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SpaceX Makes History as Oil Warnings Grow Louder · The Financial Exchange Show

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  Speaker 1: This is the Financial Exchange with Chuck Zada and Mike Armstrong.
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  Speaker 2: Joys, Chuck, Mike and Chucker with you here on these
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  Speaker 2: SpaceX I p O day. Everyone and their grandmother, aunt, niece, nephew, friend, cousin.
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  Speaker 3: Mother, father, dog.
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  Speaker 2: They're all interested in, uh, what we're gonna see from
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  Speaker 2: SpaceX in the largest I p O ever. It's gonna
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  Speaker 2: begin trading today under the ticker spc X. They did,
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  Speaker 2: in fact, sell five hundred and fifty five point six
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  Speaker 2: million shares of one hundred and thirty five dollars each,
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  Speaker 2: raising about seventy five billion dollars in the deal. And
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  Speaker 2: you know, as we look at you know, what is
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  Speaker 2: expected to happen with the stock today again, it's it's
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  Speaker 2: not trading yet. We're you know, waiting for it to
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  Speaker 2: begin trading, which should happen sometime this morning. If everything
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  Speaker 2: goes off cleanly. A lot of expectations, a lot of
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  Speaker 2: hype here, and we're going to, you know, now see
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  Speaker 2: how the rubber meets the road when this thing hits
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  Speaker 2: public markets sometime in probably the next thirty two ninety minutes,
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  Speaker 2: most likely.
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  Speaker 4: Bloomberg indicating that the open is expected to be about
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  Speaker 4: twenty nine percent above the IPO price that would put
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  Speaker 4: it in the one seventy five range. So yeah, like
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  Speaker 4: you said, you know, there's plenty else going on in
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  Speaker 4: the world today, but the only thing that investors are
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  Speaker 4: looking at is this IPO and the largest IPO in
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  Speaker 4: history by a pretty wide margin.
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  Speaker 2: And look, I think you know we've we've covered this
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  Speaker 2: pretty exhaustively over the last several weeks in that obviously
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  Speaker 2: there are questions about SpaceX's valuation. There are questions about
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  Speaker 2: the fact that this is not a pure play space company.
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  Speaker 2: It's kind of an amalgamation of like three or four
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  Speaker 2: different businesses that all have their own pros and cons.
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  Speaker 2: But today I think there's just a lot of excitement
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  Speaker 2: that you're finally going to see this thing trading and look,
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  Speaker 2: it's it's something where you know this is going to
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  Speaker 2: most likely when it starts, also making you on Musk
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  Speaker 2: the first trillionaire in the history of the world.
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  Speaker 4: Can we talk about some of the other kind of
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  Speaker 4: funny things that have been happened in the last few days.
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  Speaker 4: Because ticker symbol you mentioned is sp c X, that's
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  Speaker 4: what it will be trading under. But there's another company
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  Speaker 4: out there trading under the ticker symbol SPC, a little
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  Speaker 4: company called Verdin Galactic, Richard Branson's space company.
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  Speaker 3: Yeah, and what happened with those shares of the course
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  Speaker 3: of the last few days, Chuck.
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  Speaker 2: Well, let's let's actually spin back to twenty twenty one
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  Speaker 2: when they were trading at at a price of over
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  Speaker 2: twelve hundred dollars a share. Yes, it's the summer of
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  Speaker 2: twenty twenty one, and it was the summer where as
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  Speaker 2: Dave Portanoy put it, stocks can't go down like that
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  Speaker 2: was that was the summer of twenty twenty one.
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  Speaker 3: He was a better investor than Warren Buffett that summer
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  Speaker 3: he was.
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  Speaker 2: The problem is that Warren Buffett was, you know, better
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  Speaker 2: for you know, the forty years surrounding it and everything.
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  Speaker 2: But yeah, sure, it's fine, like he portantly had a
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  Speaker 2: heck of a summer.
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  Speaker 5: Let's be on.
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  Speaker 2: When we look at where Virgin Galactic has gone since then.
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  Speaker 2: It went from twelve hundred and fifty six dollars down
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  Speaker 2: to about two oh which is not good. And as
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  Speaker 2: recently as late April was trading at two twenty seven,
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  Speaker 2: even his race recently, as late in May, it was
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  Speaker 2: trading at two forty one. It then went from two
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  Speaker 2: forty one up to eight to ninety, presumably because a
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  Speaker 2: bunch of people that you know, just probably don't really
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  Speaker 2: know what they're doing in markets started buying it thinking
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  Speaker 2: it was SpaceX. Now, I'm sure it's undoubtedly what happened.
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  Speaker 2: I do think there are probably some smart people out
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  Speaker 2: there that said, hey, there's gonna be a bunch of
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  Speaker 2: idiots that think this is SpaceX true. Let me buy
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  Speaker 2: a few shares as a flyer. Yeah, and if it
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  Speaker 2: does indeed get bid up, I can exit as they're buying.
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  Speaker 3: Yeah.
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  Speaker 2: I'm sure there was some of that going on as well.
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  Speaker 2: But Virgin Galactic, despite no meaningful change in its business,
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  Speaker 2: has still now doubled in the last six weeks. So
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  Speaker 2: one of these kind of ancillary things that you are
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  Speaker 2: seeing here.
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  Speaker 5: I think the big question that I have.
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  Speaker 2: For markets short term and over the next twelve to
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  Speaker 2: eighteen months, between SpaceX, Anthropic and Open AI, it's a
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  Speaker 2: ton of issuance for this market to absorb.
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  Speaker 5: How well can it do that?
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  Speaker 2: Because in order to fund the seventy five billion dollar IPO,
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  Speaker 2: you got to get seventy five billion dollars from somewhere.
