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Is the labor market starting to stabilize? · The Financial Exchange Show

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  Speaker 1: and Paul Lane.
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  Speaker 2: Good morning, Happy Tuesday, Welcome back to the Financial Exchange.
• 1:15
  Speaker 2: Hope everybody's out there staying warm and healthy. I think
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  Speaker 2: I know of five people that are fall into something
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  Speaker 2: this week, whether it's noravirus or colds or RSV. So yeah,
• 1:30
  Speaker 2: stay home, stay healthy, and stay warm. But the good news,
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  Speaker 2: I think for my family, we're finally gonna have some
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  Speaker 2: skatable ponds this week, so I'm looking forward to looking
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  Speaker 2: forward to that. In spite of markets not behaving, we
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  Speaker 2: did have a positive day on Wall Street yesterday, with
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  Speaker 2: two out of three major indices positive, the NASDAK finishing
• 1:51
  Speaker 2: up over one percent yesterday, Dow closing slightly negative, and
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  Speaker 2: reversal this morning though, with NASDAK and SMP so far
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  Speaker 2: and the Red and the Dow slightly positive for the day.
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  Speaker 2: We've got the continued CEES Conference consumer Electronics show out
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  Speaker 2: in Nevada going on, and some words from Nvidia. We
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  Speaker 2: did receive a jobs report this morning, not the jobs report,
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  Speaker 2: but a jobs report the Joltzer Job Openings Labor Turnover
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  Speaker 2: Survey was released just seven minutes ago, so we'll be
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  Speaker 2: covering that shortly, but starting off with just a recap
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  Speaker 2: on markets yesterday because you did see another all time
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  Speaker 2: high from Nvidia, dollar continuing to extend some losses, and
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  Speaker 2: some other data that came out regarding European inflation, and
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  Speaker 2: then the big news politically out of Canada with Trudeau
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  Speaker 2: announcing that he will not be running again in the
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  Speaker 2: upcoming election. But in Vidia shares in particular rose one
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  Speaker 2: point nine percent in pre market saying that they were
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  Speaker 2: announcing a raft of new chips and software services. Uber
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  Speaker 2: gained as well on news about collaboration with Nvidia. So
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  Speaker 2: it seems like if you can hit your wagon to
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  Speaker 2: Nvidia in any way, shape or form, then markets will
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  Speaker 2: reward you in the short term. What else catching your
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  Speaker 2: eye so far this year in markets, Paul, Anything in particular.
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  Speaker 2: There's been plenty written about the demise of Apple in
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  Speaker 2: the first few trading days of the year, and you
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  Speaker 2: know where things are to go. But I you know, frankly,
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  Speaker 2: in spite of all of the movements, markets have been
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  Speaker 2: trading in a pretty narrow band really since the election,
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  Speaker 2: and there hasn't been much in the way of a
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  Speaker 2: what's the word I'm looking for any sort of push
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  Speaker 2: firmly in one direction or another since the early bump
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  Speaker 2: from the election.
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  Speaker 3: Yeah, I really haven't seen too much of note on
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  Speaker 3: the equity markets. I think, like you said, they've traded
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  Speaker 3: rather range brown. What has surprised me quite a bit
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  Speaker 3: is following the US tenure treasury over the course of
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  Speaker 3: the last couple weeks or so. So just back almost
• 4:01
  Speaker 3: a month ago on the fifth of December, the US
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  Speaker 3: ten year treasury was sitting at about four point one
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  Speaker 3: eight percent. Today it's up another almost eight basis points
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  Speaker 3: to four point seven percent, So that longer end of
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  Speaker 3: the yield curve has ticked up quite a bit over
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  Speaker 3: the course the last month or so, and that tends
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  Speaker 3: to have impacts on thirty year fixed mortgages and of
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  Speaker 3: course on the bond market as well, being one of
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  Speaker 3: the major bell weathers out there, So that certainly is
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  Speaker 3: something of note on the bond side of things. On
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  Speaker 3: the equity side of things, I think you have to
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  Speaker 3: really continue to focus on Nvidia and all of the
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  Speaker 3: tentacles that it has to other industries and companies in
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  Speaker 3: the semiconductor space around it. We saw Fox con report
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  Speaker 3: its quarterly numbers yesterday. They reported a record quarter of
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  Speaker 3: sixty four billion of revenue. Fox con probably most noteworthy,
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  Speaker 3: it's the supplier to Apple for its smartphones and also
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  Speaker 3: has more recently impact on sales to AI servers that
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  Speaker 3: are sold by companies like in video. So that's why
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  Speaker 3: you saw a bit of a bump from Nvidio off
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  Speaker 3: of the record quarter that Foxcom reported, and then again
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  Speaker 3: today with CS going on. NVDA continues to be in
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  Speaker 3: the news.
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  Speaker 2: In terms of other data points we'll be looking at
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  Speaker 2: this week. The most important one comes Friday with the
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  Speaker 2: US jobs report, but there is a fair bit of
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  Speaker 2: additional stuff. We've got several FED speakers all week. Barkin
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  Speaker 2: speaks today, you had the job openings, I have some
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  Speaker 2: Services index come out today, Consumer confidence comes out tomorrow,
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  Speaker 2: ADP employment comes out tomorrow. Waller is going to be
• 5:40
  Speaker 2: speaking another FED president. On Thursday, we'll get our weekly
• 5:45
  Speaker 2: jobless claims. Equity markets will be closed on Thursday, so
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  Speaker 2: actually the jobless claims are coming out Wednesday, if I'm
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  Speaker 2: not mistaken, Sorry about that. So equity markets closed Thursday,
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  Speaker 2: banks open, bond market open for most of the day.
