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Oil Prices Plunge Nearly 7% as Iran Peace Talks Spark Market Rally · The Financial Exchange Show

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Speaker 1: is The Financial Exchange with Chuck Zotta and Mike Armstrong.
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Speaker 2: Chuck, Mike, Tucker with you here on a Monday. And
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Speaker 2: we've got stocks trying to rally back some of their
1:18
Speaker 2: Friday news. Losses, the S & P now up 54 points.
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Speaker 2: It was up 76 at one point. We'll talk about
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Speaker 2: what just happened in the last 10, 15 minutes that's
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Speaker 2: changed this. Dow is up 525, about 1%, and the
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Speaker 2: Nasdaq Composite up 225, about nine-tenths of a percent. Ten-year U.S.
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Speaker 2: Treasury down another two basis points to 4.908, so rates
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Speaker 2: coming in a little bit further. Dollar index following with
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Speaker 2: that down 0.17% to $ 101. 57. We got gold bouncing on
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Speaker 2: that dollar weakness up $ 71. 10 to $ 39.
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Speaker 3: 70 per ounce.
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Speaker 2: And crude oil today down $ 6. 68 a barrel to $ 97. 44.
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Speaker 2: This on optimism surrounding talks with Iran and President Trump
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Speaker 2: indicating that he may not conduct any strikes on Iran
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Speaker 2: after midterm elections. Whether any of this actually bears fruit,
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Speaker 2: your guess is as good as mine. And that is
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Speaker 2: not a very good guess. Like, I don't know exactly
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Speaker 2: what's going to happen this week in Iran. I will say, again,
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Speaker 2: our top story this hour is what's going on in
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Speaker 2: oil prices because, again, like a 6.5% move is meaningful.
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Speaker 2: I got to tell you, Michael, I'm getting real flashbacks
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Speaker 2: to late February right now.
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Speaker 3: Quiet.
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Speaker 2: So not quiet. So over the week, in the last
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Speaker 2: three days, you've gotten all this chatter about progress being
2:41
Speaker 2: made on a potential deal in Qatar.
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Speaker 3: Yeah.
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Speaker 2: And I just go back to, you know, the pre-war
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Speaker 2: period in February, and there were multiple letters being shuttled
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Speaker 2: back and forth. There was all kinds of optimism about,
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Speaker 2: you know, a new deal. You had, I think it
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Speaker 2: was Rubio was supposed to be going to Israel and
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Speaker 2: that weekend when the conflict broke out and that trip
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Speaker 2: was obviously canceled. But it seemed like there was like
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Speaker 2: a breakthrough that was, you know, getting close. And then obviously,
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Speaker 2: you know, we didn't get that and things not broke down.
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Speaker 2: But again, the U.S. attacked Iran and things moved from there.
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Speaker 2: And so I just have this sense of deja vu
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Speaker 2: now where, again, like, here's my view and how it's
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Speaker 2: been through this entire thing. We've already had one negotiated
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Speaker 2: settlement this summer. Is it safe to say that you
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Speaker 2: and I don't know the exact conditions on the ground
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Speaker 2: in Iran? We don't know exactly how bad the Iranian
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Speaker 2: economy is, but it's bad and the people there are hurting.
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Speaker 2: We know this.
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Speaker 3: Sure.
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Speaker 2: Do we know that they're hurting enough, that the government's
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Speaker 2: hurting enough to be desperate to make a deal? No,
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Speaker 2: I don't know that because I just don't know. They
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Speaker 2: may be, they may not be, but... Just hear me out.
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Speaker 3: For a sec.
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Speaker 4: Their power structure is set up in a way that
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Speaker 4: I'm not sure the public has the ability to even
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Speaker 4: push that pressure on them.
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Speaker 2: The Iranian government doesn't care how the Iranian people are doing.
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Speaker 3: It doesn't.
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Speaker 2: The way the IRGC is set up.
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Speaker 4: Nor is there some centralized place that you could exert
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Speaker 4: power upon that government. So it really only acts when
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Speaker 4: it itself feels tremendously threatened.
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Speaker 2: Is it feeling that right now? I don't know. I'm
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Speaker 2: not trying to say that I know anything definitively. What
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Speaker 2: I do know is in the U.S., have we felt
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Speaker 2: enough pain to say, we need out of this, we're
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Speaker 2: never going to do this again? I don't think so.
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Speaker 2: I'm not saying it hasn't been painful, but in the aggregate,
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Speaker 2: are we sitting here saying, oh my goodness, I can't
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Speaker 2: believe this, like, please just do anything to get us out?
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Speaker 3: No, but.
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Speaker 4: We might be saying that depending on the results of
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Speaker 4: these midterm elections.
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Speaker 3: Again, I don't think we're pushing that.
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Speaker 2: No, no, but you got to my exact point.
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Speaker 3: Okay, yeah.
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Speaker 2: If you're the Iranians and you got attacked earlier this year,
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Speaker 2: your leader and a bunch of other top people are dead,
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Speaker 2: your economy's been devastated, like things aren't good. Are you
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Speaker 2: sitting there and you're going to be like, you know what?
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Speaker 2: I'll throw those guys a bone before their election. Yeah. No,
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Speaker 2: you're probably not.
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Speaker 1: Right.
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Speaker 3: You know?
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Speaker 2: Likewise, if you're the United States right now, like you're
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Speaker 2: pushing for this, obviously, you know, prior to the election.
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Speaker 2: But like, why are the Iranians going to give it
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Speaker 2: to you? Yeah, there's no guarantee. Now, after the election,
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Speaker 2: depending on the results, you might see, you know, OK,
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Speaker 2: there's a mandate for this or there's a mandate for that,
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Speaker 2: you know, being declared. But ultimately, like, we don't know
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Speaker 2: what the election results are going to be on Tuesday.
