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Why the Oil Crisis Is Running Out of Time · The Financial Exchange Show

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Speaker 1: a donation today. This is the Financial Exchange with Chuck
1:05
Speaker 1: Zada and Mike Armstrong.
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Speaker 2: I hope y'all had a great weekend. It's Chuck, Mike
1:15
Speaker 2: and Tucker with you. Mike forgot to bring his stack
1:19
Speaker 2: into the studio, which means I can talk about whatever
1:22
Speaker 2: I want for the rest of this segment. Just ask
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Speaker 2: me trivia questions about the Stack. What was your favorite article?
1:29
Speaker 2: What was the third word of the fourth piece that
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Speaker 2: Tucker put up? Ben? Wait, why are you gonna go
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Speaker 2: and ruin a good thing like that? Ben? Just u
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Speaker 2: Ben just did his job and brought in Mike Stack.
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Speaker 1: How dare he?
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Speaker 2: Why would you do that in the Monday ruin all
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Speaker 2: the fun? In any case, Chuck, Mike, and Tucker here
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Speaker 2: and here is the deal. There is no deal yet
1:53
Speaker 2: between the United States and Iran. And look, I don't
1:58
Speaker 2: know if we're going to get to one later today,
2:00
Speaker 2: I don't know if we're gonna get to one tomorrow,
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Speaker 2: next week, next month, blah blah blah. All I can
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Speaker 2: say is what I have been saying the entire time,
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Speaker 2: which is this, every day the strait of hormones remains closed,
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Speaker 2: the pressure on the global economy worsens at some point
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Speaker 2: in the future. That point in the future is becoming
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Speaker 2: closer and closer every day that we go. And the Iranians,
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Speaker 2: whether you love them, hate them, or are indifferent about them,
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Speaker 2: they're not stupid. Okay, Yeah, the Iranian government. I'm just
2:38
Speaker 2: trying to.
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Speaker 3: Figure out the the block of people who say I
2:41
Speaker 3: love the Iranians.
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Speaker 2: There's probably a listener somewhere who's like, you know, I'm
2:47
Speaker 2: just trying to be I got open. Like, all I'm
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Speaker 2: saying is it's kind of it gets back to the
2:53
Speaker 2: old bit. It's like, no matter what you say, you
2:57
Speaker 2: don't have to hand it to ice. Yeah, you know.
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Speaker 2: It's like there's certain things that you just you know, Okay,
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Speaker 2: you don't do that. So here's the deal. The Iranian government,
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Speaker 2: they're not dumb. They may be fanatics, they may be authoritarian,
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Speaker 2: they may be not hospitable to, you know, the way
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Speaker 2: of life that we know, but they're not stupid. We
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Speaker 2: know this also, and the Iranian government knows where everyone
3:27
Speaker 2: else's bread is buttered. And so the incentive for them,
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Speaker 2: in order to get the best possible deal that they can,
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Speaker 2: and I've said this since day one, is to draw
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Speaker 2: this thing out as long as possible. And if there's
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Speaker 2: one thing that Iranian negotiators have proven to be very
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Speaker 2: very good at over the years. It's drawing things out
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Speaker 2: as long as possible. Yeah, I mean, look, we were
3:49
Speaker 2: talking last week.
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Speaker 3: How I'm not sure everybody completely agreed with me, But
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Speaker 3: in my view, there simply has not been enough economic
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Speaker 3: pain on the US or Iran to this point to
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Speaker 3: force a deal. Lad hand here right, it's fairly recent
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Speaker 3: that we started blocking any sort of exports out of Iran. Yes,
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Speaker 3: there's been all sorts of strikes. Their economy is a mess,
4:13
Speaker 3: but their economy's kind of been a mess for the
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Speaker 3: better part of the last decade. And in the United States, no,
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Speaker 3: does anybody like four dollars fifty cents a gallon gas?
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Speaker 2: Absolutely not. But we're not dealing with shortages quite honestly,
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Speaker 2: I'm tired of people every time I pull up to
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Speaker 2: Philip Gas. I'm tired of the guy at the next
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Speaker 2: pump saying, man, this is tough. Huh yeah, I get it,
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Speaker 2: like it's tough. We you don't have to verbalize me
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Speaker 2: every time I go, oh, look at these prices the
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Speaker 2: guy yesterday.
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Speaker 3: I do it too, but I'm leaning on my ev
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Speaker 3: when I say it. The guy, are you just pulling
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Speaker 3: the pump? And I'm just I'm just leaning on my
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Speaker 3: em with fanning myself with a twenty dollars bill and
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Speaker 3: winking at the person while I say it.
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Speaker 2: Mike's just holding the pump while just like not nothing's
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Speaker 2: city prices are through the room. He's just like, oh,
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Speaker 2: this must be rough, huh. But no, Like honestly, the
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Speaker 2: guy Yesterday's like, man, we're gonna have to take out
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Speaker 2: a loan to fill up this tag. I'm like, I know,
5:08
Speaker 2: I get it. Like the joke stopped being funny in
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Speaker 2: six weeks. Yeah, it was funny the first like seventy
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Speaker 2: dollars fill up. It's not funny that the tenth. So
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Speaker 2: here here's the deal. The US economy, for all of
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Speaker 2: the complaining that we're doing about gas prices, is not
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Speaker 2: showing any meaningful weakness at this point. Case in point,
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Speaker 2: this morning, it's a big data week.
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Speaker 1: This week.
