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Has the S&P 500 become to reliant on the Magnificent 7? · The Financial Exchange Show

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  Speaker 2: Chuck, Mike and Tucker with you here kicking off a
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  Speaker 2: new week, a new month. It is the first trading
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  Speaker 2: day of November, and quite honestly, not that exciting of
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  Speaker 2: a week in markets. We got a few things to
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  Speaker 2: you know, maybe get excited about. But you can break
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  Speaker 2: some leaves, have us on in the background. You don't
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  Speaker 2: need to be glued to us leg last week. And
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  Speaker 2: we tell you this because we love to have you listen.
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  Speaker 2: But hey, full disclosure. When the biggest thing that's coming
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  Speaker 2: out data wise this week is you know, the ADP
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  Speaker 2: jobs report.
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  Speaker 3: You're kind of like, Okay, it would have been an
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  Speaker 3: exciting week except for our lawmakers shutting the government down
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  Speaker 3: for a thirty third straight thirty fourth straight day, thirty
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  Speaker 3: third straight day.
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  Speaker 2: Yeah so, I mean, otherwise we could have talked about, Hey,
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  Speaker 2: we get jolts coming out tomorrow. Can't what can't wait
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  Speaker 2: to see what those tell us. Hey, Thursday, we're gonna
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  Speaker 2: be getting more jobless claims, non farm productivity unit labor
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  Speaker 2: costs a whole bunch of stuff there. Friday, we would
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  Speaker 2: have gotten the jobs report for the month of October.
• 2:19
  Speaker 2: Instead we have to be like, hey, consumer Sentiment comes
• 2:22
  Speaker 2: out on Friday. Isn't that great? And it's it's it's
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  Speaker 2: not like the Consumer Sentiment report kind of my least
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  Speaker 2: favorite report that we cover that still is discussed as
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  Speaker 2: if it's a major report. We do have some big
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  Speaker 2: earnings this week. Today we get Palenteer reporting after the Bell,
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  Speaker 2: So that is, you know, a four hundred billion dollar
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  Speaker 2: company with four billion dollars in revenue reporting. So yeah,
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  Speaker 2: I say that just because you know, talk about one
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  Speaker 2: where you know, the fundamentals are completely detached from the
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  Speaker 2: story that's being told, kind of the the you know
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  Speaker 2: poster child there. AMD and Uber are going to be
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  Speaker 2: reporting tomorrow. That'll be interesting to see what we get.
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  Speaker 2: We also get marry At reporting as well, which gives
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  Speaker 2: us a little bit more color on what is going
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  Speaker 2: on from a travel perspective. Young brands reporting on Tuesday
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  Speaker 2: as well, so we get a little bit of information
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  Speaker 2: about the restaurant business Wednesday McDonald so more restaurants, Qualcom so,
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  Speaker 2: a little bit of Semiconductors, door Dash, we get to
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  Speaker 2: find out how many burritos need to be bought on layaway.
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  Speaker 2: And then we also have a couple of insurers that
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  Speaker 2: I'm interested to see if they give us a little
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  Speaker 2: bit of color about what's going on the private credit space.
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  Speaker 2: MetLife and All State both reporting on Wednesday, and quite honestly,
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  Speaker 2: it's kind of the peak, like, yeah, you got Airbnb
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  Speaker 2: on Thursday. Okay, I guess that's kind of exciting, but ultimately,
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  Speaker 2: heading into the end of the week, there's you know,
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  Speaker 2: we've we've kind of gotten through the heavy hitters at
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  Speaker 2: that point.
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  Speaker 3: Yeah, I think what can be interesting about this week?
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  Speaker 3: Like you said, the insurers, we've been talking a lot
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  Speaker 3: about private credit and the concerns and cockroaches bubbling to
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  Speaker 3: the surface there. So do they have convention of that
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  Speaker 3: cockroaches bubble to the certain Oh, yes they do. We
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  Speaker 3: also have that McDonald's Marriott story. So what's interesting about
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  Speaker 3: that to me? Marriott can tell me a fair bit
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  Speaker 3: about what the high end consumer is doing low end too.
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  Speaker 4: They have some you know, some.
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  Speaker 3: More discounted brands, but we've gotten some metrics from them
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  Speaker 3: in terms of where their sales are over the most
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  Speaker 3: you know, the last quarter. So I'm interested to hear
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  Speaker 3: that again McDonald's. I mean, is there a better is
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  Speaker 3: there a better barometer for you know, people going and
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  Speaker 3: looking for a discount food item than McDonald's. I don't
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  Speaker 3: really think of one, and so are they actually seeing
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  Speaker 3: good sales or is there you know, common consumer really
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  Speaker 3: pulling back like others have indicated that that's pretty interesting
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  Speaker 3: to me.
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  Speaker 2: Can we talk about something that I realized when looking
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  Speaker 2: at the just like what was on tap for this week,
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  Speaker 2: that I was just kind of shocked about quite honestly.
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  Speaker 2: Did you you know that for the last three years now,
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  Speaker 2: Uber has more revenue on an annual basis than McDonald's.
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  Speaker 4: Revenue at McDonald's.
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  Speaker 2: Isn't that kind of wild? Uber did forty seven billion
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  Speaker 2: dollars in revenue over the last twelve months. McDonald's did
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  Speaker 2: twenty six. Now I know that you can point to
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  Speaker 2: that and be like, Okay, it's because Uber a like
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  Speaker 2: just on a per item charge.
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  Speaker 1: You know.
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  Speaker 2: It's it's a lot easier to rack up a fifty
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  Speaker 2: dollars bill at Uber than McDonald's.
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  Speaker 4: It is, yep.
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  Speaker 2: It also is in you know, different areas they do
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  Speaker 2: food delivery, they take people from place to place. I
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  Speaker 2: think they still might have like that Uber Freight division.
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  Speaker 2: I can't remember if that still exists.
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  Speaker 3: But yeah, that is surprising to me, Yes, right, Like,
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  Speaker 3: isn't it kind of wild that Uber does almost twice
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  Speaker 3: the revenue annually that McDonald's does, And yet we don't
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  Speaker 3: talk about Uber as being as impactful, right, but it is.
