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AI Is Getting Dangerous, What Anthropic Just Discovered · The Financial Exchange Show

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Speaker 1: donation today. This is the Financial Exchange with Chuck Zada
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Speaker 1: and Paul Lane.
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Speaker 2: Chuck, Paul, and Tucker with you here.
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Speaker 3: And at around six fifteen maybe six thirty last night,
1:15
Speaker 3: word got out that the United States and Iran had
1:18
Speaker 3: agreed to a two week ceasefire in the conflict in
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Speaker 3: the region. And as you would expect, you've got risk
1:27
Speaker 3: assets risking today and risk off assets de risking. So yeah,
1:33
Speaker 3: you've got SP five hundred and forty two points, the
1:36
Speaker 3: Dow Jones up about eleven hundred, nasdak compositive five seventy one,
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Speaker 3: so about two and a quarter to two and a
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Speaker 3: half percent gains across your major indices this morning. You've
1:46
Speaker 3: also got the ten year Treasury now down seven point
1:50
Speaker 3: six basis points to four point two sixty seven. It
1:53
Speaker 3: was off around ten basis points earlier today, so you're
1:56
Speaker 3: seeing a modest lightning there after coming in more significantly,
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Speaker 3: but we'll see where things go. Gold's up seventy eight
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Speaker 3: thirty and outs to forty seven sixty three, and West
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Speaker 3: Texas Intermediate is down seventeen dollars a barrel to ninety
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Speaker 3: five ninety five after touching touched one seventeen actually at
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Speaker 3: one point yesterday, but closed around one twelve, and so
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Speaker 3: you've got oil prices falling about thirteen to fifteen percent,
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Speaker 3: depending on the metric that you are looking at. Obviously,
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Speaker 3: this ceasefire is a really positive step in the right
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Speaker 3: direction as far as potentially de risking the region from
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Speaker 3: additional conflict, but there still are a number of questions
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Speaker 3: that need to be answered. Specifically, as we speak right now,
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Speaker 3: the US and Israel are indicating that they do not
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Speaker 3: believe the ceasefire includes Israel's activities in Lebanon. Iran is
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Speaker 3: saying that it does, and so this is something that
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Speaker 3: obviously could you know, be problematic. You still have a
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Speaker 3: wide variety of attacks taking place across the region as
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Speaker 3: Iran tries to get word to its forces, who operate
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Speaker 3: in kind of a what's known as a mosaic structure,
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Speaker 3: where you know, local forces operate with more autonomy than
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Speaker 3: in say the US military. And so hopefully these you know,
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Speaker 3: sporadic you know, burst of conflict can wind down in
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Speaker 3: the next.
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Speaker 2: Day or two.
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Speaker 3: Otherwise they do potentially risk derailing the ceasefire. You then
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Speaker 3: also have questions about what the state of play looks
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Speaker 3: like through horror moves and through the region afterwards. Questions
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Speaker 3: about what is going to be able to be negotiated
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Speaker 3: as a final deal.
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Speaker 2: So even though this is a positive step, I.
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Speaker 3: Think that we still are not at the ultimate conclusion
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Speaker 3: and need to see how things play out over the
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Speaker 3: next several weeks here, and then we'll be able to
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Speaker 3: you know, know a little bit more about what the
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Speaker 3: world looks like after this conflict resolves. Hopefully there's a
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Speaker 3: chance this could flare back up and become worse again.
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Speaker 3: We really don't know, and I would caution anyone into
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Speaker 3: saying that anything has definitively or not definitively happened now
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Speaker 3: because still very early hours of this ceasefire, and things
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Speaker 3: can develop in a number of ways, both positively and negatively.
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Speaker 3: So just you know, understand where things are right now.
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Speaker 3: With that in mind, other topics that we want to
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Speaker 3: get to, let's talk about this one here. Oh boy,
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Speaker 3: the US economy is replaying the two thousand's, not the
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Speaker 3: nineteen seventies. So we've gone from Tucker. What was it
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Speaker 3: on Monday? It was the E shaped economy? Yeah, E shape, yes,
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Speaker 3: lowercase or uppercase uppercase right, don't know. I didn't read
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Speaker 3: it because I can't do any more. Letter shaped economies,
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Speaker 3: which the.
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Speaker 4: K one was disputed on yesterday's show. Also just to
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Speaker 4: add in, yeah, we just.
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Speaker 3: Can't do any more letter shapes, you know, let's let's
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Speaker 3: move to eventually again we're gonna be doing like the
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Speaker 3: Greek ones. And then we moved to the cyrillic alphabet.
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Speaker 3: And it's like, guys like, come on, like, you know,
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Speaker 3: let's let's take a break here. So Paul, why does
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Speaker 3: this piece from Bloomberg Opinion say that the US economy
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Speaker 3: is replaying.
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Speaker 2: The two thousands, not the nineteen seventies, all right, so Chuck.
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Speaker 4: What it goes in to say here is is it
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Speaker 4: makes some comparisons to the two thousands, the first being
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Speaker 4: that the labor market is at a weak point at
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Speaker 4: the moment. They fail to mention how significantly just fast
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Speaker 4: and furious it was in years prior, but fair point.
