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Walmart’s Digital Shift & The AI-First Layoff Trend · The Financial Exchange Show

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  Speaker 1: This is the Financial Exchange with Chuck Zada and Mike Armstrong.
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  Speaker 2: Chuck, Mike and Tucker with you here, and as we
• 1:15
  Speaker 2: kick things off, Stocks just for the last week or
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  Speaker 2: so kind of stuck in neutral, trying to figure out
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  Speaker 2: what comes next. Actually more than the last oh yeah,
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  Speaker 2: last two weeks since about May eighth, so again a
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  Speaker 2: little bit more than two weeks that we've been here
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  Speaker 2: now and just kind of treading water.
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  Speaker 3: You know.
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  Speaker 2: We had that one spike up to seventy five hundred
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  Speaker 2: on the S and P, but other than that, we're
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  Speaker 2: kind of hanging out in the seventy four hundred range.
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  Speaker 3: Sure, oil places fell yesterday below one hundred bucks a barrel,
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  Speaker 3: they're back up today above one hundred bucks a barrel.
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  Speaker 3: Ron Supreme Leader saying that uranium must stay in the
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  Speaker 3: country causing some of that.
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  Speaker 2: Than an Iranian unnamed official said, no, that's not true. So,
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  Speaker 2: as I've said since the beginning, I don't know what's
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  Speaker 2: going on negotiating wise, I'm not going to pretend to.
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  Speaker 2: All I know is what is isn't happening in terms
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  Speaker 2: of production and transit, and there's just not much going
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  Speaker 2: on there. Stock's modestly off today, S ANDP down thirty
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  Speaker 2: six points about a half percent, nothing crazy, just.
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  Speaker 4: A little bit of a garden variety pullback.
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  Speaker 2: Dal Jones is, let's see, down one hundred and eighteen
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  Speaker 2: points about a quarter percent. Nazdak can posit down one
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  Speaker 2: ninety five about three quarters of a percent, So a
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  Speaker 2: little bit of a sell off taking place, but again
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  Speaker 2: nothing too significant.
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  Speaker 4: Bond selling off modestly is well.
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  Speaker 2: Ten year treasury back up above four to six at
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  Speaker 2: four point six one nine percent. We got the dollar
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  Speaker 2: up point three one percent to ninety nine thirty two
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  Speaker 2: and gold off twenty six thirty ounce to forty five
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  Speaker 2: oh nine. Crude oils Mike mentioned back above one hundred
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  Speaker 2: dollars a barrow at one oh one forty on West Text.
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  Speaker 2: Intermediate gas prices rising as well, Triple national average up
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  Speaker 2: one point I'm sorry actually point nine cents to four.
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  Speaker 4: Fifty six and four tenths.
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  Speaker 2: Diesel also holding near its recent highs at five sixty
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  Speaker 2: five and six tenths as well. So that is what
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  Speaker 2: is moving in markets today. We got Walmart earnings before
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  Speaker 2: the belt, and here's my big takeaway. Walmart said that
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  Speaker 2: they expect their full year sales to rive somewhere around
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  Speaker 2: four to five percent this year. That is pretty much
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  Speaker 2: in line with where inflation is heading. And so the
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  Speaker 2: takeaway that I have is Walmart is able to pass
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  Speaker 2: through prices to customers, but not really expecting to see
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  Speaker 2: much in the way.
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  Speaker 4: Of any kind of organic growth.
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  Speaker 3: Yeah, like they pretty much told everybody that, Hey, in
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  Speaker 3: the first quarter, while the tax cuts that people are
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  Speaker 3: tax refunds that people received were were helpful and helped
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  Speaker 3: offset some of the impact of higher gas prices, now
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  Speaker 3: that money spent and as far as spending is going
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  Speaker 3: from our customers these days, it's being drawn down based
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  Speaker 3: on the price of gasoline and pretty much that's it,
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  Speaker 3: and they cannot keep pace. They're obviously drawing a pretty
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  Speaker 3: big differentiation between their lower income customers and their higher
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  Speaker 3: income ones, and they're seeing that spending difference. But I
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  Speaker 3: think they are echoing something that many have been saying now,
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  Speaker 3: which is, yeah, if you are already cash strapped, suddenly
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  Speaker 3: seeing gas prices shoot up forty percent is going to
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  Speaker 3: make it pretty tough for you.
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  Speaker 2: Walmart stock off seven percent on this news now. It's
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  Speaker 2: basically been just kind of a straight shot down over
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  Speaker 2: the course of the day. They didn't open in this range.
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  Speaker 2: They opened down about two or three percent, and then
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  Speaker 2: there's kind of slid during the first half hour trading
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  Speaker 2: and have been chopping around ever since. I think the
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  Speaker 2: overall story that we've gotten from retailers in the set
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  Speaker 2: of earnings reports is pretty consistent with what we've seen before,
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  Speaker 2: which is which makes sense because again Q one earnings,
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  Speaker 2: two thirds of that was before the war even started.
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  Speaker 2: And yes, like now we've seen higher gas prices, but
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  Speaker 2: they you know, even in Q two there was a ramp.
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  Speaker 4: Up period through April to get to where we are.
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  Speaker 2: It's one the story that we're hearing is yep, people
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  Speaker 2: are still spending money. We're not really seeing any kind
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  Speaker 2: of positive inflection, but we're not seeing a huge negative
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  Speaker 2: inflection yet either. That could change, but to this point
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  Speaker 2: we haven't seen it. And and this is the part
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  Speaker 2: that I keep coming back to about the US economy,
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  Speaker 2: like you've got to be able to.
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  Speaker 4: Hold two.
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  Speaker 2: Conflicting views in your head right now to understand what's
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  Speaker 2: going on right Number one is gas prices, and oother
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  Speaker 2: all kinds of prices are rising right now, Like not
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  Speaker 2: just gas prices. You got stuff going up across the boarder,
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  Speaker 2: Like take a look at what's going on with freight rates?
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  Speaker 4: I know, uh, Tucker, when do we have Craig Fuller
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  Speaker 4: coming on? Is it next week now?