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  Speaker 2: I mean, like in terms of raw economic power, it is.
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  Speaker 2: And the miraculous thing is is McDonald's revenue, by the way,
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  Speaker 2: has been flat for the last decade. Isn't that kind
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  Speaker 2: of wild? Like McDonald's doing twenty five billion dollars.
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  Speaker 3: Not shocked given where fast food has gone over the
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  Speaker 3: last decade, but yeah, it is pretty crazy, you.
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  Speaker 2: Know, Like McDonald's done twenty five billion in revenue in
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  Speaker 2: twenty fifteen, They're gonna do about twenty.
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  Speaker 4: Six billion this year. Yeah.
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  Speaker 2: Uber on the other hand, when the IPO, they were
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  Speaker 2: doing about eight billion in revenue in twenty seventeen.
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  Speaker 4: Another up to forty seven.
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  Speaker 2: Yep, Derek Hashershaw, He's done a really nice, a sneaky
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  Speaker 2: nice job there.
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  Speaker 3: There are some real questions about whether that company could
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  Speaker 3: ever be profitable, right, There's some really serious questions about that,
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  Speaker 3: and they have proven that they can.
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  Speaker 4: Their product is no longer cheap.
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  Speaker 3: In basically all scenarios that I see it's about the
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  Speaker 3: same costs as a taxi, but that was always probably
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  Speaker 3: going to be the case, and they have developed now
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  Speaker 3: a user base that really prefers them over taxis.
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  Speaker 2: He's done a really nice job there. Yeah, and it
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  Speaker 2: goes under the radar for some reason. I don't know why,
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  Speaker 2: but they maybe it's just because we still think of
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  Speaker 2: them as like just this app or something like that.
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  Speaker 4: I don't know what it is.
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  Speaker 2: But when you're a company doing fifty billion dollars in
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  Speaker 2: revenue and twelve billion in profit, like, yeah, you've got
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  Speaker 2: something there.
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  Speaker 4: Well.
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  Speaker 3: I mean, the real answer to me about why it
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  Speaker 3: doesn't get talked about is A, it's not artificial intelligence,
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  Speaker 3: and B it'll never be able to scale to be,
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  Speaker 3: you know, a competitor with the top ten companies in
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  Speaker 3: the S and P five hundred.
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  Speaker 4: Are we sure of that?
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  Speaker 2: I mean, would you ever have you know, ten years ago,
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  Speaker 2: would you ever have said that Tesla was going to
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  Speaker 2: be one of the top ten companies?
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  Speaker 4: Right? Yes, I guess you can never be sure about it.
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  Speaker 3: But in their current business model, they would need to
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  Speaker 3: change that business model rather significantly. You know, they've talked
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  Speaker 3: about being an app of everything, So if they want
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  Speaker 3: to be that seriously, then yeah, they need to be
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  Speaker 3: in everything app.
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  Speaker 2: But it's it's just kind of wild to me that
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  Speaker 2: it's you know, this two hundred billion dollar company doing
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  Speaker 2: fifty billion dollars in revenue. Now you kind of look
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  Speaker 2: at you like, there's done a really really nice job
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  Speaker 2: there with that company. Last week, we got a bunch
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  Speaker 2: of the big tech earnings and there's a piece in
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  Speaker 2: the Wall Street Journals titled what investors learned from tech
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  Speaker 2: Earnings in charts, And quite honestly, I don't think we
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  Speaker 2: learned anything from tech earnings. I think that we learned
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  Speaker 2: that some of them are good, some of them are bad,
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  Speaker 2: and some of them are okay, which is fine. Like
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  Speaker 2: there's no consistent story that we got there. I want
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  Speaker 2: to talk about something that's more interesting to me, which
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  Speaker 2: I'm sorry, like you're all gonna have to listen the
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  Speaker 2: subheadter on this. The so called Magnificent seven makeup a
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  Speaker 2: record thirty eight percent of the S and P five
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  Speaker 2: hundred and it got me just looking at S and P,
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  Speaker 2: you know, components and allocations and things like that, and
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  Speaker 2: here's the part to me that's that's kind of interesting.
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  Speaker 2: Mike if an mister came to you and said, hey,
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  Speaker 2: I've got almost nine percent of my portfolio and one
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  Speaker 2: holding and almost seven percent in three more, you'd probably
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  Speaker 2: say to them, it's a little concentrated. We'd like to,
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  Speaker 2: you know, reduce some of that because if things go
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  Speaker 2: bad there, that could potentially be a problem for you.
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  Speaker 4: Yeah, And yet.
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  Speaker 2: When you go out and you buy it in an
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  Speaker 2: S and P five hundred mutual fund or in an
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  Speaker 2: ETF wrapper, you say, oh, I'm just buying the market.
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  Speaker 2: It's diversified, and like it. I don't know why. It
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  Speaker 2: just hit me that, like, we're at the point now
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  Speaker 2: where if in video goes up another fifteen percent relative
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  Speaker 2: to the index, it's going to be ten percent of
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  Speaker 2: the S and P five hundred. And that's a level
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  Speaker 2: where normally if someone comes in and says, hey, I've
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  Speaker 2: got ten percent of my net worth tied up in
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  Speaker 2: one company, we normally sit there and're like, this is
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  Speaker 2: kind of the danger zone where it starts to represent potential.
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  Speaker 4: Problems for you. And I like, I don't know.
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  Speaker 2: Why, but this just triggered that thought in my head
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  Speaker 2: that it's like, hey, this is not a well diversified
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  Speaker 2: portfolio anymore to say you just own the S and P.
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  Speaker 4: Five, what are the top ten comprised?
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  Speaker 1: Now?
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  Speaker 4: The top ten? I can I can do something something.
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  Speaker 4: I think it's it's.
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  Speaker 2: Yeah, probably in the mid forties. That's not a well
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  Speaker 2: diversified portfolio.
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  Speaker 4: No, it's not.
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  Speaker 3: Now, you know, do most investors just have all their
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  Speaker 3: money in the S and P five hundred? Probably not,
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  Speaker 3: but a lot do many do. And yeah, that is
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  Speaker 3: a very different type of concentration than we've ever talked
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  Speaker 3: about for the S and P five hundred.
