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Magnificent 7 needs to answer these questions · The Financial Exchange Show

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1:02
Speaker 1: This is the Financial Exchange with Chuck Zada and Paul lane.
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Speaker 2: All right, it's Chuck, Paul and Tucker with you here.
1:13
Speaker 2: And as we kick things off, the Dow is up
1:17
Speaker 2: two hundred and one points, about half a percent, the
1:21
Speaker 2: SMP's up about sixteen points, about a quarter percent, and
1:24
Speaker 2: the Nasdaq is pretty much flat, up six points, which
1:27
Speaker 2: is almost not worth talking about, but hey, we got
1:31
Speaker 2: time to fill, so we're gonna.
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Speaker 1: Talk about it.
1:34
Speaker 3: Uh.
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Speaker 2: Tenure US Treasury is selling off modestly today, up four
1:37
Speaker 2: basis points to four point three seven six percent. We've basically,
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Speaker 2: Paul just been stuck in a range of like four
1:43
Speaker 2: three to four five on the ten year for I
1:46
Speaker 2: don't know, I think a couple months now, Like I
1:48
Speaker 2: haven't actually looked at the chart, but I think you
1:50
Speaker 2: got to go back to probably it's got to be
1:55
Speaker 2: like late April early May to find the last time
1:57
Speaker 2: we were out of that range for any meaningful period
1:59
Speaker 2: of time. And so mortgage rateers continue to float around
2:03
Speaker 2: that six point eight to six point nine percent range
2:06
Speaker 2: as we go. Oil West Text Intermedia it's down thirty
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Speaker 2: six cents a barrel to sixty four to ninety five,
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Speaker 2: and we've got gold down twenty an ounce doing a
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Speaker 2: little consolidation dance today as it pulls back modestly. Now
2:19
Speaker 2: it's sitting at thirty four to twenty three and forty cents.
2:24
Speaker 2: Top story here is we are kicking off MAG seven
2:28
Speaker 2: earning season, which some argue is the only true earning
2:32
Speaker 2: season at this point. I don't argue that, but on
2:38
Speaker 2: some days I do because, quite honestly, a big way,
2:41
Speaker 2: it's a big waiting Look, let's be one hundred percent honest.
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Speaker 2: As much as we like to talk about how a
2:46
Speaker 2: broader market, you know, broader market participation means a safer market. Historically,
2:54
Speaker 2: anytime this market has tried to broaden out in the
2:56
Speaker 2: last couple of years, it's basically fallen flat on its face.
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Speaker 2: It has been a market that has traded as MAG
3:02
Speaker 2: seven goes. And so this afternoon after the bell, we've
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Speaker 2: got Alphabet and Tesla both reporting earnings about two trillion
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Speaker 2: dollars in market cap that are gonna be coming to
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Speaker 2: the table. And actually, I'm sorry, it's three trillion dollars
3:17
Speaker 2: just because I was only looking at one share class
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Speaker 2: of Google, because gosh, and it's just a change in
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Speaker 2: their name to Alphabet. They also have that dual share
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Speaker 2: class thing that just makes the whole pain to deal with.
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Speaker 2: But so you got both of them reporting after the
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Speaker 2: bell today, and I think it's it's one where both
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Speaker 2: of them have interesting questions that they need to answer.
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Speaker 2: And Tesla it is, Hey, how bad are your financials
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Speaker 2: getting based on the discounts you're having to resort to
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Speaker 2: in order to sell vehicles? I saw yesterday that if
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Speaker 2: you were going to be a cash buyer for a
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Speaker 2: Model three, they were giving a year and a half
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Speaker 2: of free supercharging at this point, which you can add
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Speaker 2: up pretty quickly. For Alphabet, the question is, Okay, a
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Speaker 2: couple months ago you unveiled some really impressive AI tools,
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Speaker 2: but your core business is still search, and search is
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Speaker 2: seeing its traffic eaten into by artificial intelligence. Tell us
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Speaker 2: how you're dealing with this, right, So these are really
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Speaker 2: interesting questions on both of these companies that they're going
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Speaker 2: to have to answer here.
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Speaker 4: Yeah, to tackle Tesla first, like you mentioned, really the
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Speaker 4: focus is going to be on what we're seeing on
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Speaker 4: the vehicle delivery numbers. Their revenue for Q one missed
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Speaker 4: by two billion dollars. They came in at revenue at
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Speaker 4: nineteen billion versus twenty one billion for expectations. If you
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Speaker 4: look at the cars that they've delivered, it's three hundred
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Speaker 4: and eighty four thousand cars that were delivered. That was
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Speaker 4: a drop about thirteen and a half percent from where
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Speaker 4: it was a year earlier. So they're selling less vehicles
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Speaker 4: in order to try and juice up just the amount
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Speaker 4: of sales of vehicles. Like you alluded to earlier, they're
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Speaker 4: offering all sorts of different breaks here in the whether
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Speaker 4: it be on the supercharging or just discounts, and so
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Speaker 4: that is putting a lot of pressure on margins. So
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Speaker 4: that's what you'll be focused on there is the financials,
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Speaker 4: what does that look like from a margin perspective, And
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Speaker 4: then ultimately it's going to be something that isn't really
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Speaker 4: based in numbers. Is what kind of confidence that Elon
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Speaker 4: Musk and the team there can instill in investors that
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Speaker 4: they're robotaxis, which my view on is more pessimistic than
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Speaker 4: the Tesla certainly will be what that can look like
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Speaker 4: for twenty twenty six. I mean, they're mentioning this idea
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Speaker 4: that they would have hundreds of thousands of robotaxis in
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Speaker 4: late twenty twenty six, and Tesla has this just ability
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Speaker 4: to always just push out these deadlines where to me
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Speaker 4: it's extremely lofty, and they sort of have a history
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Speaker 4: of not hitting them pretty consistently and pushing it out further.