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  Speaker 5: June Friday? June fifth, so two weeks.
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  Speaker 4: Yeah.
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  Speaker 2: So you've got like freight rates that are going absolutely
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  Speaker 2: bonkers right now. You obviously have gas prices that are
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  Speaker 2: moving up. You've got memory chip prices that are driving up,
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  Speaker 2: electronics costs and things like that. There's you know a
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  Speaker 2: lot of different price pressures that are there that are
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  Speaker 2: making people feel really uncomfortable. Despite that, there is so
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  Speaker 2: much demand for AI computing power right now that is
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  Speaker 2: just overwhelming any of those potential concerns and throwing a
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  Speaker 2: bunch more money into the economy and generating you know,
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  Speaker 2: the economic activity that unfortunately might end up supporting the
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  Speaker 2: inflation that we're seeing.
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  Speaker 4: Yeah.
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  Speaker 3: We talk sometimes about this when it comes to government spending.
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  Speaker 3: Right when you talk about government spending, one of the
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  Speaker 3: big problems with it is that it can crowd out
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  Speaker 3: other spending. Right Like, when the government increases all of
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  Speaker 3: its defense spending, you potentially, you know, drive up prices
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  Speaker 3: because there's just competition now for those goods. Right right now,
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  Speaker 3: what we have is AI spending crowding out just about
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  Speaker 3: everything else. It made up eighty percent of GDP in
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  Speaker 3: the most recent quarter. It's driving up prices in some
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  Speaker 3: key areas, and when accompanied by an oil price shock, it's,
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  Speaker 3: you know, kind of leading to.
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  Speaker 6: Shortages.
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  Speaker 3: Might not be the right Well, yeah, it's leading to
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  Speaker 3: shortages at least in some products that go into the
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  Speaker 3: AI trade. So yeah, we are experiencing this still, And
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  Speaker 3: I don't know. I tend to always think that when
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  Speaker 3: everybody's worried about an inflation burst, it probably isn't likely
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  Speaker 3: to happen. But I'm not really convinced right now that
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  Speaker 3: people believe that an inflation burst is coming.
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  Speaker 4: No one's worried about it.
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  Speaker 2: People are worried about inflation that's here now, but I
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  Speaker 2: don't hear many people that are worried that it's still
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  Speaker 2: going to be here six to twelve months from now. Right,
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  Speaker 2: let's take a quick break when we return. Lu Kawa
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  Speaker 2: from Sherwood News joins us right after.
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  Speaker 2: Oh right, we're still uh getting Luke Cowa all cute
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  Speaker 2: up here. But in the interim, I want to talk
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  Speaker 2: about this piece from the New York Times that we
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  Speaker 2: didn't have a chance to get to earlier.
• 9:31
  Speaker 4: That we got Luke. Oh we got Luke. Yeah, let's
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  Speaker 4: go to wonderful Luke. How you doing today? Duding great?
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  Speaker 6: How about yourself?
• 9:38
  Speaker 2: Fantastic? Uh, this is Luke Kawa with Sherwood News joining us.
• 9:41
  Speaker 4: Luke.
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  Speaker 2: When we look at this market right now, we get
• 9:44
  Speaker 2: a lot of people listening that have, you know, some
• 9:48
  Speaker 2: kind of different thoughts in terms of hey, like, yeah,
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  Speaker 2: it's great that you know, AI is you know, doing
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  Speaker 2: all this stuff, but the real economy feels pretty bad
• 9:57
  Speaker 2: because of howgh gas prices. How does one reckons the
• 10:00
  Speaker 2: discomfort with what one is feeling in their personal financial
• 10:04
  Speaker 2: situation with what they're seeing in markets?
• 10:07
  Speaker 4: Oh gosh, extremely hard to do.
• 10:10
  Speaker 7: That's almost beyond the ability of a market scribe to
• 10:14
  Speaker 7: be able to help you out with.
• 10:15
  Speaker 2: Well, tell me about the market piece like why are
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  Speaker 2: markets so good right now?
• 10:19
  Speaker 4: I guess for the last month and a half.
• 10:21
  Speaker 7: I think markets are so good because of the for
• 10:25
  Speaker 7: the first time ever, I think we've had a lot
• 10:27
  Speaker 7: of visibility into end user constraints REHA.
• 10:30
  Speaker 4: I think that's been the.
• 10:31
  Speaker 7: Most material thing that's changed over the past two or
• 10:34
  Speaker 7: three months, and I think it's something that also started
• 10:37
  Speaker 7: to come through just a little bit and Nvidia's results yesterday.
• 10:41
  Speaker 7: If you look at it, it's about from their data
• 10:44
  Speaker 7: setitor segment, about half of it is hyperscalers and about
• 10:47
  Speaker 7: half of it is other. Now, the fact that there
• 10:50
  Speaker 7: is this pretty big other component, which Jensen Wong's arguing,
• 10:54
  Speaker 7: is more and more going to be Hey, your industrial company,
• 10:57
  Speaker 7: your chip design company that needs a data center right
• 11:00
  Speaker 7: by it in order to be able to be its
• 11:02
  Speaker 7: most productive and do its best work. That is something
• 11:06
  Speaker 7: that I think is the dream on. But the thing
• 11:08
  Speaker 7: that's been more tangible and the near term has been
• 11:11
  Speaker 7: everybody getting mad about running into their cloud limits until
• 11:14
  Speaker 7: they were relaxed a couple of weeks ago. So I
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  Speaker 7: still think that's been kind of the biggest thing that
• 11:18
  Speaker 7: is added to a lot of AI momentum. And what
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  Speaker 7: I think it's also done is actually made the appearance
• 11:24
  Speaker 7: of the real economy even worse than it is. High
• 11:27
  Speaker 7: gas prices. Yeah, that's a very visible thing that everyday
• 11:31
  Speaker 7: Americans are running into all of the time. However, I
• 11:35
  Speaker 7: think one part about the AI boom that can't be
• 11:37
  Speaker 7: overstated is, given how big in Nvidia is, given how
• 11:41
  Speaker 7: big chips are as an industry group, if those things
• 11:45
  Speaker 7: are doing so well, it is sucking all of the
• 11:48
  Speaker 7: oxygen out of any positive story that you could tell
• 11:51
  Speaker 7: about pretty much any other part of the market.