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Speaker 2: We got ism manufacturing came in at fifty four. That's
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Speaker 2: one point higher than the fifty three it came in
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Speaker 2: last week. We're also going to be getting jolts tomorrow.
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Speaker 2: We are getting ADP data on Wednesday, ie some services
5:46
Speaker 2: on Wednesday, claims Thursday, job support, Friday, busy week. There's
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Speaker 2: nothing out there that is broadly indicating the US economy
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Speaker 2: is slowing down. In fact, in nominal terms, not accounting
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Speaker 2: for inflation, there is evidence that the US economy is
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Speaker 2: actually speeding up. And so this is the thing that
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Speaker 2: I tell people. You have to hold two different views
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Speaker 2: in your head at the same time that kind of
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Speaker 2: contradict themselves. Hey, these high oil prices are brutal for households,
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Speaker 2: and it feels bad, and I hate it. I hate it.
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Speaker 2: I hate it, But it's not impacting the US economy negatively.
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Speaker 2: Yet it may at some point. It might be that
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Speaker 2: you need a certain duration of prices in this range.
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Speaker 2: It might be that you need gas prices to get
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Speaker 2: closer to five dollars than four. I don't know, but
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Speaker 2: but my point is, as of right now, the two
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Speaker 2: views that you need to hold in your head about
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Speaker 2: the economy today on June first, twenty twenty six, the
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Speaker 2: US economy is nowhere near recession, and gas prices are
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Speaker 2: really uncomfortable for a lot of households.
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Speaker 3: Yeah, I think I would say it slightly differently. I
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Speaker 3: do believe the US economy would be doing better were
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Speaker 3: oil prices not as high as they are right now.
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Speaker 3: But I don't think you can point to anything to
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Speaker 3: say that the get high gas prices, high oil prices
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Speaker 3: in the energy shock has damaged the economy or the
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Speaker 3: market in any meaningful way. It's just you know, if
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Speaker 3: you had a parallel universe where you didn't have all this,
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Speaker 3: then it might be a little bit better. I know
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Speaker 3: people don't come here necessarily for complete breaking news on
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Speaker 3: the stuff in the Middle East, but if you missed it,
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Speaker 3: Central Command reported that the US intercepted Iranian missiles that
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Speaker 3: were targeting American forces in Kuwait, and then more recently,
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Speaker 3: Iran has stopped negotiats with the US and vowed to
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Speaker 3: quote completely block the straight of horror moves. That's according
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Speaker 3: to their state media, which has reported all sorts of
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Speaker 3: things that turn out to be overstated and dramatic. But
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Speaker 3: again that's the most recent and on all of that,
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Speaker 3: you do have certain areas of stocks and oil most
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Speaker 3: importantly moving on the news.
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Speaker 2: Yeah you do. And look, I have no idea when
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Speaker 2: you are going to get to some kind of agreement
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Speaker 2: between the United States and Iran. I don't know what
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Speaker 2: it's going to hold within it. I don't know. I
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Speaker 2: don't know anything about it because, like again, if all
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Speaker 2: you're reading are the headlines, then the strait's been open
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Speaker 2: for the last two months. Yeah, and it's not. So
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Speaker 2: My point is, wait to see ships moving in large numbers,
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Speaker 2: and when that happens, that is when you can start
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Speaker 2: to accurately price what the damage is going to be.
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Speaker 2: What I can tell you is that every day that
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Speaker 2: you go on without that happening, the damage down the
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Speaker 2: road to the global economy is getting worse. There's no
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Speaker 2: way to avoid it. And in the US we are
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Speaker 2: more insulated from it for a number of reasons that
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Speaker 2: we've discussed, both geographically, resource wise, economically like that there
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Speaker 2: are a lot of things that will cushion the US
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Speaker 2: from these impacts. But I gotta tell you, like, we
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Speaker 2: passed the point of no return on US oil inventories
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Speaker 2: almost four weeks ago. Now Cinco de Mayo is now
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Speaker 2: well in the past. I mean, we are screaming towards
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Speaker 2: the fourth of July with no answers on this. Yeah.
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Speaker 3: I think other indicators that we have focused on recently,
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Speaker 3: you know, one we were talking last week, how you
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Speaker 3: know Frankly, it was a bit quiet in the news
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Speaker 3: cycle regarding the negotiation, which we took us good news
9:26
Speaker 3: that silence or quietness has abated. We are now getting
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Speaker 3: very loud points being made by both the Trump administration
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Speaker 3: and Iranian state media.
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Speaker 2: So you know, take that for what you will.
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Speaker 3: The other energy news, if you will, Russia has now
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Speaker 3: banned aviation fuel exports from June first through November thirtieth
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Speaker 3: of this year. Not that they are the all important
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Speaker 3: exporter of jet fuel, but they are a key player,
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Speaker 3: and I won't be surprised if we see more of
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Speaker 3: these types of announcements from other countries that do have
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Speaker 3: stuff to.
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Speaker 2: Ex which, by the way, the US is going to
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Speaker 2: run out of stuff to export somewhere, from commercial stocks
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Speaker 2: probably in the next six to eight weeks, and from
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Speaker 2: the strategic reserve probably in the next twelve to sixteen weeks.
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Speaker 2: So again, the timelines we're talking about are in weeks now.
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Speaker 2: We're not talking about you know, months or quarters or years.
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Speaker 2: We are in two weeks. So quick price update.
