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Why is nobody cashing in on soaring home values? · The Financial Exchange Show

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Speaker 2: As we continue into the second hour. Here on the
1:15
Financial Exchange is Chuck, Mike, and Tucker with you. And
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we got stock selling off today, with the Dow Jones
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off three hundred and eleven points, the S and P
1:23
is down seventy two, and the Nasdaq down three to eighty,
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so anywhere from about a three quarters of percent to
1:28
a two percent decline on your major US indicase tenure
1:31
Treasury is selling off as well, though not as much
1:34
as it was this morning at one point to touch
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four point five percent. It's back down to four point
1:38
four to one, still up two basis points from yesterday.
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We've got oil down thirty one cents a barrel to
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sixty eight thirty nine on West Texas Intermediate and the
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TRIPAA National Averagur gas prices unchanged for the third straight
1:52
day at three oh eight and four tenths of a cent,
1:56
Gold up two dollars and thirty cents an ounce to
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twenty five to seventy five and twenty cents. And so, Mike,
2:03
we sit here right now with the S and P
2:05
five hundred and fifty eight seventy six as of the
2:09
latest tick. And I'm struck by the fact that this
2:11
is the same place the market was at on October seventeenth,
2:15
and so it's been basically a month, and even including
2:19
the bump that stock saw after the election, we're pretty
2:23
much in the same place we were a month ago.
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Speaker 3: Now, yeah, the Trump bump, the four percent rally that
2:30
we saw on Wednesday of last week has now been
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about cut in half. I think the markets actually more
2:37
than that. The markets are now from Tuesday to now
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are up about one point eight percent from the close
2:44
on Tuesday, and so, yeah, the things are.
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Speaker 4: That that's normal.
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Speaker 3: We saw a big acceleration inequities as a bunch of
2:53
hedges rolled off, and I think that this is kind
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of moving into that next stage of Hey, what does
3:00
this economy look like? And what does the Trump two
3:02
point zero plan do for the economy.
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Speaker 2: Let's talk a little bit about the housing sector on that,
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because there is at this point no more important sector
3:13
for the immediate trajectory of the economy than the housing sector.
3:17
It's often been said that housing leads the economy. And
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we've got this piece here from the Wall Street Journal.
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It's titled America's homes are piggy banks that few people
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can afford to raid, And basically.
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Speaker 4: It's kind of a good thing, bad thing. Piece.
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Speaker 2: The good news is that Americans have more equity in
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their homes now than any time in human history.
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Speaker 3: Thirty five trillion dollars of equity, even when adjusting for inflation.
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Speaker 2: Yeah, it's the highest level of equity that we've had.
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So to anyone looking at the housing market and being like, oh,
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like this is bad. This is going to cause, you know,
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the next great downturn, it's not really looking like it. No,
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delinquencies on mortgages are really low. It's it's just not there.
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But here's the downside to this. There's all this equity
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in here, but if you want to get any equity
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out of your home, you have one of two options.
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You can either refinance your mortgage with a with a
4:14
cash out refi, in which case, hey, your old mortgage
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where you were paying two and a half percent, three
4:20
and a half percent, four and a half percent, even
4:22
five and a half percent on whatever remaining debt you had,
4:26
is gonna go up to a rate closer to seven
4:28
and then you're gonna pay seven on whatever else you
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take out, or you take out a home equity line
4:33
of credit, and when we look at the rates on those,
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they're typically a little bit higher than what you even
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see on mortgages. You're talking to like seven and a
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half to eight in a lot of cases, and those
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rates float. If it's a home equity line of credit
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or if you're doing a fixed home equity loan, those
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are often a little bit higher as well. So again
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you're like seven and a half to eight, And so
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a lot of Americans look at it and they're kind
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of going, gee, I got all this equity in my
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house because prices have gone up. Not really sure I'm
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gonna do a ton with it. And I say this
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even as we are seeing growth in the amount of
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home equity loans and home equity lines of credit that
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are being taken out. But it still isn't something where
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it's it's enough to generate, you know, meaningful growth in
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the economy.
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Speaker 3: Yeah, I think the last option in terms of unlocking
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home equity as you sell the home. But that's clearly
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not happening to one or rent agree, right, which, by
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the way, like you do, wonder do we get to
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a point where retirees just say, oh, forget this, I've
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got a million dollars in home Like, that's not an
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unrealistic scenario here in New England of having half a
5:40
million to a million dollars in home equity. And do
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you get people that just say, forget this, I'm unlocking
5:46
the equity and I'll just rent for the rest of
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my life. I don't care. I don't think so. But
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you think about that math equation, and there is so
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much equity to be unlocked in these homes for retirees
5:56
that just can't find a reasonable replacement place in the
5:59
purchase market. But again it comes back down to the
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state of things as Trump is entering the White House
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come next year. In October of twenty sixteen, there were
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one point four million homes for sale across the United States.
