if this is the dumbest
13:36
Speaker 2: idea ever, let me know, all right, yep, Amazon says, Look,
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Speaker 2: we're going to you know, list the tariffs as you know,
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Speaker 2: a sub header below the price or whatever. But the
13:50
Speaker 2: other thing that we're going to do is have a
13:55
Speaker 2: button on our website. You know when you're going through
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Speaker 2: you know, when you like put something into Amazon and
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Speaker 2: you get five thousand different items and you're like, oh boy,
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Speaker 2: which one do I get? And you just picked the
14:03
Speaker 2: first one because it's there?
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Speaker 4: Yep.
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Speaker 2: What about one of the ways that you can filter
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Speaker 2: that list is hey, you short me buy products made
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Speaker 2: in the United States?
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Speaker 4: Right, Yep?
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Speaker 2: That to me would seem to be something where you're
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Speaker 2: kind of throwing a bone saying, look, we're gonna list
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Speaker 2: the tariff price. But if you want to encourage people
14:20
Speaker 2: to buy us, click that button and you're buying only
14:23
Speaker 2: products that are made in the United States.
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Speaker 3: I think that's a I'm not gonna poo poo that idea.
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Speaker 3: To me, that makes a lot of sense. And to
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Speaker 3: piggyback of Alison Schrager's piece here to me, put the
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Speaker 3: pricing on there and the tariff impact, and if you
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Speaker 3: want to accomplish the goal of the administration, which, like
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Speaker 3: you just mentioned, the focus on buying more goods made
14:44
Speaker 3: in the US, put that out there so that the
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Speaker 3: consumer can say, Gee, this cost this much and I'm
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Speaker 3: paying an added cost because of this tariff you, Chuck
14:55
Speaker 3: or Paul, Is there a way that we could go
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Speaker 3: out and shop and find something that's US made that
15:00
Speaker 3: cheaper and still accomplish the goal, like you mentioned, of
15:03
Speaker 3: buying something that's made domestically, and Amazon would have the
15:06
Speaker 3: type of platform, which is the amount of third party
15:08
Speaker 3: sellers that they have there and the way that they're
15:11
Speaker 3: able to run their algorithms. I'm sure that's something that
15:14
Speaker 3: they could probably develop I don't think it would be
15:17
Speaker 3: too much of a stress to ask for that potentially.
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Speaker 2: Right, Like, it wouldn't be you know, from the company
15:23
Speaker 2: that does all these different things, would it be that
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Speaker 2: hard to have them made in America? Page?
15:28
Speaker 3: No, I can't. I can't imagine that it would be.
15:30
Speaker 2: You know, or or again an option you know, filter
15:32
Speaker 2: by country of origin for United States. M So I
15:37
Speaker 2: think part of me thinks that would be just be
15:39
Speaker 2: interesting anyways, just because again, as we've been going through
15:41
Speaker 2: all of this this tariff stuff over the last you know,
15:43
Speaker 2: a couple months, I've been like kind of wondering, like
15:46
Speaker 2: I start poking through the Amazon listings more and here's
15:49
Speaker 2: the thing. On some listings you can find it, on
15:51
Speaker 2: some you can't. But I've you know, kind of thought
15:55
Speaker 2: about it in wonder like, g like, wouldn't it be
15:57
Speaker 2: really interesting if all different detailers that's not an Amazon
16:01
Speaker 2: thing said hey, like allow me to filter by country
16:04
Speaker 2: of origin. I mean I could I can already filter
16:06
Speaker 2: by whether you know, the rug I'm buying is green, blue,
16:09
Speaker 2: square round real polyester. You know, I can already do that.
16:14
Speaker 2: Wouldn't a country of origin filter be kind of interesting
16:18
Speaker 2: in order to And by the way, lest do you
16:21
Speaker 2: think that this is just like you know something where oh,
16:24
Speaker 2: like you know, Chuck thinks, think about what's going on
16:27
Speaker 2: in other parts of the world. I mean, we've seen
16:30
Speaker 2: the stuff in Canadian retailers where they're putting big Canadian
16:34
Speaker 2: flags on all of the Canadian products in order to
16:37
Speaker 2: encourage people to buy those. I mean, what it's basically
16:41
Speaker 2: the same thing here, Am I wrong?
