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Is a tidal wave about to hit the US economy? · The Financial Exchange Show

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  Speaker 1: and Mark Fandetti.
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  Speaker 2: It's Friday here on the Financial Exchange. Markets are closed
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  Speaker 2: in observance of Good Friday.
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  Speaker 3: But we're still here.
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  Speaker 2: We still got stuff to talk about, and so it's Chuck,
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  Speaker 2: Mark and Tucker with you, and you're stuck with us
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  Speaker 2: for the next couple hours. Sorry, let's talk a little
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  Speaker 2: bit just about what we are seeing over a shortened
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  Speaker 2: trading week in markets here, just because it's been kind
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  Speaker 2: of weird quite honestly. I mean again, there's just not
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  Speaker 2: really at this point. We're starting to find ourselves a
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  Speaker 2: little bit range bound over the last five or six
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  Speaker 2: trading days, which is a good thing. Like, I don't
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  Speaker 2: think anyone wants a repeat of what we were seeing
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  Speaker 2: on April fourth, fifth, seventh, and eighth. I think we
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  Speaker 2: were fourth, fifth, eighth, and ninth, third, fourth, seventh, and eighth, whatever.
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  Speaker 3: You know, we don't we don't need to go through
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  Speaker 3: that again.
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  Speaker 2: But you've got the S and P kind of starting
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  Speaker 2: to settle into this range between you call it fifty
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  Speaker 2: two to fifty on the low end and fifty four
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  Speaker 2: hundred on the high end. So it's it's starting to
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  Speaker 2: consolidate a little bit, and I think ultimately where where
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  Speaker 2: I've kind of landed here is nobody really knows anything
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  Speaker 2: at this point about what the economy is going to
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  Speaker 2: look like over the next six months. Uh, it's something
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  Speaker 2: where again, trying to you know, mentally go through okay,
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  Speaker 2: where where do you think the data is going to go?
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  Speaker 2: You kind of end up with, Hey, you're gonna have
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  Speaker 2: some things that get all distorted to the upside over
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  Speaker 2: the next you know, a couple of months, you could
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  Speaker 2: have you know, consumers still trying to buy a ton
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  Speaker 2: of cars and stuff, undertaking you know, trying to undertake
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  Speaker 2: big projects while the tariff pause on countries other than
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  Speaker 2: China is in place. Again I say tariff pause, it's
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  Speaker 2: still ten percent baseline, twenty five percent aluminum and steel,
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  Speaker 2: twenty five percent on cars. But so you've got some
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  Speaker 2: things that you could you know, justify as hey, maybe
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  Speaker 2: there's a short term uptick in some parts of the economy.
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  Speaker 2: You've got other things where you talk to anyone who
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  Speaker 2: is adjacent to anything freight related, railroads, truckers, port workers,
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  Speaker 2: and I haven't seen them this freaked out since March
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  Speaker 2: and April of twenty twenty, and in some respects they're
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  Speaker 2: a little bit.
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  Speaker 3: More freaked out.
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  Speaker 2: So that's you know, an area where we'll cover some
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  Speaker 2: stuff that's going on there where you know, just as
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  Speaker 2: an example, Mac Trucks announced that they're going to be
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  Speaker 2: laying off two hundred and fifty to three hundred and
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  Speaker 2: fifty workers because demand for their products is cratering right now.
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  Speaker 2: And so you've got you know, all kinds of distortions here.
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  Speaker 2: But I think ultimately, for the the market as a whole,
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  Speaker 2: I think it's trying to get a sense of it's
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  Speaker 2: torn it between two different places. One is, hey, if
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  Speaker 2: the status quo continues, this is going to get very
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  Speaker 2: bad in the economy very quickly because of just you
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  Speaker 2: know how big of a trading partner China is, and
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  Speaker 2: we'll talk about that.
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  Speaker 3: And on the other hand, hey.
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  Speaker 2: With you know, Trump administration, you can always wake up
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  Speaker 2: tomorrow and hey, we've you know, made deal X, Y
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  Speaker 2: and Z, and we're gonna pause these tariffs for you know,
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  Speaker 2: another ninety one hundred and eighty days while we you know,
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  Speaker 2: finish up the negotiations. And that means something very different.
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  Speaker 2: So I think it's kind of a binary outcome that
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  Speaker 2: we have here to a certain extent, at least for
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  Speaker 2: markets over the next you know, six to ten weeks,
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  Speaker 2: but just no clear direction as to where things go
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  Speaker 2: now because things can change so quickly in either way.
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  Speaker 4: Yeah, recessions are always hard to predict, impossible arguably to predict.
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  Speaker 4: There are some lucky sure coin flippers out there who
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  Speaker 4: called one and then they fade from memory because they
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  Speaker 4: get their next call speck tacularly wrong. In this case,
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  Speaker 4: though a title wave seems to be hitting the economy,
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  Speaker 4: you're hearing the same thing from just about everybody said differently.
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  Speaker 4: I haven't heard anybody say, yeah, business as usual, things
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  Speaker 4: seem to be fine. It hasn't shown up. And the
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  Speaker 4: economic statistics yet is you and Mike Armstrong talk about
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  Speaker 4: a lot. But that's because those come with a delay.
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  Speaker 4: That's one of the problems with economic statistics, particularly GDP,
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  Speaker 4: which we only get quarterly. And that's why the folks
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  Speaker 4: who call recessions, who determine whether or not a recession
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  Speaker 4: is underway when it started, when it ended, that's why
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  Speaker 4: they don't rely on GDP.
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  Speaker 2: When we look at you know, kind of again, you
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  Speaker 2: mentioned this title wave coming. I want to talk a
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  Speaker 2: little bit about what we're seeing on the freight side
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  Speaker 2: of things, because this seems to be you know where
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  Speaker 2: it is coming first potentially, And again I know a
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  Speaker 2: couple people in this space. I also follow a handful
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  Speaker 2: on various social media networks. One of the ones that
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  Speaker 2: I'm familiar with is a guy by the name of
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  Speaker 2: Craig Fuller, and he runs a company called Freight Waves
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  Speaker 2: that basically what they do is they provide real time
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  Speaker 2: data mostly to logistics companies. Is how you buy their service.
