Latest / The Financial Exchange Show / It's time for banks to issue meaningless S&P predictions for 2025

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It's time for banks to issue meaningless S&P predictions for 2025 · The Financial Exchange Show

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Speaker 2: Chuck, Mark and Tucker here with the last hour of
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Speaker 2: the Financial Exchange before Thanksgiving. So if you want a
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Speaker 2: little bit of market and economic news, here's your chance
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Speaker 2: to get it. We've got mixed markets now that are
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Speaker 2: trending towards down. The Dow now up thirty six points,
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Speaker 2: but again was up quite a bit more earlier in
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Speaker 2: the day. Sp is down twenty five about four tenths
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Speaker 2: of a percent. NASDAK struggling the most. This has been
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Speaker 2: a trend for the last few weeks in particular, but
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Speaker 2: really since July, there's been this rotation that's been happening.
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Speaker 2: If you haven't been paying attention, I do want to
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Speaker 2: touch on this before we go further, just in terms
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Speaker 2: of what we're seeing on a sector bi sector basis.
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Speaker 2: So year to date, you take a look at technology
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Speaker 2: and it's it's still been good. It's up you know,
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Speaker 2: north of you know, twenty percent in the S and
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Speaker 2: P five hundred. But if we go and look, you know,
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Speaker 2: since July first of this year, and we look at technology,
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Speaker 2: you're talking low single digit returns. I'm I'm just trying
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Speaker 2: to get the exact numbers. I think you're right around
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Speaker 2: three percent right now for the S and P five
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Speaker 2: hundred technology sector, and that is actually the second worst
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Speaker 2: performing sector since July that we have seen in markets.
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Speaker 2: So for all of the hype about AI and how
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Speaker 2: it's been, you know, this driving force in markets really
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Speaker 2: hasn't been for the last four months now, five months
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Speaker 2: since November is nearly over at this point. Instead, the
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Speaker 2: areas that have been the strongest performing since then utilities,
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Speaker 2: consumer discretionary, though most of that consumer discretionary bump is
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Speaker 2: from Tesla post election, financials, real estate industrials, and communications services.
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Speaker 2: Those have been the areas that have been growing the
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Speaker 2: most over the last four months, at least as far
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Speaker 2: as market performance. So this rotation that's been happening under
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Speaker 2: the surface is you know, kind of interesting to watch
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Speaker 2: in terms of, yeah, you've got this broadening out that's
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Speaker 2: happening in markets overall, but these big tech companies are
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Speaker 2: kind of, you know, one of the things that is
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Speaker 2: holding back the broader in disease from being even higher
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Speaker 2: than they would be today. So again, just something that
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Speaker 2: I like to point out because it's it's a change
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Speaker 2: in trend that we've seen over the last few months,
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Speaker 2: and it's continuing to happen today. Just as an example,
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Speaker 2: when you look at you know, in Nvidia down almost
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Speaker 2: three percent today, that's been a trend since they released earnings.
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Speaker 2: They're down north of ten percent since their earnings release.
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Speaker 2: And this is a change in what we've seen from
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Speaker 2: the behavior of some of these previous market leaders over
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Speaker 2: the last few months. Here ten year Treasury is seeing
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Speaker 2: a yields dropping today, it's down four basis points to
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Speaker 2: four point two six percent. Oil West Texts Intermediate up
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Speaker 2: just to touch twenty cents a barrel to sixty eight
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Speaker 2: ninety seven triple A national average. For gas prices heading
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Speaker 2: into Thanksgiving up six tenths of a cent to three
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Speaker 2: oh seven and three tenths. So if you are stopping
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Speaker 2: on the way to Thanksgiving, good news, it is cheaper
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Speaker 2: than a year ago. A year ago, we're three twenty
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Speaker 2: five a gallon on the triple A national average, so
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Speaker 2: you're down about five almost six percent actually from a
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Speaker 2: year ago, but still struggling nationally to get below that
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Speaker 2: three dollars per gallon mark. And for gold today up
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Speaker 2: twenty one to ninety an ounce to twenty six sixty
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Speaker 2: eight and twenty cents. So if you're trying to just
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Speaker 2: you know, head over to Costco and buy an ounce
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Speaker 2: of gold today, it's gonna cost you a little over
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Speaker 2: twenty eight twenty six hundred dollars.
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Speaker 3: Does that fluctuate with the spot price? Do you know?
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Speaker 3: Are they regularly changing that?
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Speaker 2: Well in terms of like how Costco change?
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Speaker 3: Where are they just set it once in a while?
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Speaker 2: How does Costco I.
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Speaker 3: Suppose I could have done?
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Speaker 2: This is me searching to see you like, yeah, well
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Speaker 2: let's actually let's do.
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Speaker 3: You put more effort into it than I did?
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Speaker 2: And typically let's see, No, they have a listed price
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Speaker 2: that they don't market to market in real time like that. Uh,
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Speaker 2: it's unclear exactly how often they shift, but remember.
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Speaker 3: Because you can arbitrage that a little. Right.
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Speaker 2: Well, here's the thing. Costco only lets you buy two
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Speaker 2: gold bars per visit.
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Speaker 3: And you send the whole family in and you're going
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Speaker 3: one at a time or something.
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Speaker 2: It might be even per membership.