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  Speaker 2: Plus Google just did an eighty five billion dollar equity raise,
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  Speaker 2: plus you're gonna have you know, another one hundred and
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  Speaker 2: twenty one hundred and fifty billion from the other you
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  Speaker 2: know AI companies. Then you might have you know, some
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  Speaker 2: of the Mac seven doing raises, just like Google did.
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  Speaker 2: There's a lot of issuance potentially that this market needs
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  Speaker 2: to absorb. And then you're going to have lock up
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  Speaker 2: periods expiring for people who are insiders, current SpaceX employees
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  Speaker 2: and affiliated people who aren't allowed to sell their shares
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  Speaker 2: right now, but we'll be able to starting anywhere from
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  Speaker 2: sixty to three hundred and sixty days out. And what
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  Speaker 2: pressure does that put on the stock over that time
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  Speaker 2: as well?
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  Speaker 4: Yeah, to be clear, right, So, prior to SpaceX going public,
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  Speaker 4: Saudi Ramco held the previous record for offering size back
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  Speaker 4: in twenty nineteen. It looks like it was in the
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  Speaker 4: high thirty billions close to forty billion dollar range. SpaceX
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  Speaker 4: offering seventy five billion dollars of shares. It was filled
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  Speaker 4: Anthropic indicating sixty billion, open AI indicating sixty billion. These
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  Speaker 4: are going to be the three largest IPOs in history,
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  Speaker 4: all occurring within the course of a few months. So
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  Speaker 4: normally I'm not really all that curious about where the
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  Speaker 4: money comes from in markets. This is different, right, We
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  Speaker 4: talked about this earlier this week. But those four issuances,
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  Speaker 4: the three IPOs plus Alphabet's eighty billion dollar stock sale
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  Speaker 4: is pushing some what was the math, three hundred billion
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  Speaker 4: dollars No, two hundred fifty billion dollars in new shares
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  Speaker 4: that they are trying to sell out there. Yeah, and
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  Speaker 4: the money doesn't just get created out of thin air.
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  Speaker 4: It doesn't grow on trees for these IPOs.
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  Speaker 2: It's got to come from somewhere. So we'll see how
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  Speaker 2: it all plays out. Again, it's I'm not saying this
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  Speaker 2: is the end of the world or anything, but one
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  Speaker 2: of the tailwinds for markets for quite a while has
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  Speaker 2: been companies doing stock buybacks reducing the number of shares outstanding.
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  Speaker 2: These are big issuances for a market to absorb, and
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  Speaker 2: we'll see, you know, kind of where things go. Nasdaq
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  Speaker 2: as of one minute ago indicating that SpaceX still is
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  Speaker 2: in quote pre launch status, so they have not started
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  Speaker 2: trading yet, and we'll see, you know, when things get moving,
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  Speaker 2: hopefully in the next half hour. But again, with these
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  Speaker 2: we've never seen an IPO of this size. I don't
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  Speaker 2: know when we're going to actually begin trading.
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  Speaker 4: Is everybody just using space terms for this out of
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  Speaker 4: the fun, you know, the fun part of doing so.
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  Speaker 4: Not that I have an issue with it, but I
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  Speaker 4: don't believe that Nasdaq ever talks about other IPOs in
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  Speaker 4: terms of pre launch a status. No, Like everybody's just
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  Speaker 4: having a good time on this Friday, right.
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  Speaker 2: We should cut against the grain and be like, I
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  Speaker 2: don't know, there's got to be like something that we
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  Speaker 2: can do that is completely against that, Like we should
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  Speaker 2: treat them like a hot dog company or something. Yeah,
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  Speaker 2: you know, like there's there's still putting the mustard on
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  Speaker 2: this one right now.
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  Speaker 5: I don't know. I got I gotta workshop it a
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  Speaker 5: little bit more.
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  Speaker 2: Before I, you know, say it in front of the
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  Speaker 2: entire here. Lest Uh, sometimes the mouse does you know
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  Speaker 2: what it wants?
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  Speaker 5: Uh, let's take a quick break here.
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  Speaker 2: When we return, let's talk a little bit about the
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  Speaker 2: current state of play between the US and Iran. Some
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  Speaker 2: progress happening or another false start. We'll discuss after this.
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  Speaker 2: All right, So yesterday I happened to be watching Mark
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  Speaker 2: Gets around one thirty pm, and all of a sudden,
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  Speaker 2: my screen just lit up with a bunch of green
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  Speaker 2: And anytime that happens, you like, you know the drill.
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  Speaker 2: At this point, you're like, Okay, president said something, So
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  Speaker 2: we got to go and see like what you know
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  Speaker 2: was said, And sure enough, we ended up with a
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  Speaker 2: post from the President on truth Social that pretty much said, hey,
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  Speaker 2: we think we have a deal with Iran, and you know,
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  Speaker 2: I'll read the actual thing. Based on the fact that
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  Speaker 2: discussions with the Islamic Republic of Iran have been brought
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  Speaker 2: to the highest level of Iranian leadership and approved, I have,
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  Speaker 2: as President of the United States of America, canceled the
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  Speaker 2: scheduled strikes and bombings against Iran.
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  Speaker 5: This evening.
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  Speaker 2: Discussions and finer final points have been both in concept
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  Speaker 2: and great deal approved by all parties involved, including the
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  Speaker 2: United States, Israel, Saudi Arabia, UAE, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan, Egypt,
• 11:20
  Speaker 2: and others, the naval blockade were made in full force
• 11:22
  Speaker 2: and effect until this transaction is finalized. Time and place
• 11:26
  Speaker 2: of the signing to be announced shortly. So you had
• 11:29
  Speaker 2: this again about one and a half percent spike in
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  Speaker 2: the S and P five hundred that then turned into
• 11:35
  Speaker 2: you know, basically a two percent rally over the course
• 11:37
  Speaker 2: of the afternoon. Subsequently, Iran at the time, through various
• 11:43
  Speaker 2: state media, said well, no, we haven't necessarily approved anything.
