Latest / The Financial Exchange Show / AI’s Labor Threat Becomes a Bigger Problem for Big Tech

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AI’s Labor Threat Becomes a Bigger Problem for Big Tech · The Financial Exchange Show

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Speaker 2: Good morning, Welcome back to the Financial Exchange. We've got
1:15
Speaker 2: markets and mixed territory as the NASDAK continues to remain
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Speaker 2: under pressure as it has all week.
1:21
Speaker 3: This week.
1:22
Speaker 2: We had earnings last night from Micron, the memory maker
1:28
Speaker 2: and the now ninth or tenth largest company in the
1:31
Speaker 2: S and P five hundred. Blockbuster earnings, really good quarter,
1:36
Speaker 2: grow revenue an insane amount. Stock is up today, but
1:40
Speaker 2: not enough to lift the index overall. And now the Nasdaq,
1:44
Speaker 2: which is off about a third of a percent today,
1:46
Speaker 2: is off close to four percent over the course of
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Speaker 2: this week, So something to keep an eye on here,
1:52
Speaker 2: as the good news from Micron not quite enough to
1:55
Speaker 2: lift the market overall. We had announcement from Apple this
1:58
Speaker 2: morning that they'll be raising price on their mac and
2:01
Speaker 2: iPads by fifteen to twenty percent. No news yet on
2:04
Speaker 2: the latest iPhones, but presumption presumably we will see price
2:09
Speaker 2: adjustments there as well. At eight thirty this morning, we
2:13
Speaker 2: got another read on the May inflation scenario, which was
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Speaker 2: unsurprisingly hot, the hottest in several years, the year over
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Speaker 2: year number coming in at four point one percent. But
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Speaker 2: even when you strip out the food and energy pieces,
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Speaker 2: we're seeing inflation in the month of May of three
2:31
Speaker 2: point four percent, so even excluding gas prices, a pretty
2:35
Speaker 2: hefty level of inflation. Fortunately, though those numbers were right
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Speaker 2: in line with expectations. No big surprise here for analysts
2:43
Speaker 2: in terms of what we saw on those inflation figures.
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Speaker 2: So everyone now kind of expecting that disinflation coming in
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Speaker 2: the second half of the year when we see gas
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Speaker 2: prices come back down and energy prices overall decrease, presuming
2:56
Speaker 2: we get something done here in Iran, which is pretty
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Speaker 2: much being assumed that hey, you know, this is status quo.
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Speaker 2: When we will see traffic return to normal very much
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Speaker 2: an open question obviously. And then one figure we did
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Speaker 2: not talk about yet, the weekly jobless claims that we
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Speaker 2: get every Thursday, came in better than last week. So
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Speaker 2: you know, I continue to bring this up because in
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Speaker 2: the second half of last year and really all of
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Speaker 2: twenty twenty five, we saw some pretty weak hiring numbers.
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Speaker 2: So far in twenty twenty six they've been quite robust,
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Speaker 2: and in spite of the headlines about companies laying off employees,
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Speaker 2: especially some in the tech space, we are not seeing
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Speaker 2: that reflected in the overall figures. When it comes to
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Speaker 2: people filing for unemployment, and in fact the pace of
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Speaker 2: new hiring has increased substantially in twenty twenty six markets
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Speaker 2: mixed territory, NASDAQ off four tenths percent, SMP up a quarter,
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Speaker 2: DOW up a full percentage point. As we head into
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Speaker 2: last few trading days of June ahead of the two
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Speaker 2: hundred and fiftieth July fourth holiday, will be off Friday
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Speaker 2: for that holiday. Of course, as all focus remains on
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Speaker 2: artificial intelligence, there is a bigger and bigger call for somebody, government, NGOs,
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Speaker 2: the companies themselves to take a more critical look at
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Speaker 2: what the technology's impact is going to be on the
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Speaker 2: labor market. And now we have a few of those
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Speaker 2: leading companies in the space funding some five hundred million
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Speaker 2: dollars into an organization called raise us, which is being
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Speaker 2: led by Gina Ramundo, the former Commerce Secretary and Rhode
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Speaker 2: Island governor. To I guess, try and get companies to
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Speaker 2: brainstorm and think about the impact that AI could have
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Speaker 2: on the labor market and what needs to be done
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Speaker 2: to train up those folks who are impacted. And I
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Speaker 2: don't know, this seems like much ado about nothing.
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Speaker 4: I don't really have a hot. This seems a little
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Speaker 4: early to me, Mike. You know, I just don't really
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Speaker 4: know if AI is having a cutting edge impact on
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Speaker 4: the broader labor force. Like I'm sure if you talk
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Speaker 4: to people in Silicon Valley and in specific sectors of business,
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Speaker 4: it is been transformative, and there are you know, dramatic
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Speaker 4: changes to coders and engineers and their ability to find jobs.
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Speaker 4: But I just I'm not so sure that there is
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Speaker 4: enough to be done here just yet.
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Speaker 2: Well look, I won't pooh pooh, you know, thought leaders
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Speaker 2: trying to game out the different scenarios and on a
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Speaker 2: purely hypothetical basis at this point of what this technology
5:48
Speaker 2: could mean for different job sectors, Like.
