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SpaceX’s AI Bet Shows Where Musk Wants to Go Next · The Financial Exchange Show

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Speaker 1: Chuck Zada and Paul.
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Speaker 2: Lane, Chuck Paul Tucker with you here, and we've got
1:14
Speaker 2: not really too much happening in markets this morning. Not
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Speaker 2: surprising you got a FED meeting this afternoon. Morning of
1:20
Speaker 2: a FED meeting, generally things are pretty quiet in anticipation.
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Speaker 2: So it's Kevin Warrish's first meeting. All eyes are going
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Speaker 2: to be trained on him this afternoon and we'll see
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Speaker 2: exactly what we hear from him as far as any
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Speaker 2: potential changes that he wants to put in place at
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Speaker 2: the FED in the near future. Markets, as I mentioned,
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Speaker 2: not really doing too much of anything. The S and
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Speaker 2: P is down five points again like who cares. The
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Speaker 2: Dow Jones industrial average is up one hundred and nineteen
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Speaker 2: about a quarter percent, and the NASDAK composite down sixty
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Speaker 2: one points about a quarter percent, So just mixed, relatively
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Speaker 2: quiet markets. Russell two thousand is up about half a percent,
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Speaker 2: again like not much going on. Ten year Treasury not
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Speaker 2: much going on there either, up one point one basis
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Speaker 2: points to four point four to three to nine percent.
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Speaker 2: Dollar Index up a point one nine percent to ninety
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Speaker 2: nine forty seven, and gold is up eleven forty ouns
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Speaker 2: to forty three sixty five. Crude oil rebounding today after
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Speaker 2: significant declines in the last three or four days, up
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Speaker 2: about dollars seventy six a barrel to seventy seven eighty
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Speaker 2: one on West Texas Intermediate triple A national averageur gas
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Speaker 2: prices continuing to slide down another one point nine cents
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Speaker 2: overnight to four h two and five tenths, probably getting
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Speaker 2: under four dollars on the national average this weekend, if
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Speaker 2: not tomorrow, and we've got room for those to run
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Speaker 2: down into that probably three sixty to three seventy range
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Speaker 2: based on where oil prices have moved to. So another
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Speaker 2: little dip, not little, another meaningful dip coming for gas
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Speaker 2: price over the next week or two, assuming that we
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Speaker 2: hold in this range on crude. And yeah, that's basically
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Speaker 2: all that I wanted to go through in market. So
3:10
Speaker 2: I'm glad that we did that, and that was fun.
3:14
Speaker 2: We should do it again the same time tomorrow. What
3:18
Speaker 2: we're gonna do right now, though, is talk a little
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Speaker 2: bit about SpaceX. They made an acquisition yesterday. They are
3:25
Speaker 2: looking to buy Cursor, who is a startup out of
3:30
Speaker 2: San Francisco. They're going to be spending sixty billion dollars.
3:33
Speaker 2: So it's not really a startup. It's a company that's
3:36
Speaker 2: been around for a few years and they are a
3:40
Speaker 2: platform that basically provides ways to handle autonomous coding agents.
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Speaker 2: And so it really is SpaceX saying, Okay, we want
3:52
Speaker 2: to get into the AI business more heavily. And I
3:57
Speaker 2: think ultimately this is you know, point to the fact
4:00
Speaker 2: that even though SpaceX has the name space in its name,
4:05
Speaker 2: it's clear that when you look at what's actually under
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Speaker 2: the hood, Elon Musk is trying to build the company
4:12
Speaker 2: in a direction where, yes, they clearly have their launches
4:15
Speaker 2: that they do for you know, mostly Starlink launches, but
4:18
Speaker 2: also some government satellite work. But it's clear to me
4:23
Speaker 2: that Musk wants to build a company into an AI
4:26
Speaker 2: powerhouse and are acquiring Cursor based on the fact that, hey,
4:30
Speaker 2: our stock is worth you know, two point nine trillion dollars.
4:33
Speaker 2: Sure we can do an all stock deal for sixty billion,
4:35
Speaker 2: given how we're valued right now.
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Speaker 3: Yeah, when they in the SpaceX S one, they had
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Speaker 3: attributed a potential market share or a potential addressable market
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Speaker 3: of something like twenty nine trillion dollars. Of that forget
4:48
Speaker 3: that number for a second, but of that, I believe
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Speaker 3: seventy to eighty percent of or maybe more, was going
4:54
Speaker 3: to be addressable through AI and artificial intelligence endeavors. So
4:57
Speaker 3: to further your point, a significant percentage of what they
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Speaker 3: think is going to be their future for growth is
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Speaker 3: within AI. In terms of the big AI players out there.
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Speaker 3: Musk has candily said in front of I believe it
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Speaker 3: was a Congress testimony where he ranked Xai number five
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Speaker 3: in terms of the large language models out there. So
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Speaker 3: their Xai has the Grock chatbot, and you've got Anthropic,
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Speaker 3: and you've got open Ai, and you've got Google, and
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Speaker 3: he referenced Chinese open source models that sort of take
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Speaker 3: the lead in the top four ahead of Xai. SpaceX
5:32
Speaker 3: bought Xai for two hundred and fifty billion dollars, which
5:35
Speaker 3: was a significant premium to what revenue that Xai does.
5:39
Speaker 3: And so that is where we sit at this point.