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Speaker 3: Oil prices West Texas crued jumping about seven dollars a barrel,
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Speaker 3: seven and a half percent, back up to the ninety
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Speaker 3: four region as we speak, and again we've been here
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Speaker 3: plenty of times of the course the last few weeks,
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Speaker 3: but a.
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Speaker 2: Pretty big reversal from where we were last week. To
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Speaker 2: take a quick break. When we return, talk to you
10:47
Speaker 2: about the latest from Invidia right after this.
10:51
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11:30
Speaker 2: And video over the weekends. Announcing that they are going
11:36
Speaker 2: to be working with a number of PC manufacturers to
11:40
Speaker 2: use their new RTX spark AI chips in order to
11:47
Speaker 2: but the goal is to be able to run AI
11:50
Speaker 2: agents locally on PCs, as opposed to needing any kind
11:56
Speaker 2: of centralized data center to be able to run them.
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Speaker 3: And by the way, stock's moving up about four point
12:03
Speaker 3: eight percent today. So let's talk about why this could
12:07
Speaker 3: matter in the future, because I don't I don't think
12:10
Speaker 3: there's much about it that matters right at this exact moment.
12:14
Speaker 3: But I do think that if you want to move
12:17
Speaker 3: forward with things like robotics and autonomous vehicles being driven
12:23
Speaker 3: by artificial intelligence systems, then the localized AI chip makes
12:29
Speaker 3: a lot of sense for I don't know that next
12:33
Speaker 3: generation of technology. I was having a tough time figuring out,
12:36
Speaker 3: for instance, why I finance guy in Boston might ever
12:41
Speaker 3: need a laptop that runs AI locally, and I couldn't
12:44
Speaker 3: come up with a good reason.
12:45
Speaker 2: So other than security, I suppose couple different reasons why
12:49
Speaker 2: the one that you mentioned security is a big one.
12:52
Speaker 2: Not needing to have your data stored centrally is potentially
12:56
Speaker 2: a big win other things, just in terms of considerations.
13:01
Speaker 2: When you talk about the ability to you know, truly
13:06
Speaker 2: own whatever AI agency you are building, ownership matters too.
13:11
Speaker 2: Like you're basically if you if you're running them through
13:13
Speaker 2: any of these other platforms, you're basically renting them, you know,
13:16
Speaker 2: more or less. It's no different from any other software
13:19
Speaker 2: as a service platform where you're paying you know, a
13:21
Speaker 2: recurring monthly fee. But this is something where you can,
13:25
Speaker 2: you know, truly own it because it's there on your computer.
13:29
Speaker 2: What do you but what do you give up by
13:31
Speaker 2: doing so?
13:31
Speaker 3: Because in my mind, what you give up are the
13:35
Speaker 3: advancements and the models and the chips that are happening
13:37
Speaker 3: at those centralized places, Because if I'm an AI user
13:40
Speaker 3: and in video rolls out a new chip that's going
13:42
Speaker 3: to make things faster and better, then I can just
13:45
Speaker 3: switch which data center I am I'm utilizing.
13:48
Speaker 2: If one believes that models are becoming commoditized, which I do,
13:57
Speaker 2: and that the outputs are all converging even though the inputs,
13:59
Speaker 2: you know, happen in different ways, It's kind of like, look,
14:04
Speaker 2: if you're trying to I'm trying to think of the
14:06
Speaker 2: best comparison. If you're trying to write a newspaper article
14:10
Speaker 2: right now, there are a bunch of different like writing
14:14
Speaker 2: processes that people use to get there. Ultimately it still
14:18
Speaker 2: produces an article. But I think that when you look
14:23
Speaker 2: at this, if if you're thinking that these models are
14:26
Speaker 2: going to be commoditized, which I do, I think we
14:30
Speaker 2: are absolutely heading towards model commoditization, because that's when they
14:34
Speaker 2: start releasing models every two weeks. Yeah, and you start
14:37
Speaker 2: seeing like small differentiations between them instead of big ones.
14:42
Speaker 2: It's telling you that the models are becoming commoditized, and
14:44
Speaker 2: eventually the cost is going to plummet. We went through
14:47
Speaker 2: the mechanics of that last week. If that is the case,
14:52
Speaker 2: then you don't need to have the latest and greatest
14:56
Speaker 2: model because they're all basically the same. Yeah, and so
15:02
Speaker 2: it doesn't need to be you know, you could you
15:06
Speaker 2: could probably get ninety percent of the performance for ten
15:09
Speaker 2: percent of the cost. And unless you are that specific
15:13
Speaker 2: user that needs that one hundred percent piece, well then
15:17
Speaker 2: you're gonna be just fine. And so I think that's
15:21
Speaker 2: a big piece of it. But it also is about
15:24
Speaker 2: being able to Again, this is starting on PCs. You
15:28
Speaker 2: better believe this is heading for smartphones. Sure, it's just
15:30
Speaker 2: can you get the power that you need in that
15:33
Speaker 2: form factor? The two things that you're gonna run into
15:37
Speaker 2: battery life and heat. Those are gonna be the two
15:40
Speaker 2: problems in trying to get it into the smartphone form
15:44
Speaker 2: factor because right now, these things chew up an amazing
15:47
Speaker 2: amount of power and in doing so, they spit out
15:52
Speaker 2: a lot of heat. And the last thing that you
15:54
Speaker 2: want is a smartphone that works for twenty minutes and
15:57
Speaker 2: burns a hole in your pants, at least personally. We
16:02
Speaker 2: went through remember when Samsung had the exploding phones that cycle.
