Latest / The Financial Exchange Show / AI Panic, Tariff Whiplash, and the Housing Market Stall

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AI Panic, Tariff Whiplash, and the Housing Market Stall · The Financial Exchange Show

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  Speaker 1: and fall lane.
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  Speaker 2: Good more than welcome back to the financial exchange markets
• 1:12
  Speaker 2: in recovery mode today after a pretty decent selloff yesterday
• 1:17
  Speaker 2: on the tales of another AI disruption report from another
• 1:23
  Speaker 2: researcher individual that painted a pretty dire scenario out for
• 1:28
  Speaker 2: how AI could evolve in the twenty twenty six to
• 1:33
  Speaker 2: twenty twenty eight landscape. We had stock selling off yesterday,
• 1:36
  Speaker 2: bit of recovery mode, as I mentioned, now Dow up
• 1:38
  Speaker 2: three hundred and seventy five points three quarters of a percent,
• 1:41
  Speaker 2: the S and P five hundred up to thirty eight
• 1:43
  Speaker 2: points more than half of a percent, and the NASDAC
• 1:46
  Speaker 2: up about nine tenths of one percent in early trading. Here.
• 1:51
  Speaker 2: Taking a look around, you've got oil prices falling about
• 1:54
  Speaker 2: three quarters of a percent, commodity prices moving, gold down
• 1:59
  Speaker 2: one percent, silver up one percent. But the big news
• 2:03
  Speaker 2: over the last few days has been mostly about tariffs.
• 2:07
  Speaker 2: A tariff Supreme Court overruling the Trump administration's use of
• 2:12
  Speaker 2: IIPA tariffs refunds now to be this complicated process. Ten
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  Speaker 2: percent new average effective tariffs in place as of today, sorry,
• 2:21
  Speaker 2: not average effective ten percent global tariffs for a period
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  Speaker 2: of one hundred and fifty days in place, now potentially
• 2:26
  Speaker 2: increasing to fifteen percent in the near future. And then
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  Speaker 2: this morning we did get the announcement of a pretty
• 2:31
  Speaker 2: big deal between Meta and Advanced micro Devices AMD. AMD stock,
• 2:37
  Speaker 2: who will be supplying semiconductors to Meta as part of
• 2:40
  Speaker 2: their AI buildout, is up about seven percent today. Meta
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  Speaker 2: stock in early trading, not moving a whole lot this morning,
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  Speaker 2: but concerns from investors even on that deal. While optimistic
• 2:51
  Speaker 2: about the inking of this deal with AMD supplying chips
• 2:56
  Speaker 2: to Meta, some concern about the kind of the circular
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  Speaker 2: nature of the deal because in addition to supplying semiconductors
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  Speaker 2: in exchange for the one hundred billion dollars, AMD will
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  Speaker 2: also be supplying warrants for Meta to own a bunch
• 3:10
  Speaker 2: of AMD stock, and you start to just link all
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  Speaker 2: of these companies and their success or failure together and
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  Speaker 2: raises some big questions. The other big news overnight was
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  Speaker 2: Home Depots earnings out this morning, and in spite of
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  Speaker 2: slow housing sales, they did manage to eke out a
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  Speaker 2: surprise in terms of their earnings. Anything highlighting to you,
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  Speaker 2: Paul in terms of their performance in the most recent quarter,
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  Speaker 2: because again this stock pretty much flat for the last
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  Speaker 2: twelve months, up and down, but not having gained a
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  Speaker 2: whole lot of traction as the housing slow down has
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  Speaker 2: persisted through all of twenty twenty five.
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  Speaker 3: Yeah, they were able to post a increase on their
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  Speaker 3: comparable sales metric, which basically looks at stores that have
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  Speaker 3: been open for at least a year. They saw close
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  Speaker 3: to a half percent increase in the quarter that ended
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  Speaker 3: on February first. In terms of the numbers in general,
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  Speaker 3: they still are posted a four percent quarterly sales decline
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  Speaker 3: on the on the whole, and it still is a
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  Speaker 3: situation where the housing market, as noted by the CFO,
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  Speaker 3: has been sort of frozen over the last three years
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  Speaker 3: or so. They've seen some good growth on the professional
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  Speaker 3: contractor side of things. Home Duco has made some acquisitions
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  Speaker 3: to really sort of build out its pros division, who
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  Speaker 3: spend a lot more than the regular retail Joe, you know,
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  Speaker 3: you and I going to the store on a weekend basis.
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  Speaker 3: But ultimately them, like many other businesses out there, are
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  Speaker 3: still in a very tepid period of growth just because
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  Speaker 3: the housing market has really paused for the last few years.
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  Speaker 3: Home Depot, as you most people remember ripped COVID and
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  Speaker 3: post COVID because a lot of people had excess savings
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  Speaker 3: and we're looking to make upgrades to their properties.
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  Speaker 2: And without that transaction volume, that is the piece that
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  Speaker 2: is really driving sales for companies like home Depot, not
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  Speaker 2: the only ones. Furniture producers, flooring makers, all sorts of
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  Speaker 2: suppliers to the home manufacturing process are just seeing slowdowns
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  Speaker 2: because of the lack of transaction volume. I think the
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  Speaker 2: positive news on that front is we've talked a lot
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  Speaker 2: about the housing market obviously and showing signs of thawing there. Obviously,
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  Speaker 2: affordability is still an issue, but you did see mortgage
• 5:23
  Speaker 2: rates yesterday go below six percent for the first time
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  Speaker 2: in a while according to Mortgage News Daily. And then
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  Speaker 2: the inventory situation is always one that I keep an
• 5:31
  Speaker 2: eye on. So most recent data that we have from
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  Speaker 2: National Association of Realtors is for January of twenty twenty six,
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  Speaker 2: and it gives us the number of active listings that
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  Speaker 2: are out there for single, multi family, et cetera, but
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  Speaker 2: specifically residential properties. And what it found is that compared
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  Speaker 2: to January of twenty twenty across the United States as
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  Speaker 2: a whole, we're at about ninety six percent of the
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  Speaker 2: inventory levels that we were in January of twenty twenty.
