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You need to understand this fact about interest rates · The Financial Exchange Show

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Speaker 2: Hour two of the Financial Exchange now in progress, and
1:16
as we kick off November, we've got stocks in the
1:20
green for your major US in disease. This in contrast
1:24
to October which actually finished down for the S and
1:26
P five hundred. I haven't looked at the down NASDAK
1:30
because who cares, didn't want to say it, but thanks
1:35
the Dow though today is up four hundred and seventy
1:37
three points, about one point one percent, the S and
1:39
P of fifty three about a little less than one percent,
1:43
and Nasdaq up one point two percent or two hundred
1:45
and seventeen points. So a little bit of a relief
1:47
rally after what was a rather future day for stocks yesterday.
1:51
I think that's probably the best way to describe it.
1:54
Ten year Treasury up five point seven basis points this
1:58
despite a weaker than expect did jobs report. Traders basically
2:02
saying nope, we're not paying any attention to that today.
2:04
That's kind of the message I'm getting at least. And
2:07
so you've got the ten year at four point three
2:09
four percent. That's likely going to push the thirty or
2:12
fixed rate mortgage up to around seven point one point
2:14
five and crazy. Yeah, we were at six one five
2:18
crazy a month and a half ago, so we had
2:21
seen nearly.
2:22
Speaker 3: A two percent decline in mortgage rates and then boom,
2:25
they're up one percent in the last month thirty days,
2:28
just right back up there. Yeah, realtors not really thrilled
2:32
at that, probably not.
2:33
Speaker 2: No Oil West Texas intermediaup ninety cents barrel to seventy
2:36
dollars sixteen cents, still floating right around that seventy mark.
2:39
The triple A national average four gas prices that is
2:43
continuing to slide though, down another nine tenths of ascent
2:47
to three twelve and two tenths of ascent. We got
2:50
a chance to get under three to ten over the weekend,
2:52
which is very exciting. You do have some states Texas
2:56
right now averaging two sixty six, Mississippi two eight. Those
3:02
are the lowest ones that I'm seeing out there. On
3:03
the other hand, highest gas price states Mike, Hawaii, California,
3:08
and Washington. California is still at four fifty five, Hawaii
3:12
at four fifty eight, Washington at four oh three.
3:15
Speaker 3: Back to interest rates for a moment. I think there's
3:17
a potentially good lesson in here. How many people did
3:20
we hear about? And from that said, I'm putting off
3:24
any big purchases like a car, a home until.
3:27
Speaker 2: The FED cuts rates.
3:28
Speaker 3: Well to the FED cuts rates are until after the election.
3:30
Speaker 2: How's that working out for you?
3:32
Speaker 3: If you did and you know you're eyeing that home
3:35
back in September October and you said, you know what,
3:37
I just can't pull the trigger on this. I want
3:39
to see if maybe commonly gives me that twenty five
3:41
thousand dollars first time home buyer credit. Well, you've eaten
3:45
all that up and more with the increase in interest
3:48
rates up over seven percent now, so again, politics matter,
3:54
but usually not for the reasons you think.
3:56
Speaker 2: And you can always refinance, yeah if if rates go down.
4:01
Let me tell you the best thing about thirty or
4:03
fixed rate mortgages. It is quite literally one way come.
4:07
It is rent control for homeowners with the ability to
4:13
change the contract if it moves in your favor.
4:16
Speaker 3: Right and only that direction.
4:19
Speaker 2: It's absolutely wild I steal. I don't know, well, I
4:24
do know why banks do this, but quite honestly, well,
4:28
can we explain why banks do this, Yes, because the
4:32
federal government covers them.
4:34
Speaker 3: Covers them, right, Not like the federal government comes in
4:36
and says, we will buy those mortgages off your balance
4:39
sheet and give you cash. Yeah, you go and issue
4:41
them because we believe that Americans they don't cover the
4:43
ones that they keep on their balance sheet.
4:44
Speaker 2: But yes, for the mortgage writers, who all they do
4:49
is yep, we underwrite it and then we sell it
4:51
off to someone else. Yeah, the federal government is taking
4:53
that risk. And so that's why they do it, is
4:57
because we've decided that the key to a healthy economy
5:01
is home ownership and home construction.
5:04
Speaker 3: Yep. And just but I just yeah, I just want
5:07
to make sure that was clear, because we tend to
5:11
sugarcoat and and say, oh, all government intervention is bad.
5:14
And I'll just say, the only reason you get a
5:15
thirty year fixed rate mortgage with the option to refinance down,
5:19
it's not free market. It's based on our government intervening
5:22
and saying we'll buy that stuff up. Otherwise that does
5:25
not exist.
