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Why does the US want Venezuela's oil? · The Financial Exchange Show

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  Speaker 2: Face is the.
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  Speaker 1: Financial Exchange with Mike Armstrong and Mark Vandetti.
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  Speaker 3: Good morning, Happy Thursday, Welcome back to the Financial Exchange.
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  Speaker 3: We've got a mixed market at the moment, with the
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  Speaker 3: Dow up two hundred and fifteen points, closing in on
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  Speaker 3: half percent up, whereas the naszac's down nearly six ten percent.
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  Speaker 3: SMP is as flat to flat as you can get,
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  Speaker 3: currently up point one six points.
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  Speaker 2: That's what I'll say about the SMP.
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  Speaker 4: I can't see it.
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  Speaker 2: Sorry, yeah, I hear you.
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  Speaker 3: We have a jobs week here on the Financial Exchange.
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  Speaker 3: Yesterday we got news on the Job Opening's Labor Turnover Survey.
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  Speaker 3: That report has been showing continued weakening, but perhaps just
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  Speaker 3: normalization in the labor market. There are now approximately one
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  Speaker 3: job open for every one person looking for work, which
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  Speaker 3: is fairly fairly normal ratio, but is far away from
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  Speaker 3: what we saw back.
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  Speaker 2: In twenty twenty one or two.
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  Speaker 3: I don't remember exactly when, when there were two jobs
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  Speaker 3: open for every person looking for work, and you know,
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  Speaker 3: you would drive by McDonald's and see the science for
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  Speaker 3: signing bonuses and all sorts of fun stuff that we
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  Speaker 3: hadn't seen in a generation in the labor market.
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  Speaker 2: So clearly weakening there.
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  Speaker 3: The jobless claims that we received this morning came in
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  Speaker 3: a two hundred and eight thousand over the previous week,
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  Speaker 3: a slight uptick from where we were the last week,
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  Speaker 3: but at a very low and frankly, not a concerning level.
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  Speaker 3: These probably don't start to look concerning unless you're over
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  Speaker 3: a quarter million a week, and we're pretty far away
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  Speaker 3: from that at this point. So I'm going to sweep
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  Speaker 3: that one under the rug and say that it doesn't
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  Speaker 3: matter at this moment. Tomorrow at eight thirty am, Yeah,
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  Speaker 3: at eight thirty am, we will be getting the monthly
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  Speaker 3: jobs report from the BLS. This is a combination of
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  Speaker 3: two different surveys, one of households that gets you that
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  Speaker 3: unemployment rate among other data, and the other of businesses
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  Speaker 3: that gets you the pace of job hiring. Expectations for
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  Speaker 3: this coming report, which will be reporting on the month
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  Speaker 3: of December up, the unemployment rate expected to come in
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  Speaker 3: at four and a half percent, a slight downtick from
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  Speaker 3: the four to six we saw in the previous month,
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  Speaker 3: and the pace of job hiring continue to come in
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  Speaker 3: between seventy and eighty thousand. So we will see what
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  Speaker 3: we get and certainly be covering it on the show tomorrow.
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  Speaker 3: Anything else to add for you, Marc to say the
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  Speaker 3: labor market.
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  Speaker 4: You raise an interesting question about the unemployment rate in
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  Speaker 4: how do how will we actually I forget how you
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  Speaker 4: phrased it, but what's stuck in my mind is how
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  Speaker 4: do we know what the right unemployment rate is? Well,
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  Speaker 4: the unemployment rate in twenty twenty three went down to
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  Speaker 4: what three point four percent, way below have typical historical experience,
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  Speaker 4: and that was accompanied by high inflation.
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  Speaker 2: Mark.
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  Speaker 3: I was thinking about this when we were speaking this morning,
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  Speaker 3: like I think, yeah, we were talking about unemployment, not
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  Speaker 3: on the show, but I was thinking, like, what is
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  Speaker 3: the answer to, Hey.
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  Speaker 2: What is the what is the ideal unemployment?
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  Speaker 5: Right?
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  Speaker 2: Okay?
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  Speaker 4: Well I was going to answer the question, and.
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  Speaker 3: I think the answer depends on who you're asking, because
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  Speaker 3: for employees, the answer is the best, the best layer
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  Speaker 3: market you had seen in a lifetime and a generation
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  Speaker 3: sure was the one we got three years ago, the way.
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  Speaker 4: They economists at the FED would and what most of
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  Speaker 4: us care about. And I don't mean to diminish the
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  Speaker 4: experience of somebody who's underemployed or god forbid, unemployed. Uh,
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  Speaker 4: and who looks at that and says, well, that's partly
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  Speaker 4: my experience, and I want it to come down. I'm
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  Speaker 4: just talking about this as sort of a.
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  Speaker 2: A you got it detached sort of What is the
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  Speaker 2: best unemployment race? They would say.
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  Speaker 4: The economists at the FED would say, and this is
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  Speaker 4: important because they determine monetary policy. We all care about
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  Speaker 4: what interest rates you're going to do. They would say,
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  Speaker 4: it's the rate that doesn't push inflation up. And that
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  Speaker 4: rate and this is something we were talking about internally
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  Speaker 4: this morning, that rate changes over time. Is the structure
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  Speaker 4: of the economy changes.
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  Speaker 2: We know one thing. It certainly was not three point
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  Speaker 2: four percent.
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  Speaker 5: No.
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  Speaker 4: It was that was unnaturally.
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  Speaker 2: Low and drove up inflation in part and was.
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  Speaker 4: Related to the right. Demand was too hot that pushed
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  Speaker 4: unemployment too low. The FED was at least partly responsible
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  Speaker 4: for that. At the very least, they failed to push
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  Speaker 4: against the forces that were causing demand to run ahead
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  Speaker 4: of the economy's productive capacity and thus pushed up inflation.
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  Speaker 4: In the late nineteen nineties, unemployment went down to the
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  Speaker 4: force I forget exactly where it bottomed. It was so
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  Speaker 4: low that many people thought the FED should be raising rates.
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  Speaker 4: Green span correctly in retrospect identified something going on on
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  Speaker 4: the supply side of the economy.
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  Speaker 2: The interactivity boom, Yeah.