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Speaker 5: Right.
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Speaker 2: It's basically, in terms of unified control of the House
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Speaker 2: and Senate, it's not a toss-up, but most of the
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Speaker 2: prediction sites and most of the pundits are at 70-30
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Speaker 2: in terms of Democrats having control of both houses, both chambers.
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Speaker 2: And that means there's a very reasonable case that that
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Speaker 2: doesn't happen.
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Speaker 4: Frankly, if they do sweep, if I had to pick
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Speaker 4: one single item to point to for the reason, it'd
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Speaker 4: be energy prices.
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Speaker 2: Absolutely.
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Speaker 4: There's nothing else as a single issue that I could
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Speaker 4: point to other than energy.
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Speaker 3: Prices, to say, yeah, this is what.
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Speaker 4: If, again, Democrats sweep, this is the item that pissed
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Speaker 4: people off enough to either not show up to vote
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Speaker 4: or to vote down.
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Speaker 2: So with what's happening on oil prices today, again, like
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Speaker 2: down 6.5%, is it signal? Is it noise?
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Speaker 3: I got no idea.
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Speaker 2: Again, my whole thing since this broke out is don't
6:37
Speaker 2: pay attention to what people say, pay attention to what
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Speaker 2: people do. And it's unclear to me that there's anything
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Speaker 2: that's actually being done here that's different. And as I've
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Speaker 2: said also for a while, once the time comes when
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Speaker 2: this thing is fully in the rearview mirror, we're not
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Speaker 2: going to know for a while.
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Speaker 1: Sure.
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Speaker 2: Because we've already gone through one deal that was announced, signed,
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Speaker 2: and failed. So there's going to be like a verification
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Speaker 2: period where, you know, we sit there for whether it's
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Speaker 2: three months or six months and we're like, well, nothing's
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Speaker 2: happened yet. Like, are we in the clear? You're not
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Speaker 2: going to know whether you've reached the piece until... well
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Speaker 2: after it's already happened.
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Speaker 3: Because there were plenty of people saying that we had
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Speaker 3: reached that point in June.
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Speaker 2: Yes, and clearly we did not. So I think, look,
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Speaker 2: it's great that oil prices are down today. Is that
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Speaker 2: how it's going to stay?
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Speaker 3: I have no idea.
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Speaker 2: I have absolutely no idea. So we'll just have to
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Speaker 2: watch and see how things go. But I very much
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Speaker 2: am getting flashbacks to, like, late.
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Speaker 2: Late February of this year, just in terms of, like,
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Speaker 2: the vibes being discussed and things like that, because, in
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Speaker 2: this case, like, no matter how much pain the Iranians
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Speaker 2: are in, I just can't see them being like, yeah,
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Speaker 2: you know what, let's sign this the Monday before midterm elections.
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Speaker 2: Seems unlikely.
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Speaker 3: Is that tomorrow?
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Speaker 2: They're fanatics, but they're not dumb. You know, like, I
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Speaker 2: need to repeat this point occasionally, because, like, yes, like,
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Speaker 2: They're absolutely fanatics and they're nuts, but they're not stupid.
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Speaker 2: You know, like you don't have the control that you
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Speaker 2: have even internally there without some level of smarts. Now
8:27
Speaker 2: it can be applied towards completely crazy goals and everything,
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Speaker 2: but they're not stupid. So let's take a quick break.
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Speaker 2: When we come back, let's talk a little bit about
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Speaker 2: Americans and their spending on housing and food next.
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9:38
Speaker 2: Peace in the Bloomberg. Half of America's spend, half of
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Speaker 2: Americans' spending goes to housing and food, most in America.
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Speaker 2: 15 years. So the good news is that we have,
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Speaker 2: you know, again, like whether it's perfect data or not,
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Speaker 2: it's data that's consistent across, you know, multiple years. And
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Speaker 2: so we can see how much of Americans spending goes
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Speaker 2: to different items. And so Bloomberg here looked at BLS
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Speaker 2: data and said, hey, how much of Americans spending on
10:12
Speaker 2: overall spending is going to food and fuel? What they
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Speaker 2: found In 2025, it was 46.9% went there. The only
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Speaker 2: years dating back to 1984 that were higher were 2010, 2009,
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Speaker 2: and those were it. But here's the caveat on this.
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Speaker 2: The entire data series is a range between 45% and 47%.
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Speaker 4: It hasn't really budged too much. So these are always
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Speaker 4: two massive categories. I think you said fuel, but housing
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Speaker 4: and food are the two categories here.
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Speaker 2: Uh, I said, I said fuel.
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Speaker 3: I heard fuel. I don't know if you said fuel
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Speaker 3: in any case.
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Speaker 4: Um, these are always going to be the one and
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Speaker 4: two biggest categories, but yes, with high interest rates, uh,
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Speaker 4: high diesel prices and high food prices now for pretty
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Speaker 4: consistently the last five years. Um, these are hitting, I
11:07
Speaker 4: guess the upper edge of what people are happy with. Uh,
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Speaker 4: The dollar amount that's going to stick in people's minds
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Speaker 4: is that on average, American families spent an extra almost $ 2, 000, $ 1, 988
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Speaker 4: more on just those two categories, just compared to 2024.
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Speaker 4: It's a big dollar amount.
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Speaker 3: Big chunk. Again, the counterpoint that.
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Speaker 4: I like to bring up all the time and nobody
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Speaker 4: likes to hear, well, at the same time, average pre-tax
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Speaker 4: income was up 6.4% to $ 110, 847 a year.
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Speaker 3: Back in 2025.