16:43
Speaker 3: No, that's very much a similar view. It's it's incredible
16:47
Speaker 3: how protectionism has just taken over so many global economies,
16:52
Speaker 3: which you know, skeptical as to if that's the best
16:55
Speaker 3: way for the global economy to go over the long term.
17:00
Speaker 2: I mean, ultimately, like when it comes down to it,
17:01
Speaker 2: this is still raising a tax on the cost of
17:04
Speaker 2: doing business, and you know you're gonna have to see
17:06
Speaker 2: how that ends up filtering through into prices and margins.
17:10
Speaker 4: Hint, it's not going to be good for either.
17:12
Speaker 2: But hey, if you want to offer people, you know,
17:15
Speaker 2: easy alternatives to avoid having to pay those taxes, all
17:20
Speaker 2: right here, Amazon like filter by buy American and and
17:24
Speaker 2: and go from there.
17:25
Speaker 3: And I went to consumers, I've be educated too. You know,
17:28
Speaker 3: they know what they're buying and they know what the
17:30
Speaker 3: impacts are.
17:32
Speaker 2: Sure in CNBC home Buyer mortgage demand drops further as
17:36
Speaker 2: economic uncertainty royals the housing market. And this we get
17:40
Speaker 2: this data every week. I don't usually put too much
17:42
Speaker 2: stock in it, and quite honestly, I don't put too
17:44
Speaker 2: much stock in this week because it's it's one week
17:47
Speaker 2: of data. But basically what we are seeing here is
17:51
Speaker 2: that with mortgage rates still hanging out in that like
17:54
Speaker 2: six eight to seven percent range, you end up in
17:58
Speaker 2: a situation where applications to purchase a home dropped by
18:03
Speaker 2: four percent last week compared to the prior week, but
18:06
Speaker 2: volumes still about three percent higher than the same week
18:08
Speaker 2: a year ago. So it continues to paint a picture
18:11
Speaker 2: that's the one I've been seeing all year, which is, hey,
18:14
Speaker 2: there's not really any clear signs of the housing market
18:17
Speaker 2: falling apart and seeing you know, drastically lower volume, but
18:22
Speaker 2: there's also no sign that it's providing any kind of
18:24
Speaker 2: tailwind to this economy right now.
18:26
Speaker 3: No, we've seen increased inventory throughout the course of this year,
18:30
Speaker 3: and it seems like rather tepi demand in terms of
18:33
Speaker 3: purchase activity, but nothing that would point to concerns about
18:39
Speaker 3: cracks in the market or anything like that. Perhaps we
18:42
Speaker 3: see some price declines nationally later this year from the
18:45
Speaker 3: impacts of maybe Florida and some other markets that just
18:48
Speaker 3: have a tremendous amount of inventory, But I don't think
18:50
Speaker 3: that it's going to be tremendously volatile in one direction
18:53
Speaker 3: or another.
18:55
Speaker 2: Taking a look at markets as we head towards the
18:56
Speaker 2: bottom of the hour, still hanging out near the eyes
19:00
Speaker 2: of the day, but still down, if that makes any
19:02
Speaker 2: sense to anyone listening. You've got the Dow off two
19:06
Speaker 2: hundred and ninety one points, the S and P's down
19:08
Speaker 2: fifty seven, Nasdack down two fifty eight. Again, it was,
19:11
Speaker 2: you know, meaningfully worse about an hour and a half ago.
19:14
Speaker 2: So market's trying to hang in there at the moment.
19:19
Speaker 2: We're gonna take a quick break here. When we come back,
19:21
Speaker 2: we got the trivia answer and we're talking social Security
19:24
Speaker 2: after this.
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Speaker 5: Trivia question today was which city hosted George Washington's inauguration?
20:17
Speaker 5: That would be New York City. Bill from Stone amasses
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20:36
Speaker 4: Oh, we got a piece in CMBC today.
20:38
Speaker 2: It's titled does it still make sense to wait to
20:41
Speaker 2: claim Social Security retirement benefits?
20:43
Speaker 4: Here's what experts say? What do the experts say, Paul?
20:47
Speaker 3: The experts say, Chuck that one of the things that
20:50
Speaker 3: you have to consider is for those people who elect
20:52
Speaker 3: to take their Social Security as early as possible, which
20:56
Speaker 3: is age sixty two, there will be a thirty percent
20:59
Speaker 3: cut to their monthly benefits. The full retirement age for
21:03
Speaker 3: most folks out there is sixty seven, so you will
21:06
Speaker 3: be experiencing that thirty percent cut over that period of time.