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  Speaker 4: The productivity boom, and he was early there. He also
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  Speaker 4: got a little bit lucky because it took years to
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  Speaker 4: document that that's actually what it happened. We don't know
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  Speaker 4: what the right or natural or non inflationary rate of
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  Speaker 4: unemployment is today. It might be five point five. That
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  Speaker 4: could be why inflation remains elevated. So nobody wants higher
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  Speaker 4: unemployment because that real human costs. But someone who's setting
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  Speaker 4: monetary policy doesn't want to push unemployment, as callous as
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  Speaker 4: it sounds, and think about when the FED has to
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  Speaker 4: cause recessions to get inflation down, it's willing to make
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  Speaker 4: that trade off. Economists have a name for that trade off.
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  Speaker 4: It's called the sacrifice ratio. Again, it sounds glib and unsympathetic,
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  Speaker 4: but you can't push the economy too hot because inflation
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  Speaker 4: has victims too.
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  Speaker 3: The other major story of this week has, of course,
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  Speaker 3: been Venezuela and what is happening with its oil, What
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  Speaker 3: is happening with Nicholas Maduro. Will there be some sort
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  Speaker 3: of shift in power in Venezuela. Many of those questions
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  Speaker 3: remain unanswered, but we're starting to get more and more
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  Speaker 3: written about the situation with US domestic oil production, what
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  Speaker 3: it could mean if Venezuela's market is more open to
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  Speaker 3: US companies for all sorts of drilling and things along
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  Speaker 3: those lines. Fact of the matter, the state of play today,
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  Speaker 3: the US pump's more crude oil than any other country
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  Speaker 3: in the world without is.
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  Speaker 4: With thirteen million barrels a day, right is our output
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  Speaker 4: twelve thirteen, Maybe that's about it's come down a little
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  Speaker 4: bit over the past year, but twelve to thirteen.
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  Speaker 3: The recent trend in oil production has been shrinking rig
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  Speaker 3: counts because at the prices that are currently being paid,
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  Speaker 3: you are not really terribly profitable for a lot of
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  Speaker 3: these oil companies for them to continue to drill new
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  Speaker 3: rigs and get oil out of the ground. For reference,
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  Speaker 3: oil prices are up a bit today, but we're still
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  Speaker 3: below fifty seven dollars per barrel. And I this is
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  Speaker 3: not my own phrasing, but I found it really interesting
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  Speaker 3: a lot of it. You know, if you're looking at
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  Speaker 3: the Venezuela situation, a lot has been compared to Panama
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  Speaker 3: in what was that like eighty eight or eighty nine.
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  Speaker 2: Excuse me, and it was points out.
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  Speaker 4: That you know historically, just cause was eighty nine. You're
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  Speaker 4: talking about this, yes, removing oreego, Yes, eighty nine, Okay,
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  Speaker 4: because yeah, Bush was president. Yeah it wasn't ninety because
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  Speaker 4: we were dealing with a rack at that it was
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  Speaker 4: eighty nine. I think it was eighty nine.
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  Speaker 2: It'll be a trivia question three weeks from now.
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  Speaker 4: The we just google it was supposed to be stammering
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  Speaker 4: for it.
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  Speaker 3: See that's what I hate about the Internet is we
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  Speaker 3: used to have these fun conversations like, Okay, well, let's
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  Speaker 3: see I was in middle school when it happened, so
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  Speaker 3: therefore no no. Now we can just google it and
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  Speaker 3: get the answer instantaneously.
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  Speaker 1: Uh.
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  Speaker 2: Nonetheless, a lot has been compared to that period.
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  Speaker 4: Yeah, I don't have to fumble around for it.
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  Speaker 2: Is a bad thing because now kids don't know how
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  Speaker 2: to talk to each other.
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  Speaker 4: Yeah, it's about that with all these facts hanging around,
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  Speaker 4: nobody can communicate anyone.
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  Speaker 3: I used to just be able to make up conspiracy theories.
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  Speaker 3: Now I have to go to the Internet and find
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  Speaker 3: them myself.
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  Speaker 4: I don't like it's a bear market for bs ors.
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  Speaker 4: If that's what you.
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  Speaker 5: Mean, I love the conversation of fumbling around what year
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  Speaker 5: an event occurred. Yes, I prefer that conversation.
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  Speaker 4: I'd rather grow up around in the dark for three hours. Yes,
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  Speaker 4: that's my memory, one hundred percent.
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  Speaker 2: One hundred percent.
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  Speaker 4: Listeners love that one of these guys has any clue
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  Speaker 4: what's going.
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  Speaker 3: The point that was made was that historically, when the
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  Speaker 3: United States has done something like we did in Venezuela,
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  Speaker 3: it was oftentimes loud as hey, this is about democracy
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  Speaker 3: and restoring democracy in.
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  Speaker 2: The region, when everyone you knew it was all about oil.
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  Speaker 3: And this is the first time where you look at
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  Speaker 3: this one you say, I'm not really sure this is
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  Speaker 3: about the oil. I think the president certainly believes it's
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  Speaker 3: about the oil. I think he, you know, views oil
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  Speaker 3: as critical to the global economy. Frankly, I think that
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  Speaker 3: viewpoint has a bit outdated in today's economy, given how
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  Speaker 3: much oil the US produces.
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  Speaker 4: It's a it's an election year, so it's there's there's
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  Speaker 4: a little bit of an election impetus there.
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  Speaker 3: But you know, this is the first time where you
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  Speaker 3: look at it and say, Okay, they're not saying it's
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  Speaker 3: about democracy at all. Right, The administration is not talking
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  Speaker 3: about that. You want the opposition and reality. You know,
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  Speaker 3: the advisors around him, I'm sure are well aware that, Hey,
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  Speaker 3: we don't really need the oil for the United States
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  Speaker 3: to continue to be successful. In fact, we'd rather additional
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  Speaker 3: oil might not be the oil patch likes.
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  Speaker 4: H You talked about it, and we've all seen landman.
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  Speaker 4: Now we know what the oil patch likes.
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  Speaker 3: And so yeah, with that in mind, yes, I do
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  Speaker 3: believe the President views, you know, oil is critical and
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  Speaker 3: securing these that resource as pretty important reason.