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And by the way, like at the moment, I don't
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think a lot of people felt like October of twenty
6:19
sixteen was this great buyer's market. We had just come
6:23
ripping back from the weakness of twenty eleven. Today there
6:27
are only nine hundred and fifty four thousand total units
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available on the market. Do we have a significantly fewer
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even just pre COVID. Right pre COVID October of nineteen,
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there were one point two million properties for sale on
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the market. So yeah, it remains this conundrum. I do
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think that should you get equity line rates down into
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the maybe five to six percent range, people are now
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starting to get used to these rates and might start
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accessing some of that capital. But I agree with you
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Chock at seven and a half, I don't know a
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lot of people that are itch and to borrow and
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Mike absent.
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Speaker 2: A Again, the one thing that I think could bring
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interest rates down meaningfully is if you get a significantly
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smaller annual deficit going forward in the US economy. But
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absent that, the only thing that gets home equity line
7:20
rates into the fives is a recession.
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Speaker 4: Tell me I'm wrong.
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Speaker 3: Yeah, I'm trying to think of how much further that
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means the FED brings down rates to two full percentage
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points to get equity line rates down there in that
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But I mean, look.
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Speaker 2: The FED probably has to cut rates three and a
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half to four percent to get long term rates down
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to there.
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Speaker 3: But that's but that's my point is long term rates, yes,
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but home equity line rates are going to move right
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with what the Fed does. So to get home equity
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line rates down there, you probably do need at least
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one and a half percent of additional cuts. And I'm
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with you, I don't think you get there in the
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short term without a recession over two years maybe, but
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not in the short It's it's a tough path to
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get there.
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Speaker 2: And so I'm looking at this chart from the Wall
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Street Journal. It's it's a great chart. Also, it's like,
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what rates do people have on their outstanding mortgages? If
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you look at mortgages below six percent, eighty four percent
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of current loans that are outstanding are below six percent.
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It's it's a huge number still, and it's gonna get
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smaller each year because there is a portion of those
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a some of the ones that are lower they just
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you know, they they run their cycle and and they're
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no longer outstanding because they're paid off.
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Speaker 4: So that's part of what you see. Part of it is, hey,
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even if.
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Speaker 2: Someone has, you know, a four and a half percent loan, Hey,
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you know what, we're getting a new job. We got
8:41
to move from uh, you know, Austin where we moved
8:44
in twenty twenty one.
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Speaker 4: With the low rate. We gotta move back to Carancisco. Ah,
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come on, you gotta go calum Zoo there. No.
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Speaker 2: If if I'm going Topeka, I always do Topekaa, I
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always do Topeka. Yeah, we got to move to Topeka
8:57
because that's gonna be the you know, the new tech hub.
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It's okay, fine, I guess you know, since prices are
9:01
so low in Topeka. Yeah, we can take on the
9:04
seven percent mortgage, right.
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Speaker 4: The other piece that I have to just go back
9:08
to every time on this.
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Speaker 3: You know, there's been a lot of debate, and while
9:14
I still see for a lot of people how renting
9:16
can be valuable and if you do it the right
9:20
way and save what you would otherwise spend on your
9:22
mortgage and invest for your future on those savings, it
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can be beneficial. Can we just go back to talking
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about the thirty year fixed rate mortgage? Because there is
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no better deal in the history of deals than the
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thirty year fixed rate mortgage in the United States, Like
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that thing does not exist in many other parts of
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the world, and in no other area of finance. Can
9:43
you buy something with somebody else's money and have a
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deal where the interest rate can only go down.
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Speaker 4: It's a pretty good deal. It's a really good deal.
9:56
Speaker 3: And so I know there's people that are worried about
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buying that more, you know, buying that home, taking that
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mortgage at these prices, and I would urge you to
10:04
be cautious. If you cannot afford that payment at seven percent,
10:08
then you should not take that mortgage because you cannot
10:11
rely on this stuff going down. But if you can,
10:15
and you want to be there for ten plus years
10:18
in that home, I don't know that I would let
10:21
the interest rate alone scare me away from that because
10:25
of the fantastic potential deal you have of being able
10:28
to refinance it at some point.
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Speaker 4: Yeah.
