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Tim Cook is having terrible, horrible, no good, very bad year · The Financial Exchange Show

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  Speaker 2: Our two here on the Financial Exchange, Chuck, Paul and
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  Speaker 2: talker with you, and markets are very modestly drifting down today,
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  Speaker 2: no real movement, but the Dow's off eighty points, the
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  Speaker 2: S and P is down ten Nasdack's down seven again.
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  Speaker 2: Is that, you know, meaningful? Probably not, but it's it's
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  Speaker 2: what's happening. We are seeing some real movement in bonds
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  Speaker 2: ten years now up six point seven basis points, back
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  Speaker 2: up above four point five percent. The thirty years back
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  Speaker 2: up above five percent as well, after rising six point
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  Speaker 2: eight basis points. So you've got a little bit of
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  Speaker 2: renewed pressure towards higher yields after a brief.
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  Speaker 3: You know, move downward.
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  Speaker 2: Over the last day or two, we've got oil West
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  Speaker 2: Texas Intermediate up seventy eight cents a barrel to sixty
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  Speaker 2: one sixty seven, and we've got gold up twenty cents
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  Speaker 2: announced to thirty three hundred and sixty cents. Top story
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  Speaker 2: this hour, This piece from the Wall Street Journal. Tim
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  Speaker 2: Cook's bad year keeps getting worse. Tim Cook having a
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  Speaker 2: bad year, Paul, Tim Cook having a bad year.
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  Speaker 4: It's been a rough it's been a rough year for apple.
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  Speaker 4: Chuck a couple of things that they've.
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  Speaker 5: Well, they can't all be good like.
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  Speaker 2: It bothers me to know when when people are like, oh, like,
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  Speaker 2: you know, I can't believe they're having such a bad year. Why, like,
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  Speaker 2: are things just supposed to move in one direction now?
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  Speaker 2: Grant they's been facing a lot of a lot of
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  Speaker 2: crap right now, this is a lot.
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  Speaker 5: This is a lot.
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  Speaker 3: Still, like, I have no like sympathy for Tim Cook.
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  Speaker 3: You know, this is the business.
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  Speaker 2: You've chosen not to go all godfather to on us.
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  Speaker 2: But like every business has trade offs, and every position
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  Speaker 2: has trade offs, and if you are the CEO of
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  Speaker 2: one of the biggest tech companies in the world, you
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  Speaker 2: gotta deal with this. If he didn't want to do that,
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  Speaker 2: he's got enough money he could just leave.
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  Speaker 4: No question, he had done a tremendous job over his
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  Speaker 4: tenure since he took over a CEO. But now, like
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  Speaker 4: you mentioned, he's facing challenges.
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  Speaker 5: The most recent.
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  Speaker 4: One, of course, is President Trump threatening to impose twenty
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  Speaker 4: five percent tariffs on iPhones. That would be sort of
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  Speaker 4: forcing them to come to the US to make those. Currently,
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  Speaker 4: majority of those are manufacturing in China, though they are
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  Speaker 4: continuing to ramp up their presence in India. President Trump
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  Speaker 4: not thrilled with that. So that's one major issue that
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  Speaker 4: we can get into. The other one that he's battling
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  Speaker 4: is a lot of different legislation cases here, two against
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  Speaker 4: US judges the EU and regulars at the state and
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  Speaker 4: federal level are coming after their iPhone the Services Division
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  Speaker 4: in particular, one federal job judge Yvonne Gonzalez had come
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  Speaker 4: after Cook, saying that Apple had ignored the injunction to
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  Speaker 4: allow app developers to have buyers our consumers bypass the
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  Speaker 4: steep fees that Apple takes on appstore purchases. Apple takes
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  Speaker 4: twenty five percent cut. There's been many lossits coming after him,
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  Speaker 4: saying that there needs to be another way where people
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  Speaker 4: could pay for services on the app store outside of
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  Speaker 4: going through Apple's director there basically. And then you also
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  Speaker 4: have weakening market share in China. They've really struggled selling
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  Speaker 4: iPhones in China. And then the threat potentially of AI,
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  Speaker 4: which they are not a significant player in at the moment.
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  Speaker 5: So it is a lot.
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  Speaker 2: So let's talk about a few of these different things. First,
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  Speaker 2: Tim Cook took over as the CEO for Apple back
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  Speaker 2: in late twenty eleven, I believe it was. And I
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  Speaker 2: went and I pulled the chart for Apple since then.
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  Speaker 2: And here's what I saw just in looking at Apple
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  Speaker 2: over the past, was.
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  Speaker 3: That fourteen years.
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  Speaker 2: Now, do you know how many twenty percent drawdowns separate
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  Speaker 2: ones Apple has had since Tim Cook became CEO?
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  Speaker 5: Five? Very good?
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  Speaker 2: Five actually six, I guess if you count the current one.
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  Speaker 2: So they've had six of them. There was one in
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  Speaker 2: twenty thirteen, about two years after he took over. There's
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  Speaker 2: another in twenty sixteen, a few years after that, another
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  Speaker 2: one in twenty nineteen, another one in twenty twenty two,
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  Speaker 2: and now this one, I'm sorry, another one in twenty
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  Speaker 2: twenty obviously COVID, and now this one here. So he's
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  Speaker 2: been through six of these. So the first thing that
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  Speaker 2: I'll say is look Apple in and of itself. So
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  Speaker 2: he's a twenty percent draw down every two to three years.
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  Speaker 2: That's kind of how the business works. And how many
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  Speaker 2: times have I heard these stories, Gee, Apple's having trouble
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  Speaker 2: selling and oh this latest iPhone replacement cycle isn't taking off.