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Speaker 4: In twenty twenty five, the Bloomberg piece here makes a
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Speaker 4: distinction that we had only one hundred and sixteen thousand
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Speaker 4: jobs that were added. That's the lowest that we've seen
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Speaker 4: any year outside of recession. You compare that to the
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Speaker 4: two thousands, where in two thousand and one we did
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Speaker 4: have a recession where one point six million jobs were lost,
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Speaker 4: and then in subsequent years we didn't really get back
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Speaker 4: to pre recession employment levels until two thousand and five.
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Speaker 4: We also had in that era pretty low income growth
6:11
Speaker 4: that is somewhat parallel to what we're seeing today, where
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Speaker 4: there's not a tremendous amount of income growth in general.
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Speaker 4: I will give them this point a little bit. Where
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Speaker 4: I start to have issue with this piece is the
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Speaker 4: next bullet point that's mentioned here outside of the labor
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Speaker 4: market is the rising consumer debt and delinquency rates. So
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Speaker 4: obviously many of us know that heading into the mid
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Speaker 4: two thousands, we had a significant laxing of credit standards
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Speaker 4: all across the board, and it metastasized into the worst
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Speaker 4: and biggest issue of the whole bunch being the mortgage market,
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Speaker 4: or the housing market or mortgages. And the piece here
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Speaker 4: hits on the rising level of credit card debt that
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Speaker 4: also went on during this period of time in the
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Speaker 4: mid two thousands, where credit card debt rose as well
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Speaker 4: as some other areas of debt. But it excludes the
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Speaker 4: fact when it makes the comparison today saying that, hey,
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Speaker 4: today we're also seeing credit card debts rise and student
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Speaker 4: loan debt is up. They ignore the fact that housing
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Speaker 4: the housing market from a mortgage standpoint, and mortgage debt
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Speaker 4: is far superior to what it was during that period
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Speaker 4: of time in the mid two thousands. That the comparison
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Speaker 4: is being made here, seventy to seventy five percent of
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Speaker 4: household debt back in the two thousands leading up to
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Speaker 4: two thousand and eight was in mortgages, and so to
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Speaker 4: ignore the fact of a significant portion of all of
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Speaker 4: our household debt in lies in our mortgages, which are
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Speaker 4: locked in at pretty low rates and are have much
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Speaker 4: stronger equity cushions than back then. That's where I start
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Speaker 4: to take issue with this piece a little bit. You know, ultimately,
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Speaker 4: the rising credit card debt and potential for increased delinquencies
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Speaker 4: there could lead to a slow down consumer spending. I'll
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Speaker 4: give it that, But this idea that the debt market
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Speaker 4: is the same to where it was in the mid
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Speaker 4: two thousands, I just have issue with that. And the
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Speaker 4: final point is just the systematic risks in the concentration
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Speaker 4: of a financial bubble. Making the comparison of the driver's
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Speaker 4: market back in the two thousand and eight era to
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Speaker 4: some of the private credit troubles that we've discussed today
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Speaker 4: a bit of a reach, And I don't think the
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Speaker 4: piece is trying to say it's identical parallels. It just
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Speaker 4: is trying to make the point that there's similar ingredients
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Speaker 4: but have issue with some of the us there.
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Speaker 3: Yeah, I mean, look, here's the thing. Everyone wants to
8:34
Speaker 3: look for the historical analog to be like, well, it's
8:37
Speaker 3: just like when I was a young boy growing up
8:39
Speaker 3: on the far milking the cows, and like I get it,
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Speaker 3: like we're all nostalgic for our childhood and like.
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Speaker 2: To be able to be like, yes, this is familiar
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Speaker 2: to me. I know exactly what to do.
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Speaker 3: Unfortunately, like it's always kind of something new, like history rhymes,
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Speaker 3: it doesn't repeat. And look, I've said for a while
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Speaker 3: now you can find portions of the nineteen seventies here,
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Speaker 3: you can find very clearly like portions of nineteen ninety
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Speaker 3: here now with the conflict in the Gulf. You can
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Speaker 3: clearly find tech bubble parallels. You can clearly find mortgage
9:15
Speaker 3: market parallels with the private credit stuff. So you kind
9:21
Speaker 3: of have, as I've said for a while, you've got
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Speaker 3: this turduccin that you've built of kind of like some
9:27
Speaker 3: all kinds of different potential problems that are looming out there.
9:30
Speaker 3: And to this point, the thing that I will say
9:32
Speaker 3: that you got to keep coming back to because again,
9:35
Speaker 3: like you got to have a constant on this. Despite
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Speaker 3: any of these potential problems, the US economy has kept chugging.
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Speaker 3: The labor market is absolutely slowed, and there's a problem there,
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Speaker 3: but it has not impacted consumption in any meaningful way.
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Speaker 2: It has not impacted.
