Latest / The Financial Exchange Show / Are investors getting nervous about how expensive stocks are?

Transcript

Are investors getting nervous about how expensive stocks are? · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:02
Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
0:05
Speaker 1: registered investment advisor. All opinions expressed are solely those of
0:08
Speaker 1: the hosts. Do not reflect the opinions of Armstrong Advisory
0:11
Speaker 1: or anyone else. Investments can lose money. This program does
0:14
Speaker 1: not offer any specific financial or investment advice. Please consult
0:17
Speaker 1: your own financial, tax, and estate planning advisors before making
0:20
Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
0:23
Speaker 1: this program do not endorse each other or their services.
0:26
Speaker 1: Armstrong and Money Matters Radio do not compensate each other
0:28
Speaker 1: for referrals and are not affiliated. This is the Financial
0:34
Speaker 1: Exchange with Chuck Zada and Paul Lane, your exclusive look
0:38
Speaker 1: at business and financial news affecting your day, your city,
0:42
Speaker 1: your world. Stay informed and up to date about economic
0:46
Speaker 1: and market trends, plus branking business news every day. The
0:50
Speaker 1: Financial Exchange is a proud partner of the Disabled American
0:53
Speaker 1: Veterans Department of Massachusetts. Help us support our great American
0:57
Speaker 1: heroes by visiting dav five k dot com, bust and
1:01
Speaker 1: making a donation today. This is the Financial Exchange with
1:05
Speaker 1: Chuck Zada and Paul Lane.
1:09
Speaker 2: Chuck, Paul and talker with you here and taking a
1:12
Speaker 2: look at markets.
1:13
Speaker 3: A very very.
1:15
Speaker 2: Modest downward drift today that is happening in US equities.
1:20
Speaker 2: We got the Dow off about one hundred and forty
1:22
Speaker 2: points about a thirty percent, The S and P five
1:26
Speaker 2: hundred as it's called, is down six points, are about a
1:29
Speaker 2: tenth of a percent, and the Nasdaq off quarter percent
1:33
Speaker 2: about forty seven points right now, So not too much
1:36
Speaker 2: movement overall. Big stocks making moves today, Meta selling off
1:42
Speaker 2: for again. Met has been on quite a tear, but
1:45
Speaker 2: Meta down about two and a half percent today. I
1:47
Speaker 2: don't know there's any news there. Putly down a couple percent,
1:50
Speaker 2: Home Depot down a couple percent, Lenar down a couple percent,
1:53
Speaker 2: So you know, you get some some downward movement on
1:55
Speaker 2: that side. Tesla rallying back off some of its lows
1:59
Speaker 2: from last week, up about two percent, and you've got
2:03
Speaker 2: Nvidia up about half a percent as well. But overall
2:06
Speaker 2: stocks really not finding any clear direction today, just kind
2:10
Speaker 2: of chopping around the area where they've stalled out the
2:13
Speaker 2: last few times. They've gotten around sixty one hundred twenty
2:17
Speaker 2: five on the s and P five hundred tenure. US
2:20
Speaker 2: Treasury also very boring today, up two basis points to
2:24
Speaker 2: four point five four to six percent, so actually sorry,
2:27
Speaker 2: two tents of a basis points, so not much movement there.
2:31
Speaker 2: The situation on oil a little more exciting, but not much,
2:36
Speaker 2: up about fifty three cents a barrel on West Texas
2:39
Speaker 2: Intermediate to seventy two thirty eight, and the TRIPA national
2:42
Speaker 2: average for gas prices up three tenths of ascent to
2:46
Speaker 2: three sixteen and four tenths. Remember, we are heading into
2:50
Speaker 2: that spring season where you typically do see gas prices
2:53
Speaker 2: move up even if oil prices are not, as refiners
2:56
Speaker 2: change over the mix that they're starting to make. Let's
2:59
Speaker 2: don't be surprised if oil prices stay in the low seventies,
3:02
Speaker 2: if gas prices move up into that three thirty to
3:05
Speaker 2: three forty range over the next month or so. It's
3:09
Speaker 2: just kind of normal for this time of year to
3:11
Speaker 2: see those types of moves. And we've got gold also
3:14
Speaker 2: boring today, down fifty cents anounced to twenty nine forty eight,
3:18
Speaker 2: and fifty cents overall, pretty darn quiet so far today
3:24
Speaker 2: at two pm. I believe it is YEP two pm.
3:28
Speaker 2: The FED meeting minutes from January's meeting will be released
3:33
Speaker 2: to the public. Paul, Why do they wait three weeks
3:37
Speaker 2: to release this? Is it just so they have something
3:39
Speaker 2: like the FED meetings are every six weeks? Is it
3:41
Speaker 2: just so they have something to put out in the
3:43
Speaker 2: middle for us to pay attention to.
3:45
Speaker 3: Seems likely? Why would they seems like.
3:48
Speaker 2: I mean, you have someone taking the minutes, like there's
3:51
Speaker 2: you know, the Secretary of the FED or someone like that,
3:53
Speaker 2: who's you know, in the meeting room, or maybe they
3:56
Speaker 2: just do a zoom. I don't know how they do
3:58
Speaker 2: it at this point, because you know, the Fed's got
4:00
Speaker 2: branches all over the country. There's someone there taking the
4:04
Speaker 2: meeting minutes. Does it really take three weeks to put
4:08
Speaker 2: them together?
4:09
Speaker 4: Maybe they handwrite them.
4:11
Speaker 2: They don't they they're they're printed when we get them.
4:15
Speaker 3: They handwrite exactly.
4:19
Speaker 2: The FED might be quite acceptable monetary policy, but they
4:22
Speaker 2: are very bad typists.
4:24
Speaker 3: It's possible, and it seems like in here it seems
4:29
Speaker 3: like maybe just having something in the middle to answer
4:32
Speaker 3: the question there, We're likely not going to see a
4:35
Speaker 3: whole lot of activity here. These This meeting occurred before
4:39
Speaker 3: the inflation report that we saw for the month of January.
