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Did Disney just doom itself? · The Financial Exchange Show

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Speaker 1: and Mike Armstraw.
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Speaker 2: Chuck Mike Tucker with you the day after the Federal
1:14
Speaker 2: Reserve Open Market Committee meeting, and I mean, gosh, we
1:20
Speaker 2: kind of have to start by talking about that meeting,
1:23
Speaker 2: in which the Federal Reserve cut interest rates by a
1:26
Speaker 2: quarter percent. This move was largely expected and so no
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Speaker 2: real surprises on that front, and the FED funds right
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Speaker 2: now stands in a range of three and a half
1:37
Speaker 2: to three point seventy five percent. Beyond that, we did
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Speaker 2: receive a dot plot the summary of economic projections, and
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Speaker 2: so we're going to cover that and whether there were
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Speaker 2: any surprises in there. But I think overall the message
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Speaker 2: from the Fed is not entirely unexpected, and that it is, Hey,
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Speaker 2: we're cutting interest rates this time, just as we have
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Speaker 2: for the previous two meetings, and beyond that, we're not
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Speaker 2: really committing to doing anything else in the future.
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Speaker 3: Yeah, in terms of what's being asked about, the FED
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Speaker 3: asked about their meeting, you know, listening to the press conference,
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Speaker 3: it's obviously the highlight is that they cut the rates
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Speaker 3: this time, but the focus from reporters was on the
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Speaker 3: dot plot and on the Again, when I say disagreement
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Speaker 3: at the FED. It is not a hostile type of environment.
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Speaker 3: But there was a lot of disagreement at the FED
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Speaker 3: about where rates should be going at this meeting, which
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Speaker 3: they already decided, and where they're going to go in
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Speaker 3: twenty twenty six. And so that's where the questions were
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Speaker 3: directed at this meeting. Especially was Hey, it seems like
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Speaker 3: there was a fair bit of disagreement. How did that
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Speaker 3: go and how's that going to evolve in twenty twenty
2:49
Speaker 3: six when J Powell is no longer leading the Federal Reserve.
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Speaker 2: Yeah, and I think look the summary of economic projections
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Speaker 2: that they put out, it includes projections for the end
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Speaker 2: of twenty five. Gotta be honest, don't care about them
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Speaker 2: at this point. They're not relevant. Twenty twenty five's over
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Speaker 2: five there are there are twenty days left in the year.
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Speaker 2: Nothing matters for twenty twenty five at this point. What
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Speaker 2: matters now is what are we going to get in
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Speaker 2: twenty six? And this is interesting in terms of what
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Speaker 2: the FED is showing us here. So for change in
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Speaker 2: real GDP next year, they're projecting two point three percent.
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Speaker 2: During their September projection, they came in at one point
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Speaker 2: eight percent. Mike last time I checked, two point three
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Speaker 2: is higher than one point eight. Is that's still correct?
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Speaker 3: Yes? That FED Chair of J. Powell did explain some
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Speaker 3: of this away, basically saying that, hey, the lost economic
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Speaker 3: productivity from the government shutdown was going to shift now
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Speaker 3: into twenty twenty six. Don't know if I buy it,
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Speaker 3: but that was his argument, is that, yeah, in fact,
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Speaker 3: we were planning on more like one point nine versus
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Speaker 3: two point one, and now you know, government shutdown took
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Speaker 3: some of the oomph out of twenty twenty five and
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Speaker 3: put it into twenty twenty six instead.
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Speaker 2: Sure, unemployment rate they thought in September it was going
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Speaker 2: to be four point four percent for next year. They
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Speaker 2: still think it's going to be four point four percent.
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Speaker 3: Which is where we are right now.
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Speaker 2: Correct. And I think the interesting thing here is that
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Speaker 2: we've been on a little bit of an uptrend for
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Speaker 2: unemployment in the last couple of months. The FED is
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Speaker 2: effectively saying, hey, at some point in twenty twenty six,
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Speaker 2: that uptrend is going to stop, and if it goes
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Speaker 2: higher than where it already is, not only is it
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Speaker 2: going to stop, but it's going to reverse.
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Speaker 3: Can we we're going to talk about this more later too.
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Speaker 3: So I don't know if I'm preempting it, but can
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Speaker 3: we talk about that point in the context of J.
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Speaker 3: Powell saying that he doesn't believe the jobs numbers that
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Speaker 3: have been coming out.
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Speaker 2: Yes, because I thought that was one of the more
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Speaker 2: interesting things that Powell said, Uh, but also fully explainable.
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Speaker 3: Okay, So what he said is that they Federal Reserve
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Speaker 3: members are a little bit concerned that the BLS might
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Speaker 3: be over counting job creation. We're not talking about like
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Speaker 3: five hundred jobs here and there, but to the tune
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Speaker 3: of what was sixty thousand jobs a month for the
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Speaker 3: last however long. So explain to me what that means,
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Speaker 3: and I guess my concern would be justifying. Okay, I
5:11
Speaker 3: think that the unemployment rate's going to stick around four
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Speaker 3: point four percent, but I also think the job creation
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Speaker 3: is a lot weaker than what the BLS is telling me.