16:05
Speaker 3: Yeah, I'm still thinking through this of you know, who
16:08
Speaker 3: the perfect user is, and maybe it's defense companies and
16:11
Speaker 3: those that work with highly confidential information. Maybe it's healthcare workers.
16:15
Speaker 3: But I think I'm thinking too small. I do think
16:20
Speaker 3: that the big use case is the eventual stuff that
16:23
Speaker 3: you can't afford the time for it to be, you know,
16:26
Speaker 3: going out to the cloud and then back to the device.
16:30
Speaker 3: And so that makes me think of robotics, It makes
16:33
Speaker 3: me think of self driving cars. It makes me think
16:35
Speaker 3: of those items that cannot wait for Internet connectivity and
16:40
Speaker 3: need instantaneous results.
16:42
Speaker 2: I think that's fair that that, to me, is the
16:44
Speaker 2: big use case with all this.
16:46
Speaker 3: By the way, in video stock already today moving up
16:49
Speaker 3: ten bucks about five percent on I didn't see any
16:52
Speaker 3: other news regarding in video this morning, so we have that.
16:56
Speaker 2: The other piece on this that is interesting to think
16:58
Speaker 2: through is all these companies are building these massive data centers.
17:06
Speaker 2: What does this do to the economics of those Yeah,
17:09
Speaker 2: is it necessary? I don't know the answer, but it's
17:12
Speaker 2: just something that you need to ask at least. See
17:15
Speaker 2: that's where I landed.
17:16
Speaker 3: I continue to think that most users are going to
17:20
Speaker 3: prefer that method.
17:21
Speaker 2: Why, I don't know. Other than the same reason that
17:25
Speaker 2: most users.
17:26
Speaker 3: Today don't have a server sitting in their code closet
17:31
Speaker 3: for their business.
17:32
Speaker 2: Well, let's talk about who actually buys PCs.
17:35
Speaker 3: First, it's businesses, right like, it's businesses and gamers. The
17:41
Speaker 3: days of households having PCs, it's dwindling. I mean, Mike,
17:47
Speaker 3: you've got school age kids. Do they need to use
17:50
Speaker 3: like a sit down computer.
17:52
Speaker 2: No, Like they've got a school issued iPad and that's it, right,
17:55
Speaker 2: Maybe a chromebook or something like that, you know, like
17:57
Speaker 2: that that's kind of the norm at the point. And
18:01
Speaker 2: so when we talk about PCs, we are talking about businesses,
18:05
Speaker 2: so like first, like that's the thing that we need
18:08
Speaker 2: to realize. But what you know, again, yes, most businesses
18:12
Speaker 2: are using you know, cloud based hosting for all of
18:15
Speaker 2: their services now. But when you talk about a lot
18:18
Speaker 2: of the when you talk about you know, some of
18:21
Speaker 2: the mission critical stuff that they need to you know,
18:25
Speaker 2: run and operate, they still like to keep a lot
18:27
Speaker 2: of that in house because it minimizes risk.
18:31
Speaker 3: Yeah, I mean, this has been the big shift for
18:33
Speaker 3: the last right, Like, the big shift for the last
18:35
Speaker 3: couple of decades has been, hey, you can actually do
18:38
Speaker 3: this more securely by hosting it in the cloud, and
18:40
Speaker 3: it'll be faster and cheaper and more up to date.
18:44
Speaker 3: This would be a reversal of that trend for a
18:47
Speaker 3: completely different software, a completely different product. I yeah, do
18:51
Speaker 3: comprehend that, but the selling point has been Hey, this
18:55
Speaker 3: can be more efficient when done by the pros at
18:58
Speaker 3: a centralized place, and this story is about bringing it
19:01
Speaker 3: back to the local.
19:04
Speaker 2: Again.
19:05
Speaker 3: Maybe that's what needs to happen with AI because it
19:07
Speaker 3: is a different product. But I just find it to
19:09
Speaker 3: be interesting for most businesses. I'm not sure they would
19:11
Speaker 3: buy it.
19:12
Speaker 2: Let's take a quick break here and when we return,
19:18
Speaker 2: do you want to talk any more about like a
19:19
Speaker 2: chip stocks? I got nothing more to add there. Let's
19:22
Speaker 2: talk a little bit about J. Powell, no longer the
19:25
Speaker 2: FED chair but still making speeches. We'll discuss.
19:40
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Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
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Speaker 1: Street Watch, tracking the stocks, theodato and the headlines driving
19:56
Speaker 1: markets so far today right here on the Financial Exchange
19:59
Speaker 1: Rate Network.
20:00
Speaker 4: Well, markets are opening the new month in mixed territory
20:04
Speaker 4: with oil price is jumping higher on a report that
20:08
Speaker 4: around will halt talks with the US and completely blocked
20:11
Speaker 4: the straight of four moves. The tech sector also garnering
20:14
Speaker 4: attention this morning on the heels of news from in Video.