9:54
Speaker 3: The overall growth trajectory of the US economy in any
9:57
Speaker 3: meaningful way. It may still end up doing that, and
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Speaker 3: these are the things we need to continue to watch
10:03
Speaker 3: for the next year or two. But despite all of
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Speaker 3: the risks present for you know, quite a while now,
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Speaker 3: the US economy has remained remarkably resilient and strong during
10:15
Speaker 3: that time. There are certainly problems that you know, I
10:19
Speaker 3: think we need to see how they evolve over the
10:21
Speaker 3: next three to six months. But again, you've got if
10:26
Speaker 3: you really want to play the comparison card, it's not anyone.
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Speaker 3: You've got pieces of like four or five different situations
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Speaker 3: that are playing into this. And how it evolves from
10:36
Speaker 3: here is anyone's you know, anyone's question as to you
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Speaker 3: know what.
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Speaker 2: We end up seeing on this So let's take.
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Speaker 3: A quick break and when we return, we've got some
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Speaker 3: trivia and then I want to talk about kind of
10:52
Speaker 3: a major story from Anthropic the AI Model Company yesterday.
10:59
Speaker 3: This one my attention and I gotta tell you this
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Speaker 3: is something that is impressive, scary, and world changing all
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Speaker 3: rolled into one. Let's discuss when we return.
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12:31
Speaker 3: So yesterday, Anthropic, who runs the Claude family of large
12:37
Speaker 3: language models, they made an announcement that caught my eye
12:44
Speaker 3: and they have a new model that is being released,
12:46
Speaker 3: shortly dubbed claud. It's probably pronounced Mythos, but I'm gonna
12:52
Speaker 3: pronounce it Mythos because there's a great Greek beer that's
12:55
Speaker 3: pronounced mythos, and I'm gonna call it that because let's
12:58
Speaker 3: do that. So they've got this new version of COD
13:02
Speaker 3: rolling out called Mythos or Mythos, and basically I'm gonna
13:08
Speaker 3: quote from them just because.
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Speaker 2: It's it's wild what happened here.
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Speaker 3: Over the past few weeks, we've used COD Mythos preview
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Speaker 3: to identify thousands of zero day vulnerabilities, that is, flaws
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Speaker 3: that were previously unknown to software developers, and a zero
13:24
Speaker 3: day vulnerability means basically, if executed upon it can result
13:30
Speaker 3: in problems that day on t equals zero as opposed
13:34
Speaker 3: to like causing problems down the road. So thousands of
13:37
Speaker 3: zero day vulnerabilities, many of them critical, in every major
13:40
Speaker 3: operating system and every major web browser, along with a
13:43
Speaker 3: range of other important pieces of software. The following are
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Speaker 3: three examples. Mythos preview found a twenty seven year old
13:51
Speaker 3: vulnerability and OpenBSD, which is a reputation as one of
13:54
Speaker 3: the most security hardened operating systems in the world and
13:57
Speaker 3: is used to run firewalls and other critical infrastr ructure.
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Speaker 3: The vulnerability allowed an attacker to remotely crash any machine
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Speaker 3: running the operating system just by connecting to it. It
14:06
Speaker 3: also discovered a sixteen year old vulnerability in FFmpeg, which
14:11
Speaker 3: is used by innumerable piece of software to encode and
14:13
Speaker 3: decode video, in a line of code that automated testing
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Speaker 3: tools they did five million times without ever catching the problem.
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Speaker 3: The model autonomously found and chained together several vulnerabilities in
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Speaker 3: the Linux kernel, the software that runs most of the
14:27
Speaker 3: world's servers, to allow an attacker to escalate from ordinary
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Speaker 3: user access to complete control of the machine, and they
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Speaker 3: found thousands of these.
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Speaker 2: These are just three of the examples they gave. So
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Speaker 2: what they're rolling out.
14:38
Speaker 3: Is something called Project glass Wing, where basically they're working
14:41
Speaker 3: with twelve companies Amazon aws themselves, Apple, Broadcom, Cisco, CrowdStrike, Google, JP, Morgan, Chase,
14:50
Speaker 3: the Linux Foundation, Microsoft and Video, and Powle Outdo Networks,
14:54
Speaker 3: And basically what they are doing is they're saying, look,
14:57
Speaker 3: we're not rolling this model out to anyone else right
14:59
Speaker 3: now because what we found is so dangerous and so
15:04
Speaker 3: powerful that we can't allow it into the hands of
15:08
Speaker 3: the broader population until these companies go and figure out
15:13
Speaker 3: how to patch the crap that we found, and by
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Speaker 3: the way, we might find more of this. So again,
15:21
Speaker 3: my view on AI for a while has kind of
15:25
Speaker 3: been evolving towards look the early models like and being
15:29
Speaker 3: able just to chat with them. That's not really where
15:32
Speaker 3: the meat is. And I thought that that was gonna,
15:34
Speaker 3: you know, die out, because you can only make so
15:36
Speaker 3: many pictures of turtles bob sledting. You just can't do
15:39
Speaker 3: too many of them. But the important thing to remember
15:44
Speaker 3: is that every time you're using an AI program, you're
15:47
Speaker 3: using the worst version that will ever exist into the future,
15:49
Speaker 3: there's always going to be more powerful ones, and that
15:52
Speaker 3: we will absolutely have more powerful tools in the future
15:55
Speaker 3: and be using more AI in the future than we
15:57
Speaker 3: are today, even if the profitability of that is in question. This,
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Speaker 3: to me is kind of the next level of that.
