Latest / The Financial Exchange Show / Transforming the housing market isn't so easy

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Transforming the housing market isn't so easy · The Financial Exchange Show

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• 1:05
  Speaker 1: Zada and Mike Armstrong.
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  Speaker 2: Our two of the financial exchange here Chuck, Mike and
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  Speaker 2: Tucker with you. Not too much going on in markets
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  Speaker 2: thus far today. The Daz's off fifty five points nothing Burger,
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  Speaker 2: The S and P is up for nothing, Burger, Nasdak
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  Speaker 2: up twenty eight nothing, Burger, Rust two thousand down point
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  Speaker 2: zero one percent, nothing Burger. It's just no one really
• 1:31
  Speaker 2: wants to do anything heading into the weekend because no
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  Speaker 2: one knows what's going to happen in Switzerland, which is
• 1:36
  Speaker 2: negotiations with China.
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  Speaker 3: In case anybody was sleeping.
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  Speaker 2: Under a rock, or some cheese being made with some
• 1:41
  Speaker 2: pocket knives, you know, anything and everything can happen there.
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  Speaker 2: But look, I think the expectations are that there's going
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  Speaker 2: to be some kind of step down in tariffs. Whether
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  Speaker 2: it is to forty fifty, sixty, seventy eighty percent, no
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  Speaker 2: one knows, but it's not And I don't think anyone
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  Speaker 2: thinks it's going back to ten or twenty no, and
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  Speaker 2: I don't think anyone thinks it's staying at one hundred
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  Speaker 2: and forty five, which is why the interesting thing to
• 2:03
  Speaker 2: me is, hey, what if it does either of those?
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  Speaker 3: You know, like that.
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  Speaker 2: That's where the meat is in markets. It's not in
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  Speaker 2: you know, the stuff that's priced, and it's in the
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  Speaker 2: stuff that isn't. And I'm not saying it will or
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  Speaker 2: won't happen, it's just who knows. Like that, That's where
• 2:17
  Speaker 2: I get kind of curious. Tenure US Treasury down one
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  Speaker 2: whole basis point to four point three six percent. Get
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  Speaker 2: pretty quiet there. Oil West text Intermediate is up sixty
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  Speaker 2: eight cents a barrow, given that the Triple A national
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  Speaker 2: avatur gas prices is still between three ten and three twenty.
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  Speaker 2: I'm not going to tell you the exact price, uh,
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  Speaker 2: because it just hasn't been moving in the last two weeks.
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  Speaker 2: And gold bouncing back today after a week day yesterday,
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  Speaker 2: up thirty five forty ounce to.
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  Speaker 3: Thirty three forty one and forty cents. Mike, there's a.
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  Speaker 2: Piece here for the Boston Globe. It's titled to change
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  Speaker 2: to real estate commissions. Was supposed to transform the housing market.
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  Speaker 2: It hasn't happened. And gosh, I wish that I like
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  Speaker 2: indicated the date that we talked about this last year,
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  Speaker 2: because this is exactly what I said was going to
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  Speaker 2: happen on this because Look, here's what happened. There's this
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  Speaker 2: big settlement with the National Association of Realtors where they
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  Speaker 2: basically couldn't.
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  Speaker 3: Rope people into the old commission structure.
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  Speaker 2: They couldn't force you to cut the seller in on
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  Speaker 2: a deal, and you know, everyone gets two and a
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  Speaker 2: half or three percent and goes home happy.
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  Speaker 4: Nor could they explicitly advertise it anymore correct.
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  Speaker 2: So you know, people are like, oh, this is gonna
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  Speaker 2: open it up to like hourly fees, and you're gonna
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  Speaker 2: get a better deal and this, and and I kind
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  Speaker 2: of took the point. I'm like, guys, you don't buy
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  Speaker 2: homes like you buy tacos. You typically bu stocks for
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  Speaker 2: that matter, right, you typically buy one, maybe two homes
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  Speaker 2: in a lifetime if you're lucky. And so you're not
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  Speaker 2: going to know like what the better deal is in
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  Speaker 2: terms of how you're gonna do it. You're just gonna
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  Speaker 2: say five percent is the norm. Great, We're gonna do
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  Speaker 2: five percent, you know, for the cellar and whatever. And
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  Speaker 2: that's basically what we're seeing here is that, hey, the
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  Speaker 2: five to six percent commission that's been standard for I
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  Speaker 2: don't know as long as I've been alive, and as
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  Speaker 2: long as I can remember. It's pretty much still how
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  Speaker 2: most people are doing it, because no one wants to
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  Speaker 2: think about how much am I paying my agent and
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  Speaker 2: am I getting a good deal or bad deal. If
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  Speaker 2: you don't want to pay an agent, great you can do,
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  Speaker 2: you know, for sale by owner. There's nothing to stop
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  Speaker 2: you from doing that. But most people want someone to
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  Speaker 2: help them with the process, and they don't seem to
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  Speaker 2: think that this is an unfair price for doing so
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  Speaker 2: if they're doing it.
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  Speaker 4: I did like the creative way in which agents were
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  Speaker 4: signaling to each other that what the commission would be.
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  Speaker 4: I don't know if you saw some of these, but
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  Speaker 4: they would, you know, in some of the photographs they
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  Speaker 4: would include the three amigos on the television, for example,
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  Speaker 4: or they would have like three pumpkins on the table
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  Speaker 4: to indicate a three percent commission, which I, you know,
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  Speaker 4: I just do generally like as a as a creative
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  Speaker 4: way to get around things on collusion.
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  Speaker 3: The other point that I would make, though, is fifty
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  Speaker 3: years ago.
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  Speaker 4: They're making this comparison to fifty years ago when the
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  Speaker 4: New York Stock Exchange and did fixed rate commissions and
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  Speaker 4: eventually led to the likes of robin Hood, Fidelity being
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  Speaker 4: able to drive down the cost of stock trading in
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  Speaker 4: the United States for example.
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  Speaker 2: Right, because obviously Fidelity and Robinhood and all those companies
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  Speaker 2: they don't make any money now since trading's correct.
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  Speaker 3: Yeah.