20:17
Speaker 4: Right now, the Dow is down about a third of
20:19
Speaker 4: a percent, SMP five hundred dipping only four points, NASDAC
20:24
Speaker 4: up merely seven points, RUSS two thousand selling off just
20:28
Speaker 4: over one percent, Daniere Treasure reeld is up five basis
20:32
Speaker 4: points at four point five to one percent, and Oil
20:35
Speaker 4: jumping seven and a half percent, trading right around ninety
20:38
Speaker 4: four dollars. A Barrel AI and chip Trying and Video
20:42
Speaker 4: unveiled details to its new RTX Spark super chip designed
20:46
Speaker 4: for running AI agents and video. Also revealed its first
20:50
Speaker 4: personal laptop computers and will work with six manufacturers including Dell, HP, Lenovo, Asis,
20:56
Speaker 4: MSI in Microsoft and then Video stock is up over
20:59
Speaker 4: four percent, while competitors Qualcom, Intel, an AMD or seeing
21:04
Speaker 4: losses in reaction to that news. Meanwhile, Berkshire Hathaway agreed
21:08
Speaker 4: to acquire Taylor Morrison Home for six point eight billion dollars,
21:12
Speaker 4: where Berkshire CEO Greg Abel called Taylor Morrison a best
21:16
Speaker 4: in class home builder Taylor stock rallying twenty two percent. Elsewhere,
21:21
Speaker 4: the New York Times reported that Barry Dillars People Inc.
21:24
Speaker 4: Is preparing an offer to buy MGM Resorts that values
21:27
Speaker 4: it at more than eighteen billion dollars, MGM shares rising
21:31
Speaker 4: thirteen percent, and Bloomberg reporting that Young Brands is in
21:35
Speaker 4: talks to sell its Pizza Hut chain to Long Range Capital.
21:40
Speaker 4: I'm Tucker Silvan. That is Wall Street watch.
21:43
Speaker 2: It's the last time you had a pizza Hut mic.
21:46
Speaker 2: It's been a bit talking. What about you?
21:49
Speaker 4: Oh, I don't ever recall going to a pizza probably
21:52
Speaker 4: when I was like, you know, six or whatever. I
21:54
Speaker 4: don't remember it.
21:55
Speaker 2: You know, it's interesting the prior to a couple of
21:57
Speaker 2: weeks ago, the last time I had been was back
22:01
Speaker 2: in twenty fifteen in smoot Wyoming, which was it was
22:08
Speaker 2: basically the only place there. And we walked in and
22:10
Speaker 2: everyone at the place stared at us because smoot Wyoming
22:13
Speaker 2: is a town of around three hundred people. Huh, and
22:16
Speaker 2: it was you know, we were not from there.
22:18
Speaker 3: They knew is that the place with the plastic red
22:20
Speaker 3: cups that they would serve you servy drinks and okay, yes.
22:23
Speaker 2: Yeah, and this pizza hut was, you know, right out
22:26
Speaker 2: of the nineteen nineties. A couple of weeks ago, decided
22:30
Speaker 2: to have a little hut just to see, you know,
22:32
Speaker 2: how it had evolved. I got to tell you, the
22:34
Speaker 2: stuffed crust is still delicious.
22:37
Speaker 3: I continue to say that the town I live in
22:41
Speaker 3: is not famous for any great pizza places.
22:44
Speaker 2: Mike, Mike, Dominoes Like, we live in New England. Nowhere
22:47
Speaker 2: no famous for any great pizza places, like, compared to
22:50
Speaker 2: a lot of the garbage I get from some of
22:52
Speaker 2: the places. I've been ordering Dominoes more and more often
22:55
Speaker 2: because they are incredibly predictable, very reasonable, and not the
23:02
Speaker 2: worst tasting pizza out there. With any of them. You
23:04
Speaker 2: gotta tell yourself, it's kind of like Olive Garden. It's
23:07
Speaker 2: not Italian food, it's not pizza like. It's kind of
23:09
Speaker 2: a separate food group when you're getting it from a
23:11
Speaker 2: Dominos or a pizza hut. Sure, if you're looking for
23:15
Speaker 2: like a really good slice of pizza, you're not gonna
23:18
Speaker 2: get it there, But most places in New England you're
23:20
Speaker 2: not gonna get it either. It doesn't mean that those
23:21
Speaker 2: places in New England are like terrible or anything. It's
23:25
Speaker 2: just they are what they are, and it's it's fine,
23:27
Speaker 2: Like you just got to know what you're getting, uh,
23:31
Speaker 2: Speaking of which, Jay Powell no longer the FED chair
23:34
Speaker 2: at this point, Kevin Worris has taken over as of
23:37
Speaker 2: about ten days ago, now, yeah, first ten days on
23:39
Speaker 2: the job, and Jay Powell is still on the Board
23:42
Speaker 2: of Governors. He indicated that he would stay on until
23:46
Speaker 2: he had pretty much like satisfactory, you know, sufficient sufficient
23:53
Speaker 2: proof that there was gonna be no further action against
23:56
Speaker 2: you know, other FED governors or anything. And Powell was
24:01
Speaker 2: speaking at a ceremony in Boston over the weekend. He
24:06
Speaker 2: was receiving the JFK Courage Award or whatever what's it
24:11
Speaker 2: called exactly something like that. I don't even know the
24:15
Speaker 2: exact name of it. But basically, Powell continued to, you know, say, look,
24:20
Speaker 2: the reason why I'm staying is not because I want to,
24:23
Speaker 2: but because I don't want a president set that any
24:28
Speaker 2: president can force out a FED member who they simply
24:33
Speaker 2: don't like their monetary policy views on.
24:35
Speaker 3: Quote, if any administration finds a way to remove FED
24:37
Speaker 3: officials over policy differences, then future administrations will do so.