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Speaker 3: When when the company developing the tools literally says guys, like,
16:10
Speaker 3: there's a problem here and we can't let you have
16:12
Speaker 3: this because of how like how many potential issues we've
16:18
Speaker 3: found releasing it, it suggests that we're kind of getting
16:23
Speaker 3: to that next level. And quite honestly, like I've been
16:27
Speaker 3: thinking a lot about this, just because in any line
16:29
Speaker 3: of work you think about, okay, like what is AI.
16:31
Speaker 2: Mean for my business?
16:33
Speaker 3: And where I've kind of landed, like personally now after
16:35
Speaker 3: seeing this is look there, there's so the evolution on
16:39
Speaker 3: this is so fast, and there's so many smart people
16:43
Speaker 3: that are pugged into all of this that are trying
16:44
Speaker 3: to invent like the next big thing and do this,
16:46
Speaker 3: and that I think the average person quite honestly, it's
16:51
Speaker 3: not worth trying to keep up with, just except that
16:53
Speaker 3: someone out there is going to build some really cool
16:56
Speaker 3: things using this and you'll be able to use them
16:58
Speaker 3: in the future. Sure, you can try to like become
17:01
Speaker 3: someone who's like on the cutting edge, you probably won't
17:04
Speaker 3: be able to because what these companies are doing with
17:07
Speaker 3: their internal tools is so much far, so much above
17:10
Speaker 3: and beyond what you can do that trying to learn, like, hey,
17:13
Speaker 3: here's what like AI people were telling me was good
17:16
Speaker 3: in January. If you're trying to learn that now, you're
17:19
Speaker 3: already behind the curve like two months and you're out
17:22
Speaker 3: of date on this. And I've never seen anything like
17:25
Speaker 3: that before. Uh, I don't know what it means for
17:27
Speaker 3: the broader world, but I saw this and was like, Wow,
17:32
Speaker 3: this is the first thing that I've really seen that
17:36
Speaker 3: makes me think that it's not just going to be
17:39
Speaker 3: an iteration of oh, we can do this more efficiently,
17:42
Speaker 3: but the entire world is going to change.
17:44
Speaker 2: Because of this.
17:45
Speaker 4: Yeah, and also from a geopolitical perspective, it also reinforces
17:49
Speaker 4: just how critical this will be for national security standpoint
17:53
Speaker 4: to ensure that you have the lead with this technology,
17:57
Speaker 4: because the potential for for cyber attacks. If the wrong
18:02
Speaker 4: person were to harness these systems, it would be economically
18:07
Speaker 4: and otherwise devastating, So it's it's a little a little
18:10
Speaker 4: scary to kind of view.
18:12
Speaker 3: So this raises the really interesting question, which is if
18:16
Speaker 3: Anthropic has in fact created tools that are already this
18:19
Speaker 3: powerful and will continue to evolve, There's almost no chance
18:24
Speaker 3: in my mind that they're able to stay a private company.
18:27
Speaker 3: Right the US government would say, no, this has to
18:30
Speaker 3: be property of the US government.
18:34
Speaker 2: Yeah, like the like there's a reason.
18:38
Speaker 3: Why the US government does not let, you know, private
18:41
Speaker 3: citizens own and operate certain things, you know, fighter jets
18:44
Speaker 3: and things like that. If fewed similarly, you can absolutely
18:49
Speaker 3: see how this could go down that path, or at
18:53
Speaker 3: least certain parts of it would have to be owned
18:55
Speaker 3: by the US government, with like the consumer facing side
19:00
Speaker 3: being split off into a separate entity.
19:01
Speaker 2: Sure, take a quick break here.
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Speaker 3: Markets remain broadly positive following the news of the ceasefire
19:08
Speaker 3: from last night. We'll continue to watch how things evolve
19:13
Speaker 3: on that front. When we come back, we'll talk a
19:16
Speaker 3: little bit about the labor market, and then we've also
19:20
Speaker 3: got a little bit more in the private credit space
19:24
Speaker 3: to discuss as well.
19:27
Speaker 2: Stick around.
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20:01
Speaker 5: Market staging a strong rally after the US and around
20:04
Speaker 5: agreed to a two week ceasefire if the straight of
20:06
Speaker 5: four Moves was reopened immediately, sending the price of oil plunging.
20:10
Speaker 5: Right now, the Dow is up two point four percent,
20:14
Speaker 5: SMP five hundred up two point one percent or one
20:17
Speaker 5: hundred and forty three points, NASDAC up two point six
20:20
Speaker 5: percent or five hundred and seventy three points. RUSS two
20:23
Speaker 5: thousand up two point eight percent. Tenure Treasur Reel down
20:26
Speaker 5: seven basis points at four point two sixty seven percent.