21:11
Speaker 3: There is a benefit to waiting that if you wait
21:15
Speaker 3: to age sixty seven, and then even further out from
21:18
Speaker 3: there to age seventy, there is an eight percent bump
21:21
Speaker 3: that you will receive each year that you defer taking
21:24
Speaker 3: your Social Security income. The tricky thing with Social Security
21:29
Speaker 3: is what it always comes down to if is life expectancy,
21:32
Speaker 3: which none of us have a crystal ball to know
21:34
Speaker 3: as to whether or not how far we're gonna make
21:37
Speaker 3: it out or how many years are we going to
21:38
Speaker 3: be collecting for. But there is a benefit to waiting
21:43
Speaker 3: in that you have the ability to pass down your
21:46
Speaker 3: benefit to your spouse if you're playing, you know, for
21:48
Speaker 3: two people, there is some advantages that can come in there.
21:52
Speaker 3: Typically it is better to wait. There are concerns out
21:56
Speaker 3: there regarding the funding for Social Security. It isn't diticipated
22:00
Speaker 3: that potentially in twenty thirty three that it would its
22:04
Speaker 3: funds would be depleted and they would only be able
22:06
Speaker 3: to pay seventy nine percent of benefits. So that has
22:10
Speaker 3: had people leaning on the idea of, oh geez, if
22:13
Speaker 3: it's going to be depleted, perhaps I access it earlier.
22:16
Speaker 3: But many pundits out there think that social Security will
22:21
Speaker 3: continue on that some resolution will be reached, particularly for
22:24
Speaker 3: those people who are going to be collecting benefits in
22:27
Speaker 3: the here and now over the course the next five
22:29
Speaker 3: ten years or so. A lot of skepticism as to
22:31
Speaker 3: whether or not benefits would be cut for them. More
22:35
Speaker 3: likely it would be generations coming up after them that
22:37
Speaker 3: would see any type of cut in benefits.
22:40
Speaker 1: Folk.
22:41
Speaker 2: Social Security forms the backbone of many retirees income streams,
22:47
Speaker 2: and it dovetails nicely into the guide that the Armstrong
22:50
Speaker 2: Advisory Group has available this month. Now I say this
22:54
Speaker 2: month because if you take a look at the calendar,
22:57
Speaker 2: April thirtieth in April is one of those months that
23:00
Speaker 2: only has thirty days in it, you know, thirty days
23:03
Speaker 2: hath November, April, June and September. Well, this is the
23:07
Speaker 2: last day that we are giving away. The guide titled
23:09
Speaker 2: how to Build a Retirement Budget. So how do you
23:13
Speaker 2: request it? Go to Armstrongadvisory dot Com. When you're there,
23:18
Speaker 2: there's a big button that says colick here for complimentary
23:20
Speaker 2: financial guide. Fill out the information. Request it right there. Again,
23:25
Speaker 2: it's titled how to Build a Retirement Budget, and it
23:28
Speaker 2: gets at some of the big questions that you need
23:30
Speaker 2: to ask yourself as you're trying to figure out how
23:33
Speaker 2: much money you need on a monthly basis, which then
23:36
Speaker 2: helps to inform hey, when should I take Social Security.
23:40
Speaker 2: So the guide again is titled how to Build a
23:42
Speaker 2: retirement budget. The way to request is by going to
23:45
Speaker 2: Armstrong Advisory dot com and requesting it right there. You
23:49
Speaker 2: can also call eight hundred three nine to three four
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Speaker 2: to request this guide, and so again you can go
23:59
Speaker 2: to Armstrong dot com, click on the button for the
24:03
Speaker 2: complementary financial guide and then just input your information and boom,
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Speaker 2: you're off to the races. Again, that number is eight
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Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
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Speaker 1: registered investment advisor. Nothing in the ad or in any
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Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
24:22
Speaker 1: your own financial, tax into state planning advisors before making
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Speaker 1: any investment decisions. Armstrong may contact you to offer investment
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Speaker 1: advisory services.
24:30
Speaker 2: I mentioned during the open for this hour, I wanted
24:33
Speaker 2: to talk a little bit about oil.
