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Can Trump really bring the US to a new economic golden age? · The Financial Exchange Show

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Speaker 1: Zada and Mike armstrow.
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Speaker 2: Our two here on the Financial Exchange, and after a
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Speaker 2: big move up yesterday, stocks are largely treading water today.
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Speaker 2: The Dow is off thirty five points, less than a
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Speaker 2: tenth of a percent, the S and P is up
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Speaker 2: seven points about a tenth of a percent, and the
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Speaker 2: NASDAG is down four point so basically flat. So not
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Speaker 2: a ton of overall movement after all of the fun
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Speaker 2: we got to have yesterday. Tenure Treasury also not moving
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Speaker 2: a ton, but sliding down another two point six basis
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Speaker 2: points to four point two six seven percent. According to
1:36
Speaker 2: Mortgage News Daily, the average thirty year fixed mortgage rate
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Speaker 2: nationally dropped from seven and a quarter to seven point
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Speaker 2: one to three percent yesterday with interest rates sliding. So
1:46
Speaker 2: that's some good news for the housing market, but still
1:48
Speaker 2: a lot more is needed, I think, in order to
1:50
Speaker 2: get it to where you'd like to see it. Oil
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Speaker 2: down ninety nine cents barrel to seventy nine ZHO five
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Speaker 2: on West Texas Intermediate, but triple a national average. Gas
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Speaker 2: prices picking up the fact that hey, gas prices or
2:02
Speaker 2: rather oil prices had risen over the last couple weeks,
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Speaker 2: and so up another one point four cents to three
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Speaker 2: ten and three tenths of ascent. Based on how we've
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Speaker 2: seen the correlation here, you're probably heading somewhere into that
2:15
Speaker 2: three twenty to three twenty five range over the next
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Speaker 2: couple weeks as you see a little bit of ketchup
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Speaker 2: on that side, and then we've got gold up thirty
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Speaker 2: two to sixty an ounce to twenty seven fifty and
2:29
Speaker 2: forty cents Mike. Today, Scott Bessett heads to Capitol Hill
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Speaker 2: to kick off his confirmation hearing. What What are the
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Speaker 2: things that we're gonna be watching in this hearing? I mean,
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Speaker 2: I'll be one hundred percent honest, I'm not going to
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Speaker 2: watch it because I just I can't. There's so much
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Speaker 2: grand standing and everything that happens in these things. But
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Speaker 2: what are we expecting best to say and what are
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Speaker 2: some of the key points that we'd expect to hear
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Speaker 2: from them?
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Speaker 3: Well, it's also literally occurring right now. It would be
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Speaker 3: tough for you to do both at the same time.
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Speaker 4: I can multitask.
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Speaker 5: First and foremost.
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Speaker 3: If you're expecting a repeat of Pete Hegs's confirmation hearing,
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Speaker 3: then don't This is going to be considerably more boring.
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Speaker 3: This person is very clearly qualified, and at least I
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Speaker 3: personally have heard no allegations of the types of things
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Speaker 3: that heg Seth was facing. So if they do make
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Speaker 3: a big, grand standing push, which I'm sure there will
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Speaker 3: be some of that in terms of his background coming
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Speaker 3: from the hedge fund industry and such, but I do
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Speaker 3: not expect a whole lot of controversy over this pick.
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Speaker 3: He is immensely qualified to do the job and doesn't
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Speaker 3: really have much that I've seen in the way of
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Speaker 3: controversy in his background.
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Speaker 2: So I think that this is going to be something
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Speaker 2: where remember, Beston has a few key things that he
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Speaker 2: wants to focus on. The first is figuring out a
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Speaker 2: way to get the annual budget deficit down from about
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Speaker 2: six percent today down to about three percent during the
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Speaker 2: course of Trump's term. So if you look at the
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Speaker 2: annual deficit as a percentage.
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Speaker 4: Of GDP, if you take a look at.
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Speaker 2: You know where we are, you know, sitting there right now,
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Speaker 2: the twenty twenty three number against the last full year
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Speaker 2: that we have the data for right now was about
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Speaker 2: six point one percent. The year before that, twenty two
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Speaker 2: was five to two. Remember that the years before that
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Speaker 2: twenty twenty was, you know, fourteen percent. That was right
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Speaker 2: in the middle of the pandemic, and then twenty one
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Speaker 2: was about eleven coming out of it. But if you're
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Speaker 2: talking about targeting a three percent deficit on an annual basis, Mike,
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Speaker 2: do you know what the last year is that we
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Speaker 2: had a deficit below three percent?