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  Speaker 2: I think the post office might be closing early. So
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  Speaker 2: the interesting mix of closures on markets on Thursday and
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  Speaker 2: then Friday we will have that US jobs report as
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  Speaker 2: I mentioned, plus more FED speakers and consumer sentiments coming
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  Speaker 2: out on Friday as well, So potential big moves for
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  Speaker 2: the market as we head in here, because, as we've
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  Speaker 2: talked about quite a bit, the dominant narrative in markets
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  Speaker 2: so far really over the course of the last several
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  Speaker 2: months has been the I think the frank look at
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  Speaker 2: markets as being quite expensive, combined with some policies from
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  Speaker 2: an incoming Trump administration that could be very business friendly,
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  Speaker 2: but also paired with a tail risk of some policies
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  Speaker 2: that might not be quite so business friendly, with tariffs
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  Speaker 2: on a unknown number of trade partners. So a lot
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  Speaker 2: more to come there, and I think, you know, as
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  Speaker 2: you start to either climb or view that wall of
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  Speaker 2: worry a little bit more clearly, it will largely drive
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  Speaker 2: which way equity markets go. But as we've talked about
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  Speaker 2: at length, being priced really for perfection at this stage,
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  Speaker 2: with you know, average earnings expectations for the S and P,
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  Speaker 2: I think expected growth coming in at fourteen percent for
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  Speaker 2: twenty twenty five, which is a big number to fill
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  Speaker 2: and you really have to execute on a whole bunch
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  Speaker 2: of levels. It's not to say you need to necessarily
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  Speaker 2: hit those levels across the board, but if you're far
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  Speaker 2: off from them, then it does call into question some
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  Speaker 2: of these valuations. In the waning days of the Biden administration,
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  Speaker 2: a number of things are taking place. I know, the
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  Speaker 2: release of prisoners from Guantanomo Bay got a lot of headlines.
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  Speaker 2: Most recent would be slapping some more labels on Chinese
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  Speaker 2: companies as quote military in nature, and I've been reading
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  Speaker 2: a fair bit of this since it was just released,
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  Speaker 2: i think last night, and my general conclusion is that
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  Speaker 2: it's not exactly great for reputations of these companies. Some
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  Speaker 2: of them saw a dip in stock price on their
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  Speaker 2: listed exchanges. But from a practical perspective, I'm not sure
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  Speaker 2: that it has any sort of real hook behind it
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  Speaker 2: in terms of punishing these companies in any way, shape
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  Speaker 2: or for no.
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  Speaker 3: So, just to give some background, basically, the Defense Department
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  Speaker 3: has a list of Chinese military companies and it's basically
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  Speaker 3: making the assessment that China is fusing commercial and military
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  Speaker 3: technology and by doing so, Beijing is aiming to take
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  Speaker 3: some of the technology it has in any aspect of
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  Speaker 3: business and kind of fuse it together with military applications.
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  Speaker 3: So being on this list is merely a blacklist just
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  Speaker 3: that is put together with no real legal recourse or
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  Speaker 3: ramifications behind it. This is not something that would prohibit
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  Speaker 3: exports or things of that nature. It only applies to
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  Speaker 3: companies that have Of the companies that they chose to
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  Speaker 3: put on this list, you have to have some operations
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  Speaker 3: in the US. The most recognizable name on this list
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  Speaker 3: is we Chat, which is a subsidiary of which is
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  Speaker 3: a pretty well recognized video game company out of China.
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  Speaker 3: But other than that, as these companies have made public
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  Speaker 3: in their statements, there is no restrictions on them doing business.
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  Speaker 3: It's just more so signaling that hey, keep an eye
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  Speaker 3: out for these companies and some reputational damage that they're
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  Speaker 3: trying to assess with this list, and they can't do
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  Speaker 3: business obviously with the Defense Department.
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  Speaker 2: Yeah, and none of them do currently. You know, it
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  Speaker 2: does raise questions, right like you could it be setting
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  Speaker 2: the groundwork for Congress to pretty easily identify a list
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  Speaker 2: of Chinese companies to say, okay, we're going to sanction
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  Speaker 2: them in some way. It does create the groundwork for
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  Speaker 2: some of that stuff, but as of today, nothing really
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  Speaker 2: occurs here. It also, I think is a genuine question
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  Speaker 2: mark in terms of what the Trump policy is going
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  Speaker 2: to look like in regard to these companies. You know,
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  Speaker 2: he was the one that really, I think built a
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  Speaker 2: lot of the sentiment around China and the push towards
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  Speaker 2: delinking the two economies in his first administration, but most
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  Speaker 2: recently has been saying, look, I want a second look
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  Speaker 2: at the TikTok deal. I really want to control some
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  Speaker 2: of these narratives. And it might just be hey, I
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  Speaker 2: want to control them because I want to be on
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  Speaker 2: the negotiating table on them. But it's been a softer
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  Speaker 2: vocal approach than I was kind of anticipating in the
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  Speaker 2: early stages, with a lot more focus on Mexico, Canada,
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  Speaker 2: and Europe rather than purely taking a look at China.
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  Speaker 2: So I will just be intrigued to see what sort
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  Speaker 2: of things the Trump administration builds off of with this
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  Speaker 2: and which ones they sweep to the side in the
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  Speaker 2: early days of the new administration. Let's take a quick
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  Speaker 2: break when we come back, I want to jump into
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  Speaker 2: that jobs report that was just released now fifteen minutes ago.
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  Speaker 2: What it's telling you about the state of the labor market,
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  Speaker 2: quick break. We'll be right back with that next Wall Street.
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  Speaker 1: Watch a full update on the market's performance todate week
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  Speaker 1: days at ten thirty only here on the Financial Exchange
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  Speaker 1: Radio Network. Thanks to US six one seven, three six
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  Speaker 1: two thirteen eighty five with your comments and questions of
• 11:00
  Speaker 1: today's show and let us know what you think about
• 11:02
  Speaker 1: the stories we are covering. This is the Financial Exchange
• 11:06
  Speaker 1: Radio Network.
