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AI Chip Volatility Tests the Market Rally · The Financial Exchange Show

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Speaker 1: Zada and Mike Armstrong.
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Speaker 2: Okay, it's uh, it's Chuck and Mike, and it's Tucker too.
1:18
Speaker 2: And if you hear disappointment in my voice, I do
1:23
Speaker 2: ex aspiration disappointment. It's not you, it's me shot a
1:28
Speaker 2: depression in there. I don't know what's going on. I
1:30
Speaker 2: kind of missed the Hayes from yesterday. Yeah, I kind
1:34
Speaker 2: of missed the Hayes. I had a h Chuck. It
1:36
Speaker 2: is always dreamed of living on Mars, I have, and
1:39
Speaker 2: and yesterday was the closest I think we were gonna
1:41
Speaker 2: get it was. It was more Venus like, in my opinion,
1:43
Speaker 2: a little bit more yellow and you know, kind of
1:48
Speaker 2: you a Are you a Wilco fan? No? No, okay,
1:52
Speaker 2: well then I'm not gonna say what I was gonna say.
1:54
Speaker 2: In any case, Uh, let's talk a little bit about
1:57
Speaker 2: what we are seeing in markets today. Piece and Bloomberg
2:01
Speaker 2: to kick us off US stocks fall as AI trade
2:03
Speaker 2: faces fresh scrutiny. I gotta tell you, man, the AI
2:08
Speaker 2: trade is not facing any fresh scrutiny. The AA trade
2:10
Speaker 2: has been facing scrutiny for like the last year and
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Speaker 2: a half, two years now, and sometimes it's able to
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Speaker 2: overcome that. Sometimes it's not. But I don't want to
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Speaker 2: be like, hey, the AI trade is finally getting looked
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Speaker 2: at closely, like no bubble for three years, right Like,
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Speaker 2: I don't think anyone has been sitting here being like, well,
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Speaker 2: have you considered the idea that AI might be a bubble?
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Speaker 2: Like that's not a novel thought. Sure, so I think
2:35
Speaker 2: that what is happening is that things that go up
2:40
Speaker 2: very very quickly ten to more often than not, go
2:45
Speaker 2: down very very quickly as well, shortly after. Things that
2:48
Speaker 2: go parabolic topside don't just flatten off usually. And it's
2:52
Speaker 2: not to say that the AI trade is dead or
2:54
Speaker 2: that it's not going to work, but it is to
2:56
Speaker 2: say that, hey, if you are Micron Technology and you
2:59
Speaker 2: open the year, you know, at about three hundred dollars
3:02
Speaker 2: a share and then moved up to twelve hundred, is
3:04
Speaker 2: it really surprising to anyone that they're at eight seventy
3:07
Speaker 2: five right now? Not really, Like this is just kind
3:10
Speaker 2: of how things go when they get a little bit
3:12
Speaker 2: too crazy. If you are again just kind of like
3:17
Speaker 2: going through like the big names that have you know,
3:20
Speaker 2: gone through this rally recently. If you are how about
3:27
Speaker 2: Seagate sand discs. Let's let's pull them out, okay, because
3:31
Speaker 2: they're like the poster child for this one. Here. If
3:34
Speaker 2: you're sand disc, and let's go back even further. If
3:39
Speaker 2: a year ago you were trading it forty dollars a
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Speaker 2: share and then you hit twenty five hundred dollars a
3:45
Speaker 2: share in June of this year, is it surprising that
3:48
Speaker 2: you've fallen forty percent down to around fifteen hundred now?
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Speaker 2: Not really. When you go through that type of move,
3:56
Speaker 2: you're not going to be able to hold it. It's
4:00
Speaker 2: just how it is. I'm sorry, but you just can't
4:04
Speaker 2: see companies that go from being, you know, ten billion
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Speaker 2: dollar companies to four hundred billion. They don't just stay there.
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Speaker 2: It's just not how any of this works. So what
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Speaker 2: I think is happening is, yeah, there's there were some
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Speaker 2: exuberants in that April through May period in semiconductors, and
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Speaker 2: now there's a little bit of a shaking out and seeing, hey,
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Speaker 2: who's actually got you know, hands that are willing to
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Speaker 2: hold this stuff at these prices and who's not. And
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Speaker 2: that takes a little while for that sorting out to happen.
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Speaker 2: And while it does, we're gonna get more information about
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Speaker 2: what the future of those businesses look like as we
4:41
Speaker 2: go through the next couple quarters and we see what
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Speaker 2: kind of orders firm up into deliveries and what kind
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Speaker 2: of deliveries you know, turn into revenue. Like, this is
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Speaker 2: what we're going to see as we go, and it's
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Speaker 2: either going to prove one of two things. Hey, those
4:56
Speaker 2: prices that you hit back in you know, late May,
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Speaker 2: early June, those are the ones that you should have
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Speaker 2: hit because this is real and this is different. Or hey,
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Speaker 2: this is just another semiconductor bubble that we've seen, you know,
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Speaker 2: a capex cycle that we've seen, and the profits that
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Speaker 2: are being made right now are not sustainable because when
5:17
Speaker 2: you make really high profits in a commoditized business, what
5:21
Speaker 2: typically tends to happen. Those profits get eaten away as
5:23
Speaker 2: you expand capacity and that's how it goes. So we'll
5:28
Speaker 2: see which of those develops. But the market right now
5:30
Speaker 2: is just saying, yeah, like you had these big runs
5:34
Speaker 2: and with those, you know, you end up seeing you know,
5:37
Speaker 2: some shakeouts, and that's what's going on. It's no one's
5:40
Speaker 2: looking at the AI trade with fresh scrutiny right now, agreed.