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  Speaker 2: Compairing that time period because it's obviously the most relevant
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  Speaker 2: January to January time period pre COVID. It was still
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  Speaker 2: a pretty tight housing market back then, but we're at
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  Speaker 2: least getting back to that normal level. And as we've
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  Speaker 2: talked about, some areas of the country, including some of
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  Speaker 2: the those populated areas of the country, are well above that.
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  Speaker 2: California is almost exactly at their pre COVID inventory levels, Florida,
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  Speaker 2: according to the same data, is at twenty two and
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  Speaker 2: a half percent more than their January twenty twenty levels,
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  Speaker 2: and Texas has a one hundred and thirty four percent
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  Speaker 2: of their pre COVID inventory level, So you've seen some
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  Speaker 2: improvement there. Again, if you're listening to us in the Northeast,
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  Speaker 2: I understand this is a foreign concept to you. In Connecticut,
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  Speaker 2: for example, the active listings in the state of Connecticut
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  Speaker 2: are twenty nine percent of where they were in January
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  Speaker 2: of twenty twenty. Still don't understand how Connecticut has just
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  Speaker 2: continued to have no homes for sale in main sixty
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  Speaker 2: one percent of total active listings compared to Jay and
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  Speaker 2: you're a twenty twenty in Massachusetts sixty three percent. I
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  Speaker 2: cherry picked a few states in the northeast here just
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  Speaker 2: to give us an example, but New Hampshire, Vermont, they all,
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  Speaker 2: Rhode Island all fall the same trend as well, and
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  Speaker 2: so here it remains a highly regional scenario here, where
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  Speaker 2: overall across the country the situation is improving the problem
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  Speaker 2: for companies like home Depot. If you have inventory in
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  Speaker 2: places like Texas like Florida still going up, that means
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  Speaker 2: prices may still be likely to fall. That is not
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  Speaker 2: an environment that you want to build homes in, and frankly,
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  Speaker 2: just not a lot of space in Connecticut to build
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  Speaker 2: new homes. So I'm not sure what it means for
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  Speaker 2: the overall state of housing development. I do expect that
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  Speaker 2: transaction volumes will pick up in twenty twenty six, because ultimately,
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  Speaker 2: if your home is sitting out there for sale in
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  Speaker 2: Florida for six months, you're probably going to ultimately lower
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  Speaker 2: the price in order to attract a buyer or in
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  Speaker 2: Texas or in other parts of the country that are
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  Speaker 2: seeing this trend develop, and that volume in of itself
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  Speaker 2: should help out these suppliers a little bit. But as
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  Speaker 2: you can imagine the amount of stuff you buy as
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  Speaker 2: a home builder compared to the amount of stuff you
• 8:15
  Speaker 2: buy as a buyer of an existing home, of a
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  Speaker 2: used home, if you will, it just doesn't compare you.
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  Speaker 2: We all do stuff, we all know, replace the light switches,
• 8:27
  Speaker 2: we might paint something. We might in my case, we
• 8:30
  Speaker 2: did a giant renovation with new floors and a brand
• 8:33
  Speaker 2: new kitchen and all sorts of stuff. But even that
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  Speaker 2: compared to building a brand new home does not quite
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  Speaker 2: get you there. And the home building in this country
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  Speaker 2: is primarily done in the sun Belt, and those are
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  Speaker 2: the areas of the country where it just doesn't look
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  Speaker 2: terribly desirable right now to build. Right, let's take quick break.
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  Speaker 2: When we come back, we're playing a little bit at
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  Speaker 2: Paul, we continue to dive through and investors, especially do
• 11:09
  Speaker 2: the good, the bad, and the ugly of the AI
• 11:12
  Speaker 2: trade and what it might mean for all different constituents,
• 11:16
  Speaker 2: from foreign companies supplying semiconductors to domestic companies that are
• 11:23
  Speaker 2: trying to implement the tools. There was just a story
• 11:26
  Speaker 2: out this morning of how a bunch of Chinese AI
• 11:30
  Speaker 2: developers have been training their own AI tools on anthropics
• 11:34
  Speaker 2: claude and what sort of national security concerns that represents, which,
• 11:39
  Speaker 2: by the way, I would think a heck of a
• 11:41
  Speaker 2: lot bigger than any of the other stuff that we
• 11:44
  Speaker 2: are worried about when it comes to national securities, such
• 11:47
  Speaker 2: as importing cast iron. But nonetheless, we are trying to
• 11:51
  Speaker 2: everyone out there is trying to sort out who is
• 11:53
  Speaker 2: going to be the winner and loser. And quite frankly,
• 11:55
  Speaker 2: I think that I don't have any expertise in this.
• 11:58
  Speaker 2: But two competing pieces here. One, you know, the impact
• 12:02
  Speaker 2: of AI spending on the US economy may be overstated.
• 12:05
  Speaker 2: It's threat to the job market isn't. The other the
• 12:07
  Speaker 2: economy needs more competition and AI could make that happen.
• 12:11
  Speaker 2: I can see how both of those can be true
• 12:13
  Speaker 2: at the same time. What are we outlining here? And
• 12:17
  Speaker 2: I guess what's how do we stack up the risks
• 12:21
  Speaker 2: and opportunities here for something like this.
