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Apple's new iPhone highlights the latest Apple Event · The Financial Exchange Show

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Speaker 1: donation today. This is the Financial Exchange with Chuck Zada,
1:06
Speaker 1: and Mark Vandetti.
1:10
Speaker 2: Chuck, Mark and Tucker with you. And we've got markets
1:14
Speaker 2: rallying today largely on the back of some earnings that
1:21
Speaker 2: were fine from Oracle, but the guidance they gave was
1:24
Speaker 2: just monstrous. And so Oracle stock again we're gonna touch
1:28
Speaker 2: on this, but it's up forty one percent today, which
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Speaker 2: in actual dollar terms, just to put this in perspective,
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Speaker 2: you're talking about a company that added about two hundred
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Speaker 2: and eighty billion dollars in market cap in a single day,
1:47
Speaker 2: and that was almost a trillion dollar market cap. It's
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Speaker 2: it's insane. I mean, this was a company that quite
1:52
Speaker 2: honestly five six years ago, like, yes, they were around,
1:56
Speaker 2: they were still, you know, a company, but they were
1:58
Speaker 2: kind of you know, has been when it came to
2:02
Speaker 2: the tech sector. You know they exactly they were. They
2:06
Speaker 2: were fine, they were profitable, they were doing their thing.
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Speaker 2: And today you've got them, you know, potentially becoming you know,
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Speaker 2: the next member of the trillion dollar club sometime in
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Speaker 2: the next couple of days, if not today, depending on
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Speaker 2: how the rest of the day goes. So with that,
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Speaker 2: you currently have the Dow off two hundred and fifty
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Speaker 2: one points because Oracle is not in the Dow. You've
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Speaker 2: got the S and P five hundred up twenty nine points,
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Speaker 2: and the Nasdaq Composit up one hundred and two points,
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Speaker 2: both those about half a percent, And so you say,
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Speaker 2: why are those up only you know, half a percent.
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Speaker 2: The answer is, well, the money to bid up Oracle
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Speaker 2: had to come from somewhere, and basically investors are pulling
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Speaker 2: from elsewhere in tech right now, Apples down three percent,
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Speaker 2: Amazon's down two percent, salesforce is down two percent, met
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Speaker 2: is down one percent, and so you know, other tech
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Speaker 2: and tech adjacent companies are getting sold in order to
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Speaker 2: bid up Oracle. Here on the bond side of things,
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Speaker 2: pretty quiet day, but slightly lower rates on the ten year,
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Speaker 2: which is now at four point six three percent, down
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Speaker 2: one point one basis points. When we take a look
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Speaker 2: at commodity markets, we got oil up sixty six cents
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Speaker 2: a barrel on West Texas Intermediate to sixty three twenty nine.
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Speaker 2: Just not a whole lot of noise. They're just kind
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Speaker 2: of chopping around load to mid sixties as it's been
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Speaker 2: for a while. And we've got gold up another four
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Speaker 2: dollars and seventy cents an ounce to thirty six eighty
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Speaker 2: seven on the nose. No new all time high for
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Speaker 2: gold today, but hey, every day. You know, there's a
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Speaker 2: reason why they have twenty four hours in the day,
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Speaker 2: and it's so that you can see if gold's going
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Speaker 2: to get to a new all time high. And the
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Speaker 2: clock hasn't struck midnight yet, so we'll see where we
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Speaker 2: go today. I want to kick this hour off with
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Speaker 2: a little bit of a chat about Christopher Waller. Wall
3:55
Speaker 2: Street Journal has a profile piece out about him and specifically,
4:02
Speaker 2: you know, kind of talking up the fact that, hey,
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Speaker 2: he has largely, in my opinion, since being named to
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Speaker 2: the Federal Reserve Board of Governors back in twenty twenty
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Speaker 2: by President Trump at the time, I think that Waller
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Speaker 2: has been the member of the Board of Governors who
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Speaker 2: has been most pugged in and most accurate when it
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Speaker 2: comes to forecasting where the economy is wasn't is going.
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Speaker 2: And in my opinion, this along with his you know,
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Speaker 2: the fact that he's already on the Board of Governors
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Speaker 2: and in my mind, should give him a leg up
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Speaker 2: to be the next ved chair. Whether he is or not,
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Speaker 2: obviously is not something that we know right now, but
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Speaker 2: I think that When you look at Waller, he's someone
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Speaker 2: who again recently, has just seemed to be very pugged
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Speaker 2: in and locked into where this economy is, and as such,
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Speaker 2: I think would be a shoe in for the job
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Speaker 2: if President Trump ended up naming him.
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Speaker 3: Well, among the main contenders, he's the only serious monetary
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Speaker 3: policy researcher his early work somewhat ironically because Trump wants
5:14
Speaker 3: to control the FED. I'm not judging it, I'm but
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Speaker 3: it's obvious if Trump could, it would he would be
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Speaker 3: responsible for printing money. Sure, but he knows he can't
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Speaker 3: quite get away with that right now, so he's going
5:24
Speaker 3: for this incremental approach. But Waller's research done mainly in
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Speaker 3: the early nineties when he was most active in.
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Speaker 2: That He's the Saint Louis FED back then, right.