• 11:21
  Speaker 2: This morning at ten am, we received a report from
• 11:24
  Speaker 2: the Bureau of Labor Statistics, who puts out the monthly
• 11:27
  Speaker 2: Joltz Report. This is a two month look back. This
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  Speaker 2: is giving you data as the last day of November
• 11:34
  Speaker 2: is what we're measuring here, and they're taking a look
• 11:36
  Speaker 2: at not the hiring and firing that occurred in particular,
• 11:40
  Speaker 2: but rather the actual job openings. And I guess some
• 11:43
  Speaker 2: of the hiring and firing as well. And I would
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  Speaker 2: describe this as more status quo, but in still indicating
• 11:50
  Speaker 2: a bit of a stagnant labor market. I don't think
• 11:53
  Speaker 2: there's anything in here that dramatically shifts that. But some
• 11:56
  Speaker 2: positive signs as of the last day of November available
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  Speaker 2: position so those are the job openings increased to eight
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  Speaker 2: point one million. That's from an upwardly revised seven point
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  Speaker 2: eight million at the end of October, so you know,
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  Speaker 2: pretty decent jump of close to three hundred thousand jobs increased.
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  Speaker 2: In terms of people looking for work, the advance was
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  Speaker 2: led mostly by professional and business services, finance, and insurance,
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  Speaker 2: which again, these are some of the areas that people
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  Speaker 2: have been reporting having the toughest time finding work over
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  Speaker 2: the course of the last few months. If we talked about
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  Speaker 2: people who surveyed saying, hey, I've been unemployed for six
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  Speaker 2: months or more, a lot of them are in those
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  Speaker 2: types of white collar jobs that they're having a tough
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  Speaker 2: time finding work. Accommodation, food services and manufacturing actually reduced
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  Speaker 2: postings and those were some of the hottest areas over
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  Speaker 2: the last few months in terms of job creation. So,
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  Speaker 2: like I said, there's a few more jobs open, which
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  Speaker 2: I will take as a good sign here compared to
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  Speaker 2: if it had just stayed. But some of the other
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  Speaker 2: data that we've been getting in terms of the turnover,
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  Speaker 2: which again you don't want to see such high turnover
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  Speaker 2: that it's creating wage inflation necessarily, although I think we
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  Speaker 2: all liked some of that over the course of the
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  Speaker 2: last five years. But When you get too much turnover,
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  Speaker 2: it can mean a lot of disruption to the labor market,
• 13:14
  Speaker 2: like we saw in twenty twenty one and twenty twenty
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  Speaker 2: two did result in higher prices across the economy. But
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  Speaker 2: at these levels of turnover, you are starting to see
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  Speaker 2: some again, I won't say massive problems in the labor market,
• 13:27
  Speaker 2: but some just general dissatisfaction and problems for those who
• 13:30
  Speaker 2: are already unemployed and for those without experience yet entering
• 13:35
  Speaker 2: the labor force. I don't know, Paul. I was speaking
• 13:38
  Speaker 2: with the family friend of a colleague who's in school now,
• 13:42
  Speaker 2: graduating in May, and talking to him about his experience
• 13:46
  Speaker 2: and the experience with a number of I believe Bentley
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  Speaker 2: grads and his take was very few and far between,
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  Speaker 2: and his network are getting job offers at this stage,
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  Speaker 2: and you know good business school in the Boston area
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  Speaker 2: that typically places some students at ibanks and and you
• 14:03
  Speaker 2: know high powered firms and just saying, look, the offers
• 14:06
  Speaker 2: are few and far between right now, and people are
• 14:09
  Speaker 2: kind of digging deep into that network to try and
• 14:11
  Speaker 2: find something. And we have seen a lot of that,
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  Speaker 2: you know, and it does make me just wonder, you know,
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  Speaker 2: we've seen so much of this productivity number increases. How
• 14:22
  Speaker 2: much of what we're seeing on the slowdown and hiring
• 14:25
  Speaker 2: is directly related to AI. How much of it is
• 14:27
  Speaker 2: just related to kind of some you know, business jitters
• 14:31
  Speaker 2: about a change in administration, And it's really tough to know.
• 14:35
  Speaker 2: But what you can effectively say is that you know
• 14:37
  Speaker 2: the the areas where we seem to be seeing slowdowns
• 14:41
  Speaker 2: and hiring, tech, coding, marketing hiring. For some of these areas,
• 14:49
  Speaker 2: those are low hanging fruit for generative AI, and so
• 14:53
  Speaker 2: it's really tough to say that, oh, yeah, there are
• 14:55
  Speaker 2: jobs being eliminated right now because AI is making the
• 14:58
  Speaker 2: existing workers so much more effective. But there's some correlation there.
• 15:03
  Speaker 2: It seems to be that there is some correlation there
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  Speaker 2: in terms of a slow down in hiring. No layoffs
• 15:11
  Speaker 2: to speak of, but just a slow down in the
• 15:13
  Speaker 2: pace of what we had seen previously. And again, definitively
• 15:17
  Speaker 2: I won't say that that's AI related to this point,
• 15:19
  Speaker 2: but it's not like we're seeing a slow down in
• 15:21
  Speaker 2: construction hiring or nursing hiring that would indicate something else
• 15:25
  Speaker 2: about the economy.
• 15:26
  Speaker 3: Yeah, it seems like the quits rate that you're referencing
• 15:29
  Speaker 3: there before. Obviously it peaked around three percent in the
• 15:31
  Speaker 3: heyday of probably twenty one or twenty two was the
• 15:34
  Speaker 3: best years of the labor market, and some of this
• 15:36
  Speaker 3: could just be burnt off of what's been a really
• 15:40
  Speaker 3: strong couple of years for the labor market in general.
• 15:42
  Speaker 3: As you mentioned, the pendulum had sort of swung to
• 15:45
  Speaker 3: the employee's court where they had much more of the
• 15:48
  Speaker 3: leverage over the course of the last couple of years.