• 12:24
  Speaker 3: Let's tackle the job market first, where basically, what is
• 12:28
  Speaker 3: the premise of this piece and Barons and has been
• 12:30
  Speaker 3: suggested for the last year or so as these AI
• 12:34
  Speaker 3: developments keep coming through, is that there is going to
• 12:37
  Speaker 3: be a significant job loss on sort of the entry
• 12:41
  Speaker 3: level positions of the economy. Where you'll have I think
• 12:46
  Speaker 3: about myself selfishly whenever we get into these conversations. I
• 12:49
  Speaker 3: was hired out of college to work in a call center,
• 12:52
  Speaker 3: a job that five years from now. I don't think
• 12:55
  Speaker 3: that they're taking me on just because there are going
• 12:58
  Speaker 3: to be innovations within this that eliminate a lot of
• 13:01
  Speaker 3: those jobs, and so as a result of that, you
• 13:03
  Speaker 3: would see a big uptick in unemployment throughout the country.
• 13:07
  Speaker 3: I caution on some of the dire circumstances they're mentioned
• 13:10
  Speaker 3: here one in this piece. They're quoted the Anthropic CEO
• 13:13
  Speaker 3: who's behind a lot of the product innovations on cloud
• 13:17
  Speaker 3: and seems I'm sure has a very good feel of
• 13:21
  Speaker 3: where our official intelligence far better than me. But he
• 13:23
  Speaker 3: had mentioned this idea of unemployment rising to as high
• 13:27
  Speaker 3: as twenty percent as a result of these white college
• 13:29
  Speaker 3: jobs being eliminated by the end of the decade. I
• 13:32
  Speaker 3: tend to take that with a grain of salt. Obviously,
• 13:35
  Speaker 3: it's it's someone in the best interest of the CEO
• 13:38
  Speaker 3: of Anthropic to really trumpet AI and all of the
• 13:41
  Speaker 3: innovation that's going to bring. Adoption of new technology takes
• 13:45
  Speaker 3: time a little bit longer than I think tech companies
• 13:49
  Speaker 3: tend the pace that they tend to move that so
• 13:52
  Speaker 3: that's where we sit on the unemployment side.
• 13:54
  Speaker 2: I take on the unemployment side too. I just want
• 13:56
  Speaker 2: to bring this up that I don't know. I'm sure
• 13:59
  Speaker 2: they're a job that will be made irrelevant because of
• 14:01
  Speaker 2: this new technology, just like there were jobs that were
• 14:04
  Speaker 2: made irrelevant with each technological innovation that got created. Before
• 14:08
  Speaker 2: the computer, there were a whole bunch of people who
• 14:10
  Speaker 2: used to sit in cubicles physically writing out spreadsheets for
• 14:14
  Speaker 2: accountants and for finance departments. And then the computer came
• 14:18
  Speaker 2: around you could do all those computations and those jobs
• 14:21
  Speaker 2: were eliminated. But guess what new ones were created? And
• 14:23
  Speaker 2: I think through AI of how that could how that
• 14:26
  Speaker 2: could play out? Right? Are there jobs that are done
• 14:30
  Speaker 2: in our own organization that might not need to be
• 14:33
  Speaker 2: done if AI is successful? Maybe? Right, Like maybe a
• 14:37
  Speaker 2: very basic analytical role where I am running numbers and
• 14:41
  Speaker 2: crunching them in the background is no longer necessary an
• 14:44
  Speaker 2: organization like ours. But on the other hand, I think
• 14:46
  Speaker 2: of how much money I would pay somebody today to
• 14:52
  Speaker 2: come in and build a secure AI system, AI driven
• 14:57
  Speaker 2: system internally to my organization that could feed from all
• 15:00
  Speaker 2: of my different data and build me a efficiency tool
• 15:05
  Speaker 2: for my human beings that we like. I would pay
• 15:07
  Speaker 2: a lot of six figures annually for somebody to come
• 15:10
  Speaker 2: work on that. And so I continue to believe that
• 15:13
  Speaker 2: with each technological technological innovation, there are entire industries that
• 15:18
  Speaker 2: will be put out of business, entire worker categories that
• 15:21
  Speaker 2: will not exist anymore because of it, like every other
• 15:24
  Speaker 2: technology has done, and then there will be new jobs
• 15:27
  Speaker 2: created as a result of that productivity. And that remains
• 15:31
  Speaker 2: my personal view in spite of all these dour predictions
• 15:34
  Speaker 2: about the labor mark might as well.
• 15:35
  Speaker 3: That's why I push back on this idea of this
• 15:38
  Speaker 3: twenty percent unemployment, because guess what if I lose my
• 15:41
  Speaker 3: job doing this white collar gig that we have, I
• 15:44
  Speaker 3: guess I'm gonna go to my brother in LAWT Tree
• 15:45
  Speaker 3: Company and start grabbing an axe. Start so we're gonna know, sorry,
• 15:48
  Speaker 3: grab it changed all we are gonna just the point
• 15:51
  Speaker 3: being that we're gonna find that you gotta find a
• 15:54
  Speaker 3: new job, you gotta have.
• 15:55
  Speaker 2: The reality is I think that we as a society,
• 15:58
  Speaker 2: in the United States especially, but probably globally, are really
• 16:01
  Speaker 2: bad at retraining existing workers, especially older ones. And so
• 16:06
  Speaker 2: I do have concerns about the fifty five year old
• 16:08
  Speaker 2: website developer yep I have concerns about the forty nine
• 16:12
  Speaker 2: year old who's been working in software sales or all
• 16:16
  Speaker 2: of these different areas, data consolidation, any of these areas
• 16:20
  Speaker 2: that are very obviously easy to do from AI perspective.
• 16:23
  Speaker 2: And if you are in the second half of your
• 16:25
  Speaker 2: career because of agism in the workplace and because of
• 16:29
  Speaker 2: your skill set getting disrupted, Yeah, I worry about that
• 16:32
  Speaker 2: on an individual basis, just not as a societal basis.
