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A dockworkers walkout could cripple the US economy · The Financial Exchange Show

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Veterans Development Corporation. This is the Financial Exchange with Chuck
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Speaker 2: It's Chuck, Mike and Ben with you here as we
1:14
head to the second hour, the Financial Exchange stock's not
1:17
doing a whole whole bunch of anything at the moment.
1:19
They are down slightly. The Dow's off seventy five points,
1:23
the S and P is down two, the Nasdaq down twelve.
1:26
So again, all moves within about a tenth of a percent,
1:29
may be two tenths on the Dow, so not too
1:32
much movement there. Tenure US Treasury is moving up slightly
1:36
anneal to three points seven to seven five percent, up
1:38
two point six basis points. Oil West Texts Intermediate up
1:42
fifty five cents to sixty eight seventy three a barrel.
1:46
When we take a look at the triple A national
1:49
average of gas prices, down two tenths of ascent over
1:53
night to three twenty one and six tenths of ascent.
1:56
Been hovering around that three to twenty mark for the
1:58
last couple of weeks. Now we'll see if we get
2:01
any further movement, but that is where we are at
2:05
the moment. There and we've got gold today down twelve
2:10
dollars and twenty cents an ounce, and Mike anything else
2:14
catching your eye against a pretty quiet day overall here
2:19
at the moment.
2:20
Speaker 3: Not much that is moving markets at the moment, but
2:23
just in terms of what will be having potential to
2:27
move markets this week, one Drune Palell is speaking this
2:29
afternoon at about two pm. I don't know what the
2:33
occasion is, but he will be addressing someone at one
2:36
fifty five and lots of people will be listening. Tomorrow
2:39
morning we get ISM manufacturing data. We also get job
2:42
openings and construction spending all at ten am. To me,
2:47
that job openings one will be a big data points
2:50
to keep an eye. On Wednesday, ADP employment comes out
2:54
along with every other Federal Reserve member speaking. Jobless claims
2:58
as we get every week come out on Thursday, along
3:00
with ISM services and factory orders, and then finally on Friday,
3:04
the big one, which would be the Job's Report, comes
3:07
out Friday at eight thirty am. You'll get the unemployment rate,
3:11
you'll get the number of jobs created, wage information. So
3:14
that's probably the one that has the ability to move
3:19
things the most in terms of this narrative. Around the
3:21
soft landing, but a fairly big week in terms of
3:24
labor market data that we'll be getting. And then, as
3:26
we mentioned during the first hour of the program, Chuck,
3:29
a lot of this will kind of be in this
3:32
opaque area beginning in October because of the you know,
3:37
the impact from the hurricane as well as strikes that
3:41
we are likely to be seeing over the next month.
3:44
Speaker 2: And let's talk a little bit about one of the strikes, Mike.
3:47
Have you ever flown on an airplane?
3:49
Speaker 3: Yes?
3:50
Speaker 2: Have you ever flown on an airplane with one hundred
3:52
and fifty pounds of asparagus?
3:54
Speaker 1: Not?
3:54
Speaker 2: To my knowledge, I haven't either, and I wouldn't want.
3:58
Speaker 3: I'm not sure I would know. I mean, how many
4:01
pounds of asparagus can you fit in the luggage area?
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Speaker 2: Not one hundred and fifty thousand. I think this is
4:06
like the cargo plane is filled with asparagus, not just
4:09
you know underneath the uh guy that the passenger cabin. Okay,
4:14
the reason I bring this up is Tim Ryan, who
4:16
is the owner of Square one Farms, who is an
4:19
importer of agricultural products, has one hundred and fifty thousand
4:23
pounds of asparagus that he needs to get to Miami
4:26
from Peru. Doesn't this just sound like a great setup
4:30
for a movie like this in a world there's a
4:35
lot of it just sounds like this is Ocean's fourteen
4:39
or something like that, you know, like they're they're stealing
4:42
the asparagus. The reason they're flying this in is because
4:45
the port of Miami is expected to be closed starting
4:47
at midnight tonight because of the International long Shoreman's Association,
4:52
which is going to strike beginning at midnight tonight. As
4:56
far as we know, the International Longshoreman's Association, it represents
5:00
forty five thousand DOC workers along the East Coast and
5:03
Gulf Coast. And again, it is a huge union that
5:09
is critically important to the products that America imports. Just
5:12
as an example in this Wall Street Journal piece, the
5:14
ports represented by this union handled seventy four percent of
5:17
the country's seaborn wine imports, seventy five percent of our
5:21
banana imports, and eighty nine percent of imports of salt
5:25
used in chemical manufacturing. So so again, these are just
5:30
you know, some examples here, and it's not necessarily that
5:34
these are all going to stop being imported. It's that, hey,
5:37
some of these things they're going to start flying in
5:39
on cargo planes at additional cost. And what does that
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mean in terms of how these products, you know, how
5:45
companies pass on those additional costs? Can they or can
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they not? But you've seen estimates. I've seen estimates that
5:54
this strike, if it goes into effect, is going to
5:57
reduce US economic activity anywhere between about three and a
6:02
half and five billion dollars a day. Those are the
6:04
estimates that I've seen. It's a good chunk of change.