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Speaker 3: Oh okay, you know when you get together in the
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Speaker 3: parking lot with everybody, I mean, if we figure it out,
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Speaker 3: I can't think of everything now, it just it does
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Speaker 3: seem like they would be a little bit of they've
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Speaker 3: obviously thought of all this chuck, and you're right, there
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Speaker 3: are precautions. But it's interesting to think that this is
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Speaker 3: something that's fluctuating from second to second and even at
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Speaker 3: intervals shorter than a second throughout the day. Right, So
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Speaker 3: if there was a massive price, say in increase, you
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Speaker 3: could in theory buy it at cheap at costco and
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Speaker 3: sell it dear cheap versus dear. That is I don't
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Speaker 3: know down, I don't know how you'd liquidate it. That's
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Speaker 3: another question, right.
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Speaker 2: So part of the part of the issue is that
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Speaker 2: if you're looking at like large gold mergents who you
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Speaker 2: know will actually buy the stuff from you, there are
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Speaker 2: pretty significant transaction fees. It's just not worth it. It's
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Speaker 2: from what I've seen out there, the transaction fees depending
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Speaker 2: on how much you're actually trying to liquidate or anywhere
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Speaker 2: from like one to one and a half percent. So
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Speaker 2: you got to see a big move in the price
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Speaker 2: in order for it to be you know, in order
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Speaker 2: for that arbitrogy.
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Speaker 3: That's why I'm not a good schemer. Well, listen, I'll
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Speaker 3: keep trying.
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Speaker 2: You can. You can work at it. Mark, you know
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Speaker 2: you can. You can work at it. Let's talk a
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Speaker 2: little bit about my my least favorite part of the
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Speaker 2: end of the year, which is every investment bank comes
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Speaker 2: out with their year end targets.
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Speaker 3: Say, wow, this is going to go dark fast. Sorry,
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Speaker 3: go ahead. After what we talked about last time, you're
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Speaker 3: you're a Christmas fanatic.
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Speaker 2: I mean yeah, it's uh.
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Speaker 3: Borderline, yeah, borderline fanaticism. It's it's great.
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Speaker 2: It's borderline or healthy, but it's it's it's fine physically, no,
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Speaker 2: physically it actually it's great. You get a workout for
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Speaker 2: like every day for a week, it's it's it's wonderful.
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Speaker 2: But in terms of what we see at the end
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Speaker 2: of the year, all the big investment banks come out
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Speaker 2: and they say, hey, here's what we think the S
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Speaker 2: and P five hundred is gonna do next year. And
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Speaker 2: Tucker who was the one that we covered last last week,
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Speaker 2: Morgan Stanley, It might have been Morgan Stanley where they
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Speaker 2: basically said, hey, our base case is for ten percent appreciation,
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Speaker 2: which is kind of the norm for the S and
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Speaker 2: P five hundred, but the bowl case is twenty percent
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Speaker 2: better than that. And the bare case is twenty percent worse,
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Speaker 2: so it's pretty much Yeah, so the S and P
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Speaker 2: next year could perform like the S and P any year,
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Speaker 2: and you're kind of like, well, this doesn't tell me anything.
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Speaker 2: This is kind of useless. Mark. I'm curious to get
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Speaker 2: your thoughts on your end price targets for the S
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Speaker 2: and P five hundred.
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Speaker 3: Like you, because we are long term asset alex catives
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Speaker 3: and our day job at Armstrong Advisory Group, our clients
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Speaker 3: generally invest for the very long term, so we rely
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Speaker 3: on long term properties like the average return on equities
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Speaker 3: fancy way of saying stocks, which is much higher than
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Speaker 3: that on more conservative bonds. And when I say much higher,
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Speaker 3: I mean by several percentage points. It's why we accept
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Speaker 3: equity risks. So we're always thinking long term, and we
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Speaker 3: use long term returns. Assuming that the structure of the
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Speaker 3: economy doesn't change dramatically, stocks should, over the long term
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Speaker 3: continue to outperform bonds, So that's our starting point. So
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Speaker 3: these short term targets always feel a little gimmicky to me.
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Speaker 3: It's not even institutional investors, I mean like pension funds
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Speaker 3: and endowments and stuff like that, or corporate pension funds
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Speaker 3: that have very specific funding targets, and if they come
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Speaker 3: up short, it costs the money and it shows up
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Speaker 3: it hits their income. So they're very sensitive to that.
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Speaker 3: Even they don't use these short term price targets. This
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Speaker 3: is perhaps something done and I've never asked, but I
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Speaker 3: guess I should ask a manager like Goldman that produces them.
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Speaker 3: Who do you do it for? Who's the audience? Some
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Speaker 3: retail investors? Maybe you have a very short timeframe, want
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Speaker 3: to speculate a little bit on price movements over what
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Speaker 3: is a very short time from an equity market a
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Speaker 3: performance perspective of a year or less. Who is the
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Speaker 3: audience for this? And what do they do with it?
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Speaker 3: Because I don't fully get it. Chucking to your point,
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Speaker 3: there's such a wide range when you properly by the
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Speaker 3: way account for risk or standard deviation as finance types
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Speaker 3: like to measure risk is to make the point estimates,
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Speaker 3: which is the one in the middle, the one we
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Speaker 3: always get in the paper. Those are kind of useless.