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Speaker 4: So, you know, not exactly the same time frame. But yeah,
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Speaker 4: that's that is the offsetting effect here. And we've seen
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Speaker 4: this gap narrow again. But for a good chunk of
11:53
Speaker 4: time post-COVID, as painful as the inflation was, wages were
11:57
Speaker 4: actually keeping pace.
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Speaker 2: And here's, again, let's look at this in terms of,
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Speaker 2: I'm not trying to tell people that like everything's okay,
12:04
Speaker 2: but I want to give some context here because they, they,
12:07
Speaker 2: they split this out. Uh, food in 2000 accounted for 13.6%
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Speaker 2: of household spending today. It's 13. So the long run
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Speaker 2: trend over the last two and a half decades is down.
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Speaker 2: Now it's, you know, up in the last couple of
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Speaker 2: years and look part of this in 2020, uh, food
12:28
Speaker 2: spending went, like, way down as a percentage of overall spending,
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Speaker 2: but it's just.
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Speaker 3: We weren't dining out.
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Speaker 1: Right.
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Speaker 2: No one went out for dining, and dining out is
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Speaker 2: way more expensive than eating at home, and so that's
12:38
Speaker 2: why you saw that shift there. But otherwise, even if
12:41
Speaker 2: you look at just the last 15 years, spending on
12:43
Speaker 2: food is basically flat as a percentage of household spending.
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Speaker 2: The question that I think is worth asking, okay, and
12:51
Speaker 2: that I didn't see answered in here... and that I
12:55
Speaker 2: probably could answer at some point, but it won't be
12:57
Speaker 2: until tomorrow, is not as a percentage of household spending.
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Speaker 3: But of household income. Has it shrunk over time?
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Speaker 2: And that's the one that really you need to look
13:06
Speaker 2: at in terms of why people feel stressed out. Because
13:09
Speaker 2: if people just keep spending the same amount on food
13:12
Speaker 2: as a percentage of household spending, but that spending is
13:15
Speaker 2: going up as a percentage of income, that's a problem. It's,
13:19
Speaker 2: you know, okay, how does this all work together with
13:22
Speaker 2: all those pieces that you really want to answer here?
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Speaker 2: And again, I don't have that data in front of me.
13:28
Speaker 2: I can spend some time workshopping it this afternoon, but
13:31
Speaker 2: you're not going to stick around to hear that answer.
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Speaker 4: But I think this is the critical point here. The
13:38
Speaker 4: percentage of the total on your household income is the
13:42
Speaker 4: Holy grail. That's why we talk about productivity so much.
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Speaker 4: That's why we talk about GDP growth all the time, right?
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Speaker 4: Like the piece of this that matters is not what
13:50
Speaker 4: chunk of your budget goes towards groceries every month is as,
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Speaker 4: frustrating as it might be that they are a lot
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Speaker 4: more expensive, the relevant question here is, is that chunk
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Speaker 4: shrinking as a percentage of your household income over time
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Speaker 4: for that same basket of goods? I suspect the answer
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Speaker 4: is yes, not because groceries have gotten significantly cheaper, but
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Speaker 4: rather because our incomes have sustainably grown over the last, well,
14:15
Speaker 4: entire history of the American experiment.
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Speaker 2: Now, if you do want to look at something that
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Speaker 2: I do think is interesting, a piece from the Wall
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Speaker 2: Street Journal that talks about the housing side of things
14:25
Speaker 2: as well, just about every part of building a house
14:28
Speaker 2: is getting more expensive. So this is showing the cumulative
14:31
Speaker 2: price change in building materials since February 2020. Copper now
14:36
Speaker 2: is up 150%. Aluminum's up 94%. Cement up 48%. Asphalt
14:42
Speaker 2: shingle and coating materials up 46%. Again, all this stuff
14:47
Speaker 2: that goes into building a house is just going up
14:49
Speaker 2: in price rapidly. And this gets then to what we're
14:53
Speaker 2: seeing in terms of how builders are adapting to this,
14:56
Speaker 2: which is building smaller houses with fewer bells and whistles
15:02
Speaker 2: in a lot of cases and You end up with
15:06
Speaker 2: builders also, in order to make the numbers work, they
15:09
Speaker 2: are having to significantly incentivize buyers because of high rates
15:15
Speaker 2: by offering buy-downs on mortgage rates and things like that.
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Speaker 2: And so when you go and take a look at things, again,
15:24
Speaker 2: let's look at operating margins just as an example. And
15:27
Speaker 2: I'm going to pull Lenar. Let's pull D.R. Horton because
15:31
Speaker 2: they're kind of fun. Where are they? There's D.R.
15:34
Speaker 5: Horton.
15:35
Speaker 2: Who else are the big builders? Toll Brothers is another one.
15:38
Speaker 2: Who are the other ones, Mike? Big publicly traded builders.
15:42
Speaker 3: I think you got them. I don't know who the
15:43
Speaker 3: other ones are.
15:44
Speaker 2: There's got to be more of them. Hang on. I
15:47
Speaker 2: know there's like. 15 or so. Uh, let's see. What
15:50
Speaker 2: do you have here? Give me, give me a couple more.
15:52
Speaker 2: I just, I want to get the, the.
15:54
Speaker 3: Fjord and Lenar Pulte Pulte. Okay.
15:56
Speaker 2: PHM is Pulte.
15:58
Speaker 5: Who else you got?
15:59
Speaker 3: NVR.
16:01
Speaker 2: What's NVR?
16:01
Speaker 3: I don't know.
16:02
Speaker 1: Okay.
16:02
Speaker 2: Who else you got?
16:03
Speaker 3: 10 billion in revenue though.