4:43
Speaker 3: Not like that will necessarily cause any change of course. Really,
4:47
Speaker 3: it only reinforced the idea of continue to wait and
4:51
Speaker 3: see in terms of what we're looking at from the
4:54
Speaker 3: CME FED future probabilities, it's really not until the month
4:58
Speaker 3: of June you see any sort of fifty to fifty
5:02
Speaker 3: chance that we may be looking at a rate cut.
5:04
Speaker 3: At this moment, March in may look like we're going
5:07
Speaker 3: to continue to stay where we are at four and
5:09
Speaker 3: a quarter to four and a half percent. We had
5:12
Speaker 3: cut about a full percentage from Fed fund interest rates
5:16
Speaker 3: through September through the end of twenty twenty four, and
5:20
Speaker 3: now we're just kind of any holding pattern. So really,
5:23
Speaker 3: anything that we see this afternoon outside of a waiting seat,
5:28
Speaker 3: to me, it would be quite a surprise.
5:30
Speaker 2: Yeah. Basically, the read on this is there's not a
5:34
Speaker 2: significant group of market participants that thinks rates are either
5:39
Speaker 2: going to go higher or lower at this point. They
5:41
Speaker 2: think they're basically just going.
5:42
Speaker 3: To stay there.
5:43
Speaker 2: And if you read through that interpretation, I think it's
5:48
Speaker 2: basically people saying, hey, the Fed is pretty close to
5:51
Speaker 2: a neutral rate and not really exerting too much influence
5:54
Speaker 2: on the economy in either way, and as such, as
5:57
Speaker 2: long as things don't get worse or better, and we're
6:00
Speaker 2: not really seeing conclusive signs of things getting worse or better,
6:04
Speaker 2: then you would expect the FED to not really change rates.
6:07
Speaker 2: And that's what is being projected at the moment. So
6:10
Speaker 2: I think we're gonna have to see how things evolve
6:13
Speaker 2: over the next few months. There are a lot of
6:15
Speaker 2: balls in the air in terms of potential tariffs and
6:18
Speaker 2: tax changes in this and that, So I think there's
6:20
Speaker 2: a lot out there that we're gonna have to wait
6:22
Speaker 2: and see on before we start to see what the
6:25
Speaker 2: impacts are on the US economy. But at this point,
6:28
Speaker 2: the market is basically saying, yeah, we're we don't really
6:32
Speaker 2: have any conclusive direction either way in terms of where
6:35
Speaker 2: interest rates are going to go. And by the way,
6:37
Speaker 2: this is kind of the same thing that the equity
6:38
Speaker 2: markets saying, you know, like the S and P five hundred,
6:42
Speaker 2: Granted it had like a slightly higher all time high
6:46
Speaker 2: that it broke out to yesterday, but it peaked at
6:49
Speaker 2: sixty one to twenty nine, which listen, about a month ago,
6:52
Speaker 2: it peaked at sixty one to twenty eight you're kind
6:55
Speaker 2: of just between like sixty one thirty and fifty eight
6:58
Speaker 2: hundred on the low end there, you're within about a
7:00
Speaker 2: five to six percent range for the last four months
7:03
Speaker 2: now since the election, and we've yet to see any
7:08
Speaker 2: conclusive breakout to the upside. Every time we've gotten around
7:11
Speaker 2: sixty one to twenty five, we kind of start to
7:14
Speaker 2: head back down and we haven't seen any clear breakout
7:17
Speaker 2: to the downside. Every time we get around fifty eight
7:18
Speaker 2: hundred we start to bounce back up. So it's just
7:22
Speaker 2: been a market both in equities and in bonds that
7:28
Speaker 2: is kind of taking a wait and see approach at
7:29
Speaker 2: this point and isn't sure exactly where to go.
7:34
Speaker 3: Did you fall more in the camp we didn't get
7:36
Speaker 3: to talk after the inflation report came out last week
7:38
Speaker 3: of seasonality impacts to the data less of a concern
7:43
Speaker 3: or more so, Hey, this is something that we should
7:47
Speaker 3: really continue to monitor in future months.
7:49
Speaker 2: I think it needs some monitoring, but I just don't
7:53
Speaker 2: have any real I guess here's where I land is.
7:58
Speaker 2: There are three components that you need in order for
8:00
Speaker 2: inflation to really take hold. You need some kind of
8:04
Speaker 2: you know, demand shock where there's excess demand, you need
8:07
Speaker 2: some kind of supply shock where there's a reduced supply
8:09
Speaker 2: and you need high inflation expectations.
8:12
Speaker 3: And when you.