10:30
Speaker 2: Yeah, it's again, it's as you note, it's one of
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the great uh again, you look at just the history
10:39
of the thirty or fixed rate mortgage, and it has
10:41
enabled millions of Americans to accumulate significant wealth in the
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way that the otherwise would not have been able to do.
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Speaker 4: So.
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Speaker 2: Yeah, now, part of that's also because of where interest
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rates have gone over the last forty years, So we
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also have.
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Speaker 4: To consistently and persistently down.
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Speaker 2: But yeah, the vehicle that has made it possible thirty
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a fixed rate mortgage, take a quick break here. When
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we come back, let's talk a little bit about Microsoft's
11:08
cloud business and US regulators looking into it. We'll also
11:12
do a little bit of trivia here on the Financial Exchange.
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Speaker 4: Mike Piece of the Financial Times.
11:41
Speaker 2: US regulators plan to investigate Microsoft's cloud business. Kind of
11:48
interesting timing, given, you know, the two months until the
11:52
new administration under a real tight schedule here, you know,
11:56
it's the It's not many FTC investigations that conclude in
12:01
two months last time I checked.
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Speaker 3: Yeah, I mean, what are you supposed to do in
12:05
that position? Just like sit there and twiddle your thumbs though,
12:09
who Lena Kahn in her office? Yeah, I guess you
12:13
do just kind of sit there and twitter your thumbs right,
12:15
like you're not going to have the job in a
12:17
few months.
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Speaker 4: So again, I said, she might again.
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Speaker 2: Jd Vance has talked about how he's a big Lena
12:25
Khan fan. Yea, so we'll see. I think it's unlikely
12:28
she has the job, but I don't know.
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Speaker 3: So I guess let's first talk about what it is
12:33
that Microsoft is being accused of, which is anti competitive
12:39
practices when it comes to one of their business units,
12:42
which is cloud storage. So just put plane and simple
12:48
company like the Armstrong Advisory Group needs to store a
12:51
bunch of data. We used to put it all in
12:54
a server rack in a closet here. These days it
12:57
all goes onto the Microsoft Cloud. And uh, what they're
13:03
being accused of here is if say Armstrong wanted to
13:07
move our data from the Microsoft Cloud to the Amazon Cloud,
13:10
they're going to make it pretty difficult to do so.
13:12
Speaker 4: And they can do that in a few ways.
13:14
Speaker 3: One, they can make it challenging for their Office three
13:18
sixty five products to integrate with that Amazon Cloud.
13:21
Speaker 4: They raise costs on those, right, they could raise costs.
13:24
Speaker 3: They could say, hey, we're discounting all these services, which
13:27
they do. You know, you bundle this stuff together with Microsoft.
13:30
We're going to give you a discount on your team's
13:33
you know, Microsoft Office Suite and the cloud storage because
13:36
you are one bundled customer and oh you took it
13:39
away while those costs are going up for your other
13:41
unrelated services. Again, this is only really a problem because
13:46
of Microsoft's size. Any other company does this, it's normal
13:50
course of business. But when you're Microsoft and you do
13:53
control probably ninety percent of the you know, Office tools
13:59
U s PCs, it does become a little bit problematic.
14:03
Is anything going to happen during the Trump administration on
14:06
this or sorry, during the Biden administration on this?
14:08
Speaker 4: It'd be pretty tough to see the other.
14:11
Speaker 2: Thing that I look at on this again, and I'm
14:14
someone who's kind of been a cheerleader of some of
14:17
the work that the FTC has done because I think
14:18
that anti monopoly is one of the best ways that
14:21
you can get bang for your buck in terms of
14:24
generating more competition, which then means you don't have to
14:26
do as much regulation elsewhere.
14:28
Speaker 4: Mike, who does this hurt?
14:31
Speaker 2: Like, let's say, let's say that Microsoft Office costs too
14:34
much for businesses to run relative to what it would
14:37
otherwise be.
14:39
Speaker 4: Like, who's being hurt by this?
14:44
Speaker 3: A few businesses, but tough to show consumer harm and.
14:49
Speaker 2: Even on the business side, if you are a small
14:53
company with five employees, is the cost of Microsoft Office
14:59
on its own car prohibitive for you to run your business?
15:01
Because because if it is, then you're not a business.
15:04
Speaker 4: Yeah.
15:05
Speaker 2: No, it's just not that expensive, like as a percentage
15:08
of your overall stuff that you're.
15:10
Speaker 4: Trying to do.