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Speaker 2: So I think when we talk about, you know, the
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Speaker 2: job creation being weaker than what the BLS is saying, basically,
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Speaker 2: what he's referencing is these you know, large annual revisions
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Speaker 2: to the downside that have come through the last couple
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Speaker 2: of years. Yes, and the fact that you've had these
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Speaker 2: large annual revisions. By the way, the BLS had has
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Speaker 2: as of September. I didn't see this, but I saw
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Speaker 2: it talked about this morning. Actually, the BLS did indicate
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Speaker 2: in September that they are going to be making some
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Speaker 2: improvements to how they manage the birth death model throughout
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Speaker 2: the year in order to hopefully minimize those those those
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Speaker 2: revisions that happen on an annual basis. So I found
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Speaker 2: that kind of interesting as well. But basically what Powell
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Speaker 2: is getting at here is that, look, job growth probably
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Speaker 2: is weaker than being reported just because it's been weaker
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Speaker 2: for the last couple of years, and there hasn't been
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Speaker 2: a turning point in the economy, and generally, you know,
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Speaker 2: you see those those revisions shift around turning points, so
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Speaker 2: we haven't seen one there. So I think that that's
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Speaker 2: kind of what he's getting at on that side. When
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Speaker 2: it comes to the unemployment rate, I think that the
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Speaker 2: big piece is, look, what is the size of the
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Speaker 2: labor force because of the combination of baby boomers retiring
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Speaker 2: and stricter immigration controls and immigration measures, and so as
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Speaker 2: a result, do you have a labor force that is
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Speaker 2: still growing is very much an open question. Right now. Fair,
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Speaker 2: So continuing through the step, so unemployment they think is
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Speaker 2: going to be the same as it is now. We'll
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Speaker 2: get to, you know, whether or not that's a valid
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Speaker 2: point down the road. Piece of inflation, they're projecting to
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Speaker 2: be two point four percent next year compared to two
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Speaker 2: point six percent in September, so the saying is going
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Speaker 2: to be less inflation next year than anticipated. This The
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Speaker 2: explanation that I think was largely presented was, you know,
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Speaker 2: the exceptions to tariffs have been steeper than have been anticipated.
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Speaker 2: There also have been further negotiations in a couple of
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Speaker 2: cases to bring them down, and so the thought processes
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Speaker 2: as long as there is no further upward adjustment in tariffs,
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Speaker 2: that you can potentially shrug it off as a one
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Speaker 2: time impact and not something that seeps into the system
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Speaker 2: and perpetuity to the same degree, I can buy that.
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Speaker 3: Specifically, the exceptions piece, yeah, we continue to see that
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Speaker 3: every day. The grocery items, for example, are the most
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Speaker 3: recent ones where a whole bunch of items that we
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Speaker 3: buy every day of the grocery how exempts from tariffs core.
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Speaker 2: Two five next year relative to two six. So again
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Speaker 2: very modest shift there I don't think there's anything huge.
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Speaker 2: And the FED funds rate they're still projecting to be
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Speaker 2: at three point four percent next year, meeting one rate
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Speaker 2: cut being priced in for twenty twenty six. So now
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Speaker 2: we get to the question, like this is what the
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Speaker 2: FED thinks. Fed's not always right. They are smarter than us, admittedly,
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Speaker 2: like they're they're in they they study this stuff all
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Speaker 2: day every day. They all have PhDs, they all have PhDs.
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Speaker 2: They have you know, models that they build out to
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Speaker 2: do this in ways that we do not. But they're
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Speaker 2: not always right still, and so this is our chance
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Speaker 2: to you know, we're David with his slingshot being like, hey, Goliath,
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Speaker 2: you're wrong. And do we think they're wrong? Like, let's
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Speaker 2: let's ask that question because I think that's a good
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Speaker 2: starting point out of what they're projecting for next year.
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Speaker 2: Where are the places where we believe they're most likely
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Speaker 2: to be wrong?
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Speaker 3: My I guess my biggest area of concern would be
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Speaker 3: the unemployment rates staying exactly where it is right now.
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Speaker 3: We have seen a trend line here where it's increased
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Speaker 3: now year over year, by where are we a full
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Speaker 3: percentage point compared to a year and a half ago,
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Speaker 3: and so I personally would find it surprising if we
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Speaker 3: were able to level off at four point four percent
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Speaker 3: and see no increase from here or no sizeable increase
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Speaker 3: from here.
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Speaker 2: Now, the counter to that, there's two potential counters. Number One,
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Speaker 2: growth reaccelerates and as a result of that, there is
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Speaker 2: more demand for labor that pulls the unemployment rate down.
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Speaker 3: Yep.
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Speaker 2: So if you think that's gonna happen, the question that
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Speaker 2: you have to ask is where is the growth acceleration
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Speaker 2: going to come from? The place that I think you
9:42
Speaker 2: can pausibly get there is The Big Beautiful Bill had
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Speaker 2: a whole bunch of provisions in it that kicked in
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Speaker 2: basically next year. You know, some of them were in
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Speaker 2: effect this year, but they don't pay out until next year,
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Speaker 2: in things like no tax on tips, no tax on overtime,
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Speaker 2: increased tax credit, tax deductions for seniors. So potentially you
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Speaker 2: get more consumer spending coming through starting late in Q
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Speaker 2: one early in Q two, and then you've also got
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Speaker 2: some additional depreciation things that are kicking in for next year.