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  Speaker 2: But you do wonder, like, how much more of.
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  Speaker 3: This was really about a display of American military power
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  Speaker 3: about you know, rare earth materials are just securing a
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  Speaker 3: relatively close by enemy? Is I think an open question.
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  Speaker 3: I like fascinating.
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  Speaker 4: I like the preventing our potential enemies China and others
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  Speaker 4: from getting their hands on venit. I hadn't thought about
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  Speaker 4: that angle at first when I heard about the It
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  Speaker 4: wasn't really an invasion to this point what you call
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  Speaker 4: that operation. But anyway, when I first heard about it,
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  Speaker 4: I thought, oh God, here we go again. The first
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  Speaker 4: forty eight hours look great because of our superior military
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  Speaker 4: and tactical capabilities. But the tough part is locking those
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  Speaker 4: gains down. I hadn't appreciated controlling their oil to make
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  Speaker 4: sure it doesn't go to potential. If we do have
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  Speaker 4: a conflict with China or Russia or both, we'll well,
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  Speaker 4: Russia can rushes energy independent for the or could be,
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  Speaker 4: but with China will be darn will be very glad
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  Speaker 4: that we remove this source of fuel for the Chinese military.
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  Speaker 4: I hadn't thought about that. President's not saying that he can't.
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  Speaker 3: I guess sure, I think, But yeah, the further away
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  Speaker 3: we get, the more clear it becomes that in the
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  Speaker 3: short term this probably does not do much of anything to.
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  Speaker 2: The oil market.
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  Speaker 4: Well, look at the price of.
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  Speaker 3: Oil hasn't moved. It might put further caps on how
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  Speaker 3: much it can appreciate. But the idea of Exxon or
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  Speaker 3: even Chevron, who's already in Venezuela, dramatically increasing oil supply
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  Speaker 3: in the global market anywhere in the next five years,
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  Speaker 3: to me seems incredibly.
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  Speaker 4: We don't know what the rules are going to be
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  Speaker 4: right in Venezuela.
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  Speaker 3: Quick break when we come back, A little bit of
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  Speaker 5: It's Sam for trivia here on the Financial Exchange. Nineteen
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  Speaker 5: states as well as forty nine cities and counties are
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  Speaker 5: increasing their wage floors to at least fifteen dollars per
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  Speaker 5: hour for some or all employees. However, the federal minimum
• 12:52
  Speaker 5: wage will remain at seven dollars in twenty five cents.
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  Speaker 2: So trivia question.
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  Speaker 5: Today, which president introduced the federal minimum wage? Once again?
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  Speaker 5: Which president introduced the federal minimum wage? Be the fifth
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  Speaker 5: person today to text us at six one, seven, three,
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• 13:34
  Speaker 3: We're turning to China now, but now that I'm gonna
• 13:37
  Speaker 3: go back to Venezuela from a moment, did you see
• 13:39
  Speaker 3: the reporting that there was a Chinese delegation of diplomats
• 13:42
  Speaker 3: in the capitol during the US raid and in Venezuela.
• 13:45
  Speaker 4: I did not see that.
• 13:46
  Speaker 2: Yeah, so I don't know. I just found that interesting.
• 13:49
  Speaker 3: Apparently they were they put out a statement like, not
• 13:53
  Speaker 3: exactly saying you shouldn't do this because they're not gonna
• 13:55
  Speaker 3: say that, but like, hey, a heads up to our
• 13:57
  Speaker 3: you know, diplomats would have been nice. I find this
• 14:00
  Speaker 3: all interesting in the context of.
• 14:01
  Speaker 4: Oh, sure, anything else you'd like us to tip you
• 14:04
  Speaker 4: off on.
• 14:05
  Speaker 3: China is a depriving Japan of rare earth supply again
• 14:10
  Speaker 3: based on a comment made by leadership there about Taiwan, and.
• 14:13
  Speaker 2: I do just openly wonder there's this deal.
• 14:16
  Speaker 3: That the president has been working on in Video's ability
• 14:20
  Speaker 3: to sell some of their semiconductors over to China. There
• 14:23
  Speaker 3: will be the H two hundreds. This is at least
• 14:27
  Speaker 3: one generation old of semiconductors. Pretty soon it'll be two
• 14:31
  Speaker 3: generations back of the latest and greatest semi conductors. But again,
• 14:36
  Speaker 3: I've been kind of openly pondering since the events in Venezuela,
• 14:40
  Speaker 3: will there be any retaliation from anyone.
• 14:43
  Speaker 2: Not that China and Venezuela.
• 14:44
  Speaker 3: Are terribly close these days, but the low hanging fruit
• 14:49
  Speaker 3: and the method that they have been using all over
• 14:52
  Speaker 3: the course of the last year has been rare earths,
• 14:55
  Speaker 3: and they're clearly still willing to flex that muscle, at
• 14:58
  Speaker 3: least with Japan. So I don't really have any big
• 15:00
  Speaker 3: opinion on whether or not China is going to actually
• 15:03
  Speaker 3: buy these Nvidia H two hundreds. I think part of
• 15:07
  Speaker 3: it was just getting a deal approved to appease the
• 15:11
  Speaker 3: folks in Washington, and so at least what we can
• 15:14
  Speaker 3: say right now is that there has not been any
• 15:16
  Speaker 3: seeming step back in relations between the US and China
• 15:19
  Speaker 3: as of late.
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  Speaker 2: But I don't think there's much more of a story.
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  Speaker 4: We've got a little more leverage now if we control
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  Speaker 4: the flow of oil out of Venezuela so a bit.
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  Speaker 2: But again, like China has plenty of places they can
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  Speaker 2: buy oil.
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  Speaker 4: That's true. It is a global market.
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  Speaker 3: Like, it's really not a problem for them to go
• 15:35
  Speaker 3: somewhere else, to Russia and buy their oil, or to
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  Speaker 3: go to the Middle East and buy that oil instead.
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  Speaker 2: It's still pretty darn cheap.
• 15:42
  Speaker 3: It's probably not as cheap as Venezuelan oil, but it's
• 15:45
  Speaker 3: still pretty darn cheap, I think, is my overall conclusion
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  Speaker 3: on all of that. So again, I'm not sure how
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  Speaker 3: that affects the overall geopolitical situation.