8:13
Speaker 2: Look at it right now, you can make a case, hey,
8:16
Speaker 2: depending on how tariffs are implemented, they have the potential
8:18
Speaker 2: to cause a supply shock. And so that component I
8:21
Speaker 2: think is very much there as a possibility. On the
8:25
Speaker 2: inflation expectation side of things, they're somewhat elevated, but there's
8:29
Speaker 2: also so much noise just because of all the politics
8:31
Speaker 2: surrounding inflation expectations now that I find it kind of
8:35
Speaker 2: hard to get a good read on it. Like you've
8:37
Speaker 2: got Democrats thinking, according to University of Michigan survey that
8:42
Speaker 2: inflation is going to run five percent this year, and
8:44
Speaker 2: you've got Republicans think it's going to be zero. Like
8:49
Speaker 2: there's just like that's a pretty big gulf to try
8:52
Speaker 2: it to navigate. So I don't really know what to
8:55
Speaker 2: read into that at this point. And then you've got
8:57
Speaker 2: the demand side of things, which you look at what
9:00
Speaker 2: we're seeing from a job growth perspective and you know,
9:05
Speaker 2: kind of wage growth because we are a consumer spending
9:07
Speaker 2: based economy at this point, and I think that if
9:11
Speaker 2: anything that potentially is heading towards a slowdown. Because look,
9:15
Speaker 2: as much as we might want to talk about, hey,
9:17
Speaker 2: we want to see, you know, a reduction in the
9:19
Speaker 2: US deficit, that also comes with a reduction in demand,
9:22
Speaker 2: because ultimately, what you are paying for is someone to
9:26
Speaker 2: receive money for a job of doing something. Whether those
9:29
Speaker 2: jobs are things that we believe, are you know, worthwhile
9:32
Speaker 2: and viable or not, is you know, kind of what
9:35
Speaker 2: the whole debate's about and everything. But ultimately, if you
9:39
Speaker 2: are pulling whether it's five billion, fifty billion, or five
9:43
Speaker 2: hundred billion out of the economy, that money is either
9:47
Speaker 2: going to people who are you know, doing a job
9:49
Speaker 2: or people receiving benefits in one way or another, Social Security, Medicare, Medicaid,
9:54
Speaker 2: whatever it might be, and so you are pulling demand
9:57
Speaker 2: out of the economy. I'm not really concerned about any
10:04
Speaker 2: prolonged inflationary bump this year. There may be some noise
10:08
Speaker 2: around it. I'm not saying that it won't have anything there,
10:12
Speaker 2: but i think given the potential for pullbacks in federal spending,
10:17
Speaker 2: which again may very well end up being great in
10:21
Speaker 2: the long run, it's something where in the short term
10:24
Speaker 2: there can be some real pain associated with it, and
10:26
Speaker 2: I think we have to prepare for that as a
10:28
Speaker 2: more realistic possibility than inflation being the biggest problem. That's
10:34
Speaker 2: kind of where I land. And again, we'll have to
10:36
Speaker 2: see where all this goes. Like it's we still don't
10:38
Speaker 2: have a ton of clarity on you know, any kind
10:40
Speaker 2: of tax bill or anything. We still don't have a
10:43
Speaker 2: ton of clarity surrounding you know, what's actually being cut
10:47
Speaker 2: out of federal spending and things like that. So I'm
10:51
Speaker 2: kind of taking just a wait and see approach for
10:53
Speaker 2: the next couple months, and I think we'll know much
10:55
Speaker 2: more by early May. I'm kind of setting like, I
11:01
Speaker 2: think we know a lot more by Mother's Day. Sounds good,
11:04
Speaker 2: you know. I think I think we'll know by that.
11:07
Speaker 2: My wife will be thrilled exactly. It's like, that's that's
11:10
Speaker 2: what it's all about. Let's take a quick break here,
11:12
Speaker 2: and when we come back, we'll do a little bit
11:15
Speaker 2: of trivia right after this.
11:17
Speaker 1: The Financial Exchange streams live on YouTube. Like our page
11:21
Speaker 1: and stay up to date on breaking business news all
11:24
Speaker 1: morning long. This is the Financial Exchange Radio Network. The
11:28
Speaker 1: Financial Exchange Show podcast drops every day on Apple Spotify
11:32
Speaker 1: and iHeartRadio. Hit that subscribe button and leave us a
11:36
Speaker 1: five star review. You're listening to the Financial Exchange Radio network.
11:49
Speaker 4: It's time for trivia here on the Financial Exchange, And
11:51
Speaker 4: yesterday it was announced that Kentucky Fried Chicken will move
11:55
Speaker 4: its corporate headquarters from Louisville, Kentucky. To text this, Colonel
12:01
Speaker 4: Sanders began selling his famous fried Chicken from his gas
12:05
Speaker 4: station in Kentucky in the nineteen thirties and began franchising
12:09
Speaker 4: his chicken recipe in the early nineteen fifties. By the
12:13
Speaker 4: early sixties, KFC was the largest restaurant chain in the US.
12:18
Speaker 4: Trivia question today, what is currently the largest restaurant chain
12:22
Speaker 4: of the world. Once again, was the currently the largest
12:25
Speaker 4: restaurant chain in the world. Be the ninth person today
12:29
Speaker 4: it texta us at six one seven three six, two
12:32
Speaker 4: thirteen eighty five with the correct answer, and you win
12:34
Speaker 4: a Financial Looks Chaine Show T shirt once again. The
12:37
Speaker 4: ninth correct response to text us at six one seven
12:40
Speaker 4: three six two thirteen eighty five, We'll get that T shirt.
12:44
Speaker 4: See complete contest rules at Financial Looks Chain Show dot Com.
12:48
Speaker 2: Dumbthing that I just saw, but I find it kind
12:51
Speaker 2: of funny. Actually, Tucker, did you see that Aj Brown
12:55
Speaker 2: bought a mannequin and dressed his super addressed in his
13:00
Speaker 2: Super Bowl uniform like unwashed, and it's keeping it in
13:03
Speaker 2: his house.
13:04
Speaker 4: I did not see that wide receiver for the Philadelphia Eagles.
13:07
Speaker 4: For those of you aren't familiar.
13:08
Speaker 2: Everyone knows Aj Brown?
13:09
Speaker 3: Yeah, I don't know about that.
13:11
Speaker 2: Well they should because he's got a mannequin wearing his
13:14
Speaker 2: uniform right now in his house.
13:16
Speaker 3: Huh.
13:16
Speaker 2: What do you think a mannequin goes for?
13:19
Speaker 3: Um?
13:20
Speaker 2: I could see anything like.
13:23
Speaker 3: I bet you they're sneaky expensive. I was gonna say more.
13:27
Speaker 2: I mean, I think you get a bad one for
13:29
Speaker 2: two fifty. I think if you want a mannequin for
13:31
Speaker 2: a Super Bowl jersey, I'm poning up at least twelve hundred.
13:35
Speaker 4: Yeah, I'm seeing nice ones are over two hundred. Uh
13:39
Speaker 4: is a cheap, really cheap one on Amazon at thirty
13:41
Speaker 4: six bucks?
13:43
Speaker 2: Can it?
13:43
Speaker 3: I don't believe?
13:44
Speaker 2: Can it do the show for me? Let's talk a
13:49
Speaker 2: little bit about this piece from market Watch. Its title,
13:51
Speaker 2: the biggest US stocks haven't been this expensive since the
13:53
Speaker 2: dot com era. That's making investors nervous. Uh, it's not
13:57
Speaker 2: making investors nervous. If it was making them nervous, they
14:00
Speaker 2: would go down, and they're just not going down convincingly.