• 16:37
  Speaker 2: The competition piece, though, is more interesting to me, So
• 16:40
  Speaker 2: we have you can look at the competition piece from
• 16:43
  Speaker 2: a number of different lenses. Certainly, there are fewer publicly
• 16:47
  Speaker 2: traded companies available in markets today. One other measure that
• 16:52
  Speaker 2: I thought was interesting, According to the Federal Reserve, the
• 16:54
  Speaker 2: share of employment accounted for by newly formed firms fell
• 16:58
  Speaker 2: forty three percent between nineteen eighty and twenty sixteen. So hey,
• 17:03
  Speaker 2: new companies are just not employing as many people now,
• 17:07
  Speaker 2: and new companies have a lot to offer, right Sometimes
• 17:10
  Speaker 2: you're getting compensated with shares in the company. How many
• 17:13
  Speaker 2: people do you know that worked in you know, a
• 17:15
  Speaker 2: new startup twenty years ago that did not you know,
• 17:19
  Speaker 2: they worked as a secretary or as an hr manager
• 17:22
  Speaker 2: that you know, came into a lot of wealth because
• 17:24
  Speaker 2: it was a successful company that issued shares as a
• 17:27
  Speaker 2: form of their compensation. There's a lot of that that
• 17:30
  Speaker 2: is not occurring as much these days because of the
• 17:33
  Speaker 2: giant motes of huge companies. And I think most certainly,
• 17:37
  Speaker 2: if there is one result of the AI spend and
• 17:42
  Speaker 2: build out from these companies, it does seem to me
• 17:46
  Speaker 2: that it's going to be easier to launch a company
• 17:51
  Speaker 2: with all the tools you need because the startup costs
• 17:54
  Speaker 2: are just going to be smaller, right, specifically in the
• 17:56
  Speaker 2: software area, but in other areas too. Right, if it
• 17:59
  Speaker 2: has to do with designing a website, setting up my
• 18:01
  Speaker 2: own internal systems, and specifically in the software space, creating
• 18:05
  Speaker 2: a usable piece of technology that I can sell to
• 18:08
  Speaker 2: the public, that looks like it's going to be a
• 18:10
  Speaker 2: lot easier in the future. And so my hope would
• 18:16
  Speaker 2: be that it does challenge the modes of some of
• 18:18
  Speaker 2: these giant behemoths that have remained dominant in the tech
• 18:21
  Speaker 2: space for a couple of decades now, because by the way,
• 18:24
  Speaker 2: that's been the trend. You know, go take a look
• 18:26
  Speaker 2: at the ten largest tech companies in nineteen eighty and
• 18:29
  Speaker 2: then go look at nineteen ninety, twenty, twenty ten, twenty twenty.
• 18:33
  Speaker 2: Generally speaking, when you go look at the list, there's
• 18:37
  Speaker 2: a lot of turnover, right, and there really hasn't been
• 18:40
  Speaker 2: for the last fifteen twenty ish years. You know, it's
• 18:43
  Speaker 2: been the giant Microsoft's Apples, Amazons, Alphabet for the last
• 18:49
  Speaker 2: fifteen twenty years. Those guys have dominated, and Video obviously
• 18:52
  Speaker 2: came through the rankings now and is up there. But
• 18:55
  Speaker 2: I expect we'll see more disruption, and my hope would
• 18:57
  Speaker 2: be that that disruption comes in the form of newly
• 19:00
  Speaker 2: created companies with innovative ideas.
• 19:01
  Speaker 3: I would hope so these big tech companies wield a
• 19:04
  Speaker 3: lot of power, but hopefully that there can be some
• 19:07
  Speaker 3: challenge to them going forward.
• 19:08
  Speaker 2: Yeah, because to your point, for the last few decade,
• 19:10
  Speaker 2: last decade at least, they've been able to buy up
• 19:12
  Speaker 2: any interesting idea that's come to market.
• 19:14
  Speaker 3: Yeah, hopefully the rich don't get richer with this next evolution.
• 19:19
  Speaker 2: Let's take a quick break here on the Financial Exchange.
• 19:21
  Speaker 2: When we come back, full market recap coming up here
• 19:24
  Speaker 2: with Wall Street Watch.
• 19:40
  Speaker 1: Bringing the latest financial news straight to your radio every day.
• 19:44
  Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
• 19:50
  Speaker 1: Time now for Wall Street watch a complete look at
• 19:54
  Speaker 1: what's moving market so far today right here on the
• 19:57
  Speaker 1: Financial Exchange Radio Network.
• 20:00
  Speaker 4: It's a rebounding after yesterday's sell off, which was driven
• 20:03
  Speaker 4: by a viral report by Satrini Research highlighting AI's potential
• 20:07
  Speaker 4: disruption on several fronts. Right now, the Dow is up
• 20:12
  Speaker 4: six tenths of one percent or two hundred and ninety
• 20:15
  Speaker 4: five points, SMP five hundreds up nearly half a percent
• 20:19
  Speaker 4: or thirty one points. NASDAC up about three quarters of
• 20:22
  Speaker 4: a percent or one hundred and seventy one points. Russell
• 20:25
  Speaker 4: two thousands up just over nine tenths of one percent.
• 20:29
  Speaker 4: A ten year treasure reel flat at the moment at
• 20:31
  Speaker 4: four point zero three one percent, an crude oil down
• 20:35
  Speaker 4: about a quarter percent, trading just above sixty six dollars
• 20:39
  Speaker 4: a barrel. More AI spending to report this morning after
• 20:43
  Speaker 4: Meta and AMD agreed to a deal worth over one
• 20:46
  Speaker 4: hundred billion dollars where Meta will buy six gigawatts of
• 20:51
  Speaker 4: AI computing power from AMD. The deal could also result
• 20:55
  Speaker 4: in Meta owning as much as ten percent of AMD stock.
• 21:00
  Speaker 4: AMD shares are rallying seven percent, while MetaStock is flat. Meanwhile,
• 21:05
  Speaker 4: Home Deepot reported better than expected fourth quarter results, despite
• 21:09
  Speaker 4: profit falling. The home improvement retailer said it isn't planning
• 21:12
  Speaker 4: more price hikes after raising them last year to offset tariffs.