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Speaker 2: So if there's more capex coming from businesses, then you
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Speaker 2: can get that additional spend that drives more activity as well.
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Speaker 2: I think that that is very much possible. The counter
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Speaker 2: to this is that housing is in the toilet, and
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Speaker 2: construction for housing is going to get worse next year
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Speaker 2: most likely.
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Speaker 3: Yeah, it doesn't. It doesn't restart immediately either.
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Speaker 2: It's not even restart. The reason why housing's going to
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Speaker 2: get worse next year in all likelihood is prices are
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Speaker 2: falling in large parts of the country, and next year,
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Speaker 2: prices are going to be falling in a majority of
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Speaker 2: the country by the middle of the year. And if
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Speaker 2: you are a builder, you're not just competing against new homes,
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Speaker 2: you're competing against existing home stock. If that stuff is cheaper,
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Speaker 2: it either puts pressure on margins or forces you to
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Speaker 2: sell fewer units at the same price because you won't
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Speaker 2: sell the same number of units at the same price,
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Speaker 2: so you potentially have less construction activity next year. That's
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Speaker 2: not really a great growth sign. So that's your counter.
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Speaker 2: The other one, the labor market is teetering, and generally
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Speaker 2: once we get to this point in the labor market again,
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Speaker 2: it's been really surprising, quite honestly, that you haven't seen
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Speaker 2: the acceleration in a worsening that you normally see when
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Speaker 2: you get to some of these points in the labor market,
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Speaker 2: does that teetering finally, you know, kind of go over
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Speaker 2: the edge and the labor market shows a faster weakening. Maybe.
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Speaker 2: So I think there are viable cases for the economy
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Speaker 2: improves next year based on more consumer spending and more capex.
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Speaker 2: There are viable cases for the economy worsening based on
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Speaker 2: housing worsening in the labor market finally going off the cliff.
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Speaker 2: And this is the battle that we're going to see,
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Speaker 2: all against the backdrop of Hey, what's gonna happen with AI?
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Speaker 2: And so let's take a quick break, and when we
12:02
Speaker 2: come back, I want to talk about Oracle earnings from
12:04
Speaker 2: yesterday as it relates to that idea.
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13:07
Speaker 2: Mike. So, yesterday after the Bell Oracle reported their earnings
13:13
Speaker 2: and the stock is down fourteen percent today. So the
13:18
Speaker 2: assumption that someone would have is these earnings were a
13:22
Speaker 2: dumpster fire?
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Speaker 3: Is that an accurate description in your opinion? Compared to estimates? No,
13:29
Speaker 3: not really well. Their cloud sales increase thirty four percent, uh,
13:35
Speaker 3: their infrastructure business gained sixty eight percent. These were not
13:39
Speaker 3: far off from the estimates. They were, however, slightly worse
13:43
Speaker 3: than the estimates. And I think this speaks less to
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Speaker 3: the actual results and more to investor concern about who
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Speaker 3: are the actual winners and losers in this AI game.
13:57
Speaker 3: You have a different you have different take. You think
13:59
Speaker 3: it's dumb.
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Speaker 2: I think the results are borderline terrible.
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Speaker 3: Compared to I guess, but compared to analyst estimates, I
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Speaker 3: don't think they really were.
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Speaker 2: The earnings are not the problem, it's everything underlying them.
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Speaker 2: Do you know what percentage of their revenue for the
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Speaker 2: quarter they are spending on capex?
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Speaker 3: All of it?
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Speaker 2: Seventy five?
14:23
Speaker 3: Okay?
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Speaker 2: Do you know what percentage of revenue for the quarter
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Speaker 2: they are spending on depreciation for capex they have already
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Speaker 2: made thirteen point one Michael. This is before you even
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Speaker 2: account for the dramatic increase in capex that they say
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Speaker 2: they are going to do going forward, with their revenue
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Speaker 2: increasing at a much slower rate, they are going to
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Speaker 2: This is very simple. Their free cash flow is negative
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Speaker 2: ten billion dollars for the quarter. If they do not
14:52
Speaker 2: continue to borrow money or increase revenue dramatically, they will
14:56
Speaker 2: run out of money. Like it's it's that simple. That's
15:03
Speaker 2: why they're being treated this way. They're like, oh, no,
15:05
Speaker 2: we've got another one hundred and eighty billion dollars in
15:07
Speaker 2: future revenue commitments. Great, doesn't matter if you keep spending
15:11
Speaker 2: ten billion dollars more than you're bringing in every quarter.
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Speaker 3: Yeah, and all the uh, like, all the deals they're
15:17
Speaker 3: negotiating are for twenty twenty seven and beyond and they're.