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  Speaker 4: Yeah, they haven't figured out how to do that, and
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  Speaker 4: they've just been unprofitable for the last fifty years. No,
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  Speaker 4: obviously not. But the other point that I would make
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  Speaker 4: about this is it took fifty years, right, not one
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  Speaker 4: of deregulation to get any sort of structural change to
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  Speaker 4: how these companies did business with their customers and how
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  Speaker 4: much they charged for it, And so expecting and real
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  Speaker 4: estate somewhere else, expecting real estate commissions to completely change
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  Speaker 4: and be upended. I just don't find to be a
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  Speaker 4: likely scenario. And if they do, then to Chuck's point,
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  Speaker 4: either the service will dramatically degrade, which unlikely given that
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  Speaker 4: it's home buying.
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  Speaker 3: Or the money will go somewhere else.
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  Speaker 2: The other thing is and and look are show is
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  Speaker 2: based out of the New England area, which is high
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  Speaker 2: cost of living generally, yep. And I feel like people
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  Speaker 2: think that real estate agents like make a boatload of money,
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  Speaker 2: when in fact, in most of the country.
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  Speaker 3: Aside from again.
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  Speaker 2: You'll get like York, like basically New England most of
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  Speaker 2: the country. Real estate agents don't make very much money.
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  Speaker 2: And here's the math on it. Let's say that you
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  Speaker 2: are a real estate agent and you're selling a property
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  Speaker 2: with a i'll be generous six percent commission. Median home
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  Speaker 2: price in the country right now it's about four hundred
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  Speaker 2: thousand dollars, so it's due that to keep the math easy,
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  Speaker 2: and so you sell a property with a six percent commission,
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  Speaker 2: that is twenty four thousand dollars.
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  Speaker 3: That gets split.
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  Speaker 2: Then if you have a buyers and sellers agent, you
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  Speaker 2: split that so divided by two. Now each side's taking
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  Speaker 2: home twelve thousand dollars. But either, if you're working for yourself,
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  Speaker 2: you've got some costs that you have to pay, usually
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  Speaker 2: either you know, taking pictures of the home, you know,
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  Speaker 2: the staging, whatever it is that you might be doing,
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  Speaker 2: blah blah blah, there's stuff on that side. Or if
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  Speaker 2: you work under a brokerage, usually paying like thirty to
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  Speaker 2: fifty percent to that firm. So out of that twenty
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  Speaker 2: four thousand dollars total commission, you might end up. Let's
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  Speaker 2: say that you get seventy percent, you get to keep
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  Speaker 2: seventy percent of your half. You're getting eighty four hundred dollars,
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  Speaker 2: which means even if in a busy spring housing season
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  Speaker 2: you sell six properties, you made fifty thousand dollars that year.
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  Speaker 2: Does anyone look at fifty thousand dollars and say, wow,
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  Speaker 2: like you're overpaid?
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  Speaker 3: No, not really any of the country.
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  Speaker 2: Now, if you want to look at the New England
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  Speaker 2: region and say, oh, I may you know, I deal
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  Speaker 2: only with the islands, Like that's okay, fine, So you're
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  Speaker 2: selling you know, five places for two million bucks and great,
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  Speaker 2: Like you do the math and it's like, okay, so
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  Speaker 2: you made you know, two hundred thousand dollars for the year.
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  Speaker 3: Okay, Like, yeah, you're making some real money.
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  Speaker 2: But you're also in a high call area because if
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  Speaker 2: you're selling property on the islands, you're probably not taking
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  Speaker 2: Cape Air out each and.
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  Speaker 3: Every day in order to service it. Likely not.
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  Speaker 2: So I'm of the opinion and I know this is
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  Speaker 2: probably kind of like I know, some people look at
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  Speaker 2: real estate agents and they're kind of like and like
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  Speaker 2: like what.
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  Speaker 3: Did they really do?
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  Speaker 2: And I actually think real estate agents provide a hugely
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  Speaker 2: valuable service, in particular for first time buyers who have
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  Speaker 2: no idea what they're getting themselves into.
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  Speaker 4: Yeah, look, I think a good real estate agent earns
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  Speaker 4: every penny.
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  Speaker 1: Yes.
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  Speaker 3: I also like the changes that were made.
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  Speaker 4: I like the fact that it is now if you
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  Speaker 4: want it explicit in terms of what you are compensating
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  Speaker 4: your agent or the buyer, And honestly, previously it just
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  Speaker 4: was not, and there were there was a lot of
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  Speaker 4: just wishy washiness in the industry. As speaking from somebody
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  Speaker 4: who tried to negotiate this stuff, it was really unclear
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  Speaker 4: how it all was supposed to work. And I think
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  Speaker 4: this has been a first step in transparency, which does
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  Speaker 4: not always lead to lower cost.
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  Speaker 3: Just take a quick break here.
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  Speaker 2: When we return, we're going to do a little bit
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  Speaker 2: of trivia and then we're going to talk about seventy
• 9:12
  Speaker 2: thousand lollipops.
• 9:13
  Speaker 1: Right after this, Tara Fleevery's in high gear. We've got
• 9:17
  Speaker 1: the latest on what might be next and how long
• 9:20
  Speaker 1: it might last.
• 9:21
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  Speaker 5: This segment of The Financial Exchange is brought to you
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  Speaker 5: visit USVII dot com. Time for trivia here on the
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  Speaker 5: Financial Exchange, and on this day. Back in nineteen forty nine,
• 10:29
  Speaker 5: Prince Rayner the third became the Monarch of Monaco. Six
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  Speaker 5: years later, Rayner married an American actress in what was
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  Speaker 5: described as the wedding of the century. Of course, uh
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  Speaker 5: the marriage is broadcast worldwide and viewed by more than
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  Speaker 5: thirty million people. Trivia question today, which American actress did
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  Speaker 5: Prince Rayner Mary once again? Which American actress. Did Prince
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  Speaker 5: Rayner Mary be the sixth person today to text us
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  Speaker 5: at six one seven three six two thirteen eighty five
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  Speaker 5: with the correct answer, and you win a brand new
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  Speaker 5: Financial Exchange Showed T shirt. Once again, the sixth correct
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  Speaker 5: response to text us to the number six one seven
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  Speaker 5: three six two thirteen eighty five will win that T shirt.
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  Speaker 5: See complete contest rules at Financial exchine Show dot com.