5:43
Speaker 3: So the backdrop as we head now into earning season,
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Speaker 3: we just had all the big banks report, which doesn't
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Speaker 3: have much of anything to do with the AA.
5:50
Speaker 1: Man.
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Speaker 3: I suppose some of the IPOs that they made a
5:53
Speaker 3: bunch of money on do you have to do with
5:54
Speaker 3: the AI industry, But largely, you know, the banks have
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Speaker 3: their own set of business going on here.
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Speaker 2: I do find it interesting that the banks are selling
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Speaker 2: off today too. Yeah, semis typically have moved in opposite
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Speaker 2: directions for the last three four months, and the fact
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Speaker 2: that they're both moving in the same direction today, I
6:11
Speaker 2: won't lie. It caught my eye.
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Speaker 3: So as we head into earnings that the backdrop in
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Speaker 3: my mind is a similar one that we've had for
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Speaker 3: previous quarters. One expectations are extraordinarily high for anybody in
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Speaker 3: the AI supply chain, so we will see if those
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Speaker 3: revenues are in fact or those hopes of sales are
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Speaker 3: turning into sales which are turning into profit.
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Speaker 2: We also have the backdrop of a lot.
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Speaker 3: Of companies trying to raise a boatload of money. I'm
6:38
Speaker 3: not just talking about SpaceX and maybe Anthropic going public
6:42
Speaker 3: and open AI eventually, but we're talking about Google raising
6:45
Speaker 3: a bunch of equity. We're talking about many of these
6:47
Speaker 3: companies raising debt all at the same time, and so
6:51
Speaker 3: we've talked about how that's such a big reversal from
6:54
Speaker 3: the previous decade in the US dock market, where when
6:58
Speaker 3: giant tech companies had offs, what did they do?
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Speaker 2: They bought back their shares pretty much.
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Speaker 3: And so there's that reversal going on as well amongst this.
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Speaker 3: I don't even think I would call it skepticism about
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Speaker 3: the AI trade.
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Speaker 2: I don't.
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Speaker 3: I don't think the market overall is skeptical of it.
7:17
Speaker 3: Are some are skeptical it would look much mution from this. Yeah,
7:20
Speaker 3: so I think there is some loo, you know, looming
7:23
Speaker 3: concern that hey, maybe this is turning into a bubble,
7:26
Speaker 3: and some investors are concerned about that. But overall, I
7:29
Speaker 3: don't think that's the message that the markets are sending.
7:31
Speaker 2: I think it's just been Hey, things.
7:33
Speaker 3: Got pretty great over the course of the first five
7:36
Speaker 3: months of the year, and there hasn't been that next
7:39
Speaker 3: thing to shove the market higher.
7:43
Speaker 2: I don't want to say that we said it, but
7:45
Speaker 2: we said it. The semiconductor sector is not going to
7:49
Speaker 2: see its value double every two months forever, and and
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Speaker 2: that is the case, like that's that's what we're seeing.
7:57
Speaker 2: We said that after we went through May, because April
8:00
Speaker 2: to May the Philly Semiconductor Index doubled, and we said
8:04
Speaker 2: the time, like, look, it doesn't mean that like it's
8:06
Speaker 2: over now or this or that, but you're not gonna
8:10
Speaker 2: see one sector double every two months forever. You know.
8:15
Speaker 2: There's there's not much that I know to be irrefutably true,
8:19
Speaker 2: but that's one of them. That's that's one of the
8:23
Speaker 2: things like if if, if you want to like list
8:26
Speaker 2: like you know, Chuck's five most important you know, thoughts
8:31
Speaker 2: of his entire life. The semiconductor sector will not double
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Speaker 2: every two months forever, is up there. Yeah. Sorry.
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Speaker 3: The other looming Backer Chop story that I can think of, Chuck,
8:42
Speaker 3: is will interest rates and the FED work for you
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Speaker 3: as an investor against you or just kind of fade
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Speaker 3: into the background in twenty twenty six. That's you know,
8:53
Speaker 3: that's not the thing that's driving this market in one
8:56
Speaker 3: direction or another. And we've seen stocks overcome concerns about
8:59
Speaker 3: hiring frustrates this spring, but it can rear its.
9:02
Speaker 2: Ugly head depending on where things go. Yeah, and unfortunately
9:05
Speaker 2: this is going to be very dependent on what's going
9:08
Speaker 2: on in the Middle East. Yep, just because look, while
9:11
Speaker 2: the FED obviously does not look at or tries to
9:14
Speaker 2: strip out food and fuel costs when looking at inflation,
9:17
Speaker 2: because those can be very volatile from month to month
9:20
Speaker 2: as we've seen over the last six months, the fact
9:23
Speaker 2: is those things can bleed into other parts of the
9:27
Speaker 2: inflation picture because look, fuel ends up, you know, basically everywhere.