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  Speaker 2: You know, and like it's like, oh, well, I own
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  Speaker 2: five hundred different companies, okay, Well, if for every thousand
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  Speaker 2: dollars you put in, fifty cents is in, you know,
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  Speaker 2: it wouldn't.
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  Speaker 4: Even be fifty cents quite honestly, like it.
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  Speaker 2: Yeah, I mean for every thousand dollars you put in,
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  Speaker 2: you've got like a dollar in this, a dollar in that. Like,
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  Speaker 2: I don't know that that's well diversified. Yeah, necessarily, you
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  Speaker 2: know it's you. You will get the top twenty five components,
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  Speaker 2: and they're the only ones basically where you're getting north
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  Speaker 2: of like fifty sixty dollars of that thousand. Actually, no,
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  Speaker 2: I'm sorry, north of like five dollars of that thousand
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  Speaker 2: going in anywhere. The other four hundred and fifty components,
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  Speaker 2: it's less than like five dollars of that thousand going
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  Speaker 2: into them, And so like, how diversified are you actually?
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  Speaker 2: If that's the case, real question that I think is
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  Speaker 2: just worth asking. I'm not sure what it means other
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  Speaker 2: than there's now a concentration risk present in the S
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  Speaker 2: and P five hundred that you don't normally see.
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  Speaker 3: And I'll take it a step further to say, yeah,
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  Speaker 3: you've got some individual company concentration risk, you also have
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  Speaker 3: something that's more than just technology concentration. It's a specific
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  Speaker 3: type type of technology. Like if there is a threat
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  Speaker 3: to the artificial intelligence drive, forget about the tech sector
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  Speaker 3: as a whole, because Apple is a tech company and
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  Speaker 3: they don't have much to do with no. But if
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  Speaker 3: you have some sort of threat to any of the
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  Speaker 3: public or private companies in the AI story that disrupts
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  Speaker 3: that narrative, there's.
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  Speaker 2: Like twenty five percent of the S and P that's
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  Speaker 2: just tied to it right now.
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  Speaker 4: And it's not to say they will be bankrupt.
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  Speaker 3: Alphabet still has a business without AI, as is Microsoft,
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  Speaker 3: but they're not seeming presumably they're not worth nearly as
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  Speaker 3: much as.
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  Speaker 4: They are on paper today. Without that future promise.
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  Speaker 2: Of AI, anything else that you want to talk about
• 12:27
  Speaker 2: as regards to tech, I mean, I know there's you know,
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  Speaker 2: it'll be making our.
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  Speaker 4: Way throughout the entire stack.
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  Speaker 3: AAI and the tech companies that dominated are going to
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  Speaker 3: continue to be the main story that everyone talks about
• 12:37
  Speaker 3: over the course of this year, with some potential fun
• 12:42
  Speaker 3: chats about private credit as well.
• 12:45
  Speaker 2: Can't wait take a quick break when we come back.
• 12:48
  Speaker 2: Let's talk labor after this. What's going on in the
• 12:50
  Speaker 2: job market. The government won't tell us because they're shut down,
• 12:54
  Speaker 2: but we'll tell you what we can glean from what
• 12:56
  Speaker 2: we're hearing from different companies.
• 12:58
  Speaker 1: Right after This is your home for the most comprehensive
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  Speaker 1: coverage of the economy and the trends on Wall Street.
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  Speaker 1: This is the Financial Exchange Radio Network. Tax dies six
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  Speaker 1: one seven, three, six, two one three eight five with
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• 13:52
  Speaker 2: Couple pieces here on the labor market and one here
• 13:57
  Speaker 2: from Bloomberg a wave of us Lee Ploff's flash early
• 14:01
  Speaker 2: warning sign for the job market. Second one why companies
• 14:04
  Speaker 2: are no longer hanging on to employees. And a couple
• 14:08
  Speaker 2: thoughts that are some of them are mine, a lot
• 14:11
  Speaker 2: of them are not original in things that I've I've
• 14:13
  Speaker 2: read online that I do think we're reaching a tipping point.
• 14:16
  Speaker 2: On the first is, I do think that we are
• 14:21
  Speaker 2: very much at a point where companies are looking to
• 14:27
  Speaker 2: drive whatever they can margin wise right now, not through
• 14:31
  Speaker 2: increased sales, but through increased efficiency.
• 14:34
  Speaker 4: We're seeing all kinds of reports about that, and there's
• 14:36
  Speaker 4: multiple reasons.
• 14:37
  Speaker 3: One, they might be paying tariffs for the first or
• 14:39
  Speaker 3: substantially more terrorists than they were last year. They are
• 14:42
  Speaker 3: also facing pressure from investors to prove that some of
• 14:47
  Speaker 3: the spending on things like artificial intelligence are eventually going
• 14:50
  Speaker 3: to have their payoff. And so I think that there's
• 14:52
  Speaker 3: this moment right now where everyone is looking at executives
• 14:55
  Speaker 3: to ask them, show me signs that you can be
• 14:59
  Speaker 3: more efficient using the technology that you have.
• 15:02
  Speaker 4: So there's that dual pressure there, and.
• 15:06
  Speaker 3: Yeah, I think compared to this time last year, I
• 15:10
  Speaker 3: just sense more of a willingness from CEOs to depart
• 15:13
  Speaker 3: with their employees.
• 15:15
  Speaker 2: And this gets to the part that I do think
• 15:17
  Speaker 2: is like, if you want a reason for this to
• 15:20
  Speaker 2: concern you over the next three to six months and
• 15:22
  Speaker 2: the potential economic impact, Mike, if there's one thing that
• 15:26
  Speaker 2: I've picked up, well, no, not one of the things
• 15:30
  Speaker 2: that I've picked up in you know, being in this
• 15:32
  Speaker 2: business for sixteen years now, sixteen years. Corporate leaders are lemmings.
• 15:43
  Speaker 2: They love to just follow other like each other off
• 15:47
  Speaker 2: the cliff of what they think is going to be
• 15:49
  Speaker 2: successful and look no further than back in twenty twenty
• 15:54
  Speaker 2: one and twenty two when in the auto sector, Hey, Tesla,
• 16:00
  Speaker 2: you know has this crazy valuation.