5:25
Speaker 2: No, at least not at the rates that it currently.
5:28
It might still exist, it just it might be one
5:29
or two percentage points higher to be you know, like that.
5:32
Speaker 3: It might be nine percent otherwise. The reason if businesses
5:35
can't borrow this way, Yeah, I think they exactly. It's
5:39
uh yeah, no one goes to a business. Hey, do
5:42
you want a really long term loan that you can
5:44
get out of at any point if rates move lower?
5:47
Speaker 1: Oh?
5:47
Speaker 2: Sure, yeah, that's it sounds great.
5:49
Speaker 3: It's offered to like six companies Microsoft, Apple, basically the
5:53
ones that are more credit worthy of the United States government.
5:55
Those ones can do it. I was gonna say, like,
5:57
the US government doesn't even get this deal. They don't
6:00
homeowners are treated better than the US government. Not quite,
6:03
because the rates are a little higher, but not much. Yeah,
6:06
not much given the overall credit quality disparity that we see.
6:10
Speaker 2: Let's see. I want to talk a little bit about
6:11
oil here, because this is we're kind of a fascinating
6:15
juncture right now when it comes to energy prices. You've
6:19
got oil floating around right in the high sixties, low
6:21
seventies and can't really seem to get traction in either direction.
6:26
On one hand, you've got this idea that hey, there's
6:29
you know, economic malaise coming not just in the US
6:31
but around the globe, and so that's kind of capped
6:35
upside in the short term. On the other hand, you
6:38
got really low oil inventory levels domestically, and you still
6:42
have Middle East concerns that are out there, and so
6:45
it's kind of like, gee, well, how you know, every
6:47
time this thing starts getting cheap, something happens and you know,
6:49
kind of bounces off the sixty five level. So we've
6:52
been hanging out between you know, seventy five a barrel
6:54
and sixty five a barrel really for the last three
6:57
months or so now, since mid August, and I think
7:01
it's unclear exactly what direction we're going to move in next.
7:05
But we've got your big oil companies reporting earnings today
7:09
and Exceon and Chevron at least at this point saying, yeah,
7:13
this cheaper oil is impacting us simply because we're not
7:16
seeing as much flow through a volume you know, that
7:18
we would want to see, and where we are seeing it,
7:21
the margins aren't as good, and so yeah, it's not
7:24
it has not been a great quarter for our profits, right,
7:29
That's kind of what we're seeing there. But the thing
7:32
that's fascinating here is just the sheer amount of oil
7:36
that we are producing in the United States right now.
7:40
It's north of thirteen million barrels a day. It's forty
7:43
eight percent higher than Saudi Arabia. Let's put that like,
7:48
let's let's let's say that again, just because I think
7:51
oftentimes we're like, oh, we import all of our oil. Well,
7:55
the United States as of right now is producing forty
7:59
eight eight percent more oil per day than Saudi Arabia.
8:04
Speaker 3: And I think this is an important contextualization outside of
8:07
oil markets too. How many conversations have been had over
8:11
the last few years about well, we can't possibly change
8:16
to battery technology because look at all the rare earth materials,
8:19
where are we going to find them. They will never
8:21
be able to produce them domestically. We'll always be buying
8:23
from the Chinese. And the same things were said about
8:26
oil in the nineteen seventies. Yeah, and so I generally
8:31
find that when you put a market into something, you
8:37
find ways to get it. And that's the perfect example
8:40
here with oil. When you define a market, when you
8:42
have a free market price on something, if the market
8:44
determines that it's valuable, you'll go find it. It doesn't really
8:47
matter where it is. And here in the United States,
8:50
the innovation and changes you've seen in oil production in
8:53
the US are wild. I'm nowhere near an expert on
8:57
this subject. And you know, the ability to get the
9:00
oil out of the shale is fascinating engineering in and
9:05
of itself, not of finding that nobody actually wants to
9:07
go work in that industry, but it's a lot of
9:10
money to be made. Still wild in terms of the
9:14
development of the US oil industry.
9:15
Speaker 2: And I just want to read one paragraph from this
9:18
Bloomberg piece just because this stuff's fascinating, Like this is
9:22
it's wild. What you can do now? Conventional wisdom called
9:26
for drilling four wells into the ground and then horizontally
9:28
to access layers of oil soaked rock, a technical feet
9:31
perfected by the US shale industry. So already you're talking
9:34
about like horizontal drilling, which twenty years ago impossible. People like,
9:38
how do we do it? This is talking about a
9:41
company Mattador Resources, and how they were trying to drill
9:44
in this one area. The pot of land, though, was
9:46
too narrow, limiting each well reach and likely making them unprofitable.