6:07
Like you do the math out at five billion a day,
6:10
it's one hundred and fifty billion dollars a month, it's
6:12
one point eight trillion dollars a year. You're talking like
6:15
five six percent of GDP. You're taking off the table
6:18
right there. And in terms of what the International Longshoreman's
6:22
Association is asking for, seventy seven percent wage increase over
6:28
a six year period, so they're asking for a large chunk.
6:31
The counter that they received from the port ports and
6:37
ocean carriers was a forty percent wage increase over the
6:41
same time. So it's it's not like the other side
6:45
is saying no, we're offering like two percent a year.
6:47
The other side is still talking like five and a
6:49
half six percent a year over this time period.
6:52
Speaker 3: Who employs all these people? So this is just you know,
6:57
with Boeing, it's fairly easy to understand, like, yeah, we
7:00
are sometimes sitting with pots and sometimes it is the
7:03
carriers like Maersk hmm, So it depends.
7:07
Speaker 2: It can be both depending on how the port is
7:09
set up.
7:09
Speaker 3: They're all represented apparently by the United States Maritime Alliance,
7:13
so that's who's actually you know, doing this negotiating. But
7:16
it is that adds a layer of complexity, right with Boeing,
7:20
it's hey, we want these wage increases, we want these
7:23
pension contributions. These are employees that likely all have slightly
7:27
different benefits. They all belong to the same union, but
7:29
they're negotiating with likely a lot of different employers. So
7:34
this is something that has the potential to be hugely
7:38
disruptive in terms of actual goods traveling around the United
7:43
States and into the United States. Because remember, it's not
7:46
just the disruption that you're going to see at the ports.
7:49
You're going to see the teamsters acting in solidarity with
7:52
the union saying hey, look we're you know great, you're
7:55
flying this produce into Miami. Instead of you know, taking
7:58
it to the port. We're not picking that up. That's
8:01
scab produce, you know, like like that's the stuff that
8:05
you will see. And so as you you know, try
8:09
to play out how this, you know, ends up impacting
8:12
the overall economy. It could be significant, and it's happening
8:16
at a time that the Southeast is already disrupted because
8:19
of the impacts of Hurricane Helene that just went through.
8:22
There the obvious, you know, the one clear place where
8:26
you're going to see an impact. If this strike goes
8:28
into effect and stays more than you know, five or
8:30
six days, it's gonna be the job numbers for October,
8:33
which are going to be terrible. Like we're not gonna
8:38
be able to tell anything from October, right, Like, there's
8:41
a good chance that you just have to take October
8:44
throw it out because it doesn't mean anything. So a
8:47
few things. There's no great time for a strike of dockworkers. Uh,
8:52
it seems to always be not a great time. You're
8:55
talking about food supply and all sorts of other items.
8:57
Week after July fourth, Yeah, probably the best choose one. Yeah,
9:03
maybe the you know week after Christmas, Uh, you know,
9:07
fewer imports coming in at that stage. You know, this
9:11
is the time if you're unfamiliar, right, if if you
9:13
are well, any retailer in the country.
9:17
Speaker 2: This is when your shipments are coming in for the
9:19
Christmas season.
9:20
Speaker 3: All your stuff is coming in for the Christmas season. Now,
9:22
how much of that is coming on the West coast
9:24
from China?