• 15:51
  Speaker 3: And now it does seem to be the common rhetoric
• 15:54
  Speaker 3: that you hear is not necessarily elimination of jobs or layoffs.
• 15:58
  Speaker 3: Like you mentioned before, those numbers relatively static, but more
• 16:01
  Speaker 3: so employers focusing on holding what they have, not looking
• 16:05
  Speaker 3: to trim down staff, but also not so over enthused
• 16:09
  Speaker 3: Mike that they want to bring on more staff. It's
• 16:12
  Speaker 3: rather more of a status quo in nature in terms
• 16:16
  Speaker 3: of the hiring cycle that we seem to be in
• 16:19
  Speaker 3: at this point. And so that's really what becomes when
• 16:22
  Speaker 3: I'm talking with clients. The biggest focus that we have.
• 16:25
  Speaker 3: I mean, there's several, but for twenty twenty five, it
• 16:28
  Speaker 3: continues to be the labor market, and that's why we'll
• 16:30
  Speaker 3: spend so much time covering a report like this, as
• 16:32
  Speaker 3: well as the report that we're due to get on Friday,
• 16:35
  Speaker 3: is to try and glean any sort of insight that
• 16:38
  Speaker 3: we can in terms of how the labor market is faring.
• 16:42
  Speaker 3: There was a bit of a head fake over the
• 16:43
  Speaker 3: summer where there was some concerning trends we thought in
• 16:46
  Speaker 3: the labor market. Those have sort of gone by the
• 16:48
  Speaker 3: wayside and normalized a bit. But it'll be interesting to
• 16:50
  Speaker 3: see when we get more info in this on Friday.
• 16:53
  Speaker 2: So that total separations rate that Paul was mentioning there,
• 16:56
  Speaker 2: I just went and pulled the long term data on
• 16:58
  Speaker 2: this just to keep an eye on it. In normal
• 17:03
  Speaker 2: ish times, you know, the highest you see this get
• 17:06
  Speaker 2: is mid fours. I will say that if you include
• 17:09
  Speaker 2: the COVID area. I mean you had total separations in
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  Speaker 2: March of twenty twenty of eleven point one percent. Never
• 17:14
  Speaker 2: happened before in the history of the data series, which
• 17:17
  Speaker 2: only goes back to the early two thousands. But you know,
• 17:20
  Speaker 2: pre dot com bubble, you were in the mid fours
• 17:22
  Speaker 2: on this data series. Great recession, post Great Recession, yeah,
• 17:27
  Speaker 2: total separations were in the low threes for most of
• 17:30
  Speaker 2: the twenty tens, you were in that range bound three
• 17:33
  Speaker 2: to three and a half range. It was not until
• 17:35
  Speaker 2: the late twenty tens that you even got up above
• 17:37
  Speaker 2: three and a half percent. With the most recent data point,
• 17:40
  Speaker 2: we're down at three point two. Okay. Is that recessionary. No,
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  Speaker 2: it's not necessarily recessionary, but you do have a relatively
• 17:52
  Speaker 2: low level of turnover, and so I continue to hear
• 17:56
  Speaker 2: these tidbits from people. Again, it's not showing up in
• 18:00
  Speaker 2: the data unless you're looking at the length of time
• 18:04
  Speaker 2: that people are unemployed. That's the main area I can
• 18:06
  Speaker 2: look at right now to show weakness in the labor market.
• 18:09
  Speaker 2: It's not firings, it's not layoffs. That stuff could still come,
• 18:14
  Speaker 2: but it's really just getting to a labor market where
• 18:17
  Speaker 2: employers are holding onto what they have, not advertising for
• 18:21
  Speaker 2: a ton of new roles, and really trying to eke
• 18:25
  Speaker 2: the productivity out of every single employee as they head
• 18:28
  Speaker 2: into twenty As they head into twenty twenty.
• 18:32
  Speaker 3: Five, I just saw come across the take care of
• 18:35
  Speaker 3: JP Morgan's making all employees come back into the office
• 18:37
  Speaker 3: five days a week, and I just echoes back to
• 18:39
  Speaker 3: our conversations that we always had with the remote work.
• 18:42
  Speaker 3: I always said that once the leverage gets back in
• 18:44
  Speaker 3: the employer's court in terms of the labor market, that
• 18:47
  Speaker 3: you'll see more and more people sort of forcing employees
• 18:50
  Speaker 3: to go into the office. Not like JP Morgan declares
• 18:52
  Speaker 3: this a victory, but just an interesting trend of monitor.
• 18:55
  Speaker 2: Yeah, that has definitely been happening. Let's even let's actually
• 18:59
  Speaker 2: cover that next after Wall Street Watch. So that's an
• 19:02
  Speaker 2: interesting trend that we are seeing. Amazon is another one
• 19:04
  Speaker 2: that's been calling those employees back to the office. But
• 19:07
  Speaker 2: those employers are finding an interesting surprise in the commercial
• 19:11
  Speaker 2: real estate market when they go to call those folks back.
• 19:14
  Speaker 2: Let's talk about that next. We'll have a full market
• 19:16
  Speaker 2: recap first though, with Wall Street Watch, so stay tuned.
• 19:20
  Speaker 2: Last look, daw was off, SNP and Nazac were positive.
• 19:23
  Speaker 2: Tuckle covered all with you next year on the Financial Exchange.
• 19:42
  Speaker 1: Like us on Facebook and follow us on Twitter at
• 19:45
  Speaker 1: TFE show. Breaking business news is always first right here
• 19:50
  Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
• 19:55
  Speaker 1: Street Watch. A complete look at what's moving market so
• 19:58
  Speaker 1: far today right here on the Financial Exchange Radio Network.
• 20:02
  Speaker 4: Well after yesterday's rally driven by gains in the Chip sector.