9:52
So engineers tried a novel concept, a U turn. After
9:55
boring vertically into the shale layer, they then went sideways
9:59
for a mile curve the well around and drilled back
10:02
to where it began. Mattador was able to pump the
10:05
oil with two wells instead of four, essentially cutting costs
10:08
in half. Listen, I'll say it over and over again.
10:13
I'm a broken record on this. Stress is what causes
10:17
every advance in human history, and that's what you're seeing
10:20
on this. Hey, how do we drill this? We can't
10:22
drill it cost competitively. Let's try something new. Oh, it worked, progress,
10:28
Like this is what it looks like. Quick break here.
10:30
When we come back, we're gonna joined by Ted Rossman
10:32
from bank Rate talking about holiday shopping and specifically those
10:36
impulse purchases where you're like, oh, I gotta get that
10:39
and that and that. Well, he'll talk to you about
10:41
what we're seeing for trends in America when we return.
10:45
Speaker 1: Tune in for Trivia brought to you by Applebee's every
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Text us at six one seven three six two one
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Speaker 3: Joining us now is Ted Rossman from bankreag to talk
11:21
about the holiday shopping season and impulse purchases. Ted, thanks
11:25
for joining.
11:26
Speaker 4: Us, No problem, Thanks for having me so.
11:29
Speaker 3: I my neighbor Rob last night while we were trigger treating,
11:32
I think had the perfect description of the kickoff of
11:35
the holiday shopping season and the absurdity link to it.
11:37
He was in the home depot just a couple of
11:40
days ago and was staring down a chucky animatronic doll
11:46
type thing with a knife in its hand. Bloody knife
11:48
in its hand that's stabbing back and forth. And directly
11:50
next to said gory animatronic chucky was a nicely bearded
11:57
and rosy cheeked Santa Claus ready to hand out present.
12:00
That's where we've gotten here, is the holiday shopping season
12:03
has definitely kicked off if you go and look through
12:06
your home depots or probably just about everywhere else as well.
12:09
Walmart had their big, their big kickoff down in Orlando
12:13
with their employees a couple of weeks ago. I think, Now,
12:16
what sort of tips do you have for folks? As
12:19
the Christmas creep comes in here, and you know there's
12:24
more and more pressure as we get out there shopping
12:26
to fill those carts and any tips for shoppers.
12:29
Speaker 4: You're right, Christmas creep is a real thing. It is
12:32
encroaching on Halloween. The holiday shopping season is already well underway.
12:36
I mean a lot of big retailers started their best
12:39
sales a few weeks ago, and half of holiday shoppers
12:42
have already started.
12:43
Speaker 5: I actually like the early start.
12:45
Speaker 4: That's one of my tips is even if you're not
12:48
ready to start buying stuff, at least set a budget,
12:52
make a gift list, start setting money aside. You probably
12:55
still have four paychecks between now and the end of
12:57
the year. If you say a couple hundred dollars from
13:00
each of them, that gets you right around the National
13:03
Retail Federation's average projected expense of nine hundred dollars per shopper.
13:09
So that's a good tip to start early. Look to
13:11
stack discounts too. It is going to be a buyer's
13:14
market this year. Retailers are having to get aggressive on price.
13:18
Consumer spending has slowed in a lot of these holiday
13:22
favorites like clothes, toys, electronics.
13:25
Speaker 5: There are a lot of good deals.
13:26
Speaker 4: Out there, but don't stop with the thirty percent off
13:30
store promotion. Combine that with the rewards credit card that
13:33
you're hopefully pay in full and avoid interest. That could
13:36
be a second way to save on that same purchase.
13:39
A third way might be to go through an online
13:41
shopping portal, something like Racqueton or shop through Chase. You
13:45
could actually combine all three of those saving streams on
13:48
the same purchase.
13:49
Speaker 3: Ded this is a shortened holiday shopping season based on
13:52
where the Thanksgiving holiday falls, which is probably why they're
13:56
pushing things early. What are you hearing from retailers about
13:59
their own expectations other than what you just described of
14:02
rolling out discounts and trying to get shoppers in the
14:04
store early.
14:06
Speaker 4: A lot of the projections are for something like a
14:08
two or three percent.
14:09
Speaker 5: Gain over last year's sales.
14:11
Speaker 4: That's what the National Retail Federation and MasterCard and Deloitte
14:15
and others are saying. Now, that's pretty much in line
14:18
with inflation, so you could probably spend that either way.