9:25
Speaker 2: Good point.
9:26
Speaker 3: You know that might not be as big of a concern,
9:28
but you know, European imports and a lot of industrial
9:31
stuff coming in through these ports will not be affecting
9:35
military cargo that seems obvious or interesting to me. Cruise
9:38
ship services will not be affected by this strike should
9:42
it come into effect here. But nonetheless, this one, I mean,
9:48
this one, combined with what we're seeing it Boeing right now,
9:51
just does have the ability to not only you know,
9:55
be seen in the October numbers, but you think about
9:58
all of the related industries that may need to furlough
10:02
workers because of something like this. It's it could be
10:06
extensive if it lasts.
10:08
Speaker 2: Also, if you want a great trivia question, either of
10:11
you watch The Wire at any point, Yeah, then yeah,
10:14
So in The Wire second season is takes place at
10:19
the Port of Baltimore and the longshorm in there, they're
10:22
not referred to as longstorm They're referred to as steve adors.
10:25
If you ever wondered where that term comes from, I'm
10:29
asking you, I wonder almost every day. Chuck again. This
10:33
is like I saw it and I'm like, why are
10:35
they being Are they all named Steve? Like, what's the
10:38
what's the deal here? It actually came from the phonetic
10:42
spelling of esteve adore, which is the Portuguese word for
10:47
man who loads ships in stow's cargo, And it just
10:51
became common in terms of how longshoremen were referred to.
10:55
And so that's where you know, the term steve doors
10:57
comes from. Is Portuguese in Spanish.
11:00
Speaker 3: Was unaware that Baltimore had a heavy Portuguese population, isn't
11:04
it wild? Yeah?
11:06
Speaker 2: Yeah, that's good. The other thing, I believe longshoremen and
11:10
steve adores are typically separated in terms of their unions,
11:14
so like they can be referring to the same people,
11:17
but not always. Longshorremen can sometimes refer to just dock workers,
11:22
where stevedores are the ones who operate the cranes. I see,
11:27
So it can be different in some cases, but not
11:29
always It's kind of like all squares are rectangles, but
11:32
not all rectangles are squares.
11:34
Speaker 3: Yeah, got it that situation. I think good comparison.
11:36
Speaker 2: To take a quick break. When we come back, we
11:38
got another union story to cover Boeing in their union
11:41
still stalled. We'll give you an update there, and we've
11:44
got trivia right after this.
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13:47
Speaker 2: Mike an update on Boeing and their union negotiations. UH.
13:50
Apparently no progress being made on talks. I'll quote here
13:55
from UH. Let's see this is just report from Dow Jones.
14:01
It looks like Friday at the International Association of Besunists
14:04
and Aerospace Workers Local seven fifty one, the main local
14:07
union representing some thirty three thousand Boeing employees, tweet the
14:10
talks between the sides had broken off with little progress,
14:12
and we have no further dates scheduled at this time.
14:15
Usually a great time. They've been talking about wage differences
14:19
as being a key sticking point. But another piece is
14:23
supposedly the defined benefit plan that Boeing does not want
14:26
to unfreeze. The interesting thing about this to find benefit
14:32
if you're not familiar with that term, is another plan
14:34
and have the name for pension.
14:36
Speaker 3: UH.
14:36
Speaker 2: And the piece here that is kind of interesting is
14:41
we covered. I think it might have been like six
14:44
months ago, maybe nine, that IBM was actually restarting their
14:48
pension plan, and the reason they were doing so is
14:51
because interest rates had gone up, and so the funding
14:54
looked better for the pension plan with higher interest rates,
14:56
and they said, yeah, we're gonna do this because it's
14:59
actually cheap now for us to contribute to the pension
15:02
than it is to continue making matching four when K contributions.
15:05
Speaker 3: Now that rate situation has changed pretty dramatically since IBM
15:08
made that announcement. That was back when you know, long
15:10
term rates were up near five percent, correct, but they're
15:13
still you know, close to four ye.