• 11:55
  Speaker 2: I want to dig in on that a little bit more.
• 11:58
  Speaker 2: Is this a case where there's there's just not enough
• 12:01
  Speaker 2: capital to fill all of the niches that need to
• 12:04
  Speaker 2: be filled right now? And is that potentially why we're
• 12:06
  Speaker 2: seeing yields moving up a little bit as well.
• 12:08
  Speaker 4: It's just like, hey, we've got.
• 12:11
  Speaker 2: All this government borrowing, now, we've got private sector borrowing,
• 12:13
  Speaker 2: we got all these IPOs.
• 12:15
  Speaker 4: There's only so many dollars to go around, right, Yeah.
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  Speaker 7: I think what's really interesting is that, you know, at
• 12:22
  Speaker 7: the first the early yield jump that you get on
• 12:25
  Speaker 7: you know, the the war in Iran, oil price is rising.
• 12:29
  Speaker 6: That's one thing.
• 12:29
  Speaker 7: However, the long end and longer term inflation expectations measures
• 12:34
  Speaker 7: really started to take off after the ceasefire, So that's
• 12:37
  Speaker 7: more of the case of folks going, hey, well, if
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  Speaker 7: the party in an AI and issuance, if that's still going,
• 12:45
  Speaker 7: then that's actually a much bigger risk to the long
• 12:48
  Speaker 7: end and in long term yields. And I get I
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  Speaker 7: do think that's a reflection of just the idea that
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  Speaker 7: you have, you know, a lot of government spending, you
• 12:55
  Speaker 7: also have a lot of hyperscaler issuance. I believe they've
• 12:58
  Speaker 7: already you know well and truly left a last year's
• 13:01
  Speaker 7: issuance already. I can't name a country that Google has
• 13:04
  Speaker 7: not issued a bond in over the.
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  Speaker 4: Past two weeks.
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  Speaker 7: So yeah, no, I think that's a pretty important component.
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  Speaker 6: And there are two ways.
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  Speaker 7: It's not just through the issuance way that I think
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  Speaker 7: AI is driving a higher nominal growth environment and a
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  Speaker 7: shift towards a more inflationary one. If you look at
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  Speaker 7: the Producer Price Index, which posted a big jump and
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  Speaker 7: its latest reading, one of the outsized components there was
• 13:26
  Speaker 7: all the computer equipment were importing. The price of that
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  Speaker 7: is going bonkers.
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  Speaker 2: In terms of digging in more on the AI side
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  Speaker 2: of things, we got information from Anthropic yesterday, I think
• 13:38
  Speaker 2: was in a Wall Street Journal piece that was published
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  Speaker 2: that showed their estimating that they actually might be profitable
• 13:46
  Speaker 2: in Q two. Does that give us any information about
• 13:50
  Speaker 2: where the broader AI industry may be able to find
• 13:54
  Speaker 2: its footing as far as going from hey, just crazy
• 13:58
  Speaker 2: growth that can't make money to real businesses.
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  Speaker 7: Yeah, I think honestly, very important, very supportive signed pretty
• 14:07
  Speaker 7: much everything supportive about AI has has been at its
• 14:12
  Speaker 7: genesis to me, uh, an anthropic story for the for
• 14:15
  Speaker 7: the past you know, three months and counting.
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  Speaker 4: So I think just the idea that hey, all of this.
• 14:20
  Speaker 7: Money we've poured in is actually bearing fruit at some point,
• 14:24
  Speaker 7: and like, hey, uh, we've got to the point where
• 14:26
  Speaker 7: we can't call these companies, you know, startups anymore their behemoths. Uh,
• 14:30
  Speaker 7: they're they're going to be probably well in excess of
• 14:33
  Speaker 7: a trillion dollars when they when the I p O
• 14:35
  Speaker 7: among the biggest companies in the world. But just the
• 14:38
  Speaker 7: idea that hey, this hasn't been the equivalent of building
• 14:42
  Speaker 7: bridges to nowhere, of China's building ghost cities for for
• 14:46
  Speaker 7: the US spending out let, that this actually has something
• 14:49
  Speaker 7: of a return. Again, though, the the big question is
• 14:52
  Speaker 7: going to be like a you know, the the adjusted
• 14:55
  Speaker 7: return is we're of course kind of effectively stripping out
• 14:58
  Speaker 7: cappax as an expense for for a while. So this
• 15:00
  Speaker 7: is still kind of more on the operational side, so
• 15:04
  Speaker 7: doesn't give us a great kind of long term picture
• 15:06
  Speaker 7: about the about the ROI. And again, we're also living
• 15:09
  Speaker 7: in a world where this is everyone's experimenting with this,
• 15:12
  Speaker 7: so it because they feel like they have to. We'll
• 15:14
  Speaker 7: see the actual stickiness across across enterprises, across industries and
• 15:18
  Speaker 7: whether that's as strong now as it is, as strong
• 15:22
  Speaker 7: in six months, nine months, twelve months as it is now.
• 15:24
  Speaker 4: When we look.
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  Speaker 2: At the broader market, I know, obviously the last month
• 15:28
  Speaker 2: and a half has been driven by this, you know,
• 15:30
  Speaker 2: monumental surge in semiconductor stocks. What's your take on the
• 15:34
  Speaker 2: overall health of kind of the broader market when you
• 15:36
  Speaker 2: look beyond what we're seeing in semis.