14:20
You know, yes, it is growth, but it's not exceptional growth,
14:24
and a lot of it is just because things cost more,
14:26
and that's where consumers are feeling reluctant about the economy
14:32
that even though the job market's been pretty good and
14:34
GDP and consumer spending and all this data, people don't
14:38
feel like they're getting ahead. They feel like whatever wage
14:40
gains they're making are being gobbled up by higher prices.
14:45
Speaker 5: Even though wage growth.
14:46
Speaker 4: Continues to go up and inflation's coming down, we still
14:50
haven't totally caught up there. We found that only one
14:53
in four holiday shoppers are planning to spend more than
14:56
they did last year, so it's a relatively frugal consumer.
14:59
This year year, holiday spending is going to be pretty good.
15:02
I mean it's not going to fall off a cliff,
15:04
but because it's sort of treading water with respect to inflation,
15:08
retailers are having to get aggressive on price. When people
15:11
are splurging these days, it's more likely to be on
15:14
experiences like travel and dining than on physical goods.
15:18
Speaker 3: It's Ted Rossman from Bank Great joining us to talk
15:21
about the kickoff of the holiday shopping season and trends
15:24
that we're seeing amongst consumers. Ted, thanks so much for
15:27
joining us. Sure we'll talk again soon and before the holidays,
15:30
so thanks, have a great one and we'll talk to
15:33
you soon.
15:33
Speaker 5: Sounds good, Thanks you too, all right.
15:36
Speaker 6: Time for trivia here on the Financial Exchange, and it's
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brought to you by Applebee's. Take your friends or family
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You'll get a free appetizer just for signing up. Now
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that's eating good in the neighborhood void weard prohibited dye
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in only. Now that Halloween is over, let's do a
16:04
run of presidential trivia leading up to the election here
16:08
on Tuesday. In nineteen twenty six, President Calvin Coolidge pardon
16:13
an animal that was sent to the White House to
16:16
be served at Thanksgiving dinner. Coolidge pardon the animal and
16:19
kept her as a pet until the animal's death three
16:22
years later. Trivia question today, which animal did President Coolidge
16:27
pardon and later keep as a pet at the White House?
16:30
Speaker 7: Interesting question?
16:32
Speaker 6: Which animal did President Coolidge pardon and later keep as
16:35
a pet at the White House? Be the third person
16:39
today to text us at six one seven, three six,
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two thirteen eighty five. With the correct answer, you'll win
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a Financial Exchange Show t shirt. Am B registered to
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win a one hundred dollars gift card two Applebee's. Be
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sure to include the keyword Applebee's in your text and
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we'll give away that Applebee's gift card in the next
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segment six one seven three six two thirteen eighty five,
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and the third correct response will be our winner. See
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complete contest rules at Financial Exchange Show dot com.
17:06
Speaker 2: Mike, do you want to talk Intel here?
17:08
Speaker 3: Yeah, let's go Intel, because they're they're having a big
17:11
day today, up eight percent, which carves their losses or
17:16
pairs them back to only fifty one percent for the
17:18
year so far, having lost half of their value now
17:21
since January first of this year on I guess less
17:27
bad than expected.
17:28
Speaker 2: Yeah, here's a big describe it. It's a big thing.
17:30
They took a sixteen billion dollar loss for the quarter,
17:32
but it really is an accounting gimmick. The loss has
17:34
been accumulating over years. They just finally said okay, like
17:38
we're gonna realize this and move on, and ultimately their
17:42
revenue was still down six percent from the prior year,
17:46
but a little bit above the forecasts. And Intel also
17:50
gave guidance for the current quarter that is above expectations.
17:54
So it's basically the hope I think is, hey, they're
17:59
bottoming out.
18:00
Speaker 3: Dump all the bad news into a quarter and kitchen
18:03
sink it, and then hey, let's let's move on and
18:07
go from here. And really, the next two years are
18:09
gonna make or break Pat Gelsinger's tenure at the company.
18:13
It's either, hey, we've got these new fabs that are
18:15
opening up and we're gonna be able to actually make
18:17
money from them and our you know, foundry business. Maybe
18:20
we can get that working or sell it off, depending
18:22
on how you want.
18:22
Speaker 2: To approach it. But this is the next two years
18:26
are it for Intel in terms.
18:29
Speaker 3: Of can you turn around? Can you turn around?
18:31
Speaker 2: Can you get there? Because otherwise my concern with them
18:35
is that they're far enough behind then that they can't
18:37
catch up. It's kind of what it feels like, you know,
18:41
as you look at them. Taking a look at markets,
18:43
as we head towards the bottom of the hour, we
18:47
still have all three major US indices well into positive territory.