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Speaker 5: Twenty fifteen? Correct, I'm looking at.
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Speaker 3: The data, so I did cheat. But I have the
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Speaker 3: same information ahead ahead of me here. And to let
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Speaker 3: me ask you.
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Speaker 2: This, prior to twenty fifteen and twenty fourteen, which was
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Speaker 2: also below three percent, what was the last year that
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Speaker 2: we had a below three percent deficit?
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Speaker 3: I won't actually look at the data here. It would
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Speaker 3: be pre Great Financial Crisis, so I don't I don't
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Speaker 3: know two.
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Speaker 4: Thousand and seven.
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Speaker 2: Yeah, So the thing that we're working against here is
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Speaker 2: that if you look at the last sixteen years of
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Speaker 2: data that we have, two of them have had deficits
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Speaker 2: under three percent, two out of sixteen. Now, this encompasses
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Speaker 2: the back two years of the Bush administration, eight years
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Speaker 2: of the Obama administration, four years of Trump, and four
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Speaker 2: years of Biden. So it's been across you know, multiple
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Speaker 2: different administrations with multiple different congresses, and the trend has
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Speaker 2: still been unambiguously in one direction, So bezens up against
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Speaker 2: an awful lot of momentum the other way. Uh, if
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Speaker 2: you again, even like even if you look at the
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Speaker 2: nineteen nineties as an example, I'll just read you off
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Speaker 2: the annual deficits here. I just want to give some
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Speaker 2: context on this, because this is going to be there's
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Speaker 2: some work that has to be done, especially since the
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Speaker 2: demographics are worse than they were in the nineties, and
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Speaker 2: the big driver of this continues to be Social security
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Speaker 2: and Medicare. Nineteen ninety the deficit was three seven ninety one,
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Speaker 2: four to three ninety two, four four ninety three, three
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Speaker 2: seven ninety four, two seven ninety five to one ninety
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Speaker 2: six one three ninety seven point two ninety eight ninety nine,
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Speaker 2: and two thousand surplus is two thousand and one a
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Speaker 2: surplus as well, and then back to deficits. So even
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Speaker 2: in the nineties, until you add kind of that that
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Speaker 2: tech bubble at the back end, you still were consistently
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Speaker 2: running north of three percent deficits for much of the
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Speaker 2: first half of that decade. So I just again, I'm
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Speaker 2: just pointing out where we're coming from I'm not saying
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Speaker 2: it's impossible. I'm just saying this is a big one
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Speaker 2: to try to get back there, and it may or
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Speaker 2: may not be accomplishable within Trump's four year term.
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Speaker 3: Should we fundamentally take this any seriously then, any more
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Speaker 3: seriously then than Elon Musk's promised to cut two trillion
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Speaker 3: dollars worth of government spending. Because the quote that just
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Speaker 3: shut up on the television from a question post to
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Speaker 3: Scott Best, and his answer was that the US economy
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Speaker 3: faces calamity if taxes go back up. How do you
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Speaker 3: get the deficit down below three percent? If you're talking
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Speaker 3: about financial calamity, should tax you know, should revenues increase?
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Speaker 2: The big thing that this, this is the math if
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Speaker 2: you don't want to touch social Security and Medicare, which
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Speaker 2: I'm gonna start with that premise because no one wants
7:30
Speaker 2: touch social Security and medicare right now. Second you start
7:32
Speaker 2: talking about, like the one thing we just did on
7:35
Speaker 2: social Security was increased benefits.
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Speaker 4: For a subset of people.
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Speaker 5: Yeah, correct, So.
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Speaker 2: I'm gonna start with the premise of don't touch social
7:41
Speaker 2: Security and Medicare if you do the math out in
7:44
Speaker 2: order to get to a three percent deficit. You have
7:47
Speaker 2: to cut all non defense discretionary spending by about thirty percent.
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Speaker 2: That's what you have to do. I'm not saying that's good, bad,
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Speaker 2: or ugly. I'm just saying that's what you have to do.
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Speaker 2: Do we think that's going to happen? I will tell you, Mike,
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Speaker 2: I don't.