• 11:46
  Speaker 2: And then this morning I woke up and again I
• 11:51
  Speaker 2: wish that we could just get past this from a
• 11:53
  Speaker 2: certain level, just because like it's not healthy.
• 11:55
  Speaker 5: I basically like wake up.
• 11:56
  Speaker 2: In the first thing I do is I'm like, okay,
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  Speaker 2: let's see what the tweets are like kind of where
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  Speaker 2: we are right now. And so, through Iranian state affiliated
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  Speaker 2: media Mare News, they put out details of the fourteen
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  Speaker 2: point draft of the memorandum of understanding and included in
• 12:16
  Speaker 2: there they said, I'm just going to read the list
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  Speaker 2: permanent immediate cessation of war on all fronts, including Lebanon,
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  Speaker 2: America's commitment to non interference in Iran completely, lifting of
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  Speaker 2: the naval blockade within thirty days, America's commitment to withdrawing
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  Speaker 2: its forces from around Iran, reopening the straight of hormones
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  Speaker 2: within thirty days, Suspension of sanctions for sale of oil
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  Speaker 2: from Iran, need for the US and allies to present
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  Speaker 2: reconstruction plans worth at least three hundred billion dollars to Iran,
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  Speaker 2: sixty days of negotiations to finalize nuclear issues, reiterating Iran's
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  Speaker 2: commitment to the Nuclear Non Proliferation Treaty, releasing twenty four
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  Speaker 2: billion blocked Iranian funds, Establishing a monitoring mechanism to implement
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  Speaker 2: the agreement. Agreement will be approved by UN Security Council resolution,
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  Speaker 2: And to which I look at this and I'm like, okay,
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  Speaker 2: like Iran said this before, and like it's it's unclear
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  Speaker 2: if this is actually what's in the document or the
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  Speaker 2: Iranian wish list. Uh So, like I take all of
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  Speaker 2: this with a grain of salt, because it's it's unclear
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  Speaker 2: that this is actually what's in the agreement since none
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  Speaker 2: of us have seen and it hasn't even been signed.
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  Speaker 5: So that was what I woke up to. That that
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  Speaker 5: was originally it had come out.
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  Speaker 2: Around I think like three thirty or four am, and
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  Speaker 2: then just a little while ago at nine to forty
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  Speaker 2: am you get this from the President on Trusseau. So
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  Speaker 2: the terms that Iron leaked out to the fake news,
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  Speaker 2: I have nothing to do with terms that were agreed
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  Speaker 2: to in writing. What they have said, including their weak
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  Speaker 2: and pathetic statement on having a deal, bears no relation
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  Speaker 2: to the truth. Very dishonorable people to deal with with them.
• 13:47
  Speaker 2: There's no such thing as dealing in good faith. Amazing. Also,
• 13:51
  Speaker 2: they're totally rebuff drone attack last night against Indian ships
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  Speaker 2: leaving the horm move straight is totally unacceptable. They better
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  Speaker 2: get their act together and fast.
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  Speaker 3: So, Chuck, I had a busy the morning. This morning.
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  Speaker 4: I spoke with Jim Polito, Matt Gannon, and Ed Lampert
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  Speaker 4: to all this morning, and this.
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  Speaker 5: Subject high for me.
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  Speaker 3: I did.
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  Speaker 4: This subject came up with all three of them, and
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  Speaker 4: all three of them expressed pretty severe skepticism about something
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  Speaker 4: getting done here. And I feel the same way, but
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  Speaker 4: don't have any real insider expertise on the subject. Is
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  Speaker 4: anything about this series of announcement announcements seem different or
• 14:31
  Speaker 4: unique compared to the last six times we've been through
• 14:34
  Speaker 4: this exercise.
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  Speaker 2: So I have a few different thoughts. So let me
• 14:39
  Speaker 2: let me answer your question. First, there are rumors out
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  Speaker 2: there that the US is coordinating logistics to get Vice
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  Speaker 2: President Vance, who apparently would be signing this to Geneva
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  Speaker 2: this weekend.
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  Speaker 5: They're just rumors.
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  Speaker 2: And we've had like similar rumors about like, oh, the
• 14:59
  Speaker 2: Pakistani army chief is heading to Tehran and like, so
• 15:03
  Speaker 2: they're different, but I don't know that they're like substantively different.
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  Speaker 5: Yeah, it might just be variations on a theme.
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  Speaker 4: I guess one other thing that's different about this time around.
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  Speaker 2: Is it did come directly from the president instead of
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  Speaker 2: reporting from close to the president.
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  Speaker 4: Yeah, so that's a little different. And I think the
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  Speaker 4: other one is just the timeline. The closer you are
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  Speaker 4: to the oil markets blowing up, which we've insinuated is coming.
• 15:32
  Speaker 4: That does make this one and every subsequent negotiation a
• 15:35
  Speaker 4: little bit unique because you are closer to gas prices
• 15:39
  Speaker 4: going to like six bucks a gallon.
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  Speaker 3: So that's a little bit different.
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  Speaker 4: But boy, is it really tough to sit here and
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  Speaker 4: have any confidence whatsoever this is going to happen.
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  Speaker 2: Yeah, it's it's just something where I don't know, like,
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  Speaker 2: I don't have any unique insight into the process. At
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  Speaker 2: some point, every conflict reaches a solution that someone doesn't like.
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  Speaker 2: And it might be the Iranians who don't like it
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  Speaker 2: here it might be the US. Like, I don't know,
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  Speaker 2: because we don't actually know what's being negotiated, Like we
• 16:17
  Speaker 2: know what's being negotiated, but we don't know like the
• 16:20
  Speaker 2: terms of what's being you know, settled.
• 16:23
  Speaker 5: And at some point in.