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Speaker 4: The regulatory hurdles that you'd have to get through to
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Speaker 4: have hundreds of thousands of vehicles on the road in
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Speaker 4: the United States autonomous vehicles that's what the robotaxs would
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Speaker 4: look like, are tremendous. So this idea that there's gonna
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Speaker 4: be hundreds of thousands from where they are today where
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Speaker 4: they just did what was it ten or fifteen rides
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Speaker 4: chuck in Austin last month, I think it was they.
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Speaker 2: Had like twenty or so that we're working. I don't
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Speaker 2: know if they've scaled up from there, but I know
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Speaker 2: the initial rollout was somewhere around like ten to twenty
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Speaker 2: vehicles that were operating in Austin.
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Speaker 4: And then even if you want to counter me and say,
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Speaker 4: you know, Paul, that they're going to go out there
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Speaker 4: and do this, there's also competitors in this space. They're
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Speaker 4: not the only one doing it. Waimo has been up
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Speaker 4: and running with autonomous vehicles for a long time. They're
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Speaker 4: now partnering with Uber to have autonomous vehicle rides in
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Speaker 4: Miami and Washington and other areas of the country, so
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Speaker 4: they're even further behind on that leg of things. If
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Speaker 4: you're gonna make the argument to me, Paul, it's not
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Speaker 4: about the tests of vehicle sales, it's about the future.
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Speaker 4: It's ah Man, I could go on and on. It's
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Speaker 4: a frustrating from evaluation standpoint. It's all predicated on what
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Speaker 4: the future holds. Because the financials today it just there's
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Speaker 4: no rhy I.
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Speaker 2: Mean, not on the robotaxi stuff. As I like to
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Speaker 2: say about pro sports. You know, whenever my team's losing, well,
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Speaker 2: the other team gets paid too, you know. So, like
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Speaker 2: the competition is pretty robust and pretty well funded in
7:13
Speaker 2: a lot of these cases. So we've got both of
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Speaker 2: them reporting today. As we go forward there you're going
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Speaker 2: to get into the rest of the names Microsoft, Meta, Amazon, Apple,
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Speaker 2: and Nvidia, and of those, I think the biggest question
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Speaker 2: out there in my mind this quarter at least is
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Speaker 2: probably for I think there are two of those that
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Speaker 2: have real questions this quarter, and not real in the
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Speaker 2: sense that like nothing the companies aren't going out of
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Speaker 2: business' quarter. I'm not saying that, but questions is like, Hey,
7:47
Speaker 2: how's your growth trajectory evolving. I'm curious what Amazon has
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Speaker 2: to say just about their core retail business and what
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Speaker 2: they're seeing on that front in light of prices starting
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Speaker 2: to move up a little bit. I'm also interested in
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Speaker 2: what Apple is saying, given they run a premiumly priced
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Speaker 2: product that has had a lot of demand from China
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Speaker 2: and obviously, you know, relations between the US and China
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Speaker 2: have not been great over the last you know, well
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Speaker 2: seven or ten years.
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Speaker 4: And they've been losing market share.
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Speaker 2: I guess what I'm wondering is, like, has anything shifted
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Speaker 2: in the psyche of the Chinese consumers where they're not
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Speaker 2: buying as many iPhones now because of the trade conflict
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Speaker 2: and wanting to have more solidarity with you know, Chinese companies.
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Speaker 2: Is that a thing? What does us demand look like?
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Speaker 2: Is that a problem?
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Speaker 1: So?
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Speaker 2: Apple and Amazon are the ones I'm interested there in
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Speaker 2: on that front. In video, basically, what they've been telling
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Speaker 2: us is, hey, demand is pretty robust, and we don't
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Speaker 2: have like the biggest problems, we don't have enough supply
8:51
Speaker 2: right now. I wouldn't expect this to be the quarter
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Speaker 2: that that turns based on all the announcements we've gotten
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Speaker 2: about different things Microsoft. It's hard to point to any
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Speaker 2: reason why this would be a particularly critical quarter for
9:04
Speaker 2: them in any way, shape or form. And Meta. Honestly, look,
9:11
Speaker 2: let me tell you what I think about Meta these days.
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Speaker 2: I have no idea what the heck they're doing, but
9:17
Speaker 2: it seems to be working. And so if Zuck wants
9:19
Speaker 2: to continue to try to make Meta happen while at
9:22
Speaker 2: the same time, you know, the stock continues just to
9:25
Speaker 2: chug along, I guess he can do that because I honestly,
9:30
Speaker 2: I'm not really sure what it is they're doing with
9:34
Speaker 2: artificial intelligence, but the market seems to like it, and
9:39
Speaker 2: so okay, have at it for now.