• 15:40
  Speaker 7: Yeah, I think the underperformance of consumer discretionary, whether on
• 15:45
  Speaker 7: an equal weight or on just the the broad market
• 15:48
  Speaker 7: cap index A relative to staples is something that you know,
• 15:51
  Speaker 7: historically has been a bit of a flashing alarm belt
• 15:55
  Speaker 7: for the market. And again, but it's very hard to
• 15:58
  Speaker 7: strip away that from just the the overall rise in
• 16:02
  Speaker 7: oil prices which I think is you acutely impacting consumer
• 16:06
  Speaker 7: discretionary companies and their outlook. That's pretty much the place
• 16:09
  Speaker 7: where you start to see stocks go down, then earning
• 16:12
  Speaker 7: vestments go down, and then we worry about whether they
• 16:15
  Speaker 7: have successfully navigated a shock later. But yeah, no, real
• 16:18
  Speaker 7: income growth not great, probably not great for the outlook
• 16:21
  Speaker 7: for consumer spending.
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  Speaker 6: And I do think though more and.
• 16:25
  Speaker 7: More, the idea I keep coming back to is, you know,
• 16:29
  Speaker 7: the stock market is the economy for me over you know,
• 16:32
  Speaker 7: any six month period, they're going to tend to trend
• 16:34
  Speaker 7: in the same direction, and the economy is becoming more AI.
• 16:38
  Speaker 7: So it stands to reason that you can have a
• 16:41
  Speaker 7: stock market that kind of looks pretty unhealthy in terms
• 16:44
  Speaker 7: of the lack of breath, but still is delivering some
• 16:47
  Speaker 7: some pretty substantial results.
• 16:49
  Speaker 2: All right, very good, Luke, appreciate you joining us today
• 16:52
  Speaker 2: and have a great rest.
• 16:54
  Speaker 4: Of the week.
• 16:55
  Speaker 7: Thanks kyy my pleasure.
• 16:56
  Speaker 4: That is Luke Kawa from Sherwood News.
• 17:01
  Speaker 5: Do we already do trivia?
• 17:04
  Speaker 4: What was the question?
• 17:04
  Speaker 6: He was busy that day?
• 17:08
  Speaker 2: I was getting something else ready. I was bacon or something. Uh,
• 17:14
  Speaker 2: let's see, now we already kind of covered that. I
• 17:16
  Speaker 2: want to talk a little bit about the FED. Uh,
• 17:19
  Speaker 2: this is gonna be a really interesting upcoming FED meeting. Kidding, no, no, no, no, no,
• 17:25
  Speaker 2: but Michael Michael, Michael Michael, I need to go and
• 17:29
  Speaker 2: do a little bit more depth here, okay, because I
• 17:32
  Speaker 2: think this actually not just because of worsh coming in.
• 17:37
  Speaker 2: I think worsh coming in is a red herring for
• 17:41
  Speaker 2: why this is so interesting to me. Why this meeting
• 17:46
  Speaker 2: is interesting, in my opinion, is that we are clearly
• 17:52
  Speaker 2: seeing in markets right now a disconnect between what the
• 17:57
  Speaker 2: FED was pricing in the last time we got their
• 17:59
  Speaker 2: summary of economic projections in March and what's actually happening now. So,
• 18:05
  Speaker 2: for twenty twenty six, the March step was pricing in
• 18:08
  Speaker 2: core PC at two point seven percent year over year. Okay,
• 18:13
  Speaker 2: that obviously is not going to happen right now unless
• 18:18
  Speaker 2: the US economy goes into recession. It's it's just not viable.
• 18:24
  Speaker 2: At this point, core PC is already up to three
• 18:26
  Speaker 2: two and is probably heading towards.
• 18:31
  Speaker 4: You know, the high threes.
• 18:33
  Speaker 1: Yep.
• 18:34
  Speaker 2: So I think the question is going to be do
• 18:38
  Speaker 2: we get you know, we are going to get a
• 18:40
  Speaker 2: step for the June meeting, What does it tell us
• 18:45
  Speaker 2: in terms of where FED members not worse, because again
• 18:48
  Speaker 2: worse is one person like he'll try to build consensus
• 18:51
  Speaker 2: in this and that. But what does it tell us
• 18:53
  Speaker 2: about where FED members now see the risks and benefits
• 18:59
  Speaker 2: for the second half of the year. What are they
• 19:02
  Speaker 2: pricing in as they look at the picture right now?
• 19:08
  Speaker 4: And I think the problem that Warris is.
• 19:11
  Speaker 2: Gonna face is either way, there are some problems here
• 19:16
  Speaker 2: in that if they try to cut into an inflationary environment,
• 19:22
  Speaker 2: they're gonna lose control of the yield curve. If they
• 19:24
  Speaker 2: say we need to hike, hikes aren't priced in in
• 19:27
  Speaker 2: any meaningful number. Right now, Let's take a quick break,
• 19:30
  Speaker 2: let's dig in more on this when we return.
• 19:40
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  Speaker 6: Time out.
• 20:20
  Speaker 1: Full wool Street Watch tracking the stocks, the data, and
• 20:24
  Speaker 1: the headlines driving markets so far today right here on
• 20:27
  Speaker 1: the Financial Exchange Radio network.
• 20:29
  Speaker 5: Markets in negative territory after in Video earnings were released yesterday.