5:52
Speaker 3: I don't, I don't you know.
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Speaker 2: Part of my language crap on any type of research
5:58
Speaker 2: that's being done. I guess I can applaud companies who
6:03
Speaker 2: are you know, forward thinking on the subject, and certainly
6:07
Speaker 2: plenty of these have given out warnings about what they
6:10
Speaker 2: believe is going to happen to the labor market globally.
6:13
Speaker 2: To your point, I think any sort of law changes
6:19
Speaker 2: or funding into government programs to deal with this today
6:22
Speaker 2: would be very preemptive and not really be founded in
6:26
Speaker 2: any sort of reality right now. But if a think
6:29
Speaker 2: tank wants to start putting together, you know, hypothetical policies
6:32
Speaker 2: to react to what could be labor market changes down
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Speaker 2: the road, I guess that's all that this is. I
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Speaker 2: think simultaneously, if these AI companies want to actually see
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Speaker 2: their technology continue to expand, then something they need to
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Speaker 2: do that has nothing to do with this is find
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Speaker 2: a way to reposition, reposition themselves and appeal more broadly
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Speaker 2: to the general public. Because right now, when I talk
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Speaker 2: to the general public, I hear two things. One, these
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Speaker 2: companies want to create technology that's going to take my job,
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Speaker 2: and then they want to build a data center in
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Speaker 2: my backyard that's going to be loud and take up
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Speaker 2: all the water and electricity resources in my area.
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Speaker 3: Yeah, there needs not exactly a great PR situation.
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Speaker 4: There needs to be a sentiment shift and a PR
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Speaker 4: shift on AI as a whole. The leaders of AI,
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Speaker 4: I feel like have done a really lousy job in
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Speaker 4: the way that they've branded the technology. There has been
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Speaker 4: too much emphasis on some of the potential dire impacts
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Speaker 4: that the technology could bring about job loss and some
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Speaker 4: of these other factors that have been mentioned and perhaps
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Speaker 4: not enough of a real world focus on, here are
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Speaker 4: the things that it can do to enhance your day
7:44
Speaker 4: to day productivity, to enhance your life, less focus on Hey,
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Speaker 4: this is so great that we're going to just eliminate
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Speaker 4: a bunch of jobs.
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Speaker 2: And I wonder if that's just a symptom of where
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Speaker 2: the progress has been made so far. Right, if there's
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Speaker 2: one area that you can point to AI being extraordinarily successful,
8:04
Speaker 2: it's been coding and software design.
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Speaker 4: Right, really good at him.
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Speaker 2: And you know, from what I understand, that has to
8:11
Speaker 2: do with the processes that go into it. It's a
8:13
Speaker 2: very structured design process where you are, you know, setting
8:18
Speaker 2: things a certain way, testing in a very specific way,
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Speaker 2: and so therefore, you know, AI is well suited to that.
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Speaker 2: But you know, the promises that we're talked about. Look, hey,
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Speaker 2: you know, maybe this technology can create new drug combinations
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Speaker 2: to treat cancer and all sorts of more promising things
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Speaker 2: that I think the general public would be excited about
8:36
Speaker 2: rather than just hey, it makes a software coder three
8:40
Speaker 2: hundred percent more efficient, and therefore we need few r
8:42
Speaker 2: software coders.
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Speaker 3: So maybe it's just a symptom of where where we have.
8:46
Speaker 2: Seen progress so far and there's more to come here,
8:49
Speaker 2: but I'm with you that these companies probably need to
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Speaker 2: do more than throw some money into an organization that's
8:58
Speaker 2: going to study what happens in the worst case scenarios
9:01
Speaker 2: for this technology. That seems a bit shortsighted to me, Like, hey,
9:07
Speaker 2: focus a little bit on how we are going to
9:11
Speaker 2: economically benefit communities that we are building data centers in
9:14
Speaker 2: that need to be built in the United States. Talk
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Speaker 2: to me about how the technology is eventually going to
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Speaker 2: create high paying jobs in specific areas, because there's going
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Speaker 2: to be a new workforce trained and built on this
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Speaker 2: latest technology like every other technology has created in the past.
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Speaker 2: I do genuinely believe that's going to happen. I don't
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Speaker 2: know what on I don't know on what timescale, but
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Speaker 2: you'd have a tough time convincing me that companies aren't
9:43
Speaker 2: going to hire some new class of workers that are
9:45
Speaker 2: very well read on this newest technology and pay them
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Speaker 2: a whole boatload of money. Oh yeah, So yeah, there's
9:53
Speaker 2: there's I think a bit of a pr problem here,
9:56
Speaker 2: to say the least, and money talks ultimately, right, I
10:03
Speaker 2: do fundamentally believe that if data center companies pay local
10:06
Speaker 2: municipalities enough, then they'll get their data centers built. But
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Speaker 2: a little bit of positive spin would help on that
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Speaker 2: scenario two, and none of these companies seem to be
10:17
Speaker 2: doing that. Let's take a quick break when we come back,
10:22
Speaker 2: when be playing trivia here, and Alison Schrieger from Bloomberg
10:26
Speaker 2: asks if gen Z's financial trauma is going to make
10:29
Speaker 2: it more cautious as an investment group. Let's say quick break,
10:33
Speaker 2: we'll be talking about those next.