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Speaker 3: I don't you know he was ahead of the econ
5:38
Speaker 3: department in Notre Dame. More recently, he probably made had
5:42
Speaker 3: multiple FED research stands. A lot of these PhD researchers,
5:44
Speaker 3: that's a normal career path for them. But the work
5:47
Speaker 3: of his answers, yes, oh, thanks, thank you both. The
5:51
Speaker 3: work I'm familiar with is his work on institutional a
5:57
Speaker 3: design for central banks that ensures the that can operate
6:01
Speaker 3: credibly and independently. He made significant contributions to the literature
6:07
Speaker 3: on what type of central banker you want to pick
6:10
Speaker 3: and how you want to design your central bank. I
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Speaker 3: bring it up because it's ironic, because he may be
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Speaker 3: the appointee of someone who effectively views him as a puppet.
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Speaker 3: Will he be willing to kind of surrender his I
6:23
Speaker 3: don't want to say conviction. I can't speak for him.
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Speaker 3: I don't know him, but I assume, given the results
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Speaker 3: of his research, that he feels like independence is key
6:30
Speaker 3: to stable inflation and thus stable output, because those two
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Speaker 3: things are connected.
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Speaker 2: And I think it raised the question of look Waller
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Speaker 2: right now is talking about He's been one of the
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Speaker 2: very outspoken members of the FED saying we need to
6:45
Speaker 2: be cutting interest rates, and he's done so in a
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Speaker 2: way that I think maintains his independence and credibility, and
6:51
Speaker 2: that he's been talking about this kind of for the
6:54
Speaker 2: last year, like, hey, guys, the labor market's weaker than
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Speaker 2: we think, and we need to be doing something on this.
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Speaker 2: He was one of the leading voices on this last
7:03
Speaker 2: year as well. This is not you know, an about
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Speaker 2: face that he made this spring or this summer where
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Speaker 2: he suddenly said, hey, guys, like now, I think that
7:13
Speaker 2: you know, we need to be cutting This has been
7:15
Speaker 2: his position pretty consistently since last year, and I think
7:22
Speaker 2: with Waller, as with any of these candidates, the question
7:25
Speaker 2: is it's the it's the Scott Besson conundrum that you have,
7:30
Speaker 2: which is this time last year, Bessont was writing op
7:34
Speaker 2: eds talking about, Hey, I can't believe the Treasury is
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Speaker 2: issuing all this short term debt like they're deliberately doing
7:42
Speaker 2: it to try to keep long term interest rates low.
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Speaker 2: Anyone who's serious wouldn't be doing that. I can't believe
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Speaker 2: they're doing this. And then Besson comes in, takes a
7:51
Speaker 2: look around, like sees the lay of the land, and
7:52
Speaker 2: is like, yep, I'm gonna keep doing exactly that because
7:55
Speaker 2: he realized, like, Okay, when push comes to shove, I
7:58
Speaker 2: have to pay the bills for the United States, and
8:01
Speaker 2: this is the best way to do it, you know,
8:03
Speaker 2: based on you know, what my goals are and everything.
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Speaker 2: And so with with Waller, and not just Waller, but
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Speaker 2: the other you know guys who are running for the position. Effectively,
8:13
Speaker 2: you know, you got the two Kevin's out there worsh
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Speaker 2: and Hassett that are both in the running as well.
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Speaker 2: And it's one thing leading up to, you know, a
8:22
Speaker 2: nomination for a position to say, hey, I think we
8:25
Speaker 2: should be doing this. When push comes to shove and
8:29
Speaker 2: you're actually in the big chair, do you look around,
8:32
Speaker 2: realize the real politique of the situation and say, you
8:35
Speaker 2: know what, Yeah, we can probably cut this fall. But hey,
8:38
Speaker 2: if if the economy starts to rebound in Q one
8:41
Speaker 2: of next year and with it there's a rebound in
8:45
Speaker 2: inflation and growth and all the stuff that goes along
8:47
Speaker 2: with that, yeah, you better believe I'm gonna be hiking
8:50
Speaker 2: because I need to do what's right in this situation.
8:53
Speaker 2: Otherwise history is not going to remember me very well
8:57
Speaker 2: as the FED chair that just sat in my hands
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Speaker 2: while inflation rose.
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Speaker 3: Yeah, he's been a little more vocal about cutting rates
9:03
Speaker 3: given the political backdrop than I would be comfortable with.
9:05
Speaker 3: I do question whether he's behaving opportunistically.
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Speaker 2: Of course he is. I mean, look, I don't think
9:10
Speaker 2: that's a bad thing quite honestly.
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Speaker 3: That he's openly vying for the position.
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Speaker 2: You mean, this is what happens with everyone who all
9:19
Speaker 2: these positions when you are in the running to be
9:22
Speaker 2: fed chair. Do you think A that you don't have
9:25
Speaker 2: any ego and B that you haven't learned how to
9:28
Speaker 2: play the game.
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Speaker 3: Yeah, I'm not saying I'm not judging it in a
9:34
Speaker 3: moral sense. I'm saying i's if his objective is to
9:37
Speaker 3: preserve fed independence, he could distance himself a little bit
9:40
Speaker 3: more from the regime prevailing political regime the Trump administration,
9:44
Speaker 3: then he has done. I wouldn't. I was disappointed he
9:47
Speaker 3: dissented publicly. I know his views are well founded. A
9:50
Speaker 3: reasonable person can make arguments that the economy is wrea getting,
9:52
Speaker 3: et cetera. I just thought his vocal advocacy for relaxing
9:59
Speaker 3: monetary policy and his persistent advocacy of it struck me
10:02
Speaker 3: as a little bit opportunistic. But like you say, he's
10:04
Speaker 3: only human. One hopes that if he By the way,
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Speaker 3: warsh is a light weight, Bascent doesn't know what he's
10:09
Speaker 3: talking about when it comes to monetary policy. Hassett is
10:12
Speaker 3: not a light weight. Monetary policy is not his area.