• 20:05
  Speaker 4: Markets today are in mixed territory, with the tech sector
• 20:09
  Speaker 4: pulling back. At the moment, the Dow is up by
• 20:13
  Speaker 4: forty two points or tenth of a percent, SMP five
• 20:16
  Speaker 4: hundred is down by four tenths of a percent or
• 20:18
  Speaker 4: twenty six points, and the NASDAC down over one percent
• 20:22
  Speaker 4: lower or two hundred and thirty eight points. Russell two
• 20:25
  Speaker 4: thousand is off by two thirds of a percent, Daniel
• 20:28
  Speaker 4: treasurreel jumping by six basis points at four point six
• 20:32
  Speaker 4: eight percent, and crude oil is up over three quarters
• 20:36
  Speaker 4: of a percent, rating just above seventy four dollars a barrel.
• 20:39
  Speaker 4: In Vidia shares pulling back three percent today after the
• 20:42
  Speaker 4: AI and chip Giant announced new gaming chips for PCs
• 20:46
  Speaker 4: utilizing its Blackwell technology at the Consumer Electronics Show in
• 20:51
  Speaker 4: Las Vegas. Mike and Paul will have more.
• 20:53
  Speaker 1: On that coming up.
• 20:54
  Speaker 4: Speaking speaking of it, Ninvidia, Uber announced late yesterday it
• 20:58
  Speaker 4: was working with the chip make to develop autonomous driving technology.
• 21:02
  Speaker 4: Video also said Japanese car maker Toyota also plans to
• 21:06
  Speaker 4: use its technology in its next generation of vehicles, which
• 21:10
  Speaker 4: will offer advanced driving assistance. Uber up by one percent,
• 21:14
  Speaker 4: while Toyota shares are up over nearly two percent higher. Meanwhile,
• 21:19
  Speaker 4: Meta announced it is ending fact checking and removing restrictions
• 21:22
  Speaker 4: on speech across Facebook and Instagram, where CEO Mark Zuckerberg
• 21:27
  Speaker 4: said the move was an attempt to restore free expression
• 21:31
  Speaker 4: on its platforms. Meta shares pulling back by two and
• 21:34
  Speaker 4: a half percent. Elsewhere, Getty Images and shutter Stock agreed
• 21:39
  Speaker 4: to merge into a combined visual content company with an
• 21:43
  Speaker 4: enterprise value of about three point seven billion dollars, Getty
• 21:47
  Speaker 4: jumping by twenty eight percent, while shutter Stock shares are
• 21:52
  Speaker 4: up twenty one percent. RBC upgraded Carvana to outperform from
• 21:58
  Speaker 4: sector perform. That stock up by six percent and after
• 22:02
  Speaker 4: its two hundred and fifty percent surge yesterday, Fubo TV
• 22:06
  Speaker 4: shares up another sixteen percent today. This comes after Disney
• 22:11
  Speaker 4: agreed to merge Hulu Plus live TV streaming service with Fubo.
• 22:16
  Speaker 4: I'm Tucker Silvan, that's Wall Street watch Paul.
• 22:18
  Speaker 2: Before the break, we were talking a little bit about
• 22:20
  Speaker 2: that return to office trend and you mentioned what was
• 22:24
  Speaker 2: a JP Morgan. Yes, Amazon did the same thing here
• 22:28
  Speaker 2: and said, look, all employees are going to be back.
• 22:30
  Speaker 2: I think on January first, it seems to me, Well,
• 22:35
  Speaker 2: we concluded that either somebody is really crappy at planning
• 22:38
  Speaker 2: at Amazon, which sounds unlikely given gearing the fact that
• 22:44
  Speaker 2: it's Amazon, or they thought a lot more people were
• 22:48
  Speaker 2: going to quit their jobs and refuse to come back
• 22:51
  Speaker 2: to the office when they did all this because Amazon,
• 22:54
  Speaker 2: it's been reported, does not have enough office space for
• 22:57
  Speaker 2: all the employees that want to come back to the office.
• 23:00
  Speaker 2: And it's kind of this weirdly interesting trend in the
• 23:04
  Speaker 2: office space market right now. Where Don't get me wrong,
• 23:07
  Speaker 2: there is a ton of empty office space. There is
• 23:10
  Speaker 2: a large quantity of empty offices in most major metropolitan areas.
• 23:16
  Speaker 2: But if you are looking, if you're Amazon, or if
• 23:19
  Speaker 2: you are a high powered law firm, and you are
• 23:22
  Speaker 2: looking for that office space that has a view, has
• 23:26
  Speaker 2: the amenities, has parking, has a gym, is generally considered
• 23:30
  Speaker 2: a market, you know, a office space market. There's not
• 23:35
  Speaker 2: a whole lot out there at the moment, and so
• 23:38
  Speaker 2: we might be seeing a bit of a rebound here.
• 23:41
  Speaker 2: I don't know that the demand for a office space
• 23:43
  Speaker 2: continues in the same way forever, but some of these
• 23:46
  Speaker 2: companies who have been strapped for cash and are struggling
• 23:49
  Speaker 2: to keep along. Some of these owners of these market
• 23:52
  Speaker 2: of these buildings are starting to pour a lot of
• 23:54
  Speaker 2: money into redeveloping them, renovating them, and turning them into
• 23:58
  Speaker 2: the space that companies seem to want right now, which
• 24:02
  Speaker 2: again nothing to poop poo on. Like B or C
• 24:05
  Speaker 2: office space, It can get the job done. But that's
• 24:08
  Speaker 2: not where the growth is coming right now. The growth
• 24:10
  Speaker 2: is coming from a lot of companies that gave up
• 24:12
  Speaker 2: their space prior to COVID and are now looking for
• 24:14
  Speaker 2: an upgrade as they returned to the office.