24:36
Speaker 4: Is that okay, Paul? We could talk in a little
24:38
Speaker 4: bit of you know, oil right now.
24:41
Speaker 3: Absolutely, let's go for it.
24:43
Speaker 2: So a couple things are interesting to me, and I'm
24:45
Speaker 2: actually going to tie this into the US dollar as well,
24:48
Speaker 2: just because what we have seen in the last few
24:51
Speaker 2: weeks now is a pretty significant rebound in equity markets.
24:55
Speaker 2: Equity markets up over ten percent from their bottom that
24:59
Speaker 2: they found and earlier this month, and the bond market
25:03
Speaker 2: has rallied as well.
25:04
Speaker 4: We've seen things cleaned up.
25:06
Speaker 2: The US tenure is right now at about four point
25:08
Speaker 2: one seven percent if you go and take a look,
25:12
Speaker 2: you know, earlier in the month, you had that tenure
25:14
Speaker 2: up around four point five just a few weeks ago,
25:18
Speaker 2: and so bonds and equities have rallied, and so you
25:23
Speaker 2: look at that and you say, okay, like that's something
25:24
Speaker 2: that you know, makes you feel a little bit more
25:26
Speaker 2: confident about where things stand. What's interesting to me is
25:31
Speaker 2: two places that have not rallied in any meaningful fashion
25:35
Speaker 2: are oil, where West Texas Intermediate right now is at
25:38
Speaker 2: fifty nine to ninety five a barrel that is at
25:41
Speaker 2: the same place it was on April eighth, which is
25:43
Speaker 2: pretty close to where equity markets bottomed, and so oil
25:47
Speaker 2: has had no upward move that you know, meshes with hey,
25:50
Speaker 2: there's going to be more economic activity or anything like that.
25:54
Speaker 2: And likewise, the US dollar, when you look at the
25:58
Speaker 2: Dollar index, it's hanging out right around you know, ninety
26:02
Speaker 2: nine and change, which also is pretty much you know,
26:06
Speaker 2: we got a touch lower than when it where it
26:08
Speaker 2: is today, but you know, just trying to make sense
26:11
Speaker 2: of how these different asset classes are moving. And so
26:14
Speaker 2: you've got equities rallying on hey, maybe there's gonna be
26:17
Speaker 2: you know, some deals on this and that that happened.
26:19
Speaker 2: You got bonds rallying now that the immediate you know,
26:22
Speaker 2: impetus of you know, tariffs has been pushed off in
26:25
Speaker 2: a lot of cases. But you still can't get any
26:30
Speaker 2: kind of rally out of oil, and you still can't
26:31
Speaker 2: get anything out of the dollar.
26:33
Speaker 4: And I just find that interesting. I don't know if
26:35
Speaker 4: it means anything.
26:35
Speaker 2: I mean, ultimately, this is one of those divergences where
26:38
Speaker 2: you kind of sit there and you say, hey, either
26:41
Speaker 2: oil and the dollar are going to be right about something,
26:43
Speaker 2: or stocks and bonds are going to But it's it's
26:47
Speaker 2: a little bit of a pickle that we find ourselves
26:52
Speaker 2: in where things are diverging from how they were behaving
26:54
Speaker 2: earlier in the month.
26:56
Speaker 4: Any thoughts on this pall, No.
26:57
Speaker 3: It certainly seems that on the oil front that they
27:01
Speaker 3: are very much leaning into this idea that there is
27:04
Speaker 3: going to be a slowdown in economic activity China and
27:07
Speaker 3: the US to the top two oil consuming nations, and
27:10
Speaker 3: a trade war between the two of them certainly would
27:13
Speaker 3: mean less goods being exchanged between the two countries and
27:16
Speaker 3: just less economic activity in general. So with this pricing,
27:20
Speaker 3: just really leaning into this idea that you aren't going
27:24
Speaker 3: to see a tremendous amount of activity and as a
27:26
Speaker 3: result of that, oil prices will remain low. You also
27:29
Speaker 3: have OPEC continuing to boost some of their output over
27:34
Speaker 3: the course of the next couple months. They're suggesting that
27:36
Speaker 3: they would do it for the second consecutive month in June.
27:39
Speaker 3: They're set to meet on May fifth to discuss those plans.
