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Middle East Conflict Pushes Oil Markets Back to the Brink · The Financial Exchange Show

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Speaker 2: I hope everyone had a great weekend. It's Chuck, Mike,
1:22
Speaker 2: and Tucker with you here. And as we kick things
1:25
Speaker 2: off top story, things are getting a little bit dodgy
1:30
Speaker 2: in the Middle East to get and by a little
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Speaker 2: bit dodgy, I mean it's a real mess. And you know,
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Speaker 2: I here's the thing I have. I have this problem, Michael.
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Speaker 2: We know I have this problem where I what happens
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Speaker 2: is I occasionally get thoughts in my head and I
1:55
Speaker 2: can't get rid of them. And the one that's been
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Speaker 2: in my head since Mark this year is that it's
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Speaker 2: just tough for me to figure out how this situation
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Speaker 2: resolves quickly to the satisfaction of all parties involved. And
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Speaker 2: I think that's the problem. Is like, could you get
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Speaker 2: a situation that resolves in the Middle East to the
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Speaker 2: satisfaction of all parties involved? Yes? Can it happen quickly?
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Speaker 2: I don't think so. Can you get a situation that
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Speaker 2: resolves quickly? Yes you can? Can it keep everyone involved happy?
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Speaker 2: I don't think it can. And so I think you
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Speaker 2: can have one of those two things, but not both.
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Speaker 2: And here's what I mean by this is it's pretty
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Speaker 2: clear after you know, ten days of pretty intense air
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Speaker 2: strikes from the US, pretty intense ballistic missile and drone
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Speaker 2: strikes from Iran, that the sides view the Strait of
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Speaker 2: hormuves very differently and the idea of an open Strait
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Speaker 2: of Hormus very differently. Yes, and so the only way
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Speaker 2: that the United States changes Iran's mind is probably going
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Speaker 2: to take years, billions of dollars, and hundreds of thousands
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Speaker 2: of US troops. I don't think you can air strike
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Speaker 2: your way to changing the Iranians' minds. I know this
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Speaker 2: because we've tried to for the last five months and
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Speaker 2: it hasn't worked. It has been five months, it's been
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Speaker 2: five months, been almost six now, so it hasn't worked.
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Speaker 2: I also know that the Iranians the only way that
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Speaker 2: they can change the Americans' minds is by making this
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Speaker 2: conflict so utterly painfully, either economically or physically, that we say, okay,
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Speaker 2: we're never gonna do this again. And we're not there yet.
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Speaker 2: So I get to this place where it's kind of like,
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Speaker 2: I don't really know what anyone expects, but I don't
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Speaker 2: think it's what I personally still think is out there,
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Speaker 2: which is Hey, the levers to pull in order to
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Speaker 2: inflict the maximum potential pain on your adversary, which is
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Speaker 2: what these which is what the countries are trying to do.
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Speaker 2: It's a much easier pull for Iran to get there
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Speaker 2: than the United States. I'm not saying that Iran will
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Speaker 2: like win militarily, but when you think about this from
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Speaker 2: a strategic perspective, to inflict a ton of pain on
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Speaker 2: the United States, Iran has to what make gas prices
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Speaker 2: really expensive?
4:46
Speaker 3: Right?
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Speaker 2: Yeah, And basically all of us sitting here at home
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Speaker 2: aren't willing to put our butts on the line to actually,
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Speaker 2: you know, put our money where our mouth is. We'll say, yep,
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Speaker 2: that's enough because look, if we're being honest, like that's
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Speaker 2: that's who I am. I'm not in the military. I
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Speaker 2: didn't sign up for anything. I'm not a tough guy
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Speaker 2: like I'm not. On the other hand, you say, okay,
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Speaker 2: what is it going to take in order to get
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Speaker 2: you know, Iran to fully capitulate. It's not air strikes
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Speaker 2: like we've been doing that. We're still here again, like you,
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Speaker 2: I don't. I don't think it's false to say that
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Speaker 2: the Iranian military is a shell of what it used
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Speaker 2: to be, sure like used to like from a tactical perspective,
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Speaker 2: you have complete, you know, dominant, so you can do
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Speaker 2: like a ton of things that you want to do
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Speaker 2: from the air. It hasn't changed what Iran is still
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Speaker 2: able to do strategically, which is traffic through the straight
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Speaker 2: offore moves back down to a big fat goose egg,
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Speaker 2: you know. In the last few days, like there's basically
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Speaker 2: nothing flowing through there. You are seeing production being shuttered
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Speaker 2: again in a number of countries that had spoiled up previously,
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Speaker 2: tanker loadings or stuf like this is you know what
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Speaker 2: you're seeing, And so really like the question that you
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Speaker 2: got to ask on this is, hey, what's the path
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Speaker 2: to you know, the United States getting what it wants
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Speaker 2: out of the strait of horror moves now? And it's
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Speaker 2: tough to see that without the US either so significantly
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Speaker 2: escalating or I really don't see another path other than that.