• 24:16
  Speaker 3: Yeah, it's important when you're looking at the office space
• 24:19
  Speaker 3: market in general. Of the context is that overall, generally
• 24:21
  Speaker 3: still very negative sentiment across the world. But as Mike
• 24:24
  Speaker 3: highlights here, a perhaps one bright spot is the a
• 24:30
  Speaker 3: you know, Madison Avenue, the you know, uh down by
• 24:34
  Speaker 3: South Station, the financial district, you know, pick a street
• 24:37
  Speaker 3: down there, those types of areas that are that a
• 24:40
  Speaker 3: top tier office space. There continues to be demand for
• 24:44
  Speaker 3: those types of leases, so much so that the landlords
• 24:46
  Speaker 3: behind those types of office spaces don't have to offer
• 24:50
  Speaker 3: the same sort of incentives that they once did during
• 24:53
  Speaker 3: the post pandemic era. If you still look at the
• 24:55
  Speaker 3: office market in general, there is a very high record
• 24:58
  Speaker 3: vacancy rate across all of the different office spaces out there,
• 25:02
  Speaker 3: But it does seem like there's been under development over
• 25:06
  Speaker 3: the last you know, decade or so in terms of
• 25:08
  Speaker 3: that top tier office space. On average, you saw a
• 25:12
  Speaker 3: fourteen million square foot break on new ground for office
• 25:17
  Speaker 3: buildings in the last year. That is well off from
• 25:21
  Speaker 3: where it was from twenty fifteen to twenty nineteen. You
• 25:23
  Speaker 3: were typically seeing twenty million twenty one million square foot
• 25:26
  Speaker 3: in new ground broken in the office space during that
• 25:29
  Speaker 3: period of time. So there has been this under development.
• 25:32
  Speaker 3: So perhaps there is this optimism around the idea of
• 25:34
  Speaker 3: that while builders aren't looking to gravitate towards a B
• 25:38
  Speaker 3: or C tier office development, that top tier one, there
• 25:41
  Speaker 3: is still a demand for that space.
• 25:43
  Speaker 2: What do you think we have here, guys, is like
• 25:45
  Speaker 2: a a plus market market space.
• 25:48
  Speaker 3: I was actually wondering that I thought you would know.
• 25:50
  Speaker 3: I don't know.
• 25:50
  Speaker 2: We uh, we've got you know, I've got to shake
• 25:53
  Speaker 2: weight in my office for our gym. It's a shower
• 25:56
  Speaker 2: around the corner. That's a high quality shower mop in
• 26:00
  Speaker 2: there too. Case you need to take a case, just
• 26:04
  Speaker 2: forgot your Loofah, it takes.
• 26:05
  Speaker 4: About ten minutes for it to warm up.
• 26:07
  Speaker 1: It's great.
• 26:08
  Speaker 2: Have you been kicked out of the house more than
• 26:09
  Speaker 2: once at this point, Tucker?
• 26:10
  Speaker 4: How do you know that we had a power outage once?
• 26:12
  Speaker 4: So I was like, well, I smell you need to
• 26:14
  Speaker 4: shower somewhere.
• 26:15
  Speaker 2: Yeah, yeah, yeah. But those are the types of amenis
• 26:19
  Speaker 2: people are looking for more than just a shake weight
• 26:21
  Speaker 2: in Mike's office and you know, shower facilities. I don't know,
• 26:24
  Speaker 2: the idea of working out in front of my coworkers
• 26:28
  Speaker 2: just doesn't appeal to me terribly. But you know, if
• 26:31
  Speaker 2: there's a free gym attached to my mouth, all I
• 26:34
  Speaker 2: would absolutely use that.
• 26:36
  Speaker 4: The one thing I promise.
• 26:41
  Speaker 2: Sounds good, Tucker, it's going to be in New Hampshire.
• 26:42
  Speaker 2: Good luck. Uh. The CEES Conference Consumer Electronics show out
• 26:48
  Speaker 2: in Las Vegas is underway here and the trend is
• 26:53
  Speaker 2: definitely for all sorts of AI enabled gadgets to take
• 26:58
  Speaker 2: this the front stage. Year. With in Video's new chips dropping,
• 27:04
  Speaker 2: there seem to be a combination of good and stupid
• 27:07
  Speaker 2: uses of AI. I'm seeing a lot of AI enabled
• 27:10
  Speaker 2: televisions and I struggle to understand with what artificial intelligence
• 27:15
  Speaker 2: is going to bring to my TV viewing experience, it
• 27:18
  Speaker 2: just doesn't seem like a necessary next step. There's also
• 27:23
  Speaker 2: a fully battery powered briefcase sized portable television for those
• 27:29
  Speaker 2: on the road. I know we don't travel for work
• 27:33
  Speaker 2: a lot, but have you guys ever stayed at a
• 27:36
  Speaker 2: work related travel place where you didn't have access to
• 27:39
  Speaker 2: a television? Because I'm struggling to understand who this one's for. Interestingly,
• 27:44
  Speaker 2: for the New England area, you also saw a new
• 27:47
  Speaker 2: ACER laptop made partially from oyster shells, so I'm sure
• 27:53
  Speaker 2: that's going to move the market a little bit. But
• 27:55
  Speaker 2: you know they might be sourcing some of those from
• 27:57
  Speaker 2: here in New England, so that's something right about. Other
• 28:01
  Speaker 2: than that, though, the real push has been for in
• 28:04
  Speaker 2: video chips and everything in robotics seems to be really
• 28:06
  Speaker 2: taking the center stage here, which I don't know. For me,
• 28:13
  Speaker 2: that does not seem to be where the successes are
• 28:17
  Speaker 2: showing right now. You missed the show yesterday, I'm guessing, Paul,
• 28:20
  Speaker 2: But yesterday we were showing off what seemed to be
• 28:24
  Speaker 2: a pretty stupid use of artificial intelligence. Where what was
• 28:28
  Speaker 2: it ZipRecruiter, Tucker, Yes, ZipRecruiter. You look up the salaries, right, Yeah.