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  Speaker 2: But also, you know, he publishes some of it out
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  Speaker 2: there just in order to show what's going on with
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  Speaker 2: the broader economy and with freight because obviously stuff is
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  Speaker 2: kind of a big deal for the economy. Is the
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  Speaker 2: way that I think I'll put it here. And a
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  Speaker 2: couple of things. The first, in terms of what we
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  Speaker 2: are seeing just from a data perspective, the week over
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  Speaker 2: week changes in ocean bookings, and this is something that
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  Speaker 2: he quoted from another company called Vision v I z Ion.
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  Speaker 2: If if you look at the percentage change from the
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  Speaker 2: last week in March to the first week in April
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  Speaker 2: in ocean bookings overall US imports and this is not
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  Speaker 2: from China, this is overall US imports dropped sixty four
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  Speaker 2: percent week over week. Let me let me say that
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  Speaker 2: number again because I've I've said some you know, insane
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  Speaker 2: numbers back in March of twenty twenty. This is about
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  Speaker 2: as as big of a shift as I've ever seen
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  Speaker 2: for a week over week number. US imports for the
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  Speaker 2: week of April first to April eighth had a sixty
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  Speaker 2: four percent drop compared to March twenty fourth, for thirty
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  Speaker 2: first Now, this is for booking, So this is you
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  Speaker 2: know what, you know, what's the volume of stuff that
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  Speaker 2: was launched during that week down sixty four percent. US
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  Speaker 2: exports during that same time down thirty percent. So this
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  Speaker 2: this is a huge, huge signal that we are getting.
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  Speaker 2: Like when we talk about actual hard data, we've been
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  Speaker 2: talking for a while. Now, Hey, the soft data is
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  Speaker 2: showing a you know, significant concern about the economy. When's
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  Speaker 2: it going to start showing up in the hard data.
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  Speaker 2: This right here is hard data showing that for the
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  Speaker 2: week of April first to April eighth, the amount of
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  Speaker 2: goods loaded onto ships coming to the United States was
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  Speaker 2: down sixty four percent and the amount of goods loading
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  Speaker 2: onto ships leaving the United States was down thirty percent.
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  Speaker 3: There's a huge, huge shift.
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  Speaker 2: Now, some of it obviously is because companies were trying
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  Speaker 2: to front run stuff in the back end of March,
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  Speaker 2: but obviously it's sixty four percent is not. You know, hey,
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  Speaker 2: we are front running stuff because you don't have just
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  Speaker 2: extra giant super ships, you know, floating around to carry
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  Speaker 2: you know, thousands of containers. It's just they're just not there.
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  Speaker 2: So that's something that when we start talking about hard data,
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  Speaker 2: what's its showing, real real.
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  Speaker 3: Problem there other things.
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  Speaker 2: And I'm going to quote some of Craig Fuller's posts
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  Speaker 2: on x just because again he is the logistics expert
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  Speaker 2: i am not, and so I'm going to quote him.
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  Speaker 2: This is a direct quote from him from thirteen hours ago.
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  Speaker 2: For container shipping companies, twenty twenty five is worse than
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  Speaker 2: the depths of COVID. And this was in response to
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  Speaker 2: someone else who said that, hey, in May of twenty twenty,
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  Speaker 2: you had fifty one shipments blank sailings, basically ships that
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  Speaker 2: were just canceled because they had no cargo. Over eighty
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  Speaker 2: so far in April twenty twenty five, again more hard
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  Speaker 2: data that's starting to show up. It's not showing up
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  Speaker 2: in you know, the employment reporter, you know, wages or
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  Speaker 2: this and that, but this is hard data. This is
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  Speaker 2: actually what companies are doing. Another thing from Craig here
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  Speaker 2: again from thirteen hours ago. Many truckers I've spoken to
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  Speaker 2: don't realize how quickly can tainer volumes have collapsed. Starting
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  Speaker 2: in may Port freight out of California will be almost eliminated. Uh,
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  Speaker 2: and you will see an absolute collapse in I twenty
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  Speaker 2: and I forty trucking. Those are you know, two major
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  Speaker 2: interstates out that way. Other things, and again I'm just
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  Speaker 2: saying like what we're seeing right now in terms of
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  Speaker 2: you know, stuff that is concerning to people in the
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  Speaker 2: freight market. Again, Mac Trucks I mentioned earlier, he you know,
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  Speaker 2: quoted this as well. They're laying off between two hundred
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  Speaker 2: and fifty and three hundred and fifty workers at their
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  Speaker 2: Lehigh Valley operations. It's right outside Allentown. That is from
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  Speaker 2: what I can gather, about fifteen to twenty percent of
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  Speaker 2: their workforce there. So it's a pretty significant chunk when
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  Speaker 2: when you're looking at it. So the freight people are
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  Speaker 2: as freaked out as I've ever seen them. And again
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  Speaker 2: you're actually seeing the hard it's not just freaked out
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  Speaker 2: about like what may happen. It's the hard data is
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  Speaker 2: is is not good.
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  Speaker 3: There.
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  Speaker 2: Let's talk a little bit about what this means for
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  Speaker 2: the overall US economy when we come back, because look,
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  Speaker 2: we can only talk freight rates and intermodal for so long.
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  Speaker 2: What does it actually mean for you that the freight
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  Speaker 2: people are freaking out? We'll tell you when we return.
• 11:15
  Speaker 1: Market volatility is at its highest point since the pandemic.
• 11:19
  Speaker 1: Keep it here for the most comprehensive coverage of the
• 11:21
  Speaker 1: global trade war. This is the Financial Exchange Radio Network,
• 11:26
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• 11:30
  Speaker 1: here on the Financial Exchange Radio Network.
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• 12:13
  Speaker 2: In the last segment, we noted that ocean freight bookings
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  Speaker 2: for the week of April first through April eighth had
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  Speaker 2: volumes down sixty four percent for imports to the US
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  Speaker 2: and thirty percent for exports from the US relative to
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  Speaker 2: the prior week. This is obviously a huge shift in
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  Speaker 2: a short period of time, and the question that obviously
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  Speaker 2: it leads to is, Okay, what does this mean for us,
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  Speaker 2: actual humans living in the United States. The answer is twofold.