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Speaker 2: With open Ai. Yeah, like two thirds of that future
15:25
Speaker 2: revenue projection is for a company that we don't even
15:28
Speaker 2: know is going to be here in two years, you know,
15:32
Speaker 2: open Ai. The whole promise of them is, hey, they're
15:34
Speaker 2: the ones with like the best models and the best
15:38
Speaker 2: erotica for adults and you know, all the stuff that
15:41
Speaker 2: they're talking about. What if like they're not Like we
15:45
Speaker 2: just saw Gemini come in and eat open AI's lunch
15:48
Speaker 2: last week. Granted, open Ai is supposed to be, you know,
15:51
Speaker 2: in theory releasing a new model in the next week
15:53
Speaker 2: or two that that counters that. But this is all
15:56
Speaker 2: expensive and requires more money for a company that already
15:59
Speaker 2: isn't profit and Oracle has basically committed to saying, yeah,
16:03
Speaker 2: we want to be, you know, the main provider of
16:06
Speaker 2: cloud solutions to open Ai. Well, you're doing that right now,
16:11
Speaker 2: and you're you're you're not really making money on the deal.
16:12
Speaker 2: And what happens if open Ai isn't what you think
16:16
Speaker 2: it's going to be in the next couple of years.
16:18
Speaker 3: So that's the problem is like there isn't much of
16:20
Speaker 3: a backup plan. Yeah, they have other customers, but ultimately
16:25
Speaker 3: open Ai is the one supporting the stock price, and
16:31
Speaker 3: that's a lot of concentration risk.
16:33
Speaker 2: It's it is a hugely risky move. And this is
16:36
Speaker 2: why despite in the previous quarter everyone looked at all
16:40
Speaker 2: you've got like three hundred billion in future revenue commitments.
16:42
Speaker 2: Now like, wow, your stock's gonna pop forty percent. Hey,
16:46
Speaker 2: you're going for me know, three hundred and forty billion
16:47
Speaker 2: in future revenue projections to five hundred. Well, you didn't
16:51
Speaker 2: have the same effect here.
16:53
Speaker 3: What could have Oracle said or done in the most
16:56
Speaker 3: recent quarter that wouldn't have resulted in investors dumping their
16:59
Speaker 3: stock like they are today. Like, I'm just trying to
17:01
Speaker 3: think of what shift you could have made here, because
17:03
Speaker 3: you weren't going to get the revenue any faster. You
17:06
Speaker 3: have to keep spending the money in order to get
17:09
Speaker 3: the future contracts. They're in a position here that I
17:12
Speaker 3: don't really understand how they dig themselves out of, other
17:15
Speaker 3: than some form of government backstop, like the CFO of
17:19
Speaker 3: open Ai was talking about.
17:21
Speaker 2: There's only one way through, and that is for them
17:23
Speaker 2: to just plow ahead, cross their fingers and hope that
17:27
Speaker 2: the revenue's there. It's the only thing they can do
17:30
Speaker 2: at this point because field the dreams theory again, like
17:35
Speaker 2: the debts already there, like they already have now you know,
17:38
Speaker 2: over one hundred billion dollars in debt. You can't just
17:41
Speaker 2: press the undo button on that. They have one way
17:45
Speaker 2: out of this, and it is you just gotta go
17:47
Speaker 2: full speed and I'm gonna take it's gonna go out.
17:52
Speaker 3: Takes something here as good news Jack. For months now,
17:55
Speaker 3: we have been bemoaning the concerns that we have about
18:00
Speaker 3: the AI industry that everyone is being treated as a winner.
18:02
Speaker 3: We at least now have one seemingly pretty big loser
18:06
Speaker 3: at the moment. Again, their stock price is still up
18:10
Speaker 3: nearly twenty percent for the year, so I don't want
18:13
Speaker 3: to consider them to, you know, be in death throws.
18:16
Speaker 3: But you know, what's the stock down since their peak
18:18
Speaker 3: a few months ago?
18:19
Speaker 2: Like half Let me take a look and see where
18:22
Speaker 2: they were.
18:23
Speaker 3: They were at three twenty eight so not.
18:25
Speaker 2: No, they were they got up to three forty five,
18:27
Speaker 2: did they Okay? Yep? So one three forty five. They're
18:32
Speaker 2: off forty three and a half percent.
18:33
Speaker 3: Yeah, So I mean that that's one positive that we'll
18:37
Speaker 3: take from this. Is not. Everyone that announces a deal
18:40
Speaker 3: with open AI is being treated like they are going
18:44
Speaker 3: to rule the world.
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Speaker 2: So I think that this is the problem. Like, yeah,
18:49
Speaker 2: if you look at the current quarter, sir, like nothing
18:51
Speaker 2: was like that dramatically different. But all of this stuff
18:55
Speaker 2: underlying it is pointing towards a company that is not
18:59
Speaker 2: healthy and that at some point is going to have
19:03
Speaker 2: to address these things. Because you cannot run your free
19:08
Speaker 2: cash flow at negative ten billion dollars a quarter in
19:12
Speaker 2: perpetuity and just expect everything to be fine.
19:16
Speaker 3: Yeah, at least not if you're Oracle.
19:18
Speaker 2: I don't think anyone can. Yeah, I mean, like even
19:21
Speaker 2: look even Apple, like if it started doing that, it
19:24
Speaker 2: would run out of money after you know, like nineteen
19:26
Speaker 2: years or something like that.
19:28
Speaker 3: Be a while.
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Speaker 2: Let's take a quick break, and when we return, we
19:32
Speaker 2: got Wall Street.