• 20:34
  Speaker 5: Right now, the Dow is down nearly three tenths of
• 20:37
  Speaker 5: a percent, SMB five hundred down over four tenths of
• 20:40
  Speaker 5: a percent, Nasdaq down six tenths of a percent, Russell
• 20:43
  Speaker 5: two thousand is up modestly only a tenth of a percent,
• 20:47
  Speaker 5: Tenure Treasure reeled up four basis points at four point
• 20:49
  Speaker 5: sixty one percent, and Oil jumping over three percent higher
• 20:53
  Speaker 5: trading at one hundred and one dollars a barrel. And
• 20:56
  Speaker 5: Video posted record sales and income in the previous quarter,
• 20:59
  Speaker 5: driven by demand for data center computing. The chip Giant
• 21:03
  Speaker 5: also announced an eighty billion dollars share buyback plan and
• 21:06
  Speaker 5: increased its quarterly to cash dividend from one penny to
• 21:09
  Speaker 5: twenty five cents to share. That stock down by two percent. Meanwhile,
• 21:13
  Speaker 5: several quantum computing stocks are seeing gains after The Wall
• 21:16
  Speaker 5: Street Journal reported the Trump administration is awarding two billion
• 21:19
  Speaker 5: dollars in grants to nine quantum computing companies and deals
• 21:23
  Speaker 5: that include US government equity stakes. IBM is the biggest
• 21:27
  Speaker 5: beneficiary of the package, with the Commerce Department agreed to
• 21:30
  Speaker 5: give the company one billion dollars. IBM stock is up
• 21:33
  Speaker 5: by seven percent. Elsewhere, Walmart said sales grew when the
• 21:37
  Speaker 5: previous quarter shoppers looked for value and bought more online. However,
• 21:41
  Speaker 5: the retail giant issued a worse than expected outlook amid
• 21:45
  Speaker 5: surgeon gas prices. Walmart shares it now down by over
• 21:48
  Speaker 5: seven percent and Spotify now rallying fourteen percent, after the
• 21:53
  Speaker 5: music streaming platform laid out updated guidance for twenty thirty
• 21:57
  Speaker 5: at its first investor day since twenty twenty two, forecasting
• 22:00
  Speaker 5: revenue at a compounded annual growth rate in the mid
• 22:03
  Speaker 5: teens and gross margins between thirty five and forty percent.
• 22:08
  Speaker 5: I'm Tucker Silvan and that is Wall Street Watch. In
• 22:10
  Speaker 5: the previous segment, we asked you the trivia question, what
• 22:13
  Speaker 5: was the name of the sketch comedy show Stephen Colbert
• 22:16
  Speaker 5: wrote for in the mid nineties. Well, that would be
• 22:20
  Speaker 5: the Dana Carvey Show. I know that Steve Corell was
• 22:23
  Speaker 5: on that show as well, and we did not have
• 22:26
  Speaker 5: a winner today. Nobody knew. We had guesses of Second
• 22:30
  Speaker 5: City and guesses of in Living Color, but no no
• 22:33
  Speaker 5: correct answers to our text line today, So sorry, no winner.
• 22:37
  Speaker 2: Tucker, What was the question? Are you serious enough? Anyways,
• 22:46
  Speaker 2: So during the last segment we were talking nailed it
• 22:52
  Speaker 2: in any case, last segment we were talking about this
• 22:56
  Speaker 2: upcoming FED meeting, and I think it is one of
• 22:59
  Speaker 2: the most important FED meetings in years, and not because
• 23:02
  Speaker 2: of j. Powell no longer being the chair. I think
• 23:06
  Speaker 2: Kevin Worris coming into this one is largely a non factor. Like, yes,
• 23:11
  Speaker 2: it's an unknown so I know that there's like that piece,
• 23:14
  Speaker 2: but ultimately, remember the chair does you know a lot
• 23:19
  Speaker 2: of the work to try to corral the FED to
• 23:22
  Speaker 2: what they are thinking. But when we look at where
• 23:25
  Speaker 2: we stand right now, here's the inflation picture you've got
• 23:30
  Speaker 2: for the most recent month of data that we have,
• 23:34
  Speaker 2: which we haven't gotten. We get PCE next week. Correct,
• 23:38
  Speaker 2: Let me take a look. Yeah, PCE is coming out April.
• 23:42
  Speaker 2: PCE we get on Thursday of next week. The projections
• 23:47
  Speaker 2: that we have for that are that let's see do
• 23:52
  Speaker 2: I have them.
• 23:53
  Speaker 4: No, I don't have them yet, so I can't really
• 23:55
  Speaker 4: get into it.
• 23:55
  Speaker 3: Three and a half percent year over year is what
• 23:57
  Speaker 3: I'm seeing. Seven tens percent month over month.
• 24:01
  Speaker 4: Do you have the core projection.
• 24:04
  Speaker 6: Three tenths? What about the year over year three to two?
• 24:08
  Speaker 2: So you got core PC and core PC's three to
• 24:10
  Speaker 2: two right now, So you're at three to two at
• 24:13
  Speaker 2: this point. You're expected to stay there and in the
• 24:18
  Speaker 2: March step, which I'm looking at right now. Uh, they
• 24:21
  Speaker 2: thought that core pce E would come in at two
• 24:23
  Speaker 2: point seven percent for this year.
• 24:27
  Speaker 4: So there's basically no path.
• 24:30
  Speaker 2: For that to happen at that point given the prints
• 24:35
  Speaker 2: that we are going to have seen by next week.
• 24:41
  Speaker 2: And what I mean by that is if you look
• 24:43
  Speaker 2: at January through April, January was point four on core PCE,
• 24:49
  Speaker 2: February was point four, March was point three. Let's say
• 24:53
  Speaker 2: April comes into point three as well. So overall, you
• 24:57
  Speaker 2: are now for the first four months of the year
• 25:01
  Speaker 2: at one point four percent cumulative during that time, which
• 25:07
  Speaker 2: means you only have in order to get to two seven.
• 25:10
  Speaker 2: You've only got another one point three over the next
• 25:12
  Speaker 2: seven months, which means you've got average point one eight
• 25:15
  Speaker 2: percent on.
• 25:16
  Speaker 6: Core PCE stuff to do.
• 25:18
  Speaker 2: Guys, like, let's be honest, what is the mechanism for
• 25:20
  Speaker 2: inflation to drop over that period for the entire seven months?
• 25:26
  Speaker 2: Given where we are now, the only one that exists
• 25:29
  Speaker 2: is recession. And got to tell you, the yeos economy
• 25:33
  Speaker 2: doesn't look like it's heading anywhere near recession. Do you
• 25:35
  Speaker 2: happen to catch the jobs claims numbers this morning to ten?
• 25:38
  Speaker 6: Was it?
• 25:39
  Speaker 1: Uh?
• 25:39
  Speaker 4: Yes?
• 25:39
  Speaker 2: Two oh nine, Okay, that is not recessionary. Do you
• 25:43
  Speaker 2: catch the continuing jobs claims numbers?
