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Elon Musk's $1B Tesla Bet Shocks Wall Street · The Financial Exchange Show

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Speaker 1: a donation today. This is the Financial Exchange with Chuck
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Speaker 1: Zada and Mike Armstrong.
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Speaker 2: Chuck, Mike and Tucker with you here, and stock's kicking
1:14
Speaker 2: off the week with a strong start. We've got the
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Speaker 2: Dow Jones Industrial average up about a quarter percent eighty
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Speaker 2: five points, s and P five hundreds and a half
1:23
Speaker 2: percent about thirty three points, and the nasdak Can posite
1:27
Speaker 2: up one hundred and sixty seven points or three quarters
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Speaker 2: of a percent. Tenure US Treasury continuing to see yields
1:34
Speaker 2: falling down two point six basis points to four point
1:37
Speaker 2: h three four percent. And then as we head over
1:41
Speaker 2: to commodity markets, Oil West Text Center Media getting a
1:44
Speaker 2: little bit of a bump up seventy six cents a
1:46
Speaker 2: barrel to sixty three forty five. And we've got gold
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Speaker 2: today up another fifteen dollars an ounce to thirty seven
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Speaker 2: oh one and twenty cents. So gold back above thirty
1:58
Speaker 2: seven hundred for only the second time now, and we'll
2:02
Speaker 2: see if it ends up holding the previous time that
2:06
Speaker 2: it was there, which was I believe last Tuesday. It
2:09
Speaker 2: was up there for about a minute and a half
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Speaker 2: and then went back below, So we'll see if it
2:14
Speaker 2: holds up better this time. But gold about ten dollars
2:16
Speaker 2: away from another all time high. At this point, let's
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Speaker 2: talk a little bit about the news out of Tesla today.
2:26
Speaker 2: Elon Musk announced will not announced. He went and filed
2:30
Speaker 2: with the sec A form to allow him to buy
2:34
Speaker 2: a billion dollars worth of Tesla's stock. And so this
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Speaker 2: has Tesla's stock rising by more than a billion dollars,
2:42
Speaker 2: in fact, rising by about six percent right now, so
2:47
Speaker 2: several tens of billions of dollars as a result of
2:50
Speaker 2: Musk's show of support in the company.
2:53
Speaker 3: Remember a couple of weeks.
2:54
Speaker 4: Ago I asked if Tesla's or if Elon still has
2:56
Speaker 4: the power to move the stock he does.
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Speaker 2: This tails nicely, Quite honestly, I don't know what else
3:03
Speaker 2: to say about this exactly, but this is on the
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Speaker 2: heels of Musk's proposed new pay package that could be
3:10
Speaker 2: again like trillions of dollars, yes, just completely crazy pants numbers. Potentially,
3:16
Speaker 2: you know, a trillion dollars if all of it ends
3:18
Speaker 2: up being satisfied, which I think is unlikely, but hey,
3:22
Speaker 2: shoot for the moon, right, So I.
3:24
Speaker 4: Think most thought that his original pay package with the
3:27
Speaker 4: share targets that were looked at were thought that were
3:31
Speaker 4: unlikely so.
3:32
Speaker 2: Yeah, and so, the chairff Tesla's board, Robin Denhelm, gave
3:38
Speaker 2: an interview on Friday on Bloomberg and I'm going to,
3:41
Speaker 2: you know, read the quote here. He's a generational leader.
3:43
Speaker 2: There aren't any other people out there like Elon who
3:46
Speaker 2: can actually lead the company over the next decade or so.
3:50
Speaker 2: I happen to agree with her. Now, I don't agree
3:53
Speaker 2: with Elon Musk on a lot of you know, what
3:56
Speaker 2: he has done in the last couple of years, as
3:59
Speaker 2: far as like splitting his time and you know, maybe
4:01
Speaker 2: spreading himself too thin, and certainly anytime that you get
4:04
Speaker 2: involved in politics it makes things challenging from a business
4:07
Speaker 2: perspective these days. But I think that when you look
4:11
Speaker 2: at it, there's no one other than Elon Musk who
4:13
Speaker 2: can actually run that company, because without Elon, the stock
4:19
Speaker 2: doesn't trade anywhere near where it does today. Do I
4:23
Speaker 2: think that Elon is you know, critical to actually like
4:25
Speaker 2: developing the technologies that they're going to No, like anytime
4:28
Speaker 2: that you're a big company. He never really was, like
4:31
Speaker 2: maybe he had, but I think sometimes some people think
4:34
Speaker 2: that like he might be like central to it, like
4:36
Speaker 2: he's you know, Einstein in this genius. Who's you know,
4:38
Speaker 2: single handedly doing it? I don't think that's him. I
4:41
Speaker 2: think what he is exceptional at is not delivering products
4:46
Speaker 2: on time, which he's horrible at. But I think what
4:48
Speaker 2: Elon is exceptional at is identifying the lane that Tesla
4:53
Speaker 2: needs to travel in pun intended, and then identifying what
4:57
Speaker 2: needs to be done in order to to clear that
5:00
Speaker 2: path as well as possible for him. And that can
5:04
Speaker 2: mean that there are sometimes like the early twenty tens,
5:08
Speaker 2: where Elon says, yeah, I'm going to push for as muy,
5:11
Speaker 2: you know, I'm gonna align myself politically in such a
5:15
Speaker 2: way that I can get as many subsidies as possible
5:17
Speaker 2: for my cars and solar panels and everything that I
5:20
Speaker 2: want to develop. And then hey, now that I need,
5:23
Speaker 2: you know, to get into robotics and AI and stuff
5:26
Speaker 2: like that. Great, I can pivot and figure out how
5:29
Speaker 2: to make that work for me for a regular From
5:31
Speaker 2: a regulatory perspective as well. I think he is really
5:34
Speaker 2: good at doing that.