18:50
The Dow is now five hundred and forty nine point
18:52
of Rooney's one point three percent, smp is up sixty
18:55
two points, and the Nasdaq up two hundred and fifty
18:59
nine points. So you got all three indices massively in
19:02
positive territory. And it's not just a few small stocks
19:05
that are, you know, lifting the thing. I'm looking at
19:07
the S and P five hundred just right now. You
19:10
maybe have forty or fifty companies that are in negative
19:13
territory at the moment. So it's a pretty wide rally.
19:16
Actually maybe about sixty sixty five companies, So still a
19:19
pretty wide rally that you're seeing overall, and you know,
19:23
not just hey, big tech lifts all. Let's take a
19:26
quick break here. When we come back, we've got the
19:29
trivia answer after this.
19:40
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This is the Financial Exchange Radio Network.
20:11
Speaker 6: Trivia question today was which animal did President Coolidge pardon
20:16
and later keep as a pet at the White House.
20:19
There'll be a raccoon. President Coolidge was sent to raccoon
20:22
by a farmer to be served as part of the
20:25
Thanksgiving dinner held at the White House. Coolidge had no
20:28
desire to eat a raccoon and instead kept her as
20:31
a pet and named her Rebecca. We have two winners
20:35
two announced today. Winner of the Financial Exchange Show T
20:38
shirt was John from Providence, Rhode Island, and the weekly
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winner of the one hundred dollars gift card two Applebee's
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was Joshua from Portland, Maine. Some congrats to both winners.
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There and Trivia is brought to you by Applebee's. Enjoy
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Speaker 7: You'll get a free appetizer just for signing up. Now
21:00
that's eating good in the neighborhood. Void were prohibited dying
21:03
in Only you.
21:04
Speaker 2: Ever tasted raccoon? No, I mean neither.
21:07
Speaker 3: Well. I really like silly names for pat's. I had
21:10
a dog named Pretzel once. I prefer very serious names
21:15
for pets, like Rebecca, You're just like a dog named John.
21:19
Speaker 7: Yeah. I would tend to lean in that direction too.
21:22
Speaker 2: Do you guys know what day Calvin Coolis was born on?
21:25
Speaker 3: No, Independence Day?
21:27
Speaker 2: Fourth July is the only president who have ever been
21:29
born on Independence Day. But good guess, Mike, did you
21:33
know that three out of the first five US presidents
21:36
died on Independence Day?
21:37
Speaker 3: I think I do remember that.
21:38
Speaker 2: Jefferson, Adams, and Monroe all died on Independence Day. Yeah, so, uh,
21:44
there's that.
21:46
Speaker 6: Do Rebecca also died on Independence Day?
21:48
Speaker 2: Oh it's unclear.
21:49
Speaker 7: We'll find out she was eating on July fifth.
21:53
Speaker 2: Coolige, I believe, was also the first president to ever
21:55
visit Cuba.
21:59
Speaker 3: Okay, there you have it, put it out there. Yeah,
22:01
just continuing American history major. Yeah, we'll just history. No,
22:05
not just American, No, got.
22:06
Speaker 2: It, the whole world, global history. Global. Let's talk about
22:13
this piece of the New York Times that is really
22:15
quite sad. It's titled They're giving scammers all their money
22:18
and the kids can't stop them. And it opens with
22:21
an anecdote about man by the name of Chris Mansonelli
22:25
and his dad was seventy nine years old and died
22:29
last year and it talks about he goes up to
22:32
the refrigerator and he sees, you know, all the pictures
22:34
of the guy's grandkids, his children, and then there is
22:39
a picture of and I'm not a wrestling person, so
22:42
I don't even know who this is. Alexa Bliss, who's
22:45
a someone in professional wrestling, is pinned up on the
22:48
refrigerator as well, and it turns out that this guy's
22:53
father had ended up basically losing like a million dollars
23:01
in a romance scam where he thought he was dating
23:05
this woman when in fact he was just being scammed
23:09
out of all of his money.
23:11
Speaker 3: About a million dollars too, among other scams, this was
23:15
one of them. And it's yeah, incredibly sad, disturbing and
23:22
on many levels, and unfortunately, I'll tell you repeated on
23:27
many occasions, through many different scams that I've seen firsthand.
23:29
Speaker 2: And according to the FBI's Center on Internet Crime, Americans
23:33
lost estimated twelve and a half billion dollars to online
23:36
criminals last year, six hundred and fifty two million of
23:39
that was through romance scams and things like that. And
23:42
this is just for what they know of that's actually
23:44
been reported, and pretty much what you see is that
23:48
there's a lot of cases where, look, kids know that
23:52
their parents, their elderly parents are being scammed out of
23:56
their money and are trying to stop them, but they
23:58
have no legal authority to do so.