• 11:16
  Speaker 2: Mike, what would you do if seventy thousand lollipops showed
• 11:23
  Speaker 2: up on your doorstep? Specifically thirty one hundred and thirty
• 11:28
  Speaker 2: dollars boxes almost four thousand dollars in lollipops showing up
• 11:33
  Speaker 2: on your doorstep?
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  Speaker 4: I would be having some stern words with my children.
• 11:39
  Speaker 4: Noe's that's probably the direction I would go. Although I
• 11:44
  Speaker 4: was explaining during the break that I am known in
• 11:47
  Speaker 4: the Needham hockey community as the Lollipop Man because I
• 11:49
  Speaker 4: do give out to the lollipops after every skate. I
• 11:52
  Speaker 4: just don't know that I will be doing that for
• 11:54
  Speaker 4: long enough to give out seventy thousand dumb dumbs.
• 11:57
  Speaker 3: So do you represent the lollipop Guild?
• 11:59
  Speaker 1: I do? You do?
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  Speaker 3: Always have? So here's the tight for it. Here's the deal.
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  Speaker 2: There is this this kid by the name of Liam,
• 12:06
  Speaker 2: who's eight years old, and apparently, you know, like most kids,
• 12:13
  Speaker 2: like hey, mom or dad is ordering something on their
• 12:15
  Speaker 2: phone or iPad or whatever it is from Amazon, and
• 12:18
  Speaker 2: so they you know, kind of have watched Oh can
• 12:20
  Speaker 2: I help you order it?
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  Speaker 6: Sure?
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  Speaker 3: Why not press this button? Press that button? Blah blah blah.
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  Speaker 2: And apparently they had put a box of lollipops in
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  Speaker 2: their like shopping cart, but then put it in like
• 12:31
  Speaker 2: a list to buy later, like not buying it right away.
• 12:34
  Speaker 2: And apparently this kid wanted to have a carnival for
• 12:38
  Speaker 2: his friends, and so instead of you know, putting something
• 12:42
  Speaker 2: into the hey, I want to you know, wait for this,
• 12:45
  Speaker 2: maybe order it later, he accidentally ordered thirty twenty five
• 12:51
  Speaker 2: pound boxes of lollipops from Amazon. So that they show
• 12:55
  Speaker 2: up and this is just great. The kid goes, mom My,
• 12:59
  Speaker 2: suck are here. He sees like all these boxes being
• 13:02
  Speaker 2: unloaded outside. The mom, of course, is like this is
• 13:06
  Speaker 2: too many lollipops. They're like, We're not supposed to have
• 13:08
  Speaker 2: that many lollipops.
• 13:10
  Speaker 5: One of these boxes is too many lollipops.
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  Speaker 3: Correct, Yes, he's a huge.
• 13:14
  Speaker 2: Yes, each each one is what is it? Like, each
• 13:17
  Speaker 2: one is like two hundred and fifty lollipops or something
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  Speaker 2: like that.
• 13:20
  Speaker 1: It's a twenty five pound box.
• 13:22
  Speaker 3: Yeah, so's it's a big box of lollipops.
• 13:24
  Speaker 4: I'm trying to I'm looking in my Amazon car right
• 13:27
  Speaker 4: now to figure out what I recently bought in terms
• 13:29
  Speaker 4: of lolleypops because it was a.
• 13:32
  Speaker 3: Pretty large order. But let's go anyways.
• 13:34
  Speaker 2: The mom then goes to a bank account, is like, oh,
• 13:36
  Speaker 2: I've overdrafted a little bit because you know it's forty
• 13:39
  Speaker 2: two hundred dollars.
• 13:40
  Speaker 3: Let this be another great lesson.
• 13:42
  Speaker 2: Don't use a debit card for that because you can
• 13:44
  Speaker 2: be on the hook for it otherwise, whereas you know,
• 13:46
  Speaker 2: credit card, if someone orders something not too that you
• 13:49
  Speaker 2: didn't intend to order, usually through fraud. I'm guessing if
• 13:51
  Speaker 2: it's your kid, there's probably stipulations on that and everything.
• 13:55
  Speaker 2: But anyways, so seventy thousand lollipops are being ship by Amazon.
• 13:59
  Speaker 2: Amazon's like, hey, we can't take these back because they're
• 14:02
  Speaker 2: food and we can't take returns on food. Eventually, they
• 14:06
  Speaker 2: managed to get to an agreement where Amazon was not
• 14:09
  Speaker 2: going to take them back. But they would refund the order.
• 14:12
  Speaker 2: They said, we quote work directly with her to turn
• 14:15
  Speaker 2: a sticky situation into something sweet great that you.
• 14:19
  Speaker 3: Know, that's the dumbest that's what they said. Who's ai
• 14:24
  Speaker 3: did he use to come up with that? Oh? God,
• 14:26
  Speaker 3: that's bad.
• 14:27
  Speaker 4: So there's a lot A ten pound box of lollipops,
• 14:30
  Speaker 4: by the way, it was fifty two dollars.
• 14:32
  Speaker 3: It's a lot of lollipops.
• 14:34
  Speaker 2: And the family now is basically saying, look, we're donating
• 14:37
  Speaker 2: a lot of these to charity. We're giving some other families,
• 14:40
  Speaker 2: like a few people have offered to buy a box
• 14:42
  Speaker 2: here and there.
• 14:42
  Speaker 3: Nobody wants them.
• 14:43
  Speaker 2: But again, a twenty five pound box of lollipops, it's
• 14:48
  Speaker 2: a lot of suckers.
• 14:50
  Speaker 4: I yeah, Speaking as a parent of two eight year
• 14:53
  Speaker 4: olds as well as a six year old, these are
• 14:57
  Speaker 4: the Every once in a while, they'll have my wife's
• 14:59
  Speaker 4: phone and I'm constantly like, what.
• 15:01
  Speaker 3: Are you doing?
• 15:02
  Speaker 4: Don't let them have your phone because this is the
• 15:07
  Speaker 4: type of thing that happens.
• 15:08
  Speaker 3: Now greted.