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Speaker 3: Like you said, the other.
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Speaker 2: Thing is, look, let's say that you are a short
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Speaker 2: term trader and someone who does make investment decisions based
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Speaker 2: on shorter timeframes. Maybe it could be a week, a month,
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Speaker 2: a quarter, whatever it might be. The year end number
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Speaker 2: isn't of value to you. Even the is more important
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Speaker 2: than the year end value, so it like you. The
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Speaker 2: only thing that I can get on this is that
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Speaker 2: it gets people like us talking about it, or it
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Speaker 2: provides fresh meat for you know, the financial media to
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Speaker 2: be able to say, well, here's what this bank thinks
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Speaker 2: is gonna happen this year. And so it provides, you know, content,
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Speaker 2: it's it's you know, something that's kicking it out there.
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Speaker 2: But in terms of the actual value it provides or
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Speaker 2: what it does for anyone, I don't know. I've often
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Speaker 2: found it to be rather useless in my opinion, to hear,
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Speaker 2: you know, the projections of where investment banks think the
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Speaker 2: S and P five hundred is going to finish the
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Speaker 2: next year.
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Speaker 3: Yeah, and would it kill these journalists who write these
10:43
Speaker 3: articles to give a track record for these firms. I'm
10:47
Speaker 3: not going to keep track of what sch Morgan, Manley
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Speaker 3: and Goldman and whoever else does these things. Oh how
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Speaker 3: how accurate their forecasts are. But it wouldn't be that
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Speaker 3: hard to do if you were in the business of
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Speaker 3: publishing them. Every year year. You should put a little
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Speaker 3: asterisk near everybody's four. And this goes for economists too.
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Speaker 3: Uh you should. We need accuracy measures which would tell
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Speaker 3: us quickly quickly summarizes are they any good at at forecasting?
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Speaker 2: I like, uh, what'd you say? Was it?
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Speaker 3: I just reversed the Morgan Manly Morgan Manley.
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Speaker 2: I like that one.
11:21
Speaker 3: I'm sure I'm sure they'll love that too. The Uh,
11:28
Speaker 3: it's funny when you do that, right, it's funny with
11:31
Speaker 3: It works with people too, like Sucker tilva if you
11:39
Speaker 3: actually can't say mine on the air if you think
11:42
Speaker 3: about it, but anyway, it does, it works with people.
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Speaker 3: You could do this over the holiday. If you start
11:46
Speaker 3: growing irritated with people, just exchange the letters of their
11:50
Speaker 3: first and lasson sult.
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Speaker 2: It's fantastic.
11:55
Speaker 3: I give them money to that. They actually sound like
11:57
Speaker 3: a good steward of capital.
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Speaker 2: It's what do you do with like the single name banks? Like,
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Speaker 2: what do you do have to work on that? What
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Speaker 2: was it? City group? One word?
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Speaker 3: I don't know?
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Speaker 2: Lizard right, Like what do we do with this? I
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Speaker 2: don't know what they do? Break hard to say break final.
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Speaker 2: Let's let's go to Tucker. You can turn us off
12:24
Speaker 2: anytime you want, you know, like you could just go
12:26
Speaker 2: to break anyway.
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12:53
Speaker 4: All right, time for trivia here on the Financial Exchange.
12:57
Speaker 4: One of the great Thanksgiving traditions is football. As we
13:00
Speaker 4: all know, the NFL began hosting a game on Thanksgiving
13:04
Speaker 4: back in nineteen thirty four. In nineteen sixty six, a
13:08
Speaker 4: second NFL team began hosting games on Thanksgiving. Every year
13:14
Speaker 4: since the same two teams have hosted a game every
13:19
Speaker 4: year on Thanksgiving. So with that triviy question today, name
13:23
Speaker 4: one of the two teams who hosts a Thanksgiving game
13:27
Speaker 4: every year. Once again, name one of the two teams
13:30
Speaker 4: who host a Thanksgiving game every year. Be the sixth
13:34
Speaker 4: person today it texts us at six one, seven, three, six,
13:37
Speaker 4: two thirteen eighty five. With the correct answer, you'd win
13:40
Speaker 4: a Financial Shange Show t shirt. Once again, the six
13:42
Speaker 4: correct response to text us at six one, seven, three, six,
13:45
Speaker 4: two thirteen eighty five will win that T shirt. See
13:49
Speaker 4: complete contest rules at Financial Exchange Show dot com.
13:53
Speaker 2: Mark, We've got a couple of pieces in the stack
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Speaker 2: here about tariffs, which again we've we got an announcement
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Speaker 2: on tariffs earlier this week from the President elect as
14:06
Speaker 2: far as the intent to raise twenty five percent tariffs
14:09
Speaker 2: on Mexico and Canada and a ten percent tariff on China.
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Speaker 2: This is all goods coming in from those countries. Anything
14:19
Speaker 2: of note that we can discuss here. I know we
14:22
Speaker 2: can speculate on this for the next couple of months,
14:24
Speaker 2: you know, whether these will actually be implemented or not.
14:27
Speaker 2: But doing that every day would get tiring for.