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Speaker 3: He knows how to read a paper in economics. Waller
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Speaker 3: of the four I know, percents not in the running anymore,
10:20
Speaker 3: but I've gripped him in there since he since he
10:22
Speaker 3: pops off, he sounds off for monetary matters routinely. Of
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Speaker 3: the four Waller is a heavyweight to begin with. He's
10:28
Speaker 3: in the mold of Chlorida and Plosser, who recently passed away,
10:31
Speaker 3: God rest his soul, and a number of other academics
10:34
Speaker 3: who served on the Federal Reserve Board in the past
10:36
Speaker 3: twenty five years. Ben Bernanke two, Let's.
10:38
Speaker 2: Take a quick break. When we come back, we're joined
10:40
Speaker 2: by Trip Mikel from The New York Times talking about
10:43
Speaker 2: Apple's announcement yesterday and what we saw.
10:49
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11:26
Speaker 2: All right. As promised, We're now joined by Trip Mikel
11:29
Speaker 2: from The New York Times here to talk about Apple's
11:33
Speaker 2: unveiling of new products yesterday. Trip, How are you this morning?
11:37
Speaker 1: We're doing great. How are you guys?
11:39
Speaker 2: We're doing well. When we look at the Apple announcements
11:43
Speaker 2: from yesterday, a bunch of different products unveiled, can you
11:46
Speaker 2: give our listeners a sense of kind of what some
11:48
Speaker 2: of the big highlights were from the announcements.
11:52
Speaker 4: I mean, a most noteworthy thing was the introduction of
11:55
Speaker 4: really like arguably the first new looking iPhone in years,
12:01
Speaker 4: probably going back to twenty seventeen. Apple yesterday introduced an
12:06
Speaker 4: iPhone new iPhone line. It's the iPhone Air. It's about
12:10
Speaker 4: a third thinner than the than the iPhones we've seen
12:15
Speaker 4: in recent years. It does it's going to challenge people
12:19
Speaker 4: a little bit because it does have less battery life. Right,
12:22
Speaker 4: You're going to give up some functionality if you go thinner.
12:24
Speaker 4: And Apple noted that in addition to that, they just
12:28
Speaker 4: updated their existing product line. You know, they're in this
12:32
Speaker 4: period of their existence where a lot of what they
12:36
Speaker 4: do is incremental improvements. New new chips, better cameras for iPhones,
12:42
Speaker 4: bigger screens for watches. You know, AirPods Pro three are
12:48
Speaker 4: going to have better audio. Those type of changes that
12:52
Speaker 4: are just kind of improvements around the edges, so to speak, trips.
12:56
Speaker 2: Here's my question for you. Who's the person out there
13:01
Speaker 2: that said, I really want to buy an iPhone right now,
13:06
Speaker 2: but one with less battery life and one that's thinner,
13:10
Speaker 2: because the thinness is the thing that matters. Like, Who's
13:12
Speaker 2: who's demanding that? I guess because I just I feel
13:16
Speaker 2: like the number one complain of most people is, hey,
13:18
Speaker 2: my phone dies too much. And Apple went in the
13:21
Speaker 2: opposite direction here, So help me understand why they did this,
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Speaker 2: I think.
13:25
Speaker 4: But if I had to, like, you know, wager on
13:28
Speaker 4: the type of person who's going to be buying this phone,
13:30
Speaker 4: it's probably going to be a lot of people who
13:32
Speaker 4: are in you know, the Apple upgrade program. They get
13:35
Speaker 4: a new phone every year, and they'll get you know,
13:39
Speaker 4: the maximum amount of battery performance out of that device
13:41
Speaker 4: for a year, and and then they'll swap and they'll
13:45
Speaker 4: probably start to complain as the battery life gets worse.
13:48
Speaker 4: You know, we all know that battery life fades over
13:50
Speaker 4: the life span of a phone, of a device, and
13:53
Speaker 4: then they'll swap it out a year from now, and
13:55
Speaker 4: they'll do it because they want to look cool and
13:59
Speaker 4: that phone will quote unquote look cool because it looks
14:02
Speaker 4: different than than others out there.
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Speaker 1: It is.
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Speaker 4: It is kind of a return to form. Excuse the
14:08
Speaker 4: pun there. It's unintended, but I got to turn to
14:11
Speaker 4: return to form for Apple in the sense that you know,
14:14
Speaker 4: there was a period of time where you could have
14:16
Speaker 4: a new phone, be at a party or put it
14:20
Speaker 4: on a table at a restaurant and something like, oh wow,
14:23
Speaker 4: you got the new phone. How do you like it?
14:24
Speaker 2: Right?
14:25
Speaker 1: Like?
14:25
Speaker 4: It will allow people to have that conversation again, and
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Speaker 4: I bet a lot of people who who like being
14:31
Speaker 4: seen as like on the on the cutting edge of
14:33
Speaker 4: the front edge of technology will go out and purchase
14:36
Speaker 4: it for that reason alone.