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  Speaker 2: Every conflict that does not end with, you know, a
• 16:30
  Speaker 2: complete and unconditional surrender, you get a negotiated settlement that
• 16:34
  Speaker 2: comes out of it, where generally both sides don't get
• 16:37
  Speaker 2: everything they want. It's like, okay, like we just need
• 16:39
  Speaker 2: to end this, and so even though we don't love this,
• 16:41
  Speaker 2: we've got to sign this. At some point, this is
• 16:43
  Speaker 2: going to get to that as well. I don't know
• 16:46
  Speaker 2: if it's this weekend or if we're still a week,
• 16:50
  Speaker 2: two weeks, or two months away from that point. I
• 16:54
  Speaker 2: do know that, as you mentioned, the MATH is continuing
• 16:56
  Speaker 2: to get tougher on the oil side of things. And
• 16:59
  Speaker 2: this is even as in the last couple of days
• 17:03
  Speaker 2: we've talked about this, you know, you've started to see
• 17:05
  Speaker 2: some signs and the US has you know, said as
• 17:07
  Speaker 2: much that hey, they've been able to you know, sneak
• 17:09
  Speaker 2: some some ships out of the Gulf over the last
• 17:13
  Speaker 2: couple of weeks that have you know, been able to
• 17:16
  Speaker 2: you know, get some supplies out of that region. The
• 17:19
  Speaker 2: problems I've mentioned all along, it still is not leading
• 17:22
  Speaker 2: to a restart of production, and the restart of production
• 17:26
  Speaker 2: is the problem. Otherwise you're just drawing from another you know,
• 17:28
  Speaker 2: fixed stock of those ships that are in that region
• 17:32
  Speaker 2: that are not necessarily going to want to go back
• 17:34
  Speaker 2: in and potentially get stuck again.
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  Speaker 4: So the other point that I'll make about it again
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  Speaker 4: just pessimism on a deal being signed here. In previous
• 17:44
  Speaker 4: scenarios unrelated to the straight of horror moves where the
• 17:47
  Speaker 4: president has pivoted on his policy and negotiated for something else,
• 17:52
  Speaker 4: they've come at moments when financial markets are inflicting a
• 17:58
  Speaker 4: great degree of pain or realizing a great degree of pain.
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  Speaker 4: Do you see anything in financial markets that is indicating
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  Speaker 4: that right now?
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  Speaker 3: Because I don't know, no. And so that would be one.
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  Speaker 4: Counter argument for, hey, nothing's gonna get done here because
• 18:14
  Speaker 4: oil prices are down, stocks are up, and they've been
• 18:17
  Speaker 4: that way now for several weeks. So does the White
• 18:20
  Speaker 4: House feel pressure to negotiate something unless it's the best
• 18:25
  Speaker 4: possible deal they can get.
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  Speaker 2: The other piece just related to that that I think
• 18:29
  Speaker 2: is going to be challenging. The President likes to maintain flexibility.
• 18:34
  Speaker 2: Think about last year with Tariff's. Okay, like this isn't
• 18:36
  Speaker 2: working great, I'll modify them this way, you know.
• 18:39
  Speaker 4: And I think he's been intentionally opaque about what he
• 18:41
  Speaker 4: needs in this scenario to maintain that flexibility.
• 18:45
  Speaker 5: But here's the piece.
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  Speaker 2: I don't think any of the parties in this trust
• 18:49
  Speaker 2: each other. Like do you think the Iranians trust the US?
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  Speaker 5: Now?
• 18:52
  Speaker 2: Do you think the US trust the Iranians? Do you
• 18:54
  Speaker 2: think it is real trusts Iran.
• 18:57
  Speaker 3: I don't think it's real trust the United States.
• 18:58
  Speaker 2: Nos, None of these parties trust each other at all.
• 19:02
  Speaker 2: So President Trump's like ideal deal is one where it's like, hey,
• 19:06
  Speaker 2: this is what we agreed to. It's a handshake deal,
• 19:09
  Speaker 2: and oh, we can change it later.
• 19:10
  Speaker 3: Yeah.
• 19:11
  Speaker 2: Do you think Aron's gonna be cool with a handshake deal? No,
• 19:15
  Speaker 2: they want this thing signed by like, you know, in
• 19:17
  Speaker 2: front of like the galactic empire, to be like everyone
• 19:20
  Speaker 2: sees like what you agreed to, And that's not really
• 19:24
  Speaker 2: the President's negotiating style, So that there might be even
• 19:26
  Speaker 2: just a problem on negotiating styles. Quick break Wall Street
• 19:29
  Speaker 2: watches Next.
• 19:38
  Speaker 1: Like us on Facebook and follow us on Twitter at
• 19:41
  Speaker 1: TFE show. Breaking business news is always first right here
• 19:45
  Speaker 1: on the Financial Exchange Radio Network till now Full Wall
• 19:50
  Speaker 1: Street Watch, treking the stocks, fandato, and the headlines driving
• 19:54
  Speaker 1: markets so far today, right here on the Financial Exchange
• 19:58
  Speaker 1: Radio Network.
• 19:58
  Speaker 6: The largest ip the owned history is upon us when
• 20:01
  Speaker 6: SpaceX makes its debut on the nasdak today. According to Bloomberg,
• 20:06
  Speaker 6: SpaceX shares are indicated to open twenty nine percent above
• 20:10
  Speaker 6: its IPO.
• 20:11
  Speaker 5: Price.
• 20:11
  Speaker 6: Sentiment also received a lift yesterday around progress toward a
• 20:15
  Speaker 6: potential piece deal with Iran. Right now, the Dow is
• 20:19
  Speaker 6: up over four tenths of one percent, SMP five hundred
• 20:23
  Speaker 6: up over a tenth of a percent, Nasdaq dipping eighteen
• 20:26
  Speaker 6: points lower, Russell two thousand is up about one percent.