14:31
Speaker 3: Me, especially when on a WHIM policy and I put
14:35
Speaker 3: that in quotes could change. So there's the unique dissemination
14:41
Speaker 3: mechanism here. The President elect will just tweet it out
14:44
Speaker 3: or whatever he calls it on is proprietary social media
14:48
Speaker 3: network that's the vehicle for these things. Yeah, I'm kind
14:51
Speaker 3: of with you on this, Chuck. If we have to
14:54
Speaker 3: pivot every single time the winds change on a WHIM,
15:00
Speaker 3: it's going to get exhausting. So I think we've got
15:03
Speaker 3: to stay focused on the big picture, which is that
15:05
Speaker 3: tariffs are likely to go up broadly, narrowly hard to say, indefinitely,
15:12
Speaker 3: temporarily also hard to say, and that those hikes are
15:16
Speaker 3: equivalent to taxes full stop. There's a lot of pushback
15:21
Speaker 3: against that idea mainly self interested pushback. Tariffs, though they're
15:24
Speaker 3: paid by the producer, by the importer, are ultimately passed
15:29
Speaker 3: on to us as consumers, so we're less well off
15:33
Speaker 3: some industries, the protected ones might be better off, but
15:36
Speaker 3: on average, people are worse off. I'll say again, full stop.
15:40
Speaker 3: And I use that phrase because economists are in pretty
15:42
Speaker 3: much unanimous agreement on that fact. And over time, if
15:47
Speaker 3: they're kept in place, the industry that's protected, think American
15:51
Speaker 3: cars before, before Japanese cars will manufacture here to avoid tariffs,
15:57
Speaker 3: that the coddled industry, that protected industry will become less productive,
16:02
Speaker 3: quality will go down, so consumers on average do suffer.
16:06
Speaker 3: That's the economic argument. That's why economists don't like them.
16:09
Speaker 3: But there may be other arguments for them, national security,
16:12
Speaker 3: social cohesion, you know, and social welfare. Those those are different.
16:18
Speaker 2: Yeah, what I want to talk about here on this
16:21
Speaker 2: is look, when when we when we look at the
16:24
Speaker 2: policy of the incoming administration. And I highly urge anyone
16:28
Speaker 2: who's listening to pick up a copy of Robert Litthheuser's
16:31
Speaker 2: book from last year titled No Trade Is Free. And
16:35
Speaker 2: I'm not saying that I agree with everything in the
16:37
Speaker 2: book or disagree with everything, but Lightheiser's former chief of
16:41
Speaker 2: staff when he was US Trade Representative, Jamison Greer, was
16:46
Speaker 2: just nominated as the US Trade Representative for Trump's second term,
16:51
Speaker 2: pretty much implying, Hey, what we're going to on the
16:54
Speaker 2: trade side of things continue to follow the temple that
16:57
Speaker 2: Lightheiser laid out. And there's a pretty good chance that
16:59
Speaker 2: Lightheiser is be some kind of senior advisor to the
17:02
Speaker 2: president or at least heavily involved in in, you know,
17:05
Speaker 2: this this office in some way, even if he is
17:07
Speaker 2: not the US Trade Representative at this point. And one
17:12
Speaker 2: of the big points that Lightthheiser makes in his book,
17:16
Speaker 2: and he makes this over and over and over, is
17:20
Speaker 2: that the reason why he is so focused on trade
17:24
Speaker 2: as far as you know, trying to figure out how
17:28
Speaker 2: to you know, make things better for the middle class
17:33
Speaker 2: is twofold. The first is that yes, while on the aggregate, uh,
17:40
Speaker 2: you have better outcomes due to you know, free trade
17:43
Speaker 2: and lower tariff barriers. His argument is, look, when the
17:46
Speaker 2: stuff is coming in from overseas, it's all about how
17:49
Speaker 2: we then allocate the benefits from a tax policy. And
17:53
Speaker 2: and you know, from a policy standpoint, and he says
17:55
Speaker 2: that those are not accruing, you know, evenly across the population.
17:59
Speaker 2: There's a small group that is benefiting from that that
18:01
Speaker 2: tends to already be wealthier. The second piece that he
18:05
Speaker 2: argues is from a social perspective. Look, the reason that
18:09
Speaker 2: Lightheiser likes manufacturing jobs. Hey, you go in and you
18:13
Speaker 2: can say I built that, and we can disagree or
18:17
Speaker 2: not about you know, whether or not, you know, manufacturing
18:21
Speaker 2: is the only way to do that. I personally might
18:24
Speaker 2: believe that it's not. But one of the things that
18:26
Speaker 2: I have touched on is the fact that, look, so
18:28
Speaker 2: many jobs exist today. They'ren't really involved in actually doing anything.
18:32
Speaker 2: It's basically involved. You're more like a glorified consultant saying yes,
18:36
Speaker 2: I'm authorizing you to take this risk, or you know,
18:39
Speaker 2: I'm taking some you know, back end job away from
18:43
Speaker 2: someone else so that they can actually you know, handle
18:46
Speaker 2: production or this and that. And I'm just you know,
18:48
Speaker 2: sitting there so disconnected from what's actually going on in
18:51
Speaker 2: the company that I don't feel like I've accomplished anything.