16:04
Speaker 2: Taylor Morrison. Uh, let's see. I'm looking on my list. No,
16:07
Speaker 2: this is good. Let's just go with these four. I
16:09
Speaker 2: spent all that extra time for one more. Uh, so
16:12
Speaker 2: if you go back and look, let's look at 2022
16:15
Speaker 2: as an example. June, like Q2 of 22. These were
16:20
Speaker 2: the operating margins for the big publicly traded home builders. Lenar, 21%. D.R. Horton, 23%.
16:27
Speaker 2: Toll Brothers, 13%. Pulte, 19%. Basically, the low end was 13%,
16:35
Speaker 2: the high end was 23%, but call it like high
16:37
Speaker 2: teens on average. Here's where we are today. Most recent quarter. Lenar, 5%. D.R. Horton, 11%.
16:46
Speaker 2: Toll Brothers, only one that's maintained it, 14. Pulte Group, 15.
16:51
Speaker 2: The average has gone from high teens to like 10.
16:55
Speaker 2: Margin compression because the cost of what they're buying is
16:58
Speaker 2: going up, and they're having to do all of these discounts,
17:01
Speaker 2: usually through like mortgage buy-downs and things like that, which
17:03
Speaker 2: pretty much are them giving people money to buy the
17:05
Speaker 2: homes in order to sell these things. Now, this has gotten, okay,
17:11
Speaker 2: if you look at basically the 2010s, by the time
17:15
Speaker 2: housing stabilized, like, 2014 through 2019, home builder operating margins
17:20
Speaker 2: generally were around 10%. So, like, they're getting back to
17:23
Speaker 2: where they should be. So, you know, I know people
17:25
Speaker 2: will be like, oh, these home builders are greedy. They're
17:28
Speaker 2: no more greedy than they've ever been. You know, it's this,
17:31
Speaker 2: they just, there was crazy demand in 22, and so
17:34
Speaker 2: margins went up, and now they're normalizing.
17:37
Speaker 4: A separate source here, Zonda does a monthly home survey of, again, builders.
17:41
Speaker 2: Help me, Zonda.
17:43
Speaker 4: This is only data going back since COVID, but, you know,
17:46
Speaker 4: back in 2022, it looks like we hit a peak
17:50
Speaker 4: of some 80% of home builders saying they were reporting
17:54
Speaker 4: labor disruptions.
17:55
Speaker 3: We, you know, cratered after.
17:57
Speaker 4: Things kind of returned to normal in terms of reopening
18:00
Speaker 4: and everything like that, where we were reporting like 3%
18:04
Speaker 4: labor disruptions.
18:05
Speaker 3: We're back up to 40.
18:06
Speaker 2: Yes, because an awful lot of people that work in
18:09
Speaker 2: the trades are not in the United States legally.
18:11
Speaker 1: Yeah.
18:12
Speaker 2: And so if you are going to crack down on
18:14
Speaker 2: illegal immigration, you are going to have real problems building houses.
18:19
Speaker 2: I'm not saying that the answer is more illegal immigration.
18:21
Speaker 2: I'm saying the answer is, hey, how do we find
18:23
Speaker 2: ways to legalize immigration for the people that actually want
18:25
Speaker 2: to work on building homes? Otherwise, you've got to pay
18:28
Speaker 2: American citizens way more to work on building homes. And
18:32
Speaker 2: that means prices go up.
18:33
Speaker 3: Got to teach them some stuff, too.
18:35
Speaker 4: Yeah. So we've covered how the cost of framing homes
18:38
Speaker 4: and doing all sorts of different work. Anybody that works
18:40
Speaker 4: in this space right now will likely tell you, especially
18:43
Speaker 4: if they operate in the southern half of the United States,
18:46
Speaker 4: what the labor situation is like. And it's, yeah, tough
18:49
Speaker 4: to come by and pretty darn expensive compared to where
18:52
Speaker 4: it was just two years ago.
18:53
Speaker 2: Looking at markets, stocks giving back some of their gains.
18:56
Speaker 2: The S & P was up more than 1% at
18:57
Speaker 2: one point, now only up about half a percent. I
19:00
Speaker 2: can point a straight line to Meta announcing a bond
19:03
Speaker 2: offering today. that they are trying to push through, and
19:07
Speaker 2: basically stocks started to fall after that. It really feels
19:12
Speaker 2: like these tech companies are trying to kill the anthropic
19:15
Speaker 2: IPO just by raising a boatload of cash in front
19:18
Speaker 2: of it. It has those vibes. Let's take a quick break.
19:22
Speaker 2: When we come back, we've got Wall Street Watch next.
19:39
Speaker 1: Bringing the latest financial news straight to your radio every day.
19:44
Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
19:49
Speaker 3: Time now for.
19:51
Speaker 1: Wall Street Watch. Tracking the stocks, the data, and the
19:54
Speaker 1: headlines driving markets so far today. Right here on the
19:57
Speaker 1: Financial Exchange Radio Network.
19:59
Speaker 5: Markets in positive territory for giving up some of their
20:01
Speaker 5: gains with another busy week of earnings and a job
20:04
Speaker 5: support on Friday. Oil also plunging. On hopes of peace
20:08
Speaker 5: talks with Iran, right now the Dow is up 1%
20:10
Speaker 5: or 518 points up. S & P 500 is up
20:15
Speaker 5: about two-thirds of a percent or 46 points higher. NASDAQ
20:18
Speaker 5: up three-quarters of a percent or 193 points up. Russell
20:22
Speaker 5: 2000 is up over nine-tenths of 1%. Ten-year Treasury yield
20:26
Speaker 5: down four basis points at 4.882%. Crude oil down nearly
20:28
Speaker 5: 7% now at $ 96 a barrel, while Brent is at
20:30
Speaker 5: $ 105 a barrel. Merger news from the tech world this
20:38
Speaker 5: morning after Marvell Technology reached a deal to buy data
20:40
Speaker 5: center optics maker Lumentum in an all-stock deal valued at
20:45
Speaker 5: about $ 115 billion. Marvell's stock is now down 7%. Meanwhile,
20:50
Speaker 5: Bloomberg is reporting that Meta is readying a cross-border investment-grade
20:55
Speaker 5: bond offering and has asked Citigroup and Morgan Stanley to
20:58
Speaker 5: hold investor calls today and tomorrow. Meta shares are down 2%.