24:41
Speaker 3: As well, the Fed's credibility built over decades was a
24:44
Speaker 3: priceless asset, and he in his colleagues field they have
24:48
Speaker 3: a duty to safeguard that priceless asset. So that that's
24:52
Speaker 3: that's his take, that's you know, again, he didn't go
24:56
Speaker 3: out of his way to give this speech. He was
24:58
Speaker 3: receiving an award for doing precise sleep this and so,
25:02
Speaker 3: you know, taking it all in context, I do it
25:06
Speaker 3: is going to be a very interesting dynamic inside the
25:09
Speaker 3: closed doors of those Federal Reserve meetings with J Powell
25:13
Speaker 3: and a group of voting members I think probably constantly
25:18
Speaker 3: questioning the motives of the new chairperson, Kevin Warsh and
25:23
Speaker 3: the influence that he may be getting from the Trump administration.
25:27
Speaker 3: It's again, we tend to drop dramaticide, dramatize this stuff
25:32
Speaker 3: a little bit more than it should be. And I
25:34
Speaker 3: don't think it's going to be, you know, anything from
25:37
Speaker 3: a Netflix movie. But there's clearly a questioning of motives
25:41
Speaker 3: going on.
25:42
Speaker 2: The thing that I think you have to remember on
25:44
Speaker 2: all this, these guys know each other. Yes, J Powell's
25:50
Speaker 2: not gonna walk Kevin Warsh isn't going to walk into
25:53
Speaker 2: the FED meeting on June seventeenth, to be like, Jay,
25:56
Speaker 2: I'm Kevin, nice to meet you, right, Like these guys
26:00
Speaker 2: when you're playing in these circles, they all know each other. Again.
26:05
Speaker 2: Kevin Warris was on the Federal Reserve Board of Governors
26:08
Speaker 2: from twenty six to twenty eleven. Powell, before he became chair,
26:13
Speaker 2: was on the Board of Governors beginning in twenty twelve.
26:15
Speaker 2: They didn't overlap, but they had friends that overlap. Like,
26:20
Speaker 2: they all know each other. So I don't think this
26:25
Speaker 2: is not going to be something where Kevin walks in
26:27
Speaker 2: is like all right, everyone listen up. It's not like,
26:30
Speaker 2: you know, it's not like a new manager coming into
26:32
Speaker 2: a baseball team or something like that. These guys all
26:36
Speaker 2: know each other.
26:37
Speaker 3: And it's also an institution that pretty much only operates
26:43
Speaker 3: by consensus, correct, So now that's not unanimous among central banks,
26:48
Speaker 3: that's the way the US one works. Plenty of others
26:52
Speaker 3: disagree more fervently and more publicly than this US Central Bank.
26:55
Speaker 3: But that's been the tradition, and I just hesitated to
26:59
Speaker 3: believe it's going to be shaken up that dramatically inspired
27:01
Speaker 3: in spite of what Kevin Worsh has said when trying
27:03
Speaker 3: to get the job.
27:04
Speaker 2: And by the way, I don't know if it's been
27:07
Speaker 2: asked during any of the confirmation hearings or anything, but
27:10
Speaker 2: I haven't read it at least maybe just maybe it
27:13
Speaker 2: has no one published it. But if you were to
27:16
Speaker 2: ask Kevin Worsh, hey, if the same thing were happening,
27:21
Speaker 2: let's play at the string go out like two years
27:23
Speaker 2: or whatever. Sure, and I make this example just to illustrate,
27:27
Speaker 2: like where this would be coming from. Suppose that, again,
27:31
Speaker 2: I know it's not gonna happen because he's a little old,
27:34
Speaker 2: even though I guess at this point, like all of
27:35
Speaker 2: our presidents, like, yeah, this is just what we do now,
27:38
Speaker 2: is we just continue to you know, run out like
27:40
Speaker 2: seventy five eighty year olds. If Bernie Sanders wins the
27:43
Speaker 2: presidency in twenty twenty eight, do you think that, you know,
27:48
Speaker 2: Kevin worsh would just be okay. If Bernie was like Kevin,
27:51
Speaker 2: you gotta go, no, like Kevin would say no, I
27:54
Speaker 2: wouldn't leave then, the same way that Jay wouldn't leave
27:56
Speaker 2: now because I was appointed to do a job and
27:59
Speaker 2: I'm going to continue to do my job until my
28:02
Speaker 2: term runs out. He would say the exact same thing.
28:05
Speaker 2: So I think this is the overall idea that I
28:10
Speaker 2: continue to try to focus on, which is look forget
28:13
Speaker 2: about the specifics of this. Imagine the person that you
28:17
Speaker 2: think is least qualified becomes president two six, ten years
28:22
Speaker 2: from now, like whatever election it is in the future.
28:26
Speaker 2: Do you want that person to be able to just say, hey,
28:31
Speaker 2: I'm going to decide how the Fed operates. And again,
28:36
Speaker 2: think of the person least qualified. You all have this
28:39
Speaker 2: idea in your head of who that person may be.
28:43
Speaker 2: Would you want that person to be able to say, yep,
28:46
Speaker 2: I'm getting rid of the Board of Governors and replacing
28:48
Speaker 2: them with my people.
28:49
Speaker 3: It is an interesting question. Try I think everyone knows
28:52
Speaker 3: the answers no to that. But no, given how few
28:58
Speaker 3: American people know or care about what the Federal Reserve
29:01
Speaker 3: does on a day to day basis, Like, there is
29:03
Speaker 3: probably a lot of confusion from the general public on
29:05
Speaker 3: why the President didn't have the authority to just remove
29:08
Speaker 3: that person, given they have the authority to remove all
29:10
Speaker 3: sorts of other people.