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  Speaker 2: The first is it depends on how long the current
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  Speaker 2: state of play is in place between the US and China.
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  Speaker 2: If you see some kind of potential off ramp in
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  Speaker 2: the next couple of weeks, by I don't know, by
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  Speaker 2: the start of May, by day somewhere in that time frame,
• 13:02
  Speaker 2: if you see, hey, you know not, you're not gonna
• 13:05
  Speaker 2: get a trade deal between the US and China done
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  Speaker 2: in two weeks. Like obviously, there's some big things that
• 13:10
  Speaker 2: are gonna take some time to hash out. But if
• 13:12
  Speaker 2: you get hey, we've had some positive conversations and so
• 13:15
  Speaker 2: we're going to remove the reciprocal tariffs for ninety or
• 13:19
  Speaker 2: one hundred and eighty days while we negotiate. Okay, you
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  Speaker 2: can start to you know, see the potential issues, you know,
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  Speaker 2: becoming smaller. But here's the thing. Even a week or
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  Speaker 2: two of disrupted shipping into the United States or really
• 13:34
  Speaker 2: it's worldwide shipping. It's not just the US that is
• 13:38
  Speaker 2: dealing with this. Even a week or two of disrupted
• 13:41
  Speaker 2: shipping patterns and supply chains is enough to make some
• 13:45
  Speaker 2: really really weird stuff happen. And I keep coming back
• 13:48
  Speaker 2: to this story from twenty twenty five, I'm sorry, from
• 13:51
  Speaker 2: twenty twenty just because it's so good. And it's also
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  Speaker 2: why I don't have like a clear answer for exactly
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  Speaker 2: what will happen. But it's talking about we ran into
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  Speaker 2: this freaking gummy bear shortage back in twenty twenty. I've
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  Speaker 2: told this a couple times, and I keep coming back
• 14:05
  Speaker 2: to this because it's so good. And this is a
• 14:08
  Speaker 2: quote from you know, some gummy bear dude who is
• 14:11
  Speaker 2: being interviewed on a podcast. Oddly enough, he told a
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  Speaker 2: story about gelatin. They were having a hard time getting
• 14:18
  Speaker 2: gelatin in Mexico, and it's like, why can't we get it.
• 14:21
  Speaker 2: They're not slaughtering as many hogs, and they're not slaughtering
• 14:23
  Speaker 2: as many hogs because they don't need as many hides
• 14:25
  Speaker 2: from the hogs that they used to make cars. And
• 14:28
  Speaker 2: they don't need as many hides because they're not making
• 14:30
  Speaker 2: as many cars. Why are they not making as many
• 14:32
  Speaker 2: cars because they can't get the chips from Taiwan? And
• 14:35
  Speaker 2: he finished saying that one of the biggest users in
• 14:37
  Speaker 2: the world of gelatin is the company that makes gummy bears.
• 14:40
  Speaker 2: So it turns out that you can't buy gummy bears
• 14:42
  Speaker 2: because of a semiconductor shortage coming out of Taiwan. So like,
• 14:48
  Speaker 2: how does this affect all of us over the next
• 14:50
  Speaker 2: you know, several months and several quarters. You're probably even
• 14:55
  Speaker 2: if this is resolved within a week, you're going to
• 14:58
  Speaker 2: have sporadic weird stuff that pops up. From a supply
• 15:02
  Speaker 2: chain perspective, do people go out and start hoarding toilet paper? Again,
• 15:06
  Speaker 2: I have no idea. It seems like it's what we
• 15:07
  Speaker 2: do in every crisis because I don't know, but I
• 15:13
  Speaker 2: can tell you supply chains, they don't just snap back
• 15:16
  Speaker 2: instantly after something like this. There's gonna be some weirdness
• 15:19
  Speaker 2: that starts popping up, probably mid May, and some of
• 15:24
  Speaker 2: it's because companies are overbuying in certain areas, some of
• 15:27
  Speaker 2: them because they're underbuying. But you're gonna see some weird
• 15:30
  Speaker 2: stuff popping up this summer in terms of availability and pricing.
• 15:33
  Speaker 2: And it's not gonna be linear. It's not gonna be
• 15:35
  Speaker 2: all in one direction. It's gonna be a mess in
• 15:38
  Speaker 2: terms of what this means. And that's if this gets
• 15:40
  Speaker 2: resolved again in a couple weeks with Okay, we'll keep
• 15:44
  Speaker 2: the you know, ten percent tariffs in place, but walk
• 15:46
  Speaker 2: back the other stuff.
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  Speaker 5: Yeah.
• 15:48
  Speaker 4: At the same time, to relate this to the macroeconomic situation,
• 15:54
  Speaker 4: underlying inflation remains high. That's why the FED is not
• 15:57
  Speaker 4: eased since December. You can think about what appears to
• 16:02
  Speaker 4: be unfolding like an oil price shock. More generally, it
• 16:06
  Speaker 4: is a supply shock. We've got fewer things, and the
• 16:10
  Speaker 4: things we do have are going to get more expensive.
• 16:13
  Speaker 4: The FED has to think about how to react to that.
• 16:16
  Speaker 4: They need to think about what's happening to inflation expectations.
• 16:19
  Speaker 4: We've seen by a few different measures, those have been
• 16:21
  Speaker 4: going up. It could be a really ugly mix overall,
• 16:27
  Speaker 4: and that will in turn make the political environment more uncertain.
• 16:32
  Speaker 4: I have no idea what it means for interest rates
• 16:34
  Speaker 4: and equities. My gut says probably nothing good for either.
• 16:38
  Speaker 4: But as you point out, these inter relationships are complex.
• 16:42
  Speaker 4: It's hard to draw a line from cause to effect
• 16:45
  Speaker 4: because there's a lot of zig zagging and unknowns and
• 16:49
  Speaker 4: unanticipated reactions. But one senses that the overall result will
• 16:54
  Speaker 4: not be good.