21:02
Speaker 2: Half a percent.
21:04
Speaker 5: Oracle filed plans to issue new stock and more debt
21:06
Speaker 5: to finance its AI build-out, where the hyperscaler will sell
21:10
Speaker 5: $ 10 billion in common stock and $ 10 billion in senior notes.
21:14
Speaker 5: Oracle down by 5% today, as Daylada shares down over
21:18
Speaker 5: half a percent after beating quarterly expectations and also raising
21:21
Speaker 5: its full-year earnings outlook. And after today's closing bell, we'll
21:25
Speaker 5: see more tech earnings from Apple and Palantir.
21:30
Speaker 2: I'm Tucker Silva, and that is Wall Street Watch.
21:32
Speaker 3: Chuck, we turned the page on the month.
21:34
Speaker 4: And so Armstrong Advisory Group's got a brand new guide
21:37
Speaker 4: out for the month of November. And it's all about
21:41
Speaker 4: health care and retirement, which I have to say is
21:45
Speaker 4: one of the most, I guess, confused and concerning items
21:49
Speaker 4: that I see for pre-retirees. They're not sure how everything works,
21:54
Speaker 4: but they do know it's likely to be expensive over
21:57
Speaker 4: their lifetime. They know that there's this magic number somewhere
22:01
Speaker 4: around 65 where I can get the health insurance coverage,
22:04
Speaker 4: but a lot of confusion even there between Social Security
22:06
Speaker 4: retirement dates and Medicare coverage.
22:09
Speaker 3: And the cost of it and how.
22:13
Speaker 4: It's going to work compared to your employer health benefits,
22:17
Speaker 4: especially if you've had to use your health insurance in
22:19
Speaker 4: a significant way over the last few years, is just
22:22
Speaker 4: concerning to people, right? It's going off of that healthcare
22:25
Speaker 4: coverage that in many cases you might've had for 10,
22:28
Speaker 4: 15 years and transitioning onto a new plan that's somehow
22:32
Speaker 4: the government's involved in, but not really sure how. If
22:36
Speaker 4: I want to pull off a retirement before age 65,
22:39
Speaker 4: I'm going to be looking at some combination of my
22:42
Speaker 4: spouse's health insurance, maybe COBRA or an Affordable Care Act plan.
22:48
Speaker 4: What does all of that look like? And then just
22:51
Speaker 4: those Medicare basics, right? What's it going to cover? What's
22:55
Speaker 4: it not going to cover? What is it going to cost?
22:58
Speaker 4: All of this and more is contained in our brand
23:01
Speaker 4: new guide from the Armstrong Advisory Group for the month
23:05
Speaker 4: of November here. It's Paying for Healthcare in Retirement. It
23:09
Speaker 4: covers everything that I just talked about and more. If
23:11
Speaker 4: you'd like your free copy, you can request it by
23:13
Speaker 4: calling us at 800-393-4001. Again, brand new guide from the
23:20
Speaker 4: Armstrong Advisory Group, Paying for Healthcare in Retirement, 800- 393-4001.
23:26
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
23:28
Speaker 1: registered investment advisor. Nothing in the ad or in any
23:31
Speaker 1: Armstrong guide is specific financial, legal, or tax advice. Consult
23:34
Speaker 1: your own financial, tax, and estate planning advisors before making
23:37
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
23:40
Speaker 1: advisory services.
23:41
Speaker 2: We got a piece in Bloomberg today. It's titled... I'm sorry, Barron's.
23:45
Speaker 2: It's titled, Can General Motors and Ford Survive the Flood
23:48
Speaker 2: of Cheap Chinese EVs? And the answer is, well... Maybe.
23:54
Speaker 3: Yeah, it's not terribly clear to me.
23:56
Speaker 2: It's not.
23:57
Speaker 3: At least not without government support.
23:59
Speaker 2: No, here's the thing. When you look at why China
24:06
Speaker 2: is able to make these vehicles so cheaply, it's nothing
24:10
Speaker 2: that is unique about their processes for building them. They
24:14
Speaker 2: have basically started with blank slate canvases, but that's not
24:17
Speaker 2: why they're so cheap. They're so cheap because they have
24:19
Speaker 2: a ton of state subsidy behind them. And if they
24:23
Speaker 2: want to produce them in China with that subsidy, it's
24:25
Speaker 2: going to be cheaper than anything that you can produce
24:26
Speaker 2: in the U.S.
24:27
Speaker 3: Yep.
24:28
Speaker 2: Likewise, if the United States government want to throw a
24:30
Speaker 2: bunch of money at General Motors and Ford and whoever else,
24:34
Speaker 2: you know, even foreign automakers who want to build in
24:36
Speaker 2: the U.S. and then export, you could get really cheap
24:40
Speaker 2: cars that you could export as well. It's just that
24:42
Speaker 2: we don't subsidize them in that way. We do have,
24:44
Speaker 2: you know, subsidies to car companies. Don't get me wrong.
24:47
Speaker 1: But.
24:48
Speaker 2: No one exports cars from the U.S. in any material numbers.
24:51
Speaker 2: It's the most expensive place in the world to build cars, basically.
24:54
Speaker 4: Now, where the rubber hits the road for these U.S.
24:59
Speaker 4: automakers is not the likelihood that cheap Chinese EVs suddenly
25:03
Speaker 4: flood the U.S.