5:35
Speaker 1: Yeah.
5:35
Speaker 4: I was gonna ask the follow up then, which is, okay,
5:38
Speaker 4: so what lane is he clearing for Tesla right now?
5:40
Speaker 3: It seems to be all about robotics.
5:42
Speaker 2: I don't think he wants to be a car company
5:44
Speaker 2: anymore because it's a bad business. Like not Tesla, but
5:50
Speaker 2: the car industry is an incredibly tough, demanding, capital intensive
5:55
Speaker 2: business that is hard to operate in the best of times.
5:59
Speaker 2: And I think it served a role for Elon and
6:03
Speaker 2: for Tesla. If we view Tesla now as just a
6:05
Speaker 2: car company but trying to do all these different things,
6:09
Speaker 2: I think it got them to the point where they
6:10
Speaker 2: have the capital to be able to do some of
6:12
Speaker 2: the other things they want to do now. But I
6:17
Speaker 2: don't think Elon. I mean, you listen to everything over
6:20
Speaker 2: the last couple of weeks about you know, the new
6:21
Speaker 2: master planned version of this and that, and it's pretty
6:24
Speaker 2: clear that he's viewing Tesla's cars as being secondary to
6:28
Speaker 2: the future of Tesla as anything related to robotics and
6:32
Speaker 2: artificial intelligence, right.
6:35
Speaker 3: Yeah, it does. Yeah, And that's.
6:37
Speaker 4: Been where I've been kind of scratching my head, is
6:41
Speaker 4: what is going to be the big breakthrough on that
6:44
Speaker 4: front and is it going to genuinely drive quote eighty
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Speaker 4: percent of the company's long term value.
6:51
Speaker 2: And here's the thing that's gonna be challenging for must
6:54
Speaker 2: that's different from what he's done with Tesla to this point, Mike,
6:59
Speaker 2: was there any anyone else in the world when Elon
7:03
Speaker 2: was trying to develop, you know, mass market evs in
7:05
Speaker 2: the mid twenty tens, Was anyone else there really as
7:09
Speaker 2: focused on it as he was? The big automakers like
7:13
Speaker 2: didn't really care. They're like, okay, like here's a hybrid
7:16
Speaker 2: or two, Like not really, here's the Nissan leaf like great,
7:19
Speaker 2: it goes ninety miles. No one was really trying to
7:24
Speaker 2: compete there. Yeah, the key difference right now, everyone in
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Speaker 2: their grandmother is trying to build robots and artificial intelligence programs,
7:35
Speaker 2: and this is gonna be one where they're gonna have
7:37
Speaker 2: to compete in real time to see who's the best
7:40
Speaker 2: of the best. And that's a fundamental difference from Tesla ware.
7:44
Speaker 2: They had a huge head start on everyone. So if
7:48
Speaker 2: they can innovate faster and produce better products, okay, sure,
7:53
Speaker 2: like you know, there's that future, but they're gonna have
7:58
Speaker 2: to prove it because it's a different competitive and environment
8:01
Speaker 2: than the one in which they developed Tesla's core products
8:03
Speaker 2: over the last ten years.
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Speaker 3: Yeah, I don't know.
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Speaker 4: I'm also just struggling to connect a few dots, like
8:13
Speaker 4: they want to excel in robotics, and specifically they want
8:15
Speaker 4: to seemingly excel in a consumer facing robot. I mean,
8:20
Speaker 4: at least that's what they are marketing and putting out there,
8:23
Speaker 4: the kind of humanoid type robot.
8:25
Speaker 2: Which, by the way, that's where everyone's focusing now.
8:28
Speaker 4: Yeah, I mean we've talked about I mean, everybody's seen
8:30
Speaker 4: the videos from what's the Boston I think the Boston
8:33
Speaker 4: Post Dynamic Boston Dynamics, and there in their type robotics.
8:37
Speaker 4: Maybe they can do that again where they can produce
8:40
Speaker 4: a product that is familiar like Tesla's cars were, but
8:45
Speaker 4: better than everything else on the market. But it's it's
8:48
Speaker 4: a kind of a new class of product that nobody
8:51
Speaker 4: has any experience with, so it is very fundamentally different
8:54
Speaker 4: from what Elon has done previously with Tesla.
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Speaker 2: And I do happen to believe that this is an
8:59
Speaker 2: area that people are not giving enough appreciation there as
9:07
Speaker 2: far as where it can go in the next three
9:09
Speaker 2: to five years. And I think it's just because it's
9:12
Speaker 2: so new, and to be honest, we're a little bit
9:15
Speaker 2: freaked out by the idea of like humanoid robots running
9:17
Speaker 2: around and stuff. I get it. It's it's kind of
9:20
Speaker 2: creepy and freaky and scary. But here's the case for
9:27
Speaker 2: a company. Just as an example is, Hey, even if
9:32
Speaker 2: that robot requires human intervention twenty percent of the time,
9:37
Speaker 2: if eighty percent of the time it does exactly what
9:39
Speaker 2: it's told, then I can have one person run a
9:43
Speaker 2: fleet of four to five robots and get all the
9:46
Speaker 2: productivity gains from doing that. It's not necessarily that you
9:51
Speaker 2: need fewer workers overall, but like, think about just all
9:55
Speaker 2: the stuff that we need to do in the world, man,
9:58
Speaker 2: Just all this stuff that we need to do, and
10:02
Speaker 2: all the stuff that, by the way, no one really
10:05
Speaker 2: wants to do unless you pay them really well because
10:08
Speaker 2: they're just hard jobs and they're pain and it's challenging.