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Speaker 3: With this acquisition of Cursor, which will add some revenue
5:46
Speaker 3: to SpaceX. In terms of what Cursors does, they're up
5:50
Speaker 3: to an annualized revenue rate of about four billion dollars
5:53
Speaker 3: a year. They've got some steep competition though in this
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Speaker 3: autonomous coding space Anthropic has a product, A has one too.
6:01
Speaker 3: They're playing against some partners that are playing against some
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Speaker 3: other competitors that have a lot of money to burn
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Speaker 3: and sort of you know, absorbing Cursor into XAI and SpaceX.
6:12
Speaker 3: Clearly musk pointing to that they're going to continue to
6:15
Speaker 3: spend a lot on AI.
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Speaker 2: Here, Yeah, I don't know anything in terms of hey, like,
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Speaker 2: is is this going to be like great, because like
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Speaker 2: Cursor's this great platform. I don't know if there's like
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Speaker 2: other ones that are going to be able to replicate
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Speaker 2: what they do. I'm not involved enough in the technology
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Speaker 2: to be able to tell you like, yes, this is
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Speaker 2: you know, best of breed, or you know, hey this
6:39
Speaker 2: is I don't know, but I do think, Hey, if
6:45
Speaker 2: if you have a stock that you think is valued highly,
6:50
Speaker 2: the two best things that you can typically do with
6:52
Speaker 2: it are a use that stock to go and buy
6:55
Speaker 2: other companies, or b issue more stock in order to
6:59
Speaker 2: give yourself more of a hash cushion in the future.
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Speaker 2: And so must clearly saying yeah, like I got a
7:04
Speaker 2: company worth almost three trillion dollars, why wouldn't I spend
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Speaker 2: it on this? Because hey, if this company and then
7:10
Speaker 2: I'm buying ends up working out to be you know,
7:13
Speaker 2: just what we need. Great, we've secured it and helped
7:15
Speaker 2: our evaluation in the future in terms of being able
7:18
Speaker 2: to grow into what we're worth now and you know,
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Speaker 2: not really surprising there. So this is another one of
7:23
Speaker 2: the reasons why when you talk about you know, SpaceX
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Speaker 2: and its valuation. Yes, like if they just kept you know,
7:30
Speaker 2: running their business like they were last year, of course
7:33
Speaker 2: it looks crazy like they're you know, they're trading you know,
7:36
Speaker 2: one hundred and fifty times revenue right now, and revenue
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Speaker 2: is only growing you know, thirty thirty five percent a year.
7:41
Speaker 2: You had a company like this, you know, like like
7:43
Speaker 2: Cursor that's on pace to do you know, another four
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Speaker 2: billion in revenue this year and might be scaling up quickly.
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Speaker 2: And again it doesn't really make you know, SpaceX stock
7:52
Speaker 2: look cheap. I'm not saying that, but you have to
7:55
Speaker 2: think about this in terms of, hey, how can the
7:57
Speaker 2: company evolve in different ways to potentially grow into that
8:00
Speaker 2: valuation even though it looks nutty right now.
8:03
Speaker 3: Yeah, you've seen that with the deals that they've struck
8:05
Speaker 3: with Anthropic and Google where they're leasing out computer computing
8:08
Speaker 3: capacity from their Colossus data center in Memphis. That should
8:12
Speaker 3: add another three billion or so a month in terms
8:16
Speaker 3: of revenue. But those contracts are short term, so not
8:19
Speaker 3: something that can be protected further. But they may be
8:22
Speaker 3: acquiring another company as well, as mentioned in this Bloomberg
8:25
Speaker 3: piece here.
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Speaker 2: Yeah, the the question that you know just can't be
8:29
Speaker 2: put to bed is, hey, at some point will SpaceX
8:32
Speaker 2: and Tesla attempt to merge? And again, if they did,
8:37
Speaker 2: at their current pricing, you'd basically have, you know, one
8:39
Speaker 2: of the two most valuable companies on the planet if
8:42
Speaker 2: if they got there, the other one being in Vidia.
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Speaker 4: But you know, the.
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Speaker 2: Rumors won't go away because Musk obviously owns both of
8:50
Speaker 2: these companies. The list of car companies that have been
8:54
Speaker 2: able to maintain any kind of valuation like Tesla for
8:57
Speaker 2: an extended period of time starts and ends with Tesla,
9:01
Speaker 2: and so by incorporating them all under one roof, then
9:04
Speaker 2: you basically can just have everything operating, you know, in
9:07
Speaker 2: what would potentially be a more streamlined fashion. You could
9:11
Speaker 2: potentially have the capital intensive auto business being subsidized by
9:17
Speaker 2: you know, an AI or software business if that ends
9:20
Speaker 2: up becoming profitable, and so, you know, the one that
9:24
Speaker 2: I come back to that it looks similar to actually
9:27
Speaker 2: is Amazon. Just because Amazon, You've got this retail business
9:30
Speaker 2: that doesn't really make a lot of money subsized by
9:34
Speaker 2: the cloud but sized by aws. Yeah, and like this
9:36
Speaker 2: could look kind of similar, and that You've got this
9:38
Speaker 2: car business that might not make a ton of money
9:40
Speaker 2: long term, but if you've got a reliable tech business
9:44
Speaker 2: spinning off big margins, it could. The question is are
9:48
Speaker 2: there going to be big margins long term in AI,
9:50
Speaker 2: which is something that we just don't know right now.