9:31
Speaker 2: When it's all said and done, stuff has to get
9:33
Speaker 2: from point A to point B, and so those prices
9:36
Speaker 2: can move based on it. And I think that with
9:40
Speaker 2: the continued uncertainty about what the picture in the Middle
9:43
Speaker 2: East looks like over the rest of the year, you
9:46
Speaker 2: certainly have had rates move up in the last couple
9:48
Speaker 2: weeks in conjunction with oil prices. And that's a trend
9:51
Speaker 2: that unfortunately is back in place after kind of disappearing
9:55
Speaker 2: during May and June when the market was able to,
9:57
Speaker 2: you know, find its footing a little bit. But now
10:01
Speaker 2: it very much is back to Okay, oil up, great,
10:05
Speaker 2: you've got rates up as well, and that's problematic here
10:09
Speaker 2: triple a national average for gas prices, by the way,
10:11
Speaker 2: up another five cents over night to three ninety four.
10:14
Speaker 2: Diesel back above five dollars a gallon for the first
10:17
Speaker 2: time in about a month or so, and so you've
10:21
Speaker 2: got fuel prices rising, and it's it's they're getting hit
10:24
Speaker 2: from both sides. Right now, You've got crude prices that
10:27
Speaker 2: are back up West Text Intermedia today up another at
10:32
Speaker 2: this point now actually only up another fourteen cents. It
10:35
Speaker 2: was above eighty dollars a barrel for the first time
10:38
Speaker 2: in a little bit, but now it's seventy nine to
10:40
Speaker 2: seventy four. But crewe price is still up, you know,
10:43
Speaker 2: almost twenty percent in the last couple of weeks, about
10:46
Speaker 2: sixteen seventeen percent. And the other piece is crack spreads,
10:50
Speaker 2: which is, hey, what's the difference in what buyers are
10:54
Speaker 2: willing to pay for refined product relative to what refineries
10:59
Speaker 2: have to pay for crewde crackspreads are now approaching seventy
11:02
Speaker 2: dollars a barrow, which is an all time high, and
11:04
Speaker 2: continuing to make new all time highs on a daily basis,
11:07
Speaker 2: because there just is not enough refining capacity in the
11:10
Speaker 2: world right now, with a bunch of Middle East refineries offline,
11:15
Speaker 2: with a bunch of Russian refineries offline, with Chinese refineries
11:19
Speaker 2: still not spooling up the way they potentially could. This
11:24
Speaker 2: is where we are. So gas prices three ninety four
11:27
Speaker 2: gallon now nationally, you're going to be north of four
11:30
Speaker 2: dollars a gallon by early next week. So moving in
11:34
Speaker 2: the wrong direction at this point. Let's take a quick
11:38
Speaker 2: break here when we return Taiwan Semiconductor, speaking of ai
11:43
Speaker 2: related companies, they reported earnings late yesterday. I guess, not
11:47
Speaker 2: late yesterday, was early today, or I guess depending on
11:50
Speaker 2: what time zone you're talking about, it might have been
11:52
Speaker 2: early tomorrow that they reported earnings. But let's talk about
11:57
Speaker 2: that when we come back.
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13:06
Speaker 2: Surprising no one, Taiwan Semiconductor reported a profit that jumped
13:10
Speaker 2: seventy seven percent from the prior year. It was a
13:15
Speaker 2: small beat on their overall profits numbers, so I guess
13:21
Speaker 2: like technically it surprised someone, but now the market as
13:23
Speaker 2: a whole, who has Taiwan Semiconductor down about two percent today?
13:27
Speaker 2: After reporting fantastic earnings. Taiwan also raised their global capex
13:34
Speaker 2: budget this year from sixty to sixty four billion dollars
13:36
Speaker 2: I'm sorry two a sixty to sixty four billion dollar range,
13:39
Speaker 2: which is a seven to fourteen percent increase from last year,
13:44
Speaker 2: and they've committed to investing in additional one hundred billion
13:46
Speaker 2: dollars in the United States over an unspecified period of time.
13:52
Speaker 2: But I think the big thing and the reason why
13:54
Speaker 2: the stock's down two percent is everyone knows that these
13:57
Speaker 2: companies are printing money right now, and you don't get
14:01
Speaker 2: paid as a shareholder for what the company did this quarter.
14:05
Speaker 2: You get paid for what the company is expected to
14:07
Speaker 2: do in the future. And my read is, hey, expectations
14:12
Speaker 2: were sky high here and there was not enough positive
14:15
Speaker 2: forward guidance to drive the stock higher after Again, forgive
14:20
Speaker 2: me if like you've you know, heard this before, a
14:23
Speaker 2: massive run to start the year where the stock you know,
14:26
Speaker 2: at one point had rallied almost, you know, sixty five percent.
14:30
Speaker 2: If you're a two trillion dollar company, you got to show, hey,
14:33
Speaker 2: what's next to get you to three trillion. You can't
14:36
Speaker 2: just show here's what we did this quarter.
14:38
Speaker 3: Can we talk about that one hundred billion dollar investment
14:40
Speaker 3: in the United States?
14:41
Speaker 2: Would love to so two three.
14:42
Speaker 3: Years ago, if we had been talking about that, I
14:45
Speaker 3: would think that we would be talking about it in
14:47
Speaker 3: terms of, you know, what did the US need to
14:49
Speaker 3: negotiate such as the Chips Act in order to incentivize
14:52
Speaker 3: TSMC to come pour some money into US chip foundaries.
14:57
Speaker 3: It feels as though that narrative shifted a little bit.
14:59
Speaker 2: Right.
15:00
Speaker 3: It feels to me as though if you are not
15:03
Speaker 3: building foundaries and data centers in the United States, you
15:06
Speaker 3: have something to miss out on.