9:42
Speaker 4: I guess they're basically backing up the brainstruck for anyone
9:46
Speaker 4: who touches AI to try and accumulate as much talent
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Speaker 4: as possible. Does that directly lead to innovation in the space.
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Speaker 4: The time will tell on it. But the recruiting spree
9:58
Speaker 4: that he's been on on that front has been just
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Speaker 4: a lot of money shelled out for it. Financially, they've
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Speaker 4: continued to hit numbers, it seems like, and that's why
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Speaker 4: the stock has fared so well this year.
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Speaker 1: Year to date.
10:11
Speaker 4: Spinning back to in video real quick something that I'll
10:14
Speaker 4: be focused on their next Wednesday, I believe right for earning.
10:18
Speaker 2: I think later they're usually a couple of weeks later
10:20
Speaker 2: in the cycle. I want to say they're mid August.
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Speaker 4: Okay, that one there. I'll just be focused on if
10:26
Speaker 4: they have any information on the H twenty chips that
10:29
Speaker 4: previously were prohibited from being sold to China. Recent announcements
10:33
Speaker 4: in the last week or two they will be allowed
10:35
Speaker 4: to sell those going forward. Obviously that won't come up
10:38
Speaker 4: in their Q two numbers that they have, but they
10:40
Speaker 4: did take a four and a half billion dollar right
10:42
Speaker 4: down from that issue on the inventory side earlier this year.
10:46
Speaker 4: So any information if that could turn around for revenue
10:50
Speaker 4: in Q three or Q four, that will be interesting
10:53
Speaker 4: to note.
10:53
Speaker 2: I gotta tell you that the timing on all this,
10:55
Speaker 2: like next week is shaping up to be just a
10:57
Speaker 2: monster week, huge one. I know we're not even through
10:59
Speaker 2: the week, We're only like halfway through, but next week
11:03
Speaker 2: is shaping up to be a monster week. I mean,
11:05
Speaker 2: you look at just what we have from an economic
11:07
Speaker 2: data standpoint. We got home a couple different home price
11:10
Speaker 2: reports on Tuesday, Jolts on Tuesday. We've got on Wednesday
11:15
Speaker 2: the first report for GDP. For Q two, we've got
11:19
Speaker 2: ADP employment. We've got PCE on Thursday, along with the
11:27
Speaker 2: Employment Cost Index and jobless claims. Friday, we've got payrolls
11:32
Speaker 2: in ism manufacturing, and oh, by the way, there's a
11:34
Speaker 2: FED meeting on Wednesday to next week, which I completely
11:37
Speaker 2: just glossed over because again it's just a busy week,
11:40
Speaker 2: and that's before you even get to earnings, which Yuku's
11:45
Speaker 2: lined up next week. And Tuesday you've got Visa P
11:48
Speaker 2: and G, United Health and Merk. On Wednesday you got
11:53
Speaker 2: Microsoft Meta Qualcom ADP, and then on Thursday, finishing off
11:58
Speaker 2: the month of July, you got Apple, Amazon MasterCard, ABV.
12:01
Speaker 2: It's like it's just a monster week and you just
12:06
Speaker 2: look at it and you're like, Okay, there's some stuff
12:09
Speaker 2: that can move markets next week. Like things have been
12:11
Speaker 2: pretty calm, I would say since July fourth, it's generally been,
12:15
Speaker 2: you know, kind of pretty calm.
12:16
Speaker 1: Here.
12:17
Speaker 2: Next week is the week that can start to shake
12:19
Speaker 2: things up in either direction, depending on how earnings and
12:22
Speaker 2: data go. So interesting stuff out there, quick break here
12:25
Speaker 2: when we come back, we've got trivia right after this.
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14:12
Speaker 2: We're back to memestocks. Is the the news of twenty
14:18
Speaker 2: over again. It's twenty twenty one all over again, and
14:22
Speaker 2: I gotta tell you we've seen some real stuff in
14:26
Speaker 2: the last few days here that, by the way, doesn't
14:30
Speaker 2: necessarily like if I know, we make the joke like, oh,
14:33
Speaker 2: like the memestocks are back, the Fed's got a hike.
14:36
Speaker 2: There's not really a huge correlation actually between when things
14:40
Speaker 2: get mimi and when market's top. Remember the game stop
14:43
Speaker 2: stuff was going on in January of twenty one. Markets
14:46
Speaker 2: didn't top for like twelve months after that. It was
14:49
Speaker 2: like late twenty one, early twenty two when they finally did.
14:53
Speaker 2: So this week, you've got a couple of things that
14:57
Speaker 2: are going parabolic and then and again, usually when things
15:01
Speaker 2: go parabolic up, they don't just correct flat on the
15:04
Speaker 2: way down. The first one is open Door Technologies, who
15:09
Speaker 2: got to be honest earlier this week had to look
15:12
Speaker 2: up what they did because I had absolutely no idea
15:16
Speaker 2: what it is from their Wikipedia page. Headquartered in San Francisco,
15:21
Speaker 2: it makes instant cash offers on homes through an online process,
15:24
Speaker 2: makes repairs on the properties it purchases, and relist them
15:27
Speaker 2: for sale.
15:28
Speaker 4: It sounds like the Zillow algorithm thing.