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Speaker 3: Yeah, this was a fascinating piece. Liam Denning from Bloomberg
9:55
Speaker 3: has been covering this subject for a bit. In terms
9:58
Speaker 3: of the SpaceX and Tesla merge, it also would give
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Speaker 3: us more control of the combined entity where he has
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Speaker 3: about eighty four percent of SpaceX voting shares and about
10:08
Speaker 3: twenty percent on Tesla's side of things, and so combining
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Speaker 3: the two entities would give him larger voting control. You
10:15
Speaker 3: mentioned the idea of cross subsidition being able to basically
10:19
Speaker 3: subsidize some of the endeavors and Tessa. Ever more so
10:23
Speaker 3: if you listen to their earnings, calls is being more
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Speaker 3: positioned as an artificial intelligence and robotics company and less
10:29
Speaker 3: so a car company. And so that melds with this
10:32
Speaker 3: idea of what we just talked about previously with SpaceX.
10:36
Speaker 2: Just take a quick break. When we return, We've got
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Speaker 2: trivia next.
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12:39
Speaker 2: Paul, we got a piece here from tech Crunch, and uh,
12:43
Speaker 2: to those of you, that's not a familiar publication to you.
12:46
Speaker 2: Tech Crunch has been around for I don't know at
12:48
Speaker 2: least twenty five years now, and UH, basically, if you
12:52
Speaker 2: want to know anything as it relates to what's going
12:55
Speaker 2: on in the world of tech startups like it's generally
12:58
Speaker 2: a pretty good place to be an formed at the news,
13:00
Speaker 2: so very reputable source. Unfortunately, the piece that they have
13:04
Speaker 2: here sucks. It's titled the AI layoff wave is becoming
13:08
Speaker 2: a powder keg. And here here's the thing that we have.
13:17
Speaker 2: I'll quote here. Something strange is happening in tech right now.
13:20
Speaker 2: Companies are posting record profits and revenue while laying off
13:23
Speaker 2: tens of thousands of people, citing AI as the official explanation.
13:27
Speaker 2: So far this year, there have been layoffs effecting nearly
13:31
Speaker 2: one hundred and fifty thousand people, a pace of nine
13:33
Speaker 2: hundred and seventy four people per day, forty four percent
13:36
Speaker 2: faster than last year, according to true Up, a tech
13:38
Speaker 2: job board and recruiting platform. So pretty much Tech Crunches
13:42
Speaker 2: is laying out the case that they make you know
13:45
Speaker 2: through here, saying, hey, you're you're going to just see
13:48
Speaker 2: this wave of layoffs that happens throughout tech and no
13:54
Speaker 2: one's going to have a tech job ever. Again the
13:57
Speaker 2: problem with this is that when you actually go and
14:01
Speaker 2: look at the data as it relates to job openings
14:05
Speaker 2: in the tech space job openings. This is from the
14:08
Speaker 2: Jolt Support it's from indeed, like it's multiple data sources
14:12
Speaker 2: telling us the same thing. Software and tech companies, not
14:16
Speaker 2: company jobs, but software and tech jobs. Again, they can
14:19
Speaker 2: be at tech companies or not. Are actually seeing increased
14:22
Speaker 2: postings over the last four to five months, and it
14:25
Speaker 2: gets It's something that Mike Armstrong and I've talked about
14:27
Speaker 2: quite a bit over the last you know, year or so,
14:30
Speaker 2: which is companies over hired a ton in twenty twenty
14:34
Speaker 2: one and twenty two, and not only did they over
14:36
Speaker 2: hire on headcount, they had to spend a boatload to
14:40
Speaker 2: bring people on them because it was so competitive. Remember
14:42
Speaker 2: that was when Walmart was paying truckers like one hundred
14:44
Speaker 2: and fifty thousand dollars a year because everyone had a
14:48
Speaker 2: job and there was just no way to hire someone then.
14:52
Speaker 2: So the place that I go on this is, no,
14:55
Speaker 2: this isn't like some armageddon that's heading for labor, specifically
15:00
Speaker 2: even tech labor markets. The data is telling us that
15:04
Speaker 2: workers that were hired four to five years ago are
15:07
Speaker 2: being laid off because they're too expensive and companies want
15:10
Speaker 2: to bring on cheaper people right out of college in
15:13
Speaker 2: order to manage their cost structure better.
15:15
Speaker 3: Yeah, you have an imbalance where there are eager workers
15:18
Speaker 3: coming right out of college that will probably be more
15:21
Speaker 3: cost effective than seasoned professionals would be in the tech
15:24
Speaker 3: sector that we're hired back then. And I do feel like,
15:28
Speaker 3: you know, the piece here does kind of the classic
15:31
Speaker 3: trope of creating the broad brush between oh, it's just
15:36
Speaker 3: Zuckerberg and some of these other people that are sitting
15:38
Speaker 3: in there, you know, billionaire bunker caves that are making
15:42
Speaker 3: all the money here and everyone else is experiencing a
15:46
Speaker 3: signific amount of layoffs, and the truth is always more
15:49
Speaker 3: nuanced than that.
15:49
Speaker 4: And you made that point.
15:51
Speaker 3: With the availability and the tech sector jobs that are
15:54
Speaker 3: out there, it just seems like kind of low hanging
15:57
Speaker 3: fruit to write this piece of create that contrast between
16:01
Speaker 3: the concentration of wealth of the ultra high net worth
16:05
Speaker 3: individuals out there that are behind these companies versus the
16:08
Speaker 3: tech workers, where the truth is probably somewhere in the middle.