15:08
Speaker 2: I think there is at least enough of a flywheel.
15:12
Speaker 2: And here's the thing. None of these are binding commitments. Sure,
15:16
Speaker 2: and we've seen in the past, like you know, companies
15:19
Speaker 2: that say Okay, we're gonna do X, y and z,
15:21
Speaker 2: and then it doesn't end up happening. You get the
15:25
Speaker 2: reporting on those occasionally, like we see you know, a
15:27
Speaker 2: couple every quarter where it's like, oh, this planned investment
15:30
Speaker 2: didn't end up taking place and here's why. So it
15:34
Speaker 2: does seem like there's somewhat of a flywheel where again,
15:38
Speaker 2: once you get the initial stages done, now you start
15:41
Speaker 2: building you know kind of a campus of information and
15:44
Speaker 2: this you know, local hub of expertise and you say, yes,
15:48
Speaker 2: I'm willing to invest more there because I've already done
15:51
Speaker 2: the hard part, which is getting it off the ground. Yeap.
15:53
Speaker 2: So I think that's encouraging. The piece that you need
15:56
Speaker 2: to watch is Okay, what's the follow through and on
15:59
Speaker 2: what timeline? Because it's very easy, like if if I
16:04
Speaker 2: were running Chuck Semiconductor Company, It'd be easy for me
16:08
Speaker 2: to say, yes, I want to build a fab in
16:10
Speaker 2: the US and expand and here's I'm gonna pledge fifty
16:14
Speaker 2: billion dollars to do it. And then when the winds
16:16
Speaker 2: change two years from now and you know things don't
16:18
Speaker 2: look as good, say well, as part of a strategic review,
16:21
Speaker 2: we're pulling back investment worldwide. And as part of that,
16:24
Speaker 2: you know this is going to be you know, coming
16:25
Speaker 2: off the board. You need to see the follow through.
16:29
Speaker 2: These companies to this point have been following through on
16:32
Speaker 2: the buildouts, so I think that that's been good to see.
16:36
Speaker 2: There still is more work to be done, but I
16:41
Speaker 2: think the hardest thing is luring that initial investment, because
16:44
Speaker 2: once you get it there, then it's well, I've made
16:48
Speaker 2: the investment. I'm starting to see return on it. Do
16:50
Speaker 2: I want to expand it or not? And that's a
16:52
Speaker 2: much easier question than do I want to try this
16:56
Speaker 2: to begin with? In a complicated manufacturing industries such as semiconductors, Yeah,
17:02
Speaker 2: I guess.
17:03
Speaker 3: All that being said, there isn't a whole lot of
17:05
Speaker 3: evidence that we are capable of manufacturing the latest and
17:07
Speaker 3: greatest semi conductors here in the United States.
17:09
Speaker 2: Yeah, you gotta walk before you can run.
17:11
Speaker 3: Yep, you know it's probably several years out.
17:13
Speaker 2: But that's fine. That's that still is several years closer
17:17
Speaker 2: than if you hadn't gotten to this point to begin
17:19
Speaker 2: with a you know, it's we didn't all of a
17:24
Speaker 2: sudden start flying on seven forty seven's. The Right brothers said, Hey,
17:29
Speaker 2: we're gonna fly about three hundred feet on uh you know, uh,
17:33
Speaker 2: what was the beach they were on? Kitty Hawk, North
17:36
Speaker 2: Carolina was the location. I can't remember what the beach
17:38
Speaker 2: is called. Wow, I didn't even have Kitty Hawk, North Carolina.
17:42
Speaker 2: I'm sorry to hear that. Yeah, I'm sorry to hear that.
17:44
Speaker 2: Do you know the names of the Right brothers Bill
17:48
Speaker 2: and Ted, Nope, Tucker, right brothers.
17:51
Speaker 4: Uh, Kyle and Brody, Wilbur and Orville.
17:56
Speaker 2: They just don't name Popcorn. They just don't name him
17:59
Speaker 2: like that. I'm sorry to say, they just don't name
18:03
Speaker 2: him like that. Now, now we all have Braden's, Caden's, Taden's.
18:07
Speaker 2: If you notice that everybody.
18:08
Speaker 5: Has an N at the end of their name, Oh no,
18:13
Speaker 5: doesn't it feel I'm sure that like baby dot com
18:16
Speaker 5: or like like whatever website like puts out the list
18:18
Speaker 5: of top baby names.
18:19
Speaker 2: I'm sure they haven't. Like evidence of the concentration of
18:22
Speaker 2: baby names. It feels like we've really lost originality. But
18:27
Speaker 2: maybe every generation feels that way because everyone born in
18:30
Speaker 2: the nineteen sixties was named either like Susan or.
18:36
Speaker 3: Like I was at a conference racing actually recently actually
18:38
Speaker 3: and it was you know, it was a financial services conferences.
18:41
Speaker 3: So it's mostly men and a lot of them born
18:44
Speaker 3: in the nineteen seventies and eighties. Yeah, and he did
18:46
Speaker 3: it experiment. It's like raise your hand if your name
18:47
Speaker 3: is Michael.
18:48
Speaker 2: Yeah, it was like a good chuck or like today
18:51
Speaker 2: for boys, like how many Masons do you have? Like
18:54
Speaker 2: how many? Uh? I can't even think of the other ones,
18:58
Speaker 2: but like Mason's one that just like it's over and over.