15:31
Speaker 2: It does, and it's performed just like that too. Their
15:33
Speaker 2: net income was negative three hundred and ninety two million
15:35
Speaker 2: dollars last year, and generally they are not particularly profitable.
15:42
Speaker 2: So like, again, your mileage may vary on all of this,
15:46
Speaker 2: but ultimately, when you look at open Door, the fact
15:51
Speaker 2: that their stock went from oh, I don't know, fifty
15:54
Speaker 2: cents a share up to four dollars and ninety seven
15:57
Speaker 2: cents a share in a span of three weeks not
16:01
Speaker 2: really indicative of like, hey, there's this great, you know,
16:04
Speaker 2: long term thing here, like it's just kind of messy
16:09
Speaker 2: and ugly. You then have Cohl's, which was up like
16:12
Speaker 2: a whole bunch yesterday pre market before giving a lot
16:15
Speaker 2: of that away. And here here's the thing you got
16:19
Speaker 2: to go pro and Krispy Kream are going nutty today.
16:22
Speaker 2: And it's like these companies don't have anything in common
16:24
Speaker 2: other than they basically have to be like cheap enough
16:28
Speaker 2: on a per share basis and thinly enough traded that
16:31
Speaker 2: a whole bunch of or it could be heavily shorted.
16:34
Speaker 2: That's but like a bunch of a whole bunch of
16:37
Speaker 2: you know, Internet monkeys going pile in and they're like, hey, like,
16:40
Speaker 2: look what we can do. And here here's the thing.
16:43
Speaker 2: I'm not poop pooing the internet monkeys for a couple
16:45
Speaker 2: of reasons. The first is they're actually kind of right
16:49
Speaker 2: in a lot of cases, like they've actually nailed some things.
16:52
Speaker 2: If they, you know, timed it right, obviously can end
16:56
Speaker 2: very badly if you then, you know, went and bought
16:58
Speaker 2: Open Door at four dollars in ninety seven and it's
17:00
Speaker 2: sitting here today at two dollars and twenty cents. Like, yeah,
17:03
Speaker 2: losing you know, sixty percent of your value in two
17:05
Speaker 2: days doesn't feel great, I'm sure. But the early monkeys
17:09
Speaker 2: like they can be right about these things, so I'm
17:11
Speaker 2: not gonna poo poo them too much. Beyond that, I
17:15
Speaker 2: think there's something interesting and This is not my own
17:17
Speaker 2: original idea, so I'm not going to claim credit for it.
17:21
Speaker 2: But we've seen this slow down in the labor market
17:26
Speaker 2: for college grads in the last couple of years, where
17:29
Speaker 2: the unemployment rate for college grads is higher than the
17:32
Speaker 2: broad unemployment rate as a whole. And someone made the point.
17:35
Speaker 2: Look like, back in twenty ten twenty eleven, if you
17:39
Speaker 2: were a college grad and you were unemployed, you might
17:42
Speaker 2: try a couple of things. You might like drive for
17:44
Speaker 2: Uber or something like that, or Uber had just come
17:48
Speaker 2: out in twenty ten, or you might go and say, hey,
17:52
Speaker 2: you know what, I'm gonna go back to grad school
17:54
Speaker 2: and I'm gonna spend a bunch of money trying to
17:56
Speaker 2: you know, level up my education and maybe today's college. Hey,
18:00
Speaker 2: they're not doing that. They're just putting a bunch of
18:02
Speaker 2: money into gambly things because it's so easy to do
18:04
Speaker 2: now and hoping it pays off that way because the
18:07
Speaker 2: ROI on education doesn't look as good as it used
18:11
Speaker 2: to them. So I find that to be kind of
18:13
Speaker 2: an interesting idea to kick around on this, because look,
18:16
Speaker 2: it's not low interest rates that's spurring this. You know,
18:19
Speaker 2: interest rates are you know, in the fours, and so
18:22
Speaker 2: I think the question is like, why is this happening now?
18:26
Speaker 2: And the things that I get to are, hey, this
18:29
Speaker 2: is a market that has been, you know, feverishly just
18:31
Speaker 2: kind of moving up for the last couple of months,
18:33
Speaker 2: and people are just looking for that next thing. And
18:36
Speaker 2: maybe there are some people that are just you know,
18:38
Speaker 2: on the sidelines of their life kind of saying, hey,
18:41
Speaker 2: things aren't working out for me. Maybe I've got a
18:43
Speaker 2: gamble on this. I'm not saying that's healthy in the
18:46
Speaker 2: long run, but I guess I could understand the impulse
18:48
Speaker 2: if I were in that situation. Yeah.
18:49
Speaker 4: For me, I think it would largely be just the
18:51
Speaker 4: comeback that we've seen from the April second lows that
18:54
Speaker 4: perhaps has sort of boosted investor confidence and allowed for
18:58
Speaker 4: this group of really speculative investors to jump back in
19:03
Speaker 4: with both feet to get into some of these names
19:05
Speaker 4: that are in that memestock direction. It's always interesting to follow,
19:10
Speaker 4: but as you and I know, this is such a
19:12
Speaker 4: small subset of the overall market activity. So we like
19:16
Speaker 4: to talk about it because it is. It's interesting, and
19:19
Speaker 4: it is what's going on, but it's really kind of
19:21
Speaker 4: a side show to the major show that we try
19:24
Speaker 4: and cover every day.