14:38
Speaker 2: When you look at the rest of the lineup, is
14:42
Speaker 2: it safe to say incremental improvements but no major steps forward?
14:47
Speaker 2: Or am I missing something that that was noted yesterday?
14:51
Speaker 5: No?
14:51
Speaker 4: No, I mean I think that that kind of captures it.
14:53
Speaker 4: I mean. The one thing that that I would note
14:57
Speaker 4: from a business perspective for Apple that's it out is
15:00
Speaker 4: that with their two top line phones, which are bought
15:05
Speaker 4: by probably their most affluent customers, the iPhone, the iPhone
15:10
Speaker 4: Pro and the iPhone Promax, they increased the price by
15:13
Speaker 4: one hundred dollars each on those phones, and most analysts
15:16
Speaker 4: don't think they needed to increase the price because of
15:21
Speaker 4: inflation and their components that go into the device. In
15:24
Speaker 4: other words, they don't think the bill of materials went
15:26
Speaker 4: up such that they needed to increase price, or that
15:31
Speaker 4: terrorists pressured them to increase price. They think Apple increased
15:34
Speaker 4: price because it wants to push up at sales. And
15:37
Speaker 4: if we look back at Apple's business history, the last
15:41
Speaker 4: time they did a major price increase in twenty seventeen,
15:45
Speaker 4: they didn't increase the number of phones they sold the
15:47
Speaker 4: subsequent year, but they made a lot more money. And
15:50
Speaker 4: this is a mechanism that they'll turn to from time
15:53
Speaker 4: to time in order to make sure that their sales
15:55
Speaker 4: go up and their investors are satisfied.
15:58
Speaker 2: One of the other things that I know, you know,
16:00
Speaker 2: even users who aren't buying new phones will notice in
16:03
Speaker 2: the coming weeks is the rollout of the new iOS,
16:07
Speaker 2: which reportedly has a very different look. Is there any
16:11
Speaker 2: new functionality included there as well? What kind of things
16:14
Speaker 2: are people going to see?
16:15
Speaker 4: Yeah, I mean, we're we're moving towards a new user
16:20
Speaker 4: interface from Apple here with the new iOS and your
16:23
Speaker 4: correct It will be out in the coming weeks. It
16:26
Speaker 4: is bringing in what Apple calls and their great marketing
16:30
Speaker 4: wisdom liquid glass.
16:33
Speaker 1: Yeah.
16:34
Speaker 4: Yeah, you know, they love their fancy turns of phrases
16:37
Speaker 4: to promote things, and in this instance, what that really
16:40
Speaker 4: means is more transparency around kind of the visual interface.
16:45
Speaker 4: So when you toggle over something or try to pull
16:48
Speaker 4: down a a window, you'll you'll be able to kind
16:53
Speaker 4: of see through the menu that that comes down, and
16:57
Speaker 4: that displays into what was behind it little bit. You know.
17:02
Speaker 4: I think early people who tested this over the summer,
17:06
Speaker 4: when some beta versions of it were released, were a
17:09
Speaker 4: little bit critical of kind of the way it blurred.
17:14
Speaker 4: It kind of melded like the background image with the
17:18
Speaker 4: foreground font in ways that made it hard to kind
17:21
Speaker 4: of know what you were doing. And so they did
17:24
Speaker 4: some tinkering around the edges over the course of the summer,
17:26
Speaker 4: and I'm sure it's ready for primetime now.
17:29
Speaker 2: Fantastic, Trip, appreciate you joining us, and thank you for
17:32
Speaker 2: all the information on yesterday's announcements.
17:35
Speaker 4: Great thanks for having me.
17:36
Speaker 2: That is Trip, mikel from the New York Times talking
17:39
Speaker 2: about Apple all right.
17:40
Speaker 5: Time for trivia here on the Financial Exchange and today
17:44
Speaker 5: is Jack Ma's sixty first birthday. In nineteen ninety nine,
17:48
Speaker 5: Jack Ma founded his internet company that would become the
17:51
Speaker 5: world's largest retailer in twenty seventeen. So trivia question today,
17:57
Speaker 5: what is the name of the internet retail company started
18:00
Speaker 5: by Jack Ma? Once again, what is the name of
18:03
Speaker 5: the internet retail company started by Jack Ma? Uh be
18:09
Speaker 5: the sixth person today to text us at six one
18:11
Speaker 5: seven three six two thirteen eighty five with the correct answer,
18:16
Speaker 5: and he win a Financial Exchange Show T shirt. Once again,
18:19
Speaker 5: the sixth correct response to text us to the number
18:23
Speaker 5: six one seven three six two thirteen eighty five will
18:28
Speaker 5: win that Financial Exchange Show t shirt. See complete contest
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Speaker 5: rules at Financial Exchange Show dot com.
18:35
Speaker 2: Piece here from Barons Stocks bullmarket nears three year anniversary.
18:40
Speaker 2: It likely has more room to run. Well, yes, that
18:44
Speaker 2: tends to be the case with stocks. They do tend
18:46
Speaker 2: to move up in the long run and absent any
18:49
Speaker 2: kind of crisis. Again kind of the secular bull markets
18:53
Speaker 2: have been the feature, not the bug, in the United
18:56
Speaker 2: States for the last eighty years. And oh yeah, if
19:01
Speaker 2: you're a betting person generally betting on stocks to go
19:04
Speaker 2: up historically has been a better proposition than betting on
19:07
Speaker 2: them to go down.