10:13
Speaker 2: This is the stuff where you can say, hey, you're
10:15
Speaker 2: still going to have the job overseeing the robots, but
10:18
Speaker 2: they're gonna be able to do more than we could
10:21
Speaker 2: do on our own, and it's going to give you
10:23
Speaker 2: that additional power. It's no different from Hey, when you
10:27
Speaker 2: had to go and you know, put all the screws
10:30
Speaker 2: into the house by hand, hammer all the nails in
10:34
Speaker 2: by hand. Man, it took a lot longer to build
10:36
Speaker 2: a house than with a nail gun and some power tools.
10:40
Speaker 2: But we didn't say, well, we can't do that because
10:43
Speaker 2: we'll lose jobs. No, we just said, hey, this will
10:44
Speaker 2: help us build more houses. Yep, so will robots. It'll
10:50
Speaker 2: require different skill sets and different ways of managing it.
10:53
Speaker 2: And I do believe one of the big threats here
10:56
Speaker 2: is hey, a lot of and I'm guilty of this too,
11:01
Speaker 2: saying hey, like, think about all these jobs that you
11:03
Speaker 2: can't outsource, like plumbers and electricians, and I think more
11:07
Speaker 2: of those jobs are unfortunately gonna be threatened by robots.
11:09
Speaker 2: Then we want to admit now. And so it's not
11:13
Speaker 2: just the office worker is gonna get, you know, their
11:16
Speaker 2: job threatened by large language models and things.
11:18
Speaker 4: Like that, not just the Amazon warehouse worker who's getting
11:22
Speaker 4: all of us.
11:22
Speaker 2: Like, I'm telling you that there are different forms of
11:26
Speaker 2: AI and robotics that are gonna come for all of
11:28
Speaker 2: our jobs, and we're all gonna have to reckon with this,
11:31
Speaker 2: and it's it's gonna be hard because I have no
11:33
Speaker 2: idea what the path is to managing it, but it's
11:36
Speaker 2: it's coming for us. And Tesla's gonna compete on that
11:39
Speaker 2: playing field because I think they rightly see that this
11:42
Speaker 2: is the next frontier. Can they win on that one?
11:46
Speaker 2: I don't know, but they're gonna compete. And I do
11:50
Speaker 2: completely agree that there's no one but Elon that can
11:53
Speaker 2: run that company because more than any allow anyone of
11:58
Speaker 2: more than any other executive I've ever seen, even Steve
12:02
Speaker 2: Jobs and Warren Buffett, the alignment between the brand and
12:06
Speaker 2: the person is just at a different level.
12:10
Speaker 3: Yeah, right or wrong, that is definitely true.
12:13
Speaker 2: Let's take a quick break. When we return, We've got
12:17
Speaker 2: some trivia.
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13:46
Speaker 2: Couple stats on the auto loan industry that just continue
13:50
Speaker 2: to tell me that, man, we're not doing it right
13:55
Speaker 2: when it comes to buying depreciating assets that are typically
13:59
Speaker 2: either the most or second most expensive purchase that we
14:02
Speaker 2: ever make in our lifetime.
14:03
Speaker 3: Yeah really, so.
14:05
Speaker 2: Here's the deal.
14:06
Speaker 3: Uh.
14:07
Speaker 2: Twenty six point six percent of trade ins towards new
14:10
Speaker 2: car purchases in the second quarter had negative equity, meaning
14:15
Speaker 2: they owed more than the car was worth, and specifically,
14:19
Speaker 2: the average number was about sixty seven hundred dollars that
14:22
Speaker 2: they owed relative to what the car was worth.
14:25
Speaker 4: That is a tremendous amount of negative equity. I'd like
14:30
Speaker 4: to throw it out. That's a lot of money to
14:32
Speaker 4: be underwater on your car and trading in. Not to
14:35
Speaker 4: be underwater, right, but to be trading in. So and
14:37
Speaker 4: here's how it happens.
14:39
Speaker 2: It's because people want to buy certain vehicles and they
14:43
Speaker 2: can't afford them, and so they end up taking on
14:45
Speaker 2: like seven or eight year auto loans.
14:48
Speaker 1: Uh.
14:48
Speaker 2: Seven year auto loans now are almost a quarter of
14:52
Speaker 2: new loans that are out there. And here's here's what
14:55
Speaker 2: I have to say about this. It's it's not necessarily
14:56
Speaker 2: even don't buy the vehicle because look, here's the thing.
15:01
Speaker 2: All of us do things that are not the best
15:04
Speaker 2: financial decisions from time to time. I certainly do. I
15:09
Speaker 2: do things where it's like, you know, if someone like
15:11
Speaker 2: looked at my like my credit card was like you
15:14
Speaker 2: spent what on what? I'd be like, Yeah, probably wasn't
15:17
Speaker 2: you know, the best thing, But hey, like whatever.
15:19
Speaker 3: Interesting to see where this is going go on.