• 15:09
  Speaker 4: Was this done on an Alexa device or was this
• 15:11
  Speaker 4: done on the phone. It sounds like it was done
• 15:14
  Speaker 4: on a phone. Okay, yeah, I don't know. I just
• 15:19
  Speaker 4: that's the main lesson to me here. And this is
• 15:21
  Speaker 4: not the first story that we have covered. Right, We
• 15:25
  Speaker 4: had the case of a kid spending one thousand dollars
• 15:28
  Speaker 4: on roadblocks currency a three year old.
• 15:32
  Speaker 3: Which is a video game. Yeah, sorry, video game.
• 15:35
  Speaker 4: I spent three hundred dollars on movies when it's granddaughter
• 15:38
  Speaker 4: spent through thousand dollars on Google Play. Like this continues
• 15:41
  Speaker 4: to happen, and it's consistently because frankly, parents are letting
• 15:45
  Speaker 4: their kids play with their phones.
• 15:47
  Speaker 5: Yes, I put a pin on like anything if they're
• 15:51
  Speaker 5: close to anything gaming wise, like if they have their
• 15:54
  Speaker 5: little Amazon Fire tablet or you know, a Nintendo switch
• 15:58
  Speaker 5: or a Xbox, like, there's a pin, be like, okay,
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  Speaker 5: what's the pin if you want to buy this?
• 16:04
  Speaker 3: They don't know the pin? I do, yeah, you know it.
• 16:07
  Speaker 6: Yeah.
• 16:07
  Speaker 4: But now, I mean, I'm thinking this through and my
• 16:10
  Speaker 4: kids don't again, don't use my phone. But if they
• 16:14
  Speaker 4: had it and it was open and they opened the
• 16:17
  Speaker 4: Amazon application, this could happen to.
• 16:20
  Speaker 3: Me, raight.
• 16:20
  Speaker 2: There's no pin that's needed there, No, you might be
• 16:22
  Speaker 2: able to enable it, but Amazon, the default, I think
• 16:24
  Speaker 2: is just that they want as a little friction as possible, right,
• 16:27
  Speaker 2: And I want as little as friction as possible given
• 16:30
  Speaker 2: how much stuff I'm ordering, which is why I.
• 16:31
  Speaker 3: Just don't let them have my phone.
• 16:33
  Speaker 2: Yeah, that's that's the ultimate answer. So this was this
• 16:37
  Speaker 2: was kind of a wild one.
• 16:38
  Speaker 3: Yeah, pretty entertaining. Should we talk about Expedia? We should? Yeah.
• 16:42
  Speaker 4: So Expedia is following the same trend line that we
• 16:44
  Speaker 4: have been hearing from hotels as well as many airlines
• 16:49
  Speaker 4: saying that bookings are just down. And it has been
• 16:55
  Speaker 4: consistent on the travel side, and I think speaks to
• 16:59
  Speaker 4: on an Expedia case, I think it only speaks to
• 17:01
  Speaker 4: one thing, which is international travel is down. More specifically,
• 17:06
  Speaker 4: foreign travelers into the United States are way down. Go
• 17:09
  Speaker 4: talk to this, Go talk to anybody that owns a
• 17:12
  Speaker 4: rental property and Maine, for example, they are seeing a
• 17:15
  Speaker 4: decline in travel. What we don't seem to be seeing
• 17:19
  Speaker 4: is a big down trend in leisure travel by Americans.
• 17:26
  Speaker 4: And it's tough to kind of draw this out exactly.
• 17:30
  Speaker 4: But we talked about yesterday on the show how Disney's
• 17:32
  Speaker 4: earnings were fantastic, and that included bookings at the theme parks,
• 17:37
  Speaker 4: which they expected to be up and likewise Expedia. You know,
• 17:41
  Speaker 4: I look at Expedia and I don't really think of
• 17:42
  Speaker 4: them as a company that benefits or.
• 17:47
  Speaker 3: Falls because of business travel.
• 17:50
  Speaker 4: I don't know anybody that books their business travel via Expedia,
• 17:53
  Speaker 4: I guess would be my point. But they probably are
• 17:55
  Speaker 4: seeing a fallen booking from international travelers into the United
• 17:59
  Speaker 4: States that we've been experience.
• 18:00
  Speaker 2: I think they do act as like the back end
• 18:02
  Speaker 2: for some travel portals for their large websites, where they
• 18:07
  Speaker 2: might just supply like the data but like you wouldn't
• 18:10
  Speaker 2: go to Expedia necessarily, but and the other Yeah, I
• 18:14
  Speaker 2: guess the other stuff would not be business run.
• 18:16
  Speaker 3: They also keep in mind Expedia.
• 18:18
  Speaker 4: I know we all think of, you know, the planing
• 18:21
  Speaker 4: plain in vacation, but they owned Verbo for those that
• 18:24
  Speaker 4: aren't familiar, so that the main Airbnb competitor being Verbo.
• 18:28
  Speaker 4: So you're renting one of those vacation properties again international
• 18:32
  Speaker 4: travel declining, Expedia is going to feel it a little bit.
• 18:37
  Speaker 3: We can't call it Verbo. If we're gonna call it Verbo,
• 18:40
  Speaker 3: then it has to be Erbunba. On the other side,
• 18:44
  Speaker 3: isn't that what Expedia has been calling it? As verbal?
• 18:46
  Speaker 3: It is, but it started as vrbo. It did. Yeah,
• 18:51
  Speaker 3: I can't get behind it.
• 18:52
  Speaker 2: It's another one of those things where like this, they
• 18:54
  Speaker 2: didn't even change the name, they just changed the pronunciation.
• 18:57
  Speaker 3: Yeah, like it.
• 18:57
  Speaker 2: It's like when Brad Marsham went from Marshaan too Marshall
• 19:00
  Speaker 2: on back to marshand in a few years, which I
• 19:02
  Speaker 2: thought was great.
• 19:03
  Speaker 3: Like just to mess with people, just to mess with you.
• 19:05
  Speaker 3: I'm gonna keep calling it verbo.
• 19:07
  Speaker 2: I'm gonna change my name then without changing it. It's
• 19:09
  Speaker 2: pronounced zadah.
• 19:10
  Speaker 3: Sounds good. Yeah, we're moving the accent to the other.
• 19:13
  Speaker 4: So when I call you on my voice command in
• 19:16
  Speaker 4: my car, I have to pronounce it zoda to get
• 19:18
  Speaker 4: it to actually get to call you, do you.