• 15:56
  Speaker 4: Did you see the listener email regarding share reproach restrictions
• 16:00
  Speaker 4: on defense contractors paying out now dividends. It's very well
• 16:06
  Speaker 4: written and seemingly I know nothing, so to me it
• 16:09
  Speaker 4: seems authoritative. It comes from Don during today's show. You
• 16:12
  Speaker 4: seem to question the legal authority of the president. I
• 16:15
  Speaker 4: actually I was questioning it, but without any basis. I
• 16:20
  Speaker 4: just didn't think the president could tell a publicly traded
• 16:23
  Speaker 4: company what they could pay their shareholders. But the listener
• 16:27
  Speaker 4: points out, and we haven't verified this, but it seems authoritative,
• 16:30
  Speaker 4: So let's take it at face. Value dividends are included
• 16:35
  Speaker 4: in the definition of paraphrasing the listener Don's email a
• 16:38
  Speaker 4: little bit here are included in the restrictions on allowable
• 16:40
  Speaker 4: costs that are detailed for the Department of War and
• 16:42
  Speaker 4: the cost accounting in their cost accounting standards. Again I'm
• 16:46
  Speaker 4: paraphrasing a little bit here. So this listener, again, Don
• 16:51
  Speaker 4: worked in finance at Raytheon and he claims, again we
• 16:57
  Speaker 4: haven't verified it, but it sounds believable to me upon
• 17:00
  Speaker 4: kind of reflection. And I probably should have thought about this,
• 17:03
  Speaker 4: that the federal government can strain defense contractors. Now if
• 17:09
  Speaker 4: you stop contracting with them, I suppose I don't know
• 17:12
  Speaker 4: who else they would who else they'd be making product for,
• 17:16
  Speaker 4: maybe the circumstances would be different, But they apparently can
• 17:21
  Speaker 4: do so according according to this, And it does make
• 17:24
  Speaker 4: when you think about the relationship between the Department of
• 17:28
  Speaker 4: Defense and defense contractors going back to World War Two
• 17:31
  Speaker 4: and the cost plus arrangements we imposed on Ford and others,
• 17:36
  Speaker 4: it does make sense.
• 17:37
  Speaker 3: It would be truly fascinating though, so take it when Yeah,
• 17:40
  Speaker 3: thank you for emailing Don. That's informative and I appreciate it.
• 17:44
  Speaker 3: It would be fascinating at a time where clearly there
• 17:46
  Speaker 3: is additional demand for military resources. To see the stocks
• 17:50
  Speaker 3: not performed terribly well because to your point, right, if
• 17:54
  Speaker 3: you are talking about investing in a company that is
• 17:56
  Speaker 3: barred from paying a dividend or share repurchase, I think
• 18:01
  Speaker 3: that would be a pretty high barrier to entry for
• 18:02
  Speaker 3: some of the Yeah.
• 18:03
  Speaker 4: In some ways, these are quasi public entities.
• 18:06
  Speaker 2: Yep.
• 18:06
  Speaker 4: They have one big customer and the only specs they
• 18:10
  Speaker 4: care about are the specs provided by that customer. So,
• 18:14
  Speaker 4: you know, maybe my fanatical free market approach to things
• 18:19
  Speaker 4: needs to be sort of tempered in light of the
• 18:22
  Speaker 4: unique position of defense contractors.
• 18:24
  Speaker 2: Yeah, taking a but I.
• 18:27
  Speaker 3: Won't you won't do that. Okay, let's see what do
• 18:32
  Speaker 3: we have here that I want to cover next? Ah, Yes,
• 18:34
  Speaker 3: Warner Brothers, the gift that keeps on giving. Warner Brothers
• 18:38
  Speaker 3: board just put out a notice to shareholders that they
• 18:41
  Speaker 3: would recommend against Paramount's hostile takeover bid. What makes this
• 18:46
  Speaker 3: piece additionally interesting is they had previously thrown out there
• 18:49
  Speaker 3: some questions about the trust that was going to fund
• 18:53
  Speaker 3: the eventual purpose purchase of Warner Brothers and be a
• 18:56
  Speaker 3: backstop to it. Paramount then removed any of that concern,
• 19:01
  Speaker 3: and nonetheless, Warner Brothers has come back and said, yeah,
• 19:04
  Speaker 3: we don't care. We're still not recommending shareholders go with
• 19:07
  Speaker 3: this purchase. We still would prefer Netflix. Thus far, neither
• 19:11
  Speaker 3: of these companies have increased their bid. My guess would
• 19:14
  Speaker 3: be that might be what comes next. But first thing
• 19:17
  Speaker 3: is going to be this hostile takeover bid where shareholders
• 19:20
  Speaker 3: will be asked to vote on it, so we will
• 19:22
  Speaker 3: see where that goes. Quick Break Wall Street Watch coming
• 19:25
  Speaker 3: up next, bringing.
• 19:42
  Speaker 1: The latest financial news straight to your radio. Every day,
• 19:46
  Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
• 19:52
  Speaker 1: Time now for Wall Street Watch. A complete look at
• 19:55
  Speaker 1: what's moving market so far today right here on the
• 19:59
  Speaker 1: Financial Exchange Radio Network.
• 20:01
  Speaker 5: After yesterday's bullback, markets today are mixed as traders react
• 20:05
  Speaker 5: to the jobless claims data posted earlier this morning and
• 20:08
  Speaker 5: prepare for tomorrow's all important jobs report for the month
• 20:11
  Speaker 5: of December, due out at eight thirty.
• 20:13
  Speaker 2: In the morning.