14:03
Speaker 2: They're also not really going up convincingly. Most of the
14:06
Speaker 2: big tech stocks have just been chopping around for the
14:08
Speaker 2: last six months or so. The exception is Tesla, which
14:12
Speaker 2: had a huge post election spike and subsequently is given
14:16
Speaker 2: back about half of that post election spike. But otherwise
14:20
Speaker 2: you will get, you know, your big tech stocks, And
14:23
Speaker 2: the only one that I think is really chugging along
14:25
Speaker 2: is Meta. If I'm not mistakes.
14:26
Speaker 3: Correct, they're up a twenty five plus percent year date.
14:30
Speaker 3: All the finding is in this MarketWatch piece are not
14:33
Speaker 3: backed by any market activity like you're mentioning, but what
14:37
Speaker 3: they are backed by Morris survey data, where the American
14:41
Speaker 3: Association of Investors, the percentage of people who think that
14:45
Speaker 3: stocks are going to fall over the course of the
14:47
Speaker 3: next six months was surveyed and came out at forty
14:50
Speaker 3: seven percent. That was the highest since late twenty twenty three.
14:53
Speaker 3: And then when a fund manager survey that was collected
14:57
Speaker 3: by Bank of America Research, a very heavy percentage of
15:00
Speaker 3: those people thought that the market was overvalued as well.
15:03
Speaker 3: This is something that we cover on the show quite frequently,
15:07
Speaker 3: that the market is absolutely higher priced, or price to
15:11
Speaker 3: a premium price for perfection, whatever you know, phrase you
15:14
Speaker 3: want to use behind it. It's expensive and however metric
15:18
Speaker 3: you want to study, whether it be sickly adjusted, price
15:22
Speaker 3: to earnings ratio, pe price to earnings ratio, price to sales,
15:26
Speaker 3: any of these metrics, it is expensive and that is noteworthy. However,
15:31
Speaker 3: it's a lousy predictor of short term market returns over
15:35
Speaker 3: the next three to six months, like these people are
15:37
Speaker 3: being surveyed on. So while it's worth noting, it's really
15:43
Speaker 3: not significant in terms of where the market goes. There
15:47
Speaker 3: does seem to be an interesting sort of contrast where
15:51
Speaker 3: there is a lot of speculation I feel like in
15:54
Speaker 3: this market in different pockets of it that has that's
15:58
Speaker 3: surprising considering all the potential negative market ramifications that are
16:03
Speaker 3: looming out there. That has been a surprise to me
16:06
Speaker 3: that that's persistent for so long, you know, whether you
16:08
Speaker 3: want to study individual stocks, whether it's inflows into cryptocurrency, ETFs,
16:13
Speaker 3: options trading. A lot of the beats that we saw
16:16
Speaker 3: in twenty twenty one are still around today in terms
16:21
Speaker 3: of the amount of appetite for speculation, and that to
16:25
Speaker 3: me has been surprising because it does seem like while
16:28
Speaker 3: we are willing to acknowledge the market is overpriced, there
16:32
Speaker 3: still is a tremendous amount of appetite or fomo for
16:35
Speaker 3: these hot stocks or cryptos or things like that.
16:40
Speaker 2: One other thing just that I found interesting, and I've
16:42
Speaker 2: never looked at this full chart. The So Bank of
16:46
Speaker 2: America has their fund manager survey that you noted, and
16:50
Speaker 2: they do these I think it's on a monthly basis,
16:52
Speaker 2: and they always ask them, hey, do you think US
16:55
Speaker 2: equities are overvalued? They have the data going back to
16:59
Speaker 2: two thousand and one. The only period in which more
17:03
Speaker 2: fund managers surveyed by Bank of America said US equities
17:07
Speaker 2: were undervalued than overvalued. Oh it was late two thousand
17:11
Speaker 2: and eight.
17:11
Speaker 1: Yeah.
17:12
Speaker 2: Other than that, you've always had more fund managers saying
17:16
Speaker 2: market's overvalued, and specifically like even more recently, pretty much
17:21
Speaker 2: since twenty eighteen, actually twenty seventeen, seventy five percent or
17:27
Speaker 2: more of managers aside from a couple of little blips here,
17:30
Speaker 2: have said this market is overvalued. So I guess, in
17:34
Speaker 2: particular with that question that they ask is there any
17:39
Speaker 2: signal there if the if the only time in the
17:42
Speaker 2: last twenty five years fund managers have said yes, this
17:46
Speaker 2: market's undervalued was two thousand and eight. I mean, what
17:51
Speaker 2: are we doing here?
17:52
Speaker 3: They're really probably going by all these traditional metrics that
17:56
Speaker 3: we mentioned, and the only one that screamed by looking
17:59
Speaker 3: at traditional metrichs. No, the only one, but that was
18:01
Speaker 3: evidently clear studying price to earnings ratios and all these
18:04
Speaker 3: other ones I mentioned was likely in that period of
18:07
Speaker 3: time other ones, you're constantly bumping up against new norms.
18:11
Speaker 3: So perhaps that's the reason why there's that consistent pessimism.
18:15
Speaker 2: Speaking of I don't know that this is pessimism, but
18:18
Speaker 2: I just I love the headline here, and then we
18:20
Speaker 2: can dig into it. Why did Microsoft admit that AI
18:24
Speaker 2: is making us dumb? I mean, talk about a headline
18:28
Speaker 2: like it's just kind of wild there to see that one.
18:33
Speaker 2: And basically what this study did is they surveyed three
18:39
Speaker 2: hundred and nineteen knowledge workers about how they used AI,
18:43
Speaker 2: and what they found was that the more participants trusted
18:46
Speaker 2: AI for certain tasks, the less they actually practice those
18:50
Speaker 2: skills themselves. Now, this is not, you know, strange, it's Hey,
18:54
Speaker 2: if you don't practice something you like, lose your acumen
18:57
Speaker 2: at it, you can build it back. Talk to anyone
19:00
Speaker 2: who has ever ridden a bicycle or skied or played
19:05
Speaker 2: a musical instrument, like, Okay, you take a year or two.