15:16
Speaker 2: And so you look at this and say, gee, as
15:19
you know, what kind of math is Boeing doing that's
15:21
different from IBMS on this, and why would they not
15:24
make a similar Why would they not come to a
15:26
similar conclusion. Obviously, different plans, different investment structure, things like
15:30
that that can play into it. But you look at it,
15:33
and when IBM did that, I said, gee, I wonder
15:36
if any companies with pensions are gonna, you know, do
15:38
this same thing. Because the reason the reason companies moved
15:42
away from pensions was because, hey, in a period where
15:45
interest rates are falling and getting lower, it becomes more
15:48
expensive to operate them. As rates move up, it actually
15:51
becomes cheaper relative to the alternative, and so I wonder
15:55
how closely Boeing has looked at this. And the reason
15:58
that I ask is, look, we can say a lot
16:01
of things about IBM and how badly run they've been
16:04
over the last ten to fifteen years. They're good accountants,
16:08
they are phenomenal at financial engineering. It is probably the
16:11
best thing that you can say about the company right
16:13
now is that they are great financial engineers. So sad,
16:17
and so if they're coming to the conclusion that they should,
16:20
you know, restart their pension, you kind of wonder, hey,
16:23
if other companies looked at this seriously, because maybe it's
16:27
not as bad as they think it is, and maybe
16:29
Boeing's reticence to do this is, hey, you know, we're
16:33
just you know, you know, this is something that we've
16:36
pushed back on for a while and we want to
16:38
continue that the counter. And the one thing that is
16:40
different IBM does not have a unionized workforce, that is,
16:43
you know, collectively bargained with. And so if the pension
16:47
has to be collectively bargained and you can't just get
16:50
rid of it when you choose to, that is a
16:53
fundamental difference between those two companies. That could be why
16:56
IBM doesn't want to reopen that as a bargaining chip,
17:00
not ib AM Boeing.
17:01
Speaker 3: I personally look at the demise of the American pension.
17:04
I mean, these days only fifteen percent of private workers
17:06
are actually covered by a defined benefit pension plan. It's
17:11
a small fraction. I look at that death of the
17:14
pension plan and then the slow uptake on four oh
17:17
one k's an education that was required and quite frankly,
17:19
you know, twenty thirty years ago four oh one K
17:21
plans that weren't all that great in terms of costs
17:25
that were borne by the employee, et cetera. As just
17:28
a terrible period of time for a group of baby
17:31
boomers who are kind of caught in the middle of
17:33
that transition.
17:34
Speaker 2: Gen X you could refer to them as actually was
17:36
a like right in the middle of it.
17:39
Speaker 3: Yeah, yeah, So you know, older gen xers, younger Baby Boomers, all,
17:43
you know, affected by this in their retirement at this stage,
17:47
I really do wonder, like, do you think it isn't
17:50
the best interest of Boeing's union to be arguing for
17:52
this pension. I mean, we've talked about, you know, a
17:55
result of all this could be a downgrade of Boeing's
17:58
debt to below credit you know, below investment grade credit quantity.
18:02
Speaker 2: Yeah.
18:03
Speaker 3: Do you know what happens to your four O one
18:04
K when your company goes out, goes bust? Still yours nothing,
18:07
It's still yours. What happens to your pension when your
18:09
company goes bust becomes just another creditor in the whole thing.
18:12
You You suddenly are insured by the PBGC and you
18:16
know they'll hopefully get you something so long as not
18:20
everybody's going bust at the same time. But I just
18:23
do I find that compelling and interesting. Now I've made
18:28
the argument that I don't think Boeing's ever going out
18:30
of business, and you know that's just my personal view,
18:34
but if you're the union, you have to be more
18:36
worried about that today than really anytime in Boeing's history.
18:40
Speaker 2: Yeah.
18:41
Speaker 3: Yeah, Again, there are a lot of benefits to having
18:44
pensions out there, and I'm not sure on the net
18:46
they outweigh h you know, the risks that you have
18:49
for a pension going bust. But I just found that
18:53
I found that piece to be compelling and interesting because
18:56
I bet that Boone's got a pretty darn good for
18:58
a one K plan right now? And where I that worker?
19:01
I'm not sure I would love the transition back to
19:03
a pension.