24:00
Speaker 3: Actually, yeah, this case was actually pointed out where the
24:03
son knew what was going on, probably I'm guessing based
24:07
on the taglines, and the story had power of attorney
24:10
over His father removed money from his father, took it away,
24:13
one hundred thousand dollars, his last one hundred thousand. He
24:16
removed it and said, you're not scamming this away anymore.
24:18
His father sued him. Yeah, his father was convinced that
24:21
this was reality. His father sued him. I don't know
24:25
if he regained control of the money, if the son
24:27
just gave up at that stage. But the tools that
24:32
family members have to deal with this sort of thing
24:34
are kind of crap, to be quite honest, they're pretty garbage,
24:37
and I understand why because they are. You know, the
24:39
more power you give, the more potential for abuse that
24:42
exists there. But the tools are not great. If you
24:45
find a loved one in this situation, pretty much your
24:48
only option if it gets this severe is to bring
24:52
that person to court and have them declared incompetent by
24:54
the court, which is not easy but also not always
24:58
the case. No, right, Like, just because you're falling for
25:00
a scam, doesn't mean that you have no competence.
25:02
Speaker 2: Correct, That's what I meant by not like. It's not
25:05
just like, oh like, that doesn't mean you're incompetent. It
25:08
just means that you're gullible, right, which is completely different.
25:11
And Look, I know that we all think that this
25:14
can't happen to us, because we all think that we're
25:17
so smart.
25:18
Speaker 3: And this specific one might never happen to you, But
25:20
I'll give another one. Like, I know somebody first hand
25:24
who has been funneling tens of thousands of dollars onto
25:29
subscriptions for Get your Rich Quick schemes, Yeah, and subscriptions
25:35
to bogus newsletters and things that are just absolute garbage
25:39
out there, And the ability for that person's family to
25:44
control it in any meaningful way is tough.
25:48
Speaker 2: And there's tons of different ones out there. Look, you've
25:50
got romance scams out there. You've got scammers pretending to
25:54
be you know, the bank saying hey, your account's going
25:56
to be closed unless you put money into a new accountant,
25:58
like sending wads of cash and this like it's it's
26:03
it's really. There's all kinds of different ones out there.
26:06
And the biggest thing that I can say on any
26:11
of this like is he always keep your guard up
26:15
when it comes to like the second anyone asks you
26:18
for money, make sure you know exactly who you're talking
26:22
to first and foremost, but second, regardless of who you
26:26
think it is, whether it is a family member, someone
26:31
claiming to be from a financial institution, someone claiming to
26:34
be from the government, whoever it might be, whatever, whoever
26:38
that person is, calmly hang up the phone, you know,
26:43
say hey, I'll call you back in just a minute.
26:45
Something else is going on, find a number somewhere else
26:48
for that person or institution, confirm that it's the right
26:52
number to call, and then call that number. Because it's
26:56
so easy to spoof phone numbers and voices and all
26:59
kinds of stuff these days. That and they do their
27:02
best to create a sense of urgency. Oh no, you
27:04
can't hang up, because we need to nothing needs to
27:07
be done right now.
27:08
Speaker 3: Yeah, ever, I mean outline another one of these, A
27:12
thirty eight year old software engineer went to go visit
27:14
his father in San Jose for his eightieth birthday. Father
27:17
was deeply involved with an investment scheme offered through a
27:21
woman who claimed to be from South Korea. He was
27:24
up one morning like laser, focused on real time chats
27:27
and charts tracking gold Spot market. The next day, the
27:30
whole thing was a hoax, The whole platform was fake.
27:33
The money that he had wired into quote unquote in
27:35
an account was gone. And yeah, you know, the father
27:42
had been convinced that his account had grown to five
27:44
million bucks very next day. Can't get any of the
27:47
money out. Million dollars gone gone.
27:51
Speaker 2: And always if it sounds either too good to be
27:54
true or too bad to be true, usually it's not true.
27:57
You know, it's it's kind of what it is. So
27:59
I just I can't stress enough. You unfortunately have to
28:03
be vigilant on this stuff all the time. Yeah, you
28:06
just do, because there's so many different ways that people
28:08
can scam you.
28:09
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28:11
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29:02
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29:05
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29:10
Speaker 2: Piece from CNBC today, Google, I guess had an all
29:14
hands meeting yesterday and they this one just kind of
29:18
more humorous than anything else.
29:20
Speaker 3: And humorously dystopian. But yeah, I don't.