19:08
Speaker 2: Often you come back. Yeah, you're not where you were,
19:09
Speaker 2: but you can pick up and you know within you
19:11
Speaker 2: know some time you're back to where you were. But
19:16
Speaker 2: I think this the thing that's kind of funny is
19:20
Speaker 2: like the thing that you're stopping doing is thinking, and
19:25
Speaker 2: that's bad.
19:27
Speaker 3: We've got more on this, that's very bad. We gotta
19:29
Speaker 3: get more into this.
19:30
Speaker 2: We're gonna think about it over the break. While we
19:33
Speaker 2: still can't, you should too, and we'll talk about it
19:36
Speaker 2: when we return.
19:41
Speaker 1: Bringing the latest financial news straight to your radio. Every day,
19:45
Speaker 1: it's the Financial Exchange on the Financial Exchange Radio Network.
19:51
Speaker 1: The latest news on inflation, the FED, the economy, and
19:54
Speaker 1: how the markets are reacting. Every morning right here on
19:58
Speaker 1: the Financial Exchange Radio Network.
20:10
Speaker 3: I had trivia question today was.
20:14
Speaker 4: Who's currently the largest restaurant chain in the world.
20:18
Speaker 3: McDonald's.
20:19
Speaker 4: They have over forty thousand locations and more than one
20:24
Speaker 4: hundred countries. Winner today of the Financial eks Change Show
20:28
Speaker 4: t shirt was celested from Portland, Maine. Congrats to Celeste,
20:32
Speaker 4: and we played trivia every day here on the Financial Exchange.
20:36
Speaker 4: See complete contest rules at Financial ex Changshow dot com.
20:40
Speaker 2: All right, Paul, So we talked briefly in the last
20:43
Speaker 2: segment about whether AI is making us dumber. Microsoft funded
20:51
Speaker 2: a study that happened at Carnegie Mellon that kind of found, Hey,
20:55
Speaker 2: like you're you know, if you're trusting AI to do
21:00
Speaker 2: something for you, you start to see those skills atrophy.
21:04
Speaker 2: But it's not just you know, basic skills. So like
21:09
Speaker 2: there was once the idea that, hey, if people are
21:11
Speaker 2: using calculators, they won't know how to do math. And
21:13
Speaker 2: obviously that's just not true because we've had calculators for
21:16
Speaker 2: a while and I can still do math. Not everyone can,
21:21
Speaker 2: but I can, and that's important. I think the piece
21:27
Speaker 2: here a quote from it, because this is what it's
21:30
Speaker 2: getting at. What's different with AI is that it encroaches
21:32
Speaker 2: on a much broader part of our everyday cognition. We're
21:36
Speaker 2: put in positions to think critically far more often than
21:38
Speaker 2: we are asked to calculate sums or chart routes. Whether
21:42
Speaker 2: crafting a sense of email or deciding what to flag
21:44
Speaker 2: to our boss and a report, so it could leave
21:47
Speaker 2: us less able to do core professional work or more
21:50
Speaker 2: vulnerable to propaganda. And it leads back to the question
21:53
Speaker 2: of why Microsoft published these findings, and this is kind of.
21:57
Speaker 3: The crux of it.
21:58
Speaker 2: There's a clue in the report itself where the authors
22:00
Speaker 2: note that they risk creating products that do not address
22:03
Speaker 2: real workers' needs, and so basically it's Microsoft saying, Hey,
22:07
Speaker 2: if we don't figure out a way to make this better,
22:12
Speaker 2: then we might actually have workers who can't use our products,
22:16
Speaker 2: and we won't be able to sell them to people.
22:18
Speaker 3: Because they'll be so stupid.
22:19
Speaker 2: Yes, okay, it's kind of wild actually to see a
22:22
Speaker 2: company admit that.
22:24
Speaker 3: Yes, it's the whole thing, is a lot to kind
22:28
Speaker 3: of wrap your arms around. But certainly it's interesting. There
22:33
Speaker 3: are easy parallels that you can make to the calculator.
22:35
Speaker 3: I think of spelling to is probably something that I
22:39
Speaker 3: used to pay a whole heck of a lot more
22:41
Speaker 3: attention to going through school, and now it's something that
22:44
Speaker 3: I would freely admit my spelling has totally diminished because
22:47
Speaker 3: I'm so used to technology correcting any issues for me.
22:51
Speaker 3: But It's one thing to focus on spelling or calculations
22:55
Speaker 3: or GPS work anything like that, because those are small sills.
23:00
Speaker 3: But it's when all your critical thinking then I get
23:03
Speaker 3: where the concerns stem from, particularly the one of blindly
23:07
Speaker 3: following the results generated by these AI prompts. That is
23:11
Speaker 3: ultimately concerning that you would not even go back to
23:14
Speaker 3: check what information you're being fed. That that is the
23:18
Speaker 3: real concerning part. And I could absolutely see people falling
23:21
Speaker 3: into that pattern to a degree. It happens when you
23:25
Speaker 3: Google things, or the majority of us google things where
23:27
Speaker 3: you sort of take it as face value, and particularly
23:31
Speaker 3: with their Gemini AI product that they now list on
23:34
Speaker 3: the top of every search, you really you can get
23:38
Speaker 3: some some misinformation there.
23:39
Speaker 2: Like when it told you to eat one rocket a
23:41
Speaker 2: day or a week or whatever.
23:42
Speaker 3: It was exactly what I will say.
23:46
Speaker 2: If you try to intentionally fool AI, it generally picks
23:51
Speaker 2: up on it. It's much more of these accidental hallucinations.
23:54
Speaker 2: I just did a test just as an example, just
23:56
Speaker 2: because again, trying to intentionally fool it usually doesn't work.