15:10
Speaker 2: So I guess, look, there might be a there there,
15:15
But this is one of the few times where I
15:17
look at the FTC over the last few years ago
15:20
and I'm not really sure that this.
15:21
Speaker 4: Is the best use of your time.
15:24
Speaker 3: Yeah, I'm trying to think there was some other stuff
15:27
that had been alleged against maybe Microsoft or another big
15:30
tech provider on how they penalized customers for switching, and
15:34
I don't I don't remember, but I found it much
15:36
more compelling than I find this, Like it seems like
15:39
a pretty logical course of business to say, look, if
15:41
you unbundle our services, all those services separately are going
15:45
to become more expensive too.
15:46
Speaker 4: Well, I guess here's a question that I'll ask.
15:48
Speaker 2: So you and I both have said, or you said, hey,
15:53
if a small business does bundling, that's just you know,
15:56
doing business right, Like it's it's no problem.
15:58
Speaker 4: Its Microsoft's concentration. That's the problem. Will be here. Sure,
16:02
let's look at the telecoms.
16:03
Speaker 2: Why why is it cool that you know, Verizon and
16:06
AT and T in Comcast do all this bundling because
16:10
they're basically the same. You know, they all have you know,
16:13
somewhere in the ballpark, like twenty five to forty of
16:17
that market.
16:18
Speaker 4: Right, Why do we allow it there? Why is it cool.
16:20
Speaker 2: For telecoms to do you know, bundling where Yeah, if
16:23
you throw in a landline that no one ever uses,
16:26
the cost of your cable goes down by twenty dollars?
16:29
Why is that okay there? But this is not okay here?
16:33
Speaker 4: Right?
16:34
Speaker 3: I think the only argument you have is that there
16:39
are no national and global dominance dominance players like there
16:44
is Microsoft. That would be the only real argument. Is Hey,
16:48
the the anti competitive behavior that's happening within these telecoms
16:51
is only happening on a regional basis.
16:53
Speaker 4: But I don't know that that makes it any better?
16:55
Is it regional?
16:56
Speaker 2: I mean, like Verizon in AT and T and Comcast
16:58
are pretty mugey And again, even when the FTC is
17:03
you know, if they're pursuing an investigation against Microsoft. They're
17:07
limited jurisdictionally in terms of what they can do, right,
17:09
Like they can't be like, hey, Microsoft, you're really screwing
17:14
over the Namibians. Might be true, but that's not something
17:18
that the FTC can cover, right, not going after that one,
17:21
you know, like Namibia has got to deal with it
17:23
on their own. Unfortunately, just like the EU. Hey, when
17:26
there's a problem in the EU with Microsoft or Google, okay,
17:30
they deal with it there, but they don't go and
17:32
pursue claims based on what's happening in the US.
17:35
Speaker 4: So I don't know it's it.
17:37
Speaker 2: This is one where I'm kind of like, eh, I
17:39
don't know what we're really doing on this one, quite honestly.
17:42
Speaker 4: Yeah, I have a bit of an issue with it.
17:44
Speaker 2: Looking at markets, the Dow is still off two hundred
17:47
and forty five points, the SMP's down sixty five, and
17:50
the Nasdaq down three fifty five. So the sell off
17:53
that started in the last couple of days continues. By
17:55
the way, the NASDAC if it were to close in
17:57
the red, which be a heck of a turner if
18:00
it doesn't, but if it were, it would be the
18:02
first five day red trend for the Nasdaq since twenty nineteen.
18:09
Speaker 4: It's been a while. Huh h.
18:11
Speaker 2: It's kind of wild given everything. Dear God, that's what
18:15
I'm seeing here. Despite everything that went on in twenty
18:18
twenty two, the Nasdaq was not read five days in
18:20
a row.
18:21
Speaker 4: Other indices were, but not the NASDAK.
18:33
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18:54
Speaker 2: Let's talk a little bit about this piece from Bloomberg.
18:57
It's talking about potential changes in the credit card landscape
19:02
as we head towards the second Trump administration and specifically
19:07
looking at hey, the CFPB. Over the last couple of years,
19:11
the Consumer Financial Protection Bureau has sought to cap some
19:14
of the fees that banks charge on credit cards, things
19:19
like late fees and things along those lines. And I
19:24
think the question here is what happens to this because
19:27
on one hand, during the first Trump administration, I can't
19:31
remember if it was the Trump administration itself or a state.
19:35
I can't remember who it was. But there was someone
19:37
pretty high up who I think was trying to make
19:40
the case CFPB should not even be able to exist
19:44
based on the financing mechanism for it.