• 21:16
  Speaker 4: Home Depot shares are up by about three percent. Elsewhere,
• 21:21
  Speaker 4: Nova Nordis plans to cut US list prices for its
• 21:24
  Speaker 4: weight loss and diabetes drugs we Govi and Ozempic by
• 21:28
  Speaker 4: up to half beginning next year. Novo stock is down
• 21:32
  Speaker 4: by two percent. Spirit Airlines has reached an agreement with
• 21:36
  Speaker 4: its lenders to emerge from bankruptcy by early summer as
• 21:40
  Speaker 4: a smaller but still independent company. Spirit also plans to
• 21:43
  Speaker 4: announce it we'll get rid of even more of its
• 21:46
  Speaker 4: air bus fleet. And Warner Brothers Discovery said this morning
• 21:50
  Speaker 4: it has received a revised offer from Paramount to buy
• 21:54
  Speaker 4: its entire company, but didn't provide details of what the
• 21:58
  Speaker 4: offer included. Warnerstock is up over half a percent, while
• 22:02
  Speaker 4: Paramount shares are down modestly. I'm Tucker Silvan. That is
• 22:07
  Speaker 4: Wall Street watching the previous segment. We asked you the
• 22:09
  Speaker 4: trivia question how many gold medals has the US women's
• 22:13
  Speaker 4: hockey team won at the Olympics. It'll be three. George
• 22:17
  Speaker 4: from Tingsboro, Mass is our winner today, taking home the
• 22:20
  Speaker 4: Financial Exchange Show t shirt. We play trivia every day
• 22:24
  Speaker 4: here on the Financial Exchange. See complete contest rules at
• 22:27
  Speaker 4: Financial Exchange Show dot com.
• 22:29
  Speaker 2: I'm pretty sure I just booked my mother in law
• 22:31
  Speaker 2: on a Spirit Airlines flight. Hopefully that's not one of
• 22:34
  Speaker 2: the airbuses that they will be selling off prior to April.
• 22:37
  Speaker 2: She would not be very happy with me. I don't
• 22:39
  Speaker 2: think no Jamie Diamond out with his you know, once
• 22:44
  Speaker 2: a quarter doom and gloom predictions, do we what is?
• 22:47
  Speaker 2: What does Sir Jamie have to say this time?
• 22:50
  Speaker 3: What he's saying is that he's seeing a couple of
• 22:52
  Speaker 3: people doing some dumb things.
• 22:55
  Speaker 2: They're just doing the dum cockroaches.
• 22:57
  Speaker 3: No, that cockroaches coat has gotten so much play since
• 23:02
  Speaker 3: he maybe because we're just so just in the weeds
• 23:05
  Speaker 3: with this stuff that has just mentioned. Every single time
• 23:07
  Speaker 3: credit comes private credit comes up. But what he's seeing
• 23:10
  Speaker 3: is he's seeing that some lenders are doing some quote
• 23:14
  Speaker 3: unquote dumb things to create ANII, which is net interest
• 23:18
  Speaker 3: income as well chronicled on the show and through other
• 23:21
  Speaker 3: financial presses You've had several areas of potential deterioration in
• 23:26
  Speaker 3: private credit. That is, lending that is not done by
• 23:29
  Speaker 3: the large banks like JP Morgan, which Jamie Diamond heads up.
• 23:33
  Speaker 3: And part of the reason that this private credit industry
• 23:36
  Speaker 3: had got created was really post two thousand and eight
• 23:39
  Speaker 3: financial crisis. There was a tremendous amount of scrutiny on
• 23:41
  Speaker 3: the major banks and the lending that they could do,
• 23:44
  Speaker 3: and this private credit sucked up a lot of that
• 23:47
  Speaker 3: demand for small and mid sized companies.
• 23:49
  Speaker 2: I was going to say, you know, the quote here
• 23:51
  Speaker 2: parallels to the era before the two thousand and eight
• 23:54
  Speaker 2: financial crisis when a rush to make loans ended disastrously,
• 23:58
  Speaker 2: And okay, I can see the parallels, but this is
• 24:01
  Speaker 2: also coming from the CEO who runs a bank that
• 24:04
  Speaker 2: can't really make those loans. And so whenever you talk
• 24:07
  Speaker 2: about Jamie's comments, which I don't take as disingenuous, I
• 24:11
  Speaker 2: really don't. I think he does put out these statements.
• 24:14
  Speaker 2: I think he probably does believe them. They also usually
• 24:17
  Speaker 2: happen to be very self serving for his bank. It's okay,
• 24:20
  Speaker 2: but you have to take these things in context, I think,
• 24:23
  Speaker 2: and he has called for you know, disaster and financial
• 24:29
  Speaker 2: hurricanes on the horizon for a few years now, and
• 24:32
  Speaker 2: they haven't come to pass. And it's not to say
• 24:33
  Speaker 2: that they won't in the future. But oftentimes when I
• 24:36
  Speaker 2: look at these comments, it's really easy to see how
• 24:39
  Speaker 2: that scenario could line up quite well with how his
• 24:42
  Speaker 2: bank is run, and so I think you have to
• 24:44
  Speaker 2: take that in the context of which it's delivered. But nonetheless,
• 24:49
  Speaker 2: one thing that I do think is becoming clear is
• 24:53
  Speaker 2: that this technology that a few years ago was frankly
• 24:59
  Speaker 2: not that pressive, you know, misquoted things, couldn't do math,
• 25:05
  Speaker 2: and really hallucinated quite a bit, is taking on a
• 25:10
  Speaker 2: different form. And I think one point from one of
• 25:14
  Speaker 2: the tweets that we saw a few weeks ago that
• 25:16
  Speaker 2: rang familiar to me is if you used AI six
• 25:20
  Speaker 2: months ago and it seemed irrelevant, your experience is irrelevant
• 25:25
  Speaker 2: because it is evolving that quickly and clearly disrupting things
• 25:29
  Speaker 2: from large banks to private credit firms, to Indian customer
• 25:34
  Speaker 2: service providers and Taiwanese chip manufacturers. I think the other
• 25:39
  Speaker 2: piece that is concerning to me today that we've pointed
• 25:43
  Speaker 2: out is markets are the US market in particular is
• 25:47
  Speaker 2: more concentrated than it has either ever been or certainly
• 25:51
  Speaker 2: been in the last half century. And I think where
• 25:54
  Speaker 2: that leaves a lot of investors is using the tools
• 25:57
  Speaker 2: that we typically do, which are index funds in this day,
• 26:00
  Speaker 2: in AGTs for a lot of them, which has been
• 26:02
  Speaker 2: a major growth area, is in a portfolio that may
• 26:06
  Speaker 2: not be as diversified and may be overly exposed to
• 26:10
  Speaker 2: some of those risky areas. Then people realize, and that's fine.