25:04
Speaker 3: Market. It's not really what they're worried about.
25:06
Speaker 4: What they are worrying quite a bit about is the
25:09
Speaker 4: fact that they are flooding into places like Korea, Japan, all.
25:12
Speaker 3: Of Europe, Asia....
25:15
Speaker 4: And you are suddenly finding yourself, if you're Toyota or
25:18
Speaker 4: Honda or Volkswagen, that, wow, it sure is tough to
25:24
Speaker 4: compete here in our domestic market with this flood of
25:27
Speaker 4: cheap Chinese EVs. What's the last protected big market we
25:31
Speaker 4: can go to where we don't have to compete with this?
25:33
Speaker 3: And it's the United States.
25:34
Speaker 4: And so suddenly you have all these automakers looking at
25:36
Speaker 4: the U.S. and saying, well, if they keep their barriers up,
25:39
Speaker 4: at least we can compete here.
25:42
Speaker 3: What should we do? And the answer seems to be.
25:45
Speaker 4: Find ways to get our cars for sale and appealing
25:48
Speaker 4: to the U.S. buyer in a way that they previously
25:52
Speaker 4: weren't trying to do.
25:53
Speaker 2: Also, if we're being honest, these other countries need to
25:58
Speaker 2: defend their markets.
25:59
Speaker 3: Well, yeah, that's it.
26:01
Speaker 2: I mean, it's just kind of ridiculous that they're just
26:04
Speaker 2: basically giving up. Like, oh, we're just going to, like,
26:09
Speaker 2: let these vehicles come. No, like, what are you people doing? Like,
26:15
Speaker 2: this is your response? Yeah. And this is, like, there's
26:19
Speaker 2: just no wherewithal to deal with this stuff. Like, everyone's
26:23
Speaker 2: just like, oh, ho-hum. And look, I have my theories
26:26
Speaker 2: about Europe, and then I think that... there is very
26:29
Speaker 2: likely compromise at the highest levels of European government that,
26:34
Speaker 2: you know, has been effectively, you know, captured by, you know,
26:39
Speaker 2: Chinese influence. I think that is very much the case there.
26:42
Speaker 2: And it explains a number of the decisions that Europe
26:45
Speaker 2: has made as it relates to China in the past,
26:47
Speaker 2: you know, 10 to 15 years. But, like, guys, like,
26:53
Speaker 2: I don't know what the problem is, but.
26:57
Speaker 2: Whatever they have on you, like, I don't really know
27:03
Speaker 2: what else to say. Because otherwise, European actions just make
27:07
Speaker 2: absolutely no sense over the past couple decades as it
27:10
Speaker 2: relates to China. Let's see. Oh, here's another car-related one
27:14
Speaker 2: that's pretty good. To tame the fastest drivers, states deploy
27:17
Speaker 2: speed-limiting devices on cars. Virginia and other states are trying
27:22
Speaker 2: to slow, quote, super speeders with GPS technology that prevents
27:25
Speaker 2: their cars from blowing the speed limit.
27:27
Speaker 4: You know what I actually just saw on the Tesla app?
27:29
Speaker 4: You can do this to your own car, which is
27:32
Speaker 4: a pretty cool function to have.
27:34
Speaker 2: You can do it on all kinds of cars.
27:35
Speaker 3: Can you?
27:37
Speaker 2: Mike, okay, so you know.
27:38
Speaker 3: I'm feeling pretty old-fashioned now.
27:39
Speaker 2: No, so, Mike, great story here. One of our employees,
27:45
Speaker 2: when he first started working here about 10 years ago,
27:48
Speaker 2: was driving a pickup truck, and the pickup was a Ford.
27:52
Speaker 2: And on that Ford F-150... I would occasionally hop in
27:56
Speaker 2: the car with him and we'd go on the highway,
27:58
Speaker 2: and he couldn't go over, I forget the exact speed
28:01
Speaker 2: limit that it was. There was a governor on it?
28:04
Speaker 2: I asked him, I'm like, hey, what's going on here?
28:07
Speaker 2: What's the deal? He's like, so, I forget exactly how
28:11
Speaker 2: it got triggered, but you could put a governor, it
28:14
Speaker 2: was designed for if you had kids to prevent them
28:16
Speaker 2: from driving too fast. And he's like, but the only
28:19
Speaker 2: way to change it is you have to have both
28:21
Speaker 2: key fobs in the cab at the same time, and
28:24
Speaker 2: I lost one of the key fobs, and they wanted
28:27
Speaker 2: to charge me $ 400 for a new one or something
28:29
Speaker 2: like that, and he's like, at a principle, I'm just
28:31
Speaker 2: not doing it.
28:32
Speaker 3: And now I drive 45 on the highway.
28:33
Speaker 2: In the left lane. But yeah, so you can, even
28:36
Speaker 2: on older cars, this one wasn't old, it was like
28:39
Speaker 2: a mid-teens one, but you had kids' governors that you
28:41
Speaker 2: could put on.
28:42
Speaker 3: Now this is different.
28:42
Speaker 4: This is states saying, if you want to keep your license,
28:45
Speaker 4: you're going to have this GPS-controlled governor on your vehicle.
28:49
Speaker 5: So.
28:50
Speaker 2: A couple things that I think about this. The first
28:52
Speaker 2: is all of our vehicles now, any new vehicle that's
28:55
Speaker 2: made can read road signs.
28:58
Speaker 3: I know this.
28:58
Speaker 2: When I'm in my Subaru and I pass by a
29:01
Speaker 2: new speed limit sign, it pops up, okay, the speed
29:04
Speaker 2: limit is 35 miles an hour here. I got to
29:08
Speaker 2: be honest, and I say this as someone who does
29:10
Speaker 2: drive well over the speed limit occasionally, and we all do.