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Speaker 5: I don't. Yeah, I don't do I think now?
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Speaker 2: Do I think that maybe you can make some progress
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Speaker 2: around the edges and go from a six percent deficit
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Speaker 2: down to.
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Speaker 4: Five. Sure, can you even get into the forest. Maybe?
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Speaker 2: I'm open to possibilities, But there's so much institutional momentum
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Speaker 2: going the other way that until faced with the actual
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Speaker 2: reckoning of hey, here's the problem and it's immediate and
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Speaker 2: it's right now, I don't know. I'm just kind of
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Speaker 2: I'm inherently skeptical that Congress makes any big changes ever,
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Speaker 2: just because like there's a pretty long history of things
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Speaker 2: moving slowly, in particular for the last twenty years or so.
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Speaker 3: Is this the man of economic reason coming into Is
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Speaker 3: this the voice that we point to in the Trump
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Speaker 3: administration of you know, fundamental reason when it comes to
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Speaker 3: the economy, and uh, you know when when outlandish requests
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Speaker 3: on TEARKT proposed, he's peeling them back or how much
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Speaker 3: is he on the same page with other Trump advisors
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Speaker 3: when it comes to the economy.
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Speaker 2: Well, let's let's talk about this, because like the voice
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Speaker 2: of economic reason implies that, hey, tariffs are not reasonable,
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Speaker 2: and I'm going to let I'm going to let them,
9:19
Speaker 2: like at least try to see how this goes. Because
9:22
Speaker 2: Beston is someone who's on record is saying within the
9:24
Speaker 2: last year that he believes tariffs can be used positively
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Speaker 2: in order to impact trade and boost the US economy
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Speaker 2: in certain areas. So I'm not gonna work from the
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Speaker 2: premise that it's unreasonable to move forward with tariffs. I
9:38
Speaker 2: think Besont probably is the smartest guy in the like,
9:42
Speaker 2: but he's a smart dude like you. I've talked to
9:46
Speaker 2: a number of people that have worked either with him
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Speaker 2: or adjacent to him and things, and there's like whether
9:51
Speaker 2: you're talking to academics or people in the financial industry
9:54
Speaker 2: or even regulators, it's it's basically, yeah, he's a smart
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Speaker 2: guy who knows his stuff, and he's not going to
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Speaker 2: You're not going to be able to pull the.
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Speaker 4: Wool over on him.
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Speaker 2: Whether you're talking about, you know, anyone that he's dealing with.
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Speaker 2: And so I think the thing that I look at
10:11
Speaker 2: here is he's someone who is eminently qualified, very capable,
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Speaker 2: and I think if there's someone that you do want
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Speaker 2: in this position where you're trying to make large, potentially
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Speaker 2: seismic changes in how the US conducts business, I think
10:27
Speaker 2: he's the guy. I think he is very, very qualified
10:31
Speaker 2: and capable here, and I think we're going to have
10:34
Speaker 2: to again just see how he's able to try to
10:39
Speaker 2: balance all these different things that he wants to do,
10:44
Speaker 2: and it's going to be a huge challenge. There is
10:49
Speaker 2: a very narrow path that you can follow and potentially
10:52
Speaker 2: have these things work successfully, in my opinion, but there
10:56
Speaker 2: is a path that you can follow in order to
10:58
Speaker 2: try to get all these things to happen. Whether he
11:01
Speaker 2: can be the one coordinating it and end up doing it,
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Speaker 2: I think that's going.
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Speaker 4: To be the question.
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Speaker 2: But he is incredibly qualified for the position, and I
11:11
Speaker 2: think as someone who has the potential to do a
11:13
Speaker 2: fantastic job there. We're just gonna have to see how
11:15
Speaker 2: it plays out because there are so many balls that
11:17
Speaker 2: they are potentially juggling. Agreed, Let's take a quick break here.
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Speaker 2: When we return, let's see we want to talk more
11:29
Speaker 2: about spending and things like that, and do we already
11:31
Speaker 2: kind of cover that?
11:32
Speaker 3: Move along? How about some social security talk? Yeah, let's
11:34
Speaker 3: talk social security after this.
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12:04
Speaker 6: Time for trivia here on the Financial Change On this
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12:47
Speaker 2: According to a forecast by the Senior Citizens League, the
12:50
Speaker 2: Social Security cost of living adjustment could drop to two
12:54
Speaker 2: point one percent in twenty twenty six.