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  Speaker 2: There's always some story like that that's out there, and
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  Speaker 2: I guess it's kind of a a compliment to Tim
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  Speaker 2: Cook to be like, hey, every time they've been faced
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  Speaker 2: with these different challenges, they've figured it out pretty darn
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  Speaker 2: quickly because on each one of those different instances, I'm
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  Speaker 2: not just looking at like stock pullbacks that then like
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  Speaker 2: you know, hovered in flat. The stocks hit new all
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  Speaker 2: time highs after each of these, and so they're pretty
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  Speaker 2: good at fixing their problems with it. Like, once the
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  Speaker 2: problem develops, they typically fix it within six to eight quarters,
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  Speaker 2: which is kind of remarkable, Like that's pretty good. And
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  Speaker 2: so I know there's like all this hand ringing now
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  Speaker 2: about again, I feel like the AI is the one
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  Speaker 2: that everyone's all, what's up.
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  Speaker 5: We're gonna do about AI?
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  Speaker 2: And it's like, who is looking for generative AI in
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  Speaker 2: their daily life?
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  Speaker 5: It's not today, but it's all about, you know, the future.
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  Speaker 4: I guess the counter argument would be, and I'm not
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  Speaker 4: gonna go against the track run he's had at all,
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  Speaker 4: but has there been innovation over that period of time
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  Speaker 4: that compares to I mean, one of the greatestators in
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  Speaker 4: the space, his predecessor, Steve Jobs.
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  Speaker 5: Not really, I.
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  Speaker 4: Would unless I'm I don't think that there has been
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  Speaker 4: tremendous amount of new products unveil. I'm not arguing that
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  Speaker 4: Tim Cook has been a tremendous steward of the company,
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  Speaker 4: and he deserves a lot of success for the supply
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  Speaker 4: chain intricacies that are in place in China to this
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  Speaker 4: point and just running Apple really well over this period
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  Speaker 4: of time.
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  Speaker 5: But the new product piece, well.
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  Speaker 2: I guess here's the other piece that I come back
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  Speaker 2: to on AI, because that's the new product that's a new,
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  Speaker 2: shiny thing that everyone is focused on. People seem to
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  Speaker 2: forget because I know that with AI, it's like, oh,
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  Speaker 2: we got to do it now, now, now we got
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  Speaker 2: to be first verse first, because I don't know why,
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  Speaker 2: I pause for a second. Does anyone know why if
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  Speaker 2: you're not like first with AI? There's nothing for you.
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  Speaker 4: That to your point that a consumer or you know,
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  Speaker 4: individual behavior will just get accustomed to using one particular
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  Speaker 4: service and they dominate market share. But to counter myself,
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  Speaker 4: there's nothing to say that you can't come out with
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  Speaker 4: a better version than the first product and become the
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  Speaker 4: go to source out there. Google's an example of that.
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  Speaker 4: They weren't the first search engine out there. They just
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  Speaker 4: did it in any unique way that was better than
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  Speaker 4: their peers. Apple, which you're probably going down this direction
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  Speaker 4: with on the music device piece that they weren't the
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  Speaker 4: first thing. Numerous things they weren't the first thing. Their
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  Speaker 4: iPad that's not the first, you know, tablet device that
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  Speaker 4: had been unveiled, far from it. Same thing with the iPod,
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  Speaker 4: none of these were. The iPhone was not the first.
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  Speaker 4: I mean right, people forget BlackBerry was the dominant player
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  Speaker 4: in that space for five or six years and Apple
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  Speaker 4: came along in two thousand and seven and said, oh,
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  Speaker 4: that's a nice little smartphone market you got there. Suld
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  Speaker 4: be a shame if anything happened to it, and they
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  Speaker 4: ran rough shot over them. So I guess what I'm
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  Speaker 4: getting at is a I'm not really convinced that Apple
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  Speaker 4: needs an AI thing anyways, just because I just don't
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  Speaker 4: know that that's I don't know that that's who they
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  Speaker 4: need to be in their market that they operate in.
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  Speaker 4: But even if you say, okay, they do need it,
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  Speaker 4: they don't necessarily have to be first. And I think
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  Speaker 4: it's also been shown that hey, they've been able to
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  Speaker 4: leverage their market power into some pretty good deals for
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  Speaker 4: Apple as well. Granted one of them is now, you know,
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  Speaker 4: under threat the money that they get from Google because
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  Speaker 4: of Google's own anti trust cases that are going on.
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  Speaker 4: But Apple didn't develop a search engine. Instead, they said, hey,
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  Speaker 4: all use search.
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  Speaker 2: Engines out there, pay us in order to be the
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  Speaker 2: default one on our platform. And Google said, fine, no problem,
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  Speaker 2: And now they're getting like fifteen billion dollars a year
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  Speaker 2: from Google. So I kind of look at it and
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  Speaker 2: I go, all right, if Apple doesn't develop its own
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  Speaker 2: you know, native AI platform, and if AI turns out
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  Speaker 2: to be, you know, to have real staying power, and
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  Speaker 2: if it does what everyone hopes it's going to do,
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  Speaker 2: you don't think open AI is gonna be like, hey,
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  Speaker 2: we'll pay to be on your platform. So that perplexity
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  Speaker 2: doesn't you know, become the you know, default or anthropic
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  Speaker 2: or claw you know. I guess I just kind of
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  Speaker 2: look at it and I go, why does Apple need
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  Speaker 2: to always be the developer of it? That Apple's made
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  Speaker 2: its bones. Apples made its bones two ways. They've developed
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  Speaker 2: a great hardware software interface that makes everything really easy
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  Speaker 2: to use, and then they've monetized the heck out of
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  Speaker 2: it every juncture possible.
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  Speaker 3: I don't know why they need to be like the
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  Speaker 3: AI company.