• 19:19
  Speaker 3: Yeah, Oh that's unfortunate. It is. Well, don't call me anymore.
• 19:23
  Speaker 3: Let's take a quick break. When we come back. We
• 19:26
  Speaker 3: got the turn answer after this.
• 19:41
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• 19:58
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• 20:05
  Speaker 5: Trivia question today was which American actress did Prince Rayner Mary,
• 20:10
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• 20:22
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• 20:28
  Speaker 2: Peace in the Wall Street Journal, Air traffic control overhaul
• 20:31
  Speaker 2: needs billions and upfront investment. Transportation Secretary says, so, look,
• 20:36
  Speaker 2: here's the deal. Apparently this morning Newark lost radar for
• 20:41
  Speaker 2: a little bit again, second time in a week week
• 20:44
  Speaker 2: and a half.
• 20:45
  Speaker 3: When was the last one, like the middle last week
• 20:47
  Speaker 3: or something. I think it was within a week.
• 20:49
  Speaker 2: So, look, this is getting pretty dodgy at this point,
• 20:53
  Speaker 2: and we're kind of lucky that it hasn't caused further issues.
• 20:58
  Speaker 2: Now kind of embarrassing, I throw it right, I'm kind
• 21:04
  Speaker 2: of embarrassing. It's dangerous. It is straight up dangerous at
• 21:09
  Speaker 2: this point, to the point where my buddies who are
• 21:12
  Speaker 2: pilots are like, yeah, this isn't good, and normally they're
• 21:15
  Speaker 2: pretty you know, level headed people.
• 21:17
  Speaker 4: Yeah, it falls into the same category of America's underinvested
• 21:24
  Speaker 4: infrastructure system, and this falls right into the same category
• 21:28
  Speaker 4: to me, as you know, the dangers that we see
• 21:30
  Speaker 4: in bridges and highways and train systems and everything that
• 21:33
  Speaker 4: has just been for decades now ignored because really, since
• 21:39
  Speaker 4: the nineteen eighties, the entire drive has been cut taxes,
• 21:42
  Speaker 4: and that has been a winning political strategy in spite
• 21:45
  Speaker 4: of rising deficits and everything else. And one of the
• 21:50
  Speaker 4: main offshoots and and what's the word I'm looking for,
• 21:57
  Speaker 4: one of the main problems with all that has been
• 21:59
  Speaker 4: a lack of invest meant in the country's infrastructure. And
• 22:01
  Speaker 4: it's not sexy to do. Nobody loves doing it. No
• 22:05
  Speaker 4: one wants to pay for it.
• 22:06
  Speaker 2: Everyone wants to just to like get by and like okay,
• 22:09
  Speaker 2: like muddle through. But here's the deal, because everyone wants
• 22:14
  Speaker 2: to like do the exciting stuff like oh, I work
• 22:16
  Speaker 2: for Facebook making chatbots that will take your visa card
• 22:19
  Speaker 2: and like, oh, like that's supposed to drive value or something.
• 22:23
  Speaker 2: The only reason that any of that stuff can happen
• 22:26
  Speaker 2: is because you actually have the real physical world infrastructure
• 22:30
  Speaker 2: to allow for humans to do stuff that they need
• 22:33
  Speaker 2: to do. And if you don't invest in the boring,
• 22:36
  Speaker 2: the mundane, the stuff that is basically like the offensive
• 22:41
  Speaker 2: lineman or long snapper of the economy, you're not gonna have,
• 22:46
  Speaker 2: You're not gonna be able to do the other stuff
• 22:48
  Speaker 2: like you you have to spend the money on this
• 22:51
  Speaker 2: stuff in order to be able to do all the
• 22:54
  Speaker 2: cool stuff that you want.
• 22:55
  Speaker 4: Yeah, it's a shame, but it is. It's embarrassing because, yeah,
• 23:00
  Speaker 4: countries like China are kind of light years ahead of
• 23:03
  Speaker 4: us when it comes to their infrastructure at this stage,
• 23:05
  Speaker 4: which I find personally embarrassing. And you know, not to
• 23:09
  Speaker 4: mention actually advanced infrastructure countries like Japan, like Korea, where
• 23:14
  Speaker 4: it's almost unrecognizable compared to the United States.
• 23:16
  Speaker 5: Yeah, creating the right estate plan to help secure your
• 23:20
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• 24:19
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• 24:29
  Speaker 3: What's the right way to pay for that?
• 24:31
  Speaker 4: By the way, pay for one the specific investment that
• 24:33
  Speaker 4: we're going to need to make in air traffic control?
• 24:36
  Speaker 3: What do you mean pay for it?
• 24:37
  Speaker 4: Yeah? I mean, like you know, obviously it's gonna be
• 24:39
  Speaker 4: a massive thing. You have to raise taxes somewhere. Where
• 24:42
  Speaker 4: do you do it? Because I'm kind of falling on
• 24:44
  Speaker 4: the use tax, even though we already tax airline travel
• 24:48
  Speaker 4: quite a bit. I don't want to pay for this
• 24:51
  Speaker 4: if I never fly.
• 24:52
  Speaker 2: So let's get into this actually just because I think
• 24:55
  Speaker 2: it's an interesting conversation because A so a couple things.
• 25:02
  Speaker 2: First of all, a use tax. Basically, what that means
• 25:04
  Speaker 2: is that you're gonna charge by the plane, correct.
• 25:07
  Speaker 3: Like it might plane whatever you want.
• 25:09
  Speaker 2: Well, again, like, it's not just passenger planes the passing
• 25:12
  Speaker 2: these areas, it's cargo. So you end up charging by
• 25:14
  Speaker 2: the plane or buy the pound or whatever it ends
• 25:16
  Speaker 2: up being. Ultimately, that just means that those costs are
• 25:19
  Speaker 2: gonna get passed through somewhere else in the system. Correct,
• 25:22
  Speaker 2: We're all gonna end up paying for it anyways. Yeah,
• 25:24
  Speaker 2: Like I'm a big The more I've looked at how
• 25:27
  Speaker 2: governments like try to justify doing this and that and everything,
• 25:33
  Speaker 2: I've kind of gotten to the point where I'm like,
• 25:35
  Speaker 2: if you want to like raise the money, just raise
• 25:38
  Speaker 2: the money. If you want to spend the money, just
• 25:40
  Speaker 2: spend the money. Don't come up with all these justifications
• 25:43
  Speaker 2: for well, if we get the formula just right, it'll
• 25:46
  Speaker 2: target the right.