19:46
Speaker 3: Yeah, the funding mechanism was created so that Congress couldn't
19:48
limit it, which is strange.
19:51
Speaker 4: It is kind of strange. Yep.
19:53
Speaker 2: That did get rejected by the Supreme Court. But I
19:55
don't think that the Trump administration was a huge fan
19:58
of the CFPB. So on one hand, you look at
20:00
this and you say, Okay, some of these things that
20:02
the CFPP is trying to do are likely to be
20:06
shot down. On the other hand, one of the things
20:09
that President elect Trump put out there during the closing
20:13
month or so of the campaign was the idea of
20:15
capping interest rates at fifteen percent.
20:19
Speaker 4: I think it was ten. Was it ten? I think
20:21
it was ten.
20:22
Speaker 2: Yeah, either way, the idea of capping interest rates on
20:25
credit cards at you know, a.
20:26
Speaker 4: Set interest rate.
20:28
Speaker 2: And in theory, the way that you would probably do
20:30
that that would stand up best to any challenges would
20:34
be through the CFPB. But I don't really know what
20:38
to make of this because the facts that we have
20:41
an evidence from an action perspective are, Hey, the Trump
20:44
administration is probably not going to be particularly aggressive on
20:48
some of the things that the CFBPB has been pursuing.
20:51
But President elect Trump did talk about credit cards and
20:54
being too expensive in the last month or so, so I'm.
20:56
Speaker 4: Kind of like, what do I do with this?
20:57
Speaker 3: I don't know, I'm not sure, but I also want
20:59
to be that the proposals that the CFPB had on
21:03
credit cards aren't even in effect and likely are not
21:07
to go into effect by the time Joe Biden leaves office.
21:10
There was a proposal of the cap credit card late
21:12
fees at eight dollars, which is a big change from
21:15
the current thirty to forty dollars, and that was blocked
21:19
by a judge in Texas, and so I one, I
21:23
don't believe that Donald Trump's going to pass laws, but
21:26
you would probably need to do of capping interest rates
21:30
at ten percent. I don't think that i CFPB could
21:32
likely do that based on the fact that everything they've
21:34
tried to do under the Biden administration is getting blocked.
21:38
Do I really believe that The point of this article
21:41
anyway is hey, you better watch out because you know
21:43
financial companies are going to try and take advantage of
21:45
you more under a looser and less empowered CFPB. I
21:50
just I can't point to much that I feel like
21:52
the CFPB really did to prevent that sort of thing.
21:55
Speaker 2: No, so, and you and I have also talked about Look, okay, great,
21:59
you cap credit card.
22:00
Speaker 4: Eight fees at eight dollars. It's going somewhere else.
22:03
Speaker 2: Either interest rates are going to go up, or there's
22:05
gonna be another fee somewhere else, or rewards.
22:08
Speaker 4: Are coming down. Yeah, it could be any number of
22:10
those things. But yeah, I don't know.
22:14
Speaker 3: I'm just I'm just not believing that there's going to
22:16
be much of a shift on there. So what I
22:18
would urge everyone to do is always be vigilant about
22:21
things like credit cards that come with big burdensome fees
22:25
and late fees and interest rates, whether it's your checking
22:28
account or your credit card. But that all actually leads
22:32
me well into our guide for the month of November
22:35
from the Armstrong Advisory Group Chuck, which is all about
22:38
things that you can do in the last what are
22:40
we forty five days of the year.
22:42
Speaker 4: Here, Now we're getting down to it as we close
22:44
in on your end.
22:45
Speaker 3: We put together a guide on our top year end
22:49
planning tips for folks to get out there for free.
22:52
And you know, some of these are actual items that
22:54
you can only do before your end, and so it
22:57
is important to look at things like a ROTH conversion
23:00
or a required minimum distribution or tax loss harvesting, because
23:04
if you wait until January, you actually can't do them.
23:07
Others on the list I think are just really good
23:09
practices to have. Hey, once a year, I pull open
23:11
my accounts and check my beneficiaries and read my will.
23:15
That's not a bad practice to have here, review my budget,
23:19
take a look at my spending patterns, look at my
23:21
credit score, pull my credit report and make sure that
23:24
there's nothing surprising on there. We come up with all
23:27
of this and more, and like I said, it's an
23:29
easy read and frankly an easy but important to do
23:33
list for before year end. And if you want your
23:36
copy of Armstrong Advisor Groups free monthly a guide again,
23:40
it's the top year end planning tips and you can
23:42
get it by calling us at eight hundred three nine.
23:45
Speaker 4: Three four zero zero.