29:15
Speaker 2: Let's not act like any of us are better than this.
29:18
Speaker 2: But in reality, like, if the road limit says 35,
29:22
Speaker 2: is there a bad reason that your car, like, not
29:24
Speaker 2: even centrally controlled or anything, but, like, should your car
29:27
Speaker 2: be able to go 50 without, like, some kind of, like,
29:30
Speaker 2: extreme input? Like, I'm going to the hospital and I
29:33
Speaker 2: need to go 50? Probably not.
29:37
Speaker 4: Yeah, but I really don't like that level of state monitoring.
29:42
Speaker 2: I'm not saying state monitoring. You can do this at
29:44
Speaker 2: the local level. The state doesn't have to receive any
29:47
Speaker 2: information on this. Where I do have a problem is
29:51
Speaker 2: with the state in... a large number of cases saying
29:55
Speaker 2: we're going to restrict your driving speed and ability because
29:58
Speaker 2: of X, Y, and Z. That is problematic to me.
30:02
Speaker 2: But like my Subaru knows that the road near my
30:05
Speaker 2: house is 35 miles an hour. Is there any real reason? Like, again,
30:10
Speaker 2: like when you look at the reasons why accidents happen,
30:14
Speaker 2: they're basically two distraction, which I include like drinking in
30:19
Speaker 2: and speed. That's it. They're like, People are like, well,
30:24
Speaker 2: blowing a tire is not the reason why most accidents happen.
30:27
Speaker 2: It is a tiny, tiny minority. Mechanical failure is a
30:30
Speaker 2: tiny minority. If you can have people drive closer to
30:34
Speaker 2: the speed limit, you will have fewer accidents.
30:36
Speaker 4: Yeah, this is a level of control that I'm just
30:39
Speaker 4: not comfortable with, and I don't know how you implement
30:41
Speaker 4: it without some degree of too much view into things.
30:45
Speaker 4: I don't have a problem with, by the way, the
30:46
Speaker 4: reason that this is being implemented is, I think it
30:50
Speaker 4: was Virginia was the example here, They basically went to
30:52
Speaker 4: people who had reckless driving tickets and said, either you're
30:55
Speaker 4: losing your license or you can put this governor into
30:58
Speaker 4: your car.
30:59
Speaker 3: Okay.
31:00
Speaker 2: I would get rid... Just take their license. Like, I
31:03
Speaker 2: would be more aggressive on those. Like, fine. Like, you're done.
31:05
Speaker 3: Yeah.
31:06
Speaker 2: Like, if you have multiple reckless driving tickets... I agree. No,
31:09
Speaker 2: I'm sorry.
31:09
Speaker 3: Like.
31:10
Speaker 2: You don't get to drive anymore. No, like, you're done.
31:13
Speaker 2: I'm fine with that. There's no slippery slope there. Like,
31:16
Speaker 2: we make these judgments all the time on all kinds
31:18
Speaker 2: of things.
31:19
Speaker 1: Sure.
31:20
Speaker 2: My point is... Look, do I want any kind of
31:22
Speaker 2: government interference on how fast my vehicle drives?
31:26
Speaker 3: No.
31:27
Speaker 2: But there's no reason my Subaru, without government interference, can't
31:31
Speaker 2: just say, hey, this is a 35. If you want
31:34
Speaker 2: to drive faster than 40, press this button to acknowledge
31:38
Speaker 2: that you're going to drive faster than 40.
31:39
Speaker 3: Yes.
31:42
Speaker 4: I don't know.
31:42
Speaker 3: I don't like it.
31:44
Speaker 2: Again, I don't want the government involved in how fast... But, like,
31:47
Speaker 2: we make these judgments even with, like... There's a reason
31:49
Speaker 2: why you get a ticket when you run a red light.
31:52
Speaker 2: It's because the government said you needed to stop, and
31:55
Speaker 2: you didn't.
31:55
Speaker 4: I mean, yeah, there's a compelling case that a decade
31:58
Speaker 4: from now, none of us are going to be making
31:59
Speaker 4: these driving decisions anyway.
32:02
Speaker 3: And, again.
32:03
Speaker 2: Which is why I want the manufacturers to voluntarily put
32:07
Speaker 2: this in, so that you don't have government interference on
32:10
Speaker 2: it later.
32:11
Speaker 4: Right, like, there's probably a world in the not-so-distant future
32:14
Speaker 4: where the insurance costs... to you driving your own vehicle
32:17
Speaker 4: are so cost prohibitive that you just don't do it anymore.
32:21
Speaker 2: Let's slow our roll. I don't think it's going to
32:23
Speaker 2: be right away, but I think we've seen this before
32:25
Speaker 2: with self-driving cars. So let's, let's slow down a little
32:28
Speaker 2: pun intended. Let's take a quick break. When we come back,
32:31
Speaker 2: we got stack roulette.
32:32
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32:36
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32:39
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33:14
Speaker 5: The 2026 DAV 5K Boston is this Saturday, November 7th
33:19
Speaker 5: at Fort Independence at Castle Island. But even if you
33:22
Speaker 5: weren't able to register, you can still help our great
33:25
Speaker 5: American heroes by making a donation. Your gifts help fund
33:28
Speaker 5: free rides to medical appointments for veterans and the nation's
33:31
Speaker 5: first DAV-led housing initiative providing homes for single veterans and
33:35
Speaker 5: veteran families. Go to DAV5K. Boston and make your donation today.
33:40
Speaker 5: That's DAV5K. Boston. com.
33:43
Speaker 2: Mike, what do you got for Stack Roulette?
33:44
Speaker 4: I'm talking shopping bots here. So Meta's Muse made a
33:47
Speaker 4: big splash, of course, over the course of the last month.