20:31
Speaker 5: Oil now down fifteen percent, trading right around ninety five
20:37
Speaker 5: dollars a barrel. Several travel stocks are rallying on the
20:40
Speaker 5: heels of the ceasefire announcement. American Airlines is up seven percent,
20:44
Speaker 5: while United jumping nine percent higher. Separately, Delta reported better
20:48
Speaker 5: than expected first quarter results. However, the airline plans higher
20:52
Speaker 5: fares and fewer flights to manage costs as consumer demand
20:56
Speaker 5: for travel remained strong despite price incre Delta up by
21:01
Speaker 5: six percent. Meanwhile, several energy stocks pulling back in reaction
21:05
Speaker 5: to the drop in oil prices. Exon Mobile said a
21:08
Speaker 5: loss six percent of its global production in the first
21:11
Speaker 5: quarter due to the Iran war. Exon shares are now
21:14
Speaker 5: down nearly six percent, and Levi straussing It's stock rally
21:18
Speaker 5: about eleven percent after the apparel company reported an earning
21:22
Speaker 5: XAM revenue beat in the previous quarter, where direct to
21:25
Speaker 5: consumer sales for the first time made up half of
21:29
Speaker 5: it to revenue. Levi also hiked its full year earnings guidance.
21:35
Speaker 5: I'm talker Silva and that is Wall Street Watch. On
21:37
Speaker 5: the previous segment, we asked you the trivia question, which
21:40
Speaker 5: American monument did David Copperfield make vanish in nineteen eighty three?
21:45
Speaker 5: Will be the Statue of Liberty? Robert and Quincy Mass
21:48
Speaker 5: is our winner today, taking home a Financial Exchange Show
21:51
Speaker 5: T shirt. Congrats to Robert. We played trivia every day
21:54
Speaker 5: here on the Financial Exchange See complete contest rules at
21:57
Speaker 5: Financial Exchange Show dot com.
22:00
Speaker 2: What did he do with it? Still missing? Still a mistery,
22:06
Speaker 2: It's still gone?
22:07
Speaker 1: I don't know man.
22:08
Speaker 2: Did anyone look at his yard.
22:11
Speaker 1: Just out front of his lawn.
22:14
Speaker 2: He's a fountain. He's moved into the head of the
22:18
Speaker 2: Statue of Liberty. It's his new house.
22:21
Speaker 3: Let's talk about this piece in Wall Street Journal, Paul.
22:23
Speaker 3: Why more people are dropping out of the job market.
22:25
Speaker 3: Why are they doing it?
22:27
Speaker 4: People are getting old?
22:29
Speaker 2: Speak for yourself.
22:32
Speaker 4: What's happening here, Chuck, is we have a participation rate
22:36
Speaker 4: that tries to capture the percentage of the population that
22:42
Speaker 4: is working over the age of sixteen. So there is
22:44
Speaker 4: the participation rate, and then there's also the prime participation rate.
22:49
Speaker 4: So the prime participation rate is very high in this
22:52
Speaker 4: country right now. That's between ages of twenty five and
22:54
Speaker 4: fifty four. We're seeing really strong participation rates between people
22:58
Speaker 4: in those age demographics. However, if you look at the
23:01
Speaker 4: broader sphere of sixteen and up, on a much larger
23:05
Speaker 4: span of ages, we're seeing that the participation rate at
23:08
Speaker 4: sixty two percent in that demographic. That's the lowest since
23:12
Speaker 4: nineteen seventy seven and has really been falling since the early
23:16
Speaker 4: two thousands. It did kind of uptick post COVID back
23:19
Speaker 4: in twenty twenty four. But what we have is the
23:22
Speaker 4: baby boomers are stepping away from the labor force. The
23:26
Speaker 4: participation of those who were ages fifty five and older
23:30
Speaker 4: in the workforce was forty percent back in January of
23:33
Speaker 4: twenty twenty. That now sits at thirty seven percent as
23:37
Speaker 4: of last month. That was the lowest mark in twenty years. So,
23:40
Speaker 4: however you slice it, just a lot of these people
23:42
Speaker 4: are stepping out of the workforce. You also have the
23:45
Speaker 4: combined fact that from a supply side of things, there
23:48
Speaker 4: has been significant restrictions on immigration, so you have less
23:52
Speaker 4: new entrance into the workforce from that pipeline that's been
23:56
Speaker 4: largely shuttered, and as a result of that, you have
24:00
Speaker 4: a participation rate that's low. What does that mean and
24:03
Speaker 4: why should we care about it? From an economic standpoint,
24:07
Speaker 4: it can potentially cause labor shortages in the future if
24:10
Speaker 4: you don't have enough new supply of workers coming into
24:14
Speaker 4: the workforce, and you also need to have it typically
24:17
Speaker 4: new workers in the workforce to produce more stuff for
24:20
Speaker 4: more of us to consume more stuff, and to grow
24:22
Speaker 4: the economy. You can combat that a little bit with
24:25
Speaker 4: productivity gains, but it's harder over a longer period of
24:29
Speaker 4: time to have sustained productivity games to offset not having
24:32
Speaker 4: newer workers in a specific sector, and the shortages also
24:37
Speaker 4: can lead to inflationary pressure. If there are only so
24:39
Speaker 4: many mechanics out there, or whatever sector you want to
24:42
Speaker 4: look at, that can lead to pricing increases and hurt
24:45
Speaker 4: from an inflationary standpoint.