15:22
Speaker 2: Where I'm going on this is generally, if you're someone
15:27
Speaker 2: who is taking out a seven year car loan and
15:29
Speaker 2: then trading it in with a bunch of negative equity
15:31
Speaker 2: usually means you're trading it in within the first two
15:33
Speaker 2: to three years of that loan. If you know you're
15:36
Speaker 2: someone who wants to have a new car every two
15:38
Speaker 2: to three years, stop buying. You should be leasing, not buying.
15:41
Speaker 4: I gotta tell you if you are doing this, there
15:44
Speaker 4: are I can think of the two scenarios in my
15:47
Speaker 4: mind where this makes any sense at all, any sense
15:50
Speaker 4: it all? Which ones your car is totaled and you
15:53
Speaker 4: have no choice. Yeah, that's not happening a quarter of
15:56
Speaker 4: the time. No, So, like there's your scenario number one,
15:59
Speaker 4: my car got total I cannot drive it, or it's
16:01
Speaker 4: so unreliable that I need a new mode of transportation
16:04
Speaker 4: in order to continue working.
16:05
Speaker 2: Even there, Quite honestly, I don't know exactly how that
16:08
Speaker 2: works between your auto loan and the insurance company, Like.
16:13
Speaker 4: Like, it's not technically not a trade in. Yeah, so
16:15
Speaker 4: I don't think that actually fits this category. But that
16:17
Speaker 4: was one of the circumstances I thought of, where like, Okay, yeah,
16:20
Speaker 4: if your car is ruined, sure it can be underwater,
16:23
Speaker 4: and I can understand totally get the other one.
16:25
Speaker 3: Would be I suppose if you're driving a sixty.
16:30
Speaker 4: Thousand dollars car and you finally have a come to
16:32
Speaker 4: Jesus moment and you're like, yeah, I can really afford
16:34
Speaker 4: it used Honda and I'm driving an Audi, and so
16:37
Speaker 4: I am going to trade in my negative equity vehicle
16:39
Speaker 4: and go buy a cheaper vehicle with a much smaller
16:42
Speaker 4: payment and sure come out on top. Because of that,
16:46
Speaker 4: even then, I've got a ton of questions. Every other
16:49
Speaker 4: scenario out there is terrible person finance. If you need
16:53
Speaker 4: a car that's new every two to three years.
16:56
Speaker 5: Tucker, you No, I just thought of another example. Just
17:00
Speaker 5: a third kid. You need to upgrade and get a
17:02
Speaker 5: bigger car, a third row. I know somebody had to
17:05
Speaker 5: do that recently, and they had a previous car, I
17:07
Speaker 5: think it was. It was a Wrangler and they only
17:09
Speaker 5: had it for like a year and a half. Yeah,
17:11
Speaker 5: and they had to get a bigger car because of
17:13
Speaker 5: the third kid.
17:14
Speaker 4: Yeah, you know, that is another scenario that does fit
17:20
Speaker 4: in there.
17:21
Speaker 3: And I guess I go back to by that.
17:23
Speaker 4: Yeah, I do too, I just because that's I want
17:26
Speaker 4: to see more planning.
17:27
Speaker 2: It's a one time upgrade. Yeah, Yeah, and again like
17:30
Speaker 2: when you say you want to see more planning, like, look,
17:32
Speaker 2: we all have things that it's like, oh gee, I
17:33
Speaker 2: wish I could have planned for that. Yeah, life happened.
17:35
Speaker 2: Like what I'm saying, like, we all have times where
17:39
Speaker 2: we don't make the best financial decision. But when twenty
17:42
Speaker 2: six point six percent of trade ins have negative equity.
17:46
Speaker 4: It's not because all of them are being financially disciplined
17:49
Speaker 4: by getting cheaper cars and suddenly had babies.
17:51
Speaker 3: That's not a right.
17:52
Speaker 2: Yeah, no, there's just not that many three family, three
17:54
Speaker 2: kid households.
17:56
Speaker 4: That's not a quarter of households. Usually, what it is
18:00
Speaker 4: is if you're a god enticed by that new commercial
18:04
Speaker 4: for that brand new pickup that you just had to have,
18:10
Speaker 4: I will feel so much.
18:11
Speaker 2: Man, Guys, I'm not gonna rip on the pickup owers.
18:14
Speaker 2: It's it's not just I'm.
18:16
Speaker 4: Picking on them because it's the best selling vehicle out there,
18:20
Speaker 4: and so that's where I'm honing in on.
18:23
Speaker 3: But you're right, it's it's everything else.
18:25
Speaker 2: If if you're someone who needs a new vehicle every
18:29
Speaker 2: two to three years, and that's your thing, Like again,
18:32
Speaker 2: we all have our thing, Yep, I go to a
18:35
Speaker 2: lot of Boston Bruins hockey games immediately depreciating assets. Is
18:40
Speaker 2: it the best financial decision? No, especially not this year
18:43
Speaker 2: where they're gonna lose like seventy of their games. Probably okay, sneaky,
18:51
Speaker 2: let's let's not go too far.
18:52
Speaker 4: So.
18:53
Speaker 2: In any case, we all have our things that we
18:55
Speaker 2: spend money on that are not good financial decisions.
18:58
Speaker 4: But there are better ways to do it than right
19:00
Speaker 4: tinuinely trading in underrep cars, like think about whether or
19:03
Speaker 4: not a lease could make sense for you where hey,
19:06
Speaker 4: your payment might actually be less and then you don't
19:09
Speaker 4: owe a bunch of the end of three years and
19:10
Speaker 4: you could just move into a new lease.