• 16:56
  Speaker 2: Also, a little bit of breaking news out of Japan,
• 17:01
  Speaker 2: Nintendo coming out with some updated pricing for the Nintendo
• 17:06
  Speaker 2: Switch To, which, if you're not familiar with it, again,
• 17:08
  Speaker 2: I haven't bought a new video game console in like
• 17:14
  Speaker 2: fifteen sixteen years. I think it's going back to like
• 17:16
  Speaker 2: two thousand and eight, two thousand and nine, So I'm
• 17:18
  Speaker 2: not really in the video game circuit the way I
• 17:21
  Speaker 2: used to be, and I don't know as much.
• 17:22
  Speaker 3: As I used to.
• 17:23
  Speaker 2: But here's the deal, the Nintendo Switch To. I think, Tucker,
• 17:27
  Speaker 2: you're more plugged into this.
• 17:28
  Speaker 3: World than I am.
• 17:29
  Speaker 1: Yeah.
• 17:30
  Speaker 2: Probably one of the most anticipated console releases in the
• 17:32
  Speaker 2: last couple decades.
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  Speaker 5: Oh yeah, absolutely, like a huge international technology product. Yeah, huge, big,
• 17:39
  Speaker 5: big deal, big deal.
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  Speaker 2: And originally they had announced the pricing on April second,
• 17:44
  Speaker 2: the day after the reciprocal tariff announcement from the Trump administration.
• 17:48
  Speaker 2: They then said on the third, we're gonna pause the
• 17:51
  Speaker 2: pricing and pause pre orders just because we need to,
• 17:54
  Speaker 2: you know, revisit this and see what it looks like.
• 17:56
  Speaker 5: The pause alone was substantial news in this universe.
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  Speaker 2: Yes, So today they came out with updated pricing. Here
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  Speaker 2: is what they are doing. The actual console price remains
• 18:07
  Speaker 2: unchanged at four hundred and forty nine dollars and ninety
• 18:10
  Speaker 2: nine cents per console. The launch games that they have
• 18:15
  Speaker 2: the looks like it's Mario Kart World and Donkey Kong Bonanza.
• 18:20
  Speaker 2: Those are both going to stay at seventy nine and
• 18:23
  Speaker 2: sixty nine dollars, respectively. But they are making adjustments on
• 18:27
  Speaker 2: the pricing of accessories. Now I don't know what any
• 18:31
  Speaker 2: of these things actually are, but just.
• 18:34
  Speaker 5: Chock it out with like controller accessories or controllers themselves.
• 18:38
  Speaker 2: A switch to JOYCN two controller is now priced at
• 18:42
  Speaker 2: ninety four dollars and ninety nine cents, up from the
• 18:45
  Speaker 2: original listing of eighty nine ninety nine, so it's a
• 18:47
  Speaker 2: five dollars price increase, about five and a half percent. Likewise,
• 18:52
  Speaker 2: a switch to pro controller is going to be eighty
• 18:54
  Speaker 2: four ninety nine up from seventy ninety nine. Again a
• 18:57
  Speaker 2: five dollars price increase, about a five and three orders percent,
• 19:00
  Speaker 2: you know, bump in price. The switch to doc set.
• 19:04
  Speaker 2: Don't know what that is. Maybe it's for boats, maybe
• 19:06
  Speaker 2: it isn't. That is going to go from one hundred
• 19:09
  Speaker 2: and nine ninety nine to one nineteen ninety nine, so
• 19:13
  Speaker 2: a ten dollars bump or about a nine percent jump
• 19:17
  Speaker 2: in the price.
• 19:17
  Speaker 3: There the Joycon two.
• 19:19
  Speaker 2: Strap, it's a strap, that's the controller. It's going from
• 19:25
  Speaker 2: twelve ninety nine to thirteen ninety nine, about a seven
• 19:27
  Speaker 2: percent price increase. So price increases on accessories up five
• 19:31
  Speaker 2: to nine percent on the switch to This is an
• 19:34
  Speaker 2: example of how companies are adjusting based on tariffs. Quick
• 19:38
  Speaker 2: break here when we come back, it's Wall Street Watch.
• 19:42
  Speaker 1: Like us on Facebook and follow us on Twitter at
• 19:45
  Speaker 1: TFE show. Breaking business news is always first right here
• 19:49
  Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
• 19:54
  Speaker 1: Street Watch a complete look at what's moving market so
• 19:57
  Speaker 1: far today right here on the financi Shall Exchange Radio Network.
• 20:02
  Speaker 5: Markets are closed today in observance of Good Friday during
• 20:06
  Speaker 5: the shortened and volatile trading week. All three major averages
• 20:09
  Speaker 5: closed lower, with the Dow and Nasdaq shed two percent,
• 20:12
  Speaker 5: while the S and P five hundred slipped one and
• 20:15
  Speaker 5: a half percent. Bond markets also shuttered, where the ten
• 20:19
  Speaker 5: year treasureveel now sits at four point three to three percent,
• 20:22
  Speaker 5: and oil jump three percent after the US imposed news
• 20:26
  Speaker 5: sanctions to curb Iranian oil exports, lifting supply concerns. Crude
• 20:31
  Speaker 5: oil is now at sixty four dollars in forty five
• 20:35
  Speaker 5: cents a barrel. Yesterday, the Dow was weighed down by
• 20:38
  Speaker 5: significant losses from United Health with a Health Injuror stock
• 20:41
  Speaker 5: plunged twenty two percent after its earnings missed expectations and
• 20:46
  Speaker 5: substantially downgraded its projected results for this year, citing higher
• 20:51
  Speaker 5: than expected medical costs in its Medicare business, other health
• 20:55
  Speaker 5: insurance or excuse me. Other health companies, including Humana and
• 20:59
  Speaker 5: CBS Health also saw sympathy losses. Meanwhile, Netflix posted an
• 21:04
  Speaker 5: impressive first quarter earnings beat after yesterday's closing bell, where
• 21:07
  Speaker 5: its revenue rows thirteen percent in the quarter. The company
• 21:11
  Speaker 5: also said it continues to forecast full year revenue between
• 21:15
  Speaker 5: forty three point five and forty four and a half
• 21:17
  Speaker 5: billion dollars. This also marks the first earnings report where
• 21:21
  Speaker 5: the streaming giant did not disclose quarterly subscriber data as
• 21:26
  Speaker 5: it shifts its strategy to focus on revenue and other
• 21:29
  Speaker 5: financial metrics as performance indicators. Maranti trust rose for Alphabet
• 21:35
  Speaker 5: after a federal judge yesterday ruled that Google held illegal
• 21:38
  Speaker 5: monopolies in online advertising markets due to its position between
• 21:42
  Speaker 5: ad buyers and sellers. Alphabet stock fell more than one
• 21:46
  Speaker 5: percent on the news yesterday. The company will report their
• 21:50
  Speaker 5: first quarter earnings next Thursday. Speaking of earnings, other noteworthy
• 21:55
  Speaker 5: companies slated to report next week include Tesla, Verizon, at
• 22:00
  Speaker 5: and t GE Aerospace, Lockheed Martin, Philip Morris, IBM, Procter
• 22:05
  Speaker 5: and Gamble, PEPSI, and ab V will all report their
• 22:09
  Speaker 5: earnings next week. I'm Tucker Silvan, that's Wall Street Watch.