• 26:15
  Speaker 2: If you understand what it is you're doing, if you
• 26:17
  Speaker 2: have a thesis to why you're investing the way you are,
• 26:20
  Speaker 2: perhaps that's great. If you don't. If you've set a
• 26:23
  Speaker 2: portfolio up five years ago and just set it and
• 26:26
  Speaker 2: forget it, it's probably done quite well. But if you
• 26:29
  Speaker 2: don't fully understand what it is you own, why you
• 26:32
  Speaker 2: own it, and how it's going to contribute to your
• 26:35
  Speaker 2: financial future, I'd encourage you to speak with a financial advisors,
• 26:39
  Speaker 2: not to say you need to work with one permanently,
• 26:41
  Speaker 2: but it is to say, if you don't fully understand
• 26:43
  Speaker 2: what you own and why you own it, it's a
• 26:45
  Speaker 2: good benchmark to maybe get somewhat better understanding. And if
• 26:49
  Speaker 2: you can do that on your own, great if you
• 26:51
  Speaker 2: could use a second opinion and could use some expert
• 26:53
  Speaker 2: advice on this is how my portfolio is allocated and
• 26:57
  Speaker 2: this is how I see using it over the course
• 26:59
  Speaker 2: of the next deck. That is critically important, more so
• 27:03
  Speaker 2: when you are starting the distribution phase rather than the
• 27:05
  Speaker 2: contribution savings phase. If you have questions like that, if
• 27:09
  Speaker 2: you're looking for somebody to just give you a second
• 27:10
  Speaker 2: opinion on what it is you're doing now and how
• 27:13
  Speaker 2: you might alter it in the future, please give the
• 27:15
  Speaker 2: folks at Armstrong Advisory Group a call. Offices scattered throughout
• 27:18
  Speaker 2: the New England area meet with folks of the phone
• 27:20
  Speaker 2: via zoom, whatever's most convenient for you, but we'll sit
• 27:22
  Speaker 2: down with you. We'll evaluate what it is you're doing
• 27:24
  Speaker 2: today and give you our honest opinion on how that
• 27:27
  Speaker 2: lines up well or poorly with how you plan to
• 27:29
  Speaker 2: execute your plans over the course of the next few years.
• 27:34
  Speaker 2: The number to call the book your time is eight
• 27:36
  Speaker 2: hundred three nine three four zero zero one. You can
• 27:40
  Speaker 2: go to Armstrong Advisory dot com as well. There's a
• 27:43
  Speaker 2: get started button where you can book time for us
• 27:45
  Speaker 2: to call you back. But that phone number once again
• 27:47
  Speaker 2: eight hundred three nine three for zero zero one.
• 27:51
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 27:53
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 27:56
  Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
• 27:59
  Speaker 1: your own financial tax into state planning advisors before making
• 28:02
  Speaker 1: any investment decisions. Armstrong make contact you to offer investment
• 28:05
  Speaker 1: advisory services.
• 28:06
  Speaker 2: Well, Paul, Apple has announced they're going to be rolling
• 28:08
  Speaker 2: out a Maid in America mac mini. That's a mouthful,
• 28:12
  Speaker 2: as part of a push to manufacture more domestically here.
• 28:17
  Speaker 2: Does this matter or is it an attempt to please
• 28:21
  Speaker 2: the Trump administration?
• 28:22
  Speaker 3: Definitely the latter.
• 28:24
  Speaker 2: The last I looked, the Macmini accounts for less than
• 28:26
  Speaker 2: one percent of total Apple sales. So are they going
• 28:30
  Speaker 2: to do this out of like a old circuit city
• 28:32
  Speaker 2: warehouse or something like that, because it seems like it
• 28:35
  Speaker 2: does not amount to much in terms of Apple's overall
• 28:39
  Speaker 2: business model.
• 28:40
  Speaker 3: No, it's going to be They announced that they're going
• 28:42
  Speaker 3: to open a twenty thousand square foot manufacturing facility for sorry,
• 28:47
  Speaker 3: a facility for manufacturing training, and that was also part
• 28:52
  Speaker 3: of the announcement for what's going to be put together
• 28:55
  Speaker 3: in Houston. That just pales in comparison to some of
• 28:58
  Speaker 3: the you know, huge humongous data centers that are being built,
• 29:02
  Speaker 3: or if you were to look at its factories in
• 29:05
  Speaker 3: China or other areas, it's a really really small piece
• 29:09
  Speaker 3: of the pie.
• 29:09
  Speaker 2: Yeah. I tend to think that that's all this is.
• 29:12
  Speaker 2: If you want to try and convince me that you know,
• 29:15
  Speaker 2: step in the right direction and proof of concept. You
• 29:17
  Speaker 2: gotta do something small before you do something big. Sure,
• 29:21
  Speaker 2: but Apple's business model has been heavily reliant on very
• 29:26
  Speaker 2: inexpensive manufacturing by some of the foremost experts in manufacturing,
• 29:32
  Speaker 2: neither of which is done in the United States. No expertise,
• 29:37
  Speaker 2: nor the inexpense.