16:11
Speaker 2: Now, if you want to tell me, hey, it feels
16:14
Speaker 2: like an awful time to be a tech worker because
16:18
Speaker 2: layoffs are happening a lot and morales bad because if
16:21
Speaker 2: you like, I'm not saying this is like, oh, like
16:24
Speaker 2: you should just feel great about you know, working in tech.
16:27
Speaker 2: But what I am telling you is tech companies wouldn't
16:30
Speaker 2: be posting, you know, job postings in the numbers they're
16:34
Speaker 2: posting right now if they didn't want to actually hire.
16:38
Speaker 3: It's just could be a shift of what they're looking for,
16:40
Speaker 3: right I mean, obviously software has been scrutinized a lot
16:44
Speaker 3: during all these developments with AI and computer programmers and
16:47
Speaker 3: things like that. Those are areas coding that are under pressure.
16:52
Speaker 3: But I still feel as if there's a tremendous amount
16:55
Speaker 3: of demand for engineers out there that maybe they're just
16:57
Speaker 3: deployed differently, but it is going through a shakeup. I'm
17:01
Speaker 3: not questioning that at all, but perhaps being painted as
17:05
Speaker 3: a little too pessimistic here in this piece.
17:08
Speaker 2: I do want to while we're on the topic of AI,
17:11
Speaker 2: Pew Research just put out this was today, actually this morning,
17:17
Speaker 2: their survey on Americans and their AI usage. They asked Americans,
17:24
Speaker 2: have you ever used an artificial intelligence chat bot like chat, GPT, Gemini,
17:28
Speaker 2: or co Pilot. When they asked Americans this in twenty
17:31
Speaker 2: twenty four, thirty three percent of Americans said yes and
17:35
Speaker 2: sixty six said no. Okay, today it's basically a fifty
17:38
Speaker 2: to fifty split, So.
17:40
Speaker 4: I was gonna get sixty or seventy percent.
17:41
Speaker 2: Okay, No, Like, this is the thing that we got
17:43
Speaker 2: to remember half of Americans have never used an AI program.
17:48
Speaker 2: It still is something where there is not broad penetration
17:52
Speaker 2: throughout all of Americans, not like using the Internet or
17:55
Speaker 2: social media stuff like that.
17:57
Speaker 3: And I just wouldn't feel like a big jump to
18:00
Speaker 3: to use the search engines are like the models. It
18:03
Speaker 3: just didn't feel like that different from Google.
18:06
Speaker 2: They then asked, Okay, what are the reasons why you've
18:10
Speaker 2: used these? Forty two percent saying to search for information
18:14
Speaker 2: makes sense, thirty eight percent for tasks at work, twenty
18:19
Speaker 2: five percent for fun or entertainment, twenty four percent to
18:23
Speaker 2: creator edit images or videos, twenty percent to get medical advice,
18:27
Speaker 2: twenty percent to get diet and fitness information, thirteen percent
18:30
Speaker 2: to get news, ten percent for emotional support or advice,
18:34
Speaker 2: and four percent for companionship. So again, I just find
18:38
Speaker 2: it interesting, you know, kind of what's what the usage is.
18:42
Speaker 2: The other piece is, hey, how frequently are you using it?
18:45
Speaker 2: So remember fifty one percent doesn't use it at all,
18:48
Speaker 2: twenty five percent said several times a week or less.
18:52
Speaker 2: Eight percent said about once a day, twelve percent said
18:55
Speaker 2: several times a day, and four percent said almost constantly.
18:58
Speaker 2: So of the ones who you it, the vast majority,
19:01
Speaker 2: about seventy percent of the people who use it are
19:04
Speaker 2: using it a few times a week or maybe once
19:06
Speaker 2: a day. Again, not broad like overarching penetration here. So
19:12
Speaker 2: I think it's interesting just to get the data and see, okay, like,
19:16
Speaker 2: what's the actual usage like right now? And this is
19:19
Speaker 2: also why I continue to say, hey, regardless of whether
19:22
Speaker 2: you like it, hate it, or indifferent about it, we're
19:25
Speaker 2: gonna be using way more AI five years in the future.
19:29
Speaker 2: And it's because there's still are a ton of Americans
19:30
Speaker 2: who don't use it at all or very much. Quick
19:34
Speaker 2: break when we come back. We got the trivia answer
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Speaker 5: Dow is up about a half a percent, SMP five
20:16
Speaker 5: hundred edging only five points, hired, NASDAC dipping by thirteen points.
20:20
Speaker 5: Russell two thousand is up eight tens of a percent,
20:23
Speaker 5: ten Your treasureel is flat at four point four to
20:26
Speaker 5: three percent, and Oil up one percent, trading right around
20:30
Speaker 5: seventy seven dollars a barrel. The SpaceX rally has hit
20:33
Speaker 5: the brakes today after three straight days of gain since
20:36
Speaker 5: it's IPO. Right now, SpaceX shares are down by five percent.