19:01
Speaker 4: Names are Liam, Noah, Oliver, Theodore, Henry, James, Elijah, Matteo, William,
19:06
Speaker 4: and Lucas. That's your top tens in the top ten. No, no,
19:11
Speaker 4: let's go to see Henry and James in there.
19:13
Speaker 2: Those are names, yes, good kings of England. Ah. Yes,
19:17
Speaker 2: not all of the Henry's, but some of the Henry's
19:20
Speaker 2: we're good Kings of England. The James has had a
19:22
Speaker 2: mixed result as well, but hey, what are you gonna do?
19:26
Speaker 2: Quick break here and Wall Street watches next.
19:40
Speaker 1: Like us on Facebook and follow us on Twitter at
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19:47
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19:52
Speaker 1: Street Watch treking the stocks, Sandato, and the headlines driving
19:56
Speaker 1: markets so far today right here on the Financial Exchange
19:59
Speaker 1: Radio netw We're.
20:00
Speaker 4: Seeing another slight pull back in the AI trade this morning.
20:04
Speaker 4: Is more second quarter earnings rolled in. Wall Street's also
20:06
Speaker 4: keeping a close sign rising tensions between the US and Iran.
20:10
Speaker 4: Right now, the Dow is up about two tenths of
20:13
Speaker 4: one percent. SMP five hundred is mostly flat, only down
20:16
Speaker 4: by two points. NASDAC down by four tenths of one
20:20
Speaker 4: percent or one hundred and thirteen points. RUSS two thousand
20:23
Speaker 4: is up two thirds of one percent. Tenure treasureeled is
20:26
Speaker 4: up four basis points at four point five to eight percent.
20:29
Speaker 4: In oil up about three quarters of a percent, trating
20:32
Speaker 4: at eighty dollars a barrel. United Health handily beats second
20:35
Speaker 4: quarter earnings expectations and hiked its full year profit outlook
20:39
Speaker 4: as it better manages high medical costs and utilizes AI
20:43
Speaker 4: to help streamline operations. Shares are up by four percent. Meanwhile,
20:48
Speaker 4: Taiwan Semiconductor posted its fifth consecutive quarter record earnings, fueled
20:52
Speaker 4: by solid global demand for AI infrastructure. However, the stock
20:56
Speaker 4: is down by one percent. Elsewhere, shares in psychedelic drug
20:59
Speaker 4: man Hi Beckley are surging thirty four percent after Eli
21:03
Speaker 4: Lilly said it will buy the company for two point
21:06
Speaker 4: eight billion dollars. Merk shares are up nearly three percent
21:09
Speaker 4: after the FDA approved the company's once daily medication to
21:13
Speaker 4: reduce LDL cholesterol, which will sell for about thirty eight
21:17
Speaker 4: hundred dollars a year, and United Airlines down about one
21:20
Speaker 4: percent after beating earnings expectations but issued software than expected guidance,
21:25
Speaker 4: saying it expects six billion dollars in added fuel costs.
21:31
Speaker 4: I'm Tucker Slovan. That is Wall Street Watch.
21:35
Speaker 2: Got a piece here in the blooming Berg. It's titled
21:38
Speaker 2: around US hostilities worse than as Hormus shipping traffic falls
21:42
Speaker 2: and yeah, basically where we've we've gotten to at this point,
21:46
Speaker 2: the blockade is restarted at this point, so iranium traffic
21:52
Speaker 2: and traffic of you know, vessels that are not uranium
21:55
Speaker 2: but heading to and from Iran are stopped. On top
21:59
Speaker 2: of that, you don't really have much flowing through the
22:02
Speaker 2: Omani lane at the south port, in the south portion
22:06
Speaker 2: of the straight Offoe moves because well over the last
22:10
Speaker 2: week when traffic was flowing in that direction, Iran was
22:13
Speaker 2: launching cruise missiles and drones at it and was taking
22:17
Speaker 2: out oil tankers and killed a number of people and
22:19
Speaker 2: injured a number of people. And from what I gather,
22:22
Speaker 2: there are a bunch of captains and crew that now
22:25
Speaker 2: were just saying like, no, like, we're not going to
22:27
Speaker 2: travel through here. You can't provide us guarantees that we're
22:29
Speaker 2: not going to be killed, Like we're not doing that.
22:33
Speaker 1: Uh.
22:34
Speaker 2: And so I think where we stand right now is
22:38
Speaker 2: the optimism that had built over the second half of
22:41
Speaker 2: June into the you know start of July, when shipments
22:46
Speaker 2: of oil through that strait were you know, ratcheting up
22:49
Speaker 2: to averaging around ten million barrels a day, still off
22:51
Speaker 2: the norm, but you know, in a much better spot.
22:55
Speaker 2: You're now seeing that basically falling to a trickle once
22:58
Speaker 2: again of like one two million barrels a day. And
23:02
Speaker 2: this is happening at a time when also Ukraine, using
23:06
Speaker 2: a combination of different weaponry, is attacking Russian refined and
23:12
Speaker 2: product you know tankers, and now as of this morning,
23:17
Speaker 2: struck two crude oil tankers in the Black Sea, basically
23:22
Speaker 2: you know, trying to grind Russian oil and product exports
23:25
Speaker 2: to a halt as well. And so you've got kind
23:29
Speaker 2: of this, you know, these this two pronged you know
23:33
Speaker 2: problem that's coming for oil markets, and they're they're picking
23:36
Speaker 2: up on it. The price of crude West Texas Intermediate
23:39
Speaker 2: has gone from sixty eight dollars dollars a barrel at
23:44
Speaker 2: the start of July now up to eighty dollars and
23:48
Speaker 2: eleven cents. You've got crack spreads, which is again basically
23:53
Speaker 2: that that's spread that refiners make on the difference between
23:55
Speaker 2: what they sell they refined product for and what they
23:57
Speaker 2: pay for their crude inputs. Those are up to seven
24:00
Speaker 2: dollars a barrel. Because there just isn't enough refinery capacity.