19:12
Speaker 2: Anyways, there are ways that you can structure these things
19:16
Speaker 2: that are better.
19:17
Speaker 4: My signal would be that if you're underwater on the
19:19
Speaker 4: car in the first place by sixty seven hundred dollars,
19:22
Speaker 4: then going with the lease instead is still probably not
19:25
Speaker 4: the financial decision.
19:26
Speaker 2: Maybe not, maybe not, but easy to judgement over here.
19:30
Speaker 2: We just got to make better decisions on the cars.
19:33
Speaker 2: Quick Break, Triva Answer and Wall Street Watching Next.
19:39
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
19:53
Speaker 1: what's moving markets so far today right here on the
19:56
Speaker 1: Financial Exchange Radio network.
19:58
Speaker 5: And meeting week is here, and markets are currently in
20:01
Speaker 5: mixed territory as Wall Street eagerly awaits the Central Bank's
20:06
Speaker 5: likely twenty five basis point interest rate cut at the
20:09
Speaker 5: conclusion of their meeting on Wednesday. Right now, the Dow
20:14
Speaker 5: is dipping into negative territory. SMP five hundred is up
20:18
Speaker 5: four tenths of one percent, or twenty eight points higher,
20:21
Speaker 5: NASDAC up eight tenths of one percent or one hundred
20:24
Speaker 5: and seventy seven points higher. Russell two thousand is up
20:26
Speaker 5: about a half a percent, Tenure Treasure Reel down two
20:29
Speaker 5: basis points at four point zero three six percent, and
20:33
Speaker 5: crude oil up nearly one percent higher, trading just above
20:37
Speaker 5: sixty three dollars a barrel. According to Treasury Secretary Scott Besson,
20:41
Speaker 5: the US and China have reached a framework deal for
20:44
Speaker 5: social media platform TikTok. Meanwhile, a new filing with the
20:48
Speaker 5: SEC revealed Testa, the CEO, Elon Musk, purchased about one
20:52
Speaker 5: billion dollars in the ev maker stock, marking his first
20:56
Speaker 5: purchase of the stock in the open market. Since February
20:59
Speaker 5: of twenty twenty test the stock is up over six percent.
21:02
Speaker 1: Now.
21:02
Speaker 5: Another major name and Nvidia, making headlines after China's antitrust
21:06
Speaker 5: regulator said a preliminary investigation showed that chip maker violated
21:10
Speaker 5: the country's anti monopoly law and would conduct a further investigation,
21:15
Speaker 5: and Vidia stock is retreating about half a percent. Separately,
21:19
Speaker 5: China said it had launch probes into certain US analog
21:22
Speaker 5: chip imports Texas instruments down nearly three percent, while analog
21:26
Speaker 5: devices in on semiconductor are seeing slightly or trading slightly lower.
21:32
Speaker 5: Wall Street Journal reported that agriculture company Corteva is mulling
21:36
Speaker 5: a breakup that would separate its seed and pesticide business
21:40
Speaker 5: into two separate companies. That stock is down about three
21:43
Speaker 5: percent and with its gains today now up about three percent,
21:47
Speaker 5: Alphabet has officially surpassed three trillion dollars in market cap.
21:53
Speaker 5: I'm Tucker Silva and that is Wall Street Watch. And
21:55
Speaker 5: in the previous segment, we asked you the triviy question,
21:58
Speaker 5: where is Prince Harry in the line of succession? That
22:02
Speaker 5: would be fifth fifth on the list. Prince Harry's behind
22:06
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22:11
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22:17
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22:24
Speaker 2: Mike, We're starting to see kind of an interesting set
22:26
Speaker 2: of anecdotes popping up that I don't think we've really
22:30
Speaker 2: heard in probably twelve thirteen years. It's the ones of, Hey,
22:34
Speaker 2: I've got, you know, a college degree or an advanced degree,
22:37
Speaker 2: you know, beyond that, and I can't figure out how
22:40
Speaker 2: to get a job other than you know, hourly work
22:43
Speaker 2: that I feel overqualified for. So there's this piece titled
22:46
Speaker 2: more Americans are stuck with the jobs they can get,
22:48
Speaker 2: not the ones they want. And the last time that
22:51
Speaker 2: I feel like I really heard about this proliferating was
22:53
Speaker 2: probably that post financial crisis period.
22:57
Speaker 3: Yeah.
22:57
Speaker 2: The part that makes this really interesting is that unemployment
23:02
Speaker 2: right now is at four point three percent, and if
23:06
Speaker 2: you look back at the post financial crisis period and
23:10
Speaker 2: where the unemployment rate.
23:11
Speaker 3: Was, then wad peak twenty ten? Uh, yeah, you.
23:16
Speaker 2: Peaked in twenty ten at or just around ten percent,
23:20
Speaker 2: so more than double the unemployment rate of now. But
23:22
Speaker 2: it was high for a while. I mean, you didn't
23:24
Speaker 2: get below six percent until you were out to like
23:27
Speaker 2: twenty fourteen or so.
23:29
Speaker 3: So I guess what.