24:47
Speaker 2: And look, here's the thing.
24:51
Speaker 3: There are two ways that you can get new workers
24:53
Speaker 3: into the workforce this year.
24:56
Speaker 2: Number One, you.
24:57
Speaker 3: Can have babies sixteen to eighteen years ago. Number two,
25:03
Speaker 3: they can come from somewhere else in the world.
25:05
Speaker 2: That's it.
25:06
Speaker 3: Those are the two options given Tucker. Aside from our
25:12
Speaker 3: use on the show, Have have we licensed the time
25:15
Speaker 3: travel technology to anyone else?
25:17
Speaker 5: No?
25:17
Speaker 3: God, No, No, okay, So we can't go back in
25:21
Speaker 3: time to two thousand and eight and have more babies.
25:25
Speaker 2: We can't.
25:26
Speaker 3: The ones that were born then, all four point two
25:29
Speaker 3: million of them, they're coming into the workforce right now,
25:33
Speaker 3: some of the ones that were born in twenty ten,
25:35
Speaker 3: the four million babies, sir. Some of those sixteen year
25:37
Speaker 3: olds are coming into the workforce now. The eighteen year
25:39
Speaker 3: olds will be in a few years, maybe some of
25:41
Speaker 3: the twenty two year olds a few years after that.
25:43
Speaker 3: In any case, we know how many American babies are
25:46
Speaker 3: going to grow into American adults and join the workforce.
25:50
Speaker 3: It is fewer than the number of baby boomers leaving.
25:54
Speaker 3: As such, you have this gap that historically has been
25:57
Speaker 3: filled by immigration.
25:58
Speaker 2: Right now, we don't know exactly where.
26:00
Speaker 3: Immigration levels are, but the estimates so that you're basically
26:03
Speaker 3: net zero or maybe even a slightly negative immigration trend
26:08
Speaker 3: at this point. So overall, what this is done. Then
26:12
Speaker 3: Paul was talking about the broader labor force participation rate.
26:16
Speaker 3: If we look at the age twenty five to fifty
26:18
Speaker 3: four participation rate, prime age is what it's referred to.
26:22
Speaker 3: You go back ten years ago March of twenty sixteen,
26:25
Speaker 3: it was eighty one point three percent of people in
26:28
Speaker 3: that demo we're in the labor force today, it's up
26:32
Speaker 3: to eighty three point eight percent. Paul, do you know
26:35
Speaker 3: what the all time high is that we've gotten to
26:37
Speaker 3: on this well, I say eighty five, eighty four to six.
26:40
Speaker 3: We never even got to eighty five. Eighty four to
26:42
Speaker 3: six was in January of ninety nine, right as the
26:44
Speaker 3: tech bubble was bubbling. The matrix had yet to come out,
26:47
Speaker 3: like everything was hot then, and that's the highest that
26:51
Speaker 3: that's ever gotten. What it means is there's relatively little
26:55
Speaker 3: slack in the labor force actually in terms of who
26:59
Speaker 3: can come in. And people say, well, chuck, like, eighty
27:03
Speaker 3: three percent means there's still seventeen percent more people that
27:05
Speaker 3: can come into the labor force. Wrong, And the reason
27:09
Speaker 3: why it's wrong is because not all of them ever will.
27:12
Speaker 3: There are some of those people that stay home taking
27:14
Speaker 3: care of children. There are some of those people that
27:18
Speaker 3: are in school for advanced degrees, doctors, lawyers, nurses, you
27:26
Speaker 3: go down the list, you know, people getting MBAs, whatever
27:29
Speaker 3: it might be. There's people that are in school. There
27:32
Speaker 3: are some people in that demo who might be wealthy
27:35
Speaker 3: enough to retire. There are some people in that demo
27:38
Speaker 3: who might just be living in their parents' basement, not
27:41
Speaker 3: in the workforce. There's all kinds of reasons why you're
27:45
Speaker 3: never going to get to one hundred percent there. And
27:48
Speaker 3: so what this does mean is that you could have
27:50
Speaker 3: a really weird scenario that if this plays out for
27:53
Speaker 3: an extended time where job growth could remain really weak,
27:58
Speaker 3: but wages could go nutty, eating into margins or forcing
28:02
Speaker 3: price hikes because there isn't enough labor to go around, right,
28:06
Speaker 3: The counter to this is, does artificial intelligence provide enough
28:10
Speaker 3: of a productivity flywheel to generate what businesses need as
28:14
Speaker 3: far as productivity growth and keeping wage growth in check
28:17
Speaker 3: for them. Maybe we don't know, But this this is
28:20
Speaker 3: a brave new world in terms of we've never seen
28:23
Speaker 3: a labor market like this, and we've never seen, you know,
28:27
Speaker 3: the potential for changes with AI like this, And so
28:30
Speaker 3: I think it's just a really interesting situation to watch
28:34
Speaker 3: here to see kind of what we get out of
28:36
Speaker 3: all this. So that's interesting to me, is all I'm saying.