24:04
Speaker 2: And you're doing this all with US oil inventories depleted
24:10
Speaker 2: to pretty dangerous levels such that hey, once the the
24:13
Speaker 2: next you know, three to four weeks, you know, pass
24:17
Speaker 2: and those ships that were able to get out of
24:19
Speaker 2: horror moves are absorbed into you know, the global production infrastructure.
24:23
Speaker 2: Once those cargoes are offloaded, there's really not much cushion here,
24:28
Speaker 2: and so you you have a problem that is very
24:30
Speaker 2: much building that you know was put on hold in
24:35
Speaker 2: mid June, that we are once again kind of staring
24:38
Speaker 2: down the barrel of if you don't have a resolution
24:41
Speaker 2: to get things moving in HORRM moves. I would say
24:43
Speaker 2: by mid August.
24:45
Speaker 3: I'm simultaneously pessimistic that anything substantial happens in terms of
24:49
Speaker 3: negotiation with Iran in the United States, and also I
24:55
Speaker 3: feel as though maybe I should be more concerned about
24:58
Speaker 3: the inventory levels, but it just seems to me, based
25:01
Speaker 3: on recent experience, that if it gets catastrophic, the Trump
25:05
Speaker 3: administration is going to find a way to once again
25:09
Speaker 3: at least convince the public that we're heading towards negotiations
25:11
Speaker 3: and traffic can start flowing there. I think the other
25:14
Speaker 3: wild card that we talked about earlier this week on
25:17
Speaker 3: the show remains China, not in so far as their
25:20
Speaker 3: role in the Middle East, but their role in decreasing
25:23
Speaker 3: their purchases on open markets of oil has absolutely massive,
25:28
Speaker 3: and nobody really knows how long they're going to do that.
25:30
Speaker 3: Nobody has any idea how long they can continue.
25:33
Speaker 2: To do it.
25:34
Speaker 3: Correct, it appears from you know, above ground, you know,
25:40
Speaker 3: inventories and reserves that we can actually monitor that the
25:42
Speaker 3: Chinese have quite a bit more to burn through before
25:45
Speaker 3: they would need to get into coldly. But that doesn't
25:51
Speaker 3: mean that they won't just start buying again, right, So yeah,
25:55
Speaker 3: that is a big open question as well. I tend
25:58
Speaker 3: to land on the side of the Trump administration does
26:02
Speaker 3: not want to see five dollars a gallon gasoline, and
26:05
Speaker 3: so they're going to do everything in their power if
26:06
Speaker 3: we head that direction again, to prevent it from happening.
26:09
Speaker 3: But I'll also have to acknowledge here that that is
26:13
Speaker 3: not in their control the same way that say, tariffs
26:15
Speaker 3: were when it came to goods prices.
26:17
Speaker 2: No, And look, there clearly are disagreements as to what
26:20
Speaker 2: the memorandum of understanding that was signed in mid June
26:23
Speaker 2: actually means when it comes to some of these things.
26:26
Speaker 2: And look, I gotta be honest, does either side even
26:32
Speaker 2: trust each other enough to try to put this back together?
26:34
Speaker 2: Like not to try, but does either side either trust
26:37
Speaker 2: each other enough to be able to put this back together.
26:41
Speaker 2: Trust to know, But I'm not sure that there's a
26:44
Speaker 2: requirement of well, there kind of is a requirement for trust.
26:49
Speaker 2: You know, you don't have to like each other, right,
26:52
Speaker 2: but you do have to trust that the other side
26:54
Speaker 2: is going to follow through on what's agreed on. And
26:57
Speaker 2: I think each side right now feels, hey, you broke
27:01
Speaker 2: you know, part of this agreement, and that makes it
27:04
Speaker 2: harder to get to a new one. It doesn't mean
27:06
Speaker 2: it's impossible, yep. And you know, like you, I tend
27:09
Speaker 2: to think, hey, when push comes to shove, the Trump
27:14
Speaker 2: administration understands, Hey, if gas prices go crazy, that is
27:17
Speaker 2: very very bad for you know, a whole number of reasons.
27:21
Speaker 2: But we'll just have to see how this plays out.
27:24
Speaker 2: I don't know what the next you know, two to
27:26
Speaker 2: three months looks like. Here there are paths where you
27:30
Speaker 2: can get back to what things looked like a couple
27:32
Speaker 2: weeks ago, where things were improving. There are paths where
27:36
Speaker 2: this worsens. And I don't know how we're gonna move here.
27:39
Speaker 2: I just I don't it's it's it's messy right now.