29:24
Speaker 2: Think this is as bad as a lot of the
29:26
other stuff that we've covered about companies handling things badly
29:28
in recent years.
29:29
Speaker 6: I'm sorry it says they had an all hands meeting
29:31
on Wednesday, which is the weird part because.
29:35
Speaker 2: The executives were all dressed up in Halloween costumes.
29:38
Speaker 3: Quote Google's chief scientist Jeff Dean were a starfish costume.
29:42
Speaker 7: But it was Wednesday, like yesterday was Halloween.
29:45
Speaker 3: People wear costumes all week on Halloween week. The CEO
29:49
I wore one on Wednesday. Oh yeah, wore a black
29:51
T shirt that read ERA.
29:52
Speaker 2: Four four when I was working for Google.
29:56
Speaker 3: So anyway, the all hands meeting was scheduled in reaction
30:00
to their earnings call where they talked about cost cutting,
30:03
and then the executive team showed up in Halloween costumes
30:06
to tell people that, I mean, hey, we're not laying
30:09
you off today, but yeah, the costcuts are real and
30:11
you should be aware that we're thinking about this.
30:13
Speaker 2: To be fair, The reason that I say this isn't
30:14
as bad as like other places if someone showed up
30:17
in like the Grim Reaper outfit. Oh god, you know,
30:21
like Sender Purchas in the Grim Reaper costume, Like okay
30:24
that now we're talking. You know, we got some real problems.
30:27
Speaker 3: I know, but if I'm going to be told that
30:28
I might lose my job, I really don't want to
30:30
hear it from a starfish.
30:31
Speaker 7: Yeah, or Harry Potter or SpongeBob or something.
30:33
Speaker 3: I just I really don't. I know, we're all trying
30:37
to become more relatable. Does it matter who tells you
30:39
you're going to lose your job? Like, yeah, I think
30:41
if I if I've worked for a company for a
30:43
decade and you're gonna tell me that I lose my job,
30:45
at least you can do is wear a suit. But
30:46
they're not actually firing anyone here, get it, But I
30:50
don't love it.
30:51
Speaker 7: Not a great conversation.
30:52
Speaker 2: I don't think this is as bad as some of
30:54
the other stuff.
30:55
Speaker 3: I think there's plenty worse stuff out I think it's
30:57
a stupid oversight.
31:00
Speaker 2: But there have been far worse HR blunders in the
31:03
last couple of years than this.
31:04
Speaker 3: One hundred percent. You know, don't cry to your employees
31:07
when you're telling them that you're firing them all like agree,
31:10
there have been far worse blunders. But it's not like
31:12
this meeting was out of the blue. You knew that
31:14
you were going to have all hands meeting telling your
31:16
employees about cost cuts, and you decided to wear halloween costumes.
31:21
It's not a funny topic. No kind of a problem. Yeah,
31:24
it's it's not great. Yeah, that's all I leave with.
31:27
Speaker 1: Not great.
31:28
Speaker 2: Let's take a quick break here. When we come back,
31:30
paul A Monica joins us right after this.
31:32
Speaker 1: Text us six one seven, three, six two thirteen eighty
31:36
five with your comments and questions about today's show, and
31:39
let us know what you think about the stories we
31:41
are covering. This is the Financial Exchange Radio Network. If
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31:57
business and financial news. This is the Financial Exchange Radio Network.
32:02
Ladies and gentlemen, the weekend as problems.
32:10
Speaker 2: We're now joined by Paul Monica from Barons. Paul, how
32:15
are you today?
32:16
Speaker 8: I'm good?
32:17
Speaker 5: Thanks? How are you?
32:17
Speaker 8: A nice little rally we've got going into the weekend.
32:20
Speaker 2: I know it makes everyone feel a little bit better
32:22
after yesterday at least, So let's let's talk a little
32:25
bit about Amazon, who is one of the companies rallying
32:28
the most today. By my math, they are up somewhere
32:33
in the ballpark of one hundred and sixty billion dollars,
32:36
So adding you know, just a Verizon to their market
32:40
cap on it on a day. What what went right
32:42
for them this quarter?
32:44
Speaker 8: Yeah, seven game the market caps back above two trillion.
32:49
I think what went right for them is that, you know,
32:51
the guidance obviously is pretty solid going into the holidays.
32:55
The sales growth was healthy above forecasts. But when you
32:59
really look at it, I think, you know, the AI
33:03
investments are paying off, and particularly I think when it
33:07
comes to AI features for Amazon Web Services AWS is
33:13
just a beast. I mean, this is a company that
33:17
you look at the total numbers, twenty seven and a
33:21
half billion in revenue for ADWS, that's up nearly twenty percent.