28:41
Speaker 3: It's a really interesting labor market right now.
28:45
Speaker 2: Folks.
28:46
Speaker 3: The Armstrong Advisory Group has a guide available this month.
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Speaker 3: It's titled building your Emergency Financial Binder. It's all about
28:54
Speaker 3: making sure that, hey, if something unexpected happens to you,
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Speaker 2: And what to do.
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30:03
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
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Speaker 1: registered investment advisor. Nothing in the ad or in any
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Speaker 1: advisory services.
30:19
Speaker 3: Take a quick break. When we come back, we'll do
30:21
Speaker 3: a little bit of stock roulette.
30:23
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30:47
Speaker 5: Hey, the Money Matters mailbag returns this Friday. On the
30:50
Speaker 5: Financial Exchange is your chance to ask the guys questions
30:53
Speaker 5: about business the economy that you want answers to, maybe
30:57
Speaker 5: some life questions.
30:58
Speaker 2: I don't know.
30:59
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31:02
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31:15
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31:17
Speaker 2: Paul, what do you got for me for stack Roulette?
31:20
Speaker 4: AI giants are going on the charm offensive to avert
31:24
Speaker 4: public backlash. A piece here from the Wall Street Journal
31:26
Speaker 4: where polls are showing that AI is not as popular
31:32
Speaker 4: as well. I guess you could probably have projected that
31:35
Speaker 4: it wasn't gonna be as popular once it started to
31:37
Speaker 4: get going maybe not as popular when it first came
31:39
Speaker 4: on the scene and the turtles were Bob sledding or
31:42
Speaker 4: whatever you reference for the.
31:45
Speaker 2: Good the good old days.
31:47
Speaker 4: Now you have companies like open Ai and Anthropic trying
31:51
Speaker 4: to put together a wish list of policy proposals that
31:56
Speaker 4: would help combat people's fears over job replacement, walthcn Gentration
32:01
Speaker 4: trying to float out ideas of for day work, where
32:04
Speaker 4: he's basically just trying to curry favor with the general populace,
32:08
Speaker 4: which has had some skepticism on artificial intelligence and the
32:13
Speaker 4: form that it may take. Anthropics, similarly to is trying
32:17
Speaker 4: to pair up with companies that it had really inadvertently
32:21
Speaker 4: bludgeoned their stock prices because of the concerns that Nthropic
32:25
Speaker 4: would release tools that would allow for software development to
32:28
Speaker 4: be far easier and less cost intensive than it once was.
32:31
Speaker 4: But yeah, it'll be interesting to see. I feel like
32:34
Speaker 4: it's going to be a hard battle to fight Chuck
32:37
Speaker 4: to keep AI in any really sort of popularity contrast
32:43
Speaker 4: performing well. It seems like an uphill battle that they're
32:45
Speaker 4: going to face here.
32:46
Speaker 3: Yeah, you know what the problem is is that these
32:48
Speaker 3: companies are run by weirdos who have been bad shepherds
32:52
Speaker 3: of technology for the last fifteen to twenty years, and
32:55
Speaker 3: people feel betrayed by them, whether you're talking about privacy,
32:59
Speaker 3: whether you're talking about safety, whether you're talking about just
33:02
Speaker 3: about anything. And so ultimately, if you see these companies
33:06
Speaker 3: are headed up by people that have not treated you
33:08
Speaker 3: properly in the past, why are you suddenly going to
33:12
Speaker 3: believe they're gonna be good stewards of something that's, you know,
33:15
Speaker 3: exponentially more powerful than what they've already been in charge of.
33:19
Speaker 3: It's just like you're not gonna trust Mark Zuckerberg because
33:23
Speaker 3: you're just not well, you're not gonna trust Sam Altman
33:27
Speaker 3: because all the people around him tell you not to
33:29
Speaker 3: trust him.
33:30
Speaker 2: Well, yeah, and he's a weirdo.
33:31
Speaker 4: The shift from a nonprofit that OpenEye was initially founded
33:36
Speaker 4: under to now having you know, tons of investors, billions
33:40
Speaker 4: of dollars raised, and clearly the focus of at least
33:43
Speaker 4: a looming IPO. It leads to decisions as a business
33:47
Speaker 4: leader that don't take those things into account of protection
33:52
Speaker 4: and privacy and all these other policies that you should
33:56
Speaker 4: have as a company that gets thrown by the wayside
33:58
Speaker 4: to chase the almighty dollar.
34:00
Speaker 2: And that's why you know you're right.
34:02
Speaker 4: People are right to have concerns because when you get
34:05
Speaker 4: a lot of investors on at the table committing billions
34:08
Speaker 4: of dollars and they want to see return on their investment,
34:11
Speaker 4: then all of a sudden you start to get concerned
34:13
Speaker 4: with open AI and maybe others that start to lack
34:16
Speaker 4: some of their security, verification or all the different things
34:19
Speaker 4: that come with it.
34:21
Speaker 3: So that's what's going on in the AI world. Let's
34:27
Speaker 3: see what else do we want to talk about here?