• 25:45
  Speaker 1: No?
• 25:46
  Speaker 2: One point seven eight two million. That is actually still
• 25:49
  Speaker 2: below not just the last year's numbers, but the twenty
• 25:51
  Speaker 2: twenty four numbers as well. There is nothing showing up
• 25:55
  Speaker 2: that is recessionary in the US data right now.
• 25:58
  Speaker 6: A lot of people nervous about jobs ben not filing
• 26:00
  Speaker 6: front employment.
• 26:01
  Speaker 2: I'm not saying that they like your personal economy is good.
• 26:04
  Speaker 2: What I'm saying is it's not recessionary. Now, there's a
• 26:07
  Speaker 2: difference between saying I'm paying too much for gas and
• 26:10
  Speaker 2: we're in a recession.
• 26:10
  Speaker 6: So then what makes this meaning so interesting to you?
• 26:13
  Speaker 2: What makes it interesting is the fact that the US
• 26:14
  Speaker 2: economy is in fact in nominal terms accelerating. It's just
• 26:20
  Speaker 2: that that growth is being eaten up by inflation right now,
• 26:23
  Speaker 2: which is why we feel bad.
• 26:24
  Speaker 6: And that's why I think this.
• 26:28
  Speaker 3: Moment with warsh being at the Helm makes it all
• 26:32
  Speaker 3: the much more interesting because, you know what, we've had
• 26:34
  Speaker 3: eight years.
• 26:35
  Speaker 6: Of Powell.
• 26:37
  Speaker 3: Giving us his view and his ability to summarize the
• 26:41
  Speaker 3: view of other members of the FED. It's the first
• 26:44
  Speaker 3: time that anyone really outside of the FED or President
• 26:48
  Speaker 3: Trump himself is going to hear from this new incoming
• 26:50
  Speaker 3: chair and his perspective on that moment that you're describing,
• 26:54
  Speaker 3: which is pretty objectively an inflationary growth acceleration environment.
• 26:59
  Speaker 4: And and.
• 27:01
  Speaker 3: Does he agree right like is does he agree with
• 27:04
  Speaker 3: that perspective that hey, we are entering this moment here,
• 27:09
  Speaker 3: and does that conflict with his view on rates?
• 27:14
  Speaker 2: So, because the two things that I want to see
• 27:15
  Speaker 2: in the in the June step, what do they think
• 27:19
  Speaker 2: core PCE is gonna be for this year? Now, If
• 27:23
  Speaker 2: they come out and they say, yeah, we think it's
• 27:25
  Speaker 2: gonna be a little bit warmer, we think it's gonna
• 27:27
  Speaker 2: be like two nine to three one, they're gonna lose credibility.
• 27:33
  Speaker 2: And when you lose credibility as a central bank. You
• 27:37
  Speaker 2: end up like Argentina, Brazil, Turkey, all the places that
• 27:42
  Speaker 2: have you know, had real trouble because they say, no,
• 27:45
  Speaker 2: we don't need to do anything. And then the long
• 27:47
  Speaker 2: end of the yield curve goes nuts because bond investors say, Okay,
• 27:52
  Speaker 2: you're gonna let inflation run hot. Fine you can't. You
• 27:56
  Speaker 2: can't pay me four and a half percent for a
• 27:58
  Speaker 2: ten year bond. What if inflation runs four and a half,
• 28:01
  Speaker 2: you gotta pay me six. So that's the risk if
• 28:05
  Speaker 2: they come out and try to downplay it, right, folks,
• 28:07
  Speaker 2: if it was I wasn't quite done yet, fine, ed
• 28:12
  Speaker 2: one said. On the other side, if they say no,
• 28:16
  Speaker 2: inflation's gonna be warm, and then we end up with, Okay,
• 28:22
  Speaker 2: now we've got a hiking cycle. Now your bonds end
• 28:25
  Speaker 2: up having to sell off because of that as well,
• 28:27
  Speaker 2: because we're not pricing in a hiking cycle right now.
• 28:29
  Speaker 2: We're just pricing in one rate hike at some point
• 28:31
  Speaker 2: in the next couple of years. So the point that
• 28:34
  Speaker 2: I will make on this, it's a really tough needle
• 28:37
  Speaker 2: to try to thread to say we're gonna be credible
• 28:39
  Speaker 2: against inflation. But in a way that doesn't result in
• 28:43
  Speaker 2: one of those two things, because this is a risky
• 28:46
  Speaker 2: time in my opinion for bonds, particularly longer term bonds.
• 28:51
  Speaker 2: So that's kind of where I am.
• 28:53
  Speaker 6: Fair enough cool, Let's.
• 28:55
  Speaker 2: Take a quick break when we come back, Let's do
• 28:59
  Speaker 2: a little bit of staff roulette.
• 29:02
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• 29:05
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• 29:32
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• 29:54
  Speaker 4: Mike, do you mind if I kickoff stack Roulette?
• 29:57
  Speaker 6: I would love it.
• 29:57
  Speaker 2: Oh, Wonderful New York Times to twenty twenty six graduate's
• 30:02
  Speaker 2: facing a bleak job market. The nineteen ninety one grads
• 30:05
  Speaker 2: have some advice. First of all, I take umbrage with
• 30:09
  Speaker 2: the fact that this is a week job market for
• 30:11
  Speaker 2: new college grads, and look, I haven't been one in
• 30:14
  Speaker 2: about twenty years or so, but I do know how
• 30:17
  Speaker 2: to read statistics, and here's what I can tell you.
• 30:21
  Speaker 2: In September and August of last year, the age twenty
• 30:24
  Speaker 2: to twenty four unemployment rate set at nine point two percent.