27:43
Speaker 3: And then domestically, we've seen inventories rise by about three
27:46
Speaker 3: point eight million barrels this week for US crewed So
27:50
Speaker 3: it is just an interesting point to note that equity
27:53
Speaker 3: markets seem to be more optimistic on things than the
27:58
Speaker 3: energy markets, and and we'll see who who is correct.
28:04
Speaker 2: Let's talk a little bit about earnings that we are
28:06
Speaker 2: going to get after the bell today. We've got Microsoft
28:09
Speaker 2: and Meta on tap.
28:11
Speaker 4: Either one. Would you prefer to start with Microsoft or Metapaul?
28:15
Speaker 4: What do you think?
28:16
Speaker 3: Let's lead off with the Microsoft.
28:18
Speaker 2: So Microsoft obviously the focus for them, I think is
28:22
Speaker 2: going to be twofold. Number one, what are they seeing
28:25
Speaker 2: as far as you know, revenue in their cloud business,
28:27
Speaker 2: which is where most of the AI stuff ends up
28:31
Speaker 2: being categorized by them. The other piece is going to
28:35
Speaker 2: be what are they seeing as far as their future
28:38
Speaker 2: CAPEX plans and are they still increasing capex as rapidly
28:41
Speaker 2: as they thought previously, Because if not, then you've got
28:45
Speaker 2: some potential problems with Nvidia, who already had to take
28:48
Speaker 2: a charge earlier this month for some extra chips that
28:50
Speaker 2: they have on hand that they haven't been able to move.
28:53
Speaker 2: They said it was related to not being able to
28:55
Speaker 2: send them to China. But on top of that, yesterday
28:58
Speaker 2: after the Bell super Micro comput who admittedly had some
29:01
Speaker 2: you know, accounting problems in the last couple of years
29:03
Speaker 2: that forced them to go through a few different auditors,
29:06
Speaker 2: they came out with earnings and basically guided that, you know,
29:09
Speaker 2: things were not going to be anywhere near as robust
29:13
Speaker 2: as they previously thought. And so super Micro today down
29:18
Speaker 2: about fourteen percent. And so if Microsoft, one of the
29:22
Speaker 2: biggest customers for AI hardware, says anything about, hey, we're downshifting,
29:27
Speaker 2: you know, our capacity build out that we're trying to
29:31
Speaker 2: you know, do I think potentially it has the ability
29:34
Speaker 2: to move everything in that semiconductor space, just because clearly
29:40
Speaker 2: there's there's still is you know, a lot of growth
29:42
Speaker 2: priced in there, and you have to start wondering if
29:45
Speaker 2: that is going to you know, be if that's going
29:49
Speaker 2: to be able to continue.
29:50
Speaker 3: Yeah, Microsoft was expecting to spend about eighty billion dollars
29:53
Speaker 3: this year on AI related investments. There obviously is an
29:57
Speaker 3: uncertain micro microeconomic so it'll be interesting to see if
30:02
Speaker 3: they rate the guidance alphabet a competitor in the space.
30:05
Speaker 3: They reiterated their CAPEX guide for this year, so last
30:10
Speaker 3: week they said that they were going to stay on
30:11
Speaker 3: the same trap. It does seem like from pieces that
30:14
Speaker 3: I've read that there continues to be a lot of
30:18
Speaker 3: you know, belief in continuing to spend on AI for
30:21
Speaker 3: these big companies out there. There doesn't seem to be
30:24
Speaker 3: any weakening of that. I know that Microsoft had slowed
30:26
Speaker 3: down a little bit on some of their data center investments,
30:29
Speaker 3: but not necessarily any big shift on the AI front.
30:35
Speaker 3: And then also we'll be focusing, like you mentioned, on
30:38
Speaker 3: the cloud computing growth of as you're that had slowed
30:41
Speaker 3: down a little bit. Its revenue growth was down to
30:44
Speaker 3: thirty one percent from thirty three percent in the January quarter.
30:49
Speaker 3: So that's a number that we'll be focused on as well.
30:52
Speaker 3: At the close of the bell here, just.
30:54
Speaker 4: Take a quick break. When we come back, we'll do
30:56
Speaker 4: a little bit of stack Roulette after.
30:58
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31:59
Speaker 3: Paul out for me for stock Roulette Chuck Starbucks. Starbucks
32:03
Speaker 3: needs a jolt, and it just got some cold brew.