27:45
Speaker 2: US grocery slowdown deepens, as shoppers buy fewer items, raising
27:49
Speaker 2: pressure on food companies. From data from Baine Consulting, grocery
27:55
Speaker 2: units sales fell one point eight percent in June versus
27:58
Speaker 2: last year as shoppers cut back. That is a pretty
28:04
Speaker 2: sharp reversal from what we were seeing a year ago
28:07
Speaker 2: where there was very modest year over year growth. Prices
28:11
Speaker 2: are continuing to rise, you know, in that two to
28:13
Speaker 2: three percent range from what we're seeing from cpis. So
28:16
Speaker 2: overall dollar volume is you know, keeping sales you know,
28:20
Speaker 2: level at least, But.
28:23
Speaker 3: This is not an area of consumerism that you see
28:25
Speaker 3: fluctuate much. You can't, like it's it's groceries. It's pretty inelastic.
28:31
Speaker 3: You can maybe swap out chicken for steak or eggs
28:34
Speaker 3: for some other protein, but like you don't see volume
28:37
Speaker 3: sales dramatically move. And the fact that you are seeing
28:41
Speaker 3: year over year grocery sales down one point eight percent,
28:44
Speaker 3: I mean, the article here speaks about, you know, the
28:47
Speaker 3: pain that the average consumer's in and pulling back there.
28:52
Speaker 3: On the other hand, we're seeing data from JP Morgan
28:55
Speaker 3: contradict that in terms of what they're seeing on credit
28:57
Speaker 3: card spending and things along those lines.
28:59
Speaker 2: So and this is why I think there's something else
29:05
Speaker 2: afoot here. You know, you get this quote from Uh,
29:10
Speaker 2: what are you pointing towards? What do you? Yeah? Yeah,
29:13
Speaker 2: that's exactly what I'm gonna say. But I gotta I gotta.
29:15
Speaker 3: Get there first. That's love it so camera too.
29:20
Speaker 2: For all of our YouTube listeners, Yes, and for all
29:22
Speaker 2: of you listening to viewers that too. Listeners, No, No,
29:26
Speaker 2: sometimes just have it on the background talker. Yeah, but
29:29
Speaker 2: it's a visual.
29:29
Speaker 1: He was pointing.
29:30
Speaker 2: Whatever, keep going, Kurt, Kurt, is it Graciel or Grishelle
29:36
Speaker 2: or grickle grickle grickle? Obviously? Uh, the head of bank
29:42
Speaker 2: bands America's retail practice. That big grocery stock up trip
29:45
Speaker 2: that cost you three hundred dollars in twenty nineteen now
29:47
Speaker 2: costs you four hundred. Okay, but that's been the case
29:48
Speaker 2: for like three years. Grocery prices haven't changed a ton
29:51
Speaker 2: In the last couple it was mostly twenty one and
29:54
Speaker 2: twenty two grocery prices went nuts, and then they've had
29:57
Speaker 2: you know, kind of their standard you know, slow increase
30:00
Speaker 2: from there. So like it's not like it's not like
30:03
Speaker 2: household suddenly woke up in June of this year and
30:05
Speaker 2: They're like, hey, grocery prices are up, you know, twenty
30:08
Speaker 2: five percent since twenty nineteen. We got to do something. No,
30:11
Speaker 2: what I think is actually going on is that there
30:15
Speaker 2: are more and more households now that are on GLP
30:19
Speaker 2: one weight loss drugs, And there's a reason why you
30:23
Speaker 2: are seeing a decline in grocery shopping. And I think
30:27
Speaker 2: it is absolutely correlated towards the rise of those drugs
30:32
Speaker 2: is becoming more and more mainstream with each passing year,
30:36
Speaker 2: and with the newer versions that are being developed being
30:39
Speaker 2: better at stimulating additional weight loss through managing appetite. So
30:46
Speaker 2: I think that is the piece that is going on here.
30:51
Speaker 3: By the way, Gallup reports that roughly fifteen percent of
30:56
Speaker 3: US adults report having used them GLP one, the medicine
31:00
Speaker 3: for weight loss, at some.
31:01
Speaker 2: Point like ever in the last year. Ever, what was
31:05
Speaker 2: the number out a year ago? Do you have like
31:06
Speaker 2: any longitudinal data? O? Yes, back in twenty twenty four
31:11
Speaker 2: it was six percent. And what was it last year?
31:16
Speaker 2: The middle the middle one twelve? So twelve. Okay, so
31:21
Speaker 2: hear me out, my good jump, No, hear me out.
31:23
Speaker 2: Last year we were at twelve and now we're at fifteen.
31:27
Speaker 2: That's a three percent difference, right, Yeah, there's been a
31:30
Speaker 2: two percent drop in grocery sales. Yeah, could hear me out?
31:35
Speaker 2: I mean, they don't buy no groceries, but well, I'm
31:38
Speaker 2: not saying they bought none, but maybe they reduced their
31:40
Speaker 2: grocery intake just a little bit and that's that's all
31:43
Speaker 2: it takes. There. Do I think that some of this is,
31:45
Speaker 2: you know, families, you know, trying to manage pricing in
31:48
Speaker 2: the face of rising gas prices and things like that. Also, yes,
31:51
Speaker 2: sure I could see that, But I got to tell you,
31:54
Speaker 2: when grocery stores are the one place that are saying, hey,
31:58
Speaker 2: we're having like trouble with volume, it strikes me as
32:02
Speaker 2: maybe it's an appetite related thing and the rise of
32:07
Speaker 2: ozempic and other things like that. What are the other ones?