19:25
Speaker 2: The other one that is, well, actually, I've got something
19:29
Speaker 2: else I want to talk about about a company that's
19:31
Speaker 2: even getting in on this. We'll talk about that when
19:34
Speaker 2: we return.
19:40
Speaker 1: Bringing the latest financial news straight to your radio every day.
19:45
Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
19:50
Speaker 1: Time now for Wall Street watch a complete look at
19:54
Speaker 1: what's moving markets so far today right here on the
19:57
Speaker 1: Financial Exchange Radio Network.
20:00
Speaker 3: Positive territory as investors react to the trade deal agreed
20:03
Speaker 3: upon between the US and Japan, which will include a
20:06
Speaker 3: reciprocal terrist at fifteen percent for the country. Second quarter
20:11
Speaker 3: corporate earning season also continues to move along.
20:14
Speaker 1: Here right now.
20:16
Speaker 3: The Dow is up by half a percent, or two
20:18
Speaker 3: hundred and thirty six points. S and P five hundreds
20:21
Speaker 3: up about a third of a percent or nineteen points,
20:24
Speaker 3: and the Nasdaq is edging about a tenth of a
20:27
Speaker 3: percent higher, or twenty seven points. Russell two thousand is
20:30
Speaker 3: up one percent now twenty four percent twenty four points higher.
20:34
Speaker 1: Excuse me.
20:35
Speaker 3: Ten year trades reiled up four basis points at four
20:37
Speaker 3: point three seven six percent, and crude oil is off
20:42
Speaker 3: about half a percent now trading right around sixty five
20:44
Speaker 3: dollars a barrel. Texas Instrument shares are now sinking nearly
20:48
Speaker 3: thirteen percent after the semiconductor company posted a third quarter
20:52
Speaker 3: forecast that missed estimates. As for its second quarter, the
20:55
Speaker 3: company did beat on earnings in revenue. Meanwhile, AT and
20:59
Speaker 3: T beach street expectations for the second quarter in terms
21:03
Speaker 3: of earnings in revenue, and added more wireless subscribers than anticipated,
21:07
Speaker 3: driven by discounted bundles. AT and T stock is up
21:11
Speaker 3: by about half a percent. Elsewhere, hotel operator Hilton posted
21:15
Speaker 3: better than projected results, but its outlook for adjusted per
21:19
Speaker 3: share earnings for the current quarter disappointed. That stock down
21:24
Speaker 3: by two percent. After seeing memestock movement from open Door
21:28
Speaker 3: Technologies and Cole's Krispy Kreme is now seeing volatile retailer
21:33
Speaker 3: trading shares in the donut maker and now up by
21:37
Speaker 3: seventeen percent after jumping about twenty percent earlier. Capital One
21:42
Speaker 3: stock is rising over one percent today after the consumer
21:45
Speaker 3: lenders earnings beat estimates, helped by a rise in interest income,
21:51
Speaker 3: and after today's close, we'll see the kickoff to mag
21:54
Speaker 3: seven earnings from Google's Alphabet and Tesla IBM will also
21:59
Speaker 3: post their second quarter earnings. I'm Tucker Silvan. That is
22:03
Speaker 3: Wall Street Watch And in the previous segment, we asked
22:06
Speaker 3: you the trivia question, what did Ozzy Osbourne do to
22:09
Speaker 3: get banned from Texas? It wasn't biting the head off
22:13
Speaker 3: a bat. It was urinating at the Alamo or on
22:16
Speaker 3: the Alamo. Excuse me. Scott from Auburn, New Hampshire is
22:20
Speaker 3: our winner today taking on a Financial Exchange show tea shirt.
22:23
Speaker 3: Congrats to Scott and we played trivia every day here
22:26
Speaker 3: in the Financial Exchange. See complete contest rules at Financial
22:30
Speaker 3: Exchange Show dot com.
22:32
Speaker 2: Texas Forever right absolutely Now. Krispy Kreme's got a great ticker,
22:39
Speaker 2: doesn't it. D n U T D. If you guys
22:43
Speaker 2: had to take your life public, what would your your
22:48
Speaker 2: ticker be? Tuck Tuck like it? Paul I would go lane, Plane,
22:58
Speaker 2: I would go yeah, I actually I actually want to
23:01
Speaker 2: do that one.
23:01
Speaker 4: But I mean five, Yeah, your.
23:04
Speaker 2: Compress does it? You're right and does yeah?
23:07
Speaker 4: That That would be my go to plane or I
23:10
Speaker 4: was gonna do jet if five was not available.