32:06
Speaker 3: As an article here from Bloomberg, the Starbucks had reported
32:10
Speaker 3: earnings earlier this week. The stock was off six or
32:13
Speaker 3: seven percent. Upon those earnings. They had hired Brian Nicol,
32:17
Speaker 3: who was the CEO previously of Chipotle, did a tremendous
32:20
Speaker 3: job turning around Chipotle, and the stock, like I mentioned,
32:24
Speaker 3: Starbucks is off about seven percent today in market trading
32:28
Speaker 3: where they just haven't seen any real positive impacts of
32:33
Speaker 3: a turnaround since he's taken the helm. Granted it's only
32:36
Speaker 3: been a couple quarters here, but they've just found that
32:39
Speaker 3: they haven't been able to incase increase sales traffic. And
32:42
Speaker 3: you and I have talked about on the show before
32:45
Speaker 3: where they found themselves in a difficult predicament where initially
32:50
Speaker 3: Starbucks the focus there was that you could go sit quietly,
32:54
Speaker 3: enjoy a cup of coffee, and spend a significant amount
32:57
Speaker 3: of time there. But with the adoption of the mobile app,
33:00
Speaker 3: it seems like when you visit Starbucks that much more
33:04
Speaker 3: of the focus is just picking up online orders, and
33:07
Speaker 3: they had all sorts of issues with staffing and being
33:11
Speaker 3: able to replicate the experience that they once had. It
33:14
Speaker 3: does seem like with recent advertising campaigns that you'll see
33:17
Speaker 3: watching the NBA playoffs or whatever you're watching, that they're
33:20
Speaker 3: trying to get back to their roots of having Starbucks
33:23
Speaker 3: be more experiential. But it seems like they're having a
33:26
Speaker 3: tough time shaking off sort of the more recent DNA,
33:30
Speaker 3: which just seems like it's predicated on kind of mobile
33:33
Speaker 3: ordering your in and out of Starbucks very quickly.
33:37
Speaker 4: Yeah.
33:37
Speaker 2: I mean, look, I think the other thing on this
33:41
Speaker 2: is and maybe I'm going too far down the rabbit
33:46
Speaker 2: hole on this because I'm not a coffee drinker, Like
33:48
Speaker 2: I don't do it, so I don't understand like all
33:51
Speaker 2: the ins and outs of the different brands and this
33:54
Speaker 2: and that. But I think is it fair to say
33:58
Speaker 2: that the core promise of Starbucks was two things? Number
34:03
Speaker 2: one and I'm not saying that this is true. I'm
34:05
Speaker 2: just saying that this is what they promised. Number one
34:08
Speaker 2: was a better cup of coffee, yes, which is why
34:11
Speaker 2: they command the premium pricing and number two was a
34:16
Speaker 2: vibe and setup that looked and felt like what everyone
34:21
Speaker 2: thought a stereotypical like small coffee place was correct.
34:28
Speaker 3: Correct. I mean, if you if you listen to Howard Schultz,
34:31
Speaker 3: the founder of Starbucks, that is truly his vision and
34:35
Speaker 3: what the company was built upon. But at some point
34:39
Speaker 3: in time they were early to adopt mobile, the mobile app,
34:43
Speaker 3: and write by all accounts did a pretty good job
34:46
Speaker 3: developing it. But that sort of ate away at the
34:50
Speaker 3: experiential nature of Starbucks, of you know, meeting up with
34:53
Speaker 3: someone and spending a significant amount of time there.
34:57
Speaker 5: Yeah, Chuck, I know you're not a coffee drinker. Just
35:00
Speaker 5: to put it in perspective, that coffee house vibe that
35:02
Speaker 5: you bring up, it turned into people hovering around the
35:07
Speaker 5: counter waiting for their orders. And on top of seeing
35:11
Speaker 5: all the people waiting around the counter, you just saw
35:15
Speaker 5: ten twenty drinks just piling up on said counter and
35:19
Speaker 5: it just turned into a chaotic, unorganized mess. That's what
35:23
Speaker 5: the Starbucks experience turned into, and that's what Brian Nichols
35:26
Speaker 5: trying to get away from.