• 16:02
  Speaker 4: What should we.
• 16:03
  Speaker 2: Do make ev We're gonna make only EV's by twenty thirty. Yeah,
• 16:07
  Speaker 2: and now it's like, Okay, maybe that wasn't you know,
• 16:09
  Speaker 2: the smartest thing to you know, to do that. That
• 16:13
  Speaker 2: probably wasn't the best move for us. You take a
• 16:17
  Speaker 2: look this year and it's hey, like, what do we
• 16:20
  Speaker 2: have to do? We got to use AI like in
• 16:23
  Speaker 2: our company in order to you know, do something like
• 16:28
  Speaker 2: think about like who is the was it Wendy's or
• 16:30
  Speaker 2: Taco Bell who experimented with the AI ordering drive throughs?
• 16:36
  Speaker 2: And then they were like, Mark, Oh, this is actually
• 16:38
  Speaker 2: really bad. This is this is not working.
• 16:41
  Speaker 4: And so when I see, by.
• 16:44
  Speaker 3: The way, before we move on from that, I don't
• 16:46
  Speaker 3: remember if it was Taco Bell or no other company,
• 16:48
  Speaker 3: but people got into the habit of screwing with the
• 16:52
  Speaker 3: AI machines. Oh yeah, did you see them order like
• 16:54
  Speaker 3: a million cups of water? Yeah, you know, it's a
• 16:57
  Speaker 3: really funny thing that wouldn't fall for But nay, I,
• 17:01
  Speaker 3: you know, is going to process that order for free,
• 17:05
  Speaker 3: for a million cups of water.
• 17:07
  Speaker 2: You know what's a sneaky good ad that I just
• 17:09
  Speaker 2: saw for the first time this weekend is the one
• 17:11
  Speaker 2: of Mitch Trubisky as the backup orderer for the drive
• 17:14
  Speaker 2: through ad. It's a progressive ad, but it's like someone
• 17:18
  Speaker 2: like fumbling around trying to like get their order in
• 17:20
  Speaker 2: the drive through, and they're like, no, we got to
• 17:21
  Speaker 2: get the backup orderer in here. And they get Mitch Trubisky,
• 17:24
  Speaker 2: who's you know, washed up NFL quarterback and didn't you know,
• 17:27
  Speaker 2: amount to being a starter, and he like executes like.
• 17:30
  Speaker 4: A perfect order. It's pretty good.
• 17:34
  Speaker 2: But like when I say, like corporate lemmings, you see
• 17:37
  Speaker 2: these companies that are now like Amazon announces layoffs last week,
• 17:41
  Speaker 2: stock goes up. How many CEOs do you think are
• 17:43
  Speaker 2: sitting there over the weekend saying, hey Andy, Andy got
• 17:47
  Speaker 2: rid of thirty thousand employees and look what it did
• 17:49
  Speaker 2: to his stock. When I get in, I gotta I
• 17:52
  Speaker 2: gotta talk to, you know, the the chief operating officer
• 17:55
  Speaker 2: on Monday, and we got to see if we have
• 17:57
  Speaker 2: to do our own, you know, headcount reductions.
• 18:00
  Speaker 3: So what I keep coming back to is the FED
• 18:02
  Speaker 3: is having this debate around the supply and demand of labor.
• 18:05
  Speaker 3: Right on one hand, they clearly see the slowdown and hiring,
• 18:09
  Speaker 3: but on the other they're just not sure how many
• 18:12
  Speaker 3: people are out there looking for work in the absence
• 18:15
  Speaker 3: of all the data. What's your sense of the job
• 18:17
  Speaker 3: market right now? Because my sense and by the way,
• 18:19
  Speaker 3: you can text the show at six one, seven, three,
• 18:21
  Speaker 3: six two and thirteen eighty five, uh, to.
• 18:23
  Speaker 4: Give your opinion too.
• 18:24
  Speaker 3: But my feeling right now when I hear from folks,
• 18:29
  Speaker 3: when I when I you know, just generally ask people
• 18:32
  Speaker 3: about how they're doing. They're worried about the state of
• 18:35
  Speaker 3: their job and they're having a very tough time finding
• 18:38
  Speaker 3: a new one.
• 18:40
  Speaker 2: And I think the other thing is, you know, with
• 18:45
  Speaker 2: the with the additional layoff announcements, I think that you
• 18:49
  Speaker 2: can make a case that the job market is continuing
• 18:52
  Speaker 2: to slow further, you know, like it's it's worsening still. Yep,
• 18:57
  Speaker 2: it still is one where on a net basis, the
• 19:00
  Speaker 2: rate of layoffs is not particularly high relative to historical standards.
• 19:05
  Speaker 2: But it's again we're kind of in that danger zone
• 19:09
  Speaker 2: where if you don't see a change in trajectory soon,
• 19:14
  Speaker 2: it starts to get kind of problematic. Now the last
• 19:17
  Speaker 2: two years, we've seen that change in trajectory heading into
• 19:21
  Speaker 2: year end. Can we go three for three? Maybe we'll
• 19:24
  Speaker 2: see quick break here when we return. It's Wall Street watch,
• 19:29
  Speaker 2: and we're also going to be joined by the Virgin
• 19:32
  Speaker 2: Islands Governor Albert Bryan right after this.
• 19:40
  Speaker 1: Like us on Facebook and follow us on Twitter at
• 19:42
  Speaker 1: TFE show. Breaking business news is always first right here
• 19:47
  Speaker 1: on the Financial Exchange Radio Network. Time now for Wall Street.
• 19:52
  Speaker 1: Watch a complete look at what's moving market so far
• 19:55
  Speaker 1: today right here on the Financial Exchange Radio Network.