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  Speaker 4: Yeah to your point, they have the position where they
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  Speaker 4: can offer just as recent search here one point four
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  Speaker 4: billion active iPhone users worldwide. So you think any AI
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  Speaker 4: platform out there that becomes successful would want access to
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  Speaker 4: that user base. Now, the the argument being made here
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  Speaker 4: is that maybe iPhones aren't, you know, the hardware device
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  Speaker 4: of the next ten years. But that's a story for
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  Speaker 4: another day as to how that that plays out.
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  Speaker 2: Are you going to get the brain chip when they
• 11:34
  Speaker 2: make one? I want to be really late to that,
• 11:38
  Speaker 2: really late, Tucker. What about you getting chipped up? If
• 11:41
  Speaker 2: if if they come out with like if they got
• 11:44
  Speaker 2: the eyebrain a few years from now, are you you
• 11:46
  Speaker 2: get an eyebrained first edition?
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  Speaker 6: You know, I'll be the guinea pig if you will.
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  Speaker 3: Yeah, why not make sure you pay for the extra memory?
• 11:54
  Speaker 3: You know you could use it. You could use a little,
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  Speaker 3: all of us could. Let's take a quick break here.
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  Speaker 2: When we come back, let's see we get some trivia,
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  Speaker 2: and then we'll talk about a headline that's already out
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  Speaker 2: of dat as it relates to treasuries.
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  Speaker 3: Right after this.
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  Speaker 1: Thankst us six one, seven, three, six, two, thirteen eighty
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  Speaker 6: All right, let's do a little bit of trivia here
• 12:38
  Speaker 6: on the Financial Exchange and on this day. Back in
• 12:41
  Speaker 6: nineteen thirty six, Alan Turning submitted his paper on computable
• 12:46
  Speaker 6: numbers for publication. The paper is notable for setting the
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  Speaker 6: groundwork for modern computing.
• 12:54
  Speaker 3: Turning would go on to be.
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  Speaker 6: Pivotal in the war effort, likely saving millions of law
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  Speaker 6: vibes with his work. So trivia question today, who portrayed
• 13:05
  Speaker 6: Alan Turning in the twenty fourteen movie The Imitation Game?
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  Speaker 6: Once again, who portrayed Alan Turning in the twenty fourteen
• 13:13
  Speaker 6: movie The Imitation Game. Be the sixth person today to
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  Speaker 6: See complete contest rules. At Financial Exchange Show dot com.
• 13:39
  Speaker 2: Tucker forwarded on a text from no name, no name
• 13:45
  Speaker 2: from no name from someone listening, quote being first an
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  Speaker 2: aifer refers to AGI and ASI. AGI being artificial general intelligence,
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  Speaker 2: which is, you know, something that can actually think like
• 13:57
  Speaker 2: a person. In ASI is artificial superintelligence, the self improving
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  Speaker 2: type that will stay ahead forever with truly novel discoveries
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  Speaker 2: and abilities. I mean, okay, if you think that's where
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  Speaker 2: we're actually heading, fine, Like that's I guess here's what
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  Speaker 2: I get at on even this, because I really want
• 14:18
  Speaker 2: to dig in on this whole AGI thing, this artificial
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  Speaker 2: general intelligence peace. What happens once we have Let's say
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  Speaker 2: that we get there and someone you know, develops artificial
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  Speaker 2: general intelligence? What then, Okay, like you've developed it, so
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  Speaker 2: what do you start doing with it? Do you start
• 14:41
  Speaker 2: just replacing humans in all jobs? Because now you've got
• 14:45
  Speaker 2: a bunch of people just sitting around. And I can
• 14:47
  Speaker 2: tell you that there's one thing that governments don't like.
• 14:52
  Speaker 3: It's a bunch of people just sitting around.
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  Speaker 5: I think we can all agree it's because you usually do.
• 14:57
  Speaker 3: Because usually things.
• 14:58
  Speaker 2: Start to get ugly when everyone's just sitting around and furthermore,
• 15:01
  Speaker 2: then you get into like the age old question, which
• 15:04
  Speaker 2: is a great one, by the way. Let's say that
• 15:07
  Speaker 2: you had one button that you could push in order
• 15:09
  Speaker 2: to operate everything on Earth, and all you have to
• 15:11
  Speaker 2: do is wake up each morning and push that button,
• 15:14
  Speaker 2: and the food got grown, the steel got made, you know,
• 15:18
  Speaker 2: the everything, everything that needed to happen happened. Well, how
• 15:23
  Speaker 2: does everyone actually pay for all of that stuff then?
• 15:27
  Speaker 2: Because if no one actually has to work, and again
• 15:30
  Speaker 2: I know we're going we're jumping ahead, but this is like,
• 15:34
  Speaker 2: this is with all this futurist stuff that I get
• 15:36
  Speaker 2: kind of skeptical about. If no one has to work,
• 15:40
  Speaker 2: then all we're really dealing with is a resource distribution problem.
• 15:43
  Speaker 2: How do you make sure that everyone has what they want?
• 15:47
  Speaker 2: Do we have any good ideas about that? The answer
• 15:51
  Speaker 2: is no, We've got a bunch of crappy ideas, but
• 15:55
  Speaker 2: we don't really have any good ideas about that.
• 15:58
  Speaker 5: That would be very problematic.
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  Speaker 4: That shift and capitalism is probably one of the greatest
• 16:04
  Speaker 4: ideas that has been built over the last hundreds several
• 16:09
  Speaker 4: hundreds of years. So to completely get rid of that system,
• 16:13
  Speaker 4: because there's no need to really amass assets would be
• 16:19
  Speaker 4: really problematic.