19:09
Speaker 3: Yeah, the argument of this piece seems to be and
19:11
Speaker 3: this is not necessarily wrong. Before the fact, we'll find
19:16
Speaker 3: out if things continue to go as they've gone, stocks
19:18
Speaker 3: will continue to go up. And I'm not really oversimplifying.
19:21
Speaker 2: No, AI, go ahead, Chuck, No, No, we just got
19:24
Speaker 2: to go to break the one time you're not looking
19:27
Speaker 2: at the clock, but I read you though. Quick break
19:30
Speaker 2: here when we come back. We got the trivia answer
19:33
Speaker 2: in Wall Street Watch.
19:40
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Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
19:50
Speaker 1: Time now for Wall Street Watch. A complete look at
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20:00
Speaker 5: Markeets in mixed territory. After the Producer Price Index this
20:02
Speaker 5: morning revealed wholesale prices actually fell zero point one percent
20:07
Speaker 5: last month, better than expectations of a zero point three
20:10
Speaker 5: percent increase. We'll get another look at inflation tomorrow morning
20:14
Speaker 5: at a thirty when the Consumer Price Index is released.
20:18
Speaker 5: Right now, the Dow is down by six tenths of
20:21
Speaker 5: one percent, or two hundred and ninety points lower. SMP
20:25
Speaker 5: five hundred is down three tenths of one percent or
20:28
Speaker 5: twenty one or two is up three tenths of one
20:31
Speaker 5: percent or twenty one points higher in the Nasdaq, also
20:34
Speaker 5: up by about three tenths of one percent. Russell two
20:37
Speaker 5: thousand is flat at the moment. Tenyure Treasure Reealed is
20:40
Speaker 5: down two basis points at four point zero five three percent,
20:44
Speaker 5: and crude oil up over one and a half percent higher,
20:48
Speaker 5: trading at sixty three dollars in sixty six cents a barrel.
20:52
Speaker 5: Oracle surging by forty two percent now after the software
20:55
Speaker 5: company forecasted huge gains in cloud infrastructure revenue. The cloud
21:00
Speaker 5: Giant is on pace for its best day since nineteen
21:03
Speaker 5: ninety two. It is now approaching the one trillion dollar
21:06
Speaker 5: market cap benchmark. More on Oracle with Chuck and Mark
21:10
Speaker 5: here in a matter of moments. Meanwhile, Memestock in video
21:14
Speaker 5: game retailer game Stop is climbing over five percent higher
21:18
Speaker 5: after it reported a jump in quarterly profit and said
21:20
Speaker 5: the value of its bitcoin holdings topped half a billion
21:24
Speaker 5: dollars in the previous quarter. Elsewhere, we Go Vi and
21:28
Speaker 5: Ozembic maker Novo Nordisk said it plans to cut nine
21:32
Speaker 5: thousand jobs. The company also cut its guidance for the
21:35
Speaker 5: second time in six weeks. That stock is up nearly
21:38
Speaker 5: one percent, Chiwi sinking sixteen percent after the online pet
21:42
Speaker 5: products retailer posted a decline in quarterly profit. In online brokerage,
21:48
Speaker 5: Robinhood announced it will launch its own social media network
21:52
Speaker 5: that will allow users to post their trades. Robinhood stock
21:56
Speaker 5: is up by two percent. I'm Tucker Silva and that
22:00
Speaker 5: Wallstree watch and in the previous segment, we asked you
22:02
Speaker 5: the trivia question, what is the name of the internet
22:05
Speaker 5: retail company started by Jack Ma That would of course
22:09
Speaker 5: be Ali Baba. Andrew from Hyannis, mass is our winner
22:13
Speaker 5: today taking on my Financial Exchange Show t shirt. Congrats
22:16
Speaker 5: to Andrew and we played trivia every day here in
22:19
Speaker 5: the Financial Exchange. See complete contest rules at Financial Exchange
22:22
Speaker 5: Show dot com.
22:24
Speaker 2: As Tucker noted, Oracle reported earnings after the bell yesterday
22:29
Speaker 2: and coming into the week, I'll be one hundred percent
22:32
Speaker 2: honestly said, look, you know, in terms of earnings reports,
22:35
Speaker 2: there's nothing that is huge this week. I think like
22:38
Speaker 2: my words were somewhere along the lines of sure, you've
22:41
Speaker 2: got Oracle, but you know, they're not what Microsoft and
22:44
Speaker 2: in Video and you know, YadA YadA are And today
22:48
Speaker 2: I kind of have to, you know, crumple up all
22:50
Speaker 2: those words on a piece of paper, eat them, and
22:52
Speaker 2: you know say oops, like gosh, didn't really see that coming.
22:58
Speaker 2: And the good news is I wasn't the only one
23:00
Speaker 2: who didn't see this coming, because if other people did,
23:03
Speaker 2: the stock wouldn't be up forty two percent today because
23:06
Speaker 2: it would have already been, you know, priced in. So
23:09
Speaker 2: here's what happened. Oracle reported earnings, and the earnings for
23:12
Speaker 2: the current quarter actually missed on both earnings per share
23:16
Speaker 2: and revenue. They missed, but they came out and they said, hey,
23:24
Speaker 2: we now have four hundred and fifty billion dollars worth
23:31
Speaker 2: of basically what they call it is contracted revenue that
23:35
Speaker 2: has not yet been recognized, so contracts to provide cloud services.