29:11
Speaker 2: But this is why, like my general approach to governance
29:15
Speaker 2: is imagine the worst person possible in any role, and
29:20
Speaker 2: now think about the controls that you'd like to place
29:22
Speaker 2: on their power. Yeah, that I think is a good
29:25
Speaker 2: place to start at any level, whether you're talking local,
29:28
Speaker 2: whether you're talking statewide, whether you're talking national. Imagine the
29:33
Speaker 2: person least qualified in that role. How much control do
29:37
Speaker 2: you really want them to have? You know, what, what
29:39
Speaker 2: do you want them to be able to do on
29:40
Speaker 2: their own versus Hey, you need you know, multiple stakeholders
29:44
Speaker 2: and people to be able to operate this way. That's
29:48
Speaker 2: That's how I think about just about anything when it
29:51
Speaker 2: comes to this stuff. Just take a quick break. When
29:53
Speaker 2: when we come back, we'll talk about what we're seeing
29:57
Speaker 2: in uh, white collar workers struggling to make advances, or
30:03
Speaker 2: just an alarmist piece that has no basis in reality.
30:06
Speaker 2: We'll discuss when we return.
30:08
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31:12
Speaker 2: He's in the Wall Street Journal, in fact, an exclusive
31:14
Speaker 2: from the Wall Street Journal. No raise, no promotion. One
31:18
Speaker 2: in four white collar workers are stalling out. Which this
31:21
Speaker 2: is the best part about fractions, Chuck. That means that
31:24
Speaker 2: three out of four are not. Yes. So the questions
31:28
Speaker 2: that we have to ask about this number one, what
31:31
Speaker 2: data are we seeing that actually confirms this? Number two?
31:35
Speaker 2: Is this is this different from what we have seen historically?
31:39
Speaker 2: Number three? If so, do we expect it to continue
31:43
Speaker 2: into the future?
31:44
Speaker 3: All right, So where we got the stat from was
31:47
Speaker 3: a new study tracking the careers of one point three
31:49
Speaker 3: million mid career professionals across a range of industries since
31:52
Speaker 3: two thousand and I don't have any context as to
31:58
Speaker 3: whether it's worse than it was previously.
32:00
Speaker 2: So here's the thing. This is a study that was
32:03
Speaker 2: done by the Burning Glasses, to which gey Berger, who
32:06
Speaker 2: I frequently cite, works there. So they generally put out
32:10
Speaker 2: good research. So that's that's good to know. And in
32:14
Speaker 2: terms of you know, what they are talking about here,
32:19
Speaker 2: it's people who you know, get five ten years into
32:21
Speaker 2: their career and then they just find themselves not really
32:26
Speaker 2: being promoted, not being fired, but just kind of sitting
32:29
Speaker 2: there and hanging out. And it varies, you know, depending
32:33
Speaker 2: on the specific industry that you're in. It's not something
32:35
Speaker 2: that happens across the board, but it's a question of look,
32:39
Speaker 2: the time in which you can generally make the biggest
32:42
Speaker 2: gains in your salary and title, typically from your early
32:48
Speaker 2: twenties to your mid forties. You know, at like after that,
32:53
Speaker 2: agism becomes a very real thing in many companies as
32:57
Speaker 2: far as you know, the ability to be promoted and
33:01
Speaker 2: see salary gains at that point, Which of those gains
33:04
Speaker 2: accrew in the first half of your career.
33:05
Speaker 3: Which is too bad because in your mid to late
33:07
Speaker 3: forties you oftentimes have more financial independence to be able
33:11
Speaker 3: to make some of those guts your decisions. Sure, by
33:14
Speaker 3: your thirties to forties, you're kind of in that key.
33:19
Speaker 3: Oh my god, I've got multiple babies at home and
33:21
Speaker 3: can't possibly lose the security of my job.
33:24
Speaker 2: Stage For a lot of folks in your twenties, though,
33:26
Speaker 2: you can be you.
33:27
Speaker 3: Know, hopping and looking for that big gain. They then
33:31
Speaker 3: have a bunch of so one can we both agree
33:35
Speaker 3: agree that this study does not give us enough context
33:37
Speaker 3: of whether or not this is a big deal.
33:38
Speaker 2: It doesn't because what we don't have here is, hey,
33:42
Speaker 2: ten years ago this percentage was only fifteen percent, and
33:44
Speaker 2: so it's gotten a lot worse. Or ten years ago
33:47
Speaker 2: it was thirty five percent, so it's actually gotten better.
33:50
Speaker 2: It does tell us that, hey, there are a bunch
33:53
Speaker 2: of workers that aren't seeing the gains they want to
33:55
Speaker 2: in terms of salary and title. But I have nothing
34:01
Speaker 2: to compare it to, and so I don't know if
34:02
Speaker 2: this is good, bad.
34:03
Speaker 1: Or ugly.
34:04
Speaker 3: Yeah, they have some tips that I find interesting, one
34:06
Speaker 3: of which coincided with one that was a truism at
34:10
Speaker 3: my last company, which is, if you wanted to get
34:13
Speaker 3: ahead at this giant financial services company, your best route
34:17
Speaker 3: was to leave and then come back later in your career.