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20:01
Speaker 4: One day after the FED delivered it's expected interest rate cut,
20:04
Speaker 4: markets today are mixed after Oracles disappointing quarterly revenue at
20:09
Speaker 4: increase spending forecast, fueling deck concerns. Oracle shares are currently
20:14
Speaker 4: plunging thirteen percent right now. For markets, the Dow is
20:19
Speaker 4: up nearly one percent higher or four hundred and fifty
20:23
Speaker 4: one points, SMP five hundreds down nearly two tenths of
20:26
Speaker 4: one percent, NASDAC down just over seven tenths of a
20:29
Speaker 4: percent lower one hundred and seventy points, RUSS two thousand
20:32
Speaker 4: is up about a half a percent, Tenure Treasure Reel
20:36
Speaker 4: down four basis points at four point one one six percent,
20:40
Speaker 4: and crude oil down nearly two percent lower, trading a
20:43
Speaker 4: fifty seven dollars and thirty seven cents of barrel. Other
20:47
Speaker 4: AI names are all seeing sympathy losses in reaction to
20:50
Speaker 4: oracles earnings report. Nvidia, Broadcom, and AMD are all falling
20:55
Speaker 4: three percent at the moment. Speaking of AI, breaking news
20:59
Speaker 4: involving Disney this morning after the Media and Entertainment Jina
21:04
Speaker 4: now still we'll make a one billion dollar equity investment
21:07
Speaker 4: in open Ai. The investment will allow users to make
21:11
Speaker 4: videos of more than two hundred of Disney's copyright characters
21:14
Speaker 4: on open AI's video platform. Sora, including Marvel, Marvel, Pixar,
21:20
Speaker 4: and Star Wars. Disney stock is up over one percent. Meanwhile,
21:24
Speaker 4: Adobe shares arising nearly two percent after the software provider
21:28
Speaker 4: said it expects double digit revenue growth next year as
21:32
Speaker 4: it looks to expand its AI business elsewhere. Eli Lilly
21:36
Speaker 4: set a late stage trial of its next generation obesity
21:39
Speaker 4: drug delivered what appears to be the highest weight loss
21:42
Speaker 4: yet while reducing knee arthritis pain. ELI stock is climbing
21:47
Speaker 4: three percent, and Coca Cola announced CEO James Quincy will
21:51
Speaker 4: step down in March and will be replaced by COO
21:54
Speaker 4: Henrique Braun. Coke stock is down about one percent. I'm
21:59
Speaker 4: Tucker Silva in that Walltree Watch and remember you can
22:02
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22:05
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22:08
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22:14
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22:23
Speaker 2: Just nice to know that Disney just doesn't care about
22:25
Speaker 2: anything anymore. I was stunned to say, like, why don't
22:30
Speaker 2: you just like spit on all of your content creators,
22:33
Speaker 2: Like literally just go and spit on them, because like
22:36
Speaker 2: this is basically what you just did. Like why would
22:39
Speaker 2: anyone go work for Disney at this point? I always
22:42
Speaker 2: thought they would protective of their characters, So I was
22:46
Speaker 2: really surprised to see this. I I although I'm not
22:52
Speaker 2: I'm sure Open a Eye is gonna be like, oh,
22:54
Speaker 2: like we're building protection so that like you can't have
22:57
Speaker 2: Mickey be heading an elephant or something like that. But
23:00
Speaker 2: like what you think that people are not going to
23:02
Speaker 2: figure out how to make all kinds of bad crap
23:05
Speaker 2: with this using Disney characters? Of course?
23:08
Speaker 3: Why yeah, why what does who need this? Who needed this?
23:13
Speaker 3: And why?
23:13
Speaker 4: Because it's AI slop and we're all getting dumber.
23:17
Speaker 2: Like I I don't know why we cover companies anymore.
23:24
Speaker 2: Like if this is all it's gonna be, is just
23:25
Speaker 2: like giving away all your crap, then what's the point
23:27
Speaker 2: of even like having a business.
23:30
Speaker 3: So this deal that they inked basically they're allowed to
23:35
Speaker 3: invest in Open Ai for shares of their company along
23:39
Speaker 3: with uh their.
23:40
Speaker 2: Agreement to so like Open Eye is gonna pay Disney
23:44
Speaker 2: for this fine, But like you just devalued your entire brand. Yeah,
23:49
Speaker 2: if I don't need to go watch Disney movies in
23:52
Speaker 2: order to watch Disney characters, what's the point, Like the
23:59
Speaker 2: whole thing's gone, that's it. You'd like, you're done, it's over. Well,
24:08
Speaker 2: if if I can make my own Disney movie, why
24:11
Speaker 2: do I need to go see a Disney movie?
24:14
Speaker 3: I guess I would argue that nobody's seeing Disney movies now,
24:17
Speaker 3: so what someone is, Mike, let's not say that no
24:20
Speaker 3: one's Yeah, but like maybe that's the point that they
24:24
Speaker 3: are making. I'm not willing to say that Disney's as
24:26
Speaker 3: a company as an entity is dead and their creative
24:28
Speaker 3: departments are over based on this deal.
24:31
Speaker 2: But why would I go work for this company? They
24:33
Speaker 2: just licensed all of the stuff I do to the
24:36
Speaker 2: general public and I don't get anything from that. Why
24:40
Speaker 2: would I go make any movies.