• 20:31
  Speaker 6: Ten You're treas reeled up three basis points at four
• 20:34
  Speaker 6: point five zero percent, and Oil pulling back about one
• 20:39
  Speaker 6: and a quarter percent, rating right around eighty six dollars
• 20:42
  Speaker 6: a barrel. Several space space stocks garnering your attention leading
• 20:47
  Speaker 6: up to the space XIPO. EchoStar is down by six
• 20:53
  Speaker 6: percent after jumping eleven percent yesterday. Ast Space Mobile climb
• 20:57
  Speaker 6: twelve percent yesterday, however, is down by eleven percent today,
• 21:01
  Speaker 6: and rocket Lab shares are pulling back by seven percent.
• 21:05
  Speaker 6: Airline stocks, including United American and Delta, seeing modest gains
• 21:10
  Speaker 6: with the retreat in oil prices today. Adobe down by
• 21:14
  Speaker 6: over six percent. After the software giant beat on the
• 21:17
  Speaker 6: top and bottom lines in the previous quarter. However, the
• 21:20
  Speaker 6: company announced that its CFO would leave the company on Monday,
• 21:24
  Speaker 6: and home construction company Lenar missed quarterly revenue expectations, while
• 21:29
  Speaker 6: deliveries also fell short of estimates. That stock is down
• 21:33
  Speaker 6: by three percent. I'm Tucker Silva, and that is Wall
• 21:37
  Speaker 6: Street Watch.
• 21:39
  Speaker 2: Let's see anything else that you want to tie up
• 21:42
  Speaker 2: as it relates to US Ron MIC No.
• 21:47
  Speaker 4: I guess the only thing that we've repeated over and
• 21:49
  Speaker 4: over is that oil executives, who are better informed about
• 21:52
  Speaker 4: the state of energy markets than we are, have been
• 21:55
  Speaker 4: warning now for several weeks about the looming crisis and
• 21:59
  Speaker 4: energy market. And it's not something that they normally do
• 22:06
  Speaker 4: just playing simple. You don't you don't see executives going
• 22:09
  Speaker 4: out to the White House or going out to Wall
• 22:12
  Speaker 4: Street and saying publicly that we are in, like you know,
• 22:17
  Speaker 4: crisis mode here and prices are going to shoot up
• 22:19
  Speaker 4: if we don't do.
• 22:20
  Speaker 3: Something about it.
• 22:21
  Speaker 4: So you know, it's not to say they don't have
• 22:23
  Speaker 4: their own incentives and reasons for doing so beyond just warning,
• 22:27
  Speaker 4: but it is extraordinarily rare to hear that from oil executives.
• 22:31
  Speaker 4: And we will see where things go over the weekend here.
• 22:36
  Speaker 2: Next week, we've got the G seventh summit taking place
• 22:40
  Speaker 2: in France.
• 22:42
  Speaker 5: Do you want know where is it going to be?
• 22:43
  Speaker 5: In Paris? There's other cities in France, I know, but
• 22:46
  Speaker 5: we don't know. I don't know where here we go.
• 22:49
  Speaker 5: It's in the French Alps.
• 22:53
  Speaker 3: You just pressed G eight.
• 22:56
  Speaker 5: Well, I'm glad that we got that out of the way.
• 22:58
  Speaker 2: It's going to be in the French Alps. And we
• 23:00
  Speaker 2: got a piece from the Wall Street Journal titles eight.
• 23:09
  Speaker 3: Tucker's checked out this Friday.
• 23:11
  Speaker 4: He's got all of the the Chris Farley cs ready
• 23:14
  Speaker 4: to go, and he's.
• 23:20
  Speaker 5: It's fantastic.
• 23:23
  Speaker 4: Tugers just back there giggling for those of you that
• 23:25
  Speaker 4: can't hear him right.
• 23:26
  Speaker 5: Now, because I can only play very happy with them.
• 23:28
  Speaker 6: I can only play this drop one time a year
• 23:31
  Speaker 6: during the G seven conference, and I was like, oh,
• 23:33
  Speaker 6: I forgot to play this.
• 23:35
  Speaker 5: Is a pretty heavy Chris Farley lea. I mean, we're
• 23:39
  Speaker 5: we're cooking.
• 23:40
  Speaker 3: Yeah.
• 23:40
  Speaker 5: So you got this piece from the Wall Street Journal.
• 23:43
  Speaker 2: It's titled the Global Economy is threatened again by Trade Imbalances?
• 23:47
  Speaker 2: And I don't know, like, what do we think is
• 23:51
  Speaker 2: going to change here at the G seven?
• 23:53
  Speaker 3: Nothing, Chuck.
• 23:56
  Speaker 4: This is going to take such a backseat to everything
• 23:59
  Speaker 4: else going on in the world. There's just nothing that's
• 24:02
  Speaker 4: going to be agreed to. There are going to be
• 24:06
  Speaker 4: nations complaining about all sorts of different trade imbalance and
• 24:11
  Speaker 4: tariff issues, and I just cannot envision a scenario where
• 24:14
  Speaker 4: anything gets done at all on this. There was there's
• 24:22
  Speaker 4: one quote from the Wall Street Journal that I thought
• 24:24
  Speaker 4: was worth getting.
• 24:25
  Speaker 5: Well part of this.
• 24:26
  Speaker 2: Just to make it clear, the G seven does not
• 24:31
  Speaker 2: include China, right, So you cannot have a real conversation
• 24:36
  Speaker 2: about trade imbalances if China is not there. It's Canada, France, Germany, Italy, Japan,
• 24:41
  Speaker 2: the UK, and the US.
• 24:42
  Speaker 3: Right, So even we're China there.
• 24:45
  Speaker 4: This is the quote from the Wall Street Journal that
• 24:46
  Speaker 4: I found you know, summarize a good summary of the situation.