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Speaker 2: Alison Traeger from Bloomberg asks will gen Z's financial trauma
12:18
Speaker 2: make it more cautious? To which I asked, which financial
12:22
Speaker 2: trauma did gen Z have? I mean, we had like
12:24
Speaker 2: a thirty percent stock market pullback. We've had a really
12:28
Speaker 2: strong labor market, So I don't know what the I
12:31
Speaker 2: guess high inflation would be the financial trauma to the
12:35
Speaker 2: gen Z group.
12:36
Speaker 3: Perhaps.
12:38
Speaker 2: She points out that like certain generations did have a
12:42
Speaker 2: very clear scarring from their experience. Right when you talk
12:45
Speaker 2: about folks that lived through the Great Depression, they didn't
12:50
Speaker 2: trust banks. Sure, they generally didn't want to invest in
12:53
Speaker 2: the stock market for a prolonged period of time, and
12:55
Speaker 2: you saw some of those traits pass down to their
12:58
Speaker 2: baby boomer kids in a lot of cases, right, Like
13:01
Speaker 2: that is definitely a trend that I've been able to detect.
13:04
Speaker 2: In the case of millennials, I think through the millennial
13:08
Speaker 2: class that they went through the Great Recession. They weren't
13:12
Speaker 2: investing back then, but they did see a lot of
13:15
Speaker 2: their parents get laid off from long term careers. And
13:18
Speaker 2: you know what, I actually do see a trend there,
13:21
Speaker 2: not in their investment behavior, because I don't think they
13:23
Speaker 2: bore the scars of the Great Recession from that perspective,
13:27
Speaker 2: but go take a look at the average tenure of
13:29
Speaker 2: a millennial in terms of their working career and how
13:32
Speaker 2: long they stay at jobs. It's significantly different than Gen
13:36
Speaker 2: xers or Baby boomers way less, right, you know, from
13:40
Speaker 2: what I'm seeing out there, you know, the job hopping
13:43
Speaker 2: on average for millennials. This has probably changed a little bit,
13:46
Speaker 2: but a few years ago was like threeish years compared
13:49
Speaker 2: to five to ten years for boomers and Gen xers.
13:51
Speaker 2: So I do think behavior changes. I don't think there's
13:56
Speaker 2: much from gen Z that tells me that they are
13:58
Speaker 2: going to change in term their investment behavior or their
14:03
Speaker 2: behavior towards employers. There might be I would imagine there's
14:07
Speaker 2: something that's going to be social and health related due
14:11
Speaker 2: to their COVID experience.
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Speaker 3: Like I don't know, Like there's a whole.
14:15
Speaker 2: Group of kids who was forced to stay in and
14:18
Speaker 2: not socially interact in person.
14:19
Speaker 3: For a prolonged period of time. That's got to.
14:21
Speaker 2: Screen you up in some way. Maybe you're less trusting
14:24
Speaker 2: of health systems. I'm not exactly sure how that's going
14:27
Speaker 2: to play out, But I don't see anything that would
14:29
Speaker 2: make them more or less tolerant for risk I think
14:33
Speaker 2: than any other group.
14:34
Speaker 4: No, and she does hit on this a little bit
14:36
Speaker 4: the piece I would sort of lean the other way
14:39
Speaker 4: on it. She first highlights this idea that it is
14:42
Speaker 4: the Chinese gen Zers who are a little bit more
14:45
Speaker 4: conservative from a risk Ton's perspective in the way they
14:48
Speaker 4: invest I view it oppositely here. Domestically, it feels like
14:52
Speaker 4: there is much more of an impetus for this younger
14:55
Speaker 4: gen Z generation to get investing earlier and often and
14:58
Speaker 4: more risky than gambling. Yeah, that, like all those aspects
15:03
Speaker 4: in general, the gamification of investments. Robin Hood was kind
15:07
Speaker 4: of the pioneer behind that as a company, you've got
15:10
Speaker 4: just a much wider array of access to trading very
15:15
Speaker 4: easily and very cheaply. Compared to when you and I
15:18
Speaker 4: started investing, Mike, it was at least you know, seven
15:20
Speaker 4: bucks of trade for a commission, and that now all
15:23
Speaker 4: those barriers are completely eliminated, and you can have access
15:27
Speaker 4: on your mobile phone to be able to trade stocks
15:30
Speaker 4: on a daily basis. So I almost view it, you know,
15:33
Speaker 4: oppositely here that there is going to be continued apposite
15:37
Speaker 4: from gen Z domestically to invest and not to mention
15:39
Speaker 4: to your point, from the beginning of the segment, they
15:43
Speaker 4: haven't experienced any significant economic downtterm. She references the pandemic here,
15:47
Speaker 4: and I'll absolutely get behind the physical and emotional concerns
15:52
Speaker 4: that could perhaps arise from that pandemic period, but not
15:56
Speaker 4: so much on the investing side. Outside of twenty twenty two,
15:59
Speaker 4: you've had some really robust years of the market that
16:02
Speaker 4: has really rewarded risk.