• 29:38
  Speaker 3: The expertise, and the sourcing of the resources that go
• 29:41
  Speaker 3: into Apple products are global in nature, and there really
• 29:46
  Speaker 3: hasn't been an area to consolidate all those parts here domestically.
• 29:51
  Speaker 3: Maybe this is a step in that direction. I tend
• 29:53
  Speaker 3: to grade it with a little bit of skepticism. Will say,
• 29:56
  Speaker 3: a tremendous appreciation for iPads after traveling with you young
• 30:00
  Speaker 3: kids over the last week or so, that technology was
• 30:04
  Speaker 3: quite life changing for flights.
• 30:06
  Speaker 2: But as amazing as it was if it were to
• 30:08
  Speaker 2: manufactured here domestically, and cost three grand. Proper wouldn't have two.
• 30:11
  Speaker 2: Probably would take a quick break when we come back.
• 30:15
  Speaker 2: But a stack roulet is.
• 30:16
  Speaker 1: Next Smart Financial Talk. Whenever you want, find the Financial
• 30:21
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• 30:24
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• 30:26
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• 30:31
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• 30:35
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• 30:39
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• 30:50
  Speaker 2: Time for a bit of stack rou let here, Paul,
• 30:52
  Speaker 2: what do you have to kick things off?
• 30:56
  Speaker 3: There was one I was gonna potentially go after ball
• 30:59
  Speaker 3: skip it up. PayPal tracts takeover interest after a stock slump.
• 31:04
  Speaker 3: The company is fielding meetings with banks and an interest
• 31:08
  Speaker 3: for different suitors out there to try and buy certain
• 31:11
  Speaker 3: PayPal assets. PayPal is been one of the biggest beneficiaries
• 31:16
  Speaker 3: of the digital payment ecosystem, developed back in the late
• 31:20
  Speaker 3: nineties by a slew of different entrepreneurs who have gone
• 31:25
  Speaker 3: on to tremendous success and now they boast a really
• 31:28
  Speaker 3: significant network when it comes to payments all across the globe.
• 31:33
  Speaker 3: But they've really struggled over the course of the last
• 31:36
  Speaker 3: few years or so. The stock has fallen about forty
• 31:39
  Speaker 3: six percent over the last year or so, and they're
• 31:43
  Speaker 3: trying to find ways to monetize some of its payment technologies.
• 31:47
  Speaker 3: They also have lost significant market share to Apple Pay
• 31:51
  Speaker 3: and Google Pay, so they're looking for a strategic pivot
• 31:55
  Speaker 3: of sorts. It'll be interesting to see if anyone finds
• 31:58
  Speaker 3: them as an appealing acquisition target. The company stock had
• 32:02
  Speaker 3: jumped as much as ten percent on that news that
• 32:05
  Speaker 3: had leaked out the other day.
• 32:06
  Speaker 2: This is again, I mean, their stock wasn't doing terribly
• 32:09
  Speaker 2: well before the AI disruption trade, but you know, it
• 32:13
  Speaker 2: was sitting at like, let's take a look mid January
• 32:17
  Speaker 2: fifty five bucks a share before creating down to forty
• 32:20
  Speaker 2: bucks a share in early February. Out of these AI concerns,
• 32:23
  Speaker 2: and this is another one the payment networks argument on AI,
• 32:27
  Speaker 2: I'm not sure I fully understand. I get the competition
• 32:30
  Speaker 2: from you know, I pay for a lot of things
• 32:32
  Speaker 2: on my watch with my credit card loaded into there
• 32:35
  Speaker 2: via Google Pay. I know other people to use Apple Pay.
• 32:38
  Speaker 2: I can see how that disrupts PayPal's business model. The
• 32:43
  Speaker 2: AI piece, I'm just unclear about why we think AI
• 32:48
  Speaker 2: is going to disrupt Visa, master Card, PayPal's existing payment networks,
• 32:55
  Speaker 2: Like PayPal has other issues, so I'm not lumping them
• 32:58
  Speaker 2: entirely in with them. It's a lot easier for me
• 33:01
  Speaker 2: to pay via Amazon Pay or Google Pay than it
• 33:04
  Speaker 2: is PayPal because of how my networks are lined up,
• 33:07
  Speaker 2: and that's a problem for them. But a I really
• 33:11
  Speaker 2: going to create a faster and cheaper payment network.
• 33:14
  Speaker 3: I just think about, you know, getting my driveway by
• 33:17
  Speaker 3: the other day paying through Venmo, Like the amount of
• 33:19
  Speaker 3: transactions you do through Vemo just does hey, I just
• 33:22
  Speaker 3: rap that. I'm just trying to think that through and
• 33:23
  Speaker 3: I don't think so. I think it's just maybe simplifies
• 33:26
  Speaker 3: the path where I tell some agent, hey, pay Mike
• 33:29
  Speaker 3: Armstrong twenty bucks for pizza, and it saves me one
• 33:32
  Speaker 3: or two steps of going through the app. But other
• 33:35
  Speaker 3: than that, I don't know if you can replicate the
• 33:37
  Speaker 3: networks some of the networks that's created where I have
• 33:40
  Speaker 3: saved contacts in and many recipients that I've sent money
• 33:43
  Speaker 3: to before, Like, what is going to be my impetus
• 33:45
  Speaker 3: to change from using Venmo? As an example of something
• 33:49
  Speaker 3: that falls under PayPal's.
• 33:50
  Speaker 2: The only thing I think it does is and this
• 33:53
  Speaker 2: is a you know, a truth for every software company
• 33:55
  Speaker 2: out there is, can you now create a PayPal network competitor,
• 34:00
  Speaker 2: or a Venmo competitor, or a Google pay competitor for
• 34:04
  Speaker 2: a lot cheaper? Right? Like you can? You can create
• 34:06
  Speaker 2: the software and the interconnections, I think, cheaper than you
• 34:10
  Speaker 2: could before.