24:01
Speaker 2: So I went to chat GPT and I said, tell
24:03
Speaker 2: me about Pedro Martinez, his little known side career as
24:06
Speaker 2: a ventriloquist, and it said, quote, there's no record of
24:10
Speaker 2: Pedro Martinez having a side career as a ventriloquist, so
24:12
Speaker 2: that would be quite the curveball pun intended. It's trying
24:15
Speaker 2: to be funny. However, Pedro was certainly known for his
24:17
Speaker 2: larger than life personality. Blah blah blah blah blah. If
24:20
Speaker 2: you're referring to a joke meme or some otherwise obscure
24:23
Speaker 2: anecdote about him doing ventriloquism as a gag, I'd love
24:26
Speaker 2: to hear more. So if you try to fool it,
24:31
Speaker 2: it generally doesn't happen. It's much more. Hey, I'm interested in, like,
24:36
Speaker 2: tell you about the most important work on you know,
24:39
Speaker 2: economic research, ever, and it might spit out something that
24:43
Speaker 2: doesn't exist. You know, it might combine like names of
24:46
Speaker 2: different books and different authors, and so instead of getting
24:49
Speaker 2: like The Wealth of Nations by Adam Smith, you get
24:52
Speaker 2: the Wealth of Puppies by Adam Jones, And it's like, no,
24:57
Speaker 2: that's not quite what I was looking for. So again,
25:01
Speaker 2: I still think the piece that I come back to
25:06
Speaker 2: is if the companies that were actually making these tools
25:14
Speaker 2: believed in them so much wouldn't they be downsizing much
25:17
Speaker 2: more rapidly themselves. Like, as an example, Salesforce has this
25:22
Speaker 2: whole agent force thing that they're trying to roll out,
25:25
Speaker 2: and Mark Benningoff, the CEO, said, we're going to hire
25:27
Speaker 2: two thousand more salespeople to help sell this, but why
25:31
Speaker 2: can't you use AI agents to help sell the AI agents?
25:35
Speaker 2: So like, I'm just trying to get past that because
25:39
Speaker 2: there's clearly like promise here. But I still look at
25:43
Speaker 2: this two years out and I think that there are
25:47
Speaker 2: productivity improvements that individuals can make, But is there the
25:52
Speaker 2: wholesale change that I think a lot of people have
25:54
Speaker 2: been expecting. I don't know that the answer is there yet.
25:56
Speaker 2: It might get there, and I acknowledge that as a possibility,
25:59
Speaker 2: it's still here, but to this point, and I say
26:03
Speaker 2: this to someone who like benefits from using it to
26:06
Speaker 2: help me with you know, writing and even thinking about
26:08
Speaker 2: some things, it's it's not there yet to where it's
26:13
Speaker 2: replacing people the way that you know, people feared and
26:17
Speaker 2: are even being talked about now with you know, AI agents.
26:20
Speaker 2: I just don't think it's there. So that's that's kind
26:24
Speaker 2: of where I'm at this point, folks, I want to
26:26
Speaker 2: talk to you about the latest guide from the arm
26:30
Speaker 2: Strong Advisory Group. It's titled Understanding Medicare Essential Questions Answered.
26:35
Speaker 2: A lot of people when they are getting close to
26:38
Speaker 2: the age when they need to apply for Medicare, they
26:40
Speaker 2: don't really know where to start. Or maybe you're on
26:43
Speaker 2: Medicare and you're just wondering, Hey, do I understand how
26:46
Speaker 2: the program works as well as I should to make
26:49
Speaker 2: sure I'm getting the best bang from my buck. That
26:52
Speaker 2: is what this guide is designed to answer. Again, It's
26:55
Speaker 2: titled Understanding Medicare Essential Questions Answered, and you can request
27:00
Speaker 2: it at eight hundred three nine three for zero zero one.
27:04
Speaker 2: That number again is eight hundred three nine three for
27:08
Speaker 2: zero zero one to request the guide Understanding Medicare Essential
27:12
Speaker 2: Questions Answered.
27:14
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
27:16
Speaker 1: registered investment advisor. Nothing in the ad or in any
27:19
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
27:22
Speaker 1: your own financial tax into state planning advisors before making
27:25
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
27:28
Speaker 1: advisory services.
27:30
Speaker 2: Peace from this time. Financial Times Yeah so, Financial Times
27:36
Speaker 2: says return to office mandate caused logistics chaos, and yeah,
27:41
Speaker 2: you're running into some different issues here depending on who
27:46
Speaker 2: you're talking to. There was the story that we covered
27:49
Speaker 2: about Amazon maybe a month or so ago, where they
27:52
Speaker 2: had this whole big return to office thing, and then
27:54
Speaker 2: they pushed it back because they realized they didn't have
27:56
Speaker 2: enough office space for all the people they were asking
27:58
Speaker 2: to return to the office. Likewise, i'll quote here from it.
28:03
Speaker 2: In Washington last week, for example, the US Navy civilian
28:06
Speaker 2: staff were asked to return to work full time from
28:08
Speaker 2: the city's Navy Yard, bringing what was expected to be
28:10
Speaker 2: seventeen thousand workers to the area. The Navy yard only
28:14
Speaker 2: has four four hundred and seventy three parking spots, according
28:17
Speaker 2: to the Washington City Council met that's problematic. So these
28:21
Speaker 2: are some of the things that you're trying to sort
28:24
Speaker 2: through on these things. And it's look, I believe entirely
28:31
Speaker 2: that most of these return to office mandates are being
28:33
Speaker 2: put in place by companies that want to shed headcount
28:36
Speaker 2: without having to go through a layoff process. And the
28:39
Speaker 2: further we've gone, the more convinced of that that I am,
28:42
Speaker 2: just because you're seeing from other companies that hey, they're
28:44
Speaker 2: starting to. You know, you're starting to see some layof
28:46
Speaker 2: announcements popping up here and there as companies are trying
28:49
Speaker 2: to get a little bit leaner. But obviously when you're
28:53
Speaker 2: doing layoffs, you have to pay severance when you are
28:56
Speaker 2: forcing someone to return to office if they're like, no,
28:58
Speaker 2: I'm not going to and then they go look somewhere
29:01
Speaker 2: else and get another job or just you know, quit,
29:04
Speaker 2: and you're not having to pay severance in that situation.