• 28:32
  Speaker 2: You could look up salaries for all sorts of jobs
• 28:35
  Speaker 2: on ZipRecruiter, and it'll give you a range of you know,
• 28:37
  Speaker 2: compensation expectations. And if you enter completely nonsense jobs like
• 28:44
  Speaker 2: I think we shaw Moon mining engineer with shrimp, it
• 28:48
  Speaker 2: would display salaries for silly things like goose walker and
• 28:53
  Speaker 2: things that don't exist. And again this is just a
• 28:56
  Speaker 2: minor example, but if you're talking about putting that technology
• 29:01
  Speaker 2: into a robot and putting it in front of consumers,
• 29:05
  Speaker 2: I don't think that it's really going to be usable
• 29:08
  Speaker 2: in any way, shape or form. It's also why I'm
• 29:10
  Speaker 2: really not all that concerned about AI in the immediate
• 29:14
  Speaker 2: future replacing Google and replacing search engine optimization, because it
• 29:18
  Speaker 2: seems to be doing a real crappy job of it.
• 29:20
  Speaker 2: I was I was looking at how to clean my
• 29:22
  Speaker 2: washing washing machine this uh yesterday and using vinegar and
• 29:27
  Speaker 2: making sh Yeah. I was looking at that, and the
• 29:31
  Speaker 2: AI search result said pour two cups of vinegar in there,
• 29:34
  Speaker 2: pour a bunch of baking soda into the drum, and
• 29:38
  Speaker 2: run it. And I was like, Okay, that's interesting. Let
• 29:41
  Speaker 2: me go check the source material on here, and it
• 29:43
  Speaker 2: turns out you don't want to do that because those
• 29:45
  Speaker 2: two have a chemical interaction that could clog and then
• 29:48
  Speaker 2: you know, ruin your machine if you do them together.
• 29:50
  Speaker 2: In fact, you need to run one and then the other.
• 29:52
  Speaker 2: But AI is bad at interpreting these things and translating them,
• 29:56
  Speaker 2: and look the pace at which this is moving. They
• 29:59
  Speaker 2: will saw a lot of these problems. But I don't
• 30:01
  Speaker 2: think it's going to fully solve the issue of misinterpreting
• 30:05
  Speaker 2: human language and giving you confidently bad information on things.
• 30:10
  Speaker 2: The low hanging fruit here where it is incredibly useful
• 30:14
  Speaker 2: is developing marketing material, developing all sorts of stuff where
• 30:18
  Speaker 2: humans still interact, and I think that's going to be
• 30:21
  Speaker 2: the piece that's intriguing. But if you're telling me that
• 30:24
  Speaker 2: there's going to be a Tesla robot that's going to
• 30:28
  Speaker 2: come around my house and help out with daily chores,
• 30:31
  Speaker 2: we're just a long ways away from that, and I
• 30:33
  Speaker 2: think that excitement might be a bit misplaced.
• 30:36
  Speaker 3: Yeah, I agree with that. I think that ultimately, with
• 30:39
  Speaker 3: all the capital that's being poured into the space in general,
• 30:43
  Speaker 3: not specific to robots, but towards the development of a
• 30:47
  Speaker 3: you have to feel like there is certainly a ton
• 30:51
  Speaker 3: of merit behind it. It's just the early adoption of
• 30:54
  Speaker 3: it doesn't seem to be business changing or life changing,
• 30:58
  Speaker 3: but it does seem like it will get there as
• 31:01
  Speaker 3: time progresses. But this idea of automation and warehouses in faction,
• 31:05
  Speaker 3: I think it's coming, but it just may take longer
• 31:08
  Speaker 3: than people anticipating.
• 31:09
  Speaker 2: I think the big caution that I have, especially in
• 31:11
  Speaker 2: the investment universe, is just to beware of AI washing.
• 31:15
  Speaker 2: We we've talked about greenwashing in the past, where companies
• 31:20
  Speaker 2: tout their renewable energy investments that turn out to be
• 31:24
  Speaker 2: nothing even close to that. And there's probably a lot
• 31:26
  Speaker 2: of AI washing right now with companies coming out and saying,
• 31:29
  Speaker 2: look at this artificial intelligence powered new tool that we
• 31:32
  Speaker 2: have when in flact, it's the same thing that's been
• 31:35
  Speaker 2: around for a decade and they're just using the term
• 31:38
  Speaker 2: AI because they can. So beware of that because it
• 31:42
  Speaker 2: is getting a lot of attraction, it's getting big, still
• 31:44
  Speaker 2: moving stock prices here and there, and then sometimes comes
• 31:48
  Speaker 2: back down to earth too with the realization that it's
• 31:50
  Speaker 2: nothing new quick break when we come back state of
• 31:53
  Speaker 2: the US auto market. As we head into twenty twenty five,
• 31:55
  Speaker 2: a lot of new models being released this time of year.
• 31:57
  Speaker 2: We'll cover that next year on the Financial Exchange.
• 32:00
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• 32:04
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• 32:06
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• 32:11
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• 32:13
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• 32:19
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• 32:22
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• 32:32
  Speaker 2: Well Paul. In twenty twenty four, America's continued obsession with
• 32:37
  Speaker 2: pricey vehicles and bad decision making led to another increase
• 32:41
  Speaker 2: in vehicle sales. About fifteen point nine million vehicles were
• 32:44
  Speaker 2: sold last year. That's up two point two percent from
• 32:48
  Speaker 2: twenty twenty three. In particular, you saw the last few
• 32:51
  Speaker 2: months with sales growing pretty significantly. December car sales grew
• 32:56
  Speaker 2: at six percent year over year. Any other highlights that
• 33:00
  Speaker 2: you saw from the market. I mean, clearly hybrids are
• 33:02
  Speaker 2: taking a very big role in terms of demand, and
• 33:06
  Speaker 2: Toyota is benefiting greatly from that trend. Right now with
• 33:09
  Speaker 2: the push for hybrid vehicles instead of pure electric. The
• 33:13
  Speaker 2: only other trend that I can really look at is
• 33:15
  Speaker 2: the increasing number of people who are taking out very
• 33:18
  Speaker 2: unaffordable loans and are underwater on their loans on their
• 33:22
  Speaker 2: vehicles at the moment. But any other pieces that shine
• 33:26
  Speaker 2: for you here?