• 24:51
  Speaker 4: The US blames its problems on others, especially China. China
• 24:54
  Speaker 4: sees no need to change policies it thinks are working.
• 24:57
  Speaker 4: The IMF, the one body charge with disciplining imbalances, has
• 25:02
  Speaker 4: no means.
• 25:02
  Speaker 3: To do so.
• 25:04
  Speaker 4: So, yeah, that's what you can expect from the G seven.
• 25:08
  Speaker 4: There's too many of these groups, to be honest, Like,
• 25:10
  Speaker 4: you got the G seven. There was the G eight
• 25:11
  Speaker 4: for a while.
• 25:13
  Speaker 2: The G eight was the G seven plus Russia they.
• 25:17
  Speaker 5: Got booted out.
• 25:19
  Speaker 2: There's there's the G twenty, right, that's another one that
• 25:22
  Speaker 2: we have that's out there that does include China and
• 25:28
  Speaker 2: Russia in there. That is, let's see, who do we
• 25:31
  Speaker 2: have in here?
• 25:32
  Speaker 5: Oh?
• 25:32
  Speaker 2: Okay, this is actually wild. Even within the G twenty
• 25:36
  Speaker 2: there are five groups of four. Okay, who are we
• 25:39
  Speaker 2: lunked in with? We are in there with natural you
• 25:43
  Speaker 2: know partners, Australia, Canada, and Saudi Arabia. What then, Group two,
• 25:49
  Speaker 2: which kind of makes sense, is India, Russia, South Africa,
• 25:52
  Speaker 2: and Turkey. Group three is Latin American countries Argentina, Mexico
• 25:56
  Speaker 2: and Brazil. I don't know why that went. Is only
• 25:58
  Speaker 2: three is the G twenty actually nineteen? No, there's only
• 26:03
  Speaker 2: nineteen members in the G twenty. What is going on here?
• 26:06
  Speaker 3: Hard to say?
• 26:07
  Speaker 1: For sure.
• 26:07
  Speaker 2: Russia's in it, so it's not like they've been kicked out.
• 26:10
  Speaker 2: Group four of the G twenty is France, Germany, Italy
• 26:13
  Speaker 2: and the UK, and Group five is China, Indonesia, Japan
• 26:18
  Speaker 2: and South Korea. So we ended up in like the
• 26:21
  Speaker 2: Hodgepodge group.
• 26:23
  Speaker 3: You know.
• 26:25
  Speaker 5: But h so, why are there only nineteen members of
• 26:28
  Speaker 5: the G twenty?
• 26:30
  Speaker 4: Gotta leave a little room for It's it's like when
• 26:32
  Speaker 4: you set the dinner table for an extra person.
• 26:34
  Speaker 5: Wait, I'm a visitor. I'm reading the Wikipedia page. So
• 26:37
  Speaker 5: here's the thing.
• 26:38
  Speaker 2: The five groups have nineteen countries in them, but the
• 26:43
  Speaker 2: top of the page says that there are twenty one
• 26:45
  Speaker 2: members of the G twenty. What do I do with
• 26:50
  Speaker 2: the IDIA forstore? I don't think we should report on it.
• 26:56
  Speaker 2: Can someone call the G twenty, Tucker? Can you get
• 26:58
  Speaker 2: them on the phone them how many members they have?
• 27:03
  Speaker 5: Yes?
• 27:03
  Speaker 2: Hello, Yes, we're wondering how many members you have? Nineteen
• 27:09
  Speaker 2: twenty and twenty one?
• 27:10
  Speaker 5: Great? Thanks?
• 27:12
  Speaker 2: So anyways, I don't think there's gonna be much trade
• 27:15
  Speaker 2: conversation that ends up turning into anything because you can't
• 27:19
  Speaker 2: have that conversation when China's not there.
• 27:22
  Speaker 4: And I am on the official G twenty Miami twenty
• 27:25
  Speaker 4: twenty six page here.
• 27:27
  Speaker 5: In Miami this year and when.
• 27:31
  Speaker 3: Twenty twenty six when working on it? Hold on, but
• 27:38
  Speaker 3: up up.
• 27:41
  Speaker 2: December fourteenth and fifteenth. You're welcome, Ago, Thanks. Can we
• 27:45
  Speaker 2: do a remote?
• 27:46
  Speaker 5: Yes?
• 27:46
  Speaker 3: Confirmed?
• 27:47
  Speaker 5: Here?
• 27:47
  Speaker 4: I see four, eight, twelve, sixteen, nineteen countries in the
• 27:51
  Speaker 4: G twenty.
• 27:52
  Speaker 2: I don't know what to do with that. Can we
• 27:55
  Speaker 2: do a remote in Miami to me? Yeah, Miami in December?
• 27:59
  Speaker 5: Sounds nice? Set it up, all right? Yeah, we'll talk
• 28:03
  Speaker 5: to the.
• 28:03
  Speaker 3: What's happened with the G twenty? Nothing?
• 28:05
  Speaker 4: Everyone blames each other for their country's problems. Okay, good,
• 28:09
  Speaker 4: it won't tell us. That's a good image.
• 28:11
  Speaker 5: I don't know. Could be fun.
• 28:13
  Speaker 2: So that's what we've got coming up soon. Just take
• 28:16
  Speaker 2: a quick break when we come back. Two competing views
• 28:19
  Speaker 2: on what AI is going to do to the labor market.
• 28:22
  Speaker 5: Next.