32:10
Speaker 2: Is Munjara one or is that something else? I'm trying
32:13
Speaker 2: to think of all the commercials that I see when
32:14
Speaker 2: I'm watching like the World Cup now, and I just
32:17
Speaker 2: don't know. Let's take a quick break here, and when
32:21
Speaker 2: we come back, let's talk about speaking of new drugs.
32:26
Speaker 2: FDA approving a new cholesterol pill. We'll discuss find daily
32:31
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32:34
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32:37
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32:53
Speaker 1: This is your home for the latest business and financial
32:56
Speaker 1: news in New England and around the country. This the
33:00
Speaker 1: Financial Exchange Radio Network.
33:14
Speaker 2: All right, we got a piece here in the New
33:16
Speaker 2: York Times. Mike, what's the name of this? Not the
33:21
Speaker 2: marketing name, but the actual name of the drug that
33:23
Speaker 2: the FDA has approved here, So it's not the Lipphendra No,
33:28
Speaker 2: with the one on the line before that, right there?
33:32
Speaker 2: I know, right there?
33:34
Speaker 3: Oh well that's uh and Lisiti.
33:38
Speaker 2: Yeah very nice. Yeah, not too shabby.
33:40
Speaker 3: I was gonna give it a lick atie a hard see,
33:43
Speaker 3: but I went with the side.
33:44
Speaker 2: I think you did the right thing, so I'll quote here.
33:47
Speaker 2: Clinical trials have shown that it can bring levels of LDL,
33:49
Speaker 2: the dangerous type of cholesterol, down to fifty or sixty
33:52
Speaker 2: or even lower adults not taking cholesterol lowering drugs typically
33:56
Speaker 2: have levels above a hundred, So you're talking about like again,
33:59
Speaker 2: like fifty percent reductions in the more dangerous type of
34:02
Speaker 2: cholesterol that typically results in about a twenty percent reduction
34:06
Speaker 2: in the risk of heart attack for high risk patients.
34:10
Speaker 2: So a couple interesting things first, like, it's really cool
34:13
Speaker 2: that you're seeing this stuff developed. The second piece, this
34:17
Speaker 2: might be out of date before it even actually hits
34:23
Speaker 2: the market in a few weeks. The reason being in May,
34:26
Speaker 2: there was a research team between I think it was
34:30
Speaker 2: University of Oregon and Barcelona that offered so this would
34:34
Speaker 2: be a daily pill that you need to take and
34:38
Speaker 2: it targets this It inhibits this protein called PCSK nine
34:42
Speaker 2: that I guess leads to the buildup of LDL cholesterol.
34:48
Speaker 2: This research team developed a one time shot that changes
34:52
Speaker 2: a gene in your I think it's liver. I'm not
34:55
Speaker 2: entirely sure that they think will be able to be Okay,
34:58
Speaker 2: you inject this once and for the rest of your life,
35:01
Speaker 2: it manages that same PCSK nine protein in order to
35:06
Speaker 2: not have the development of cholesterol levels. So again, like,
35:11
Speaker 2: this is the kind of stuff that like you see,
35:12
Speaker 2: it's it's really freaking cool. And it's just fascinating that
35:18
Speaker 2: we're getting to this point. And I gotta be honest,
35:22
Speaker 2: between like the GLP one renaissance and now this stuff
35:27
Speaker 2: you're really talking about. I mean, the stuff that you
35:30
Speaker 2: know raises the risk of dying at every age is
35:32
Speaker 2: basically like high weight coupled with high blood pressure. Like,
35:35
Speaker 2: that's the stuff that is not great. There's a real
35:40
Speaker 2: chance that within a generation that is stuff of the past.
35:43
Speaker 3: Buy And as exciting as all the AI stuff is,
35:46
Speaker 3: this is I just get So this stuff is pretty wild,
35:50
Speaker 3: and the GLP one stuff, it has been just fascinating
35:54
Speaker 3: to watch over the last five years.
35:55
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37:05
Speaker 2: Mike, do you follow the Korean stock market closely? No?
37:08
Speaker 2: I don't either, but realized volatility in the Korean stock market,
37:14
Speaker 2: so the actual volatility experienced over the last thirty days
37:18
Speaker 2: is now higher than during the Asian financial crisis in
37:23
Speaker 2: the late nineties and the global financial crisis in two
37:27
Speaker 2: thousand and eight. This is how insane the moves are
37:31
Speaker 2: in because the Korean stock market buying large race point
37:34
Speaker 2: is right. It's yet it's it's basically like Samsung Skhnix.
37:38
Speaker 2: And who's the other one that I'm forgetting? There's one
37:41
Speaker 2: that I'm forgetting. I don't know. Hang on, give me
37:44
Speaker 2: just a second. Now, I got to go and actually
37:46
Speaker 2: do the research and say, Okay, what's the other one
37:49
Speaker 2: that's in there? Yes, so it's it's sk Highnix Samsung.
37:53
Speaker 2: It's really those two. Those two represent like forty percent
37:56
Speaker 2: of the index, which is just again insane. Realized volatility
38:01
Speaker 2: in the Korean market now is higher than the Great
38:03
Speaker 2: Financial Crisis and the Asian Financial Crisis. That is how
38:07
Speaker 2: nutty the last thirty days have been in Korea, and
38:09
Speaker 2: it's also why they've put a moratorium in place on
38:12
Speaker 2: new single stock leveraged ETFs because things are just out
38:16
Speaker 2: of control there. Quick break for just a little bit,
38:19
Speaker 2: and then we're back with that hour two soon