24:42
Speaker 3: For Disney because all the other companies are going to
24:44
Speaker 3: do it too, That's my only guess, Like, why would
24:47
Speaker 3: I go work for Disney because my employer's doing the
24:49
Speaker 3: exact same thing or they're already doing.
24:53
Speaker 2: This is why no one's going to work in this industry,
24:55
Speaker 2: Like they are killing their business. This is the what
24:58
Speaker 2: the point I just made. Yeah, like anyone who dreams
25:03
Speaker 2: of working in film is going to say, no, this
25:05
Speaker 2: is stupid and they're just not going to do it.
25:08
Speaker 3: And here's the logical piece to me too. It maybe
25:12
Speaker 3: maybe I am missing this, but did you saw the
25:17
Speaker 3: stuff about the Norwegian McDonald's commercial?
25:21
Speaker 2: Oh? Was this the one that McDonald's had to poll
25:23
Speaker 2: because I generated? Yes? Yeah, people don't like this stuff.
25:26
Speaker 3: People hate it. And so what exactly are you trying
25:30
Speaker 3: to accomplish here? Because every time somebody, any company has
25:33
Speaker 3: tried to release an AI generated advertisement or pretty much
25:40
Speaker 3: anything else, it's gotten very poor reception from customers. The
25:45
Speaker 3: McDonald's commercial I watched it. It was stupid. Yeah, it
25:48
Speaker 3: was dumb, Like it was dumb. It was very cheap
25:52
Speaker 3: to create, no doubt, but it was poorly received. And
25:57
Speaker 3: so what makes you think that licensing your characters to
26:01
Speaker 3: open a eye is going to result in anything different?
26:04
Speaker 3: The only stuff that's going to be popular is stuff
26:06
Speaker 3: that you don't want to see your characters doing.
26:08
Speaker 2: Correct, it's going to be oh like I don't even know,
26:13
Speaker 2: it's not going to be good. Yeah, And and again
26:17
Speaker 2: it's it's two different, two things where like, yes, no
26:21
Speaker 2: one wants to see this, but everyone's just gonna make
26:23
Speaker 2: the dumb stuff and that's what you're going to get
26:25
Speaker 2: and there's no revenue in that, so you're you're simultaneously
26:29
Speaker 2: killing your own ip and no one's going to watch
26:32
Speaker 2: the new stuff. Like the entire thing just doesn't mean anything.
26:39
Speaker 2: You used to have to go if again, like just
26:44
Speaker 2: from my own life and everything. When I was a kid,
26:46
Speaker 2: Looney Tunes. Looney Tunes was Disney.
26:48
Speaker 3: Right, No, Warner Brothers, Yeah.
26:51
Speaker 2: Okay, whatever, Looney Tunes. Let's say that Warner Brothers did this,
26:54
Speaker 2: which they got enough of their own stuff going on
26:56
Speaker 2: right now, so let's uh let them get through there.
26:59
Speaker 2: But let's say that they do a deal like this.
27:01
Speaker 2: It used to be I'd have to sit down on
27:03
Speaker 2: my couch and watch Looney Tunes on TV and I'd
27:06
Speaker 2: get whatever it is. Now it's different. I could go
27:08
Speaker 2: on YouTube, and I'm sure I could go to the
27:11
Speaker 2: Looney Tunes YouTube channel and I could watch Bugs, Bunny
27:14
Speaker 2: and Elmer Fudd and all of them do all their
27:15
Speaker 2: things great, but I still have to go through them.
27:19
Speaker 2: And the ad revenue that they generate from that goes
27:21
Speaker 2: to Warner Brothers and so on and so on. If
27:26
Speaker 2: my friend Jim goes and makes you know, Elmer Fudd
27:31
Speaker 2: chasing I don't know, like a crocodile around with a
27:36
Speaker 2: saw and sends it to me personally, there's nothing like
27:41
Speaker 2: there's no commerce there, and I don't need to go
27:43
Speaker 2: anywhere for my fix anymore.
27:45
Speaker 3: I'm I'm less concerned about the commerce side of things
27:48
Speaker 3: because I think eventually look open Aye is not licensing
27:52
Speaker 3: this content so that they can permanently provide it to
27:53
Speaker 3: everyone for free. That would be my take is that
27:56
Speaker 3: they're going to plan to monetize it at some point.
27:59
Speaker 3: My point, as you are worsening your product, cheapening your
28:03
Speaker 3: product and private sharing though, Like so let's say no,
28:09
Speaker 3: but they can monetize the creation.
28:10
Speaker 2: Of it, okay, But then, like, what what are you
28:13
Speaker 2: gonna do after that? Like, it's not a DVD. You
28:16
Speaker 2: can't be like, well, you have to have the express
28:19
Speaker 2: written consent of Bob no oh.
28:22
Speaker 4: The big FBI warning at the beginning of the video,
28:25
Speaker 4: you know, like don't.
28:26
Speaker 2: Top this video, Like okay, Like what are you gonna do?