33:50
Speaker 4: The longer time goes on, the more people I'm hearing
33:53
Speaker 4: talking about this thing and talking about it positively.
33:56
Speaker 3: I know the numbers may be.
33:58
Speaker 4: I'm not sure where the numbers are in terms of
33:59
Speaker 4: people continuing to use the app, but in a few
34:03
Speaker 4: social circles that I've heard, people are just really happy
34:06
Speaker 4: with its capabilities and the features that it's rolled out here.
34:11
Speaker 3: All the while.
34:12
Speaker 4: admittedly concerned about the privacy stuff along with it. But
34:16
Speaker 4: Amazon very quickly blocked Meta's Muse from surfing its site
34:21
Speaker 4: and being able to pick items, primarily because they just
34:26
Speaker 4: wanted to hinder Meta's Muse's success. There wasn't another reason
34:32
Speaker 4: to do it. Maybe they had privacy concerns, but the
34:35
Speaker 4: reality is if this thing became usable of, hey, I
34:40
Speaker 4: can buy all the stuff that I usually want on
34:42
Speaker 4: Amazon without having to browse through the sponsored results, then
34:45
Speaker 4: it's a huge dent to Amazon's business model, which makes
34:48
Speaker 4: a lot of money on sponsored results and advertising, just
34:52
Speaker 4: like Google does. Walmart has embraced the technology, as have
34:56
Speaker 4: a few other retailers, mainly because they want to catch
34:58
Speaker 4: up to Amazon. But it puts One, it puts Amazon
35:04
Speaker 4: in a very similar position to Google or Alphabet in
35:07
Speaker 4: my mind here. Not that nearly as much of their
35:09
Speaker 4: revenue comes from advertising as Alphabet's does, but a good
35:13
Speaker 4: chunk of growth has come from that space. And it
35:16
Speaker 4: also just makes me wonder openly what type of advertising
35:20
Speaker 4: is going to be valuable in the future. Because there's
35:23
Speaker 4: a world, I'm not saying we're going to get to
35:24
Speaker 4: this world, but there's a world in which the sponsored
35:28
Speaker 4: placement of different products online... is no longer relevant, or
35:34
Speaker 4: is not nearly as.
35:35
Speaker 1: Relevant as it was.
35:35
Speaker 2: Right, because it's not a person who's browsing for that.
35:37
Speaker 4: And we've seen the case with Alphabet, where when there's
35:40
Speaker 4: an AI summary for your search, the click-through rate on
35:44
Speaker 4: behalf of people is far lower than it was on
35:46
Speaker 4: a normal search result. In Amazon's case, they haven't published
35:50
Speaker 4: that type.
35:50
Speaker 3: Of data, but I suspect.
35:53
Speaker 4: that they are pretty darn good about driving your attention
35:56
Speaker 4: to the sponsored items that you are looking for instead
35:59
Speaker 4: of the one that's item 15 down on the list.
36:03
Speaker 4: And if an AI is taking that process out of it,
36:08
Speaker 4: to me, there's two options. One, you pay the company
36:12
Speaker 4: that builds the AI, you pay them to place your
36:16
Speaker 4: product in a more sponsored fashion, which is a huge
36:19
Speaker 4: conflict from, you know, everything that I can think of here,
36:22
Speaker 4: especially if the AI is making the purchases for you.
36:26
Speaker 4: And otherwise, you know, I was thinking about this during
36:29
Speaker 4: our Netflix conversation, like, Oh yeah, we might be getting
36:32
Speaker 4: back to a world where the main thing that works
36:35
Speaker 4: is guaranteed eyeballs. And this sponsored results stuff might be
36:38
Speaker 4: out the window.
36:41
Speaker 2: I think the interesting thought exercise on this stuff is, um,
36:47
Speaker 2: Imagine that you have an agent that goes and basically
36:52
Speaker 2: can act on your behalf in all purchases that you
36:58
Speaker 2: normally make and shop around for the best price. What
37:05
Speaker 2: does that do? And then imagine that each business has
37:07
Speaker 2: an agent that is determined to get the best price
37:10
Speaker 2: from you as well. Where does that land us in
37:15
Speaker 2: terms of, like, where's the new equilibrium that you land in?
37:18
Speaker 2: Because if it's just one-sided, like, let's say that it's
37:20
Speaker 2: just you. And, Mike, as an example, we live, our
37:24
Speaker 2: business is based in Massachusetts. Electricity in Massachusetts is regulated for,
37:31
Speaker 2: you know, rates and everything. Despite there being the ability
37:35
Speaker 2: to choose your electric supplier... only 15% to 17% of
37:39
Speaker 2: Massachusetts residents actually do in any given year. Otherwise, everyone's
37:42
Speaker 2: just like, oh, I signed up with two big ones here,
37:45
Speaker 2: Eversource and National Grid, and that's how it goes. People
37:48
Speaker 2: don't realize that your generation company can be different from
37:51
Speaker 2: the one delivering the power to you. And so on
37:55
Speaker 2: one level, you're like, oh, shop around, and you're like, oh, great,
37:58
Speaker 2: everyone will pick the lowest rates, and that'll incentivize the
38:01
Speaker 2: providers to move to the lowest rates. But then it's, well,
38:05
Speaker 2: what if... The way that this is set is now
38:07
Speaker 2: based on average rate and not based on, like, the
38:11
Speaker 2: same rate for everyone. And so it ends up being higher. Like,
38:15
Speaker 2: where's the equilibrium? It's really hard to figure out. Let's
38:19
Speaker 2: take a quick break for the rest of the day.
38:21
Speaker 2: We're going to see you tomorrow. And a lot to
38:23
Speaker 2: get to as we have jolts and more coming out then.