• 30:27
  Speaker 2: Today it is at seven point six percent, having declined
• 30:30
  Speaker 2: by one and a half percent. In March it was
• 30:32
  Speaker 2: down to six point four But obviously this is a
• 30:34
  Speaker 2: volatile data series, but either way, it's pretty clear that
• 30:37
  Speaker 2: the unemployment rate for age twenty to twenty four has
• 30:39
  Speaker 2: come down significantly in the last six months. The age
• 30:43
  Speaker 2: twenty five to twenty nine unemployment rate has gone from
• 30:46
  Speaker 2: five point nine percent in January down to four point
• 30:50
  Speaker 2: nine percent now. On top of that, when we go
• 30:53
  Speaker 2: to Indeed and look at their job openings data, what
• 30:58
  Speaker 2: we are seeing is that their job openings have increased
• 31:02
  Speaker 2: by around two and a half percent since last fall
• 31:05
  Speaker 2: as well. So I do understand that this is a
• 31:08
  Speaker 2: lower hiring rate environment right now, but I got to
• 31:12
  Speaker 2: tell you what I'm seeing from a lot of companies
• 31:14
  Speaker 2: that are going through layoffs. They are like the thing
• 31:17
  Speaker 2: that you are absolutely seeing it show up in the data. Now,
• 31:21
  Speaker 2: they're laying off expensive people in their forties, fifties, and sixties,
• 31:25
  Speaker 2: and they are hiring cheap kids. Yeah, that's what the
• 31:29
  Speaker 2: data is telling me.
• 31:30
  Speaker 3: I know, twenty year olds aren't kids, but yeah, again,
• 31:34
  Speaker 3: even going back to ninety one, the piece here was, hey,
• 31:38
  Speaker 3: let's go basically talk to or revisit a piece that
• 31:41
  Speaker 3: we did with the parents of the kids that are
• 31:43
  Speaker 3: graduating right now. The unemployment rate back then was over
• 31:47
  Speaker 3: ten percent. At least, there is an argument back in
• 31:49
  Speaker 3: ninety one that hey, this is a tough job market.
• 31:51
  Speaker 3: I really like, I'm trying to look at the prolonged
• 31:56
  Speaker 3: periods of time where the unemployment rate for twenty to
• 31:59
  Speaker 3: twenty four year old was under seven percent. I mean,
• 32:02
  Speaker 3: it was the very late twenty tens.
• 32:09
  Speaker 6: Nine.
• 32:10
  Speaker 3: So you have to go back to the sixties the
• 32:13
  Speaker 3: last time, like when when college graduation rates were much lower,
• 32:17
  Speaker 3: to find a time when it was prolonged below that
• 32:19
  Speaker 3: seven percent rate. So look, I don't debate that AI
• 32:22
  Speaker 3: is scary and that it is challenging right now. Sometimes
• 32:27
  Speaker 3: to find the exact type of role you're looking for,
• 32:30
  Speaker 3: but the data just don't back it up.
• 32:33
  Speaker 2: And every generation as they're coming into the workforce goes
• 32:38
  Speaker 2: through something that's scary in the economic and the hiring cycle.
• 32:43
  Speaker 2: You look at the millennials, Yeah, I'll hand.
• 32:46
  Speaker 6: It to my millennials here.
• 32:47
  Speaker 3: When June of twenty ten, they're facing an unemployment rate
• 32:51
  Speaker 3: for twenty to twenty four year olds at fifteen percent.
• 32:54
  Speaker 4: Yeah.
• 32:55
  Speaker 2: So again, okay, millennials went through the financial crisis. You
• 32:59
  Speaker 2: go and take a look at gen X. Okay, gen
• 33:03
  Speaker 2: X was nervous that all of the like that every
• 33:07
  Speaker 2: job and every like all economic growth was gonna end
• 33:10
  Speaker 2: up in Japan because that was like the big fear.
• 33:12
  Speaker 2: Then you go and you take a look at the
• 33:14
  Speaker 2: boomers and when they were coming into the workforce into
• 33:16
  Speaker 2: ten fifteen.
• 33:17
  Speaker 3: Years before eighty two, you had a they're entering labor
• 33:21
  Speaker 3: force at an unemployment rate of similar to the Great Recession,
• 33:23
  Speaker 3: like sixteen percent.
• 33:25
  Speaker 2: Again, I don't think any generation goes through this unscathed.
• 33:30
  Speaker 2: But to call this a bleak job market, guys, I'm telling.
• 33:35
  Speaker 3: It honestly does them a disservice because it's just you're
• 33:38
  Speaker 3: describing something as bleak.
• 33:39
  Speaker 6: That's actually can get a heck of a lot worse.
• 33:43
  Speaker 2: If if you took a twenty two year old right
• 33:46
  Speaker 2: now and took them back to June of twenty ten
• 33:49
  Speaker 2: and said find a job, they would be crying to
• 33:53
  Speaker 2: come back to twenty twenty six by the end.
• 33:55
  Speaker 4: Of the day.
• 33:56
  Speaker 3: Yeah, I not look as stories that are being written
• 34:00
  Speaker 3: back then were of PhD graduates with what are today
• 34:06
  Speaker 3: pretty useful Pa, I'm not talking about the PhD in
• 34:09
  Speaker 3: English lit.
• 34:11
  Speaker 6: No offense to the English lit PhD.
• 34:13
  Speaker 3: I'm talking about like you know, stem PhDs delivering pizza
• 34:17
  Speaker 3: in twenty eleven.
• 34:18
  Speaker 4: Yes, I mean like it was bad.
• 34:22
  Speaker 2: I mean look, when I was graduating from college, I
• 34:26
  Speaker 2: applied to like one hundred jobs. I got three interviews. Like,
• 34:30
  Speaker 2: it wasn't even like three offers. It was no, I
• 34:32
  Speaker 2: got three interviews.
• 34:35
  Speaker 6: It was.
• 34:35
  Speaker 2: It was brutal then. And this was back before everyone
• 34:39
  Speaker 2: was screening with AI and this and that to weed
• 34:41
  Speaker 2: you out. This was no like just no one wanted
• 34:44
  Speaker 2: to hire because no one had anything to sell.
• 34:46
  Speaker 4: It was it was brutal.