28:30
Speaker 2: Have that at the beginning of every video that you
28:32
Speaker 2: send via text message? I mean I was literally Just
28:35
Speaker 2: as an example, I'm on a group text chain that
28:38
Speaker 2: yesterday one of my friends was sending videos of us
28:43
Speaker 2: based on pictures that we have taken over the last
28:45
Speaker 2: few years. There's no disclaimer, there's no disclosure. It's just like, hey, like,
28:51
Speaker 2: here's what's going on, Like, this is one of your
28:53
Speaker 2: houses on fire, this is one of your dogs biting
28:56
Speaker 2: another person, Like, and what are you going to do
28:59
Speaker 2: with this? And Disney things that can control this? You
29:06
Speaker 2: want to try to ride that tiger? I like, I
29:11
Speaker 2: can't say how dumb I think this is.
29:13
Speaker 3: Yeah, I'm trying to figure out in my mind why
29:16
Speaker 3: you go and do this? And I think the answer
29:18
Speaker 3: is we can't control.
29:21
Speaker 2: We're short sighted, and we think it'll make us money.
29:24
Speaker 3: So if I'm going to be the most optimistic about it,
29:26
Speaker 3: it is this. We can't control it anyway, Yeah, chat GPT,
29:30
Speaker 3: if we want to sue them for creating this stuff,
29:32
Speaker 3: then we might be successful there, but fifteen other video
29:36
Speaker 3: generation companies that aren't controlled by US authorities and we
29:40
Speaker 3: have no ability to take down the content are going
29:42
Speaker 3: to crop up next to it, and so we might
29:45
Speaker 3: as well make some money while we can because otherwise everyone,
29:48
Speaker 3: you know, every video generator you're out there, is going
29:50
Speaker 3: to create you know, fake Bluey videos, fake Mickey Mouse videos. Anyway,
29:57
Speaker 3: at least we're going to license some money out of this,
30:00
Speaker 3: and you know, for some legitimate company out there. That's
30:03
Speaker 3: my most optimistic view of this is, hey, we're screwed anyway,
30:06
Speaker 3: so let's get some money in the meantime.
30:09
Speaker 2: And it continues to push me towards the point where
30:11
Speaker 2: it's like this might kill the Internet. Like it really,
30:17
Speaker 2: I don't think we're ready for what's coming the next
30:19
Speaker 2: five years. I don't think we are. And I just
30:25
Speaker 2: I can't see this ending. Well, what else did you
30:27
Speaker 2: talk about there, Tucker? There was something else that caught
30:29
Speaker 2: my ear?
30:30
Speaker 4: Oh geez, hold on, Eli, Lily, No, that's good, a Doobe.
30:37
Speaker 2: No, that's fine. It was just this.
30:40
Speaker 3: Let's take a break.
30:41
Speaker 2: Yeah, let's take a break and see if we can.
30:44
Speaker 3: Chuck's gotta cool off, take a cold bath. Chuck Disney's
30:48
Speaker 3: the one who needs to take a cold bath. They
30:49
Speaker 3: just sold their company for like pennies on the dollar. Basically, Yeah, Like,
30:55
Speaker 3: I just I don't.
30:57
Speaker 2: Know why people think they can control this. They can't.
31:02
Speaker 2: And the only way to deal with it is to
31:06
Speaker 2: have zero tolerance for losing your IP and Disney just
31:10
Speaker 2: did the exact opposite, and I don't know what they're
31:14
Speaker 2: gonna do. Let's take a quick break. When we come back,
31:17
Speaker 2: we'll talk about uh, let's see, oh, oil takers and
31:21
Speaker 2: the reflation trade.
31:22
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32:09
Speaker 2: Mike, before we move on to talk about oil tankers,
32:13
Speaker 2: I have one more AI thing I need to say.
32:17
Speaker 2: Hit me. Did you happen to see the what is now?
32:22
Speaker 2: Irrelevant Time magazine cover for their Person of the Year
32:26
Speaker 2: for this year that was announced this morning. No, it's
32:30
Speaker 2: the architects of AI. And are you you remember the
32:34
Speaker 2: picture from I don't know the year, but like nineteen tens,
32:37
Speaker 2: nineteen twenties of all of the construction workers sitting having
32:41
Speaker 2: lunch on the ibeam above New York City. Sure they
32:44
Speaker 2: took that iconic picture of young men risking their lives
32:49
Speaker 2: for very little pay to go and build great things
32:52
Speaker 2: and replaced it with eight tech CEOs like on their
32:56
Speaker 2: phones and laptops sitting up there, probably using AI to
33:00
Speaker 2: make it.
33:01
Speaker 3: Almost undoubtedly based on this picture that I'm looking at, And.
33:04
Speaker 2: I just can't think of anything like more on the
33:08
Speaker 2: nose than a completely irrelevant magazine that I don't think
33:12
Speaker 2: even publishes a print version anymore. Is that correct? As
33:15
Speaker 2: far as I know, I believe they stopped publishing their
33:17
Speaker 2: print version several years ago, using tools that could help
33:22
Speaker 2: to destroy that magazine's you know, reach even further to
33:27
Speaker 2: promote a group of billionaires who are basically racing a
33:31
Speaker 2: ticking debt clock, to try to create technology to allow
33:37
Speaker 2: companies to replace workers.
33:41
Speaker 3: And they probably trained themselves on a bunch of times
33:43
Speaker 3: content over the years.
33:44
Speaker 2: Probably probably already ripped off their ip. I mean, man, like,
33:49
Speaker 2: doesn't it just feel like like there's just a vampire
33:54
Speaker 2: like grabbing it our neck the entire time? Now?