29:07
Speaker 2: So I think that's that's the crux of what we're
29:11
Speaker 2: seeing here, is companies wanting to shed headcount without going
29:14
Speaker 2: through layoffs, and the data is kind of starting to
29:17
Speaker 2: back that up as well.
29:18
Speaker 3: I think it definitely is. And as a result of
29:21
Speaker 3: these influx of people coming back to the different offices,
29:24
Speaker 3: you've seen a lot of different buildings from Amazon and
29:28
Speaker 3: others out there having to delay the full implementation of
29:31
Speaker 3: everyone coming back to make sure that there's enough desks
29:34
Speaker 3: and parking spaces and everything else to accommodate people coming
29:38
Speaker 3: back to the office. So interesting to see how long
29:42
Speaker 3: this continues for. But I would imagine a couple other
29:45
Speaker 3: companies will take this in their playbook two and throw
29:48
Speaker 3: it out there.
29:49
Speaker 2: Let's take a quick break. When we return, we'll do
29:51
Speaker 2: a little bit of stack Roulette.
29:55
Speaker 1: Miss any of the show. Catch up and your convenience
29:57
Speaker 1: by visiting Financial Exchange show dot com and clicking the
30:00
Speaker 1: on demand icon, where you'll find all of our interviews
30:03
Speaker 1: in full showers. This is your home for the latest
30:06
Speaker 1: business and financial news in New England and around the country.
30:10
Speaker 1: This is the Financial Exchange Radio Network. Find daily interviews
30:15
Speaker 1: and full shows of the Financial Exchange on our YouTube page.
30:18
Speaker 1: Like us on YouTube and get caught up on anything
30:21
Speaker 1: and everything you might have missed. This is the Financial
30:24
Speaker 1: Exchange Radio Network.
30:31
Speaker 4: The Financial Change is a proud partner of the Disabled
30:33
Speaker 4: American Veterans Department of Massachusetts. By making a donation, you
30:38
Speaker 4: can support the Veteran Advancement Program, which offers permanent and
30:42
Speaker 4: transitional affordable housing to veterans and their dependents. The DAVA
30:46
Speaker 4: Massachusetts is the only DAV department in the country to
30:49
Speaker 4: lead a veterans housing initiative for single vets and those
30:54
Speaker 4: with families. Visit DAV five K dot Boston to make
30:58
Speaker 4: a donation today. Make no for this year's five K
31:01
Speaker 4: to be held on.
31:02
Speaker 3: Saturday, November eighth.
31:04
Speaker 4: That's dav five k dot Boston, Paul, what have you got.
31:08
Speaker 2: For me for stack Roulette?
31:10
Speaker 3: Apple is unveiling a cheaper iPhone sixteen E, powerful enough
31:15
Speaker 3: to run AI. They will be later this month retailing
31:18
Speaker 3: this iPhone sixteen E, which will retail for six hundred
31:22
Speaker 3: bucks a month. It will not have a home button
31:25
Speaker 3: or a fingerprint sensor. Instead, it's going to use the
31:28
Speaker 3: Apple face ID scanner, and also it will have Apple's
31:33
Speaker 3: eighteen chip, which is used in the iPhone sixteen miles.
31:37
Speaker 3: If you look at Apple and where they've gone to
31:40
Speaker 3: start this year, there's been some concerns regarding their growth
31:43
Speaker 3: in China. Really, Chinese smartphone consumers have been looking more
31:48
Speaker 3: domestically and less spending to buy Apple iPhones. In general.
31:52
Speaker 3: For the December quarter, Apple's iPhone sales were down about
31:55
Speaker 3: one percent on an anile basis. They're still selling, you know,
31:58
Speaker 3: seventy billion dollars worth of phones over that period of time,
32:02
Speaker 3: but it's been difficult for them to innovate, to find
32:07
Speaker 3: sort of any sort of appetite for these these new
32:09
Speaker 3: products out there and providing a lower cost option, you'd
32:12
Speaker 3: hope if your Apple allows for access to some more
32:16
Speaker 3: consumer conscious, cost conscious people out there.
32:20
Speaker 4: See, I've been kind of monitoring this SE announcement because
32:23
Speaker 4: it's been three years since they came out and announced
32:26
Speaker 4: an SE model, and this new one that they just
32:28
Speaker 4: announced about an hour ago is one hundred and seventy
32:31
Speaker 4: dollars more than the previous SE model five ninety nine.
32:35
Speaker 4: I'm in the market for a new phone, have been
32:37
Speaker 4: because this one's failing to connect in terms of LTE
32:41
Speaker 4: for some reason. Stupid but for five ninety nine, Like
32:46
Speaker 4: that makes me want to get the iPhone sixteen just
32:49
Speaker 4: for seven ninety nine or two hundred dollars more, Like,
32:51
Speaker 4: I don't get it, Like I'll just spend the extra
32:54
Speaker 4: two hundred bucks to get a much better phone at
32:56
Speaker 4: seven ninety nine, right reasonable?
32:59
Speaker 3: Or is that just me?
33:00
Speaker 1: No?
33:00
Speaker 2: I think it's a question. And look, maybe that's part
33:03
Speaker 2: of the theory behind how they're pricing this is all right,
33:08
Speaker 2: it's not cheap enough that there's gonna be much demand,
33:11
Speaker 2: and people instead are like, fine, I'm just gonna move
33:13
Speaker 2: on and get like the the other one instead of
33:15
Speaker 2: looking for something.
33:16
Speaker 4: Else, Just get the normal one. Yeah, yeah, Like four
33:18
Speaker 4: nine is a better price point, Yeah.
33:22
Speaker 2: Yeah, they get expensive in a hurry, they do. Uh,
33:26
Speaker 2: KFC is moving its US headquarters from Kentucky to Texas.
33:31
Speaker 2: I got a problem with this. If you have a
33:35
Speaker 2: state in the name of your company, you should be
33:38
Speaker 2: legally required to be based in that state.
33:42
Speaker 3: Fair, I don't think.