12:56
Speaker 4: That would be the lowest COLA in five years.
13:00
Speaker 2: Another forecast that they have, according to independent Social security
13:03
Speaker 2: and Medicare analyst Mary Johnson, thinks that it might be
13:06
Speaker 2: as low as point zero six percent. Now, Mike this
13:09
Speaker 2: all basically I have a question, are any of these
13:12
Speaker 2: people better at forecasting inflation than the rest of us?
13:16
Speaker 4: Well, here, here's the thing, because that's what cola is.
13:20
Speaker 4: They're not.
13:21
Speaker 2: And it's again, that's basically what it's saying is, Hey,
13:25
Speaker 2: if inflation's lower, your cola will be lower. If inflation's higher,
13:28
Speaker 2: it will be higher. But we don't really have the
13:31
Speaker 2: track records of these groups in terms of how well
13:35
Speaker 2: they've predicted them a year out previously.
13:37
Speaker 3: Yeah, we got a two and a half percent bump
13:39
Speaker 3: for twenty twenty five. We know that much for recent
13:42
Speaker 3: search security recipients. One fun little bug about all of
13:45
Speaker 3: this that people that were on security in the twenty
13:48
Speaker 3: tens decades will let you know about was there was
13:50
Speaker 3: a brief period of time there where the cost of
13:53
Speaker 3: living adjustment was so low because of inflation that they
13:56
Speaker 3: actually they actually yeah, there were a few years where
13:58
Speaker 3: it's negative, but there were even years whereas pause. But
14:00
Speaker 3: because Medicare rates went up faster than the increase on
14:04
Speaker 3: Social Security, a lot of recipients received a few years
14:08
Speaker 3: of no increases on Social Security until they finally paid
14:11
Speaker 3: back that Medicare increase that went into effect. And so look,
14:15
Speaker 3: I know that that's not a fun issue for seniors,
14:19
Speaker 3: but I will take that over eight percent inflation any
14:22
Speaker 3: day of the week. And that's that's what you're talking
14:24
Speaker 3: about when it comes to all of this. But there's
14:26
Speaker 3: been a lot of updates regarding Social Security and a
14:30
Speaker 3: lot of conjecture about future updates. You know, the obviously
14:33
Speaker 3: the Social Security Fairness Act just went into place, and
14:35
Speaker 3: so if you worked for a you know, source of
14:39
Speaker 3: income that did not pay to Social Security for a
14:42
Speaker 3: period of time, definitely understand how you're going to be
14:45
Speaker 3: affected there, because there's still a lot of confusion on
14:47
Speaker 3: that one. But we actually got an email, Chuck, I
14:49
Speaker 3: think this morning about Social Security taxation, and maybe we
14:53
Speaker 3: didn't do a good job, good enough job explaining this,
14:56
Speaker 3: But the question was you guys said social scurity taxes
14:59
Speaker 3: on retirement benefit do you Retirement benefits include pensions, irais
15:03
Speaker 3: and social Security income And I want to be rather
15:07
Speaker 3: clear about this. So when you are working, you have
15:12
Speaker 3: Social Security taxes and Medicare taxes coming out of your payroll,
15:16
Speaker 3: half of it's paid by the employee, half of it's
15:18
Speaker 3: paid by the employer, or in the way of FIKA
15:21
Speaker 3: FIICO does not exist on any of these other income
15:25
Speaker 3: sources in retirement, whether it's pensions, iras.
15:27
Speaker 5: Or social security. So hopefully that clears that piece up.
15:31
Speaker 3: What does exist and has existed since nineteen eighty three
15:35
Speaker 3: is income taxes on social Security benefits, and specifically that
15:41
Speaker 3: law went into effect in eighty three, taxing up to
15:43
Speaker 3: fifty percent of benefits. Now it's been updated to include
15:47
Speaker 3: for higher income earners up to eighty five percent of
15:49
Speaker 3: their Social Security benefits would become taxable. And to be clear,
15:54
Speaker 3: the revenue generated from those taxes does go directly into
15:58
Speaker 3: the trust fund. Is there anything I'm missing on all
16:00
Speaker 3: that or misdescribed there, because I know there's still a
16:03
Speaker 3: lot of confusion about how all this works.