16:07
Speaker 3: Risk.
16:07
Speaker 4: Not the operation risk taking, yeah I was gonna say so,
16:10
Speaker 4: cand just say risverse, but risk taker investors.
16:13
Speaker 2: The other big impact that I can see right now
16:16
Speaker 2: is we are still experiencing the worst inflation in fifty years, right,
16:21
Speaker 2: Like it's you know, the period that we've experienced for
16:24
Speaker 2: the last five years. You know, I don't think there's
16:27
Speaker 2: been any five year period in the last fifty since
16:30
Speaker 2: the nineteen seventies that have had the cumulative inflation that
16:33
Speaker 2: we've dealt with now, So I'm unclear about what that
16:36
Speaker 2: will do in terms of shape being expectations of young people.
16:39
Speaker 2: But that would be the other major event that I
16:42
Speaker 2: could point to as a formative economic effect on that
16:47
Speaker 2: group of people. But yeah, it doesn't always play out
16:49
Speaker 2: the way you would think, right, I mean, baby boomers,
16:52
Speaker 2: who did live through several big recessions and inflationary period
16:57
Speaker 2: generally speaking, are one of the most holler into generations
17:01
Speaker 2: for risk taking. Millennials also quite high up there in
17:06
Speaker 2: terms of their investment, risk taking willingness. That's in spite
17:10
Speaker 2: of them coming of age during the Great Recession. So
17:12
Speaker 2: you know, these things do seemingly have an impact, but
17:15
Speaker 2: not necessarily in the way that you think they would,
17:20
Speaker 2: and not in the way that the previous generation had, right,
17:23
Speaker 2: I mean, the Great Recession was undoubtedly the worst recession
17:25
Speaker 2: that we had since the Great Depression, and yet it
17:29
Speaker 2: didn't shape people's minds towards investing in the same way
17:33
Speaker 2: that the Great Depression did, probably because we had a
17:36
Speaker 2: bunch of safeguards that didn't require us to starve in
17:39
Speaker 2: the street and eat zoo animals. But yeah, that's one
17:43
Speaker 2: of the stories that has always stuck with me about
17:46
Speaker 2: the Great Depression is a historian talking about, you know,
17:49
Speaker 2: tough economic times and comparing it to the Great Depression,
17:53
Speaker 2: and the historian just says, you know, until they closed
17:57
Speaker 2: the zoo, slaughter of the email, the slot of the animals,
18:00
Speaker 2: and hand out the meat to the hungry in the streets.
18:02
Speaker 2: I don't think you can justify comparing this economic moment
18:05
Speaker 2: in time to what people in the Great Depression went through.
18:08
Speaker 2: That's I think that's an important reminder. Annuity options growing
18:12
Speaker 2: in four oh one k's No one seems to be
18:14
Speaker 2: buying that, any idea, why, Paul.
18:17
Speaker 4: Typically those annuity options are not nearly as prevalent as
18:24
Speaker 4: the four to one K target day funds that are
18:26
Speaker 4: much more the default for programs out there. The thing
18:31
Speaker 4: with annuities, they get a bad rap sometimes and probably
18:36
Speaker 4: more eductytimes for good reasons, for good reason, but oftentimes
18:39
Speaker 4: you need more education around the liquidity aspect with annuities
18:43
Speaker 4: can be a deterring factor where you're not You were
18:46
Speaker 4: perhaps promised a lifetime payment, but the access to those
18:50
Speaker 4: funds is not nearly as liquid as just regularly investing
18:53
Speaker 4: in your four one.
18:54
Speaker 2: My answer, annuities get sold for right or for wrong
18:59
Speaker 2: by really compelling salespeople who get paid big commissions.
19:04
Speaker 3: That does not exist in.
19:05
Speaker 2: The four oh one k market, and so therefore you're
19:07
Speaker 2: not seeing the sales true. You know, whether you think
19:11
Speaker 2: that's a good thing or a bad thing. One thing
19:13
Speaker 2: that is pretty consistent to the nuity market is that
19:15
Speaker 2: they're sold by if they're making money, good salespeople who
19:20
Speaker 2: get big commissions, those who have been stripped out in
19:22
Speaker 2: the four oh one k market, so sales aren't looking
19:24
Speaker 2: like what they are in other places. Quick Break Full
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Speaker 5: stock is up by two percent. Darden Restaurants posted mixed
21:16
Speaker 5: quarterly results in weak guidance, sending shares in the Olive
21:19
Speaker 5: Garden parent company up modestly, and after its twenty six
21:23
Speaker 5: percent jump yesterday, New Meme stock Wendy's down by almost
21:27
Speaker 5: five percent today. I'm Tucker Silva and that is Wall
21:32
Speaker 5: Street Watch.