23:41
Speaker 2: And that's up three hundred and fifty nine percent from
23:43
Speaker 2: a year ago. And everyone kind of went, excuse me,
23:48
Speaker 2: you have you have what? And how did this just happen.
23:53
Speaker 2: What they're saying is that their cloud business, which did
23:57
Speaker 2: ten billion dollars in revenue last year, is going to
24:01
Speaker 2: do around eighteen billion this year, and then in fiscal
24:04
Speaker 2: twenty seven it'll go to thirty two billion. In fiscal
24:07
Speaker 2: twenty eight, it'll go to seventy three billion, in fiscal
24:10
Speaker 2: twenty nine to one hundred and fourteen billion, and in
24:13
Speaker 2: fiscal twenty thirty to one hundred and forty four billion dollars.
24:17
Speaker 2: So their cloud revenue, they're saying, is going to go
24:19
Speaker 2: up fourteen x in the next five years, which is insane.
24:25
Speaker 2: It's crazy. I'm not saying it's not going to happen.
24:28
Speaker 2: I'm just saying it's it's crazy growth. It's basically what
24:31
Speaker 2: in video went through in the last couple of years.
24:35
Speaker 2: And so you try to piece this all together and say, Okay,
24:40
Speaker 2: how is this happening because further sales of in vidio
24:44
Speaker 2: processors are no longer moving in that fashion. But Oracle,
24:49
Speaker 2: if you look at like what they what they do,
24:51
Speaker 2: they're saying, no, we're going to have you know, people
24:53
Speaker 2: are going to use our cloud in order to basically
24:58
Speaker 2: provide AI services. Could be Microsoft subcontracting out some of
25:02
Speaker 2: the you know, cloud demand that they have, it could
25:05
Speaker 2: be whatever, but Oracle pretty much saying, yeah, this is
25:09
Speaker 2: where we're going to make our bread and butter. The
25:12
Speaker 2: question becomes, Okay, is this actually like new revenue somewhere else?
25:16
Speaker 2: Is this something that isn't you know that no one
25:18
Speaker 2: else is pricing in. If so, where's it coming from?
25:22
Speaker 2: And so, you know, people are just trying to figure out, like,
25:24
Speaker 2: where's this spend going to come from? Given what's already
25:28
Speaker 2: been announced by other companies and what's allocated out there.
25:32
Speaker 2: And I think that's the remaining question. But it's driving
25:35
Speaker 2: up everything today related to semis. You will get you know,
25:39
Speaker 2: other big semi names and videos up four and a
25:41
Speaker 2: half percent today, AMD up three and a half, broad
25:45
Speaker 2: Coom up another ten, Core Weave up eighteen. It's basically
25:48
Speaker 2: that entire AI ecosystem is just through the roof today,
25:52
Speaker 2: and this because people are like, oh gee, there's like,
25:55
Speaker 2: is there a whole nother leg on all of this?
25:59
Speaker 2: There might be. I mean it's it's certainly as possible.
26:03
Speaker 2: But where is the spending going to come from? Is
26:06
Speaker 2: always the question that's out there, and I still don't
26:09
Speaker 2: have a good read on that. But it doesn't really
26:10
Speaker 2: matter if I have a good read on it, because
26:13
Speaker 2: the stocks are absolutely rocketing today after quite honestly, Semi's
26:19
Speaker 2: and AI had kind of weakened again in the last
26:23
Speaker 2: month or so. I think we had the piece Tucker
26:26
Speaker 2: when was it was like sometime in the last week
26:28
Speaker 2: or two, the piece about like, oh, like does this
26:31
Speaker 2: mean anything about like that the AI boom is over?
26:35
Speaker 2: We cover that piece about like how AI stocks had
26:37
Speaker 2: been you know, struggling recently, and we said at the time, like, no,
26:41
Speaker 2: it just means that they haven't done well for a
26:43
Speaker 2: few weeks. And look, this is kind of the case
26:46
Speaker 2: in point. There's you know, you never know what the
26:48
Speaker 2: market doesn't know out there, and in this case, it
26:50
Speaker 2: missed a ton of information, and so you've got Oracle
26:53
Speaker 2: stock up almost three hundred billion dollars on the day.
26:57
Speaker 2: It's insane. I've never seen anything like this for a
26:59
Speaker 2: company of this.
27:00
Speaker 3: No, given the number of analysts covering it. I'm looking
27:02
Speaker 3: at our innovation for example of famous AI and other.
27:09
Speaker 2: Kathy Woods, ut did they even hold it? They don't
27:12
Speaker 2: own it.
27:14
Speaker 3: And I'm looking at competitors. I picked on ARC for
27:17
Speaker 3: only because they're conspicuous and vote for but I'm looking
27:20
Speaker 3: at competitors. They don't own it. So my question is,
27:23
Speaker 3: how do you, how do you miss? They have contracts
27:25
Speaker 3: with open Ai, XAI, Meta and videos so AI and
27:29
Speaker 3: AI adjacent companies, and they're one of the few people
27:33
Speaker 3: that can make the storage for the data that these
27:36
Speaker 3: AI models train and perform other functions, so all the paraphernalia.