• 20:14
  Speaker 5: Right now, the Dow is up six tenths of a percent,
• 20:17
  Speaker 5: or three hundred points higher. SMP five hundred is down
• 20:21
  Speaker 5: only two points at the moment. NASDAC down by over
• 20:24
  Speaker 5: two thirds of a percent, or one hundred and fifty
• 20:26
  Speaker 5: eight points lower. Rusted two thousand up six tenths of
• 20:30
  Speaker 5: a percent, and Your Treasure reeld is up three basis
• 20:33
  Speaker 5: points at four point one seven five percent, and crude
• 20:36
  Speaker 5: oil up nearly two percent higher, now trading just above
• 20:39
  Speaker 5: fifty seven dollars a barrel. Several defense stocks are rallying
• 20:42
  Speaker 5: after President Trump called for a one and a half
• 20:44
  Speaker 5: trillion dollar defense budget in twenty twenty seven, a significant
• 20:48
  Speaker 5: increase from the nine hundred and one billion dollars approved
• 20:51
  Speaker 5: by Congress in twenty twenty six. Shares in Lockheed Martin
• 20:55
  Speaker 5: and Northrook Grumman are up by five percent, while RTX
• 20:58
  Speaker 5: shares are climbing about two percent higher. Meanwhile, Applied Digital
• 21:03
  Speaker 5: stock rallying fifteen percent after the AI infrastructure company beat
• 21:07
  Speaker 5: earnings expectations for its most recent quarter and also saw
• 21:11
  Speaker 5: its revenue roughly triple. Elsewhere, the maker of Modello and
• 21:15
  Speaker 5: Corona Constellation brands reported lower quarterly sales and profit as
• 21:19
  Speaker 5: customers continued to buy less beer. However, the results did
• 21:23
  Speaker 5: beat expectations. Constellation shares are up by four percent. According
• 21:27
  Speaker 5: to Bloomberg, China plans to approve some imports of in
• 21:30
  Speaker 5: videos h two hundred chips as soon as this quarter,
• 21:33
  Speaker 5: and Video shares are down two percent. CrowdStrike announced that
• 21:37
  Speaker 5: it is buying identity management startup SGNL and a deal
• 21:40
  Speaker 5: valued at nearly seven hundred and forty million dollars. CrowdStrike
• 21:44
  Speaker 5: is down by three percent and Apple shares are off
• 21:47
  Speaker 5: over one percent following news that JP Morgan Chase has
• 21:51
  Speaker 5: reached a deal to take over the Tech Giants credit
• 21:53
  Speaker 5: card program from Goldman Sachs. I'm Tucker Silva and that
• 21:58
  Speaker 5: is Wallstreet Watch and the trivia qui we asked in
• 22:00
  Speaker 5: the previous segment was which president introduced the federal minimum wage?
• 22:05
  Speaker 2: That would be FDR.
• 22:07
  Speaker 5: Bill Bill from Lebanon, New Hampshire is our winner today
• 22:10
  Speaker 5: taking ELM a Financial Exchange Show t shirt. Congrats to Bill,
• 22:14
  Speaker 5: and we played trivia every day here in the Financial Exchange.
• 22:17
  Speaker 5: See complete contest rules at Financial Exchange Show dot com.
• 22:21
  Speaker 3: There's some anticipation of a big IPO the year this year,
• 22:24
  Speaker 3: after frankly several years of not much in the way
• 22:27
  Speaker 3: of IPOs. We saw hot new listing year in twenty
• 22:31
  Speaker 3: twenty one during the craze of the backcraze of twenty
• 22:35
  Speaker 3: twenty one that didn't end up going terribly well, but
• 22:37
  Speaker 3: big name companies like SpaceX, Open Ai, and Thropic all
• 22:42
  Speaker 3: rumored to maybe be considering going public this year. And frankly,
• 22:47
  Speaker 3: this has been a trend for the last several decades.
• 22:49
  Speaker 3: This is nothing new, but fewer and fewer companies have
• 22:51
  Speaker 3: been publicly listed. I don't know if you have a
• 22:54
  Speaker 3: timeframe for when that kind of peaked, mark when did
• 22:57
  Speaker 3: like the most When were the most US companies public?
• 23:01
  Speaker 2: Was that late nineties? Would be my guest before Starbanes Oxley.
• 23:05
  Speaker 5: Yeah, we should keep speculating.
• 23:07
  Speaker 4: Yeah, ridders and academic used to be in Florida. I
• 23:10
  Speaker 4: think he's somewhere else is interested. We've referenced this before,
• 23:13
  Speaker 4: at least I have. It was probably years ago, though
• 23:15
  Speaker 4: even I don't remember when. But yeah, there were one hundreds,
• 23:18
  Speaker 4: several hundred throughout the nineties, really peaking in the mid nineties,
• 23:22
  Speaker 4: waning a little bit, never really recovering to those heights.
• 23:27
  Speaker 4: The highest they've been is three hundred and eleven, and
• 23:30
  Speaker 4: this was in twenty twenty one, and then it's slowed
• 23:32
  Speaker 4: to a trickle. So yeah, dramatic slow down, Mike from
• 23:34
  Speaker 4: the from the last century.
• 23:36
  Speaker 2: And there's a number of reasons.
• 23:37
  Speaker 3: One is the cost of being a public company have
• 23:40
  Speaker 3: increased over time. All the accounting things you need to do,
• 23:42
  Speaker 3: the audits that you need to do in order to
• 23:45
  Speaker 3: be public are costly, especially for a smaller sized company,
• 23:48
  Speaker 3: and the ability of private funds to keep companies private
• 23:52
  Speaker 3: for longer has grown over a course of time.
• 23:55
  Speaker 2: So private equity firms.
• 23:56
  Speaker 3: Allison points out something that I wouldn't have really thought of,
• 24:00
  Speaker 3: but you know, a real IPO boom, She says, this
• 24:04
  Speaker 3: is Alison Schraeger from from Bloomberg. That is could spell
• 24:08
  Speaker 3: trouble for private equity and I have a tough time
• 24:10
  Speaker 3: making sense of that because IPO is one of the
• 24:13
  Speaker 3: methods that private actually equity actually realizes the gains on
• 24:17
  Speaker 3: their built companies that they have acquired at a smaller
• 24:20
  Speaker 3: it's their liquidity. And so why in her mind could
• 24:23
  Speaker 3: that be a problem for private equity investors.
• 24:27
  Speaker 4: Well, as the name suggests, this is these are privately
• 24:31
  Speaker 4: traded security's known by pension funds, other institutional investors and
• 24:34
  Speaker 4: maybe wealthy investors too. These are valued according to what
• 24:39
  Speaker 4: the accountants and auditors who work for or are contracted
• 24:43
  Speaker 4: by private equity managers to assess.