20:41
Speaker 5: Sticking with the space sector where ast Space Mobile set
20:45
Speaker 5: its successfully launched into orbit three new satellites that will
20:49
Speaker 5: continue to build its cellular broadband network in space. That
20:53
Speaker 5: stock up by two percent. Meanwhile, CarMax dropping seven percent
20:57
Speaker 5: despite the car retailer posting and earnings and revenue beat
21:00
Speaker 5: in the first quarter. Elsewhere, shares in Lingates Studios are
21:04
Speaker 5: retreating six percent after streaming giant Netflix denied reports that
21:09
Speaker 5: is interested in acquiring the media company. Lions Gate rallied
21:13
Speaker 5: yesterday by fourteen percent amid the speculation, and Snapchat parent
21:19
Speaker 5: company Snap is seeing its stock fall almost five percent
21:22
Speaker 5: following yesterday's product announcement of its new augmented reality specs
21:28
Speaker 5: that retails for two thousand, one hundred and ninety five dollars.
21:33
Speaker 5: I'm Tucker Silva and that is Wall Street Watch.
21:36
Speaker 2: Joining us now in the studio from Armstrong Advisory Group
21:40
Speaker 2: is Susan Powers and Susan, great to have you here today.
21:45
Speaker 4: Thanks.
21:45
Speaker 6: It's been a hot minute since I've been in the
21:46
Speaker 6: big studio.
21:47
Speaker 2: When's the last time you were in here to?
21:48
Speaker 6: Eleven years ago? Eleven years ago when we used to
21:52
Speaker 6: pingpong financial exchange with Barry.
21:54
Speaker 2: It's a long time, it is. Do you know what
21:57
Speaker 2: a gingerbread man puts on his bed? Cookie sheets? Yeah?
22:03
Speaker 2: Cookie sheets?
22:04
Speaker 6: Cute.
22:05
Speaker 2: Susan, want to talk to you a little bit about
22:07
Speaker 2: Social Security in terms of filing for it. A lot
22:12
Speaker 2: of different you know, reading out there and things like
22:15
Speaker 2: that that people do. But what are the main considerations
22:18
Speaker 2: that people need to look at in order to make
22:22
Speaker 2: the right filing decision for their situation?
22:24
Speaker 6: So really confusing for a lot of people. There are
22:27
Speaker 6: more than twenty seven hundred rules when it comes to
22:30
Speaker 6: Social Security, so not only the rules, but looking at
22:34
Speaker 6: your own financial situation you have to look at, I
22:37
Speaker 6: would say, first and foremost, ask your doctor, how do
22:40
Speaker 6: you look?
22:40
Speaker 2: How do you sure?
22:41
Speaker 6: What kind of health are you in? Are you single?
22:44
Speaker 6: If you're in poor health, you may want to claim
22:46
Speaker 6: it early. If you're married in in poor health, you
22:48
Speaker 6: may want to claim it later so that your spouse
22:50
Speaker 6: has a larger survivor benefit. You know, do you have
22:54
Speaker 6: assets that can kind of bridge the way until if
22:57
Speaker 6: you say, all right, well, I'm not going to claim
22:58
Speaker 6: it when I retire, let's say sixty five, I'm gonna
23:01
Speaker 6: wait until seventy. Do you have other assets that you
23:04
Speaker 6: can rely on to say, okay, where's my income gonna
23:07
Speaker 6: come from? I mean, overall, I think when you look
23:09
Speaker 6: at kind of a break even that people try to
23:12
Speaker 6: do straight math to say, okay, if I claim at
23:14
Speaker 6: sixty two, I'm gonna have this many dollars and I'll
23:18
Speaker 6: break even about twelve years after my folly time in
23:21
Speaker 6: ager on sixty nine. Well, that's great if you're looking
23:24
Speaker 6: at social Security in a vacuum to say these are
23:26
Speaker 6: the dollars I would receive, But you're also depleting your
23:29
Speaker 6: assets at the same time. If you're waiting, then you've
23:32
Speaker 6: got the folks that say, well, I'm gonna claim it
23:34
Speaker 6: at sixty two and I'll just invest the funds. Invariably,
23:38
Speaker 6: no one ends up investing all of the funds. Sure,
23:40
Speaker 6: and you think about, wait, every year you wait to
23:43
Speaker 6: claim Social Security, you're getting a seven to eight percent
23:47
Speaker 6: increase plus the cost of living increase. So if you're waiting,
23:51
Speaker 6: you could be getting you know, I mean we're at
23:53
Speaker 6: what five nine or so last year, so you could
23:56
Speaker 6: be getting you know, sixteen, fifteen, fourteen, depending on what
24:01
Speaker 6: the cost of living increases each year.
24:03
Speaker 2: When we look at the strategies for married couples, I know,
24:08
Speaker 2: there aren't as many as there used to be. I know,
24:10
Speaker 2: you know, ten fifteen years ago. There's all kinds of
24:12
Speaker 2: stuff that you could.
24:12
Speaker 6: Do, lots of fun stuff.
24:14
Speaker 2: But there's still some fun stuff that married couples can
24:16
Speaker 2: do in trying to claim.
24:17
Speaker 6: Yeah, there are. And so there are some folks that
24:20
Speaker 6: you know, the lower earning spouse might claim at sixty
24:23
Speaker 6: two because when their spouse starts claiming it their full
24:27
Speaker 6: retirement age, they'll qualify for half of their spouse's benefits,
24:32
Speaker 6: so they'll get a raise at that point. And then
24:34
Speaker 6: when their spouse. If they their spouse predeceases them, then
24:39
Speaker 6: they're going to get a step up after that point.
24:41
Speaker 6: So really looking at where it makes the most sense.