33:59
Speaker 3: No, but we do seemingly have an infatuation with glorifying
34:02
Speaker 3: billionaire tech CEOs that I cannot wrap my head around.
34:06
Speaker 2: Like I I just don't get it. I just don't
34:12
Speaker 2: get it. But that's just me.
34:14
Speaker 4: When the holidays roll in and the cold settles over
34:18
Speaker 4: New England, find your escape in the US Virgin Islands.
34:22
Speaker 4: Trade the freezing temps and gray skies for warm sun,
34:25
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34:29
Speaker 4: the second you land. This December through early January, Saint
34:33
Speaker 4: Croix ignites with the Crucian Christmas Festival, a celebration over
34:36
Speaker 4: a century old. Frederick Seig comes alive with colorful parades,
34:40
Speaker 4: live regae in streets filled with the sites and flavors
34:44
Speaker 4: of real Caribbean culture. It's the holiday season with the
34:47
Speaker 4: tropical beat from there explores Saint Thomas with its duty
34:51
Speaker 4: free shopping in the legendary views in Megan's Bay, or
34:54
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34:57
Speaker 4: park trails make every day feel like you your own
35:00
Speaker 4: private adventure.
35:02
Speaker 3: Getting there could.
35:03
Speaker 2: Not be easier.
35:04
Speaker 4: No passport is needed, and there's no money to exchange.
35:07
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35:10
Speaker 4: pure sunshine. This holiday season, let yourself fall naturally in
35:14
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35:16
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35:21
Speaker 4: com and book your trip today. That's visit USVII dot com.
35:25
Speaker 3: I stand corrected by the way, Chuck, Time magazine apparently
35:29
Speaker 3: does still publish a print version of itself, which.
35:32
Speaker 2: Was this It was a newsweek that stopped publishing.
35:35
Speaker 3: Recently, right, I can't recall.
35:37
Speaker 2: I think it might have been Newsweek. But in any case,
35:41
Speaker 2: I would imagine that the circulation for Time is a
35:45
Speaker 2: little smaller than it used to be.
35:46
Speaker 3: During the second half of two thousand and nine, they
35:51
Speaker 3: saw giant declines twenty twelve at circulated three point three million.
35:55
Speaker 3: By twenty twenty four, you were talking about one million
36:00
Speaker 3: for combined print and digital back in twenty twenty four.
36:04
Speaker 2: So yeah, but exactly is a digital magazine.
36:09
Speaker 3: Not something you would want to read, Yeah, uh, US
36:13
Speaker 3: seas US season is oil tanker off the Venezuela coast.
36:18
Speaker 2: It is. It was unclear at the time exactly which
36:22
Speaker 2: vessel this was, and now appears that it is known
36:25
Speaker 2: as the Skipper, which again has been involved in a number.
36:30
Speaker 3: Really cute name for a boat that ships oil between
36:33
Speaker 3: Venezuela and Iran.
36:35
Speaker 2: Yeah, it's been. It's been involved reportedly in a number
36:39
Speaker 2: of different transactions involving oil that has been sanctioned in
36:46
Speaker 2: the last several years. Oil market's not really paying much
36:50
Speaker 2: attention to this.
36:51
Speaker 3: I want to bring this up right, Jack. We have
36:54
Speaker 3: a massive you know, oil sanctioned, the seizure of an
36:58
Speaker 3: oil vest the President toted as the largest one ever seized,
37:04
Speaker 3: and oil prices are down nearly two percent today. I
37:07
Speaker 3: know there's other stuff going on, specifically the Russia Ukraine
37:10
Speaker 3: deal that's being debated, but just kind of fascinating that
37:15
Speaker 3: you have this happening. An oil price is moving down
37:17
Speaker 3: sharply today.
37:18
Speaker 2: So I don't know what to make of this. As
37:21
Speaker 2: far as you know exactly where things go from.
37:24
Speaker 3: Here, I think we can view it as an escalation
37:26
Speaker 3: in the US Venezuela tension.
37:30
Speaker 2: Yeah, it sure seems like something's going to happen there,
37:33
Speaker 2: like something further. I don't know exactly what form it
37:35
Speaker 2: takes or the timing in this and that, but it
37:37
Speaker 2: sure seems like things are heading in that direction.
37:40
Speaker 3: Especially now that what's I'm sorry, who's the Nobel Prize winner.
37:45
Speaker 3: I have no idea the Venezuelan opposition leaders now out
37:48
Speaker 3: of the country. It seems like that's maybe opened a
37:50
Speaker 3: door for the Trump administration to escalate further.
37:52
Speaker 2: So, look, this potentially has you know, big global geopolitical ramifications,
37:57
Speaker 2: just because when you look at where Venezuela tends to
37:59
Speaker 2: ex sport oil too, tends to be places that we're
38:03
Speaker 2: not huge fans of necessarily, you know, places like China
38:06
Speaker 2: and so on and so forth, and so you do wonder, hey,
38:10
Speaker 2: is there another you know, shoot a drop that potentially
38:14
Speaker 2: could influence geopolitics further? But at this point, nothing you know,
38:19
Speaker 2: moving beyond what we know today. Quick break here and
38:23
Speaker 2: when we come back, we got out of two coming
38:25
Speaker 2: up