• 24:48
  Speaker 3: It's an important consideration, right, Like the reason we know
• 24:51
  Speaker 3: that Nvidia is worth, however many trillion dollars is because
• 24:55
  Speaker 3: we know there are certain number of shares out standing
• 24:57
  Speaker 3: on their trade off.
• 24:58
  Speaker 4: We all say so, yeah, it's it's.
• 25:00
  Speaker 2: That's not how firms work, transparent privately.
• 25:03
  Speaker 4: Private equity firms valued it what the manager effectively decides.
• 25:07
  Speaker 4: Schrager's point is if they decide to use the IPO
• 25:11
  Speaker 4: channel to exit, which every private equity manager has to do,
• 25:14
  Speaker 4: they don't want to own a company forever, they.
• 25:16
  Speaker 2: Doesn't need to go by IPO. But they could sell
• 25:18
  Speaker 2: it to any other.
• 25:19
  Speaker 4: Yea, they could, but generally yeah, yeah.
• 25:22
  Speaker 2: It's the story. It's usually going IPO.
• 25:25
  Speaker 4: But yeah, that's gonna be the They're going to have
• 25:28
  Speaker 4: to mark to reality that they call it marked to
• 25:31
  Speaker 4: market when well, that's that's one way anyway to change
• 25:34
  Speaker 4: the valuation. They're going to have to uh face the
• 25:38
  Speaker 4: music at some point. Anyway. If they've been carrying something
• 25:41
  Speaker 4: on their books at an artificially high at an inflated
• 25:44
  Speaker 4: and there's nothing in the city is going on, they
• 25:46
  Speaker 4: may just been overly optimistic, or markets may have changed.
• 25:49
  Speaker 5: This is a message for families who've put who've been
• 25:53
  Speaker 5: putting off their estate planning from the Elder Law Attorney's
• 25:56
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• 25:59
  Speaker 5: long term care is that if you didn't plan five
• 26:02
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• 26:06
  Speaker 5: When a health crisis hits and a loved one needs
• 26:08
  Speaker 5: nursing home care, many families panic can start writing checks
• 26:11
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• 26:14
  Speaker 5: The reality is there may still be meaningful legal options
• 26:19
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• 26:23
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• 26:27
  Speaker 5: It breaks down what the five year look back really
• 26:30
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• 26:57
  Speaker 1: The proceeding was paid for, and the views expressed are
• 26:59
  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
• 27:01
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• 27:04
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  Speaker 1: not affiliated.
• 27:08
  Speaker 3: Tucker likes putting stories into the stack that I'm interested in.
• 27:11
  Speaker 3: Ford is entering the race to offer eyes off driving technology,
• 27:16
  Speaker 3: starting with an alleged thirty thousand dollars EV in twenty
• 27:19
  Speaker 3: twenty eight, which I'm not buying it. Plenty of these
• 27:21
  Speaker 3: companies have said they're going to offer cars for thirty
• 27:23
  Speaker 3: thousand dollars and don't get to that price point. What
• 27:26
  Speaker 3: I do find exciting is I think that we are
• 27:28
  Speaker 3: actually getting close to cars that are pretty good at
• 27:31
  Speaker 3: driving themselves. We've seen it with way Mo and what
• 27:34
  Speaker 3: they're able to do on those vehicles, but by all estimates,
• 27:38
  Speaker 3: those things cost a good one hundred thousand dollars to
• 27:40
  Speaker 3: produce and so not exactly a retail car. Mercedes Benz
• 27:45
  Speaker 3: has gotten there with one of their self driving technologies,
• 27:49
  Speaker 3: but it's very limited in terms of where it's able
• 27:52
  Speaker 3: to go. And then the next level down you've got
• 27:54
  Speaker 3: the Tesla full self driving, You've got the Chevy Super
• 27:58
  Speaker 3: Crews and the Forward Blue Cruise.
• 28:02
  Speaker 2: I believe it is all of these are.
• 28:04
  Speaker 3: I think they're called level two driving systems where your
• 28:08
  Speaker 3: eyes have to remain on the road, but you don't
• 28:10
  Speaker 3: necessarily need to control the steering wheel. The vehicle will
• 28:14
  Speaker 3: go so far as to change lanes for you and
• 28:16
  Speaker 3: to move over when it's time for you to exit,
• 28:19
  Speaker 3: and slow the vehicle down when it's time to exit,
• 28:21
  Speaker 3: bring it to a full stop, start it back up again.
• 28:24
  Speaker 3: So that's where the technology is now, and Ford saying, hey,
• 28:27
  Speaker 3: by twenty twenty eight, we want to be able to
• 28:28
  Speaker 3: step that up to a new level.
• 28:30
  Speaker 2: And frankly, you know, I.
• 28:32
  Speaker 3: Would say that Ford, Tesla, and Chevy are probably the
• 28:37
  Speaker 3: front runners today in this technology. And I guess I
• 28:42
  Speaker 3: wouldn't necessarily trust Elon Musk's statements on the future of
• 28:46
  Speaker 3: this because he'd been probably saying to deliver self driving
• 28:48
  Speaker 3: cars for the better part of a decade. But it
• 28:51
  Speaker 3: does seem like we're getting pretty close to this. Does
• 28:54
  Speaker 3: this matter to either of you?
• 28:56
  Speaker 4: Like this piece of technology where the demand is for it?
• 28:59
  Speaker 4: Is this something people are clamoring for and would don't
• 29:02
  Speaker 4: have to be clamoring for it. That will you make
• 29:04
  Speaker 4: long drives once a.
• 29:05
  Speaker 2: Week on the highway.
• 29:07
  Speaker 5: It would be extremely useful for me.
• 29:09
  Speaker 4: Doesn't doesn't. Well, adaptive cruise control gets you part of
• 29:12
  Speaker 4: the way there, you still have to keep your hands
• 29:13
  Speaker 4: on the wheel.
• 29:15
  Speaker 3: Yeah, I've found the I found that the adaptive cruise
• 29:18
  Speaker 3: control varies greatly depending on the make. My adaptive crewe
• 29:22
  Speaker 3: control in my Toyota is terrible and cannot keep me
• 29:25
  Speaker 3: in the lane, whereas my Honda's really good.