• 22:14
  Speaker 2: I want to talk a little bit about this piece
• 22:15
  Speaker 2: from I Think It's Bloomberg.
• 22:17
  Speaker 3: Yeah, it's Bloomberg.
• 22:19
  Speaker 2: Headline is truck moves to levy Chinese vessels in widening
• 22:22
  Speaker 2: trade war. So basically, the US trade representative yesterday indicated
• 22:27
  Speaker 2: that all Chinese built and owned ships docking in the
• 22:30
  Speaker 2: US would be subject to a fee based on the
• 22:33
  Speaker 2: volume of goods carried. This is an attempt to try
• 22:37
  Speaker 2: to reduce global trades reliance on Chinese vessels for transporting
• 22:42
  Speaker 2: goods Chinese made and operated. Right now, I believe Chinese
• 22:46
  Speaker 2: made vessels account for like almost fifty percent of all
• 22:50
  Speaker 2: goods that are being transitated around the world, and so
• 22:53
  Speaker 2: it's a pretty significant number. This also includes a five
• 23:00
  Speaker 2: year phase in for these fees that will ratchet up
• 23:04
  Speaker 2: over the course of five years, and operators can avoid
• 23:08
  Speaker 2: the fees from up to three years if they show
• 23:10
  Speaker 2: that they've ordered a new US built vessel US built
• 23:14
  Speaker 2: vessel and then eventually take a delivery of said vessel. Now,
• 23:19
  Speaker 2: part of this there really isn't much infrastructure in the
• 23:22
  Speaker 2: US to build cargo ships right now. It's just not
• 23:25
  Speaker 2: something that we do. We used to quite a bit
• 23:28
  Speaker 2: back in the early nineteen eighties and even into the
• 23:31
  Speaker 2: nineteen nineties a bit, but the capacity has largely been
• 23:33
  Speaker 2: hollowed out at this point.
• 23:35
  Speaker 3: So a couple of things.
• 23:36
  Speaker 2: The first is, look, this is the exact kind of
• 23:39
  Speaker 2: plan that I think you want to put in place
• 23:41
  Speaker 2: if you want to try to make a significant change
• 23:46
  Speaker 2: in how global trade is conducted. You've got a five
• 23:49
  Speaker 2: year plan that is laid out here as far as
• 23:52
  Speaker 2: how the costs are going to increase if shippers continue
• 23:55
  Speaker 2: to use Chinese made or operated ships, and that gives
• 23:59
  Speaker 2: companies time to adjust and then you know, build their
• 24:03
  Speaker 2: ships somewhere else for you know, future transport. Obviously, it
• 24:08
  Speaker 2: has the potential to add some cost in the short term,
• 24:10
  Speaker 2: but if you think that getting away from just having
• 24:13
  Speaker 2: China being you know, one of the main shipbuilders in
• 24:15
  Speaker 2: the world is a good thing, this is exactly what
• 24:18
  Speaker 2: you want to see, even though from an economic perspective, again,
• 24:22
  Speaker 2: adding some cost, but there's more than just the economic cost,
• 24:26
  Speaker 2: I think in terms of you know, trying to make
• 24:28
  Speaker 2: sure that your supply chains and supply lines are not
• 24:33
  Speaker 2: subject purely to the whims of a country that may
• 24:36
  Speaker 2: or may not be friendly with you at any particular
• 24:39
  Speaker 2: point in time.
• 24:40
  Speaker 4: Yeah, this further constricts supply This exacerbates some of the
• 24:44
  Speaker 4: problems we were talking about in the last segment.
• 24:47
  Speaker 3: It does.
• 24:47
  Speaker 2: But I think the reason that I think this is
• 24:50
  Speaker 2: something that makes sense to me is it's targeted at
• 24:53
  Speaker 2: a very specific issue, and it also has a phasing
• 24:57
  Speaker 2: period so that companies can adjust with out having to
• 25:01
  Speaker 2: you know, pivot on a dime. So I think the
• 25:03
  Speaker 2: implementation here makes an awful lot of sense to me.
• 25:07
  Speaker 4: So the long term impact of this is to have
• 25:09
  Speaker 4: more goods coming in on non China built vessels. Is
• 25:14
  Speaker 4: that the objective? Yes, it could be the same quantity
• 25:18
  Speaker 4: and dollar amount of Chinese goods just chipped on non
• 25:21
  Speaker 4: Chinese ships. Yes, okay, so it doesn't necessarily help the
• 25:25
  Speaker 4: trade balance.
• 25:26
  Speaker 3: This isn't about the trade balance.
• 25:28
  Speaker 4: Yeah, I'm just trying to figure out the It's.
• 25:30
  Speaker 2: About shipbuilding capacity and making sure that the that a
• 25:33
  Speaker 2: disproportionate amount of the world shipbuilding capacity is not concentrated
• 25:38
  Speaker 2: in the hands of a country that may not be
• 25:40
  Speaker 2: friendly to US interests.
• 25:41
  Speaker 3: In a lot of sure, then.
• 25:43
  Speaker 4: Why not just subsidize US shipbuilders? I wonder if it's
• 25:47
  Speaker 4: a if it's deemed vice.