• 25:47
  Speaker 3: It never actually works, like you end up.
• 25:49
  Speaker 2: This is how you build the bureaucracy is through trying
• 25:52
  Speaker 2: to be like, well, now we need to measure if
• 25:54
  Speaker 2: someone's getting this just right. If you want to spend
• 25:57
  Speaker 2: the money, spend the money, like, don't worry about like
• 26:01
  Speaker 2: is it gonna affect every group equally or this one
• 26:04
  Speaker 2: just a little bit.
• 26:05
  Speaker 3: If you want to do it, go do it.
• 26:07
  Speaker 2: So I don't like being like, oh, like we're gonna
• 26:09
  Speaker 2: do a use tax, because that then you got to
• 26:11
  Speaker 2: be like, Okay, now we have to hire a bunch
• 26:13
  Speaker 2: of people into the government in order to monitor the
• 26:15
  Speaker 2: use tax and make sure it's being collected properly and
• 26:17
  Speaker 2: no one's skirting it. Just raise the money if you
• 26:21
  Speaker 2: want to do it, you know, like simple is better
• 26:26
  Speaker 2: it is.
• 26:27
  Speaker 4: However, this is the way we come back, We come
• 26:32
  Speaker 4: back full circle to the way that this has been
• 26:34
  Speaker 4: paid for for decades now has been just well, I'll
• 26:37
  Speaker 4: just spend the money and we'll raise the taxes later.
• 26:39
  Speaker 2: No, it's not like we have like a gas tax
• 26:41
  Speaker 2: that's supposed to be allocated to roads. Is that how
• 26:43
  Speaker 2: it actually works in reality? No, it's not beyond this
• 26:49
  Speaker 2: the idea that hey, we need to know like if
• 26:51
  Speaker 2: the money is like being recouped in this, does anyone
• 26:54
  Speaker 2: look at the US military and be like, why aren't
• 26:56
  Speaker 2: they making money.
• 26:57
  Speaker 3: No, No, because their job is not to make money.
• 26:58
  Speaker 3: It's to keep us safe.
• 27:00
  Speaker 2: Air traffic control is not supposed to make money. It's
• 27:03
  Speaker 2: supposed to keep us safe. Like a there's certain things
• 27:08
  Speaker 2: where you can be like okay, like this is a
• 27:09
  Speaker 2: revenue raising enterprise. Air traffic control is not one of them. Nope,
• 27:14
  Speaker 2: Like I don't want it to make money. I wanted
• 27:15
  Speaker 2: to keep plane safe. On a related note or kind
• 27:20
  Speaker 2: of related note, one of the most embarrassing recalls that
• 27:24
  Speaker 2: I have seen for an automaker, not because it's inherently dangerous,
• 27:27
  Speaker 2: but just because of how how many people had to
• 27:31
  Speaker 2: somehow overlook this in order for it to happen. So
• 27:34
  Speaker 2: Volkswagen unveiled a couple of years ago their ID Buzz.
• 27:38
  Speaker 2: It's the VW bus that's electric now, and they rolled
• 27:43
  Speaker 2: it out about six or seven months ago, and they're
• 27:45
  Speaker 2: now recalling all of the ones that have been sold,
• 27:48
  Speaker 2: which is only about fifty six hundred, so fortunately for them,
• 27:50
  Speaker 2: it's not a huge recall. The reason that they're recalling
• 27:53
  Speaker 2: it is because, according to US regulations, the third seat
• 28:01
  Speaker 2: is so wide that it needs a third seat belt
• 28:04
  Speaker 2: and not just two of them, and so the fix
• 28:08
  Speaker 2: The fix is not hey, like, we'll install a third
• 28:12
  Speaker 2: seat belt or something like that. The fix is we're
• 28:15
  Speaker 2: gonna put a big piece of hard plastic in the
• 28:17
  Speaker 2: middle of that row in order to shrink the seat
• 28:21
  Speaker 2: and reduce seating capacity.
• 28:23
  Speaker 3: So I have a few comments about this one, Volkswagen.
• 28:27
  Speaker 3: What is going on? How is you build an entire
• 28:29
  Speaker 3: car for the US market and then fail to understand
• 28:32
  Speaker 3: the regulations that apply to the US market.
• 28:34
  Speaker 2: How is there not one guy whose specific job is
• 28:37
  Speaker 2: I need to understand every measurement in this car and
• 28:40
  Speaker 2: whether it fits within US regulation.
• 28:42
  Speaker 3: By the way, this wasn't the only one.
• 28:44
  Speaker 4: They also installed an emergency breaking notification that was amber
• 28:47
  Speaker 4: instead of red, which is against US regulation. Needs to
• 28:50
  Speaker 4: be recalled for that. That having been said, what are
• 28:55
  Speaker 4: we doing with these stupid car regulations? Well, there's play
• 29:00
  Speaker 4: ty of blame to go around here, and I'm sorry,
• 29:02
  Speaker 4: but a US regulation that says if the seat is
• 29:05
  Speaker 4: too wide, then we have to make it three seats
• 29:07
  Speaker 4: instead of two is kind of dumb. Let the car
• 29:10
  Speaker 4: maker decide what they want to put back there. So
• 29:12
  Speaker 4: long as there's a seat belts and you disclose how
• 29:14
  Speaker 4: many people can sit in the car. I really don't
• 29:17
  Speaker 4: see an issue with a seat being too wide. We're
• 29:20
  Speaker 4: kind of fat here in America. We need wide seats. Likewise,
• 29:23
  Speaker 4: if an emergency breaking alert is red an orange instead
• 29:26
  Speaker 4: of red.
• 29:28
  Speaker 3: I'll figure it out right now.
• 29:30
  Speaker 4: I don't think that's a necessary regulation for us to
• 29:32
  Speaker 4: have in the three thousand pages that who regulates all
• 29:36
  Speaker 4: of this probably nitsa that Iza has when you're manufacturing
• 29:40
  Speaker 4: a car. I think that's kind of silly and stupid.