34:31
Speaker 3: I want to talk you guys didn't cover this company
34:33
Speaker 3: retreat story yesterday, did you no?
34:37
Speaker 2: Okay?
34:38
Speaker 3: Wall Street Journal Inside a corporate retreat that went very
34:41
Speaker 3: badly wrong. Senior executives at the tech company Plex were
34:47
Speaker 3: eager to trade their one hundred and twenty fully remote
34:49
Speaker 3: staffers to a week long corporate getaway into tropical paradise.
34:52
Speaker 4: Sounds good.
34:54
Speaker 3: The plan for the Hondura's trip was simple company meetings
34:57
Speaker 3: and team building by powdery soft beaches during the day,
35:00
Speaker 3: an island fun at night, at a cost of roughly
35:02
Speaker 3: five hundred thousand dollars to the company.
35:05
Speaker 4: So I thought hunters would be a little more affordable.
35:08
Speaker 2: How about just pay the employees.
35:09
Speaker 5: Okay, continue, sorry.
35:11
Speaker 2: But let's actually do some math here.
35:12
Speaker 3: Okay, this was going to be let me read more
35:18
Speaker 3: first and then we'll do the math. They built the
35:20
Speaker 3: trip around a Survivor theme with teams and challenges. It'd
35:25
Speaker 3: be fun, not too physically grueling, and the CEO of Plex,
35:29
Speaker 3: a free streaming platform, would play a role similar to
35:31
Speaker 3: that of Survivor hosts, Jeff Probst. And basically what ended
35:36
Speaker 3: up happening here is that this ended up being pretty
35:44
Speaker 3: much the fire Festival of corporate retreats in that people
35:50
Speaker 3: arrived there and like the food was a mess. They
35:55
Speaker 3: had a former Navy seal come in in order to
35:58
Speaker 3: try to like get everyone active. That the navy seal
36:02
Speaker 3: just left because he was like, you guys can't keep
36:04
Speaker 3: up with me, and I'm not gonna like work with you.
36:08
Speaker 2: And it was.
36:09
Speaker 3: Pretty much a complete disaster by all accounts. They one
36:15
Speaker 3: of the guys found a porcupine in his shower, which
36:18
Speaker 3: is not something you want to find in your shower.
36:20
Speaker 2: Did not think they were needed to. You know, it's fine, Yeah,
36:24
Speaker 2: it's good for exfoliating, you know, but here's the thing.
36:28
Speaker 2: You do the math.
36:29
Speaker 3: Five hundred thousand dollars. I'm not saying it's a small
36:31
Speaker 3: amount of money, but for one hundred and twenty people, Okay,
36:35
Speaker 3: it works out to around uh forty one hundred dollars
36:39
Speaker 3: a person. And this was a four day trip flights, hotel, food,
36:44
Speaker 3: navy seal and everything. I can tell you that when
36:48
Speaker 3: you're talking about like international travel for that many people
36:52
Speaker 3: in this type of corporate setting, you are not going
36:55
Speaker 3: to end up with the like the comfortable trip that
36:58
Speaker 3: you think for that much per person for that long.
37:03
Speaker 2: Wow.
37:04
Speaker 3: So again, like as Tucker said, look, if you want
37:08
Speaker 3: to do something nice for your employees, why didn't you
37:10
Speaker 3: just give them all a four thousand dollars bonus?
37:12
Speaker 5: Ew somebody had to eat a dead tarantula.
37:14
Speaker 1: Yes, oh my god.
37:16
Speaker 2: I didn't want to go. I didn't want to go
37:18
Speaker 2: through like all the stuff. But yes, it was.
37:21
Speaker 4: How do you hire a Navy seal if you said
37:23
Speaker 4: it's not gonna be physically grueling, I mean their mo
37:26
Speaker 4: is being physically grueling.
37:28
Speaker 3: The kitchen was trying to rush food out because the
37:30
Speaker 3: chef had never served one hundred plus people in one go.
37:33
Speaker 3: The steamed vegetables that came out one day. They literally
37:36
Speaker 3: just boiled the vegetables and flopped them into a catering thing.
37:40
Speaker 5: Oh, there needs to be a documentary about the stat
37:43
Speaker 5: Like Netflix needs to jump on this.
37:44
Speaker 4: Now.
37:45
Speaker 3: There's other stuff in here that is really not like
37:48
Speaker 3: bad and just just people complaining. Quote, someone saw an
37:51
Speaker 3: alligator on the golf course. Okay, have you ever been
37:54
Speaker 3: to Florida or like the Carolina's Like, yeah, you see
37:57
Speaker 3: like three a day if you're playing there, So you know,
38:00
Speaker 3: some of this is just you know, complaining. But man,
38:04
Speaker 3: you got a porcupine in your shower and you're serving
38:08
Speaker 3: uncooked chicken for dinner. Seems a little problematic. Let's take
38:13
Speaker 3: a quick break for the whole rest of the day.
38:15
Speaker 3: We will go on our own little retreat for a bit,
38:18
Speaker 3: and we'll see you tomorrow with more financial exchange.