• 16:21
  Speaker 2: I just don't know what you do. I'm not saying
• 16:23
  Speaker 2: it's good or bad. I'm just saying, like, what, I
• 16:25
  Speaker 2: don't need to do that, and there's no good answer
• 16:29
  Speaker 2: for it.
• 16:30
  Speaker 4: On the piece on you know, how would we utilize agent?
• 16:35
  Speaker 4: Hopefully the optimistic version would be to replace some human
• 16:41
  Speaker 4: workers but increase productivity and hopefully grow the economy at
• 16:44
  Speaker 4: a faster pace.
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  Speaker 2: But if it's general intelligence, meaning it can like learn
• 16:51
  Speaker 2: and adapt and do all kinds of different things, why
• 16:52
  Speaker 2: would you stop it replacing some human workers. I'm not
• 16:56
  Speaker 2: saying this is good or bad. I'm just saying, hey,
• 16:59
  Speaker 2: if you had something that could learn and do all
• 17:02
  Speaker 2: of this stuff and create an innovate yeah, correct, And
• 17:07
  Speaker 2: so I guess it also then gets it like why
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  Speaker 2: do you have to be first there? Why is there
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  Speaker 2: this assumption that whoever gets to AGI first wins.
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  Speaker 5: It's how getting there first and then harnessing it to
• 17:23
  Speaker 5: whatever your angle.
• 17:24
  Speaker 2: So again, I don't like to speculate like too far out,
• 17:29
  Speaker 2: because I have no idea if any of this stuff
• 17:31
  Speaker 2: is even gonna work. Like I went on chat GPT
• 17:34
  Speaker 2: trying to make me an ordered list of numbers yesterday
• 17:37
  Speaker 2: and it couldn't even do it, Like it was just
• 17:39
  Speaker 2: not ordering numbers correctly and not adding them upright. And
• 17:43
  Speaker 2: so part of me is like, hey, we got like
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  Speaker 2: a long ways to go until we get to you know,
• 17:49
  Speaker 2: artificial general intelligence. And this is before you even get
• 17:52
  Speaker 2: to the really like the really disturbing questions of hey,
• 17:57
  Speaker 2: what if you you know, assign your AGI. Hey, I
• 18:00
  Speaker 2: want to you know, figure out ways to reduce energy
• 18:06
  Speaker 2: usage in order to you know, in order to maximize, uh,
• 18:11
  Speaker 2: you know, the the utility of every drop of oil
• 18:14
  Speaker 2: we have left on the planet. And the AGA comes
• 18:16
  Speaker 2: back and says, great, I'm gonna kill all of you
• 18:18
  Speaker 2: because then no energy will be used. I mean, technically
• 18:23
  Speaker 2: it solved the problem, but not quite in the way
• 18:25
  Speaker 2: that you planned on it. Or let's say that you say, hey,
• 18:28
  Speaker 2: you know what i'd like you to do, AGI. I
• 18:31
  Speaker 2: want you to figure out how to reduce my headcount
• 18:36
  Speaker 2: to minimize my staffing. Great, I just fired everyone. What
• 18:39
  Speaker 2: should I do next? Well, I didn't want you to
• 18:42
  Speaker 2: do that. No, you're you're staffing costs or minimize Now, Okay,
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  Speaker 2: I guess we'll have to work. So I just I
• 18:51
  Speaker 2: understand the promise of it. I just I can't get
• 18:56
  Speaker 2: over that hump. And look, maybe in five years right
• 18:59
  Speaker 2: now or AGI overlords are gonna come down and be
• 19:02
  Speaker 2: like you should not have doubted me, because that's how
• 19:06
  Speaker 2: your artificial intelligence will speak. But I can't get there
• 19:11
  Speaker 2: right now with what I'm seeing. I do think that
• 19:16
  Speaker 2: some form of AI, combined with what we may see
• 19:18
  Speaker 2: in robotics over the next five to six years, could
• 19:21
  Speaker 2: actually pivot this on its head and be like, hey,
• 19:23
  Speaker 2: maybe this isn't great for people who do manual labor.
• 19:27
  Speaker 2: Right now, we only think it's service sector workers that
• 19:29
  Speaker 2: could be impacted. Maybe it's not. But I just I
• 19:33
  Speaker 2: can't get to this whole AGI thing right now.
• 19:36
  Speaker 5: Just take a quick break.
• 19:37
  Speaker 3: When we come back, we'll do the trivia answer.
• 19:41
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• 19:46
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• 20:06
  Speaker 6: Trivia question today was who portrayed Alan Turing in the
• 20:11
  Speaker 6: twenty fourteen movie The imitation game, that would be Benedict
• 20:15
  Speaker 6: cumber Patch. David from Port Smith, New Hampshire is our
• 20:20
  Speaker 6: winner today, taking home the Financial Exchange Show t shirt.
• 20:23
  Speaker 5: Congrats to David.
• 20:24
  Speaker 6: We played trivia every day here on the Financial Exchange.
• 20:28
  Speaker 6: See complete contest rules at Financial Exchange Show dot com.
• 20:33
  Speaker 2: All right, we got a piece yesterday from I guess
• 20:35
  Speaker 2: this morning from Bloomberg US, thirty year yield falls most
• 20:39
  Speaker 2: since March as investors lured back.
• 20:44
  Speaker 3: In the time since this was printed.
• 20:45
  Speaker 2: The thirty years back above five percent, up another five
• 20:49
  Speaker 2: point seven basis points. So I guess, Look, maybe we
• 20:53
  Speaker 2: shouldn't like read too much into what happens over one
• 20:58
  Speaker 2: day in the bond market. I think it's more important
• 21:01
  Speaker 2: to pay attention to what is going on with trends
• 21:05
  Speaker 2: over you know, at least a period of weeks, probably
• 21:08
  Speaker 2: over a period of months. And to this point, the
• 21:14
  Speaker 2: ten year yield has basically been trendless over the last year.