• 29:42
  Speaker 4: We should do away with it. But Volkswagen, those are
• 29:45
  Speaker 4: the rules of the road. You should have figured it
• 29:46
  Speaker 4: out before you built these things, regardless of whether or
• 29:49
  Speaker 4: not they're you know, bad regulations, which I think there's
• 29:51
  Speaker 4: a pretty convincing case that, as you said, like as
• 29:54
  Speaker 4: long as you have you know, big letters, two people
• 29:58
  Speaker 4: in the back seat, okay, like who cares?
• 30:02
  Speaker 3: Who cares?
• 30:03
  Speaker 2: But having said that, the law says, hey, you get
• 30:07
  Speaker 2: you know, x inches of you know seat with per occupant.
• 30:11
  Speaker 2: There has to be someone at Volkswagen who knows that.
• 30:15
  Speaker 2: And if there's not, what are we doing here?
• 30:19
  Speaker 3: Yeah?
• 30:19
  Speaker 4: Agreed, plenty of blame to go around, but uh, pretty
• 30:23
  Speaker 4: dumb for a rollout of such an important vehicle. Right,
• 30:27
  Speaker 4: this wasn't a new Jetta. No, this is sixty They're
• 30:33
  Speaker 4: not cheap.
• 30:34
  Speaker 3: And the range is bad. Oh, the range is bad.
• 30:36
  Speaker 3: The range like miles or something like that. I don't
• 30:39
  Speaker 3: know who's gonna buy it.
• 30:40
  Speaker 4: Yeah, it's and that's why it's not weighted down with
• 30:43
  Speaker 4: eight passengers.
• 30:44
  Speaker 2: When they unveiled it, I was like, oh, like, this
• 30:46
  Speaker 2: looks fantastic, and then I saw the specs was like, eh,
• 30:49
  Speaker 2: I don't think that's gonna work. But uh, they've sold
• 30:52
  Speaker 2: fifty six hundred of them, which is not great. But
• 30:55
  Speaker 2: I guess the question is like, those are all the
• 30:57
  Speaker 2: people who are really interested, Like, what do your sales
• 30:59
  Speaker 2: look like? Do you get past them?
• 31:01
  Speaker 3: Good question? I don't know.
• 31:02
  Speaker 2: Let's take a quick break when we come back. Paul
• 31:04
  Speaker 2: Monica from Barons joins us after.
• 31:06
  Speaker 1: This taras fears continue to grip markets, get the latest
• 31:11
  Speaker 1: straight from Wall Street right here on the Financial Exchange
• 31:14
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• 31:19
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• 31:26
  Speaker 1: Financial Exchange Radio Network. Ladies and gentlemen, the weekend.
• 31:41
  Speaker 2: Alright, as promised, We are now joined by Paul Lamonica
• 31:45
  Speaker 2: from Barons.
• 31:47
  Speaker 3: Paul, how are you today.
• 31:49
  Speaker 6: I'm good. Thanks you guys do it.
• 31:51
  Speaker 3: We're doing well.
• 31:51
  Speaker 2: Let's talk a little bit about Decker's Outdoor for people
• 31:54
  Speaker 2: who aren't familiar with the company.
• 31:56
  Speaker 3: Who are they and what do they sell to other
• 31:58
  Speaker 3: human beings?
• 32:00
  Speaker 7: Yes, they sell some popular footwear to human beings, although
• 32:05
  Speaker 7: maybe not as popular as it used to be, which
• 32:09
  Speaker 7: is a concern. So this is a company that owns
• 32:12
  Speaker 7: the ug brand of Ugly shoes, but has really kind
• 32:17
  Speaker 7: of gained a lot of ground in recent years because
• 32:20
  Speaker 7: they also own Hookah, which is, you know, a sneaker
• 32:24
  Speaker 7: brand that sort of kind of came out of nowhere.
• 32:27
  Speaker 7: It is now, you know, you know, seemingly on the
• 32:31
  Speaker 7: feet of a lot of people in the same way
• 32:33
  Speaker 7: that Nike and Adidas are.
• 32:35
  Speaker 6: But there are worries about.
• 32:37
  Speaker 7: Sales momentum maybe slowing, and that has hit this once
• 32:41
  Speaker 7: hot stock. It's down more than forty percent this year.
• 32:45
  Speaker 2: Is this a case of taste changing? Is it related
• 32:48
  Speaker 2: to tariffs and cost? Is it something else? What's going
• 32:51
  Speaker 2: on there?
• 32:52
  Speaker 7: Yeah, tariffs are obviously one of the concerns.
• 32:58
  Speaker 6: I think that you know, fashion is very fickle. So
• 33:03
  Speaker 6: there is you know, an.
• 33:04
  Speaker 7: Element of you know, maybe you know, the Sneakers not
• 33:08
  Speaker 7: being as popular as they once were. You know, Nike
• 33:12
  Speaker 7: is trying to make a comeback obviously, Adidas is always
• 33:17
  Speaker 7: you know, a tough competitor.
• 33:18
  Speaker 6: New Balance very popular as well.
• 33:20
  Speaker 7: And then there's Sketchers, which you know they've struggled a
• 33:24
  Speaker 7: little bit also. But what's happening with Skechers might give
• 33:28
  Speaker 7: investors in Deckers a little bit of hope because Sketchers
• 33:32
  Speaker 7: announced earlier this week that it's going private, selling to
• 33:35
  Speaker 7: three G Capital for a nice premium. I don't think
• 33:38
  Speaker 7: that necessarily means that Deckers is you know, looking to
• 33:41
  Speaker 7: go private or sell out either. But if the stock
• 33:44
  Speaker 7: continues to slide, you do have to wonder if there
• 33:48
  Speaker 7: is a company out there that might look to scoop
• 33:51
  Speaker 7: it up at a bit of a premium.
• 33:53
  Speaker 2: You mentioned they have, you know, a couple of brands
• 33:55
  Speaker 2: under their umbrella. Is there also something where maybe they
• 33:58
  Speaker 2: could be in the market for acquiring a just brands
• 34:00
  Speaker 2: or is that not in the cards for them?