19:05
Speaker 2: Yeah, it's the other thing that I'm just thinking through this, Like,
19:10
if you are here, here's the other thing. As a
19:13
worker at Boeing, there is also no backup plan, Like
19:18
this is something that you have to consider that, Like
19:20
there's no other aerospace manufacturer that you can go to
19:24
in the United States, right Like, this is the only
19:28
place you can work. I mean, sure you can buy
19:31
your French it's you got suppliers, but it's still a
19:35
different environment. Quick break here trivia answers next.
19:39
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Speaker 2: All right.
20:18
Speaker 4: Today's trivia question was how many licks to get to
20:22
the center of a Tootsie Pop.
20:25
Speaker 2: Well, let's go to our reporter in the.
20:27
Speaker 4: Field, mister raw, how many licks dedicated to get to
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the cuttual center of the Tursifa.
20:34
Speaker 5: Let's find out the one, two for free for three.
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winner is Lori in New Durham, New Hampshire. She's taking
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Speaker 2: We're now joined on the phones by Todd Lutsky from
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the law firm of Cushing and Dolan. Mister Lutsky, how
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are you today?
21:21
Speaker 5: I am never better and you.
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Speaker 2: We're doing well here. Todd want to talk to you
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a little bit about different types of trusts that are
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Whereas revocables pretty big right, it's your incomplete control. You
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shelters assets for state taxes, and of course controls your
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assets for your family in the way that you want
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them to get It so very straightforward, Whereas irrevocable trusts
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come in different flavors, so to medicaid. Irrevocable trust if
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you're concerned about nursing homes, also keeps you probably ninety
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five ninety eight percent in control. You can just avoid
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the probate protected from the nursing home. You can also
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shelter it for estate taxes and provide of course distributions
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for these for your family the way you want them
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to go. If you do, you got a file an
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extra tax return, put no extra tax because it flows
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onto your tax return. Whereas an irrevocable life insurance trust
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might require a little less control, but the assets are
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out of your estate for a state tax purpose, because
22:46
I know that's a lot, but I just wanted to
22:48
give you a little taste.
22:49
Speaker 2: Ton if someone's considering, you know, doing some kind of
22:53
a state plan creating one, what ages typically make sense
22:56
for someone to do this, or is there not any particular.
23:02
Speaker 5: So I would say, if you're young, married and have kids,
23:07
even if you don't have a ton of assets, because
23:08
we all know when we're young, we don't have a
23:10
ton of assets. So we might have that house, we
23:13
might have that four O one K or whatever is
23:16
in our bank. We know our children can't own the
23:20
assets because they're minors, so we would want to consider
23:23
doing the planning not only does take care of each other,
23:25
but really to make sure that the kids are taken
23:28
care of, even though there may not be a huge
23:30
tax reason to do it. Of course, once you get
23:33
older than that, then you're looking at doing it to
23:36
avoid probate and taxes and bloodline planning, of course, but
23:40
it comes into play. And then finally sixty enough, you're
23:43
probably thinking, wells nursing home is an issue, then you've
23:46
got to add that as a component and another reason
23:50
to do planning. On top of the fact that you
23:52
have a family, have assets, want to avoid probate and
23:55
reduce tax. Folks, at the end of the day, there
23:59
is a rate field of planning involved in your state.
24:04
There's many different kinds of trust. But what we try
24:06
to do in this guide, which is the end of
24:08
the month, so it's the last chance to get at folks,
24:11
is to give you the top what we believe to
24:14
be seven of most used estate planning trust. It will
24:19
explain to you how they work from a tax standpoint
24:22
and an operational standpoint. And if you've never done your planning,
24:26
it maybe will get you started as figuring out which
24:29
trust might be right for you. And if you've done
24:32
your planning, maybe it's time to switch. If you got
24:34
older and get out of the trust you're in and
24:36
get into a different trust. Call and get the guide
24:39
at the end of the month eight six eight, five
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last chance eight six six, eight five six nine to
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nine the top seven estate planning trusts.
24:56
Speaker 2: Mister Lunsky, thank you for joining us today.
24:59
Speaker 5: Always a pleasure.
25:00
Speaker 3: Thank you.
25:01
Speaker 1: The proceeding was paid for and the views expressed are
25:03
solely those of cushingan Dolan, cushingan Dolan and or Armstrong
25:05
Advisory may contact you offering legal or investment services. Cushing
25:09
and Armstrong did not endorse each other and are not affiliated.