• 29:27
  Speaker 4: So it steers for you as well. It doesn't just
• 29:28
  Speaker 4: adjust speed.
• 29:30
  Speaker 3: Yeah, it's supposed to also keep you centered in the lane. Okay,
• 29:33
  Speaker 3: that's what some of these systems do. So yeah, to me,
• 29:39
  Speaker 3: I actually think that there's a consumer demand thing here.
• 29:42
  Speaker 2: But I do also wonder about us how I.
• 29:44
  Speaker 4: Spread it is though maybe it doesn't have to be widespread.
• 29:47
  Speaker 2: I don't.
• 29:47
  Speaker 3: I think it's pretty niche based on what I've seen,
• 29:49
  Speaker 3: because when I went out there to shop for it,
• 29:51
  Speaker 3: it was not a sales point that the people were
• 29:53
  Speaker 3: making that Hey, this is a really cool technology.
• 29:55
  Speaker 5: OK.
• 29:55
  Speaker 4: At some point it's going to be standard. This will
• 29:57
  Speaker 4: get cheap and easy to and at some point, well
• 30:00
  Speaker 4: standard means you can't refuse it, but you don't have
• 30:03
  Speaker 4: to eat like Lake cruise Control. It became cheaper to
• 30:06
  Speaker 4: just add it to every vehicle than to discriminate and
• 30:09
  Speaker 4: put it in only higher tier levels.
• 30:10
  Speaker 3: To me, where the money is, though, it is not
• 30:12
  Speaker 3: some ev that you sell to Tucker, Like, if this
• 30:16
  Speaker 3: is truly usable, then there's massive implications for long haul trucking,
• 30:22
  Speaker 3: right like that is the single one of the biggest
• 30:24
  Speaker 3: costs of moving goods across this country is paying the
• 30:27
  Speaker 3: people to drive the trucks.
• 30:28
  Speaker 2: Around, and they're limited in terms of their hours. It
• 30:31
  Speaker 2: is a stressful job.
• 30:32
  Speaker 3: And this technology, if it's really usable, put into some
• 30:36
  Speaker 3: of those semi trucks makes a big difference. So that's
• 30:40
  Speaker 3: to me where the money is to be made on this,
• 30:41
  Speaker 3: not on selling you me or Tucker a new car,
• 30:43
  Speaker 3: which I'm buying one with some of this technology, and
• 30:46
  Speaker 3: because I find it really fascinating and interesting.
• 30:48
  Speaker 2: But yeah, well we will see. I do feel like
• 30:52
  Speaker 2: we are getting pretty close.
• 30:54
  Speaker 3: And my mind shifted on that after going into a
• 30:58
  Speaker 3: way mow and just seeing how how frankly impressive it
• 31:01
  Speaker 3: was to be able to deliver me to where I
• 31:03
  Speaker 3: was going right from the airport without a human being there.
• 31:08
  Speaker 3: Quick Break when we come back. Bit a Stack Roulette
• 31:10
  Speaker 3: is next on the Financial Exchange.
• 31:12
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• 31:26
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• 31:30
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• 31:40
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  Speaker 5: This segment of The Financial Exchange is brought to you
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  Speaker 5: by the US Virgin Islands Department of Tourism. Experience America's
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• 32:22
  Speaker 3: I'm gonna preface with this next story with I have
• 32:24
  Speaker 3: been a dog owner my own life. Love dogs, love cats,
• 32:29
  Speaker 3: love animals, pets of all sorts.
• 32:32
  Speaker 2: But this seems like a bad idea.
• 32:34
  Speaker 3: Massachusetts is considering passing a few initiatives that the MSPCA
• 32:40
  Speaker 3: is launching. The bills would eliminate breed specific bands in
• 32:44
  Speaker 3: public housing and condo bylaws. They would add pet friendly
• 32:48
  Speaker 3: emergency shelter terms, remove breed bands from insurance policies, cappet fees,
• 32:52
  Speaker 3: and support elderly pet owners. I'm not gonna get into
• 32:55
  Speaker 3: the breed stuff. I think there's plenty of evidence to
• 32:57
  Speaker 3: support that. You know, insurance companies and others, and private
• 33:02
  Speaker 3: owners of real estate should have the right to say, hey,
• 33:06
  Speaker 3: we're not comfortable with dogs over a certain weight or
• 33:10
  Speaker 3: of a certain breed based on our perception.
• 33:13
  Speaker 2: Of possible problems. I don't really see that as an issue.
• 33:17
  Speaker 3: Furthermore, I recognize that trying to find an apartment that
• 33:23
  Speaker 3: will accept your dog is challenging, but as a landlord,
• 33:28
  Speaker 3: I should be able to say no, right like.
• 33:32
  Speaker 2: That is going to do.
• 33:33
  Speaker 3: Is there any debate that an animal in the apartment
• 33:36
  Speaker 3: is going to do additional wear and tear to the apartment.
• 33:39
  Speaker 2: Right like?
• 33:40
  Speaker 3: I should be able as a private homeowner to say no,
• 33:43
  Speaker 3: I'm not renting to somebody with a dog. I love dogs,
• 33:46
  Speaker 3: but I don't want the additional upkeep. And capping the
• 33:50
  Speaker 3: pet fees is saying that, no, you can't go and
• 33:52
  Speaker 3: do that. And so yeah, I know that we have
• 33:56
  Speaker 3: a weird approach to housing in Massachusetts and rules, but
• 33:59
  Speaker 3: these are private owners of real estate that are making
• 34:01
  Speaker 3: decisions about how to rent out their properties. They're condo
• 34:04
  Speaker 3: owners that want to create rules that fit the most residents.
• 34:07
  Speaker 3: And passing a state law to say you can or
• 34:09
  Speaker 3: can't do this based on specific pet breeds or types
• 34:12
  Speaker 3: of pets or this is just crazy. This is this
• 34:17
  Speaker 3: is you know, tie it in with the proposal to
• 34:22
  Speaker 3: put in new rent control in Massachusetts and just make
• 34:26
  Speaker 3: it impossible to own rental property in Massachusetts.
• 34:29
  Speaker 2: And I don't know if there's anything to add.