16:05
Speaker 4: No, I mean I think those are the big big
16:08
Speaker 4: items there.
16:08
Speaker 2: Obviously, Look that we've talked about, you know, the Social
16:12
Speaker 2: Security system and it's long term instability, kind of even
16:16
Speaker 2: intermediate term instability at this point. But that's something where
16:20
Speaker 2: if you're trying to figure out, hey, how are you
16:22
Speaker 2: know what's taxable to me today? It's not really a
16:26
Speaker 2: relevant question as to you know, when does the Social
16:29
Speaker 2: Security Trust Fund run out of money? Other than as
16:32
Speaker 2: you mentioned, hey, the taxes go directly towards trying to
16:35
Speaker 2: replenish the trust fund. Any changes to those taxes would
16:40
Speaker 2: obviously have impacts on the longevity of the trust fund.
16:44
Speaker 3: This is pretty complex stuff, which I will acknowledge for
16:46
Speaker 3: a moment here, and trying to determine, for instance, will
16:49
Speaker 3: I face more or less taxes in retirement, How do
16:51
Speaker 3: my rmds affect my taxation of Social Security? What if
16:55
Speaker 3: I want to convert to ROTH, should I pull Social
16:57
Speaker 3: Security early? These are complicated questions that are pretty unique
17:01
Speaker 3: to every individual. If you are facing questions like this
17:04
Speaker 3: and not finding the answers that you need calls an
17:07
Speaker 3: armstrong advisory group. We work with our clients every day
17:10
Speaker 3: to try and solve these problems. Then numbers eight hundred
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Speaker 3: three nine three for zero zero one, you can chat
17:16
Speaker 3: with a real life human being set up a consultation
17:18
Speaker 3: number again eight hundred three nine three for zero zero one.
17:23
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17:38
Speaker 2: The Biden administration early today announcing an executive order on
17:42
Speaker 2: cybersecurity imposing new standards for companies selling to the US government.
17:48
Speaker 2: What specifically do they want and why are they doing
17:50
Speaker 2: this now?
17:53
Speaker 3: I guess they're doing it because they're about to not
17:56
Speaker 3: have the ability to do it. And guess what, we
17:59
Speaker 3: keep getting massive intrusions into our every aspect of our
18:05
Speaker 3: over the air lives. What they're specifically doing is passing
18:09
Speaker 3: a set of or proposing that there exist a set
18:12
Speaker 3: of standards that all vendors to the General Service Administration
18:19
Speaker 3: and the US Government would have to adhere to. What
18:22
Speaker 3: those standards would be. Nobody seems to know yet, suffice
18:27
Speaker 3: to say they're going to be immensely complex and probably
18:31
Speaker 3: take years to have them written, because this doesn't even
18:33
Speaker 3: go into effect until twenty twenty seven.
18:35
Speaker 4: Yeah.
18:35
Speaker 2: I don't know nearly enough about any of this to
18:38
Speaker 2: be able to speak credibly on it, so I won't
18:40
Speaker 2: even try to.
18:41
Speaker 3: Going on past experience, I would guess that any standards
18:45
Speaker 3: you set are going to I think this does need
18:49
Speaker 3: to exist in some way, shape or form. But I
18:52
Speaker 3: think we also have to acknowledge that the hackers at
18:55
Speaker 3: this pace are moving a lot faster than our regulators
18:58
Speaker 3: seem to be able to keep pace with.
19:01
Speaker 2: Yeah, it's by the time you get to twenty twenty seven,
19:03
Speaker 2: you might have completely different threats than the one you're
19:05
Speaker 2: facing that.
19:06
Speaker 5: Yeah.
19:07
Speaker 3: Yeah, And I don't think you should just throw your
19:09
Speaker 3: hands in the air and do nothing about it.
19:10
Speaker 5: That's not what I'm saying.
19:11
Speaker 3: But this is a pretty heavy bar to get over
19:15
Speaker 3: in terms of actually delivering something that's going to be useful.
19:18
Speaker 2: Taking a look at markets as we hit towards the
19:20
Speaker 2: bottom of the hour, Dow is off eleven points.
19:23
Speaker 4: S and p is up five.
19:25
Speaker 2: Nasdaq is down twenty five, so mixed, very quiet, markets today.