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Speaker 2: And I'm I'm not sure that we are prepared as
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Speaker 2: a society to do that. Yeah, I'm not. I'm not
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Speaker 2: either checking is anyone sitting here like pounding the table
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Speaker 2: for like, hey, let's let's go send, let's go send
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Speaker 2: some troops into Iran. Doesn't seem like it. No, And
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Speaker 2: if you are on the like pounding the table for that,
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Speaker 2: are you backing it up with anything? You know, Like,
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Speaker 2: I'm just I'm not someone who can be like, yes,
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Speaker 2: we need to do this militarily when I'm not willing
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Speaker 2: to sacrifice anything for it. And if I'm being on
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Speaker 2: like I'm not, I'm here, I'm not in the Middle East.
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Speaker 4: So I'm trying to think of what what's new and
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Speaker 4: unique to say about this situation, because frankly, you know,
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Speaker 4: for anyone listening, it probably seems a bit like groundhog Day.
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Speaker 2: We seem to be right.
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Speaker 4: Back where we were a couple of months ago. Three
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Speaker 4: US service members are dead. We are, I'm correct about that,
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Speaker 4: right after the most recent weekend.
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Speaker 2: It's unclear if it's three or four, but it's in
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Speaker 2: the single digits.
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Speaker 4: Yeah, it seems very much like we are back on
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Speaker 4: the path of blockade, no real product moving through the strait,
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Speaker 4: at least for the time being. I think what has
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Speaker 4: left people a little bit perplexed has been oil prices
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Speaker 4: that dropped so dramatically. We were always perplexed how they
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Speaker 4: didn't get even higher to begin with and yet you know,
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Speaker 4: gasoline refined products have not moved in any meaningful way.
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Speaker 4: And we talked a bit about this on the program
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Speaker 4: last week. But there's a few things that I think
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Speaker 4: are worth mentioning that don't have to do directly with
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Speaker 4: Iran right now.
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Speaker 2: One would be.
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Speaker 4: The amount of refined product capacity that is no longer
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Speaker 4: coming out of Russia due to Ukrainian strikes within Russia.
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Speaker 2: Yeah, the update that I actually saw this morning is
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Speaker 2: fifty five percent of Russian oil refinery capacity is offline,
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Speaker 2: so over half.
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Speaker 4: You know, not that Russia was the biggest supplier out there,
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Speaker 4: but any meaningful shift there makes a difference. Chinese refined
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Speaker 4: capacity is way down for reasons that we can only
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Speaker 4: really guess at, but they haven't been importing nearly as
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Speaker 4: much oil as they were prior to the events in Iran,
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Speaker 4: and so it follows that perhaps their exports of refined
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Speaker 4: products would follow the decline in imports. And then finally,
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Speaker 4: there's a bunch of refined capacity that can't be operating
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Speaker 4: right in the Middle East due to the conflict in Iran.
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Speaker 2: And so day you've got somewhere in the ballpark between
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Speaker 2: Russia where You've got like four and a half to
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Speaker 2: five million barrels a day of refinery capacity offline. Middle
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Speaker 2: East is like three, China's like four to five. So
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Speaker 2: you got somewhere in the ballpark like twelve to fourteen
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Speaker 2: million barrels a day of refinery capacity that's offline worldwide. Right,
9:19
Speaker 2: And so we.
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Speaker 4: Again seem to be playing a game of checking with
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Speaker 4: theiron here in terms of who's going to inflict a
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Speaker 4: whole lot of pain and how much pain is the
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Speaker 4: United States and the rest of the globe willing to
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Speaker 4: accept for some sort of negotiated settlement here, because again
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Speaker 4: without without change here, a few things happened. One, gas prices,
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Speaker 4: diesel prices again go through the roof. But more concerningly,
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Speaker 4: we were on the precipice of genuine shortages of refined products.
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Speaker 4: The President said, So, so you know, it's not like
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Speaker 4: we ma logically resolved that with you know, two weeks
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Speaker 4: of the strait being twenty percent open.
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Speaker 2: Oh, we'll give like four. It was about four about
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Speaker 2: four weeks, you know, like four weeks, and we had
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Speaker 2: like good flows coming out at least, so like it's
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Speaker 2: it's given us a little bit of an on water cushion.
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Speaker 2: That's that's come out.
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Speaker 4: But I think, you know, a reminder that China probably
10:24
Speaker 4: can't curb their imports forever. They've been doing it since
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Speaker 4: the outbreak of war. They're not going to do it forever.
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Speaker 4: And so there's a lot of different factors. You know,
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Speaker 4: the United States has already pretty much drained its spr
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Speaker 4: We're not going to be able to continue to supply
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Speaker 4: the globe with extra oil. And so we again now
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Speaker 4: sit here in this position of where where might this
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Speaker 4: go next? And how close to shortages are we?
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Speaker 2: And again when when you talk about like, look, why
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Speaker 2: does each side need to inflict you know, X amount
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Speaker 2: of pain? Well, a couple of things like if you're
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Speaker 2: looking at okay, what's gonna get the US to change course? Well, again,
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Speaker 2: the US hasn't really the only thing that got the
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Speaker 2: US to kind of change course. And by the way,
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Speaker 2: like the President, vice president, and Secretary of State all
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Speaker 2: said as much, Yeah, oil inventories, we're getting towards dangerous levels.