18:54
Speaker 2: Now is the way to rectify that by just going
18:57
Speaker 2: out and saying, Hey, we want to build a bunch
18:59
Speaker 2: of factories. Not necessarily, but I bring this up just
19:03
Speaker 2: because this is where the incoming administration is going to
19:08
Speaker 2: be focusing, and I think it's important to say what
19:12
Speaker 2: their goals are going to be because this is what
19:14
Speaker 2: we're then going to judge them on, is hey, are
19:16
Speaker 2: you are you able to effectively accomplish those goals and
19:21
Speaker 2: do they actually create the benefits that you think they're
19:23
Speaker 2: going to create. So this is there's a lot of
19:27
Speaker 2: meat here as far as where I think the Trump
19:30
Speaker 2: administration is going to be focused in the next four years.
19:35
Speaker 2: Let's take a quick break. We've got the Trivia Answer next.
19:41
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19:45
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20:06
Speaker 4: Trivia question today was to name one of the two
20:09
Speaker 4: teams to a host a Thanksgiving game every year. It
20:13
Speaker 4: will be the lines of the Cowboys. The Detroit Lions
20:15
Speaker 4: have hosted a game on Thanksgiving every year since nineteen
20:19
Speaker 4: thirty four, and in nineteen sixty six the Dallas Cowboys
20:22
Speaker 4: began their traditional tradition of hosting Thanksgiving games. Richard from Quincy,
20:28
Speaker 4: Mass is our winner today taking home a Financial Exchange
20:32
Speaker 4: showed T shirt. Congrats to Richard, and we played trivia
20:35
Speaker 4: every day here on the Financial Exchange. See complete contest
20:39
Speaker 4: rules at Financial Exchange Show dot com.
20:43
Speaker 2: Mark I want to talk a little bit about flying,
20:47
Speaker 2: and specifically airlines that are padding flight time. So the
20:51
Speaker 2: New York Times has this piece here, and in it
20:54
Speaker 2: they give the average flight time from JFK to LAX
21:00
Speaker 2: in nineteen ninety five and then in twenty twenty three,
21:03
Speaker 2: and they break it down by the different pieces. Actually,
21:06
Speaker 2: so in ninety five, the average gate departure delay was
21:08
Speaker 2: eight minutes. Today it's thirteen. Time to taxi out to
21:12
Speaker 2: the runway was twenty four minutes in ninety five today
21:16
Speaker 2: it's twenty five. Time in air was five hours and
21:19
Speaker 2: twenty minutes, then it's five twenty nine now, and then
21:22
Speaker 2: taxi in time was eight minutes in ninety five today
21:25
Speaker 2: it's eleven. Overall, this is bumped up the flight time
21:29
Speaker 2: from six hours to six hours and eighteen minutes. You
21:34
Speaker 2: do the math. It's a five percent bump in average
21:37
Speaker 2: flight time. And yet the percentage of flights that are
21:41
Speaker 2: arriving late based on their scheduled times has dropped from
21:44
Speaker 2: fifty one percent down to thirty seven percent because airlines
21:47
Speaker 2: are saying, hey, if we just say this flight is
21:50
Speaker 2: going to take six and a half hours instead of six,
21:55
Speaker 2: we can make it look like we're getting there on
21:57
Speaker 2: time more often. Curious just to get your thoughts on
22:01
Speaker 2: whether this is good, bad, or a nothing burger nothing burger.
22:06
Speaker 3: I don't know. I honestly don't know. What are we
22:08
Speaker 3: to make of it? Are there broader implication? I'm sorry,
22:11
Speaker 3: I just don't this. This story didn't resonate with me.
22:15
Speaker 3: Are they gaming something? Is there a Is there a
22:18
Speaker 3: market failure here calling for government intervention to remedy? I don't.
22:22
Speaker 2: I don't think so, because ultimately, like look it's it's
22:25
Speaker 2: an airplane flight. You're going to get there when you
22:28
Speaker 2: get there, And sure, I think you can make the case. Hey,
22:33
Speaker 2: if there are you know, flights that are delayed significantly, okay,
22:38
Speaker 2: like what remedies do we lay out? And in general
22:41
Speaker 2: we've seen those from the Department of Transportation over the
22:44
Speaker 2: last you know, ten fifteen years, as there's been more
22:47
Speaker 2: consolidation in the industry, the DOT has stepped in and said, okay,
22:51
Speaker 2: here's what you have to do from a compensatory perspective
22:53
Speaker 2: when you know your flights are three hours or more late,
22:57
Speaker 2: in things along those lines. But I continue to come
23:02
Speaker 2: back to the idea that look, if you really want
23:04
Speaker 2: to build a situation for air travel that allows people
23:11
Speaker 2: to you know, actually have more choice, you don't need
23:15
Speaker 2: to have those remedies. The reason why you need to
23:17
Speaker 2: have those remedies right now is because if you're flying
23:20
Speaker 2: Atlanta to Poughkeepsie, there's one airline that does that. It's
23:26
Speaker 2: Delta at least I'm guessing because again, Atlanta's you know,
23:29
Speaker 2: Delta's big hub. If you are flying from Chicago to
23:34
Speaker 2: Des Moines, great, you're on United, that's your choice, rather
23:38
Speaker 2: than hey, we have more competition in the airline industry,
23:43
Speaker 2: and so if you're having bad experiences with airline X,
23:48
Speaker 2: Y or Z, okay, next time, you've got the choice
23:51
Speaker 2: to choose someone else, and that airline that's doing badly
23:54
Speaker 2: is going to be punished and might even go out
23:56
Speaker 2: of business, Whereas today that's not really a thing because
23:59
Speaker 2: they're there are four airlines that basically control eighty percent
24:03
Speaker 2: of US air travel, and so they don't you don't
24:07
Speaker 2: have any choices aside from there. But to me, the
24:10
Speaker 2: remedy is not, hey, we need to you know, make
24:13
Speaker 2: it more stringent in terms of, you know, how people
24:16
Speaker 2: are paid in the event that flights are late. I
24:19
Speaker 2: get that this is the landscape that we're in today,
24:22
Speaker 2: but rather, hey, let's let's allow for more competition. And
24:26
Speaker 2: maybe we shouldn't have approved these mega mergers back in
24:28
Speaker 2: you know, two thousand and five to twenty twelve, and
24:31
Speaker 2: maybe that's the reason why we're here right now with
24:34
Speaker 2: people so unsatisfied with air travel. That's yeah, I'm a
24:39
Speaker 2: big believer if you if you force more competition, you
24:42
Speaker 2: can have less government intervention because the competition will take
24:45
Speaker 2: care of it.