• 34:02
  Speaker 7: No, I think it's possible. I mean, given the stock weakness,
• 34:07
  Speaker 7: you know, they would probably look to do any deals
• 34:10
  Speaker 7: if they were thinking about it, you know, more likely
• 34:13
  Speaker 7: with you know cash, you know, as opposed to using
• 34:17
  Speaker 7: their shares which are no longer as attractive as as
• 34:22
  Speaker 7: acquisition currency. But yeah, I think it is possible that
• 34:27
  Speaker 7: you could see Decker's look to make some acquisitions. I'm
• 34:31
  Speaker 7: not really sure what other companies are out there that
• 34:35
  Speaker 7: would be a good fit per se.
• 34:37
  Speaker 6: But you know, this is clearly an environment right now
• 34:40
  Speaker 6: where we're.
• 34:41
  Speaker 7: Slowly starting to see some M and A picking up,
• 34:46
  Speaker 7: you know, particularly in the consumer space. The you know,
• 34:48
  Speaker 7: there have been a couple of you know, beverage deals
• 34:50
  Speaker 7: this year, you know, Pepsi buying you know, Poppy for example.
• 34:54
  Speaker 7: So it wouldn't shock me if they're thinking about deals,
• 34:57
  Speaker 7: But nothing jumps to mind as an obvious takeover target.
• 35:02
  Speaker 2: I want to go back to the Sketchers deal that
• 35:04
  Speaker 2: you mentioned. How does anyone go out and I know
• 35:08
  Speaker 2: that was a pe deal, but how does anyone go
• 35:10
  Speaker 2: out and know how to value these companies given where
• 35:13
  Speaker 2: their supply chains are and with that tariff uncertainty right now?
• 35:17
  Speaker 6: Yeah, I mean it's a great question.
• 35:18
  Speaker 7: And when you look at Deckers, for example, their valuation
• 35:23
  Speaker 7: has taken a gigantic hit.
• 35:26
  Speaker 6: The knock on this company before its big slide was
• 35:29
  Speaker 6: that it was very pricey.
• 35:30
  Speaker 7: It was trading around thirty eight times earnings forecasts in
• 35:36
  Speaker 7: the early part of the year.
• 35:38
  Speaker 6: That was a premium even the.
• 35:39
  Speaker 7: Nike, which is you know, obviously dow component, the pre
• 35:43
  Speaker 7: eminent global brand. Now, because of this huge haircut that
• 35:48
  Speaker 7: Deckers has taken, the stock is at a reasonable price
• 35:52
  Speaker 7: of about twenty times earnings, which is below its five
• 35:55
  Speaker 7: year average obviously now at discount to Nike, and it's
• 35:58
  Speaker 7: even in a discount to the market the sp five
• 36:01
  Speaker 7: hundred as well. So the question for investors, obviously is
• 36:06
  Speaker 7: has this stock taken a big enough hit that it
• 36:09
  Speaker 7: is once again reasonably valued or is there more downside ahead?
• 36:15
  Speaker 6: You know, analysts are starting to grow a little bit
• 36:18
  Speaker 6: more bullish.
• 36:20
  Speaker 7: You know, you're seeing, you know, a bunch of analysts
• 36:23
  Speaker 7: that have price targets that are significantly higher than where
• 36:27
  Speaker 7: the stock is currently trading.
• 36:29
  Speaker 2: Very good, Paul, appreciate you joining us today and hope
• 36:32
  Speaker 2: you have a great weekend and we'll talk to you.
• 36:35
  Speaker 6: Yep, same you guys, appreciate it.
• 36:37
  Speaker 2: That is paul A Monica from Baron's talking about deckers outdoor.
• 36:43
  Speaker 3: Who you guys buy from for shoes these days. I'm
• 36:46
  Speaker 3: a new balanced guy now officially, Yep, I'm wearing right now.
• 36:52
  Speaker 3: I don't know.
• 36:52
  Speaker 4: I just go to the store, I run in whatever
• 36:54
  Speaker 4: they tell me to and then so we're talking specifically
• 36:58
  Speaker 4: running shoes. Yeah, I'm a Brooks guy myself, got it.
• 37:02
  Speaker 4: I converted over about five six years ago. Had a
• 37:04
  Speaker 4: real bad experience with.
• 37:05
  Speaker 2: Some Nikes in twenty sixteen, twenty seventeen. That might have
• 37:10
  Speaker 2: just been like me getting old, but I bought a
• 37:12
  Speaker 2: pair of like you remember, like the the phase where
• 37:15
  Speaker 2: they were trying to like slim down the shoes and everything,
• 37:18
  Speaker 2: and it was like a very like oh, like your
• 37:20
  Speaker 2: feet will like feel the road more. It was like
• 37:22
  Speaker 2: neutral shoes, and I think my feet felt the road
• 37:24
  Speaker 2: too much.
• 37:25
  Speaker 3: Yeah, and I'm all about the cushion now. I love
• 37:28
  Speaker 3: love the cushion.
• 37:29
  Speaker 4: You know. It's like yeah, so quick quick mention to
• 37:34
  Speaker 4: the WU socks for those who are local and considering.
• 37:37
  Speaker 4: I just saw the funniest promotion that you can possibly
• 37:41
  Speaker 4: come up for for a baseball game. May twenty first
• 37:44
  Speaker 4: is per in the Park where you can actually bring
• 37:48
  Speaker 4: your cat to a ballgame. Chuck and I were talking
• 37:52
  Speaker 4: during the break. I can't really imagine an activity that
• 37:54
  Speaker 4: a cat would like to attend less than a live
• 37:57
  Speaker 4: baseball game with lights, colors and always, but they're doing
• 38:01
  Speaker 4: it and it's creative. WU so's pretty good take, as
• 38:07
  Speaker 4: was the pass socks. I loved going to that stadium too,
• 38:09
  Speaker 4: But you do have fun.
• 38:10
  Speaker 2: Your cat does have to be on a leash or
• 38:12
  Speaker 2: in the bag, yeah, during the game.
• 38:15
  Speaker 3: So that's a little disappointing to me personally. You're vile,
• 38:19
  Speaker 3: jem very.
• 38:20
  Speaker 2: Hope everyone has a great weekend. We'll see back here
• 38:23
  Speaker 2: on Monday. Busy week including a bunch of inflation data
• 38:26
  Speaker 2: on Monday. Well if the inflation data is not Monday,
• 38:29
  Speaker 2: but we'll see you Monday.