24:44
Speaker 6: It may not be for both of you to claim early,
24:47
Speaker 6: or both of you to claim it full retirement age,
24:49
Speaker 6: or both of you to claim at seventy. If you're
24:51
Speaker 6: going to get a spousal benefit and that's greater than
24:54
Speaker 6: your own, there's no delayed retirement credit on that, So
24:57
Speaker 6: don't file that any later than your full retirement age
25:00
Speaker 6: if that's sixty seven or sixty six in a couple
25:02
Speaker 6: of months or so. So really looking at the way
25:05
Speaker 6: to optimize what you're going to get.
25:07
Speaker 2: One more question is it relates to couples in their filing.
25:10
Speaker 2: Let's say that unfortunately a spouse has passed away recently.
25:15
Speaker 2: What are the different ways that that can affect how
25:18
Speaker 2: benefits accrue to a family.
25:21
Speaker 6: Yeah, so you can claim a survivor benefit as early
25:24
Speaker 6: as age fifty if you're disabled or at sixty, you
25:28
Speaker 6: are going to be subject to an earnings test same
25:30
Speaker 6: way you are if you're claiming your own benefit before
25:32
Speaker 6: your full retirement age, you can only make up to
25:34
Speaker 6: your own twenty four twenty four four eighty is the
25:37
Speaker 6: amount you can make before retirement age, so you can
25:41
Speaker 6: claim that benefit, but you actually get some other strategies
25:44
Speaker 6: as a result of it, of the survivor benefit, because
25:47
Speaker 6: you can claim your own benefit early and then switch
25:50
Speaker 6: to a survivor benefit at seventy or the vice versa.
25:54
Speaker 6: You can you can claim a survivor benefit, let your
25:56
Speaker 6: own benefit grow until seventy and switch after that. So
26:00
Speaker 6: lots of things to consider when you're trying to determine
26:02
Speaker 6: when to claim Folks.
26:04
Speaker 2: As Susan mentioned, there are over twenty.
26:07
Speaker 6: Seven hundred twenty seven hundred rules.
26:09
Speaker 2: Twenty seven hundred rules as it relates to social security.
26:13
Speaker 2: The bad news is that she can't cover all of
26:15
Speaker 2: them right now. The good news is that she is
26:18
Speaker 2: putting on a retirement planning seminar with a focus on
26:22
Speaker 2: social security and Medicare essentials on June twenty fifth at
26:28
Speaker 2: five pm at the Marriott Hotel in Quincy, Massachusetts. Again,
26:33
Speaker 2: it's Thursday, June twenty fifth at five pm, and Susan
26:37
Speaker 2: will be going through all kinds of social security details.
26:40
Speaker 2: She's gonna be joined there by Effie Vesulus, who is
26:43
Speaker 2: going to be discussing Medicare planning strategies as well, and
26:48
Speaker 2: so it's kind of a one stop shop to learn
26:50
Speaker 2: a ton of information about social security and medicare. Two
26:54
Speaker 2: ways that you can sign up for that event. Number one,
26:58
Speaker 2: you can go to Armstrong Advice read dot com slash
27:01
Speaker 2: events and sign up for it right there. Number two,
27:04
Speaker 2: you can call eight hundred three nine three for zero
27:08
Speaker 2: zero one and get your registration done right over the phone. Again.
27:12
Speaker 2: That website is Armstrong Advisory dot com slash events, or
27:17
Speaker 2: you can call eight hundred three nine three for zero
27:21
Speaker 2: zero one one more time. It is on June twenty
27:25
Speaker 2: fifth at five pm at the Marriott in Quincy, Massachusetts.
27:29
Speaker 2: Eight hundred three nine three for zero zero one. Susan,
27:33
Speaker 2: thank you so much for joining us.
27:34
Speaker 4: Thank you for having me.
27:36
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
27:38
Speaker 1: registered investment advisor. Nothing in the ad or in any
27:41
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
27:44
Speaker 1: your own financial, tax and to state planning advisors before
27:46
Speaker 1: making any investment decisions. Armstrong may contact you to offer
27:49
Speaker 1: investment advisory services.
27:51
Speaker 4: Well, we're going to.
27:52
Speaker 2: Take a quick break here. When we return, we're gonna
27:56
Speaker 2: do a little bit of stack rou left.
28:00
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28:41
Speaker 5: Oh, before we get to stack Roulette, we got to
28:43
Speaker 5: pay off the trivia question. Now. We asked a couple
28:45
Speaker 5: segments ago, which was who was the first Republican to
28:50
Speaker 5: serve as US presidents? That would be Abraham Lincoln and
28:54
Speaker 5: Steven in Middleton, New Hampshire's our winner today taking on
28:58
Speaker 5: the Financial Exchange Show. T Shirt can to Steven and
29:01
Speaker 5: we played trivia every day here on the Financial Exchange.
29:06
Speaker 5: See complete contest rules at Financial Exchange Show dot com.
29:09
Speaker 2: Paul, what do you got for me for stack Roulette?
29:11
Speaker 3: I want to talk about the housing market a little bit.
29:14
Speaker 3: We got some new information that new construction has sunk
29:18
Speaker 3: to a six year low in terms of the sales
29:23
Speaker 3: of new construction homes. We saw that a real load number.