• 34:11
  Speaker 3: But how do you get the network effects? How do
• 34:14
  Speaker 3: you replicate me and you and Tucker all being on
• 34:17
  Speaker 3: the same I don't have work And what is the
• 34:20
  Speaker 3: pitch to get us there? Because right now, us transacting
• 34:22
  Speaker 3: on Venmo, there's no cost to me I do this.
• 34:25
  Speaker 2: Suppose what you would have to do is go after
• 34:28
  Speaker 2: the retailers and say, hey, I am going to be
• 34:30
  Speaker 2: a new payment network that is going to take half
• 34:32
  Speaker 2: of what Visa takes.
• 34:33
  Speaker 3: Yeah, and right undercut the vigue that they've taken.
• 34:37
  Speaker 2: But those guys have such a massive market command that
• 34:40
  Speaker 2: I can't imagine. You know, you imagine you're seven to eleven.
• 34:44
  Speaker 2: Well maybe that's the answer. Maybe seven to eleven and
• 34:46
  Speaker 2: all these retailers can set up their own proprietary payment
• 34:49
  Speaker 2: networks with a combination of AI systems plus crypto, you
• 34:53
  Speaker 2: know type thing I that was.
• 34:57
  Speaker 3: All those credit cards out there, you'd Visa would clap
• 35:01
  Speaker 3: back with something say, okay, you're not gonna accept my payment, then.
• 35:07
  Speaker 2: This is what I'm gonna do. I don't know. This
• 35:09
  Speaker 2: technology to me seems a little bit too close. We've
• 35:13
  Speaker 2: talked about this, right. The easiest to disrupt businesses seem
• 35:17
  Speaker 2: to me to be the ones that are furthest away
• 35:19
  Speaker 2: from people or things, and this one's pretty close, right, Like,
• 35:25
  Speaker 2: this is a direct to consumer product. In a lot
• 35:28
  Speaker 2: of cases, I physically have a credit card in my pocket.
• 35:33
  Speaker 2: This is one of those where you're not selling software
• 35:35
  Speaker 2: to another business. Here, you are selling a trusted payment
• 35:39
  Speaker 2: network directly to a consumer. And it's gonna take me
• 35:41
  Speaker 2: a lot of confidence to say, yeah, I am now
• 35:46
  Speaker 2: switching to payment dot Ai, this new network that is
• 35:50
  Speaker 2: supposedly going to be safe and secure my money. Man,
• 35:54
  Speaker 2: I'm not sure I would be making that switch anytime soon. Yeah,
• 35:58
  Speaker 2: so we will see. The automakers could start raising prices
• 36:02
  Speaker 2: this year. Heard that one before, But here is the
• 36:07
  Speaker 2: circumstances for automakers. Generally, Demand has been a little bit
• 36:12
  Speaker 2: rough on the part of consumers, mainly because the new
• 36:15
  Speaker 2: cars are very expensive. The tariffs that have been in
• 36:18
  Speaker 2: place while they have been all over the place and
• 36:22
  Speaker 2: changing nearly every single month for automakers, and they have
• 36:25
  Speaker 2: gotten a lot of exemptions. They've largely taken the approach of, hey,
• 36:29
  Speaker 2: let's just wait this out and see how it goes
• 36:31
  Speaker 2: before dramatically raising prices or relocating manufacturing facilities. The longer
• 36:36
  Speaker 2: this goes on, the less of an ability you have
• 36:40
  Speaker 2: to actually delay delay delay, And especially now with these
• 36:45
  Speaker 2: universal tariffs again, items that are subject to the what's
• 36:51
  Speaker 2: the NAFTA replacement that was put in place under President Trump,
• 36:55
  Speaker 2: whatever the free trade agreement is that we have with
• 36:58
  Speaker 2: US and Mexico and Canada, the new tariffs exempt products
• 37:02
  Speaker 2: that are compliant with that. So I'm not saying that
• 37:05
  Speaker 2: this will be immediate. But the real point here is
• 37:08
  Speaker 2: that as time goes on, the likelihood that car makers
• 37:12
  Speaker 2: can keep prices where they are seems pretty unlikely to
• 37:16
  Speaker 2: most experts that are out there.
• 37:18
  Speaker 3: I agree that eventually something will break with that. I
• 37:21
  Speaker 3: just wonder you're in the face of a pretty weak
• 37:24
  Speaker 3: auto market. Really, I believe that the projections for this
• 37:27
  Speaker 3: year in terms of vehicle sales were pretty bleak in
• 37:31
  Speaker 3: terms of what we've seen from prior years.
• 37:34
  Speaker 2: And if there were to be one item that I
• 37:37
  Speaker 2: could see this administration pivoting on, it would be something
• 37:41
  Speaker 2: as big ticket in front and center as car affordability. Right,
• 37:45
  Speaker 2: they've already taken steps to weaken emission standards and a
• 37:49
  Speaker 2: bunch of other things to try and make it easier
• 37:51
  Speaker 2: for auto manufacturers. If the auto manufacturers all come out
• 37:53
  Speaker 2: and say they have to jack up prices by seven percent,
• 37:56
  Speaker 2: I would think that that's going to be one of
• 37:58
  Speaker 2: the first areas that the administration says, Okay, maybe this
• 38:01
  Speaker 2: isn't quite worth the cost. That's all the time we
• 38:04
  Speaker 2: have for today's edition. To the financial exchange markets in
• 38:07
  Speaker 2: recovery mode with the NASDAC leading the way up nearly
• 38:10
  Speaker 2: a full percentage point two hundre one hundred and fifteen points.
• 38:13
  Speaker 2: We will be back at it tomorrow. Folks, have a
• 38:15
  Speaker 2: great rest of your day, and good luck still digging
• 38:18
  Speaker 2: out from the storm.