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26:12
Speaker 2: Mike, you've been to Covert Township, Michigan.
26:15
Speaker 3: No, Well maybe I don't know. I don't think so.
26:17
You probably haven't. Yeah, I think you'd know if you did.
26:19
Speaker 2: They have a big nuclear power plant there, the Palisades
26:22
Nuclear Power Plant, or at least they used to have it there.
26:25
Palisades just closed on a one and a half billion
26:28
dollar loan to restart operations by the end of next year.
26:33
This is the first nuclear power plant in the United
26:36
States to restart operations if they're successful in doing so.
26:41
Speaker 3: All the attention has been going to Three Mile Island.
26:44
Speaker 2: It has been, but look, part of you know, when
26:47
we talk about nuclear development, we also do need to
26:50
realize there are a handful of nuclear power plants throughout
26:52
the United States that have been shut down in you know,
26:59
the last twe twenty thirty forty years, and so you
27:03
do have the ability to potentially look at some of these,
27:07
uh and say, hey, rather than building entirely new construction,
27:12
what if we simply reauthorize and you know, retrofit these
27:17
to allow them to operate in the future because you
27:20
already have the facilities there that, like, they've already been
27:22
proven to work. Sure, you have to do some maintenance
27:25
in order to get them up to speed, and there's
27:26
a whole process. It's you don't just turn the key
27:30
and and you know vision, Yeah, but not like that,
27:35
it's not.
27:36
Speaker 3: But hence a one point five billion dollar loan to
27:38
restart these operations could just be an expensive key. Yeah. Yeah,
27:41
it could be a few pieces about this that I find,
27:45
you know, interesting compelling. One, they only closed in twenty
27:47
twenty two, and at the time that they closed they
27:50
referenced cheap net gas prices as being one of the
27:53
reasons they couldn't. I'm pretty sure that gas is cheaper
27:56
now than it was in twenty two. Yeah, So just
27:58
looking at this, and I forget, how do they express
28:00
it is dollars per British thermal unit whatever. I don't
28:05
know how they express that.
28:06
Speaker 2: Can I think it's per million BTUs?
28:07
Speaker 3: Yeah, at that point in time, when they closed, which
28:11
was around May of twenty twenty two, net gas prices
28:14
we're in the high sevens.
28:17
Speaker 2: Low eights.
28:19
Speaker 3: Yeah, in May of twenty twenty two. Today it's below
28:23
three bucks. So what this all spells to me is
28:30
higher demand for electricity and higher prices being paid for electricity,
28:34
because you don't do this with NOTT gas prices where
28:39
they are right now unless there is a compelling story
28:43
on the demand side that says, yeah, we can sell
28:46
this stuff for so much. That doesn't matter how cheap
28:49
net gas prices are. We're gonna be able to sell
28:51
this stuff on the market and make some money.
28:53
Speaker 2: So yeah, I do wonder if you start to see
28:56
additional consideration given to plants that have been recently shut down. Again,
29:01
it's Pilgrim. When did Pilgrim go off for twenty nineteen.
29:04
I they're further along in the decommissioning process, so I
29:08
don't know if they're gonna get there, but yeah, I mean,
29:12
even look, you think about something like that, but it's
29:15
it's something that clearly is being considered now. I mean, look,
29:19
I haven't heard of any you know, plans to restart
29:22
reactors before the last month, and now you've got two
29:25
that have said, yeah, we're going ahead with this. Yeah,
29:27
so there's something kind of notable there that's happening. And again,
29:32
is this gonna happen everywhere? No. I have been unable
29:36
to find a full list of like all the US
29:39
nuclear reactors that have been shut down, so it's it's
29:41
not like hundreds, but I wouldn't be surprised if there's
29:44
a dozen or something like that. And maybe you start
29:46
to seeing more and more noise on this front. Let's
29:49
take a quick break here. When we come back, let's
29:52
do a little bit of stack roulette.
29:54
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31:00
Speaker 2: I want to talk a little bit about AT and T.