• 33:26
  Speaker 4: Uh?
• 33:27
  Speaker 3: Yeah, this one hit home a little bit just because
• 33:29
  Speaker 3: GM sales rose twenty one percent, largely behind the strong
• 33:34
  Speaker 3: demand for suburbans and other SUVs. Guilty as charged here
• 33:38
  Speaker 3: on a suburban purchase in the month of December, and
• 33:41
  Speaker 3: that's where their sales had rose from October to December.
• 33:44
  Speaker 3: That was a twenty one percent game, like I was mentioning,
• 33:47
  Speaker 3: and then you also had ford have some uptick there too.
• 33:50
  Speaker 3: It is crazy. The monthly prices on average, you're talking
• 33:53
  Speaker 3: about seven hundred and fifty bucks for a new car payment.
• 33:56
  Speaker 3: That's the combination of high prices and high interest rates.
• 34:01
  Speaker 3: Relatively high interest rates, I should say, for a new
• 34:04
  Speaker 3: car clocking in about seven percent and eleven percent interest
• 34:06
  Speaker 3: on you.
• 34:07
  Speaker 2: If you're listening, raise your hand if you remember having
• 34:09
  Speaker 2: a mortgage payment for less than seven hundred dollars a month,
• 34:13
  Speaker 2: first condo eight eight twenty Who wow? Yeah. Yeah, car
• 34:18
  Speaker 2: prices have gotten pretty pricey these days.
• 34:21
  Speaker 4: The calendar has turned and the cold is here to stay.
• 34:24
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• 35:25
  Speaker 2: A couple other pieces just on the auto market as
• 35:27
  Speaker 2: we're talking about it, taking a look here at equity
• 35:32
  Speaker 2: negative equity in particular, and I've got some data here
• 35:34
  Speaker 2: from Edmunds going back the last five years, sorry six years,
• 35:40
  Speaker 2: going back to data from twenty nineteen, and pretty consistently,
• 35:43
  Speaker 2: when Americans buy new vehicles, they tend to trade in
• 35:47
  Speaker 2: old ones. So between forty three and forty eight percent
• 35:52
  Speaker 2: of sales when being purchasing a new vehicle, it involved
• 35:55
  Speaker 2: a trade in of some sort or another. In twenty
• 35:58
  Speaker 2: twenty four, the percentage of trade ins with negative equity
• 36:05
  Speaker 2: hit twenty four point two percent, So again, roughly half
• 36:09
  Speaker 2: forty percent of people when buying a new vehicle trade
• 36:12
  Speaker 2: in one and a quarter of that forty ish percent
• 36:16
  Speaker 2: have negative equity in their vehicle when they go do
• 36:19
  Speaker 2: that trade. And on average, the amount of negative equity
• 36:22
  Speaker 2: when trading in that vehicle was sixty five hundred dollars
• 36:26
  Speaker 2: and the age of that vehicle was only three point
• 36:28
  Speaker 2: six years. So taking a look at now in twenty
• 36:32
  Speaker 2: twenty that was actually worse. Thirty one percent had negative equity,
• 36:35
  Speaker 2: but it was only negative equity of five grand I
• 36:38
  Speaker 2: have to think that in twenty twenty there was just
• 36:40
  Speaker 2: weird COVID stuff going on. A lot of people trading
• 36:43
  Speaker 2: in vehicles or you know, taking advantage of their stimmy
• 36:47
  Speaker 2: checks at some point or another would be my guest here,
• 36:49
  Speaker 2: or just concerned and you know, fire sailing their cars.
• 36:53
  Speaker 2: But the numbers of people with big, big loans outstanding.
• 36:59
  Speaker 2: Again according to Edmunds, so when those people were trading
• 37:02
  Speaker 2: in those vehicles, one in five of those who had
• 37:06
  Speaker 2: that negative equity, oh more than ten thousand dollars on
• 37:09
  Speaker 2: their auto loans when they go to turn it in,
• 37:14
  Speaker 2: and a significant chunk of them actually fifteen one thousand
• 37:18
  Speaker 2: dollars or more on those vehicles. And so, yeah, I
• 37:22
  Speaker 2: don't think that this is the thing that sinks the economy.
• 37:25
  Speaker 2: I'm not making that point, but there have to be
• 37:30
  Speaker 2: a lot of vehicle owners right now with negative equity
• 37:33
  Speaker 2: on their cars. Anything that was purchased, certainly, any evs
• 37:38
  Speaker 2: that were purchased over the course of the last four
• 37:40
  Speaker 2: years definitely have negative equity given where the pricing has
• 37:43
  Speaker 2: gone over the last couple of years. And we all
• 37:46
  Speaker 2: remember I mean I might be close to that on
• 37:49
  Speaker 2: my own Honda Civic just based on where those prices
• 37:52
  Speaker 2: were when we had to purchase them in twenty twenty one,
• 37:54
  Speaker 2: twenty twenty two. But yeah, something definitely to keep an
• 37:58
  Speaker 2: eye on here. Like I said, I don't think it's
• 38:00
  Speaker 2: going to sync the system, but could there be a
• 38:02
  Speaker 2: lender out there that's in particularly bad shape with these
• 38:05
  Speaker 2: auto loans, I wouldn't be shocked. Let's take a quick break,
• 38:08
  Speaker 2: but a lot more to cover in the second hour
• 38:11
  Speaker 2: of the Financial Exchange. I want to talk a little
• 38:12
  Speaker 2: bit more about valuations here where we stand up compared
• 38:15
  Speaker 2: to historically in the incoming Trump administration. That's next here
• 38:19
  Speaker 2: on the Financial Exchange.