• 19:59
  Speaker 5: Market's beginning the week in mixed territories. Investors ready for
• 20:02
  Speaker 5: a new batch of third quarter earnings Right now. The
• 20:05
  Speaker 5: Dow is down by about four hundred points, SMP five hundreds,
• 20:08
  Speaker 5: down two tents of one percent, and the Nasdaq is
• 20:11
  Speaker 5: up about a quarter of a percent. Major news in
• 20:14
  Speaker 5: the tech space this morning after OpenAI signed a thirty
• 20:17
  Speaker 5: eight billion dollar deal with Amazon, where Amazon Web Services
• 20:21
  Speaker 5: will provide the Chat GPT maker with access to hundreds
• 20:24
  Speaker 5: of thousands of in videographics processor units as part of
• 20:28
  Speaker 5: a seven year deal. Amazon up over four percent, and
• 20:32
  Speaker 5: Kimberly Clark announced this morning it's reached an agreement with
• 20:35
  Speaker 5: talentel maker Kenbew in a deal value to forty eight
• 20:38
  Speaker 5: point seven billion dollars, which would create a consumer stables giant.
• 20:42
  Speaker 5: Kimberly Clark shares are down twelve percent, while Kenbustock is
• 20:45
  Speaker 5: jumping fifteen percent. On the news, I'm Tucker Silvan. That
• 20:49
  Speaker 5: is Wall Street Watch.
• 20:50
  Speaker 3: Joining us now is the Governor of the United States
• 20:53
  Speaker 3: Virgin Islands, Albert Bryan, Governor.
• 20:55
  Speaker 4: Thank you so much for joining us today. Appreciate it.
• 20:58
  Speaker 6: Thank you, tok for having me. It's great to be
• 21:00
  Speaker 6: on the show all the time to talk about what's
• 21:02
  Speaker 6: going on in the Virgin Islands and what we expect
• 21:04
  Speaker 6: to see for the upcoming season.
• 21:06
  Speaker 3: So, Governor, we reached freezing temperatures here this morning, and
• 21:12
  Speaker 3: we will be for the next several months. I'll allow
• 21:14
  Speaker 3: you to I'll allow you to boast about your weather
• 21:16
  Speaker 3: down there eventually, But I actually want to start on
• 21:18
  Speaker 3: a different subject, which is the state of the government
• 21:21
  Speaker 3: down in the Virgin Islands. You know up here much
• 21:25
  Speaker 3: more in the twenty tens was discussed about Puerto Rico's
• 21:28
  Speaker 3: fiscal situation and the struggles that they had and kind
• 21:31
  Speaker 3: of overshadowed what was happening in the Virgin Islands in
• 21:34
  Speaker 3: the late twenty tens. Can you talk to us about
• 21:37
  Speaker 3: where the territory was at the end of the twenty
• 21:41
  Speaker 3: ten decade, and just where you see it's come over
• 21:44
  Speaker 3: the course of the last several years.
• 21:46
  Speaker 6: Yeah, I think we were in a really bad place.
• 21:48
  Speaker 6: So I'm much like Puerto Rico. Often when I go
• 21:51
  Speaker 6: to the Senate, I have been trying to get a
• 21:53
  Speaker 6: bill poss that would allow the treasury to back all
• 21:56
  Speaker 6: our bonds. I mean, it's one simple thing that they
• 21:59
  Speaker 6: could do in order to shore up. But in twenty ten,
• 22:02
  Speaker 6: we were facing an energy crisis. We couldn't go to
• 22:05
  Speaker 6: the markets, mainly because we hadn't completed our audits. We
• 22:08
  Speaker 6: kind of topped out during the Great Recession trying to
• 22:12
  Speaker 6: just keep the government alive. Is you know, thirty percent
• 22:15
  Speaker 6: of our population and our workforce works for the government,
• 22:18
  Speaker 6: and probably another fifteen to twenty percent the total population
• 22:21
  Speaker 6: is affected by that in terms of whether it's a
• 22:23
  Speaker 6: spouse or a husband, kids on the support, insurance programs
• 22:28
  Speaker 6: and whatnot. Also facing us in twenty twelve, we had
• 22:31
  Speaker 6: the shutdown of the hess Oil or the Venza as
• 22:35
  Speaker 6: people come and know it. It's the third largest refinery
• 22:38
  Speaker 6: in the Western Hemisphere, so it really impacted us. We
• 22:41
  Speaker 6: lost like twenty percent of our employment overnight. So when
• 22:46
  Speaker 6: Puerto Rico was going through Petivase, so we had to
• 22:48
  Speaker 6: really fight I'm saying Pettibase and Petivasa on the takeover,
• 22:54
  Speaker 6: we really had to fight not to be included in
• 22:57
  Speaker 6: a lot of those bills that Puerto Rico still hasn't
• 23:00
  Speaker 6: really gotten out of as yet. It doesn't seem to
• 23:03
  Speaker 6: benefit Puerto Rico all that much. So since then, we've
• 23:07
  Speaker 6: been me Coming to office in twenty nineteen, for sure,
• 23:11
  Speaker 6: was about solidifying our finances, making sure that the Virgin
• 23:15
  Speaker 6: Islands was able to meet its bills, meet its payrolls,
• 23:19
  Speaker 6: and also to expand. And since that time we've been
• 23:22
  Speaker 6: doing incredibly well. I have to say. We had two
• 23:25
  Speaker 6: major hurricanes, two cap fires, back to back within a
• 23:27
  Speaker 6: month in twenty seventeen, and that caused us a lot
• 23:33
  Speaker 6: of distress, grief, but it also brought a lot of
• 23:35
  Speaker 6: opportunity in terms of money. When we started doing the
• 23:40
  Speaker 6: recovery from this hurricane was under Governor mop it was
• 23:43
  Speaker 6: about eight billion that we thought we would recover in damages.
• 23:48
  Speaker 6: We're up to twenty four billion at this point and
• 23:51
  Speaker 6: under major recovery here in the Islands.
• 23:55
  Speaker 4: So talk to me about the most recent fiscal year.
• 23:58
  Speaker 3: What was the success is still being worked down at
• 24:01
  Speaker 3: the government level, and what is the state of the
• 24:03
  Speaker 3: territories today.