23:30
Speaker 2: I'm trying to reconcile is a few different things. We
23:34
Speaker 2: know that the hiring picture for recent college grads is
23:37
Speaker 2: not good because they now have a higher unemployment rate
23:40
Speaker 2: than the rest of the country as a whole. Same
23:43
Speaker 2: thing for recent high school grads. It's not a college
23:44
Speaker 2: grad thing. It's just recent grads are struggling, So I
23:47
Speaker 2: can reconcile that. But overall, the damage to the labor
23:54
Speaker 2: market seems to be relatively contained, simply because combination of
24:00
Speaker 2: demographics and deportations has reduced the available labor force. And
24:04
Speaker 2: so if you if you had a job prior to
24:07
Speaker 2: the last couple of years, you should generally be in
24:11
Speaker 2: a pretty good spot because you're probably in the same
24:14
Speaker 2: job that you've been in or have been able to
24:15
Speaker 2: make a lateral move.
24:16
Speaker 4: So I guess what big difference is. It's not being
24:19
Speaker 4: paired with the layoffs.
24:20
Speaker 2: No, So I guess what I'm trying to reconcile here is,
24:24
Speaker 2: you know this this talks about, Hey, more Americans are
24:26
Speaker 2: stuck with the jobs they can get, not the ones
24:28
Speaker 2: they want. That still feels to me like it should
24:31
Speaker 2: be a relatively small subset of the population, and yet
24:34
Speaker 2: these stories are coming out. So I'm just trying to
24:37
Speaker 2: make sense of this and what it means. I guess,
24:41
Speaker 2: you know this. One of the people they interview in
24:43
Speaker 2: here is a thirty six year old. Now granted she's
24:46
Speaker 2: in you know it, which is you know, an area
24:49
Speaker 2: that's being potentially changed by AI as well. But I
24:53
Speaker 2: don't sit there and say, Wow, this must be a
24:56
Speaker 2: really tough job market for mid thirties. It special, but
25:00
Speaker 2: maybe it is. So I just feel like I don't
25:03
Speaker 2: have a great handle on this labor market. I guess I.
25:07
Speaker 4: Do get the sense that it is a pretty tough.
25:09
Speaker 4: When I talk to people that are of any age
25:12
Speaker 4: demographic working in coding software development, it sales any of
25:19
Speaker 4: those areas. Not all of them are unemployed. Don't get
25:23
Speaker 4: me wrong. Sure a lot of them are either unemployed
25:27
Speaker 4: or very nervous about their future employment.
25:30
Speaker 3: And I think a lot of that has to do
25:31
Speaker 3: with a number of factors.
25:33
Speaker 4: But AI, especially the other area that I see it
25:36
Speaker 4: and probably only because we operate in the Boston area.
25:40
Speaker 4: Biotech anybody that's been working in the biotech space at
25:44
Speaker 4: really any level, whether it's marketing, corporate consulting, there are
25:51
Speaker 4: a lot of folks there who are saying, this is
25:54
Speaker 4: not the market that was just two or three years ago.
25:58
Speaker 4: But I'm with you, Chuck, I don't know what that
26:01
Speaker 4: means for their broader economy. I don't think it's gonna
26:04
Speaker 4: mean like you know, in twenty ten, it meant people
26:06
Speaker 4: lose their houses, and it doesn't feel like that right now.
26:08
Speaker 3: Well, and I guess the.
26:09
Speaker 2: Other things are like when you look at a lot
26:12
Speaker 2: of the broad based economic data out there, not even
26:14
Speaker 2: from the federal government, talk about like what you see
26:16
Speaker 2: from the banks and retailer is it. There's not really
26:22
Speaker 2: anything out there that's pointing to like a broad based downturn.
26:25
Speaker 4: Now, the spending is still happening, but it's just the
26:29
Speaker 4: uncertainty seems heavier, but everything else is still I guess
26:34
Speaker 4: the answer is people seem dissatisfied but are generally making
26:38
Speaker 4: ends meet.
26:40
Speaker 2: But this also then gets back to hey, so much
26:43
Speaker 2: of the spending power is tied to the top twenty
26:45
Speaker 2: percent of the workforce now that maybe it really is
26:49
Speaker 2: just the vast majority of people are struggling, but they
26:53
Speaker 2: don't make enough to have it, you know, impact the
26:56
Speaker 2: broader spending distributions at this point.
26:58
Speaker 4: Yeah, it's either way, like it's not good, it's not
27:04
Speaker 4: I keep going back to something chuck though.
27:06
Speaker 3: I do feel as.
27:08
Speaker 4: Though a lot of employers are really nervous about separating
27:12
Speaker 4: from their existing employees and hiring new ones, and part
27:15
Speaker 4: of that is a general concern about tariffs and the
27:18
Speaker 4: economy part of it. I really genuinely believe that investors
27:22
Speaker 4: right now are interested in efficiency. They want to see
27:25
Speaker 4: efficiency at companies, and they want to see them be
27:28
Speaker 4: able to point towards AI as the reason that they're
27:30
Speaker 4: becoming more efficient, and that has to put pressure on
27:34
Speaker 4: managers as to whether or not to hire. I really
27:37
Speaker 4: think that that as an effect that is only kind
27:41
Speaker 4: of attached to the AI story. I think the exuberance
27:45
Speaker 4: around artificial intelligence is causing hiring managers to say, I
27:51
Speaker 4: really got to put a cap on my spending here,
27:52
Speaker 4: because we need to signal to investors that we are
27:55
Speaker 4: benefiting from AI, whether or not we truly are.
27:58
Speaker 3: And so that could turn around.