• 21:19
  Speaker 3: A year ago, on five.
• 21:21
  Speaker 2: Twenty eight, twenty four, the ten year opened at four
• 21:26
  Speaker 2: point four to six and closed at four point five
• 21:27
  Speaker 2: to four. It's at four four nine, right in the
• 21:29
  Speaker 2: middle of that range now, so it hasn't gone anywhere.
• 21:31
  Speaker 2: It's gone as low as about three point six percent
• 21:35
  Speaker 2: last September, It's gone as high as around four point
• 21:39
  Speaker 2: eight percent, four point nine percent in January of this year.
• 21:43
  Speaker 2: It's basically been trendless. There has not been any intermediate
• 21:48
  Speaker 2: term trend over the last year or so. You can
• 21:51
  Speaker 2: make a case that since April second, we've seen a
• 21:55
  Speaker 2: fairly steady up trend of the lows being higher and
• 21:59
  Speaker 2: the highs being higher. So there's kind of this you know,
• 22:02
  Speaker 2: process that's moving there. But I think that sometimes we
• 22:07
  Speaker 2: just want to read too much into what's happening on
• 22:08
  Speaker 2: a daily basis. And I've said this, you know, both ways,
• 22:11
  Speaker 2: Like hey, like yesterday was the US deficit problem solved
• 22:15
  Speaker 2: and investor was like, great, we can buy all these
• 22:17
  Speaker 2: bonds now. Well No, Likewise, did the deficit picture worsen
• 22:22
  Speaker 2: meaningfully today from yesterday?
• 22:24
  Speaker 3: Also?
• 22:25
  Speaker 2: No, So I just caution people on these pieces. Any
• 22:28
  Speaker 2: thoughts Paul.
• 22:30
  Speaker 4: On the US ten year treasury piece, it is fair
• 22:33
  Speaker 4: to say that the term premium is the highest it's
• 22:35
  Speaker 4: been since twenty fourteen to own the US ten year treasury.
• 22:39
  Speaker 4: That to me, at least reflects some of what's going
• 22:43
  Speaker 4: on in the bond market recently, but I agree with
• 22:46
  Speaker 4: your other sentiments that the bond market doesn't move that rapidly,
• 22:51
  Speaker 4: that there needs to be a day to day update
• 22:54
  Speaker 4: as to why rates are trending in one direction or another.
• 22:58
  Speaker 2: I think ultimately, when looking at rates, it comes back
• 23:02
  Speaker 2: to two things. What's growth gonna be and what's inflation
• 23:05
  Speaker 2: gonna be. If growth and inflation are both high, rates
• 23:10
  Speaker 2: need to go way higher. If growth and inflation are
• 23:13
  Speaker 2: both low, rates.
• 23:14
  Speaker 3: Need to go lower.
• 23:15
  Speaker 2: If we're basically just gonna be on the same track
• 23:17
  Speaker 2: we were on last year, you could probably hang out
• 23:19
  Speaker 2: somewhere between like four two and four eight on the
• 23:21
  Speaker 2: ten year and you're absolutely fine. The interesting piece is, hey,
• 23:25
  Speaker 2: what happens if you know, one of these pieces goes
• 23:28
  Speaker 2: higher and the other stays the same, or one goes
• 23:30
  Speaker 2: lower example, or what if they move in opposite directions.
• 23:34
  Speaker 2: This idea of stagflation, what happens if growth goes down
• 23:39
  Speaker 2: but inflation goes up.
• 23:40
  Speaker 1: And J.
• 23:41
  Speaker 2: Powace talked about this a little bit in this press conference,
• 23:43
  Speaker 2: is basically saying, hey, we got to go in whatever
• 23:46
  Speaker 2: direction is the greater threat If unemployment goes from four
• 23:52
  Speaker 2: to two up to four seven, but inflation goes from
• 23:56
  Speaker 2: three up to six, fit's probably hiking.
• 24:00
  Speaker 5: Mm.
• 24:01
  Speaker 3: If unemployment goes from.
• 24:03
  Speaker 2: Four to two to five seven and inflation goes from
• 24:05
  Speaker 2: three to four, that's probably cutting. The magnitude of each
• 24:09
  Speaker 2: move matters as well. So I think we're at a
• 24:13
  Speaker 2: really interesting time right now. I mean, my goodness, the
• 24:18
  Speaker 2: amount of potential, just the sheer number of scenarios that
• 24:23
  Speaker 2: you can picture over the next six to twelve months.
• 24:27
  Speaker 2: I mean, it's a fantastic like time to be looking
• 24:31
  Speaker 2: at this and being able to, you know, say, Okay,
• 24:35
  Speaker 2: here's what I think will or won't happen. But I
• 24:38
  Speaker 2: don't think anyone should have like any confidence that something's
• 24:40
  Speaker 2: gonna play out definitively, because we just don't know what
• 24:43
  Speaker 2: growth and inflation are going to look like over the
• 24:45
  Speaker 2: next six to twelve months, because the tariff pictures still evolving,
• 24:48
  Speaker 2: the policy pictures evolving, and pardon me if you've heard
• 24:51
  Speaker 2: this before, but we're just gonna have to wait.
• 24:54
  Speaker 6: So there's that The United States Version Islands is consistently
• 24:58
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• 25:01
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• 25:25
  Speaker 6: you arrive, you'll fall naturally in rhythm with the heartbeat
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• 25:32
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• 25:58
  Speaker 2: Paul, why do we care about Macy's earnings?