23:13
Speaker 2: Jet, yes, jet instead of plane, because you know it's
23:17
Speaker 2: it's a play on words. Tucker a pun if you will, Yeah, gotcha,
23:24
Speaker 2: I would probably go ZOD. That's a good one. Yeah,
23:27
Speaker 2: you know, I kind of like that. My fans could
23:30
Speaker 2: be the Zod squad. Those could be my memerst out
23:34
Speaker 2: your fans, those could be my memers. Let's is it
23:37
Speaker 2: memers whatever. We got a piece here talking about the
23:43
Speaker 2: current trend in return to office, and what we have
23:47
Speaker 2: here is that for Fortune one hundred workers, uh, the
23:50
Speaker 2: majority of companies or the majority of workers are now
23:55
Speaker 2: required to be back fully in office. This according to
23:59
Speaker 2: data from Jones Laying LaSalle, who indicate that as of
24:03
Speaker 2: Q two of twenty twenty five, fifty four percent of
24:07
Speaker 2: Fortune one hundred workers are now required to be in
24:10
Speaker 2: office full time, forty one percent or hybrid, only one
24:13
Speaker 2: percent are fully remote, and four percent are team dependent
24:17
Speaker 2: slash other. This is a big shift from Q two
24:20
Speaker 2: of twenty twenty three, just two years ago, where only
24:22
Speaker 2: five percent of these workers were fully in office, seventy
24:26
Speaker 2: eight percent hybrid, six percent fully remote, and eleven percent
24:29
Speaker 2: team dependent. And I come back to my theory on this,
24:33
Speaker 2: which is the companies that are really pushing this. Yes,
24:37
Speaker 2: they might want you back in the office, but really
24:39
Speaker 2: they want people to quit who are looking for less
24:42
Speaker 2: time in office, and this is how they're trying to
24:46
Speaker 2: downsize headcount without having to do layoffs. And so I
24:49
Speaker 2: sit there and I wonder are they getting the headcount
24:51
Speaker 2: reduction they want from this and if not, when do
24:54
Speaker 2: we start seeing layoffs from some of these companies.
24:57
Speaker 4: Yeah, this playbook has been invoked by am JP Morgan.
25:02
Speaker 4: I believe there was another one recent. Yeah, there's been
25:06
Speaker 4: a collection of them that have gone this approach. It
25:09
Speaker 4: would seem like with some of the layoffs that you've
25:11
Speaker 4: seen from from Amazon and others where Amazon didn't even
25:15
Speaker 4: have enough desks, I believe to get people back in
25:18
Speaker 4: the office that it's had some impact, but but not
25:23
Speaker 4: not a tremendous influence. So I'm not sure when we
25:27
Speaker 4: would see sor of the laft because it's it's hard
25:30
Speaker 4: in some of these companies. It's specific areas that they're
25:32
Speaker 4: targeting layoffs and less so, you know, general overall headcount
25:36
Speaker 4: because particularly with the tech companies, a lot of reallocation
25:39
Speaker 4: of capital to anything AI related and then trimming headcount
25:42
Speaker 4: in other areas. You know, is that systematic of issues
25:46
Speaker 4: with the business or is it just your redeploying capital
25:49
Speaker 4: and resources to other areas.
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26:51
Speaker 2: If you're not familiar with the company, PJM interconnection would
26:58
Speaker 2: not be surprising They're not really an that rolls off
27:01
Speaker 2: the tip of your tongue on a regular basis, but
27:03
Speaker 2: they do operate one of the major electric grids in
27:08
Speaker 2: the eastern United States. They basically cover the area from
27:13
Speaker 2: New Jersey west through ohioan parts of Indiana and Illinois,
27:19
Speaker 2: and down through Virginia, West Virginia and the eastern part
27:23
Speaker 2: of Kentucky. And they don't actually produce power. They're just
27:28
Speaker 2: a grid operator, so you never get a bill from
27:31
Speaker 2: them necessarily. But if you're like me, when you get
27:34
Speaker 2: your you know, electric bill for the month, you go
27:36
Speaker 2: through it and you see two different charges. You see
27:39
Speaker 2: generation charges and distribution. And the distribution piece is the
27:43
Speaker 2: one that often companies like PGM sorry PJAM will impact.
27:48
Speaker 2: And what we saw here is that based on the
27:55
Speaker 2: based on the auctions that are conducted for electricity, in
28:01
Speaker 2: order for PGAM to provide supplies of electricity across its grid,
28:07
Speaker 2: it's going to be a twenty two percent increase compared
28:10
Speaker 2: to the prior year. And the thing that I think
28:15
Speaker 2: we're going to have to reckon with on this is
28:19
Speaker 2: there are a few different reasons for it, some that
28:21
Speaker 2: are not related to actual electricity and some that are.
28:25
Speaker 2: The one that isn't is the fact that net gas
28:27
Speaker 2: prices have been rising, and they've been rising largely because
28:31
Speaker 2: US rig count is actually decreasing, and most gnat gas
28:35
Speaker 2: that we use in the United States is produced domestically
28:40
Speaker 2: and it's largely a byproduct of fracking, and so when
28:43
Speaker 2: there is less new fracking activity that is going on,
28:46
Speaker 2: you have a little bit less production of gnat gas
28:49
Speaker 2: that happens. And so as a result, even though oil
28:52
Speaker 2: prices have been falling because of increases in OPEC production
28:58
Speaker 2: over the last few months, OPEK doesn't really produce much
29:01
Speaker 2: in the way of net gas. It's not a huge
29:03
Speaker 2: thing for them. The two big countries that produce net
29:05
Speaker 2: gas or the US and Russia. And so if US
29:08
Speaker 2: new activity is sliding, which is what's indicated by rig
29:12
Speaker 2: counts coming down, then net gas prices tend to move.
29:15
Speaker 1: Up a little bit.