29:28
Speaker 3: There's a significant backlog of inventory about five hundred thousand
29:31
Speaker 3: homes that remain again, these are new construction homes that
29:34
Speaker 3: remain unsold. That's a nineteen year high, and at the
29:37
Speaker 3: current sales pace we are at, it would take about
29:41
Speaker 3: nine and a half months to clear that inventory. And
29:44
Speaker 3: so the housing market finds itself again an interesting spot
29:47
Speaker 3: where we haven't seen a tremendous amount of growth for
29:51
Speaker 3: the housing sector in general. There was some optimism heading
29:54
Speaker 3: into this year that interest rates may come down a
29:56
Speaker 3: little bit, but we still sit about six and a
29:58
Speaker 3: half percent on the thirty year fixed mortgage, and you've
30:01
Speaker 3: got a lot of these builders having to offer discounts
30:05
Speaker 3: to potentially unload some of the new homes that they
30:08
Speaker 3: had built. About thirty five percent of builders, according to
30:11
Speaker 3: the National Association of home Builders as of May, were
30:14
Speaker 3: offering discounts on those new homes. So interesting to see
30:18
Speaker 3: what will happen with the the housing market heading into
30:22
Speaker 3: twenty seven. As we're kind of in the rearview mirror
30:24
Speaker 3: of the spring housing.
30:27
Speaker 2: Market here, I am not buying this housing report.
30:31
Speaker 4: Okay, how so or why what are you buy?
30:33
Speaker 2: None of the surrounding data makes any sense. There's no
30:36
Speaker 2: reason why construction would have just suddenly collapsed last month permits.
30:40
Speaker 2: The previous you know several months were just fine, around
30:43
Speaker 2: one point four million annualized. The trend in construction over
30:48
Speaker 2: the last six months or so was you know, flat,
30:51
Speaker 2: but with a modest you know, upward move to it.
30:54
Speaker 2: And there's nothing out there that would suggest that builders
30:59
Speaker 2: and mass des hey, we're not going to build new
31:03
Speaker 2: homes to the tune of like fifteen to twenty percent
31:05
Speaker 2: fewer than we were building previously. So I am going
31:08
Speaker 2: with weird data fluke for some reason on this, but
31:12
Speaker 2: unlikely to be repeated. If it is repeated for whatever
31:16
Speaker 2: reason when we receive the June data, then there's something
31:21
Speaker 2: very strange going on as it relates to housing. But otherwise,
31:26
Speaker 2: what we've been seeing for the last you know, not
31:28
Speaker 2: six months, last three to four months. The markets where
31:31
Speaker 2: most of the construction happens Florida, the Carolinas, Georgia, Arizona,
31:36
Speaker 2: like the place is where you can do like, you know,
31:38
Speaker 2: ten thousand unit developments. Not Massachusetts, where you know, we live,
31:41
Speaker 2: where it's like, hey, we're doing a big development, how
31:44
Speaker 2: many units? Sixteen wah, Like no places where they really
31:49
Speaker 2: build housing. Those markets have started to stabilize in terms
31:53
Speaker 2: of pricing and demand. Pricing fell for you know, the
31:56
Speaker 2: last couple of years in a lot of those places,
31:59
Speaker 2: and now has found a level where it's matched with demand,
32:02
Speaker 2: and so builders are starting to come back to those markets.
32:06
Speaker 2: I don't know why you would suddenly see a big
32:09
Speaker 2: drop off in construction in May. People say, oh, well,
32:12
Speaker 2: you know, because what about the you know, conflict in
32:15
Speaker 2: the Middle East. Okay, well let's start at the end
32:17
Speaker 2: of February. Why are they why they wait two months?
32:20
Speaker 2: And so they went through March and said no, we're
32:23
Speaker 2: not going to do anything. They went through April and
32:24
Speaker 2: said no, we're not going to change plans. And then
32:27
Speaker 2: in May they said, yes, now we're going to construct
32:30
Speaker 2: fewer No. Like I just I that doesn't make any
32:33
Speaker 2: sense to me either. So I'm going with Fluke report
32:36
Speaker 2: and Tucker, if you want to put this one on
32:37
Speaker 2: the prediction wall Ah. When we get next month's reports,
32:42
Speaker 2: I will say that it recovers back north of one
32:45
Speaker 2: point three million annualized. So I will put my post
32:50
Speaker 2: it where my mouth is.
32:54
Speaker 4: Okay, that's right, put me down for the.
32:56
Speaker 2: Red tie and Kevin Worrish if you want to throw it.
32:58
Speaker 2: So you got red tie, I got gold tie. Tucker's
33:00
Speaker 2: got no talk. That's a whole new post it.
33:02
Speaker 4: Hold on, well, yeah, I mean if that's a neat
33:04
Speaker 4: quick I don't think.
33:05
Speaker 2: I don't think we need a post it for that
33:06
Speaker 2: one was red, Chuck was what gold?
33:10
Speaker 4: Gold? Okay? You were no tie? Cash keV.
33:16
Speaker 2: And I texted Mike and he said tuxedo T shirt.
33:20
Speaker 2: So Mike said, I don't know. Oh, yes, thank you, Michael,
33:26
Speaker 2: I I appreciate you. Uh, let's talk a little bit
33:30
Speaker 2: about this piece from the Wall Street Journal. State Farm's
33:34
Speaker 2: a I plan for sales agents sparks uproar, quote a
33:38
Speaker 2: real slap in the face. State Farm not part of this, Yes,
33:44
Speaker 2: diabolical move here. Well it's it's Jake but spelled with AI,
33:48
Speaker 2: not A. So it's Jake from State Farm.
33:52
Speaker 1: Uh.