• 24:04
  Speaker 6: Well, one of the things that really hampered us in
• 24:08
  Speaker 6: the last year was, well the last four years, is
• 24:11
  Speaker 6: we get a tax extender called the Rum cover over
• 24:14
  Speaker 6: and it takes our ten fifty So every proof gallon
• 24:18
  Speaker 6: of rum we shipped to the United States, we get
• 24:20
  Speaker 6: back ten fifty of the excise tax. There was a
• 24:24
  Speaker 6: tax extender that had been extended multiple times that allowed
• 24:27
  Speaker 6: us to get three thirteen twenty five. It carried the
• 24:31
  Speaker 6: amount of the tax we got per proof gallon from
• 24:34
  Speaker 6: ten twenty five, from ten fifty, sorry to thirteen twenty five.
• 24:37
  Speaker 6: We had been trying to get this solidified for a
• 24:39
  Speaker 6: long time. This year, under the Bipartisan Budget Act, the
• 24:44
  Speaker 6: Big Beautiful Bill, I'm sorry, we were successful in getting
• 24:49
  Speaker 6: it solidified. So now forever that thirteen fifty is going
• 24:53
  Speaker 6: to come back to the Virgin Hos. The big part
• 24:56
  Speaker 6: about that is is it solidified our pension system, which
• 24:59
  Speaker 6: is arguably was arguably the worst in the country. We've
• 25:03
  Speaker 6: now funded that pension system using that So every single
• 25:07
  Speaker 6: year we've been moving along, we've been making tremendous strides
• 25:13
  Speaker 6: that was a big one for this year. I think
• 25:15
  Speaker 6: we also during the last administration we got our match
• 25:21
  Speaker 6: for this twenty four billion reduced from ten percent to
• 25:24
  Speaker 6: two percent under the Biden administration, so that was big
• 25:28
  Speaker 6: for US as well. Coming into President Trump, the good
• 25:32
  Speaker 6: news is the Virgin Islands is not affected by any
• 25:36
  Speaker 6: of the Trump tariffs.
• 25:37
  Speaker 4: So see that surprised.
• 25:39
  Speaker 3: I mean, I would think by necessity the territories have
• 25:43
  Speaker 3: to import a lot of stuff, but I guess the
• 25:45
  Speaker 3: answer is that it's coming from either within the United
• 25:49
  Speaker 3: States rather than importing a whole lot from overseas.
• 25:54
  Speaker 6: Yeah, so, I mean ninety percent of everything we get
• 25:56
  Speaker 6: comes from the US mainland. We would never be able
• 25:59
  Speaker 6: to sustained the amount of people on such a small
• 26:02
  Speaker 6: island just from beginning for beginners, but then we get
• 26:06
  Speaker 6: a large tourism economy that's on fire, and that all
• 26:09
  Speaker 6: the liquors imported and everything else or to service those
• 26:14
  Speaker 6: needs as well. So not being affected by these tarifts
• 26:18
  Speaker 6: have been kind of like going all over the place saying, hey,
• 26:21
  Speaker 6: you can import your stuff into the Virgin Islands, we
• 26:24
  Speaker 6: have a free trade zone and not pay the Trump tariffs.
• 26:27
  Speaker 6: And if you have thirty percent in value dan it
• 26:30
  Speaker 6: becomes a US made product and it can go into
• 26:33
  Speaker 6: the United States tariff free. So we've been getting a
• 26:36
  Speaker 6: lot of calls about our free trade zone in sync Court,
• 26:40
  Speaker 6: specifically where we have a deep water port and the
• 26:43
  Speaker 6: ability to extend tax benefits on top of that. So
• 26:48
  Speaker 6: you get one hundred percent reduction of your state taxes
• 26:52
  Speaker 6: and ninety percent reduction of your federal income taxes. So
• 26:56
  Speaker 6: it's kind of like no tariff, no tax. It's a
• 27:00
  Speaker 6: condition for charging our industrial sector, a light industry sector
• 27:06
  Speaker 6: here in the island. So I'm doing a lot of
• 27:08
  Speaker 6: worker I'm not.
• 27:11
  Speaker 3: Governor on that on that subject, if you don't mind,
• 27:15
  Speaker 3: So I'm sure the first very question is about those
• 27:18
  Speaker 3: potential tax benefits and how it all works into the tariffs.
• 27:21
  Speaker 3: I would imagine the second question has to be about
• 27:23
  Speaker 3: infrastructure and what companies are used to versus what the
• 27:28
  Speaker 3: Virgin Island has been focusing on developing. What is you know,
• 27:32
  Speaker 3: what do you see as the biggest infrastructure accomplishments, say
• 27:34
  Speaker 3: in future projects that need to be accomplished to continue
• 27:37
  Speaker 3: to drive growth there.
• 27:39
  Speaker 6: So so just to get just to kind of picture
• 27:41
  Speaker 6: what we're talking about here, our entire economy is about
• 27:44
  Speaker 6: four billion dollars. This year. We have already issued six
• 27:48
  Speaker 6: billion in contracts. We already had a billion out and
• 27:52
  Speaker 6: by the end of the year we would have issued
• 27:54
  Speaker 6: eight billion in contracts. That means new schools, new hospital,
• 27:59
  Speaker 6: all new under ground water sewer electric. We're putting in
• 28:03
  Speaker 6: two new power plants Saint Croix in this last year.
• 28:07
  Speaker 6: The second solar farm we opened up Saint Croix peaks
• 28:11
  Speaker 6: at forty four megawatts. We have thirty five megawats of
• 28:15
  Speaker 6: solar pound for pound, we have the most solar per
• 28:19
  Speaker 6: capita in the world. We're about to open two more plants,
• 28:23
  Speaker 6: one in Saint Thomas on the west end and one
• 28:26
  Speaker 6: on the East end, which will also bolster the solar
• 28:30
  Speaker 6: generating power of that island as well too. So my
• 28:33
  Speaker 6: race is to get a power down to put in.
• 28:37
  Speaker 6: Contracts have now been let for most of Saint Croix
• 28:41
  Speaker 6: underground water sewer. Saint Thomas's on the way as well,
• 28:47
  Speaker 6: and we're getting two new essentially two new power plants
• 28:51
  Speaker 6: and Saint Thomas. The sides of solar that we've installed,
• 28:54
  Speaker 6: we're putting in much more efficient generators, trying to drive
• 28:57
  Speaker 6: down the cost of energy, so governa Obviously tourism is
• 29:02
  Speaker 6: always a big focus for the Virgin Islands.