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Speaker 2: In mid June, President Trump said, yep, we're about four
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Speaker 2: weeks away from you know, running out of you know,
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Speaker 2: any surplus that we had. Okay, so like we we
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Speaker 2: know that when you talk about Iran. Look, it's a
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Speaker 2: case where you don't even know if ron Like I
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Speaker 2: don't even think the two sides trust each other right now, Yeah,
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Speaker 2: Like you don't even know if the two sides really
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Speaker 2: want to like get in a room together and be like, oh,
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Speaker 2: like sure, let's make a deal. Well, the last one
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Speaker 2: lasted three weeks and we're right back here, so like
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Speaker 2: the only thing that gets a wrong to the table
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Speaker 2: is not like that they trust you necessarily, but just
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Speaker 2: that they've experienced like so much pain that they're like, okay,
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Speaker 2: like we're done, and clearly airstrikes haven't done that. Right,
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Speaker 2: let just take a quick break. When we return, let's
12:07
Speaker 2: talk a little bit about what we've got coming up
12:09
Speaker 2: this week for earnings right after this.
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13:21
Speaker 2: Let's talk a little bit about what's coming this week
13:24
Speaker 2: from a earnings and data perspective. This is one of
13:29
Speaker 2: those times where again I think it's important to be honest,
13:32
Speaker 2: because if every week's the most important week, well then
13:35
Speaker 2: none of them are. This week not the most important week.
13:39
Speaker 2: If you have things to do other than watching financial
13:42
Speaker 2: markets and data, do them this week because the calendar
13:45
Speaker 2: this week sucks. There is nothing remotely interesting to me
13:51
Speaker 2: on the calendar. Here's what we have today. We've got
13:54
Speaker 2: a three and six month Treasury bill auction. Yeah, that
13:57
Speaker 2: really gets me excited. Tomorrow we get eightyp weekly employment data.
14:02
Speaker 2: It's interesting, not worth getting out of bed for, just
14:04
Speaker 2: on its own. Wednesday we get EIA crude oil not
14:09
Speaker 2: crude oil, but ea, you know, oil inventory data. Interesting,
14:13
Speaker 2: but we get that every week like it's it's fine,
14:16
Speaker 2: d like it's it's fine. We also have some We
14:20
Speaker 2: have a twenty year bond auction and a three month
14:24
Speaker 2: bond auction. Yeah.
14:26
Speaker 4: Who, here's where we're gonna be saved, Chuck. What there
14:28
Speaker 4: are eighty six s and P five hundred companies that
14:30
Speaker 4: are reporting earnings.
14:31
Speaker 2: Okay, great, there's three that matter.
14:33
Speaker 4: I agree, But there's always something fun, you know, I
14:36
Speaker 4: can to talk about when eighty six companies report there.
14:38
Speaker 2: Okay, here's can I give my earnings preview? Sure? Okay,
14:43
Speaker 2: here's my earnings preview. Tuesday, let's see General Motors reports
14:48
Speaker 2: they sold some cars. No one cared. Wednesday Alphabet reports interesting,
14:54
Speaker 2: we'll see what they're saying about AI. Yeah, Tesla reports
14:57
Speaker 2: they sold some cars, maybe more than people thought, maybe
14:59
Speaker 2: fewer than p thought. Doesn't matter. The stocks one point
15:01
Speaker 2: five trillion dollars no one cares at and t reported earnings.
15:06
Speaker 2: They still overpaid for HBO Max back when they bought it. However,
15:09
Speaker 2: many years ago. That was Moody's reports earnings. They're still
15:14
Speaker 2: upset they didn't nail the financial crisis and get those
15:17
Speaker 2: bond ratings right. Intel reports on Thursday. Okay, let's see
15:21
Speaker 2: if they're seeing like some real meat from their turnaround,
15:24
Speaker 2: like show us like what's going on in the earnings.
15:26
Speaker 2: I find that one interesting. Beyond that, it's it's just
15:30
Speaker 2: kind of like, do I.
15:31
Speaker 4: Believe we're the three that you care about? Because I
15:33
Speaker 4: only heard two. I heard Alphabet and Intel.
15:36
Speaker 2: Tesla's interesting because it's at least like a one point
15:38
Speaker 2: five trillion dollar one point two five trillion dollar company,
15:41
Speaker 2: so it does matter to the market. But like, okay,
15:46
Speaker 2: technically Comcast is in the S and P five hundred.
15:50
Speaker 2: Sure for all intents and purposes, it doesn't matter. And
15:55
Speaker 2: I'm saying there or a shareholder, I'm saying this, Do
15:58
Speaker 2: I do I subscribe to Comcast? Who do I use
16:01
Speaker 2: for doing? Why are you asking this? Don't you guys know?
16:06
Speaker 2: Don't you guys track this.
16:07
Speaker 3: I've seen your billing statements, Yeah you do.
16:10
Speaker 2: I don't know who I use for Internet at my house,
16:12
Speaker 2: but it might be them, So maybe I'm interested in
16:14
Speaker 2: When Tucker runs Chuck's credit every quarter, he notices that
16:18
Speaker 2: he's a Comcast. Don't worry about that PlayStation five.
16:20
Speaker 4: So then let's chat about the four point two trillion
16:23
Speaker 4: dollar company that's going to be reporting this week. Google's
16:26
Speaker 4: interesting tearing company, Alphabet, So they, I would stay, are
16:31
Speaker 4: very much a front runner in the entire AI space.
16:34
Speaker 2: You might not be able to claim them as one of.