24:46
Speaker 3: It should, and I think most consumers would agree with that,
24:49
Speaker 3: so it's a little bit ironic that they also. So
24:50
Speaker 3: I got to tie this back into tariffs because I'm
24:53
Speaker 3: kind of a one trick pony and it's where I'm
24:55
Speaker 3: most comfortable. The economic policies of the incoming given stration
25:00
Speaker 3: and of the present one for that matter, they've kind
25:02
Speaker 3: of moved in the opposite direction there. I would call
25:05
Speaker 3: anti competitive is not the right word because that's usually
25:07
Speaker 3: used to refer to practices of companies, not governments. But
25:10
Speaker 3: if you like competition and think it's good for reasons
25:12
Speaker 3: that you just articulated, Chuck, you should have serious misgivings
25:16
Speaker 3: about protecting industries and creating new wards of the state,
25:20
Speaker 3: which is what many of these I'll just call the
25:22
Speaker 3: I'll group them under industrial policies, whether they're tariff or
25:26
Speaker 3: related or subsidy related, and both both parties are now
25:30
Speaker 3: guilty of indulging in them. If you remember what buying
25:34
Speaker 3: a car was like, I know I used this analogy
25:36
Speaker 3: a lot by owning an American car. Forgive me. There
25:39
Speaker 3: were some good ones. There are a lot of bad ones,
25:41
Speaker 3: or a lot of mediocre ones. If you remember what
25:43
Speaker 3: that experience was like in the seventies and eighties that
25:48
Speaker 3: should make you a zealous proponent of competition, and a
25:52
Speaker 3: lot of the policies trade and otherwise that are being
25:55
Speaker 3: floated do nothing for the the self correcting results that
26:03
Speaker 3: are possible only through competition.
26:06
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26:08
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28:06
Speaker 2: Mark would stick with air travel just because some of
28:09
Speaker 2: our listeners right now may be on the way to
28:11
Speaker 2: the airport to catch a flight for Thanksgiving. What is
28:16
Speaker 2: more stressful for both of you, Tucker, Mark getting on
28:19
Speaker 2: the plane or getting off the plane on how come, just.
28:25
Speaker 4: Making sure you got all your crap together and you
28:27
Speaker 4: know you're not going to miss your flight, and making
28:29
Speaker 4: sure you're at the right gate, and if it's been delayed,
28:31
Speaker 4: all that stuff. I get anxiety about.
28:36
Speaker 2: Mark. Why are you laughing?
28:40
Speaker 3: Thought he's sweating. Wait, we're talking actual physically the physical
28:46
Speaker 3: active boarding. So you're already there, cleared the gate, the
28:50
Speaker 3: before process. But well he asked a very specific question though,
28:53
Speaker 3: like you've already.
28:54
Speaker 2: Been planing or getting on planing.
28:57
Speaker 3: You've already arrived at the gate, your tickets, you're you're
29:00
Speaker 3: getting on them. That's that's fine. You know you're gonna
29:02
Speaker 3: make it d Planing if, but particularly if you're on
29:05
Speaker 3: your way to a meeting is more stressful, and particularly
29:08
Speaker 3: if you make the mistake of not upgrading so that
29:12
Speaker 3: you're sitting close to the front of the business travelers,
29:14
Speaker 3: know what I mean. You fly out on the shuttle
29:16
Speaker 3: for an eight am or something in New York City,
29:19
Speaker 3: so you're out there, you're out of the five point
29:20
Speaker 3: thirty shuttle. It's a little bit tight. You don't want
29:23
Speaker 3: to be the last guy off the plane.
29:24
Speaker 1: I'll add a qualifier.
29:25
Speaker 4: If you have a connecting flight you have to catch
29:27
Speaker 4: that's more stress.
29:28
Speaker 3: Well, that's that's that's a nightmare.
29:30
Speaker 2: Don't do that absent connecting flight. I'm a big believer
29:33
Speaker 2: in what's the rush to get off the plane?
29:37
Speaker 3: Oh, I don't get it. Well, it depends on why
29:38
Speaker 3: you're traveling, chuck.
29:40
Speaker 2: Well, No, like abs in connecting flight, the dip.