21:33
Speaker 2: Well, we don't frequently cover German economic policy, but the
21:38
Speaker 2: whole frankly, the whole world right now is changing demographically
21:44
Speaker 2: in terms of how many babies they are having. Not
21:47
Speaker 2: only is this being seen in countries like the United States,
21:50
Speaker 2: Europe and China. China is one that sneaks up on people.
21:53
Speaker 2: They don't really realize that China has one of the
21:57
Speaker 2: very concerning birth rates across the globe right now.
22:00
Speaker 3: But even in places.
22:01
Speaker 2: Like Africa, you know, birth rates are still very much
22:06
Speaker 2: higher than replacement, but slowing dramatically over the course of
22:09
Speaker 2: the last few decades. And as such, especially in developed
22:13
Speaker 2: nations where those birth rates are quite low, the social
22:16
Speaker 2: programs that have been built to fund retirees are all
22:20
Speaker 2: falling apart. In Germany, the government appointed Pension Commission this
22:26
Speaker 2: week released a series of recommendations to fix their systems,
22:30
Speaker 2: one of which includes raising the retirement age to seventy
22:34
Speaker 2: by year twenty ninety two, as well as an already
22:40
Speaker 2: existing change that brings it up to sixty seven by
22:43
Speaker 2: age twenty by year twenty thirty one. Here in the US,
22:45
Speaker 2: the full retirement age for most folks already is age
22:48
Speaker 2: sixty seven, confused often with the Medicare age of sixty five,
22:54
Speaker 2: But genuinely, I do think that anyone planning out their
23:00
Speaker 2: retirement today that's more than a decade away from that retirement,
23:04
Speaker 2: that's not at least testing out what things could look
23:06
Speaker 2: like if those ages get pushed back, is doing themselves
23:09
Speaker 2: a bit of a desk service, right, Like I'm not.
23:12
Speaker 2: I've given my opinion that for most older Americans, I
23:16
Speaker 2: don't expect.
23:16
Speaker 3: Their Social Security to be disrupted.
23:18
Speaker 2: In any way seven years from now when the trust
23:21
Speaker 2: fund runs out.
23:23
Speaker 3: But that doesn't mean I.
23:24
Speaker 2: Don't think there will be reforms, especially for younger Americans,
23:27
Speaker 2: to those programs as they quite literally run out of
23:31
Speaker 2: money here domestically.
23:32
Speaker 4: Oh yeah, there's going to have to be in I
23:33
Speaker 4: think one of the lovers to pull would be increasing
23:36
Speaker 4: the age. If we were to do that domestically, the
23:41
Speaker 4: hiking the retirement age by two years would only account
23:44
Speaker 4: for about one fifth of the Social Security's funding gap.
23:46
Speaker 4: He has noted here, So that's not going to do.
23:49
Speaker 4: That's from Andrew Biggs, a senior fellow at a enterprise Institute, thinking.
23:54
Speaker 4: But of course what also is going to have to
23:56
Speaker 4: happen is you know, less benefits for me a year,
24:00
Speaker 4: me and you when we go to collect Mike. That's
24:02
Speaker 4: probably the most realistic way to make some future reforms
24:06
Speaker 4: is to cut down the future benefits of those people
24:08
Speaker 4: who are far away from collecting. Or the third lever
24:12
Speaker 4: that we've talked about a lot is you got to
24:14
Speaker 4: increase taxation to get more money going into the till.
24:18
Speaker 4: So a variation of probably all those is going to
24:21
Speaker 4: have to happen way too late. But that's how it's
24:24
Speaker 4: going to be.
24:24
Speaker 3: We haven't raised taxes in this country in twenty five
24:27
Speaker 3: thirty years. It's not gonna happen.
24:28
Speaker 2: Yeah, Like the last time you can credibly look at
24:32
Speaker 2: things and say you raise taxes was sometime in the nineties.
24:36
Speaker 4: What about increasing the income limit on contributions? Right now
24:40
Speaker 4: it's capped at like one seventy or something.
24:42
Speaker 3: Yeah, I mean all of those things would do the trait.
24:44
Speaker 2: My point is that you cannot look at any federal
24:47
Speaker 2: policy over the course of the last thirty years and
24:49
Speaker 2: point to it and say that they've raised taxes on
24:52
Speaker 2: darn near anybody.
24:53
Speaker 4: Sure.
24:53
Speaker 2: So if it does happen that way, which I don't
24:57
Speaker 2: see how you fix those security without that, and I
25:00
Speaker 2: plenty of people, you know, we've seen people text into
25:02
Speaker 2: the show like applauding that yeah, good, do away with
25:05
Speaker 2: Social Security, cancel it, which.
25:08
Speaker 3: Is surprising text to get.
25:10
Speaker 2: But we have had genuinely people texting and applotting saying, yeah,
25:14
Speaker 2: stop doing social Security, stop collecting the taxes, cancel it entirely,
25:19
Speaker 2: but genuinely, we haven't raised taxes on people in a generation.
25:25
Speaker 2: We are going to face these shortfalls for Social Security
25:28
Speaker 2: and Medicare within the next like very soon, and I'll
25:33
Speaker 2: be fascinated to see how it's dene with. Like I said,
25:35
Speaker 2: in the short term, I think they just print the money.