• 34:31
  Speaker 4: On that market now. I think, again, what do we
• 34:33
  Speaker 4: do a good free market framework? Serve hul here if
• 34:37
  Speaker 4: somebody owned. Now, this is this is a this is passe.
• 34:39
  Speaker 4: I'm going to sound very you know, nineteenth century year.
• 34:42
  Speaker 4: But you own the property, you should be able to
• 34:43
  Speaker 4: do with it as you please, unless you're hurting somebody else.
• 34:46
  Speaker 4: If that means I don't want to rent to a
• 34:49
  Speaker 4: guy because he's Italian American and they're loud like me,
• 34:53
  Speaker 4: then I should be able to exclude them. That would
• 34:55
  Speaker 4: be legal, probably definitely. I use Italian American as an
• 34:59
  Speaker 4: example because I am on both sides, and I feel
• 35:01
  Speaker 4: like I can safely use that as an example. But
• 35:03
  Speaker 4: I am sorry.
• 35:04
  Speaker 3: If I want to have an apartment where I have
• 35:05
  Speaker 3: no smoke detectors also going to be a problem.
• 35:07
  Speaker 2: And I agree that there should story though.
• 35:10
  Speaker 4: Yeah, that's that's health, safety, welfare, that's that's that's that's
• 35:14
  Speaker 4: traditional police power stuff that states have been able to
• 35:17
  Speaker 4: regulate for a long time. But when it comes to lifestyles,
• 35:21
  Speaker 4: including dog ownership, I too am a dog owner. If
• 35:24
  Speaker 4: he if he wants to peel over my hardwood floor
• 35:27
  Speaker 4: and make it look like a leopard skin pattern because
• 35:30
  Speaker 4: it's all stayed, now, that's that's on me. I put
• 35:32
  Speaker 4: up with that, But I would not expect a landlord
• 35:34
  Speaker 4: to now I would I would invoke the right to
• 35:37
  Speaker 4: choose here. The right to choose what you do with.
• 35:39
  Speaker 2: Your having a property is not some inane human right.
• 35:43
  Speaker 3: If you're gonna have a pet and you're gonna rent,
• 35:45
  Speaker 3: it's gonna cost a heck of a lot more and
• 35:46
  Speaker 3: it's gonna be tougher to find a place.
• 35:48
  Speaker 2: Just's just.
• 35:49
  Speaker 4: It's another example of government intervening in an area where
• 35:51
  Speaker 4: it frankly shouldn't. And this is now we're talking about
• 35:54
  Speaker 4: state government. I was I was ranting about the federal
• 35:56
  Speaker 4: government earlier, but the same general polosophy here I think.
• 36:01
  Speaker 2: Can should apply.
• 36:03
  Speaker 4: I think so, Mike, And it's not. Look, we all
• 36:06
  Speaker 4: love the cuddly You see the pictures in the article,
• 36:08
  Speaker 4: and it's adorable little dogs. And it's the implication is
• 36:13
  Speaker 4: I didn't read the whole thing. The implication is cruel
• 36:15
  Speaker 4: landlords are pushing these people out onto the street. But
• 36:19
  Speaker 4: like you said, why would you get into that business
• 36:22
  Speaker 4: if you couldn't do what you if you can't write,
• 36:24
  Speaker 4: if you can't control what you charge, which is what
• 36:27
  Speaker 4: rent control does.
• 36:28
  Speaker 3: The idea of forcing this on condo associations and homeowners
• 36:33
  Speaker 3: is just preposterous to me. But anyway, what do you
• 36:35
  Speaker 3: have for us for stack?
• 36:36
  Speaker 2: Really?
• 36:36
  Speaker 4: Oh, trade. You'll see headlines today, it's a quickie. You'll
• 36:39
  Speaker 4: see headlines about the trade deficit falling by forty percent
• 36:42
  Speaker 4: in October, and that's true relative to September. But a
• 36:46
  Speaker 4: couple things. Firstly, in the year two October, the trade
• 36:51
  Speaker 4: deficit actually went up by eight percent relative to the
• 36:55
  Speaker 4: year before. I don't necessarily think that is a bad thing.
• 36:58
  Speaker 4: That means we bought more from a broad because we
• 37:01
  Speaker 4: wanted to. Then we sold abroad in terms of goods
• 37:04
  Speaker 4: and services. In exchange for that, foreigners bought US equities
• 37:07
  Speaker 4: and US treasuries or just held on to those dollars.
• 37:10
  Speaker 4: So if you're thinking, is well, an increase in tariffs
• 37:13
  Speaker 4: are responsible for that, I'm afraid that's probably not true.
• 37:17
  Speaker 4: There are countries with high tariffs that have no trade
• 37:20
  Speaker 4: deficit or a trade surplus. There are countries with high
• 37:23
  Speaker 4: tariffs that have big trade deficits. There's no correspondence.
• 37:26
  Speaker 3: Interestingly, and keep in mind, too big story that we
• 37:31
  Speaker 3: haven't really covered yet but most certainly will be, is
• 37:34
  Speaker 3: whether this what the Supreme Court does in terms of
• 37:36
  Speaker 3: ruling on these.
• 37:37
  Speaker 2: Terriffs that comings.
• 37:38
  Speaker 4: They are tomorrow.
• 37:39
  Speaker 3: It's coming January or early February. I don't think tomorrow,
• 37:42
  Speaker 3: but it is expected.
• 37:43
  Speaker 2: This month or I thought I heard late January.
• 37:45
  Speaker 3: Yeah, January or early next February is the expectations.
• 37:49
  Speaker 4: When they start releasing opinions. Excuse me, okay, yeah.
• 37:52
  Speaker 3: So, and in the meantime, all the companies that are
• 37:55
  Speaker 3: subject to these tariffs are ssuing the government to try
• 37:57
  Speaker 3: and get their reimbursements if they get ruled against. So
• 38:00
  Speaker 3: a lot more to come on the future of the
• 38:02
  Speaker 3: current tariffs that are in place. All the time we
• 38:04
  Speaker 3: have markets remain in mixed territory here. As we close
• 38:07
  Speaker 3: out the show, we'll have a recap for you tomorrow
• 38:09
  Speaker 3: as well as a jobs report on a job's Friday
• 38:12
  Speaker 3: here on the Financial Exchange had a great day of folks.