33:52
Speaker 2: So here here's the deal is uh the State Farm
33:57
Speaker 2: CEO UH pretty much said okay, like we've got to
34:01
Speaker 2: you know, figure out, you know, ways to change because
34:05
Speaker 2: they haven't been having you know, a great last couple
34:07
Speaker 2: of years. And according to a video of this event
34:09
Speaker 2: that you know he was you know, speaking at, he
34:12
Speaker 2: literally said State Farm needs to change, and basically what
34:17
Speaker 2: he wants to do is put more AI into the
34:21
Speaker 2: business and specifically is talking about ruling out a new
34:27
Speaker 2: contract for agents that is going to cut benefits and
34:32
Speaker 2: encourage agents to consolidate into bigger offices so less you know,
34:38
Speaker 2: freedom and autonomy and things along those you know lines. Also,
34:42
Speaker 2: agents who don't meet certain new sales targets for two
34:45
Speaker 2: years in a row will be paid out lower commissions. Uh,
34:48
Speaker 2: and you know certain types of commissions are being changed
34:51
Speaker 2: as well. And on top of this, agents are then
34:56
Speaker 2: being asked to incorporate AI into their sales process. So
34:58
Speaker 2: I said, okay, like, let me read about this and see,
35:01
Speaker 2: you know what it says.
35:04
Speaker 4: Quote.
35:05
Speaker 2: New tech tools will include digital assistants and AI powered
35:08
Speaker 2: instant summary of each household's active concerns and tailored product recommendations.
35:12
Speaker 2: The insurance piloting an AI assistant for customers reporting auto losses.
35:16
Speaker 2: According to an internal State Farm report on takeaways from
35:19
Speaker 2: the Vegas convention, Okay, well they're not like replacing agents
35:25
Speaker 2: with AI. I don't know if if your boss came
35:30
Speaker 2: in and said, hey, we've got a piece of you know,
35:35
Speaker 2: this is a copier. We want you to use it
35:37
Speaker 2: to make copies instead of carbon paper, do you just
35:42
Speaker 2: throw your hands up and go, oh, I can't use this.
35:45
Speaker 6: No.
35:45
Speaker 2: Like again, it's not like they're replacing people. They just
35:48
Speaker 2: want them to be more productive, which, by the way,
35:50
Speaker 2: I think is exactly what we want AI to do
35:53
Speaker 2: in a perfect world. We want it to not replace us,
35:56
Speaker 2: but allow us to do more. The same way that
35:59
Speaker 2: a carpenter doesn't say the only good saw is a hacksaw. No, Like,
36:05
Speaker 2: it's not like how it works. You use the best
36:08
Speaker 2: tool for the job. And if power tools can make
36:11
Speaker 2: you a more efficient carpenter or plumber or whatever, you
36:14
Speaker 2: use them because they allow you to turbo charge your performance. Likewise,
36:20
Speaker 2: the reason why we use computers and not you know,
36:23
Speaker 2: word processors or abacuses, abicus is or abakai. That's leterally
36:29
Speaker 2: about to ask that maybe it's abicasusses. It's definitely that abakassi.
36:39
Speaker 2: We'll do some research on that. But the reason that
36:41
Speaker 2: we don't use the abacus in the modern you know,
36:44
Speaker 2: work in the modern office is because A the little
36:47
Speaker 2: beads get lost everywhere, and b the computer is much
36:51
Speaker 2: more efficient. So if AI turns out to be more efficient,
36:54
Speaker 2: we'll use it. If it sucks and is useless for
36:56
Speaker 2: our job, companies will figure that out and they'll be like, no,
36:59
Speaker 2: this is a waste of money.
37:00
Speaker 4: We're not going to do it. Ultimately, what this comes
37:02
Speaker 4: back to that.
37:05
Speaker 2: So not ABOCAI.
37:08
Speaker 4: Sorry, Paul, go ahead.
37:10
Speaker 3: They're cutting these employees pay, which is never going to
37:13
Speaker 3: make anyone happen. If you said to me, hey, Paul,
37:15
Speaker 3: we're gonna incorporate some new AI tools into our firm here,
37:19
Speaker 3: but we're gonna ask you to take a pay cut
37:21
Speaker 3: and use these tools more, I'm not going to be
37:24
Speaker 3: thrilled about that. And what ultimately, whether it's insurance or
37:28
Speaker 3: what we do, is a relationship driven business. And yes,
37:31
Speaker 3: you want to use tools to make yourself more productive,
37:35
Speaker 3: but on the heels of cutting your pay at the
37:37
Speaker 3: same time doesn't really instill a lot of confidence in
37:40
Speaker 3: your company.
37:40
Speaker 2: No, But here's the counter, Paul. You probably know a
37:44
Speaker 2: bunch of people in sales in the financial industry. When
37:46
Speaker 2: you talk to them, how many of them say, hey,
37:49
Speaker 2: my commission structure is much better this year, Like it's
37:51
Speaker 2: easier for no, Like everyone that I talked to is well,
37:54
Speaker 2: they reorganized our department, and my sales quotas.
37:58
Speaker 4: Are higher, and you know it's his way to cut
38:01
Speaker 4: down the expense.
38:02
Speaker 2: Like that's what I hear from just about everyone in
38:04
Speaker 2: the financial business. So I don't know. We're gonna take
38:08
Speaker 2: a quick break. Mark Germain broadly flat in advance of
38:11
Speaker 2: Kevin Warsh's first meeting as FED chair. We're gonna summarize
38:17
Speaker 2: it tomorrow and you should listen to us do just that.