25:37
Speaker 2: But longer term, you do have to fix the problem.
25:40
Speaker 2: Otherwise your deficits just continue to run amuck.
25:44
Speaker 3: If you are.
25:46
Speaker 2: Not yet collecting on these programs, or even if you are,
25:50
Speaker 2: and you haven't at least gone through the exercise of
25:53
Speaker 2: testing out what happens to your finances if the programs
25:56
Speaker 2: get disrupted.
25:57
Speaker 3: In some meaningful way.
25:58
Speaker 2: I genuinely believe you're doing yourself a disservice by not
26:01
Speaker 2: testing that out. When we at Armstrong Advisory Group build
26:06
Speaker 2: financial plans for the clients that we work with, that
26:10
Speaker 2: is a component of the type of testing we are doing.
26:13
Speaker 2: Is what happens if market returns are worse than they
26:16
Speaker 2: have been. What happens if you get surprised by a
26:19
Speaker 2: health scenario that wasn't in the plan. What happens if
26:23
Speaker 2: changes get made to tax rates or social security. All
26:26
Speaker 2: of these things need to be tested out, and you
26:28
Speaker 2: cannot just rely on recent history as an indication for
26:32
Speaker 2: what's going to happen in the future. If you're starting
26:35
Speaker 2: to build your plan and need to focus on what
26:37
Speaker 2: that magic number needs to be for your retirement, I
26:41
Speaker 2: urge you to sit down with a professional and map
26:43
Speaker 2: it all out. The number for Armstrong Advisory Group, if
26:46
Speaker 2: you'd like to have us assist, is eight hundred three
26:48
Speaker 2: nine three for zero zero one with offices scattered throughout
26:52
Speaker 2: New England. We're happy to meet you close to where
26:54
Speaker 2: you live. The number once again though eight hundred three
26:57
Speaker 2: nine three four zero zero one.
27:00
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
27:02
Speaker 1: registered investment advisor. Nothing in the ad or in any
27:05
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
27:08
Speaker 1: your own financial tax into state planning advisors before making
27:10
Speaker 1: any investment decisions. Armstrong make contact you to offer investment
27:14
Speaker 1: advisory services.
27:15
Speaker 3: Forget whereck Man. Passive income is the new American dream.
27:19
Speaker 2: Paul, Are your social media feeds flooded with garbage like this?
27:23
Speaker 4: I get them from time to time.
27:26
Speaker 2: You can't say it's all garbage like people. Some people
27:28
Speaker 2: do actually find a way to make passive incurs I
27:31
Speaker 2: see there.
27:31
Speaker 3: Is a lot of garbage.
27:32
Speaker 5: I see a lot of this passive income stuff on
27:34
Speaker 5: social media, specifically for vending machines. Yes, Like, look at
27:39
Speaker 5: how it is operative vending machine Big one, and they
27:43
Speaker 5: only show a gross cash flow from the vending machine.
27:45
Speaker 4: They don't take into account.
27:47
Speaker 2: Yeah exactly, So, Yeah, it is ideas like that. More
27:52
Speaker 2: and more I'm hearing of people trying to, you know,
27:56
Speaker 2: sell their voice rights to AI that you know will
28:00
Speaker 2: go and create ads and things like that for them.
28:04
Speaker 2: I even recently heard of a lawyer who quit his
28:08
Speaker 2: job bought three portable saunas. I don't know if you've
28:14
Speaker 2: seen portable saunas. They go on a trailer head, and
28:18
Speaker 2: his whole new business model is I'm not a lawyer anymore.
28:21
Speaker 2: I rent out saunas and I will deliver them to
28:24
Speaker 2: your home. And doesn't sound like terribly passive income. It
28:31
Speaker 2: sounds like a pretty active business.
28:32
Speaker 3: Now you have to run.
28:33
Speaker 4: That's the issue that I have with all these is
28:35
Speaker 4: that you talk to real estate owners or landlords that
28:38
Speaker 4: it is far from passive. Oftentimes, when you establish any
28:43
Speaker 4: type of income stream like that, whether it's renting out saunas,
28:48
Speaker 4: whether it's hauling around to vending machines all over the
28:51
Speaker 4: place and fill them with freeedo lay products like that,
28:53
Speaker 4: there's work that goes into that.
28:55
Speaker 3: Yeah.
28:55
Speaker 2: Can we just all agree that the American dream is
29:00
Speaker 2: not some loophole that's going to allow you to generate
29:03
Speaker 2: six figure income on some passive job. It's just I
29:08
Speaker 2: don't know, Maybe I'm missing the boat on this one,
29:10
Speaker 2: but I'm not saying somebody can't find a niche and
29:13
Speaker 2: make a lot of money doing something. I'm just saying
29:16
Speaker 2: that finding that niche and learning how to make a
29:20
Speaker 2: bunch of money doing something is going.
29:22
Speaker 3: To require a lot of effort.
29:24
Speaker 2: It is not going to be to kick your feetback
29:27
Speaker 2: and make a bunch of money on a well placed
29:30
Speaker 2: vending machine without any work.