33:43
Speaker 2: I don't think that's too much to ask. You know,
33:47
Speaker 2: it's California. Pizza Kitchen should not be based in Minnesota.
33:52
Speaker 2: Now it's not. But like again, if if you have
33:57
Speaker 2: is it. I know that we all know that these
33:59
Speaker 2: are like big multinational conglomerates in they Audiata. But isn't
34:02
Speaker 2: it kind of dishonest to call yourself Kentucky Fried Chicken
34:05
Speaker 2: if you're based in Texas? They you know, Texas Roadhouse,
34:12
Speaker 2: don't know where it's based, probably not Texas.
34:17
Speaker 3: It's a reasonable point. I'm not gonna beat you up
34:19
Speaker 3: for it.
34:19
Speaker 2: I will say, where's Texas Roadhouse headquarters?
34:25
Speaker 3: Louisville, Kentucky.
34:27
Speaker 2: What are we doing here? So Texas Roadhouse is now
34:33
Speaker 2: based in Kentucky and Kentucky Fried Chicken is now based
34:36
Speaker 2: in Texas. We're in the upside down and we don't
34:40
Speaker 2: even know it. Like, this is a real problem. I'm
34:43
Speaker 2: saying this kind of jokingly, that's crazy, but it's also like,
34:48
Speaker 2: what are we doing here at this point? Like there's
34:52
Speaker 2: there's so much noise in advertising and branding and everything,
34:56
Speaker 2: and I don't know this. This isn't well with me,
35:00
Speaker 2: and I'm I'm very pro KFC. I'm very pro KFC,
35:05
Speaker 2: even though, to be fair, not my favorite fast food
35:08
Speaker 2: chicken place. Either of you guys got you know, kind
35:11
Speaker 2: of top top names on that list specifically for fried chicken.
35:15
Speaker 4: Ummm, not really, no, I'd go to a local place
35:19
Speaker 4: in my town that's not like a fast food place
35:21
Speaker 4: or anything.
35:21
Speaker 2: Let me ask you, guys, have either of you ever
35:24
Speaker 2: eaten at a Crispy Crunchy chicken?
35:26
Speaker 3: I've never even heard of it, Chuck, I'm glad to
35:29
Speaker 3: hear that.
35:29
Speaker 2: Well, actually I'm not. I'm kind of sad for you.
35:32
Speaker 2: So Krispy Crunchy their entire business model is that they
35:35
Speaker 2: basically co locate in gas stations or other like like
35:43
Speaker 2: seven eleven type places, yeah, convenience stores. And I first
35:47
Speaker 2: went to one maybe four or five years ago. And
35:49
Speaker 2: the chicken is huge. It is juicy, it is fresh
35:53
Speaker 2: and obviously like fried and nicely breaded.
35:56
Speaker 1: It.
35:56
Speaker 2: Actually, if you look at it. They're like Michelin stars
36:01
Speaker 2: chefs who praise Crispy Crunchy chicken as being like some
36:04
Speaker 2: of the best fried chicken they've ever had.
36:07
Speaker 3: Is there a reasonable Northeast presence?
36:10
Speaker 2: A couple of there's a bunch of the Northeast.
36:12
Speaker 3: Actually it's one in Braintree.
36:14
Speaker 2: There there are more than you think, believe it or not.
36:18
Speaker 2: Krispy Crunchy is spelled with ks, so you gotta make
36:22
Speaker 2: sure it's crispy with the K and crunchy with a K,
36:24
Speaker 2: which again we'll get We'll talk about the spelling you
36:28
Speaker 2: know later. But uh, yeah, so that there are quite
36:31
Speaker 2: a few throughout the Northeast. There's again just looking you know,
36:35
Speaker 2: kind of in the Boston area. There's one in Wilmington, Peabody, Uh,
36:39
Speaker 2: a couple in Salem Stone them. Then you get up
36:42
Speaker 2: into New Hampshire, there's one in Plastow, there's one.
36:45
Speaker 3: In Yeah, but they're within a store.
36:49
Speaker 2: They are so but they are absolutely fantastic.
36:52
Speaker 3: And so these look like they're competing right against KFC.
36:55
Speaker 3: Just skimming through this menu and everything else there, Yeah,
36:58
Speaker 3: they're head to head right against them.
36:59
Speaker 2: Yeah, what I I can tell you for like the
37:01
Speaker 2: average person looking at a Krispy Crunchy meal, you don't
37:06
Speaker 2: need that much. Like a two piece is probably good
37:09
Speaker 2: for most people because the pieces are huge. They also
37:13
Speaker 2: come with these honeybiscuits that are quite delicious, and you
37:17
Speaker 2: get to pick a side as well. And if if
37:21
Speaker 2: you haven't tried a Crispy Crunchy chicken, all I'm saying
37:25
Speaker 2: is you're missing a little bit of a hidden gem.
37:27
Speaker 3: Wow.
37:28
Speaker 2: You know you don't go to a gas station to
37:31
Speaker 2: get your swordfish, but your fried chicken. Krispy Crunchy. They
37:36
Speaker 2: do a good job. I gotta tell you.
37:39
Speaker 3: I can't believe I haven't heard them. Twenty six hundred
37:41
Speaker 3: locations across forty seven It's.
37:42
Speaker 2: A fascinating business. Mind like, they own no real estate,
37:45
Speaker 2: they have no footprint of their own. It's all co
37:48
Speaker 2: locations within gas stations or convenience stores.
37:51
Speaker 3: Huh interesting.
37:54
Speaker 2: I couldn't recommend them highly enough. So the more you
37:57
Speaker 2: know Krispy Crunchy Chicken with with k's taking a look
38:02
Speaker 2: at markets really boring day. The Dow is down ninety
38:06
Speaker 2: seven points, the SMP's up for the Nasdaq's down too.
38:10
Speaker 2: That's the reason why we didn't talk much about markets today.
38:12
Speaker 2: They're not really doing much. Quick break here for the
38:14
Speaker 2: rest of the day. We'll see you tomorrow on the
38:16
Speaker 2: Financial Exchange