• 29:06
  Speaker 3: What else is at the top of your list for
• 29:07
  Speaker 3: twenty twenty six in terms of priorities.
• 29:10
  Speaker 6: So we got this year. We opened up the first
• 29:13
  Speaker 6: hotel in thirty five years, Hampton is right on the
• 29:17
  Speaker 6: beautiful Whyco doc in downtown Saint Thomas Saladamali, and we're
• 29:21
  Speaker 6: working on a deal where ownership of the Premier Frenchman's Reef,
• 29:26
  Speaker 6: another hotel, will revert back to the Virgin Islands government
• 29:30
  Speaker 6: courtesy of our Hotel Development OX. So we've been finally
• 29:33
  Speaker 6: started building and renovating our hotels because we have a
• 29:35
  Speaker 6: lot that says you can take the hotel room tax,
• 29:39
  Speaker 6: which is at about fourteen percent, increase it by seven
• 29:44
  Speaker 6: points so that you can actually take the twenty one
• 29:48
  Speaker 6: percent room tax and rehab or build a new hotels.
• 29:54
  Speaker 6: So we've been getting a lot of track film hoteliers
• 29:57
  Speaker 6: using that in order to find out it's building all
• 30:01
  Speaker 6: these new developments. So that is really there. And then
• 30:05
  Speaker 6: for twenty twenty I leave office in January twenty seventh,
• 30:10
  Speaker 6: so my race now is getting a power plant and
• 30:12
  Speaker 6: getting energy in the right place that if we get
• 30:17
  Speaker 6: our power, our energy down to about twenty something since
• 30:20
  Speaker 6: in the industrial power, I'm trying to be able to
• 30:22
  Speaker 6: give it at twelve cents. Couple with a tariff break
• 30:25
  Speaker 6: on the tax initiatives that we have, I really think
• 30:30
  Speaker 6: we could put more fire in our economy. So that's
• 30:32
  Speaker 6: what I'm really focused on.
• 30:34
  Speaker 3: Governor Albert Bryan of the United States version ILDs join
• 30:37
  Speaker 3: us today talk about the state of the Virgin Island,
• 30:38
  Speaker 3: state of the economy there and economic development. Governor, really
• 30:42
  Speaker 3: appreciate you coming on as always and looking forward to
• 30:44
  Speaker 3: chatting with you again and as we had in the
• 30:47
  Speaker 3: last couple of months of the year.
• 30:48
  Speaker 6: Here fantastic and have a sunny Virgin Islands that I
• 30:52
  Speaker 6: hate that code for you, but it's good for me
• 30:53
  Speaker 6: coming down.
• 30:55
  Speaker 4: Thank you, Governor thanke care.
• 30:57
  Speaker 3: Let's take a quick break when we come we're talking
• 31:01
  Speaker 3: not employment. We're talking about tariffs and the doomsday predictions
• 31:07
  Speaker 3: that have yet to take place. Quick break, We'll be
• 31:09
  Speaker 3: back with tariffs next.
• 31:11
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• 31:14
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• 31:53
  Speaker 2: How do yours economy is defined? Doomsday predictions on tariffs?
• 31:57
  Speaker 2: This is the piece from the Wall Street Journal. The
• 31:59
  Speaker 2: first sentence should be, Hey, after the tariffs were imposed
• 32:02
  Speaker 2: in April, the rates were brought back down and so
• 32:05
  Speaker 2: it wasn't as bad as you know, people thought it
• 32:06
  Speaker 2: would be. But I don't like the rest is I
• 32:11
  Speaker 2: can't keep talking about this just because it's like, look,
• 32:16
  Speaker 2: if you actually look at goods prices, they are rising
• 32:20
  Speaker 2: this year. If you look at the stuff that is tariffed,
• 32:23
  Speaker 2: those prices are rising faster. See audio equipment up like
• 32:27
  Speaker 2: fifteen percent since the start of the summer. The big
• 32:31
  Speaker 2: thing is there are a bunch of exemptions that were
• 32:33
  Speaker 2: put in place. The stuff that doesn't have exemptions is
• 32:36
  Speaker 2: going up about as much as you would expect based
• 32:38
  Speaker 2: on the tariffs. And to this point, that is leading
• 32:43
  Speaker 2: to prices moving up, but not in a fashion that's
• 32:45
  Speaker 2: been high enough to derail the economy otherwise.
• 32:48
  Speaker 3: Yeah, the estimates that i've seen total tariffs collected through
• 32:52
  Speaker 3: September thirtieth through around one hundred and ninety five billion.
• 32:54
  Speaker 3: It's a lot of money, but it was seventy seven
• 32:56
  Speaker 3: billion the previous year. We're not talking about ten x
• 33:00
  Speaker 3: the collection of tariffs. We're not talking about any of
• 33:03
  Speaker 3: these other numbers. Yes, the average teriff rates are substantially
• 33:06
  Speaker 3: higher than where they were prior to but this is
• 33:09
  Speaker 3: this complex web of different rates of things.
• 33:13
  Speaker 4: And what you're seeing here is that there are all
• 33:18
  Speaker 4: sorts of exemptions.
• 33:19
  Speaker 3: The rates are far lower than was estimated back in April,
• 33:22
  Speaker 3: and so there is an effect, but it is a
• 33:26
  Speaker 3: far cry from what everyone was talking about it. And
• 33:29
  Speaker 3: again it is not because companies somehow managed through ultra
• 33:34
  Speaker 3: high tariffs. Again, it is certainly some pressure from big
• 33:38
  Speaker 3: companies who are able to pressure suppliers, but a lot.
• 33:40
  Speaker 4: Of it is all sorts of.
• 33:43
  Speaker 3: Lower rates that were actually implemented, all sorts of loopholes
• 33:47
  Speaker 3: that have been granted. And you know, a policy that
• 33:50
  Speaker 3: looks a lot different than it did in early April.