29:31
Speaker 3: To do with it.
29:34
Speaker 2: But more and more I do see this occurring, and
29:38
Speaker 2: a lot of it's you know, very well established, Like
29:41
Speaker 2: I would put Airbnb in this category.
29:45
Speaker 5: Even that's a challenge though, Oh yeah, it's not easy.
29:47
Speaker 2: Yeah, yeah, you're dealing with people, oftentimes really annoying people
29:52
Speaker 2: that want to come destroy your home. But you know,
29:55
Speaker 2: you can rent out your car on sites like turo,
29:57
Speaker 2: you can rent out your RV on places like ov share,
30:00
Speaker 2: and I'm sure you can do with a boat and
30:01
Speaker 2: all sorts of other things. And more and more people
30:05
Speaker 2: seem comfortable with that that sharing economy today than was
30:10
Speaker 2: possible in the past. But just beware, because you know,
30:15
Speaker 2: they also outline this poor woman with cancer who you know,
30:19
Speaker 2: couldn't work a regular nine to five and blue thirty
30:22
Speaker 2: five hundred dollars on different training courses.
30:24
Speaker 3: On side hustles, and like, yeah, there's a.
30:29
Speaker 2: Lot of scams out there on social media, and you
30:31
Speaker 2: have to beware of what you're where you're sinking your money,
30:33
Speaker 2: and what the expected ROI is going to look like.
30:36
Speaker 4: If it looks too good to be true, sometimes it
30:38
Speaker 4: is too good.
30:39
Speaker 2: If it looks too good to be true, ninety nine
30:41
Speaker 2: and a half percent of the time it is too
30:42
Speaker 2: good to be true.
30:43
Speaker 3: Let's take quick break. When we come back. Stack Roulette
30:46
Speaker 3: is next.
30:47
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32:15
Speaker 3: We got a text to the show.
32:16
Speaker 2: You can text the show at six one seven three
32:18
Speaker 2: six two thirteen eighty five. But on a topic we've
32:21
Speaker 2: been getting a lot of feedback on recently, job market is.
32:25
Speaker 3: Not good, even for highly qualified gen.
32:28
Speaker 2: Z with strong resume, And I have to tell you
32:30
Speaker 2: I've been getting texts like this almost every time we
32:34
Speaker 2: talk about the labor market, and I do hear from
32:37
Speaker 2: people frequently that their kid or the gen Z member
32:40
Speaker 2: themselves is having a tough time finding the job. But
32:42
Speaker 2: I gotta tell you, you gotta give me evidence, because the
32:45
Speaker 2: evidence that I have does point to a slightly elevated
32:49
Speaker 2: unemployment rate compared to the.
32:51
Speaker 3: Last few years.
32:52
Speaker 2: Right in the last five years, the unemployment rate for
32:56
Speaker 2: that age twenty to twenty four demo, which I assume
32:59
Speaker 2: this person and is talking about recent college grads, the
33:02
Speaker 2: unemployment rate got as low there as five and a
33:05
Speaker 2: half percent back in April of twenty twenty three. Today
33:08
Speaker 2: it's at seven point two percent. So with you compared
33:11
Speaker 2: to twenty twenty three lows and that really robust job market,
33:14
Speaker 2: we're at a higher unemployment level, but we are lower
33:19
Speaker 2: now than just about any time we've seen in the
33:21
Speaker 2: last twelve months, and I think more importantly contextualizing things here,
33:26
Speaker 2: we are substantially lower on that twenty to twenty four
33:30
Speaker 2: unemployment rate than we were at any time during the
33:34
Speaker 2: twenty ten decade when I take a look at those
33:37
Speaker 2: time periods here just readjusting my chart, we entered twenty
33:44
Speaker 2: ten with a twenty to twenty four unemployment rate that
33:48
Speaker 2: was pushing sixteen percent. We did not get below ten
33:53
Speaker 2: percent unemployment, for folks know, between that twenty to twenty
33:57
Speaker 2: four demo until around twenty fifteen, and we did not
34:02
Speaker 2: get to the levels where we're seeing now until around
34:04
Speaker 2: twenty seventeen.
34:05
Speaker 3: So I'm with you.
34:07
Speaker 2: I hear you loud and clear that many people in
34:10
Speaker 2: that demo are having a tough time finding a job
34:13
Speaker 2: in their field, even though they're well qualified. But my
34:17
Speaker 2: only warning to that group is if you think this
34:19
Speaker 2: is bad, watch out. It can get a hell of
34:21
Speaker 2: a lot worse.
34:23
Speaker 4: And there are some factors that could lead for it
34:26
Speaker 4: to potentially get worse. AI is obviously the biggest one
34:29
Speaker 4: that gets mentioned as a looming thread out there. It
34:32
Speaker 4: does seem like, though all we have is the economic
34:35
Speaker 4: data of the study, that then a lot of these
34:39
Speaker 4: companies are very hesitant to take on new workers in
34:42
Speaker 4: this demographic. And I know it comes back to the
34:44
Speaker 4: numbers of the unemployment rate, but it just seems like
34:48
Speaker 4: a lot of companies are sort of staying pat with
34:51
Speaker 4: the workforce that they have rather than making a huge
34:54
Speaker 4: initiative to hire.