27:41
Speaker 3: Much like the Internet boom Oracle made a lot of
27:43
Speaker 3: the paraphernalia, there are shades of that here. To think
27:47
Speaker 3: that they've been the beneficiary of both booms is pretty remarkable.
27:51
Speaker 3: There was an interim period when they lost you know,
27:53
Speaker 3: ninety percent of their market cap.
27:55
Speaker 2: But yeah, it is.
27:56
Speaker 3: It is kind of wild. And how did active managers
27:58
Speaker 3: who we pay not we as Armstrong Advisory Group where
28:01
Speaker 3: we do our day work, but we as investors generally
28:04
Speaker 3: pay a lot of money to to outperform, how do
28:06
Speaker 3: they miss this story?
28:08
Speaker 2: Folks? If you are wondering where the economy is heading,
28:11
Speaker 2: you are not alone. GDP. We've talked about it's growing,
28:14
Speaker 2: but Tariff's inflation and jobs numbers are making headlines, all
28:18
Speaker 2: kinds of questions about interest rates, housing cost policy changes,
28:21
Speaker 2: even AI. Look, it's changing our markets. Move you see
28:24
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29:42
Speaker 2: I want to talk a little bit about the auto
29:44
Speaker 2: industry here, and specifically about Jaguar as they are known.
29:51
Speaker 2: And basically, they've tried to go through a rebrand this year,
29:58
Speaker 2: and you know, in including getting rid of the Jaguar
30:02
Speaker 2: logo and just moving to a weird font Jaguar type.
30:10
Speaker 2: And Jaguar says that they expect only fifteen percent of
30:14
Speaker 2: their current customers to buy their cars once the rebrand
30:17
Speaker 2: is complete. So they're saying, we know we're alien eating
30:20
Speaker 2: eighty five percent of our current customers and we're cool
30:23
Speaker 2: with it, which is generally like not a great business model,
30:27
Speaker 2: because it's typically cheaper to maintain your current customers than
30:31
Speaker 2: to try to find new ones. Now, the case that
30:35
Speaker 2: Jaguar is trying to make is that their current models
30:39
Speaker 2: had fallen behind the times and the stereotypical Jaguar owner
30:44
Speaker 2: had become, you know, a sixty five year old that
30:47
Speaker 2: might only buy one more Jaguar from them, and so
30:50
Speaker 2: they wanted to get back into the youth market. And
30:54
Speaker 2: I gotta tell you a couple things first. Whenever people
30:59
Speaker 2: try to like target a market that they're not really
31:02
Speaker 2: known in. They generally do it really badly. I have
31:07
Speaker 2: two good examples of this. One in the auto industry.
31:10
Speaker 2: The first one I'm gonna give though, is the NFL,
31:13
Speaker 2: and the NFL a few years back decided that they
31:16
Speaker 2: wanted to try to make inroads with women. They wanted
31:20
Speaker 2: more women watching football, and instead of being like, hey,
31:24
Speaker 2: women who like football, how do we get more women
31:26
Speaker 2: to watch football? They just threw out a bunch of
31:29
Speaker 2: pink branded stuff and said this will be what makes
31:32
Speaker 2: it work. And obviously it didn't work because that's not
31:35
Speaker 2: how any of this works, and so it was just
31:37
Speaker 2: this huge flop because they didn't actually understand what they
31:41
Speaker 2: were doing in their target audience. Another one in the
31:45
Speaker 2: auto industry about twenty years ago, Toyota, who generally has
31:49
Speaker 2: really good decision making on a lot of this stuff,
31:51
Speaker 2: they decided they wanted to target young people too, and
31:54
Speaker 2: they came out with a car brand called Scion Scion
31:58
Speaker 2: and it lasted maybe five or six years. They had
32:01
Speaker 2: like a couple like cheap, boxy looking models, and they,
32:05
Speaker 2: you know, came out with all these commercials that were
32:07
Speaker 2: just like all these young people being like, oh, like
32:10
Speaker 2: cyon Yahoo Cool Laws, and it flopped because it turns
32:14
Speaker 2: out young people don't want to buy cars that are
32:16
Speaker 2: geared at young people. They want to feel you know,
32:19
Speaker 2: older and mature driving a car. And so if you
32:22
Speaker 2: try to sell a car that's you know, targeted at
32:25
Speaker 2: in you know, a twenty year old, you're not going
32:27
Speaker 2: to sell because they don't want something that's targeted them.
32:30
Speaker 2: They want to feel older. So to bring this full
32:34
Speaker 2: circle to Jaguar, the Jaguar is basically doing what a
32:37
Speaker 2: combination of Toyota and the NFL did in that they're
32:43
Speaker 2: trying to sell a car to young people by being like, oh, look,
32:46
Speaker 2: we're hip because our new logo has some capital letters
32:50
Speaker 2: where there shouldn't be and some lowercase letters where there
32:53
Speaker 2: shouldn't be, And buy Jaguar because you're young and we're
32:57
Speaker 2: young too. And that's just not how this works.
33:02
Speaker 3: Yeah, it's hard for a luxury brand that has a
33:07
Speaker 3: nostalgia appeal like Cadillac or jag to evolve. I bring
33:12
Speaker 3: up Cadillac because I think they've done a good job
33:14
Speaker 3: of keeping personal opinion. You know, a Caddy when you
33:18
Speaker 3: see one, you still my whole life. They've had a
33:20
Speaker 3: distinctive grill, distinctive kalelights, and other little features that are
33:23
Speaker 3: indicative of something being a caddy. Same is true in
33:25
Speaker 3: my mind of Buick and Lincoln, and I name American
33:29
Speaker 3: brands because that's what I grew up admiring. Jag such
33:34
Speaker 3: a rat. BMW's an example of a When you see
33:37
Speaker 3: a BMW coming head on made in any era, you
33:40
Speaker 3: know it's a beamer.