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29:06
Speaker 2: Pace in the Wall Street Journal and unresponsive public is
29:09
Speaker 2: undermining government economic data, not intentionally, but it's just Hey,
29:14
Speaker 2: these are largely survey based results that we report on
29:19
Speaker 2: on a monthly or quarterly basis in many cases, and
29:23
Speaker 2: the survey response rates have been Here's what's interesting. The
29:28
Speaker 2: initial month survey response rates are lower than they've been
29:33
Speaker 2: at any point, but we are still collecting basically the
29:37
Speaker 2: same level of response rates, just on a much delayed
29:40
Speaker 2: schedule right now.
29:41
Speaker 3: Yep.
29:42
Speaker 2: And that's pretty much been the way things have trended
29:45
Speaker 2: for the last five years.
29:46
Speaker 4: At this point, this should not be surprising at all.
29:50
Speaker 4: I want to just let's rewind twenty years ago when
29:53
Speaker 4: we found these data points to be a lot more reliable.
29:57
Speaker 4: When your father needed a bunch of tools and some groceries,
30:01
Speaker 4: he would drive to the local hardware store and then
30:05
Speaker 4: the grocery store and pick up everything in his cart. Today,
30:08
Speaker 4: I would guess that you chuck get half of those
30:12
Speaker 4: items from Amazon delivered to you, and then subsequently, for
30:15
Speaker 4: every individual order you get a survey request.
30:18
Speaker 3: Hey, what did you think of this purchase? You might
30:21
Speaker 3: get three or four of them.
30:22
Speaker 4: Sure, you go book a flight and then you stay
30:24
Speaker 4: at a hotel and rent a car for you.
30:26
Speaker 2: Tell us how we did.
30:27
Speaker 4: Please tell me how we did, how was the review,
30:29
Speaker 4: how was your stay at the hotel that you stayed in,
30:35
Speaker 4: every single thing that I ordered a salad for lunch,
30:38
Speaker 4: I'm going to get a survey request.
30:42
Speaker 3: I'm not shocked. I haven't eaten it yet, but I'll
30:45
Speaker 3: let you know.
30:47
Speaker 4: I'm not shocked that you know people are not responding
30:50
Speaker 4: to these things. You have caller ID in a way
30:53
Speaker 4: that you didn't previously and go talk to anybody by
30:55
Speaker 4: the way that worked or works currently. In any sort
30:59
Speaker 4: of business that requires people to pick up the phone
31:02
Speaker 4: in order to do that business, well, nobody wants to do.
31:06
Speaker 3: For good reason, guys, I don't want to pick up
31:07
Speaker 3: my phone.
31:08
Speaker 2: Let's be honest. When when someone called. When when the
31:12
Speaker 2: phone rang thirty years ago, first of all, was in
31:15
Speaker 2: your house because there were no cell phones, and you
31:19
Speaker 2: knew that it was something legitimate. It might not be
31:22
Speaker 2: someone who you liked like. It might be the telemarketer
31:26
Speaker 2: calling at six pm right as you're sitting down to dinner,
31:29
Speaker 2: might have been a politician asking for your vote, but
31:32
Speaker 2: you knew that it was a real person in something legit.
31:35
Speaker 2: The percentage of phone calls that I get now that
31:39
Speaker 2: are scam versus legit. I'd say it's probably nine to
31:47
Speaker 2: one the ratio I was going to put it in there. Now.
31:49
Speaker 2: Part of this is just because I don't make many
31:52
Speaker 2: phone calls.
31:53
Speaker 3: Yeah, it's all done via text.
31:54
Speaker 2: But the vast majority of calls that I get are
31:58
Speaker 2: someone trying to scam me. A Hey, the irs is gonna,
32:02
Speaker 2: you know, take your I don't know what, they're gonna
32:07
Speaker 2: take your salad for lunch. And it's just like no
32:12
Speaker 2: one picks up the phone or even on email. All
32:15
Speaker 2: the unsolicited stuff that you get, how many of them
32:17
Speaker 2: are like, not sure if this is a scam or not.
32:19
Speaker 2: I'm just gonna delete it.
32:20
Speaker 4: And even if it's not a scam. Though, again I
32:23
Speaker 4: keep going back to the example from thirty years ago,
32:25
Speaker 4: you were not asked to review every product that you
32:28
Speaker 4: put in your shopping cart. No, today you are. And
32:31
Speaker 4: it's exhausting. And I don't really know how the government
32:36
Speaker 4: improves upon this without just going and stop. You know,
32:40
Speaker 4: there's a few things that I can think they could, like, hey,
32:42
Speaker 4: we're just gonna take the data from actual employment sources
32:46
Speaker 4: and use that to estimate it instead of doing these surveys.
32:50
Speaker 4: But I can't really think of a different survey methodology
32:54
Speaker 4: that's going to work better. Is texting people going to
32:56
Speaker 4: work better? Is pushing it to social media going to
32:58
Speaker 4: work better? And I don't think so. So I don't
33:01
Speaker 4: really see a path for these statistics to get more accurate.
33:06
Speaker 2: You don't know if there's a national do not call list? Yeah,
33:09
Speaker 2: I register for that doesn't work, doesn't do it first
33:11
Speaker 2: of all, doesn't do anything.
33:12
Speaker 3: Nope.
33:13
Speaker 2: Okay, So now we can actually talk a little bit
33:15
Speaker 2: about the real problem, which is that the telecom companies
33:17
Speaker 2: have no incentive to crack down on any of this
33:20
Speaker 2: and it basically leads to the proliferation of all of it. Yeah,
33:24
Speaker 2: which gets me too. There should be a national do
33:26
Speaker 2: not survey list? Yeah?