23:46
Speaker 3: One will be happy to email you or ship you
23:48
a copy of the new guide. Again, it's our top
23:51
year end planning tips guide and it's available by calling
23:54
eight hundred three nine three four zero zero one.
23:58
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
24:00
registered investment advisor. Nothing in the ad or in any
24:03
Armstrong guide a specific financial, legal, or tax advice. Consult
24:06
your own financial, tax, and estate planning advisors before making
24:09
any investment decisions. Armstrong make contact you to offer investment
24:12
advisory services.
24:14
Speaker 2: My favorite headline of the year, just in terms of hey,
24:20
telling you what the store is going to be about.
24:23
Human in bear suit was used to defraud insurance companies.
24:26
Officials say, and I don't know if I'll be able
24:31
to get through this. It really is just fantastic. So
24:34
there was a video in January that was submitted as
24:37
part of an insurance claim in California. It was a
24:41
brown bear going through a roll's voice that was parked
24:44
in the driveway, and it turned out that there were
24:48
a couple other videos that were taken as well. In
24:51
the three insurance companies ended up paying out one hundred
24:54
and forty thousand dollars. And so you started know kind
25:00
of looking into it or not. I did, but the
25:02
California Department of Insurance started looking into it, and on
25:06
Wednesday of this week, after concluding an investigation they called
25:10
Operation bear Claw. They determined that the bear was actually
25:15
a guy dressed up in a.
25:17
Speaker 4: Suit, and the.
25:20
Speaker 2: Scratch marks inside the vehicles from the bear clause were
25:23
from a callike kitchen accessory usually used to shred meat.
25:27
Speaker 4: Now, Mike, yeah, pull or something I do too?
25:32
Speaker 2: I have to Yeah, it's and so basically they figured out, okay,
25:38
this is people, and they also then arrested for people
25:42
on Wednesday. Reuben Tamarazian, Ararat Churkinian, Vaje Murrad Canyon, and
25:50
Alifa Zuckerman, all of southern California, are now facing charges
25:56
of insurance fraud and conspiracy. It's un clear which of
26:02
the men was the bear and which ones were simply
26:06
having their cars broken into under false pretenses.
26:09
Speaker 3: Yeah, that that part is unclear. I've got the video
26:13
open right now and am watching it. And granted it's,
26:17
you know, nighttime. It's a pretty far away camera, but
26:21
it doesn't look terribly like a bear.
26:24
Speaker 6: It doesn't end anything like a bear.
26:27
Speaker 3: Specifically, the action of the bear climbing into the car
26:31
is pretty humorous, and the best part.
26:34
Speaker 6: Is the bear opens the door with ease.
26:37
Speaker 4: Right, It's not crawling a clown. Around at the door.
26:40
Speaker 3: It doesn't smash the glass, It just casually comes into view,
26:45
opens the doorhand like a human being, and then subsequently trashes.
26:52
Speaker 4: Like the car.
26:54
Speaker 2: You look at like the butt of the bear, and
26:56
you can clearly see it's a human butt inside a
26:58
suit that's stretching it. Uh, just like I've looked at
27:04
I've looked at some bear butts, Mike, that's that's not
27:07
that's not a real bear butt, very skinny bear in
27:10
this car.
27:11
Speaker 3: We're gonna have to start doing, I mean, at this pace,
27:13
I think we could, you know, replace our Florida man
27:16
story with our weekly California man story.
27:18
Speaker 4: This is top notch fraud where it's kind of wild.
27:24
Speaker 2: Actually, speaking of kind of wild, one other story that
27:27
we have to touch on. Mark Zuckerberg just released a
27:31
cover of Get Low with t.
27:32
Speaker 6: Pain, available on Spotify.
27:35
Speaker 4: No he did it's it's it's on Spotify.
27:37
Speaker 6: I can't play it because there's knotty lyrics in it.
27:40
Speaker 4: No, can't play it.
27:41
Speaker 2: But apparently the soul wants this Zuckerberg, and look, this
27:46
is the thing that you can do if you're a
27:47
like sent to billionaire. Apparently the song was playing when
27:52
he met his wife in high school twenty one years
27:55
ago at Harvard before he dropped out, and so I
27:58
guess he always wanted to record it with T Pain.
28:01
So he probably just paid T Pain a bunch of
28:03
money to go and record the song.
28:06
Speaker 4: Yeah, I do that. Now here's the question.
28:08
Speaker 3: Okay, yeah, you do that right to me, I probably
28:12
wouldn't do that where I was Mark Zuckerberg, but I
28:14
would do that where I tea even if.