• 33:53
  Speaker 2: They also this piece mentions you know, auto manufacturers, and look,
• 33:58
  Speaker 2: if you want to see what's happening on this Yes,
• 34:00
  Speaker 2: you can look at auto manufacturers. Just as an example,
• 34:03
  Speaker 2: before tariffs went into effect, the you know, previous several quarters,
• 34:09
  Speaker 2: GM was averaging about you know, seven to eight percent
• 34:11
  Speaker 2: profit margins. They're now down to two because GM is
• 34:16
  Speaker 2: paying more for its inputs and hasn't raised prices enough
• 34:20
  Speaker 2: to offset that. If we take a look at Ford
• 34:24
  Speaker 2: Motor Company, this is one where they don't have quite
• 34:27
  Speaker 2: the same exposure. Remember, GM is more heavily tied into
• 34:30
  Speaker 2: Canadian manufacturing, and so Ford's profit margin still running about
• 34:34
  Speaker 2: three percent, pretty much where it was before. Why because
• 34:37
  Speaker 2: most of what they sell is the F one fifty,
• 34:38
  Speaker 2: which is already made in the US and assembled there
• 34:41
  Speaker 2: and has you know, tighter supply lines. If you look
• 34:45
  Speaker 2: at let's take a look at the European ones, just
• 34:48
  Speaker 2: because I haven't you know, looked at them. Should we
• 34:51
  Speaker 2: will get Volkswagen. Sure, let's see Volkswagen.
• 34:55
  Speaker 4: Where are you?
• 34:56
  Speaker 2: Oh, they haven't reported earnings yet this quarter, but their
• 34:58
  Speaker 2: margins in the previous couple orders have gone from around
• 35:01
  Speaker 2: six percent down to Hang, I'm sorry, from around nine
• 35:06
  Speaker 2: percent down to six percent, so you're seeing some compression
• 35:09
  Speaker 2: there as well. So I think overall, you know, in
• 35:12
  Speaker 2: terms of why haven't tariffs you know, caused the problems
• 35:15
  Speaker 2: people thought in April, the answers, well, the April tariff
• 35:17
  Speaker 2: rates never went into effect. The other ones that have
• 35:21
  Speaker 2: subsequently gone in have only been in place since was
• 35:24
  Speaker 2: it late September or early September? I can't remember when
• 35:27
  Speaker 2: the higher rates that were then put into effect.
• 35:30
  Speaker 4: Yeah, I don't know.
• 35:31
  Speaker 2: Somewhere in that range. They're probably starting to hit now
• 35:34
  Speaker 2: ish into Q one, so we'll see if there's you know,
• 35:37
  Speaker 2: further impact there. But the biggest thing is, look, the
• 35:40
  Speaker 2: high rates that were feared in April did not go
• 35:44
  Speaker 2: into effect, right, That's the biggest thing is.
• 35:46
  Speaker 5: State planning isn't just about taxes. It's about peace of mind.
• 35:50
  Speaker 5: Cushing and Dolan believes your plan should protect your family,
• 35:54
  Speaker 5: not complicate your life. A joint revocable trust can help
• 35:58
  Speaker 5: you do both. It lets you have foid probate, which
• 36:01
  Speaker 5: means no court delays, no public filings, and no stress
• 36:03
  Speaker 5: for your loved ones. Your estate stays private and your
• 36:06
  Speaker 5: family stays in control. Their New guide The Simplicity of
• 36:10
  Speaker 5: Joint Revocable Trusts also explains how a trust can protect
• 36:14
  Speaker 5: your children's inheritance from creditors, divorce, or bad financial decisions
• 36:18
  Speaker 5: down the road. This guide makes it easy to understand
• 36:22
  Speaker 5: why a joint trust maybe the smart move for your
• 36:25
  Speaker 5: family's future. Call eight sixty six eight four eight five
• 36:28
  Speaker 5: six nine nine right now, and as for your free
• 36:31
  Speaker 5: copy of the Simplicity of Joint Revocable Trusts once again
• 36:35
  Speaker 5: eight sixty six eight four eight five six nine nine,
• 36:39
  Speaker 5: or you can request it from their website Legal exchange
• 36:42
  Speaker 5: show dot com.
• 36:43
  Speaker 1: The proceeding was paid for and the views expressed are
• 36:45
  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
• 36:48
  Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
• 36:51
  Speaker 1: Cushing and Armstrong did not endorse each other and are
• 36:53
  Speaker 1: not affiliated.
• 36:54
  Speaker 2: Tucker's kind enough to forward on a text from a
• 36:57
  Speaker 2: listener regarding the job market. I'll quote here. I know
• 37:00
  Speaker 2: of several people who are applying for low end jobs
• 37:03
  Speaker 2: at places they claim to be hiring and not getting
• 37:05
  Speaker 2: a job. Someone I know was hiring minimum wage help
• 37:08
  Speaker 2: for his movie theater and had no issue scheduling twenty
• 37:12
  Speaker 2: interviews for two part time positions.
• 37:15
  Speaker 3: That's the feel I get too, although I will also
• 37:17
  Speaker 3: say that within the last couple of months we were
• 37:20
  Speaker 3: hiring here and had a lot of applications, but a
• 37:27
  Speaker 3: lot of no shows and no callbacks.
• 37:30
  Speaker 4: So I do sometimes get mixed messages.
• 37:32
  Speaker 3: But my overall assessment of the labor market is much
• 37:34
  Speaker 3: more like the text we got than our own personal experience.
• 37:37
  Speaker 2: So you're saying it's the no hire, no fire, no
• 37:40
  Speaker 2: interview labor market.
• 37:42
  Speaker 3: Again, we got plenty of people to come in for interviews,
• 37:44
  Speaker 3: but a lot, you know, a surprising number of got
• 37:48
  Speaker 3: your resume, sow that you applied and you never return
• 37:51
  Speaker 3: our call.
• 37:52
  Speaker 2: There's a real problem with communication just in the world, man.
• 37:55
  Speaker 3: Like I think there's just this attitude of ghosting is
• 37:58
  Speaker 3: okay these days that I guess you just see everywhere.
• 38:01
  Speaker 4: I just don't get it.
• 38:03
  Speaker 2: I just don't get it, Like showing up and being
• 38:07
  Speaker 2: a human being is kind of I don't know a
• 38:10
  Speaker 2: big thing, But what do I know. Let's take a
• 38:12
  Speaker 2: quick break. When we come back, we had hour two
• 38:15
  Speaker 2: coming up,