31:04
They have announced that they are selling their seventy percent
31:06
stake in Direct TV to a private equity firm by
31:09
the name of TPG. And look, this is great. You know,
31:15
they're finally getting out of this. They're gonna get about
31:18
seven point six billion dollars for this. And the only
31:23
problem is that they bought one hundred percent of Direct
31:26
TV for forty eight and a half billion dollars back
31:29
in twenty fifteen, which means that seventy percent of it
31:32
was like thirty five billion. So they're only taking a
31:36
twenty eight billion dollar loss on this piece here, which
31:41
is pretty It's not like a car, No.
31:44
Speaker 3: You doesn't doesn't depreciate by that much when you drive
31:47
it off the lot.
31:48
Speaker 2: You wouldn't expect a company to depreciate, but that's exactly
31:52
what happened here. Yeah, and again, this is exactly why
31:58
AT and T is where they are today, is because
31:59
they have been horrible allocators of capital over the last
32:02
couple of decades. And it's good that this is finally
32:07
done and we'll see what their next bad purchase is.
32:10
Speaker 3: Does in your mind, does AT and T kind of
32:12
take the ranking on two of the worst mergers in
32:14
modern history? I mean between this and Time Warner.
32:20
Speaker 2: Yeah. I mean, look like these two mergers have effectively
32:23
they haven't killed the company because it's still alive, but
32:25
they've rendered it a zombie that has no direction and
32:29
have stripped it of a ton of capital at a
32:32
time where they could really use that capital to make
32:35
an actual good acquisition or expand the business in a
32:37
good fashion.
32:38
Speaker 3: What are some of the other ones that are tossed
32:39
out there as worst acquisitions of all?
32:41
Speaker 2: I mean the AOL Time Always There, a well, Time Warner.
32:45
I put the HP autonomy one there. It's not the
32:48
same scale because I think it was like eight and
32:49
a half billion dollars, but they wrote it down by
32:53
like ninety five percent within a year and a half
32:55
or two years.
32:56
Speaker 3: Oh, Quaker Oats and Snapple is oftentimes looked at as
32:58
one of the really bad ones that it was only
33:00
one point seven billion, but that was back in ninety
33:02
four and they basically spun it back off a few
33:05
years later. Yeah, there's a lot of them, But AT
33:08
and T has been at the center of a couple
33:10
in a few years.
33:11
Speaker 2: I mean Sprint and Next Tel. That was a thirty
33:14
five billion dollars.
33:14
Speaker 3: Whoops, Sprinted, Next Tel, Google and Motorola. They didn't do
33:18
anything with that, although maybe they did in the cell
33:20
phone space.
33:21
Speaker 2: We just don't know. I AT and T, Like, I
33:25
don't think there's much competition. They are the worst shepherd
33:28
of capital in the past two decades.
33:30
Speaker 3: Yeah, Like there might have been worse mergers, but few
33:33
have eroded the company as much as I don't know
33:37
if there have.
33:37
Speaker 2: Been many, like those two mergers that the problem was
33:43
they were the same mistake and they made it twice. Yeah, Like,
33:48
it was just it was the same thing over and over.
33:50
Speaker 3: We're at the utility company with all this cash, what
33:52
should we do with it? Award shareholders, or go make
33:55
acquisitions that of businesses that we don't know how to run.
33:58
Speaker 2: Hey, let's buy a content district combustion service that is
34:03
maybe not where the puck is going.
34:05
Speaker 3: What the hell is the future of DirecTV? By the way,
34:08
they don't have a Sunday ticket anymore.
34:12
Speaker 2: You don't just.
34:13
Speaker 4: Drive around and look to see how many dishes you
34:15
see on the side of people's houses or anything.
34:17
Speaker 2: I mean, if the.
34:18
Speaker 3: Key goal, if one of the key goals of I
34:20
don't remember which department of the US government, but whoever
34:23
is in charge of delivering high speed internet to the
34:26
remaining Americans that don't have access to it. It's like
34:29
a big push that has been going on for five
34:31
years and is going to continue for another decade once
34:34
that's through. Give me one good reason why anybody needs
34:37
to settleite.
34:38
Speaker 2: There still are like places and people who.
34:41
Speaker 3: Agreed they will still exist, but it is a rapidly
34:45
shrinking group that needs satellite based television.
34:49
Speaker 2: Someone still thinks there's seven point six billion dollars in
34:53
value there.