• 26:04
  Speaker 4: It's uh one of the one of the big stores
• 26:07
  Speaker 4: out there, Chuck, Right.
• 26:09
  Speaker 2: Why why do we care about you know, we always
• 26:13
  Speaker 2: get the front page news of oh like Macy's earnings
• 26:16
  Speaker 2: where this and that? Is it just because they sponsored
• 26:19
  Speaker 2: the Thanksgiving Day parade, because otherwise there's nothing particularly special
• 26:22
  Speaker 2: about them. I mean their sales are twenty three billion dollars,
• 26:25
  Speaker 2: which is it's a big name. That's all it is now.
• 26:28
  Speaker 5: Is it that even anymore?
• 26:30
  Speaker 6: It's yeah, it's a historical, big name retailer, and they
• 26:33
  Speaker 6: see the name and they just have to put it
• 26:35
  Speaker 6: out there. But in reality, they're really in the same
• 26:38
  Speaker 6: bucket as coals.
• 26:40
  Speaker 5: I was just gonna go there a Tucker's favor his
• 26:43
  Speaker 5: favorite coals.
• 26:45
  Speaker 2: Yeah, and and like they're again, it's not like they're
• 26:48
  Speaker 2: like teen c tiny. I mean, they do twenty three
• 26:51
  Speaker 2: billion in sales, but the market basically believes that they're dead.
• 26:55
  Speaker 2: I mean they're worth four billion, not even three and
• 26:57
  Speaker 2: a half billion dollars, So the market believes that, hey,
• 27:00
  Speaker 2: you're not going to grow your sales, You're not gonna
• 27:02
  Speaker 2: do anything with it, so why should we care about you.
• 27:05
  Speaker 2: I don't think they're much of a bell Weather for
• 27:08
  Speaker 2: anything at this point. Who is the Macy's target customer
• 27:14
  Speaker 2: these days? I can think of two older demo right.
• 27:18
  Speaker 5: Elderly women on the Bloomingdale side.
• 27:20
  Speaker 2: It's gotta be an older demo or people registering for weddings.
• 27:25
  Speaker 2: But even that, like, look, it's been a while since
• 27:27
  Speaker 2: I got married. Okay, you only get married for the
• 27:29
  Speaker 2: first time once.
• 27:31
  Speaker 3: Here's the thing.
• 27:33
  Speaker 2: Are people in their twenties registering at Macy's or are
• 27:36
  Speaker 2: they just doing it at freaking Amazon?
• 27:38
  Speaker 3: It's probably Amazon, right.
• 27:40
  Speaker 4: Yeah, Amazon or Crane Barrel, those those kind of ones. Yeah, yeah,
• 27:48
  Speaker 4: I mean.
• 27:48
  Speaker 5: I went in.
• 27:48
  Speaker 6: I went into a Macy's two three weeks ago. It
• 27:51
  Speaker 6: was like a random week day, like four o'clock, given,
• 27:54
  Speaker 6: yet I really had to use the restaurant, so.
• 27:58
  Speaker 5: I went in there.
• 27:59
  Speaker 6: You had to, you had to kind of voyage, you know,
• 28:02
  Speaker 6: to the red restroom. Yeah, but all I saw in
• 28:05
  Speaker 6: the store were a couple of groups of older women.
• 28:09
  Speaker 6: That was pretty much it, because other than that, it
• 28:11
  Speaker 6: was pretty empty.
• 28:13
  Speaker 4: Is Blue Mercury a popular brand on the beauty side
• 28:17
  Speaker 4: of things?
• 28:17
  Speaker 3: I don't know what that is.
• 28:19
  Speaker 5: Never it's they own.
• 28:21
  Speaker 4: Macy's acquired them in twenty fifteen. In this piece, they
• 28:23
  Speaker 4: talk about investing more into their beauty chain Blue Mercury.
• 28:27
  Speaker 4: So any listeners out there can Texas six one seven
• 28:30
  Speaker 4: three sixty two one three eight five if it is
• 28:32
  Speaker 4: in fact a big brand on the beauty side of things.
• 28:39
  Speaker 5: I don't think so.
• 28:40
  Speaker 3: I don't know.
• 28:41
  Speaker 5: I don't know that's out of my.
• 28:43
  Speaker 4: Area.
• 28:44
  Speaker 2: In any case, Macy's cut their profit out look for
• 28:47
  Speaker 2: the year and.
• 28:49
  Speaker 5: They're closing one hundred and fifty stores. They'll be down to three.
• 28:52
  Speaker 3: I don't understand this.
• 28:53
  Speaker 2: They've be closing one hundred and fifty stores a year
• 28:54
  Speaker 2: every year since I've been alive.
• 28:57
  Speaker 3: How are they not out of stores?
• 28:58
  Speaker 5: They will have three fifty remaining.
• 29:00
  Speaker 2: This is like when you get the box of fried
• 29:03
  Speaker 2: rice and no matter how much you eat, it's still
• 29:05
  Speaker 2: full three days later.
• 29:07
  Speaker 3: It keeps multiplying.
• 29:09
  Speaker 4: I wonder what they had at their peak for STORESS
• 29:11
  Speaker 4: got to be in the thousands, right, I would get
• 29:15
  Speaker 4: maybe less, just because they took up so much square footage.
• 29:18
  Speaker 2: Macy's store count by year? Will anything show up from that?
• 29:22
  Speaker 2: I don't really know. Here we go, Okay, let's see
• 29:26
  Speaker 2: they had at the end of fiscal twenty four. Okay,
• 29:29
  Speaker 2: I've got something here. In twenty fifteen they had eight
• 29:32
  Speaker 2: hundred and sixty eight stores. Yes, that's as far back
• 29:35
  Speaker 2: as I go.