35:27
Speaker 3: So frequently when you walk in there, you don't see
35:30
Speaker 3: anyone sitting. You see very few people sitting down right, Tucker, Like,
35:34
Speaker 3: it just seems like that that cluster of people waiting
35:37
Speaker 3: for their mobile order is eighty five to ninety percent
35:42
Speaker 3: of the people in there. There are very few people
35:45
Speaker 3: who are just sitting there, And it wouldn't make for
35:47
Speaker 3: a good experience if you wanted to sit and just
35:50
Speaker 3: read a book and hang out and enjoy your coffee.
35:52
Speaker 3: If you see fifteen twenty people just hovering around the
35:55
Speaker 3: counter or waiting for the orders, that's not the experience
35:58
Speaker 3: that they're trying to create. But I don't know if
35:59
Speaker 3: you can put the twoth baste back into the tube here.
36:02
Speaker 3: I mean, the mobile ordering is so ingrained in consumer
36:06
Speaker 3: behavior on Starbucks front. I'm just not sure I know
36:09
Speaker 3: a clear cut answer to resolve this issue that they have.
36:12
Speaker 3: And they're struggling in China a lot too.
36:15
Speaker 2: Can I ask you a questions because I'm kind of
36:16
Speaker 2: dumb about this. People generally like get their coffee at
36:21
Speaker 2: the same time every day, right, yes?
36:23
Speaker 1: Sure?
36:25
Speaker 2: Why does it matter if it's mobile orders versus in
36:27
Speaker 2: person for the oncemer, Like, well, doesn't the line take
36:33
Speaker 2: in order for someone to make that coffee? Doesn't it
36:36
Speaker 2: take the same amount of time? Whether it's twenty mobile
36:38
Speaker 2: orders or twenty in person.
36:41
Speaker 5: Yes, well, it's just a matter of if you're trying
36:45
Speaker 5: to get back on the highway quick, you just want
36:47
Speaker 5: to pick it up at the drive through or walk
36:49
Speaker 5: in quick. You're in and out in twenty seconds.
36:51
Speaker 3: Yeah, my wife doesn't want to take the chance that
36:54
Speaker 3: there's gonna be five or ten people in line with
36:57
Speaker 3: you know, young kids in the car with her in
36:59
Speaker 3: the store. She'd rather just be ready for when she
37:01
Speaker 3: gets there.
37:02
Speaker 5: But now there are some circumstances truck to your point
37:04
Speaker 5: where there's so many mobile orders that you might as
37:08
Speaker 5: well have just stayed in line, right, So I guess
37:10
Speaker 5: my question is, why don't they just throttle the mobile ordering?
37:14
Speaker 4: Okay? Like well, no, Like, just hey, we know that.
37:17
Speaker 2: Our our baristas can process two mobile orders a minute. Okay,
37:24
Speaker 2: so if we get ten mobile orders, the next pickup
37:26
Speaker 2: time is going to be pushed back five minutes so
37:28
Speaker 2: that you know when to show up.
37:30
Speaker 5: Sure, Like, there's got to be some algorithm, like you
37:34
Speaker 5: could risk pushing it back too far for the potential
37:37
Speaker 5: of the person ordering.
37:38
Speaker 3: They just I guess they've already committed to that point.
37:41
Speaker 3: But that would create a frustrating customer exp.
37:43
Speaker 2: But they're gonna get it either way, Like is it
37:45
Speaker 2: different from either way? They're gonna get the coffee at
37:48
Speaker 2: the same time, But why don't just tell? So why
37:51
Speaker 2: not just tell them when they're going to get their coffee?
37:55
Speaker 3: But wouldn't that, as a result, create an effect where
37:58
Speaker 3: they have to wait forty five minutes to an hour
38:00
Speaker 3: to pick it up if we're stacking them that far.
38:03
Speaker 4: But don't they have to do don't they have to
38:04
Speaker 4: wait that long? Anyways?
38:06
Speaker 2: Like, all I'm saying is, if you know it's gonna
38:08
Speaker 2: take so long to make your coffee, tell people I
38:12
Speaker 2: don't know. Uh, let's take a quick break for the
38:14
Speaker 2: entire rest of the day. Stocks remain off but improving
38:18
Speaker 2: as the day goes on. We'll see if they close
38:20
Speaker 2: anywhere near even or positive today. Back at tomorrow with
38:23
Speaker 2: more data and earnings on the financial Exchange