16:35
Speaker 4: The top five model producers today, but whatever, They're all
16:38
Speaker 4: leapfrogging each other. They're spending a boatload of money on it.
16:42
Speaker 2: I guess. First question, is there anyone that's spending.
16:45
Speaker 4: More money than Alphabet on exploring artificial intelligence?
16:48
Speaker 2: Like maybe Microsoft, but they're up there. The only three
16:53
Speaker 2: that I think are really in contention are Alphabet, Microsoft,
16:56
Speaker 2: and Meta. Yeah, you know those are the three, and
17:00
Speaker 2: and Meta I think is very much. I wouldn't be surprised, Tucker,
17:03
Speaker 2: if you want to put it on the board. Meta
17:04
Speaker 2: is gonna be the first hyperscaler to cut Capex in
17:07
Speaker 2: the next six months, So you can pop that up there,
17:10
Speaker 2: just because Meta is at the point now where they've
17:12
Speaker 2: had a couple deals that they've announced to sell off
17:14
Speaker 2: excess capacity, and so I get the sense that they
17:18
Speaker 2: can do that for so long, but eventually they're gonna
17:20
Speaker 2: be like, okay, like we should probably stop building more
17:22
Speaker 2: data centers if we're just gonna sell the space off.
17:25
Speaker 4: So Alphabet has gone from the dominant search advertising company
17:31
Speaker 4: out there that has generated I mean, what sort of
17:34
Speaker 4: operating margins was that was Alphabet sitting on before all
17:38
Speaker 4: of the hyper scaling AI stuff. I mean, like some
17:40
Speaker 4: of that products are ninety percent plus profit margins, others
17:43
Speaker 4: are lower. But one of the if not the most
17:46
Speaker 4: profitable business in the history of the world decided to
17:50
Speaker 4: get into this new trade and has been going from hey,
17:53
Speaker 4: we have all these profits and we're buying back our
17:55
Speaker 4: own shares to twenty twenty six where they're turning around
17:59
Speaker 4: and saying, hey, we are taking all of our profits
18:02
Speaker 4: and investing in AI, and by the way, we're also
18:05
Speaker 4: going to sell some of our shares on the public
18:07
Speaker 4: market in order to fund more of that build out
18:09
Speaker 4: of AI. Most recent news their latest Gemini model that
18:15
Speaker 4: they intended to release last week they delayed. They delayed
18:19
Speaker 4: it because by their own mission it wasn't really good
18:22
Speaker 4: enough to be released. Yeah, So I don't think that
18:25
Speaker 4: there's much else about about Alphabet's earnings that matter.
18:29
Speaker 2: The piece that I'm interested in. They do have their
18:31
Speaker 2: their hardware that they've developed, the chips that they are running, yes,
18:34
Speaker 2: their stuff on. I always I think Alphabet is the
18:38
Speaker 2: TPUs the tensor processing units is what they call them,
18:41
Speaker 2: that they're using. Okay, show me, like, what kind of
18:45
Speaker 2: uptake are you getting on those aside from Anthropic who's
18:49
Speaker 2: been interested in procuring them? You know, is there something
18:52
Speaker 2: going on in the semiconductor space where you know they
18:56
Speaker 2: are a player now for certain uses? Okay, I'm interest
19:00
Speaker 2: to see that. The other thing not from an earnings perspective,
19:03
Speaker 2: but I gotta tell you, you're seeing waimos popping up all
19:06
Speaker 2: over the place. And if you want to talk about
19:09
Speaker 2: like what could be a major story for the future
19:12
Speaker 2: of Alphabet's earnings driverless tech, they seem to be right
19:16
Speaker 2: at the top of the heap, and I'm interested in
19:18
Speaker 2: when that maybe starts making a material impact in their earnings.
19:22
Speaker 2: It's not there yet. Let's take a quick break. When
19:26
Speaker 2: we return, we got Wall Streets, Wall Street, Watch Wall
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Speaker 3: Markets are mixed to again the week, with a modest
20:01
Speaker 3: rebound in tech. The energy sector seeing attention with an
20:04
Speaker 3: escalation and attacks between the US and Iran leading to
20:07
Speaker 3: more uncertainty with oil. Right now, the Dow is down
20:11
Speaker 3: about a third of a percent, SMP five hundred is
20:13
Speaker 3: up a quarter of a percent, Nasdaq up just over
20:16
Speaker 3: half a percent higher, RUSS two thousand is dipping mostly flat,
20:20
Speaker 3: Tenure treasurreeled is up three basis points at four point
20:23
Speaker 3: five to eight percent, and oil dipping mostly flat at
20:27
Speaker 3: the moment, trading at eighty two dollars barrel. Microsoft announced
20:31
Speaker 3: this morning it will deploy AMD Helios racks and its
20:34
Speaker 3: Azer data centers, joining Meta, Open AI and Oracle slated
20:38
Speaker 3: to ship later this year. AMD's Helios rax scale system
20:42
Speaker 3: is its most competitive move against Nvidia yet. AMD shares
20:48
Speaker 3: are up about four percent. Meanwhile, Domino's is up by
20:51
Speaker 3: three percent despite the pizza chain posting a second quarter
20:54
Speaker 3: earnings miss. The company reported a slightly better than expected
20:58
Speaker 3: revenue where its CEO said it had meaningful order count
21:01
Speaker 3: growth in both its delivery and takeout business.