• 28:23
  Speaker 1: Subscribe now to our YouTube page, where you'll find daily
• 28:26
  Speaker 1: interviews and full shows of the financial Exchange. We'll get
• 28:29
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• 28:31
  Speaker 1: missed right here on the Financial Exchange, breaking business and
• 28:36
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• 28:40
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• 28:45
  Speaker 6: The Financial Exchange is incredibly proud to be a partner
• 28:48
  Speaker 6: of the Disabled American Veterans Department of Massachusetts. Hundreds of
• 28:52
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• 29:25
  Speaker 4: We are still awaiting the first trade of SpaceX, but
• 29:30
  Speaker 4: since the show started, we have seen indications that these
• 29:34
  Speaker 4: stock which ipoded one hundred and thirty five dollars a share,
• 29:37
  Speaker 4: would open up at one hundred and seventy five. Then
• 29:40
  Speaker 4: I saw Bloomberg report one hundred and seventy four one
• 29:44
  Speaker 4: hundred and seventy As of this moment, I am now
• 29:46
  Speaker 4: seeing a price indicated of one hundred and sixty eight
• 29:49
  Speaker 4: dollars and twenty five cents, So we'll continue to keep
• 29:53
  Speaker 4: you updated. Have not yet seen a trade go through,
• 29:55
  Speaker 4: but that's been the trend so far in and where
• 30:01
  Speaker 4: this thing might end up opening.
• 30:04
  Speaker 2: We've got two different views on what artificial intelligence might
• 30:10
  Speaker 2: do to the labor market. First, in the Financial Times,
• 30:13
  Speaker 2: Jeff Bezo says AI will bring golden ages, not mass
• 30:16
  Speaker 2: job losses. And then from Anthropic, what happens if AI
• 30:23
  Speaker 2: causes twenty five percent unemployment? Anthropic has a concept of
• 30:26
  Speaker 2: a plan.
• 30:27
  Speaker 3: Yeah.
• 30:28
  Speaker 4: Now, I will point out that the Anthropic explained quote,
• 30:31
  Speaker 4: we are not seeking job displacement. We are working to
• 30:34
  Speaker 4: prevent or minimize it. So they are not saying that
• 30:38
  Speaker 4: we think that we necessarily get there.
• 30:39
  Speaker 3: But I don't think you make.
• 30:40
  Speaker 4: A plan for twenty five percent unemployment unless somebody has
• 30:43
  Speaker 4: brought it up in your organization as a possibility. Bezos
• 30:47
  Speaker 4: indicating that hey, you know, the advancements that he sees
• 30:50
  Speaker 4: happening will revolutionize the world so much that he actually
• 30:53
  Speaker 4: sees a labor shortage for the future. In the case
• 30:57
  Speaker 4: of anthropic, they are saying, hey, you need to build
• 31:01
  Speaker 4: out social safety net scenarios across the globe for what
• 31:05
  Speaker 4: happens if AI causes such mass unemployment. And I don't
• 31:11
  Speaker 4: think either one is terribly likely, but I have to
• 31:14
  Speaker 4: say that I just I can't really imagine the world
• 31:18
  Speaker 4: where a technology causes unemployment of twenty five percent and
• 31:22
  Speaker 4: then can still support itself.
• 31:26
  Speaker 5: I know that's the thing.
• 31:27
  Speaker 4: Like, just think through the mechanics there, right, If one
• 31:31
  Speaker 4: in four people can't find a job, then you can't
• 31:34
  Speaker 4: buy any of the stuff that AI wants to make
• 31:39
  Speaker 4: more usable, available and revolutionary. Yes, are you claiming that
• 31:44
  Speaker 4: we are going to somehow move beyond any sort of
• 31:47
  Speaker 4: consumer based economy because of AI, Because that's somehow what
• 31:50
  Speaker 4: would need to happen, and the entire globe would need
• 31:55
  Speaker 4: to be removed from a consumer based economy into what
• 32:00
  Speaker 4: so Yeah, Like, yes, I could see a scenario where
• 32:04
  Speaker 4: temporarily unemployment shoots up, but planning for a long term
• 32:09
  Speaker 4: scenario where unemployment is exceeding ten percent for an extended
• 32:13
  Speaker 4: period of time seems like a unreasonable plan.
• 32:19
  Speaker 7: I think it's the piece that is tough to get to,
• 32:25
  Speaker 7: in my opinion, is when you talk about the companies
• 32:29
  Speaker 7: that are.
• 32:32
  Speaker 2: When you talk about the companies that are moving most
• 32:34
  Speaker 2: heavily to adopt AI right now, it's tech companies.
• 32:38
  Speaker 5: Correct.
• 32:38
  Speaker 2: Yes, Like we're talking a lot of this. We're talking
• 32:40
  Speaker 2: about like coding being the front line, yep. And the
• 32:42
  Speaker 2: reason why is that with coding you can very easily
• 32:48
  Speaker 2: there's a record of here's what the AI did, here's
• 32:53
  Speaker 2: the output. Do we like that, yes or no? That
• 32:57
  Speaker 2: happens in a way that it doesn't wear customer service
• 33:01
  Speaker 2: just as an example, like let's say that you're using
• 33:03
  Speaker 2: AI to try to, you know, solve some customer service cases,
• 33:09
  Speaker 2: you don't have the same easy, clear record of, Hey,
• 33:13
  Speaker 2: we wanted it to do.
• 33:15
  Speaker 5: X, it did. Why is that good or bad? Right?
• 33:18
  Speaker 2: It's it's more complicated, and customer service is one of
• 33:21
  Speaker 2: those areas that I think a lot of AI proponents
• 33:23
  Speaker 2: will describe as low hanging fruit. Sure, you know when
• 33:26
  Speaker 2: we talk about chatbots and things like that, and that's
• 33:28
  Speaker 2: still challenging. Then you start getting into the more complex
• 33:33
  Speaker 2: stuff that you want to or need to do, and
• 33:38
  Speaker 2: it becomes very clear that even if you can have
• 33:43
  Speaker 2: AI handle some of the work, it still needs a
• 33:47
  Speaker 2: whole lot of manual input to make sure that it's
• 33:52
  Speaker 2: being done correctly. Now this can change over time if
• 33:56
  Speaker 2: you know, we're able to develop AI programs that can
• 33:59
  Speaker 2: you know, perform oversight functions and things like that. But
• 34:05
  Speaker 2: I think the other piece in terms of like, for
• 34:07
  Speaker 2: unemployment to go to twenty five percent, something bad has
• 34:12
  Speaker 2: to happen.