33:28
And what's really just mind boggling is that the net
33:32
the operating profit excuse me for AWS is end point
33:39
five billions. So the margins are just phenomenal for that
33:45
part of Amazon, and I think that's what investors have
33:48
been valuing the company on probably for some time, not
33:52
so much the core retail business.
33:54
Speaker 2: When we talk about that that cloud space. Everyone these
33:57
days is talking about how they're implementing AI in cloud.
34:00
What are Amazon? What's Amazon specifically doing and are there
34:03
any signs that they're starting to generate additional revenue specifically
34:07
from AI at this point?
34:09
Speaker 8: Yeah, I think all of the companies that are trying
34:13
to add AI offerings to their various various services, and hey,
34:21
Amazon's doing it both with shopping as well as on
34:24
the cloud side. You know, it's an open debate whether
34:28
or not these companies are spending too much. I mean,
34:30
it was only yesterday that Microsoft and Meta got punished
34:34
by Wall Street for appearing to have AI investments that
34:38
weren't really panning out. But I think, you know, the
34:41
Amazon results today, it's a testament to the fact that
34:44
if you are putting up strong earnings and revenue growth
34:48
while continuing to spend, Wall Street will probably be more
34:53
forgiving in that scenario. And I think that's what we happened.
34:55
What happened with alphabet numbers earlier this week as well.
34:58
You know, the Google YouTube giants also had some pretty solid,
35:04
you know numbers, so that's a big reason why that
35:07
stock had a nice pop as well.
35:09
Speaker 2: Paul what's going on with kind of the original core
35:12
business for Amazon, which is selling a bunch of stuff
35:15
to people. What does that look like these days in
35:17
terms of growth and or margins?
35:20
Speaker 8: Yeah, I mean, margins are still a little bit tight
35:24
on the core retail side because it's you know, retail.
35:27
I mean, so that's something that I think investors have
35:31
you grown to accept. But you know, Amazon has done
35:37
a very solid job still gaining market share. I think
35:41
for many consumers right now and investors, it's perceived as
35:44
a two horse race with Amazon and Walmart really dominating
35:49
the consumer shopping experience. Right now. We're heading into the holidays,
35:53
a lot of people are going to be spending on
35:55
gifts and that's why I think, you know, one of
35:57
the reasons why the fourth quarter outlook was pretty healthy is.
36:00
Speaker 2: Well, what about the streaming business that they have. Does
36:04
that contribute anything materially to the company or do we
36:07
just not really know what's going on because of how
36:09
they structure their units.
36:11
Speaker 8: Yeah, I think it's hard to necessarily say. I mean,
36:14
there is an advertising component that comes in to streaming
36:20
that you know, gives them a little as well from
36:24
the streaming side, but you know, clearly. You know, Amazon
36:28
is looking at streaming things like the NFL and some
36:32
of their other exclusive offerings as a way to just
36:37
boost the Prime memberships. And that's something that you know,
36:42
Prime members are continuing to grow. Amazon's a little bit
36:46
opaque with the exact number of memberships, you know, the
36:50
consternation of you know, some analysts out there, but by
36:53
all accounts, prime memberships are you know, continuing to grow
36:56
pretty dramatically. And I think the streaming aspect one part
37:01
of it. I mean, if you're already going to be
37:04
considering watching NFL on Thursday nights and shopping at Whole Foods,
37:11
for example, why not get that annual Prime membership, which
37:15
they've also shown an ability to boost the subscription for
37:20
and not really lose much in the way of revenue.
37:23
Speaker 2: Fantastic, Paul, appreciate you joining us, have a great weekend,
37:27
and we'll talk to you soon.
37:29
Speaker 8: Thanks a lot, appreciate it.
37:31
Speaker 2: That is Paul Monica from Barons talking about Amazon taking
37:35
a look at markets. As we head towards the top
37:37
of the hour, The dial up four hundred and sixty
37:39
eight points, the S and pup forty eight, the nasdag
37:41
up two hundred and thirteen points, so a lot of
37:43
green on the board. This despite a jobs report that
37:47
was disappointing, with twelve thousand jobs added this morning, though
37:50
the caveat Hey it was during a time where we
37:53
had two hurricanes that had just come through, so we
37:56
don't really know what this one actually means, and we'll
37:59
have to look for more clarity in the coming months.
38:03
We are done for the day and for the week,
38:06
but we'll be back on Monday. We will, Yeah, I'll
38:11
be here, and so I hope you all have a
38:13
great weekend and we'll see you Monday on the Financial
38:16
Exchange