21:04
Speaker 2: Elsewhere.
21:05
Speaker 3: Bone shares are off over one percent after CEO Kelly
21:08
Speaker 3: Ortberg told CNBC that the playmaker will need a couple
21:11
Speaker 3: more years to repair its finances before launching a new
21:15
Speaker 3: commercial jet. And SpaceX down nearly three percent after the
21:19
Speaker 3: rocket company announced it's moving its launch attempt or for
21:23
Speaker 3: its Starship rocket to Thursday after aborting last week's launch.
21:28
Speaker 2: Due to engine issues.
21:31
Speaker 3: I'm Tucker Silva and that is Wall Street.
21:33
Speaker 2: Watch. Well they have the check engine light pop up
21:38
Speaker 2: on the old rocket again.
21:39
Speaker 3: I think that's what it was.
21:40
Speaker 2: Yeah, yeah, you gotta take that thing into the dealer.
21:42
Speaker 2: They got they got to clear the code and then
21:45
Speaker 2: you can get your rocket back to Marrow. The door
21:47
Speaker 2: was a jar.
21:51
Speaker 3: Yeah, oh that needs a whole reset.
21:53
Speaker 2: Elon, you didn't fasten you a seat belt. It's gonna
21:57
Speaker 2: beep all the way to mos if you do that.
22:00
Speaker 2: Just put on your belt, put your belt, get your
22:02
Speaker 2: helmet on.
22:03
Speaker 4: Elon, why does this woman have this accident, when you accident?
22:07
Speaker 4: When she lives at Houston, Texas.
22:10
Speaker 2: She lives there now, Yeah, but she cat an amazing backstory.
22:14
Speaker 2: She comes from Everett. You know. That's that's that's she's
22:18
Speaker 2: in Houston via Everett. Got it? In any case, let's
22:21
Speaker 2: talk a little bit about the mag seven. This is
22:25
Speaker 2: interesting to me Wall Street Journal piece. Every day investors
22:28
Speaker 2: are over the mag seven and into New AI darlings great.
22:33
Speaker 2: Quite honestly, I don't care what retail investors are doing
22:35
Speaker 2: like it. It's not that they don't matter. It's just like, okay,
22:39
Speaker 2: like everyone's got a different way of measuring them, and
22:42
Speaker 2: like sometimes they're right, sometimes they're wrong. The last couple
22:45
Speaker 2: of years, they've knocked it out of the park. But
22:47
Speaker 2: here's something that I do want to point out. Since
22:50
Speaker 2: June twenty fifth, which is almost a month ago. Do
22:55
Speaker 2: you know what the S and P five hundred has
22:57
Speaker 2: done since then? Michael? Sorry, since what date June twenty fifth?
23:01
Speaker 2: This year? Yes? Nothing down, it's up one point two
23:04
Speaker 2: two percent. Okay, uh, do you know since June twenty
23:09
Speaker 2: fifth what the S and P technology sector has done?
23:16
Speaker 2: Plus one percent? It's down four point eight seven percent.
23:19
Speaker 2: Do you know what the Mag seven have done since then?
23:22
Speaker 2: Down six, up nine and a half. Exactly, you got
23:27
Speaker 2: fooled by what you thought was gonna happen. So here
23:30
Speaker 2: here's the deal. The Mag seven haven't been great all year.
23:34
Speaker 2: Uh they actually are like basically flat. Max Seven's up
23:37
Speaker 2: one and a half percent this year, But in the
23:40
Speaker 2: last three and a half weeks they have been knocking
23:42
Speaker 2: the cover off the ball, which is why it's perplexing
23:45
Speaker 2: to me that the Wall Street journals like, oh, the
23:47
Speaker 2: Mag seven's over. They're dead, Like the Mag seven has
23:51
Speaker 2: been over, but now they're showing signs of life because
23:53
Speaker 2: it's the classic like Yogi bearra thing. Oh, like that
23:56
Speaker 2: place is too crowded, nobody goes there anymore, Like, Okay,
24:00
Speaker 2: tell me what you really think.
24:01
Speaker 4: So I guess I have a question about investors because
24:04
Speaker 4: I don't personally know any of these You know what
24:07
Speaker 4: the Wall Street Journal describes as almost like drooling with
24:10
Speaker 4: enthusiasm Mag seven fans. It seems to me that instead
24:14
Speaker 4: it was a way of the financial media describing what
24:17
Speaker 4: were the market leaders for several years in the tech
24:20
Speaker 4: sector and creating this Mag seven identity and ETFs that
24:25
Speaker 4: surrounded it.
24:27
Speaker 2: Am I getting that roll.
24:28
Speaker 4: Because genuinely, I don't know anybody who's like, oh man,
24:31
Speaker 4: my mag seven is what I'm going to live and
24:34
Speaker 4: die by. I generally get the sense that people are
24:37
Speaker 4: excited that the stock market is up, and they care
24:41
Speaker 4: a little bit less about you know, which Magnificent seven
24:44
Speaker 4: are driving that.
24:45
Speaker 2: I think there's a couple of things to untangle there.
24:49
Speaker 2: The first is there are two members of the mag
24:51
Speaker 2: seven that have huge retail followings, Tesla and Nvidia. Yeah
24:56
Speaker 2: cute because for two actually no, for one very simple reason.