• 34:47
  Speaker 3: I think there's some good advice in some of the pieces,
• 34:49
  Speaker 3: like you know, expect your first job is gonna kind
• 34:53
  Speaker 3: of suck. You're going to do explotive work like that,
• 34:56
  Speaker 3: that's kind of what the gig is. And if you
• 34:59
  Speaker 3: end up delivering around the office, and that's kind of
• 35:01
  Speaker 3: what you do.
• 35:04
  Speaker 6: Another piece of advice that I saw.
• 35:05
  Speaker 3: Mentioned there is, you know, I know, everybody wants to
• 35:07
  Speaker 3: go work for that giant name company and go back
• 35:10
  Speaker 3: to their five year college reunion being known for the
• 35:13
  Speaker 3: guy that worked for JP Morgan, or for Johnson and Johnson,
• 35:16
  Speaker 3: or the massive, big name that everybody recognizes. But you know, honestly,
• 35:20
  Speaker 3: there are great opportunities of companies of all sizes.
• 35:23
  Speaker 6: And I don't get me wrong.
• 35:24
  Speaker 3: I started my career at a very giant, well known
• 35:27
  Speaker 3: company and I value that time, but it's probably not
• 35:30
  Speaker 3: the most important thing.
• 35:32
  Speaker 4: I don't care. Your examples of big companies were JP
• 35:34
  Speaker 4: Morgan and Johnson and Johnson.
• 35:35
  Speaker 3: I was just stuck on js not you know, Google
• 35:38
  Speaker 3: or Meta, you know, stuck on Jays.
• 35:41
  Speaker 4: Like I said, it's fine, what else you got for me?
• 35:43
  Speaker 3: Layoff notices, meta planning about eight thousand employees who I
• 35:49
  Speaker 3: think we're already terminated. And you know, the zuck in
• 35:53
  Speaker 3: there talking about how in the age of AI success
• 35:56
  Speaker 3: is not a given. No kidding Zuckerberg, you guys are
• 36:00
  Speaker 3: you know, pretty far behind the eight ball. I would
• 36:02
  Speaker 3: say success is pretty far out of reach, not necessarily
• 36:04
  Speaker 3: just not a given. Also into it planning to cut
• 36:08
  Speaker 3: their workforce by some seventeen percent, as the tax software
• 36:12
  Speaker 3: maker is reckoning with their expected slowing growth going forward,
• 36:17
  Speaker 3: and just the software demolition that AI has taken to
• 36:20
  Speaker 3: that market over the course of the last few months.
• 36:22
  Speaker 3: I think these headlines, though, are what continue to spook
• 36:27
  Speaker 3: not only recent college grads. Like the recent college grads
• 36:31
  Speaker 3: are voicing it. I do see it there, but you know,
• 36:34
  Speaker 3: speaking I didn't actually speak to somebody, so, you know,
• 36:36
  Speaker 3: third hand news from somebody working for Meta's. It's a
• 36:39
  Speaker 3: pretty scary place to work right now. A lot of pressure,
• 36:42
  Speaker 3: a lot of effort. Anecdotally that morale is not good. Yeah, So,
• 36:45
  Speaker 3: like I can comprehend why the vibes are so weak
• 36:52
  Speaker 3: right now in corporate America. But again, I think describing
• 36:57
  Speaker 3: this labor market as atrocious and impossible to find work
• 37:03
  Speaker 3: for recent college grads is doing them a diskservice, because unfortunately,
• 37:09
  Speaker 3: it can get a hell of a lot worse than
• 37:11
  Speaker 3: what we are experiencing right now to the tune of
• 37:15
  Speaker 3: like twice as bad. So I will fully acknowledge if
• 37:18
  Speaker 3: we get to a point where it's, you know, a
• 37:20
  Speaker 3: rough labor market like we've seen at other times, it's
• 37:22
  Speaker 3: just not right now.
• 37:24
  Speaker 2: You want an honest place where at least for the
• 37:25
  Speaker 2: next five years there's a ton of demand and not
• 37:28
  Speaker 2: nearly enough people.
• 37:32
  Speaker 6: I mean nursing and construction, truck driving truck Okay.
• 37:36
  Speaker 2: They're like between some changes from a regulatory perspective and
• 37:41
  Speaker 2: other factors, you have not nearly enough drivers to cover
• 37:47
  Speaker 2: the loads that are out there, and trucking rates have
• 37:50
  Speaker 2: gone up by seventy five percent in the last three
• 37:52
  Speaker 2: months as.
• 37:53
  Speaker 4: A result of it.
• 37:53
  Speaker 6: How old do you have to be to be a
• 37:54
  Speaker 6: long haul trucker?
• 37:55
  Speaker 4: I don't know. Probably at least like ten twelve, I
• 38:01
  Speaker 4: would think.
• 38:02
  Speaker 3: I mean, like you gotta be twenty five to rent
• 38:03
  Speaker 3: a car, so at least twenty one in the US
• 38:06
  Speaker 3: to do that.
• 38:07
  Speaker 6: I'll tell you it could be a pretty.
• 38:11
  Speaker 3: Fun gig as a twenty one year old to travel
• 38:13
  Speaker 3: the country drive for three.
• 38:14
  Speaker 4: To five years.
• 38:15
  Speaker 3: Like, you know, that'd be pretty You have to be
• 38:17
  Speaker 3: a pretty independent spirit and pretty cool to pick that up,
• 38:20
  Speaker 3: but man, that'd be pretty cool.
• 38:22
  Speaker 2: All kinds of opportunities right now. It is again who
• 38:25
  Speaker 2: knows what the long term picture looks like, but next
• 38:29
  Speaker 2: three to five years, I think they're wide open opportunities,
• 38:33
  Speaker 2: uh in trucking.
• 38:35
  Speaker 4: So there you go.
• 38:36
  Speaker 2: Quick break here for the entire rest of the day,
• 38:38
  Speaker 2: but we're gonna be back at it tomorrow to finish
• 38:40
  Speaker 2: up the week before a big, nice long Memorial Day weekend.
• 38:45
  Speaker 4: Have a great day, we'll see tomorrow.