29:44
Speaker 3: Rush, you get off the planet because you're gonna make
29:45
Speaker 3: your meeting.
29:46
Speaker 4: Well no, but but there's no reason to stand up
29:49
Speaker 4: and get your crap when the plane's door isn't even
29:52
Speaker 4: open yet.
29:53
Speaker 3: There is to ensure you get preferential exiting position.
29:56
Speaker 2: No, you're supposed to go row by row.
29:58
Speaker 3: Sorry, sorry, step on. Yeah, yeah, I am one of those.
30:01
Speaker 2: Oh god, the difference between the person who leaves it
30:06
Speaker 2: the front of the plane in the back is like
30:09
Speaker 2: eight minutes.
30:10
Speaker 3: Yeah, eight precious minutes.
30:13
Speaker 2: Yeah.
30:13
Speaker 4: But you're not gonna jump the person at the front
30:15
Speaker 4: of the plane. If there mark mien, you can do that.
30:19
Speaker 2: They can't.
30:20
Speaker 4: They can't you No, no, no, you're you're a human
30:23
Speaker 4: and you wait for the plane the row in front
30:25
Speaker 4: of you to exit and it's a it's a domino effect.
30:28
Speaker 4: You have to wait your turn.
30:29
Speaker 2: Marc has figured out that the fastest way to d
30:31
Speaker 2: plane is to commit some infraction on board, So your
30:33
Speaker 2: duct taped to the you know, the door right next
30:36
Speaker 2: to the exit as soon as possible. That could be
30:40
Speaker 2: the way to do.
30:40
Speaker 3: This, Mark, if you're willing to put up with the
30:43
Speaker 3: detour through airport law enforcement.
30:47
Speaker 2: Yeah it's true. But look, I'm a big believer. Guys.
30:53
Speaker 2: The plane has landed trying to save thirty seconds by
30:59
Speaker 2: pushy and jostling, and you know, oh, like I got
31:05
Speaker 2: your meeting's gonna be there. They'll wait for you if
31:09
Speaker 2: you're that important. If you're not, then it shouldn't have
31:12
Speaker 2: been a meeting anyways.
31:14
Speaker 3: Yeah, Mark, Well, guys, if you go to a meeting
31:18
Speaker 3: where you're one of many professionals, they've got an investment person,
31:22
Speaker 3: a lawyer, a benefits person, take an earlier flight they
31:25
Speaker 3: ain't gonna wait for And if you happen this is
31:27
Speaker 3: this is my it's my choice to not go in
31:30
Speaker 3: the night before and thank god I don't have to
31:32
Speaker 3: do this anymore. And you don't pull this kind of
31:35
Speaker 3: crap on the shuttle where they're all there for a meeting.
31:38
Speaker 3: You pull this on Southwest where it's people who are
31:41
Speaker 3: all discombobulated and they've got a bunch of kids in town.
31:44
Speaker 3: It's amateur hour. Get out of my way, but Mark
31:47
Speaker 3: is going full.
31:48
Speaker 2: If you can't spot the sucker at the table, then
31:50
Speaker 2: you're the sucker.
31:51
Speaker 3: Something like that. It's more of a I am prioritizing
31:56
Speaker 3: my own travel needs above other people hols. I don't
32:01
Speaker 3: do this anymore, and I don't condone it, but I
32:04
Speaker 3: can understand why people would with that.
32:07
Speaker 2: Let's take a quick break and when we come back,
32:09
Speaker 2: we'll do a little bit of stack roulette.
32:11
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32:48
Speaker 4: The Financial Exchange has built an incredible partnership with the
32:51
Speaker 4: Disabled American Veterans Department of Massachusetts, and once again we
32:54
Speaker 4: were thrilled to take part in this year's DAV five
32:57
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33:00
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33:16
Speaker 2: Mark, what do you have for me? For stack root left?
33:20
Speaker 3: I'll just read the headline and the subtitle or whatever
33:24
Speaker 3: it's called. This is from the New York Times. Headline reads,
33:27
Speaker 3: the sidewalk fruit vendor who sold a six point two
33:30
Speaker 3: million dollar banana for twenty five cents. I'll editorialize a
33:34
Speaker 3: little bit and say, these sadistic reporters at the Times
33:40
Speaker 3: went out and found the guy who sold the banana
33:43
Speaker 3: to the artist whose work eventually went for several million dollars.
33:47
Speaker 3: That on its face, if you stop right there, seems
33:49
Speaker 3: a little cruel, doesn't it, because he this is a
33:52
Speaker 3: seventy four year old him. Anyway, they tracked him down.
33:55
Speaker 3: Chuck guy lives in a basement in the Bronx with
33:58
Speaker 3: like ten other people, works fifteen hour days, and The
34:02
Speaker 3: Time says he was stunned to hear what his banana
34:05
Speaker 3: went for at auction.
34:07
Speaker 2: Shit, I guess here here's the counterpoint on this. Okay,
34:12
Speaker 2: how much did Picasso pay for his paints?
34:15
Speaker 3: You could go out and find the bender.
34:17
Speaker 2: I guess you know how much did Steve Jobs pay
34:21
Speaker 2: for the guy? You know the silicon that they needed
34:26
Speaker 2: to know.