28:16
Speaker 4: I'm Mark Zuckerberg. That's just too cringey for me if
28:18
I'm Mark Zuckerberg. But yeah, no, the cringey part is
28:21
why did you release it to the public. Yeah?
28:24
Speaker 2: I understand recording it and being like, hey, you know,
28:27
for our twenty first anniversary, I made you the song
28:30
that we were listening to when we met with the
28:33
guy who.
28:34
Speaker 3: Met it right, Oh, like weird but romantic, got it?
28:38
Why are you putting it on Spotify?
28:39
Speaker 4: Man? You I don't need you don't need the money.
28:41
Speaker 6: Or the press under the artist name of Z Pain.
28:44
Speaker 2: Oh no, oh, this just gets worse now. It raises
28:49
the question who made the decision to do so? Because
28:53
it's been a while since we've heard from T Pain,
28:56
and you wonder, hey, are T Pain's finance is not
28:59
quite as good as Zucks?
29:01
Speaker 4: Well, they're most definitely not as good as Zucks. And
29:05
so the.
29:05
Speaker 2: Question is, hey, is this T Pain's decision to do so?
29:10
And does he need a little bit of a boost
29:12
up the Spotify charts.
29:13
Speaker 4: Could be a lot of different potential options.
29:16
Speaker 2: Here the best line in the whole story. A representative
29:20
for Lil John, the rapper behind the original version of
29:22
Get Low, did not respond to a request for comment.
29:27
So Lil John is not happy with T Pain for
29:30
hanging him out to dry on this it sounds like
29:32
and I look, I get it if someone replaced me
29:36
with Mark Zuckerberg.
29:39
Speaker 4: I don't know, especially with creative music.
29:43
Speaker 2: Now I can get behind the name z Pain. I
29:45
think that's fantastic. Love every bit of it. Let's take
29:48
a quick break here. When we come back, we'reen We
29:50
be joined by Paul Lamonica right after.
29:53
Speaker 1: This fine daily interviews and full shows of the Financial
29:56
Exchange on how are YouTube, Paige get cut up on anything?
30:00
End everything you might have missed. This is the Financial
30:03
Exchange Radio Network. Text us six one seven three six
30:07
to two one three eight five with your comments and
30:10
questions about today's show. This is the Financial Exchange Radio Network.
30:15
Speaker 7: Ladies and gentlemen.
30:17
Speaker 8: The weekend, the Financial Exchange wants to thank all of
30:22
you who took part in this year's DAV five k.
30:24
The event sold out earlier than ever before and was
30:27
another tremendous success. If you weren't able to attend, but
30:30
we would still like to support our great American heroes,
30:32
visit DAV fivek dot Boston and make your gift today.
30:36
Every dollar raised will support a wide variety of initiatives
30:39
like the DAV Transportation Program, which takes disabled vets to
30:43
important medical appointments that supply both the physical and mental
30:47
care they need. Thank you again for your support. The
30:50
DAV five K Boston is presented by Veterans Development Corporation.
30:54
Speaker 2: As promised, we're now joined by the one and only
30:57
Paul Amonica here to talk a little bit of about
31:00
IAC and potentially their latest spinoff.
31:05
Speaker 4: Paul, how are you today?
31:07
Speaker 7: Good? Thanks? How you guys doing? I'm not sure how
31:08
I follow up that last segment.
31:10
Speaker 4: Though we covered a lot of ground. We covered a
31:14
lot of ground. Mary Dillar d pay not so sure
31:19
that'd be fantastic.
31:20
Speaker 2: Let's let's talk a little bit just about IAC and
31:24
what the corporate structure is like there and what they
31:26
actually do.
31:29
Speaker 7: Yeah, it's it's a great question.
31:31
Speaker 9: So the news this week is that I See, which
31:35
owns the home services company ang which used to be
31:38
known as Angie's List, They are going or at least considering,
31:43
spinning off their full stake about eighty five percent of it,
31:47
which would make it a completely separate independent company. Angie
31:52
already trades ANGI, but this would be a full spin
31:56
off if they do it, and that would allow IC
31:59
to focus on their core businesses of dot Dash, Meredith,
32:04
the digital and online publishing company that owns People and
32:08
Southern Living, many other assets.
32:10
Speaker 7: They have. The old ask.
32:12
Speaker 9: Search business that used to be owned has Asked, jeevescare
32:16
dot com.
32:16
Speaker 7: Is an emerging business for them.