• 25:48
  Speaker 2: And ideally you'd probably want to couple it with that, right,
• 25:51
  Speaker 2: like you would want to I think, I mean, look
• 25:55
  Speaker 2: in a perfect world, like here, here's the way that
• 25:57
  Speaker 2: you would you would kind of frame this is okay,
• 25:59
  Speaker 2: the revenue that you use is from that you raise
• 26:01
  Speaker 2: from these fees, because again, like you're not going to
• 26:04
  Speaker 2: just see it like turn over on a dime. But
• 26:06
  Speaker 2: the revenue that you raise from these fees you pile
• 26:09
  Speaker 2: back into US shipbuilding capacity.
• 26:12
  Speaker 4: Okay, yeah, that's as you said. It's more it's go
• 26:15
  Speaker 4: hear it. It seems well thought out. Again, I think
• 26:18
  Speaker 4: relative to some of theknee jerk stuff we've seen lately,
• 26:21
  Speaker 4: I should say I.
• 26:21
  Speaker 2: Think stuff like this makes an awful lot of sense,
• 26:24
  Speaker 2: just because, again, you don't want to have such a
• 26:28
  Speaker 2: critical service concentrated in the hands of a country that
• 26:33
  Speaker 2: could very easily turn into you know, more of an
• 26:37
  Speaker 2: adversary than they are today.
• 26:39
  Speaker 4: It's just a tough time to pile this on with
• 26:41
  Speaker 4: all the the inflation, the inflation expectation effects.
• 26:45
  Speaker 3: Of yes, potential supply shocks that I don't disagree when
• 26:48
  Speaker 3: when it when?
• 26:49
  Speaker 2: When you talk about it in you know, the context
• 26:51
  Speaker 2: of everything else that's going on here. Let's take a
• 26:54
  Speaker 2: quick break when we come back. We had Netflix earnings.
• 26:58
  Speaker 2: We'll talk about them when we return.
• 27:01
  Speaker 1: Tara Spears continue to grip markets. Get the latest straight
• 27:05
  Speaker 1: from Wall Street right here on the Financial Exchange Radio Network.
• 27:10
  Speaker 1: Miss any of the show, catch up at your convenience
• 27:12
  Speaker 1: by visiting Financial Exchange Show dot com and clicking the
• 27:16
  Speaker 1: on demand icon where you'll find all of our interviews
• 27:18
  Speaker 1: and full shows. This is your home for the latest
• 27:22
  Speaker 1: business and financial news in New England and around the country.
• 27:25
  Speaker 1: This is the Financial Exchange Radio Network.
• 27:38
  Speaker 2: We're going to talk Netflix in just a second. Before
• 27:41
  Speaker 2: we do, Marco, I want to talk about one other thing,
• 27:45
  Speaker 2: just in terms of the current trade situation. By the way,
• 27:48
  Speaker 2: if anyone's got questions, I know that there's a lot
• 27:51
  Speaker 2: of stuff going on, but our text line here is
• 27:54
  Speaker 2: six one seven three six two thirteen eighty five. You
• 27:57
  Speaker 2: can send those texts in and Tucker Rolls send them
• 28:00
  Speaker 2: over to us. But against six one seven three six
• 28:03
  Speaker 2: two thirteen eighty five, if you have questions about the economy, markets, tariffs,
• 28:07
  Speaker 2: anything that you want answered.
• 28:09
  Speaker 5: Uh. Favorite foods, things like that, Nintendo switch.
• 28:14
  Speaker 2: Yeah, favorite video games, favorite TV shows, least favorite TV shows,
• 28:18
  Speaker 2: least favorite people.
• 28:19
  Speaker 3: We'll answer all these questions.
• 28:21
  Speaker 5: Uh.
• 28:21
  Speaker 2: Six one seven three six two thirteen eighty five is
• 28:26
  Speaker 2: the number. I want to just point something else out
• 28:30
  Speaker 2: that when it comes to what you're seeing right now
• 28:34
  Speaker 2: from a trade perspective, UH, if you talk to anyone
• 28:38
  Speaker 2: who works in the retail business, you start planning your
• 28:43
  Speaker 2: holiday inventory.
• 28:46
  Speaker 3: Now.
• 28:48
  Speaker 2: The April May period is when you get those orders
• 28:51
  Speaker 2: in so that your suppliers can make them over the
• 28:54
  Speaker 2: course of the summer, ship them in September, and people
• 28:59
  Speaker 2: can buy them in October, November, and December. What's fascinating
• 29:04
  Speaker 2: is just that you have, again, at least in the
• 29:07
  Speaker 2: short term right now, for like the last week and
• 29:09
  Speaker 2: a half, basically all kinds of signs that those orders
• 29:13
  Speaker 2: are not happening, and it's not Look, they may at
• 29:18
  Speaker 2: some point maybe you get you know, kind of this
• 29:20
  Speaker 2: rush that comes up later, but companies are kind of
• 29:22
  Speaker 2: paralyzed in terms of what they do here, and so
• 29:25
  Speaker 2: when you're talking about, you know, things that are happening
• 29:28
  Speaker 2: now that are going to affect the world later this year.
• 29:31
  Speaker 3: This is one of the big things.
• 29:32
  Speaker 2: Quite honestly, I talk a lot about my buddy who
• 29:35
  Speaker 2: runs a board game company. They've had multiple orders canceled
• 29:39
  Speaker 2: by their big retail partners who are saying, look, we
• 29:43
  Speaker 2: don't want to buy this inventory. Those orders are never
• 29:46
  Speaker 2: coming back because if you wait two months to try
• 29:50
  Speaker 2: to place them, you are not getting them for the
• 29:53
  Speaker 2: same price and same profit. You're either a not getting
• 29:56
  Speaker 2: them like they won't be able to be delivered or
• 29:58
  Speaker 2: b your profit's going to be impacted. Now they're rush
• 30:00
  Speaker 2: orders at higher volumes in a shorter period of time,
• 30:04
  Speaker 2: and so your profitability is severely impacted as a result.