34:26
Speaker 3: It's true their inputs cost less than final produc but
34:28
Speaker 3: there was an unusually small amount of value added here.
34:32
Speaker 2: It's it's true. You would have you would have thought, hey,
34:34
Speaker 2: if if my painting sells for six point two million,
34:38
Speaker 2: not my painting, if my banana sells for six point
34:40
Speaker 2: two million dollars, maybe I can find the guy and
34:43
Speaker 2: give him ten grand.
34:46
Speaker 3: And maybe he did, maybe the artist did. We don't know.
34:48
Speaker 3: Now that it's now that, now that the Times has
34:51
Speaker 3: put a cracked team of journalists on this and track
34:54
Speaker 3: the poor guy down. He was right outside south of
34:57
Speaker 3: Pecet because I guess the fruit has to be fresh
35:00
Speaker 3: in this form of art. Because it didn't take too
35:03
Speaker 3: much effort to track him down.
35:04
Speaker 2: But yeah, it's uh, I mean, look, you can do
35:07
Speaker 2: this with anything that goes for an insane amount of money.
35:11
Speaker 2: The guy who made Tom Brady's avocado ice cream, his
35:14
Speaker 2: avocado ice cream guy, how much of brady salary is
35:17
Speaker 2: he getting? You know?
35:20
Speaker 3: Yeah, you could. It just seemed to unusually, It's got
35:22
Speaker 3: a funny angle to it. It reads a little bit
35:24
Speaker 3: like an onion story because he sold the banana for
35:27
Speaker 3: twenty five cents and like, fifteen minutes later, same banana
35:31
Speaker 3: plus a piece of duct tape. Don't know, I'm sure
35:33
Speaker 3: that what about the duct tape. I'm sure the Times
35:36
Speaker 3: has a crew tracking that one down. They'll find him
35:39
Speaker 3: at a hardware or something. But in this case, it's
35:41
Speaker 3: it's a it's especially galling because they went right from
35:46
Speaker 3: right from the banana stand across the street from Sotheby's inside.
35:50
Speaker 3: Fifteen minutes later, twenty five cents becomes five point two million.
35:55
Speaker 2: You know what this is evidence of Mark? There's always
35:58
Speaker 2: money in the banana stand?
36:01
Speaker 3: Is that from arrested developed a.
36:02
Speaker 2: Very good there we go. I'm glad, I'm glad we
36:07
Speaker 2: uh we closed that loop. There. I I really, uh
36:10
Speaker 2: really enjoyed that one. Uh let's see, uh here we go,
36:13
Speaker 2: so uh Shaw's and Star Market could soon have a
36:16
Speaker 2: new owner. Here's what this means for local shoppers. That's
36:22
Speaker 2: the headline from the Boston Globe. And basically what you
36:27
Speaker 2: have here is that, look, these these chains are just
36:30
Speaker 2: not big enough and that they don't fit kind of
36:33
Speaker 2: the Barbelle approach that you're seeing in groceries right now,
36:35
Speaker 2: which is that, hey, you've got high end groceries and
36:38
Speaker 2: you've got discount chains. They're kind of right in the
36:40
Speaker 2: middle here. And so the question is, hey, does someone
36:44
Speaker 2: end up looking at uh these chains and saying, yeah,
36:48
Speaker 2: we might need to uh figure out a path forward,
36:53
Speaker 2: you know, on this frontier. So I think that this
36:56
Speaker 2: is something that is going to be kind of interesting
37:00
Speaker 2: to watch here, just because there continues to be so
37:04
Speaker 2: much consolidation in the grocery space, which I'm not sure
37:08
Speaker 2: it's great for us overall in the long term, but
37:10
Speaker 2: the fact is, the economics of grocery stores they're terrible.
37:15
Speaker 2: The basic premise is this, you go out, you buy
37:18
Speaker 2: a lot of land, you build a grocery store. You
37:20
Speaker 2: spend thirty to forty million dollars in doing so, and
37:23
Speaker 2: then you hope that you can make pennies on the
37:25
Speaker 2: dollar to make that money back over the next twenty years.
37:29
Speaker 2: That's basically the economics for a grocery store at this point.
37:32
Speaker 2: And it's it's a horrible business to get into. It's
37:36
Speaker 2: it's there's no one who wakes up and is like, Hey,
37:39
Speaker 2: I can't wait to start a grocery store. Change like
37:41
Speaker 2: it's it's just a miserable business where the fractions of
37:45
Speaker 2: the penny are the thing that matter, and it just
37:48
Speaker 2: it drives you to be just someone who all you're
37:50
Speaker 2: concerned about is fractions of fractions of pennies. But that's
37:54
Speaker 2: where the grocery business is these days. So we'll see
37:58
Speaker 2: what happens locally with some of the local grocery chains
38:02
Speaker 2: that are still out there. Folks, it's all the time
38:04
Speaker 2: we have for the day. Hope everyone has a great
38:08
Speaker 2: Thanksgiving tomorrow. Again, if you're traveling, appreciate you sticking with us.
38:12
Speaker 2: But I hope you have easy travels the rest of
38:14
Speaker 2: the day. I hope you can spend some time with
38:16
Speaker 2: friends and family, and I hope you have some great food
38:18
Speaker 2: on the table. We'll see after Thanksgiving on the Financial
38:21
Speaker 2: Exchange