29:16
Speaker 2: All else being equal, you know whether and things like
29:18
Speaker 2: that can affect it as well. The part that is
29:21
Speaker 2: dependent on electricity demand is the fact that you've got
29:25
Speaker 2: this AI boom going on and Dollie g willkers these
29:29
Speaker 2: Nvidia chips and the stuff needed in order to cool
29:33
Speaker 2: them uses I believe the technical term is a boatload
29:39
Speaker 2: of electricity.
29:40
Speaker 4: The US power grid is an area that should be
29:44
Speaker 4: of a concern for the government and just anyone over
29:49
Speaker 4: the course of the next five to ten years. If
29:51
Speaker 4: AI continues on the trajectory that it seems like most
29:54
Speaker 4: you know, major company executives think it will, where there
29:58
Speaker 4: will just be more and more demand for it, and
29:59
Speaker 4: we'll become more and more prevalent, because, as you mentioned,
30:02
Speaker 4: the power demand is so great. The grid system is
30:05
Speaker 4: something that's one hundred years old, and over time there
30:09
Speaker 4: has been certainly investment by the utility companies to expand
30:13
Speaker 4: it and do the best they can, but in terms
30:16
Speaker 4: of innovation, there has been minimal changes on that front,
30:21
Speaker 4: and so the amount of money that is going to
30:23
Speaker 4: be required an investment to try and become more efficient
30:27
Speaker 4: or find other sources of power. If power demand is
30:30
Speaker 4: going to increase at the level it has, it's it's
30:33
Speaker 4: going to create a difficult situation for the grid to
30:36
Speaker 4: continue on in its current form without some of that
30:40
Speaker 4: going forward, and it's it's not the easiest thing to do,
30:44
Speaker 4: but that is something that is certainly should be on
30:46
Speaker 4: people's minds from the next couple of years perspective.
30:49
Speaker 2: This is going to become a big story I think
30:51
Speaker 2: as we head into like twenty six and twenty seven,
30:53
Speaker 2: which is, hey, my electricity costs are going up and
30:56
Speaker 2: we're spending We're seeing companies spending all this money on
30:59
Speaker 2: data centers. Why is no one helping me? And why
31:02
Speaker 2: are all of these companies just allowed to chew up
31:04
Speaker 2: all this electricity for AI in a way that's negatively
31:08
Speaker 2: impacting a large number of people on on electricity prices.
31:11
Speaker 2: Because the other thing, if you look at like where
31:14
Speaker 2: these things are being built, they're generally being built in
31:17
Speaker 2: places where right now the cost of electricity is pretty low.
31:21
Speaker 2: But if you build up so much demand for electricity
31:25
Speaker 2: in those areas, what does that do to local electricity prices?
31:30
Speaker 2: Probably doesn't push them down. No, let's take a quick
31:33
Speaker 2: break here. When we return Stack Route left.
31:38
Speaker 1: Find daily interviews in full shows of the Financial Exchange
31:41
Speaker 1: on our YouTube page. Subscribe to our page and get
31:44
Speaker 1: caught up on anything and everything you might have missed.
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32:17
Speaker 3: Now's a great time to register for the DAV five k,
32:21
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32:51
Speaker 2: Paul, what do you got for me? For stack Roulettes?
32:54
Speaker 1: Chuck?
32:54
Speaker 4: Want to talk a little bit about college sports in
32:57
Speaker 4: particular College football is a couple I guess three four
33:01
Speaker 4: weeks away, and I was recently having a conversation with
33:05
Speaker 4: some folks down the Cape and I had taken my
33:08
Speaker 4: son to a Cape cod baseball game, which is a
33:10
Speaker 4: great take during the summer, and one of the things
33:12
Speaker 4: I had asked these folks that was meaning with their
33:15
Speaker 4: son plays college baseball and had knew some people that
33:18
Speaker 4: were playing in the Cape League currently. It is just
33:20
Speaker 4: what is the NIL impact on the Cape Cod Baseball League,
33:23
Speaker 4: which is sort of around this area a pastime of summer.
33:28
Speaker 4: Just a really fun take. And what they were explaining
33:30
Speaker 4: to me is that some of the money that these
33:32
Speaker 4: kids are making, it's not as large as it is
33:35
Speaker 4: in football or basketball necessarily, some of the deals that
33:38
Speaker 4: they're making, you know, even mentioning to me that a
33:42
Speaker 4: kid was offered to move from a school in the
33:44
Speaker 4: Metro Atlantic Athletic Conference. I went to school a fairfield
33:47
Speaker 4: at Saint Peter's PREPP moving to Tennessee making seven hundred
33:50
Speaker 4: k from an NIL deal. This is just for baseball.
33:53
Speaker 4: So what does this mean for the Cape Cod Baseball League,
33:55
Speaker 4: which doesn't have the funds to play to pay players
33:57
Speaker 4: during the summer, and if they're earning money during a year,
34:00
Speaker 4: does that sort of less than the appetite for them
34:03
Speaker 4: to go out there. It's still a great place to
34:05
Speaker 4: be seen by scouts and things like that. And it's
34:07
Speaker 4: a tremendous take. But this story, I mentioned that because
34:10
Speaker 4: it ties into this story in the Wall Street Journal
34:12
Speaker 4: just about the billion dollar question looming over college sports,
34:15
Speaker 4: which is basically, once this nil thing, the horse was
34:19
Speaker 4: out of the bar and whatever expression we want to use,
34:21
Speaker 4: it just became an absolute cluster where boosters are just
34:24
Speaker 4: banned together and shuffling money to these players left and right.