25:02
Speaker 2: Both of them had massive one to three year run ups.
25:05
Speaker 2: Yeah okay, And there's nothing that it excites any human
25:09
Speaker 2: being more than making like six a twenty bagger in
25:15
Speaker 2: the stock market. Maybe some people get excited about other stuff,
25:18
Speaker 2: but like if you take like ten grand and turn
25:20
Speaker 2: into two undred grand, you're gonna be like, wow, like
25:22
Speaker 2: this is awesome, like that I should do this every
25:25
Speaker 2: I've never done that, but I'm sure it feels great,
25:27
Speaker 2: So I get that. I also understand if you talk
25:31
Speaker 2: about again retail stocks, Apple, Yeah, it's got like it's
25:36
Speaker 2: not the same as those other ones, but there's an
25:38
Speaker 2: interested retail following for Apple, I'm not really sure that
25:42
Speaker 2: that exists for Microsoft, Amazon meta or alphabet. Like, I
25:48
Speaker 2: don't really know many Mark Zuckerberg stands out there. I
25:52
Speaker 2: don't really know many people that are like at this point,
25:57
Speaker 2: like the biggest fans of Amazon the stock.
26:01
Speaker 4: Yeah, I just don't think you're gonna find many heartbroken
26:05
Speaker 4: mag seven fans this year I portfolio hit.
26:10
Speaker 2: Maybe. Now here's the counter to this is about hang on,
26:15
Speaker 2: I go. I want to make sure I get the
26:16
Speaker 2: date right here we go. Yep. About three years ago,
26:22
Speaker 2: mid April of twenty three, an ETF company called round
26:27
Speaker 2: Hill launched a magnificent seven ETF. Yeah. Do you know
26:30
Speaker 2: how much is in there right now? No, four point
26:33
Speaker 2: three billion dollars is sitting in there at the moment.
26:36
Speaker 2: I have to imagine that the vast majority of that
26:40
Speaker 2: is retail held. I don't think there are too many
26:43
Speaker 2: professional investment firms that are holding this. There might be some,
26:48
Speaker 2: like I'm not saying that there aren't any there, there
26:49
Speaker 2: might be some, but I'm guessing that a decent chunk
26:52
Speaker 2: of that is retail. So I do think there's probably
26:56
Speaker 2: like somewhere in the range like three to five billion
26:58
Speaker 2: dollars in retail like specific mag seven fans because they
27:02
Speaker 2: bought the ETF. I think that the piece that is
27:07
Speaker 2: interesting to me here is that everyone now is talking
27:12
Speaker 2: like the Magnificent seven is dead, when it's actually been
27:16
Speaker 2: one of the best corners to park your money in
27:18
Speaker 2: for the last three and a half weeks. Just three
27:20
Speaker 2: and a half weeks make a year. Doesn't mean that
27:22
Speaker 2: the trend's really reversing, No, but when the sentiment is
27:27
Speaker 2: going in a different direction than what the price is
27:29
Speaker 2: going in, that makes me interested.
27:32
Speaker 4: I'll also just say that one of the defining features
27:34
Speaker 4: of the US DOC market for let's see the last
27:39
Speaker 4: twenty years, I'll make the case has been the lack
27:43
Speaker 4: of tech leadership turnover That was a defining tech turner.
27:47
Speaker 4: Turnover was a massive defining feature of markets throughout What
27:51
Speaker 4: do you mean by that? Meaning go take a look
27:54
Speaker 4: at the largest tech companies in nineteen eighty and all
27:58
Speaker 4: but Microsoft had turned over. By nineteen ninety and since
28:02
Speaker 4: mitchew thousands, there was pretty much no turnover in that leadership.
28:05
Speaker 4: And so if you're suddenly betting against Max seven, not
28:08
Speaker 4: only are you betting that you know those aren't the
28:12
Speaker 4: leaders but it's going to reverse the trend of the
28:14
Speaker 4: last twenty years that these giant tech behemoths that have
28:17
Speaker 4: bought their way into dominance and have really cornered much
28:22
Speaker 4: of the technology sector are going to be upended by
28:25
Speaker 4: these others. And I'm I'm not sure I'm ready to
28:28
Speaker 4: get there, given how much lack of anti trust success
28:32
Speaker 4: there's been against them and how much they're pouring money
28:34
Speaker 4: into the latest and greatest stuff.
28:36
Speaker 2: Yeah, it will say. So, let's this is actually a
28:40
Speaker 2: great conversation to have in nineteen ninety four, and this
28:43
Speaker 2: is by revenue, So let's not do this by market cap,
28:48
Speaker 2: by revenue. Can you give me the five in terms
28:50
Speaker 2: of publicly traded companies ninety four? Nineteen ninety four, what
28:54
Speaker 2: are the five biggest publicly traded US companies by revenue?
28:59
Speaker 4: Berkshire No, Walmart, Yes, Walmart is number four, IBM, IBM
29:05
Speaker 4: is number six, just outside Oracle No Microsoft, No, Mike.
29:15
Speaker 2: Let me give you the top ten for ninety four,
29:16
Speaker 2: because this is this is a trip Man Number one,
29:20
Speaker 2: General Motors, number two, Fomo, Ford Motor Company. Number three.