34:55
Speaker 3: Yeah, I hear you. I mean, one off stories are
34:57
Speaker 3: interesting to me.
34:59
Speaker 2: I don't want to ignore them, but I need I
35:01
Speaker 2: need data to be able to back up a viewpoint
35:04
Speaker 2: on this, and whether I look at the labor force
35:06
Speaker 2: participation rate for that demo or the unemployment rate. They
35:09
Speaker 2: do not reflect a group in free fall. And I'll
35:13
Speaker 2: be the first one to point it out if we
35:14
Speaker 2: start to see it. It's just it's not happening there yet.
35:17
Speaker 4: I want to go prediction on a year end unemployment
35:20
Speaker 4: for this demographic, or we could.
35:21
Speaker 3: Do it for the year twenty to twenty four. Yep, yeah,
35:24
Speaker 3: by year end, I will.
35:27
Speaker 2: Go with an unemployment rate for twenty to twenty four
35:31
Speaker 2: year old of give me just a second. I am
35:38
Speaker 2: going to go with uh six point seven percent by
35:42
Speaker 2: year end.
35:42
Speaker 4: Coming down, I'm gonna go with eight.
35:46
Speaker 3: Okay, there we go, twenty to twenty four. All right,
35:53
Speaker 3: there we have it.
35:53
Speaker 4: We've got a thrown down the gauntlet.
35:56
Speaker 3: There we go. What do you have for stack with that? Paul?
35:58
Speaker 4: Speaking of the younger gen, and this may be even
36:01
Speaker 4: younger than the twenty twenty four demographic, TikTok and YouTube
36:04
Speaker 4: are reinventing sports viewership. Broadcasters start taking note. Obviously, we're
36:09
Speaker 4: coming off in NBA Finals where they saw record numbers
36:12
Speaker 4: in terms of the Spurs and Knicks viewership. I'm sure
36:15
Speaker 4: Mike was tuned into every game just like I was.
36:18
Speaker 4: But they had come in with the rating of an
36:20
Speaker 4: average of twenty point six million viewers during some of
36:23
Speaker 4: those NBA Finals games, which were really good numbers. But
36:26
Speaker 4: more and more what they're seeing is that the impressions
36:29
Speaker 4: that they're getting on social media are just far exceeding
36:32
Speaker 4: those figures by Gargantu and sums. The five game series
36:36
Speaker 4: between the Nix and Spurs generate fifteen billion views and
36:39
Speaker 4: counting on social media. That's the most for an NBA
36:42
Speaker 4: Finals and nearly triple the previous record set in twenty
36:45
Speaker 4: twenty five. And it just further emphasizes this point. And
36:48
Speaker 4: you guys might see it with having younger kids that
36:51
Speaker 4: streaming and TikTok and YouTube is where they consume most
36:55
Speaker 4: of their media, and so the leagues are in this
36:58
Speaker 4: tough spot where they do want to make sure that
37:00
Speaker 4: their content is out there and available to be consumed.
37:03
Speaker 4: But it does seem like there's this shift that the
37:06
Speaker 4: younger generation is more focused on watching highlights than rather
37:09
Speaker 4: the older school approach of sitting down and watching the
37:12
Speaker 4: full broadcast. You can still monetize both of those, but
37:16
Speaker 4: when you're paying for or you're getting a signlei fi
37:18
Speaker 4: amount of revenue from those rights deals with the linear
37:21
Speaker 4: cable TV providers and everybody's watching highlights, then it does
37:25
Speaker 4: make them question the prices that they're paying for.
37:27
Speaker 1: The live action.
37:28
Speaker 2: If you are right, and I'm not the best sports
37:31
Speaker 2: media expert out there, I might be the worst sports
37:33
Speaker 2: media expert out there. I don't know what ESPN's business
37:36
Speaker 2: model is in that case. I don't know, correct, Thank you, Tucker.
37:40
Speaker 4: I guess they're the ones you Canadian that have to
37:42
Speaker 4: that have the rights to the product with the NBA.
37:45
Speaker 4: But yeah, it's uh, the license it out for social
37:49
Speaker 4: media content, but it just seems like that would make
37:52
Speaker 4: it far chat.
37:54
Speaker 3: Why would I use them?
37:55
Speaker 2: If I'm the NBA right, I can create create high
37:57
Speaker 2: highlight reels just as well as anybody.
38:00
Speaker 4: And you've got streamers who would pay more.
38:01
Speaker 2: Than That's all the time we have for the financial
38:04
Speaker 2: exchange today.
38:05
Speaker 3: Markets remain in mixed territory.
38:07
Speaker 2: NASDAC down third of percent, Dow up three quarters in
38:11
Speaker 2: the S and P five.
38:11
Speaker 3: Hundred and up, and fifth percent.
38:13
Speaker 2: We'll be back at it tomorrow for a Friday financial exchange.
38:16
Speaker 2: Have a great rest of you day, folks,