• 29:37
  Speaker 5: That's all I've got too.
• 29:38
  Speaker 2: I don't know it doesn't go back further. But we've
• 29:40
  Speaker 2: reached the end of the Internet, Tucker. We can call it.
• 29:43
  Speaker 3: We can ten years ago.
• 29:44
  Speaker 2: Yeah, we can call it a day. The internet ended
• 29:46
  Speaker 2: in twenty fifteen, which is after it began. Sometime, let's
• 29:51
  Speaker 2: take a quick break. When we come back, we'll do
• 29:53
  Speaker 2: some stack roulette and see if we can find more
• 29:55
  Speaker 2: stuff on the Internet.
• 29:56
  Speaker 1: After this, missed one of our shows, catch up anytime
• 30:00
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• 30:03
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• 31:02
  Speaker 5: Paul, what do you got for me?
• 31:03
  Speaker 3: For stak Rulet.
• 31:05
  Speaker 4: We talked a lot about AI earlier in the show,
• 31:08
  Speaker 4: Chuck as to what it looks like in the future.
• 31:10
  Speaker 4: I can tell you what one thing for sure with
• 31:12
  Speaker 4: AI right now, it's it's being used rampantly in colleges
• 31:16
  Speaker 4: and high schools across the country to assist with students
• 31:19
  Speaker 4: doing their assignments. I talked with a couple teachers over
• 31:24
  Speaker 4: the course of the last week or so and resounding
• 31:28
  Speaker 4: acknowledgment of a you know, supremely immense problem it is
• 31:32
  Speaker 4: for them when they assign students a paper or anything
• 31:35
  Speaker 4: that can basically be done outside of the classroom. The
• 31:38
  Speaker 4: use of chat TPT to write that five paragraph essay
• 31:42
  Speaker 4: on you know, name any classic literature novel out there,
• 31:46
  Speaker 4: or for many types of complicated scientific calculations.
• 31:50
  Speaker 5: It's everywhere.
• 31:51
  Speaker 4: So what's making a resurgence in classrooms and this was
• 31:55
  Speaker 4: backed up by some of the teachers I spoke with
• 31:57
  Speaker 4: is handwritten blue books. Blue book essays that you and
• 32:01
  Speaker 4: Tucker and I would would be used to back in
• 32:03
  Speaker 4: the day in high school and in middle school where
• 32:07
  Speaker 4: there is much more of a focus, and the teacher
• 32:09
  Speaker 4: I was speaking with this weekend said that I'm much
• 32:11
  Speaker 4: more concerned in terms of their participation in class when
• 32:14
  Speaker 4: they're speaking, as well as handwritten assignments that are done
• 32:19
  Speaker 4: within the confines of the classroom. So you have a
• 32:21
  Speaker 4: company out there in called Roaring Spring Paper Products which
• 32:26
  Speaker 4: is seeing a huge surge in demand for their blue
• 32:30
  Speaker 4: book notebooks that are used during exam time this time
• 32:35
  Speaker 4: of year.
• 32:36
  Speaker 2: Yeah, Look, this is a tough problem that I have
• 32:40
  Speaker 2: some sympathy for because, as this beast talks about, Look,
• 32:45
  Speaker 2: you don't want to deprive kids who are again once
• 32:52
  Speaker 2: you're in college, like you're basically an adult. You don't
• 32:55
  Speaker 2: want to deprive students of the ability to use tools
• 33:00
  Speaker 2: make their that that give them additional power, an additional
• 33:04
  Speaker 2: ability to do things you don't.
• 33:09
  Speaker 3: I'm guessing.
• 33:09
  Speaker 2: I mean I wasn't alive then, but I'm guessing you know,
• 33:11
  Speaker 2: when uh, you know, power tools were invented, you didn't
• 33:16
  Speaker 2: just have you know, Carpenter just said, well, like you
• 33:18
  Speaker 2: can't use those, you know, like that's cheating, Like, no,
• 33:20
  Speaker 2: I can build more stuff using the power tools, so
• 33:24
  Speaker 2: let me do that. I think that the challenging piece
• 33:28
  Speaker 2: is trying to figure out what we're actually teaching kids
• 33:34
  Speaker 2: in school and making sure they're getting the balance of
• 33:37
  Speaker 2: of what we need to teach them, because on one hand,
• 33:41
  Speaker 2: if it's just knowledge accumulation, hey, you're never gonna just
• 33:45
  Speaker 2: know everything. There's there's more. Contrary to when I said
• 33:48
  Speaker 2: last segment, we have not reached the end of the Internet.
• 33:50
  Speaker 2: There's there's always more, and there's always more stuff to learn.
• 33:53
  Speaker 2: So being able to use chat, GPT or cloud or
• 33:58
  Speaker 2: whatever it is to you know, get access to knowledge,
• 34:01
  Speaker 2: I think is a really good skill to be able
• 34:03
  Speaker 2: to have. It's kind of like how our generation grew
• 34:05
  Speaker 2: up with search engines, and I'm always kind of amazed
• 34:09
  Speaker 2: that people like thirty forty years older than us, they're like, oh, like,
• 34:12
  Speaker 2: how'd you find that? It's like, I don't know, Like
• 34:13
  Speaker 2: I grew up using search engines. I just know how
• 34:16
  Speaker 2: to get the result that I want, even though search
• 34:18
  Speaker 2: engines kind of suck now because there's too much aislop
• 34:20
  Speaker 2: that permeates them. So you want kids to be able
• 34:24
  Speaker 2: to learn these new skills, but they also need to
• 34:28
  Speaker 2: be able to think critically, and that's historically what writing
• 34:31
  Speaker 2: has taught us is how do you structure an argument
• 34:34
  Speaker 2: so that you can actually prove what you're trying to prove?