• 30:08
  Speaker 2: So this is something else just in terms of the
• 30:11
  Speaker 2: calendar and where we are right now. The time that
• 30:13
  Speaker 2: companies are planning for whatever they want to have in
• 30:17
  Speaker 2: stock for the holiday shopping season is right now, and
• 30:22
  Speaker 2: those orders are not happening in the same volumes because
• 30:25
  Speaker 2: companies don't know what to do.
• 30:27
  Speaker 3: So that's kind of interesting to me.
• 30:29
  Speaker 5: Beneficiary planning an asset protection go hand in hand. Cushing
• 30:34
  Speaker 5: in Dolan as a new guide out this month. It's
• 30:36
  Speaker 5: called how to Leave Assets to Beneficiaries, and it can
• 30:39
  Speaker 5: help make your planning process smooth and easy. Leaving your
• 30:43
  Speaker 5: assets to your children isn't as simple as it sounds,
• 30:47
  Speaker 5: especially if they have problems of their own. If you're
• 30:50
  Speaker 5: retired or nearing retirement, it's time to consider the best
• 30:53
  Speaker 5: way to keep your assets in your family while avoiding
• 30:57
  Speaker 5: significant financial consequences down the road. Called Cushing and Dolan
• 31:01
  Speaker 5: right now at eight six, six, eight four, eight five,
• 31:04
  Speaker 5: six nine to nine and get their new guide called
• 31:07
  Speaker 5: how to leave assets to beneficiaries. You'll learn which paths
• 31:12
  Speaker 5: are the safest when it comes to protecting yourself and
• 31:15
  Speaker 5: your children while avoiding unnecessary risks that can create substantial
• 31:20
  Speaker 5: problems in the long run. That number again is eight
• 31:23
  Speaker 5: six six eight four eight five six nine to nine.
• 31:28
  Speaker 5: Or you can request the guide from their website legal
• 31:31
  Speaker 5: exchange show dot com.
• 31:33
  Speaker 1: The proceeding was paid for and the views expressed are
• 31:35
  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
• 31:37
  Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
• 31:41
  Speaker 1: Cushing and Armstrong do not endorse each other and are
• 31:43
  Speaker 1: not affiliated.
• 31:44
  Speaker 2: Netflix reported earnings after the bell yesterday, and I gotta.
• 31:48
  Speaker 3: Tell youse company's.
• 31:50
  Speaker 2: Firing on all cylinders, Mark, It's amazing. I just the
• 31:54
  Speaker 2: execution is fantastic. They know they have pricing power and
• 31:59
  Speaker 2: are to flex it. You know, we talked about which
• 32:02
  Speaker 2: companies have pricing power where Hey, you know the price
• 32:06
  Speaker 2: of eggs goes up by and again I know, like
• 32:09
  Speaker 2: on a here's the thing. Eggs went up in price
• 32:12
  Speaker 2: by like six hundred percent, but ultimately it was it
• 32:16
  Speaker 2: was a few extra dollars, right, and everyone was complaining.
• 32:20
  Speaker 2: I'm not saying that you're wrong for complaining. I'm just
• 32:22
  Speaker 2: saying that you were. Netflix raises its prices at this
• 32:26
  Speaker 2: point a few dollars each year on a monthly basis.
• 32:30
  Speaker 2: Do you hear boo from anyone?
• 32:32
  Speaker 3: No?
• 32:33
  Speaker 2: No, like like people just absorb it. Like people are like, yes,
• 32:36
  Speaker 2: I will pay the Netflix the extra moneies.
• 32:38
  Speaker 5: And I was talking to somebody who pays for the
• 32:40
  Speaker 5: ad tier one and I don't know how much that is,
• 32:42
  Speaker 5: but it's like the basic AD I think like five
• 32:46
  Speaker 5: or something like. This is coming from somebody who spent
• 32:48
  Speaker 5: you know, the premium package with no commercials and now
• 32:52
  Speaker 5: they have the commercials. Like, yeah, not a big deal.
• 32:55
  Speaker 5: It's like what two minutes an hour or something like it,
• 32:58
  Speaker 5: Like it doesn't bother them.
• 32:59
  Speaker 2: What's a they Netflix has pricing power. They they have
• 33:04
  Speaker 2: something that quite honestly, there's no other media company in
• 33:07
  Speaker 2: the world that has what they do for some reason,
• 33:10
  Speaker 2: and I don't know why that's the case, but they
• 33:15
  Speaker 2: just like, for some reason, they're viewed differently from Paramount
• 33:20
  Speaker 2: Plus and Disney Plus and whatever HBO calls their thing.
• 33:25
  Speaker 2: Yet that's the one man talk about just totally devaluing
• 33:30
  Speaker 2: the brand by calling it Max. But Netflix, for whatever reason,
• 33:36
  Speaker 2: they've got the pricing power. And the other piece that
• 33:38
  Speaker 2: they have figured out. I was looking at this yesterday.
• 33:40
  Speaker 2: They got fat margins. They got like twenty seven percent margins,
• 33:43
  Speaker 2: which in the media business is not even just in
• 33:45
  Speaker 2: the media business, just in general, is insane to have
• 33:48
  Speaker 2: margins that high. And here's the other thing that they like,
• 33:51
  Speaker 2: they're just genius about. Yes, they still have like one
• 33:56
  Speaker 2: or two tent pole things that are, you know, really
• 33:59
  Speaker 2: big and expensive over the course of the year. I'm
• 34:02
  Speaker 2: sure you know Squid Game. Probably the first season didn't
• 34:05
  Speaker 2: cost much to make, but I'm sure the second one.
• 34:07
  Speaker 2: You know, they definitely if you watch season two, Like
• 34:10
  Speaker 2: I haven't watched hither of them, I feel like I should. Yeah,
• 34:12
  Speaker 2: it's good, it's good. But in the season two they
• 34:14
  Speaker 2: up their budget significantly.
• 34:16
  Speaker 3: But you look at the.
• 34:18
  Speaker 2: Vast majority of stuff that Netflix is putting out right now,
• 34:21
  Speaker 2: and it falls into three camps. The first is cheaply
• 34:26
  Speaker 2: made documentaries. Think about the one that they just did
• 34:30
  Speaker 2: on the Red Sox. They've got Formula one drive to survive.