34:54
Speaker 3: Well, AT and T thought there was fifty billion dollars
34:56
worth of value there like eight years ago, and they
34:58
were sure wrong. About it, so I'm not sure.
35:00
Speaker 2: Maybe they just want to repurpose it for something else. Yeah,
35:03
so they will be as part of this, By the way,
35:05
what else could you use all those satellites for something? Fun?
35:09
Speaker 3: Ramen, They will be merging this. It looks like with
35:17
Dish Network. But again, the wrongs don't make it right. Yeah,
35:21
like you know, you still have the same shrinking population
35:24
here that.
35:25
Speaker 2: Was like when who was it?
35:26
Speaker 1: Was it?
35:26
Speaker 2: Uh? When Verizon? But Yahoo and AOL? Remember they Verizon?
35:31
But like the remp was, no is Yahoo and someone else?
35:36
They bought who was it? Hang on, give me just
35:40
a second on this, so Verizon Media. Yeah, Verizon bought
35:44
AOL and twenty fifteen like the remnants of it and
35:47
then Yahoo two years later. Remember they merged them into
35:49
a company called oath Oh right, that they said was
35:52
gonna like reshape Digital didn't. It didn't and they had
35:56
to sell them off in twenty twenty one to Apollo,
35:58
who I'm not sure has done anything with it either, right.
36:01
Speaker 3: Yeah, yeah, those ones are entertaining. The mist acquisitions are
36:06
also pretty fun to reminisce on, like when Blockbuster turned
36:09
down the Netflix acquisition, Apple turned down Tesla.
36:14
Speaker 2: There are others where I'm trying to think of who.
36:16
Speaker 4: Else Yahoo tuned turned down Google?
36:20
Speaker 3: Yeahoo turned down? Or do they make a bid or
36:23
do they can't remember.
36:24
Speaker 4: I can't remember Google went to them and said for
36:26
a million dollars you can, and they.
36:28
Speaker 3: Said, yeah, yeah. Those are ones are almost as entertaining.
36:32
Speaker 2: The other ones that are fun to think about are
36:34
the ones like, hey, what if they had turned this down?
36:36
What would it look like? Think about if YouTube would
36:38
turned down Google as an example and was just a
36:41
separate company. Imagine imagine Instagram turns down Facebook back when
36:47
it was Facebook.
36:48
Speaker 3: Ways turns down Google.
36:49
Speaker 2: The ways one is like a personal convenience thing. But
36:53
imagine what the Internet would be like if Google didn't
36:56
have YouTube under it Pretty different to really different. That's
37:00
that's a globally different Internet at that point, Like the
37:04
way this thing is like, Okay, I would have liked
37:05
to see some competition, but whenever it's it's maps. You know,
37:10
the whole YouTube thing is so central to what Google
37:13
is now.
37:14
Speaker 3: It'd be a a pretty different looking internet. Agreed, Yeah,
37:17
I love fast food companies throwing shade at each other.
37:20
And Wendy's did this over the weekend, they partnered with
37:24
the developer of micbroken dot com, which I had not
37:28
heard of until today, but it tracks all of the
37:30
ice cream machines that are out and they have started
37:34
donald McDonald sorry, yeah, all the McDonald's ice cream machines
37:36
that are quote broken and in many cases actually are broken.
37:40
And they have started pulling up a truck that sells
37:44
Frosty's in front of the McDonald's, which I can't imagine
37:47
they can easily get permits for. But nonetheless they are
37:49
doing this, and you know, they'll yeah, they're just having
37:53
a pretty fun time with saying, oh, yeah, this is
37:56
a funny thing that McDonald's is incredibly guilty of and everybody,
38:00
and here's how we're going to advertise for ourselves. At
38:03
the same time, I.
38:04
Speaker 2: Enjoy that quite a bit.
38:05
Speaker 3: I like it. I like it.
38:06
Speaker 2: I do techno good markets. The daves off one twenty one,
38:09
that S ANDP is down one, the Nasdaq is up six,
38:11
so exciting. Not much movement today, pretty quiet. Start to
38:15
get some data coming in tomorrow. We get ism manufacturing
38:18
and we also get the Jolts report, So we will
38:21
see you tomorrow and we'll have all that and more
38:24
on the show