34:19
Speaker 3: YEP basically allows you to jump multiple levels. And that
34:22
Speaker 3: tends to be not in all industries, right if you're
34:25
Speaker 3: in your union, if you're in some specific roles, then
34:28
Speaker 3: it might not make sense. But in a lot of
34:30
Speaker 3: big companies, the best way to look good on a
34:34
Speaker 3: resume is to be at that company, get some experience,
34:36
Speaker 3: go elsewhere, get some different experience, and then come back,
34:39
Speaker 3: you know, the old boomerang.
34:41
Speaker 2: As a way of skyrocketing your career. They talk about.
34:43
Speaker 3: Specialized training, especially these days in artificial intelligence, if you
34:47
Speaker 3: can differentiate that way.
34:49
Speaker 2: But I'll tell you.
34:52
Speaker 3: Again, this study, as we see with a lot of
34:55
Speaker 3: these types of surveys, I don't think indicates much of anything.
34:58
Speaker 2: Again, I think if you want to take the.
34:59
Speaker 3: Reverse side of it, if you had printed a story
35:01
Speaker 3: that said three quarters of workers are making advances in
35:05
Speaker 3: their career and not stalling out, this is a completely
35:08
Speaker 3: different story. And that's uh, that's the reverse or the
35:12
Speaker 3: inverse of this equation here.
35:14
Speaker 2: So, did either of you happen to hear the meteorite
35:20
Speaker 2: that entered the atmosphere just off the Massachusetts coast over
35:23
Speaker 2: the weekend. I did.
35:24
Speaker 3: I thought it was my kids jumping off the top
35:26
Speaker 3: bunk of their bunk bed. So I screamed at them
35:28
Speaker 3: and then realized that they were in fact all in
35:31
Speaker 3: the room next to me and not in their bedrooms.
35:33
Speaker 4: No, I didn't. I was too busy hearing the May
35:36
Speaker 4: thirtieth nor Rester we had. It was uh same winds,
35:40
Speaker 4: which I had to clean up all day yesterday.
35:42
Speaker 2: It was great, awesome. There's like forty nine other states
35:45
Speaker 2: that you could live. Yeah, I gotta say it's kind
35:49
Speaker 2: of wild. I woke up on on Saturday morning, lovely morning.
35:52
Speaker 2: I'm like, by the way, I'm like, it's thirty nine degrees.
35:58
Speaker 2: The heck is going on here? What is this? It's
36:01
Speaker 2: almost June, it's thirty nine degrees. But this metea ite.
36:05
Speaker 2: So the deal is the thing was, you know, coming
36:08
Speaker 2: in at seventy five thousand miles an hour. There's another
36:11
Speaker 2: one on the southeast coast earlier this week as well,
36:16
Speaker 2: which I gotta tell you, I think we're approaching one
36:20
Speaker 2: of the great convergence events of our lifetime. You've got
36:26
Speaker 2: these little media rites again. This one they estimate was
36:28
Speaker 2: maybe like three feet in diameter. Yeah, that's what they
36:31
Speaker 2: want you to think, Chuck. The other one. I haven't
36:33
Speaker 2: seen the estimate of how big it is, but it's
36:35
Speaker 2: these little ones. And I remember from the movie Armageddon
36:42
Speaker 2: that the first thing that happens in it is the
36:45
Speaker 2: space shuttle blows up because it gets hit by one
36:47
Speaker 2: of these in space. Right, we also had a rocket
36:51
Speaker 2: blow up on a launch pad last week. Interesting, and
36:54
Speaker 2: this is also happening at a time where there is
36:57
Speaker 2: a global oil crisis. Uh huh huh, So we have
37:02
Speaker 2: to faris a theory. Chuck comes out, we have to
37:05
Speaker 2: find Bruce Willis and get him into space to drill
37:10
Speaker 2: for oil. Check. The poor guy's got Alzheimer's. No, it's
37:13
Speaker 2: not that, it's not nuts. It's different. Sad. It is
37:18
Speaker 2: very sad. But I think you would appreciate us talking
37:21
Speaker 2: about him because, like again, I'm just saying, there's something
37:26
Speaker 2: happening now, and I think we got to drill for
37:28
Speaker 2: oil in space. Okay, I got nothing else sounds good,
37:34
Speaker 2: but there's something out there.
37:36
Speaker 1: No.
37:37
Speaker 2: Look, here's the thing. This stuff does happen more frequently
37:40
Speaker 2: than people realize. It was pretty cool. I'm glad. I
37:44
Speaker 2: mean On one hand, it's pretty cool. The other thing,
37:47
Speaker 2: I will say, I heard a couple of people. They
37:49
Speaker 2: are like, Hey, why did NASA see this? Guys? It's
37:52
Speaker 2: a three foot piece of rock moving at seventy five
37:55
Speaker 2: thousand miles an hour. What do you what do you mean?
37:58
Speaker 2: How come NASA didn't? Guys? We can't even see in
38:00
Speaker 2: the straight of horror moves half the time, and you
38:03
Speaker 2: want to pick up every three foot piece of rock
38:05
Speaker 2: out in space.
38:06
Speaker 3: My favorite was my local police department imploring people to
38:09
Speaker 3: stop calling them and asking what it was.
38:12
Speaker 2: We don't know, right, why would you call that? Yeah,
38:18
Speaker 2: we need another department for we need a what was
38:20
Speaker 2: that department? Let's take a quick break. When we return,
38:24
Speaker 2: we got more coming up.