• 34:35
  Speaker 3: They've got full swing.
• 34:37
  Speaker 2: It's not that the production values are low, it's just
• 34:39
  Speaker 2: look all they're doing is walking around with a bunch
• 34:41
  Speaker 2: of cameras shooting stuff, Like they don't have to pay actors,
• 34:44
  Speaker 2: Like it's just okay.
• 34:46
  Speaker 3: Like the the.
• 34:46
  Speaker 2: I'm sure they're getting some kind of licensing fee from
• 34:49
  Speaker 2: you know, the PGA and from Formula one for you know,
• 34:53
  Speaker 2: promoting their content and this, and like, I'm sure that
• 34:55
  Speaker 2: there's some stuff there. The other thing that they have
• 34:59
  Speaker 2: that's insanely popular is they've got all these reality shows
• 35:03
  Speaker 2: that are on there. I'll be the first to tell
• 35:05
  Speaker 2: you I've watched every single season of Love Is Blind,
• 35:08
  Speaker 2: watched every single season of Drive to Survive in full
• 35:11
  Speaker 2: swing as well. But like, these things cost nothing to
• 35:14
  Speaker 2: produce because it's a bunch of people that sign up
• 35:16
  Speaker 2: to go in a dating show. All you have to
• 35:17
  Speaker 2: do is build the set and.
• 35:19
  Speaker 3: Then they're on there. It's great.
• 35:22
  Speaker 2: The third thing that they have, and this is something
• 35:25
  Speaker 2: that admittedly is kind of a problem, that they've realized
• 35:28
  Speaker 2: that a lot of people, just like everyone used to
• 35:31
  Speaker 2: do with Law and Order and all that stuff, a
• 35:34
  Speaker 2: lot of people just put on Netflix's background noise in
• 35:37
  Speaker 2: their house and so you get these There have been
• 35:41
  Speaker 2: a number of articles written about it where it's just
• 35:43
  Speaker 2: these horribly written, horribly produced movies where it's like the
• 35:48
  Speaker 2: characters are literally telling you everything they're doing. It's like,
• 35:51
  Speaker 2: why'd you go over there yesterday?
• 35:53
  Speaker 3: Well?
• 35:53
  Speaker 2: I walked in to try to convince Jimmy that I
• 35:55
  Speaker 2: was gonna do this, and then there was a bear there. Well,
• 35:59
  Speaker 2: were you sk scared of the bear? Of course I
• 36:01
  Speaker 2: was scared of the bear. Like it's literally that bad.
• 36:05
  Speaker 2: But these things cost nothing to make and people watch them,
• 36:08
  Speaker 2: and so they've just got all this content that is
• 36:11
  Speaker 2: pretty cheap to produce. They have a couple things that
• 36:13
  Speaker 2: are expensive here and there just to give you that
• 36:14
  Speaker 2: premium feel, but they can keep pricing you because for
• 36:18
  Speaker 2: whatever reason, we're just hooked on it in a way
• 36:21
  Speaker 2: that we aren't with other streaming platforms.
• 36:23
  Speaker 3: It's wild.
• 36:25
  Speaker 5: It just feels like everybody on their Friday night, you know,
• 36:29
  Speaker 5: Netflix exactly, Netflix and Shell and the first thing that
• 36:34
  Speaker 5: people check out when they put on their streaming devices
• 36:37
  Speaker 5: is what's on Netflix. Yeah, nobody else's first. No, think
• 36:41
  Speaker 5: about it.
• 36:42
  Speaker 2: No, it's it's absolutely true. And I don't know why,
• 36:45
  Speaker 2: but Netflix has become to streaming what Google is for search. Yeah,
• 36:50
  Speaker 2: and I maybe it was just the first mover advantage.
• 36:53
  Speaker 2: I don't know what it is, but they occupy just
• 36:56
  Speaker 2: a unique spot in our brains that is fun to
• 37:00
  Speaker 2: mentally different from every other streaming service. And I can't
• 37:05
  Speaker 2: explain it. I just can't. But I am looking forward
• 37:10
  Speaker 2: to whenever the next season of Love is Blind comes out, because.
• 37:13
  Speaker 5: Yeah, you're not going to see me watching that.
• 37:15
  Speaker 3: How come?
• 37:16
  Speaker 5: I'm not a reality show, guys, especially when it comes
• 37:19
  Speaker 5: to like romance and all that, because it's just I
• 37:22
  Speaker 5: can't get by the fact that it's completely scripted.
• 37:25
  Speaker 3: Like, clearly you think it's scripted. Of course, Oh I
• 37:28
  Speaker 3: don't think it's scripted. I mean I don't.
• 37:30
  Speaker 5: I can't speak to Love is Blind, but most of
• 37:33
  Speaker 5: those shows have some sort of script in place.
• 37:36
  Speaker 2: Again, my my experience is kind of limited, and you know,
• 37:39
  Speaker 2: like I watched this one, but I don't know, like
• 37:44
  Speaker 2: it's kind of just okay if I want to like
• 37:45
  Speaker 2: turn my.
• 37:46
  Speaker 3: Brain off for a little bit.
• 37:47
  Speaker 5: Yeah, yeah, I get that.
• 37:48
  Speaker 2: Yeah, you know, it's fine, it's and if it is scripted,
• 37:52
  Speaker 2: it's still real to me.
• 37:53
  Speaker 5: Let's not say script let's say structure and oh, of course, yeah, totally.
• 37:58
  Speaker 5: What character is gonna do?
• 37:59
  Speaker 3: What Oh, I don't know about that, but maybe, yeah,
• 38:02
  Speaker 3: maybe he just blew my mind a little bit.
• 38:05
  Speaker 5: I gotta I gotta kind of reseteched.
• 38:07
  Speaker 2: Let's let's take a quick break here.
• 38:08
  Speaker 3: We still got another hour to come.
• 38:10
  Speaker 1: Uh.
• 38:10
  Speaker 2: We're gonna be talking a little bit more about what's
• 38:12
  Speaker 2: going on in anti trust world. Uh, and then we're
• 38:16
  Speaker 2: gonna talk meet in the next hour, which can't wait.