34:28
Speaker 4: There's really the NCAA has lost total control over the
34:31
Speaker 4: whole thing, and so there is more legislation going on
34:34
Speaker 4: as to what a legitimate nil deal should look like.
34:38
Speaker 4: Is it because it's supposed to be tied to name,
34:40
Speaker 4: image and likenss meaning you do commercials, you do some
34:44
Speaker 4: sort of charity work or something to justify any sort
34:47
Speaker 4: of payment rather than just a flat out salary. And
34:51
Speaker 4: it's unfortunate out of control the whole thing's gotten with
34:55
Speaker 4: college sports, but it just seems to be getting even
34:58
Speaker 4: more and more convoluted.
35:00
Speaker 2: I gotta tell you here's where I'm at. At this point,
35:05
Speaker 2: I think that you need to take college football, and
35:11
Speaker 2: quite honestly, at this point both men's and women's basketball,
35:15
Speaker 2: and I think you need to pull them out of
35:18
Speaker 2: the schools.
35:19
Speaker 1: Oh, out of the schools.
35:20
Speaker 2: Yeah, And here's the way that I would effectively do it.
35:24
Speaker 2: And again, like reasonable reasonable minds can differ, on. This
35:27
Speaker 2: is okay, pull those teams out and you know, set
35:32
Speaker 2: them up as new entities in call it. You know,
35:36
Speaker 2: someone will come with a better name than this, but
35:37
Speaker 2: you know, like the Age eighteen to twenty two League
35:41
Speaker 2: or whatever the heck it is. And then all that
35:44
Speaker 2: the schools need to do, the schools, all they all
35:46
Speaker 2: that they should be doing is just licensing out their
35:50
Speaker 2: logo colors and all that stuff. So let's say that
35:53
Speaker 2: you are LSU's got, you know, a perennial powerhouse football team.
35:56
Speaker 2: Basketball teams are good, YadA YadA. LSU says, okay, you want,
36:00
Speaker 2: you know, here's the football team that wants to be
36:02
Speaker 2: associated with us. You pay US X million dollars per year,
36:08
Speaker 2: and in return, we will give you the right to
36:11
Speaker 2: the LSU Tiger, use the stadium, blah blah blah, all
36:14
Speaker 2: that stuff. Right, that separate entity then can go and
36:20
Speaker 2: operate as a professional team, because let's be honest, these
36:23
Speaker 2: are professionals. They are, and they should be getting paid.
36:26
Speaker 2: They're just younger than the people who would be in
36:27
Speaker 2: the NFL or Major League Baseball, you know, or the
36:31
Speaker 2: NBA and so on and so forth. For all the
36:34
Speaker 2: other sports that are not revenue generating. I think you
36:38
Speaker 2: can basically say, look like, do what you want, and
36:42
Speaker 2: you can still work that within the confines of these schools.
36:46
Speaker 2: But the other thing that would do and look, I
36:48
Speaker 2: know I sound kind of like, you know, get off
36:50
Speaker 2: my lawn. You know, YadA YadA, all this stuff like
36:52
Speaker 2: back in my day it was better. But here's the thing,
36:56
Speaker 2: as someone who knows you know people that play college
36:58
Speaker 2: sports today in non revenue new sports. If you are
37:02
Speaker 2: a fencer in the Atlantic Coast Conference and you've got
37:06
Speaker 2: to fly Stanford to BC, hey, your school spending a
37:11
Speaker 2: bunch of money, b like you're out of school for
37:13
Speaker 2: a week because you're doing a whole West Coast trip,
37:16
Speaker 2: you're not actually like getting what you think there. Take
37:19
Speaker 2: everything else and shrink the conferences back down geographically so
37:23
Speaker 2: that they're not as big, and kids in the non
37:25
Speaker 2: revenue sports can actually focus on getting an education because
37:28
Speaker 2: most likely they're not going to be making money from
37:31
Speaker 2: their sport as a career. But for the ones that
37:34
Speaker 2: are again football, men's and women's basketball, you can even
37:39
Speaker 2: make a case the women's College World Series got a
37:42
Speaker 2: whole bunch of press this year, and there's some big
37:44
Speaker 2: nil deals on that side too, you could maybe even
37:47
Speaker 2: do baseball and softball. Beyond that, I think that everything
37:52
Speaker 2: else needs to be downsized and scaled back just because
37:56
Speaker 2: it's not doing a service to the kids that are
37:58
Speaker 2: not going to make this money in the long run.
38:00
Speaker 2: But the other stuff, as it's called spait to spade,
38:02
Speaker 2: start treating them like the professionals they are. They just
38:05
Speaker 2: happen to be younger or not as physically developed as
38:08
Speaker 2: the people in the current pro leagues. To take a
38:11
Speaker 2: quick break for the entire rest of the day, But
38:14
Speaker 2: don't worry. Tomorrow is Tomorrow's Thursday, right, Tucker, Okay, yeah,
38:19
Speaker 2: we'll be back on Thursday recapping Google and Tesla earnings.