29:28
Speaker 2: Exon Mobile It was really just x On that x
29:31
Speaker 2: On Mobile hadn't merged yet. Number four Walmart, number five,
29:37
Speaker 2: AT and T. Again, this is why these companies like
29:39
Speaker 2: used to mean something. Number six General Electric, number seven, IBM,
29:47
Speaker 2: number eight is the mobile side of Exon Mobile, number
29:50
Speaker 2: nine Sears. Sears is the number nine company by revenue.
29:55
Speaker 2: In nineteen ninety four, and we finished things up with
29:58
Speaker 2: Philip Morris. Let's go forward five years from there, nineteen
30:01
Speaker 2: ninety nine, so tech bubble is teching right. General Motors
30:05
Speaker 2: still number one. Walmart moves up to number two, Exon
30:07
Speaker 2: is number three, Ford's number four, GE number five, So
30:11
Speaker 2: you're still not feeling it there. But watch how things
30:13
Speaker 2: start to change on the bottom half of the top ten.
30:16
Speaker 2: IBM City Group creeps in AT and T, Philip Morris, Boeing,
30:24
Speaker 2: So you got a couple of new entrants there. Fast
30:26
Speaker 2: forward to two thousand and four. Again we're still going
30:28
Speaker 2: by revenue number one Walmart. Americans love their cheap stuff.
30:32
Speaker 2: Uh huh. Number two Exon Mobile mergers complete at this point. Okay,
30:37
Speaker 2: there you know out there at number two, GM and
30:40
Speaker 2: Ford are still three. Four GE is number five, Chevron, Conico, Phillips,
30:47
Speaker 2: City Group, AIG, IBM round out the top ten, So
30:50
Speaker 2: you're still not feeling it. There. Let's go to two
30:53
Speaker 2: thousand and two thousand and nine's I'm gonna move a
30:57
Speaker 2: couple of years past that, just because O nine was
30:59
Speaker 2: kind of a mess. Let's go twenty eleven, twenty eleven,
31:03
Speaker 2: ex On Mobile, Walmart, Chevron, Conico, General Motors. Okay, so
31:07
Speaker 2: you're still, you know, very heavy in non tech. Berkshire,
31:12
Speaker 2: Hathaway gets in there. Then Fanny May, which became publicly
31:17
Speaker 2: traded at that point, Ford, HP, and AT and T.
31:22
Speaker 2: You're still not seeing tech there in twenty eleven. Let's
31:26
Speaker 2: go forward five more twenty sixteen, Walmart, far and away
31:30
Speaker 2: the top one. Berk's your Hathaway. Apple now is number three,
31:34
Speaker 2: after not being in the ten five years previous, now
31:37
Speaker 2: number three. Exon Mobile, McKesson, United Health, CVS, General Motors,
31:41
Speaker 2: AT and T. So Healthcare gets that push at that
31:44
Speaker 2: point as well. Yeah, makes sense. Twenty twenty. Do we
31:48
Speaker 2: want to go twenty twenty one? Sure, let's go twenty
31:50
Speaker 2: twenty one. Uh yeah, still a little two pandemic e
31:54
Speaker 2: for me. Let's go twenty three. Just I'm trying to
31:56
Speaker 2: get away from like big things. Twenty three Walmart, Amazon, Apple,
32:00
Speaker 2: United Health, Berkshire, CVS, Exon Mobile, Google, McKesson, Amerisource Bergen.
32:09
Speaker 2: So really like these tech behemoths only got this big
32:14
Speaker 2: in the last five to seven years.
32:16
Speaker 1: Really it.
32:18
Speaker 2: I know it feels like they've been this way forever,
32:21
Speaker 2: but it's really since you call it eight to ten years,
32:23
Speaker 2: since twenty sixteen is when they've gotten this big. Microsoft
32:28
Speaker 2: is still not a top ten US publicly traded company
32:30
Speaker 2: by revenue in twenty twenty three. Now by market cap
32:34
Speaker 2: they are, because again they're growing faster than some of
32:36
Speaker 2: these But it's kind of interesting just to watch that develop.
32:40
Speaker 2: I know it feels like it's been this way forever,
32:43
Speaker 2: but it's really only like post twenty fifteen that we've
32:46
Speaker 2: gotten as tech heavy in the US as we are. Now,
32:49
Speaker 2: let's take a quick break when we return. Let's see
32:54
Speaker 2: we want to talk about volatility. No I, I wanna
32:56
Speaker 2: talk about the World Cup now that have just ended.
32:58
Speaker 2: Let's do that when we return.
33:00
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33:42
Speaker 2: So I remember very well May of twenty twenty six,
33:49
Speaker 2: and I remember the uh the stories that were being
33:53
Speaker 2: written in May of twenty twenty six. Oh no, one's
33:58
Speaker 2: gonna go to the World Cup games. These unsold tickets.
34:01
Speaker 2: I remember we covered another one on the show. Oh no,
34:04
Speaker 2: they want to keep the bars open an hour later?
34:08
Speaker 2: How are we ever gonna deal with it?
34:10
Speaker 1: Man?
34:11
Speaker 2: What are we gonna do?
34:12
Speaker 4: I didn't think that would be a travesty. I was
34:14
Speaker 4: suspicious of the price of tickets and the lack of sales.