33:41
Speaker 2: Can we talk about BMW just for a second, I'd
33:43
Speaker 2: love to. I don't know who their current stylist is.
33:48
Speaker 2: They're making some weird decisions. I got to say, you
33:50
Speaker 2: can still recognize them. But unfortunately it's just like these
33:53
Speaker 2: two giant buck teeth driving right at you now. With
33:56
Speaker 2: the new vehicles they're rolling out, I.
33:57
Speaker 3: Haven't seen that yet they and I'll be careful with that.
34:01
Speaker 2: I've been a big believer in like they've normally had
34:03
Speaker 2: like really classly, really good looking vehicles and Gollie g Wilkers.
34:08
Speaker 2: I'm not really sure that that's the case anymore with
34:09
Speaker 2: some of the new stuff I'm seeing coming off the line.
34:13
Speaker 3: Yeah, you have to be faithful to some characteristics that
34:16
Speaker 3: people associated.
34:18
Speaker 2: It just looks like a giant beaver coming at you. Now,
34:21
Speaker 2: it's like the grill. The problem is what they're doing now,
34:24
Speaker 2: so that the grill always used to stop just below
34:27
Speaker 2: kind of like the kneeline of the car, is how
34:29
Speaker 2: I describe it, Like that lower bumper, right, the grill
34:32
Speaker 2: was that top part. Now that they've taken it, they've
34:34
Speaker 2: narrowed it and made it go all the way down,
34:36
Speaker 2: like to the foot of the car, and so it's
34:39
Speaker 2: just this narrow, little bucktooth thing that's coming right at you.
34:43
Speaker 3: Oh so it's more vertical.
34:45
Speaker 2: Yeah, it's like the proportions are all wrong.
34:49
Speaker 3: Yeah. Ford tried that, I forget with which I think
34:51
Speaker 3: the original edsel or something had a vertical grill, and
34:55
Speaker 3: people hated it. They quickly went back went back to
34:57
Speaker 3: the traditional horizon. I don't know why that comes to mind.
34:59
Speaker 3: You just have to be careful when you're messing with
35:01
Speaker 3: something that is distinctively associated with your lineup.
35:05
Speaker 2: Let me see if I can. I'll see if I
35:06
Speaker 2: can find a picture for you in the break. But
35:08
Speaker 2: let's go to break right now, and when we come back,
35:10
Speaker 2: we'll do some stack roulette.
35:12
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35:47
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36:18
Speaker 2: Mark what do you got for me? For sack roulette?
36:20
Speaker 3: Wall Street Journal reporting that health insurance costs for businesses
36:24
Speaker 3: are expected to rise by the most in fifteen years
36:27
Speaker 3: next year. A on a big consultancy that works with
36:32
Speaker 3: employers on providing benefits packages Willis Towers Watson better known
36:38
Speaker 3: as WTW. In fact, I don't think they go by
36:40
Speaker 3: Willis Towers Watson anymore, but anyway, are both saying that
36:43
Speaker 3: they expect coverage for health insurance to increase by nine
36:49
Speaker 3: to ten percent on average next year. They service mainly
36:53
Speaker 3: big employers, but the same forces driving that will of
36:56
Speaker 3: course affect smaller, smaller groups and the individuals who buy
37:01
Speaker 3: through exchanges. This is obviously not good for inflation.
37:05
Speaker 2: All else equal, no, And obviously what you hear then
37:09
Speaker 2: from employers is okay. They go to their benefits manager
37:12
Speaker 2: and they say, how can I reduce this cost? And
37:14
Speaker 2: you generally have two options. You can raise deductibles or
37:18
Speaker 2: you can push a bigger chunk of this onto your
37:22
Speaker 2: employees to handle, where you might say, okay, we used
37:25
Speaker 2: to cover ninety percent of the cost, now we're going
37:27
Speaker 2: to cover eighty percent of the cost, you know, just
37:30
Speaker 2: as an example there so companies rarely, you know, eat
37:35
Speaker 2: cost increases of this magnitude on their size, and so
37:38
Speaker 2: the concern for I think a lot of workers would be, Hey,
37:41
Speaker 2: am I either going to be seeing higher deductibles in
37:44
Speaker 2: my plan in the coming year or is my employer
37:49
Speaker 2: going to cover less of the premium than they used to?
37:53
Speaker 1: Right?
37:53
Speaker 2: You know, those are two things to watch out for
37:56
Speaker 2: as you get into the new rates that are rolled
37:58
Speaker 2: out in the next month or two. We're gonna take
38:01
Speaker 2: a quick break for the entire rest of the day.
38:03
Speaker 2: Tomorrow is Thursday, and that means that we're gonna be
38:08
Speaker 2: doing a show. We're gonna talk about the consumer price Index,
38:12
Speaker 2: we're gonna talk about continuing jobless claims, and a whole
38:15
Speaker 2: lot more. So you should tune in and listen to us,
38:17
Speaker 2: because it's gonna be great.