• 34:13
  Speaker 5: Very rapidly to employment because if it's a.
• 34:16
  Speaker 2: Gradual process where this job is disrupted this year, this
• 34:20
  Speaker 2: one's disrupted next, this one, like that's always going on
• 34:24
  Speaker 2: in one way of shape or form, you know.
• 34:27
  Speaker 4: So not that we have great data on it, but
• 34:29
  Speaker 4: like it would have to be something the scale of
• 34:31
  Speaker 4: the industrial revolution.
• 34:33
  Speaker 2: Like it's gotta be more than that. It's it's because
• 34:36
  Speaker 2: it's not just the scale, it's the pace. Remember, go
• 34:39
  Speaker 2: back to again, one of my least favorite things in
• 34:43
  Speaker 2: all of the charts that we have to look at
• 34:45
  Speaker 2: now is the fact that we have this issue with
• 34:51
  Speaker 2: basically every data set.
• 34:53
  Speaker 5: From twenty twenty.
• 34:55
  Speaker 2: And one of the things that we can do though
• 34:57
  Speaker 2: is look at what happened to the unemployment rate in
• 35:00
  Speaker 2: twenty twenty, where when the US economy basically shut down
• 35:05
  Speaker 2: for a month or so. During the pandemic, the unemployment
• 35:09
  Speaker 2: rate went to fourteen point eight percent in like three
• 35:13
  Speaker 2: weeks from four and a half or three and a half.
• 35:18
  Speaker 2: What we're talking about, in order for the unemployment rate
• 35:20
  Speaker 2: to go to twenty five, you have to have it
• 35:23
  Speaker 2: go what it did, go to what it did in
• 35:26
  Speaker 2: twenty twenty, and then do that again. You need another
• 35:30
  Speaker 2: ten percent rise in unemployment. Then that has to happen
• 35:35
  Speaker 2: really fast. I mean, even take a look at y'all listening.
• 35:38
  Speaker 2: You all remember how bad things were during the financial
• 35:41
  Speaker 2: crisis for jobs. The unemployment rate went from four point
• 35:45
  Speaker 2: seven to ten percent. In order for it to go
• 35:49
  Speaker 2: to twenty five, it has to do that and then
• 35:51
  Speaker 2: do it three more times. Twenty five is a tough
• 35:56
  Speaker 2: putt man. Yeah, Like I'm I'm gonna throw some cold
• 36:00
  Speaker 2: water on that. Given what we are seeing with AI,
• 36:06
  Speaker 2: which again my view on this is consistent. We are
• 36:09
  Speaker 2: all going to be using way more AI five years
• 36:12
  Speaker 2: from now than we are today. But I'm just not
• 36:15
  Speaker 2: sure that it's going to have these kinds of impacts
• 36:18
  Speaker 2: that some people are talking about.
• 36:19
  Speaker 3: Yep.
• 36:20
  Speaker 4: Yeah, it's not to say that we shouldn't plan and
• 36:25
  Speaker 4: I don't. It's not that I think the government has
• 36:27
  Speaker 4: no role in helping figure out job retraining and you know,
• 36:34
  Speaker 4: good things that we can be thinking about ahead of time.
• 36:38
  Speaker 4: But I I don't think there's much of a purpose
• 36:43
  Speaker 4: of planning for an economy that has twenty five percent
• 36:46
  Speaker 4: unemployment for an extended period of time because there's really
• 36:51
  Speaker 4: nothing that you can do on the interim.
• 36:53
  Speaker 5: Itself that problem.
• 36:55
  Speaker 2: It's also like, at a very cynic level, it'll be
• 36:58
  Speaker 2: self correcting if you have twenty five percent unemployment because
• 37:01
  Speaker 2: of AI, those twenty five percent unemployed people are gonna
• 37:04
  Speaker 2: go destroy the data centers. Yeah, yeah, they're gonna be
• 37:08
  Speaker 2: They're gonna be sitting around at home. They're gonna be like, hey.
• 37:10
  Speaker 5: This sucks.
• 37:11
  Speaker 3: I get no job, I have no food, destroy everything.
• 37:14
  Speaker 2: But again, we twenty five percent of employment. I don't
• 37:18
  Speaker 2: think you can conceptualize that most people, it's one in four,
• 37:22
  Speaker 2: Like normally high unemployment is one in like eighteen, one
• 37:26
  Speaker 2: in seventeen.
• 37:27
  Speaker 5: You know. So we'll see, Uh, we'll see where things
• 37:31
  Speaker 5: go here.
• 37:32
  Speaker 2: Uh let's see Lenar cutting their full year target, citing
• 37:37
  Speaker 2: stubborn housing market headwinds. This is the only company that
• 37:41
  Speaker 2: i've seen in housing that's talking about things like this.
• 37:44
  Speaker 2: It really strikes me as something that is more related
• 37:48
  Speaker 2: to execution than any particular problems with the housing market,
• 37:52
  Speaker 2: in my opinion.
• 37:53
  Speaker 4: Yeah, and they didn't cite anything shocking here, right, They
• 37:58
  Speaker 4: really just talked about how they're not seeing the demand
• 38:00
  Speaker 4: and because of high interest rates.
• 38:03
  Speaker 3: I don't know that there's much of a story.
• 38:04
  Speaker 5: No other builders are saying that.
• 38:06
  Speaker 2: Yeah, so I get the sense this is an execution problem.
• 38:11
  Speaker 2: Let's take a quick break. When we return hour two,
• 38:14
  Speaker 2: it's cumming up