32:18
Speaker 9: But what's interesting is that they also own a very
32:22
significant stake in the casino company MGM, about twenty percent
32:26
or so, as well as more than thirty percent in Toro,
32:30
the car sharing service that's a privately held firm.
32:35
Speaker 7: So there are a lot of moving parts.
32:37
Speaker 9: At IC, and it's always been a company that you know,
32:42
to some extent, maybe trades at a discount to the
32:44
broader market because that can conglomerate structure. It's always incubating
32:48
and spinning off companies.
32:51
Speaker 2: Is the reason for doing this, because they need the
32:54
capital for something else, for some of those other departments
32:56
that you mentioned. Is their potential that hey, they want
32:59
to be bringing something else on board as kind of
33:01
the newest thing to spin up and spin out.
33:05
Speaker 7: Yeah, I would guess that it might be the latter.
33:09
Speaker 9: I spoke to CEO Joey Levin before the announcement was made,
33:14
and you know, he was coy about, you know, wanting
33:17
to slim the portfolio so that they can think more
33:20
clearly about the future, and didn't rule out, you know,
33:23
the possibility that they could boost their stake in MGM
33:27
Resorts or maybe do some other deals. Because keep in mind,
33:31
IAC tried to buy Paramount but got outbid by Skydance Media,
33:37
which is run by David Ellison, who was backed by
33:40
his dad, some guy named Larry Ellison, who's one of
33:43
the wealthiest people in the world because of his founding
33:46
of Oracle. So it wouldn't shock me at all. I
33:50
see as thinking about doing something different because this is
33:54
a company that's just constantly trying to find something new
33:59
to invest in me. And there are so many IC
34:02
spinoffs out there that people might forget used to be
34:06
part of that corporate umbrella we're looking at. You know,
34:09
Expedia is one, Ticketmaster now part of Live Nation, match Group,
34:15
trip Advisor. These are all formerly under the IC umbrella
34:19
that are now separate standalone companies.
34:22
Speaker 2: Paul's this is similar setup to kind of like what
34:24
Liberty Media does in that respect, but just in a
34:26
little different niche or there are differences between them, Yeah.
34:29
Speaker 7: I mean there are differences.
34:30
Speaker 9: I mean Liberty has you know, really done a lot
34:35
under John Malone that tracking stock sort of mechanisms, so
34:41
they would set up units that track the performance of
34:46
various Liberty divisions. But I think there are definite comparisons
34:51
between Malone and Diller and how they invest in all
34:55
these various businesses, you know, Malone now and Liberty you
34:59
know with serious sax Sam and Formula one. You know,
35:02
clearly a lot of these disparate businesses part of a broader,
35:07
you know, corporate umbrella. And I think, you know, there's
35:11
always this desire to decomplicate the structure because I think
35:15
companies like Liberty and I see sometimes get penalized by
35:19
investors because you do have to scratch your head and say, well,
35:22
what the heck am I actually buying here?
35:25
Speaker 4: Sure? Sure, Paul, appreciate you joining us.
35:27
Speaker 2: We've got to run, but thank you so much for
35:29
the time, and I hope you have a great weekend.
35:32
Speaker 7: Thanks and your guys. Giants are playing, so I'm looking
35:35
forward to it.
35:36
Speaker 4: Pats have tuck. Who do the Pats have this weekend?
35:39
Is the Rams? Yeah, probably gonna be a lot aesome
35:42
to say it goes, But the Pat's been.
35:43
Speaker 2: Playing a little better lately, gotta say, Paul, just it
35:47
doesn't take much to play a little better.
35:48
Speaker 7: No, No Giants, Pat super Bowl anytime soon.
35:51
Speaker 2: No, it's thankfully we don't need another one of those.
35:55
Speaker 4: We're good on them for a while. Have a going, Paul,
35:58
Thanks you too.
35:59
Speaker 2: It's Paul Monica talking a little bit about IAC. Taking
36:04
a look at markets as we had towards the top
36:05
of the hour, heading back towards the low's of the
36:07
day for most major indices. The dows down three to
36:10
oh six, the S and p Is down seventy five,
36:12
the Nasdaq down four to three, So a little bit
36:15
of pain continuing as we get through the day today,
36:20
We'll see if it continues all the way into the weekend.
36:23
We're done for the day, done for the week. Back
36:26
at it next week. A little quieter than the last
36:28
couple weeks. We do get some housing data coming out, though.
36:31
We'll have weekly jobless claims and in Vidia earnings. Always
36:35
interesting to see what they cook up. They'll be reporting
36:38
on Wednesday. Have a great weekend. We'll see you Monday.