• 34:39
  Speaker 2: And this, I think is a key problem, which is,
• 34:43
  Speaker 2: if you're just asking kids to recite information, even in
• 34:48
  Speaker 2: written form, what are you really doing? Like it's actually
• 34:53
  Speaker 2: kind of you know, looking at hey from a teaching perspective,
• 34:56
  Speaker 2: are you maximizing it or are you helping to build
• 34:59
  Speaker 2: the skills that they'll need in order to talk during
• 35:03
  Speaker 2: you know, conversations with their friends, during conversations at work,
• 35:08
  Speaker 2: like all the stuff that you need in order to
• 35:10
  Speaker 2: actually be successful in life. And so I think this
• 35:14
  Speaker 2: is a really interesting place that we're at right now.
• 35:17
  Speaker 2: I have a number of friends that are either teachers
• 35:21
  Speaker 2: or college professors, and there's no one size fits all,
• 35:25
  Speaker 2: there's no great way to deal with this.
• 35:27
  Speaker 5: But some of this.
• 35:27
  Speaker 2: Stuff, you know, like bringing back the blue books, helps
• 35:30
  Speaker 2: to do that. And you want to balance it because
• 35:32
  Speaker 2: you don't want to just like punish kids for having
• 35:34
  Speaker 2: access to technology. Like we're going about our day, Paul,
• 35:38
  Speaker 2: are we like limited as it like, oh, you can't
• 35:39
  Speaker 2: use your calculator to solve that.
• 35:41
  Speaker 4: Well, No, I was thinking about the calculator example, and
• 35:43
  Speaker 4: you know everything in that nature, but I just wish, like,
• 35:46
  Speaker 4: you can't do it.
• 35:47
  Speaker 5: You got to do a handwritten but you have to.
• 35:49
  Speaker 2: Have that those baseline skills so that you can know, Hey,
• 35:53
  Speaker 2: is what the calculator giving me right? Is the calculator
• 35:56
  Speaker 2: giving me the right answer? Is chat GPT giving me
• 35:59
  Speaker 2: the right answer? Because I'll tell you, as someone who
• 36:01
  Speaker 2: uses these on a regular basis, there are places where
• 36:05
  Speaker 2: I'm like, I don't know if this is right. I
• 36:07
  Speaker 2: need to send this to a subject matter expert and
• 36:10
  Speaker 2: they'll come back to be like, yeah, ninety nine percent
• 36:12
  Speaker 2: of this is right, but here's like the error that
• 36:14
  Speaker 2: it made and I wouldn't have gotten that otherwise.
• 36:16
  Speaker 4: Similarly, I had with the college professor I was talking
• 36:18
  Speaker 4: with this about that there's sometimes hallucinations that these models have,
• 36:23
  Speaker 4: and there can be parts of the paper that they
• 36:25
  Speaker 4: put together that are just inaccurate. So it's critical that
• 36:31
  Speaker 4: there's some backchecking to it too.
• 36:34
  Speaker 2: I want to talk about this piece quickly from the
• 36:37
  Speaker 2: Financial Times, as titled should ordinary US retirement accounts be
• 36:41
  Speaker 2: investing in private assets, you know, talking about private equity,
• 36:45
  Speaker 2: private credit, hedge funds, things like that. And I go
• 36:52
  Speaker 2: very back and forth on this because in general, for individuals,
• 36:59
  Speaker 2: it's a really bad idea to try to replicate what
• 37:02
  Speaker 2: large institutional investors do for two reasons.
• 37:06
  Speaker 3: The first is you're.
• 37:07
  Speaker 2: Generally not gonna have access to the same caliber of
• 37:09
  Speaker 2: manager that those big institutional investors do, and when it
• 37:12
  Speaker 2: comes to private assets, caliber of manager is pretty much
• 37:15
  Speaker 2: all that matters.
• 37:16
  Speaker 1: Yes.
• 37:18
  Speaker 2: The second piece is most institutional investors have a huge
• 37:22
  Speaker 2: chunk of their stuff tied up in privates, and they
• 37:26
  Speaker 2: can do that because they don't need access to all
• 37:28
  Speaker 2: of it at once, and they generally have big pools
• 37:29
  Speaker 2: of money that they can, you know, kind of defer
• 37:31
  Speaker 2: and move stuff around. The average individual does not have,
• 37:35
  Speaker 2: you know, all these big pools of money they can
• 37:36
  Speaker 2: move around in tons of liquidity. So I don't love
• 37:39
  Speaker 2: it as an idea. On the other hand, hey, should
• 37:42
  Speaker 2: you not you know, be able to buy this in
• 37:45
  Speaker 2: retirement accounts? Well, when the I guess where I come
• 37:48
  Speaker 2: back to is hey, when the retirement accounts are set
• 37:51
  Speaker 2: up with tax advantages granted to you by the federal government.
• 37:54
  Speaker 2: There has to be a pretty high bar for certain
• 37:56
  Speaker 2: investments to be able to be included in that and
• 37:58
  Speaker 2: have access to that giant pool of money. And given
• 38:03
  Speaker 2: what I'm seeing in private investments right now, I'm not
• 38:05
  Speaker 2: sure that it meets.
• 38:06
  Speaker 4: I worry that there's more risks than rewards with this proposition.
• 38:10
  Speaker 2: Yeah, it just it doesn't feel great to me.
• 38:15
  Speaker 3: I guess we'll leave it there.
• 38:16
  Speaker 2: Let's take a quick break, but hey, tomorrow we're gonna
• 38:19
  Speaker 2: be back. We got Nvidio earnings after the bell. We'll
• 38:21
  Speaker 2: discuss what we see tomorrow on the show.