34:18
Speaker 4: I was a bit suspicious that, you know, everybody was
34:22
Speaker 4: saying that alcohol sales were going to go through the roof.
34:24
Speaker 4: I wasn't sure that was going to happen. So I'll
34:27
Speaker 4: put myself in the wrong category on some of these things.
34:30
Speaker 2: Here's what I gotta say. Number one, I'll put this
34:33
Speaker 2: out to both of you. Name a better sporting event
34:39
Speaker 2: that you have ever seen in your life, not in
34:43
Speaker 2: terms of like the quality of like the final, the
34:45
Speaker 2: final was it was shine, but just in terms of
34:49
Speaker 2: overall enjoyment level and general funness, happiness and excitement ness.
34:55
Speaker 4: Yeah, you know, I have to go back to some
34:58
Speaker 4: of the championships from you know, the two thousands in
35:01
Speaker 4: the Boston area, and those are teams that you were
35:03
Speaker 4: involved in precisely, and even there it's not the same
35:07
Speaker 4: because here you had guests coming to the United States
35:13
Speaker 4: excited about just the mere event of the World Cup
35:16
Speaker 4: and whether or not their team even won. The ability
35:19
Speaker 4: to just be there and pretty part of the experience.
35:21
Speaker 4: I mean, no, I don't think there's anything that quite compared.
35:24
Speaker 2: To the last five weeks in the look. I know
35:26
Speaker 2: I'm a soccer fan, and I know that you know,
35:27
Speaker 2: not everyone out there is, but I gotta tell you,
35:31
Speaker 2: just like from you know, hanging out with a bunch
35:34
Speaker 2: of Scots in Boston to watching you know, Japanese guys
35:39
Speaker 2: riding like the mechanical bulls in Houston, you got the
35:42
Speaker 2: South Koreans and Mexicans doing tequila shots together, like everything
35:47
Speaker 2: about it has just been exactly what you want out
35:49
Speaker 2: of a sporting event, which is a bunch of people
35:52
Speaker 2: coming together because they want to have fun and they
35:54
Speaker 2: love the sport, and that's what it's been. It's just
35:57
Speaker 2: been a ton of fun for the last five week weeks.
36:00
Speaker 2: That also has given huge boost to local economies. Talk
36:04
Speaker 2: to Boston bars just as an example, the Scots drank
36:07
Speaker 2: them dry. Literally, Yeah, okay, Boston, they didn't have to
36:11
Speaker 2: stay open till three because they had no more beer.
36:13
Speaker 4: Boston saw the largest percentage increase in alcohol sales of
36:16
Speaker 4: any city across the country.
36:18
Speaker 2: Surprising. Yeah, the love affair between the city of Boston
36:22
Speaker 2: and the country of Scotland. It's pretty serious. Like there
36:26
Speaker 2: are going to be so many Boston kids named like
36:31
Speaker 2: nine months from now after Scottish people like you are
36:35
Speaker 2: going to have like so many like William Wallace Sullivan's
36:39
Speaker 2: that are born in Boston this fall.
36:42
Speaker 4: I don't mean to be the the one just looking
36:46
Speaker 4: for bad news, but how many years before or months
36:48
Speaker 4: before we find out like how FIFA accidentally or intentionally
36:53
Speaker 4: bribed or stole a bunch of money from this World Cup.
36:56
Speaker 2: It seems like that bad news. That's that's part of
36:59
Speaker 2: the course. Here's the thing I understand what FIFA is.
37:03
Speaker 2: They are a horribly corrupt organization that I put in
37:07
Speaker 2: like my bottom three in terms of committee. FIFA, THEO,
37:12
Speaker 2: the IOC, and FIFA are kind of one two to
37:14
Speaker 2: be honest, like most of them share board members, so
37:16
Speaker 2: it's kind of one A and one B, and then
37:19
Speaker 2: I put the NCAA on like a whole different tier
37:21
Speaker 2: below in terms of you know, my love lost for them.
37:25
Speaker 2: But I think that ultimately it's something where you can
37:28
Speaker 2: untangle the crappiness of FIFA from just how awesome this was.
37:34
Speaker 2: And there are a ton of cities around the country
37:38
Speaker 2: that benefited from hosting this thing. It wasn't like the
37:41
Speaker 2: Olympics where you're like, oh, we shelled out all this
37:43
Speaker 2: money and it didn't benefit us. No, Like you can
37:45
Speaker 2: talk to any business owner in these cities and they're like, yeah,
37:48
Speaker 2: it was amazing for the last month.
37:50
Speaker 4: I think we can also say here in Boston that
37:52
Speaker 4: we've proven we can have nice things well not burn
37:55
Speaker 4: the city to the ground. We figured, which was a
37:57
Speaker 4: fear that I think a lot of people had in
37:59
Speaker 4: this city where they don't allow public consumption of alcohol
38:02
Speaker 4: or bars to be up until three am. And I
38:04
Speaker 4: think this was a nice event that proved the worst
38:05
Speaker 4: case scenarios. You put a bunch of traffic cones on statues.
38:08
Speaker 2: We figured out how to have some fun. It was good.
38:11
Speaker 2: It was really good. So it's great. Let's take a
38:17
Speaker 2: quick break. Our two's coming up next