33:30
Speaker 3: Again, Is that gonna work any better?
33:31
Speaker 1: No?
33:32
Speaker 2: But I'm just saying I like the idea and concept.
33:34
Speaker 4: I mean I do too. But have you ever gotten
33:37
Speaker 4: a legitimate survey from the US government?
33:39
Speaker 3: Because I haven't.
33:40
Speaker 2: No, Like, that's the other question. How do I get
33:42
Speaker 2: on one of these lists? Like I'm one of the
33:44
Speaker 2: six people that would actually respond. That'd be like, ooh,
33:47
Speaker 2: the BLS reached out to me. Yes, I'm gonna tell
33:49
Speaker 2: them if I'm employed. Like, I would get so excited
33:53
Speaker 2: if I got a legit email record for a legit
33:56
Speaker 2: survey from the BLS or like the Census Bureau.
34:00
Speaker 3: Yeah.
34:00
Speaker 4: The only survey requests that I get are for products
34:03
Speaker 4: that I have purchased.
34:04
Speaker 3: It products or services that I have purchased.
34:07
Speaker 2: Right, Like, you give me a BLS survey, I'll be like, yes,
34:11
Speaker 2: can you get me one for my neighbors too. We're
34:14
Speaker 2: going to dedicate a segment to it on the Financial
34:16
Speaker 2: Liks please, I'd love to. In any case, let's take
34:19
Speaker 2: a quick break. When we come back, we'll do some
34:21
Speaker 2: stack roulette.
34:23
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34:25
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34:29
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35:31
Speaker 2: Mike, what do you got for stack Roulette?
35:32
Speaker 4: We've got this piece here, I don't even know who
35:34
Speaker 4: this is from Financial Times, how to build a million
35:37
Speaker 4: dollar future for your kids and it goes into these
35:40
Speaker 4: inheritance strategies. But that's kind of reminded me of a
35:43
Speaker 4: client conversation that I was happening just.
35:46
Speaker 3: The other day. It was with somebody who.
35:48
Speaker 4: Is a very high income earner, I would say, top
35:52
Speaker 4: three percent in the nation in terms of income, and
35:56
Speaker 4: they were talking about their finances they're spending, and it
35:59
Speaker 4: was very much.
35:59
Speaker 3: A keeping up with the Joneses conversation, Like you know.
36:02
Speaker 4: Sure our friends that are of similar back similar backgrounds, Like,
36:05
Speaker 4: you know, they're wearing this flashy jewelry and driving these
36:08
Speaker 4: gorgeous cars, and I feel like, we don't do that stuff,
36:11
Speaker 4: and yet I still don't quite feel sound in my retirement.
36:15
Speaker 4: And I brought something up with them that hadn't even
36:19
Speaker 4: crossed their mind, Like this was a person who you know,
36:22
Speaker 4: generally put themselves through college and med school, had a
36:25
Speaker 4: bunch of loans to pay off when they're done, And I.
36:28
Speaker 3: Just mentioned, like, did you consider the fact that.
36:30
Speaker 4: They might not have done it their own, Like these
36:34
Speaker 4: people who are spending way more money than you seemingly
36:37
Speaker 4: and I don't know, it's entirely possible that their financial
36:40
Speaker 4: situations and actual wreck.
36:41
Speaker 2: Right you had some idea of what they look like
36:43
Speaker 2: behind the curtain.
36:44
Speaker 4: It's also possible that their parents left them millions of
36:47
Speaker 4: dollars that you're not aware of. Like, these are scenarios
36:50
Speaker 4: that I don't feel like cross people's minds when they're
36:53
Speaker 4: evaluating other people's finances. It's all, you know, what are
36:56
Speaker 4: they doing right that I'm doing wrong? When in fact,
36:59
Speaker 4: a lot of the time it is nothing like that.
37:03
Speaker 4: And you really nobody likes talking about personal finances and
37:07
Speaker 4: they I don't think they should. It doesn't make good
37:10
Speaker 4: dinner conversation. But that keeping up with the Joneses mentality
37:14
Speaker 4: is really dangerous because of what you don't know.
37:19
Speaker 2: Even more than that, the other thing that I always
37:21
Speaker 2: come back to is, look, it doesn't matter what you do,
37:25
Speaker 2: there's always someone with more money than you.
37:27
Speaker 3: Yeah, unless you are Elon Musk, there is always somebody
37:29
Speaker 3: with more.
37:30
Speaker 2: There's there's always someone with more money than you.
37:32
Speaker 3: Yeah.
37:33
Speaker 2: And if you look at even just you know where
37:38
Speaker 2: things are today in terms of like overall like income
37:43
Speaker 2: percentiles and things like that, they're like over a million
37:47
Speaker 2: households in the US with household incomes over seven hundred
37:50
Speaker 2: thousand dollars a year. You're like a million households. Like
37:55
Speaker 2: it's insane how much money there is out there. Like you,
37:58
Speaker 2: you're just you're never gonna get.
38:00
Speaker 3: There, So don't compare.
38:02
Speaker 2: No, Like it's it's just not you. You're not gonna
38:06
Speaker 2: get there. There's always gonna be someone with more money
38:09
Speaker 2: than you. And so you got to run your own race.
38:12
Speaker 2: Let's take a quick break for the entire rest of
38:13
Speaker 2: the day. We'll see you tomorrow on the show.