19:29
Speaker 2: No fireworks to uh to this point at least in
19:33
Speaker 2: the day. Quick break when we come back, we got
19:35
Speaker 2: the trivia answer and we're talking TikTok.
19:41
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21:11
Speaker 4: Mike, let's talk a little bit about TikTok.
21:13
Speaker 2: We've got three days until the potential ban goes into effect.
21:17
Speaker 2: We still have not heard from the Supreme Court as
21:20
Speaker 2: to the case being heard in front of them last week.
21:24
Speaker 4: Correct, we have not. I would anticipate that we would
21:29
Speaker 4: in the next two days. Yep. So there's that lingering
21:33
Speaker 4: out there. But one of the.
21:36
Speaker 2: Open questions is, hey, if this TikTok band goes into effect,
21:39
Speaker 2: where do all of the users and the revenue generated
21:42
Speaker 2: by them go.
21:43
Speaker 3: A lot of it to meta a lot of it
21:46
Speaker 3: to YouTube, A lot of it's lost in the short term,
21:49
Speaker 3: but I mean there's some clear winners here. X maybe
21:54
Speaker 3: to a limited degree, but I mean Meta is the
21:56
Speaker 3: one to me that has a copycat app of TikTok,
22:01
Speaker 3: so that that probably is where a good chunk of
22:03
Speaker 3: it goes. I'm going to toss out a prediction here,
22:08
Speaker 3: and this might be overly safe, but I'm going to
22:10
Speaker 3: say that sixty days from now, TikTok, even if it
22:14
Speaker 3: was temporarily removed, is still in or back in app stores.
22:18
Speaker 4: It's got that vibe, doesn't it.
22:20
Speaker 5: It does.
22:20
Speaker 3: I mean, with the rumors going around of Elon Musk
22:24
Speaker 3: making a purchase, there's been you know, pieces published about
22:28
Speaker 3: the estimated value of TikTok were it to face a sale.
22:33
Speaker 4: I don't know.
22:35
Speaker 3: Donald Trump has insinuated that he wants to pass an
22:37
Speaker 3: executive order to rescue it.
22:39
Speaker 5: So it's got that feel to me.
22:41
Speaker 3: I don't know what format it's going to be, who's
22:43
Speaker 3: going to own it, but I just don't really get
22:46
Speaker 3: the sense it's actually going to be banned.
22:48
Speaker 4: It's kind of disappointing to me.
22:50
Speaker 3: Well, it'll be disappointing to me if it's not banned
22:54
Speaker 3: and still owned by the Chinese. Yeah, i'd be tremendously
22:57
Speaker 3: disappointing to me because there's a of a lot of
23:00
Speaker 3: evidence right now that this type of abuse is what
23:05
Speaker 3: the Chinese wanted to do.
23:06
Speaker 4: I'll put it this way.
23:07
Speaker 2: So when I forget exactly when the law was passed
23:11
Speaker 2: that would effectively require TikTok to be banned in the US,
23:13
Speaker 2: I think it was like last it was April or
23:16
Speaker 2: May somewhere around there, is that, right.
23:18
Speaker 5: I don't recall, but yeah, it was last year at
23:21
Speaker 5: some point.
23:22
Speaker 2: And what I remember very clearly is just before it,
23:27
Speaker 2: I don't remember the exact timeline. I don't know if
23:29
Speaker 2: it was like a week before or a month before,
23:32
Speaker 2: there was a closed door security briefing for members of
23:35
Speaker 2: Congress on TikTok specifically discussing it. So it was basically
23:40
Speaker 2: like the military and the intelligence community bringing this like
23:44
Speaker 2: to them, and no one really said like what was
23:47
Speaker 2: said during it, because again it's a closed door, confidential,
23:50
Speaker 2: you know, top secret meeting. But basically immediately after that,
23:55
Speaker 2: this bill ended up passing, and I find that to
23:59
Speaker 2: be notable. Well, and it passed, you know, with with
24:01
Speaker 2: bipartisan you know, majorities in both the House and the Senate,
24:06
Speaker 2: which is kind of hard to do these days. Like
24:07
Speaker 2: that kind of stuff just doesn't happen very often. And
24:12
Speaker 2: so I find that notable when hey, whatever was said
24:16
Speaker 2: in that meeting was meaningful enough to get the majority
24:21
Speaker 2: of congress people and.
24:25
Speaker 4: Senators to say, yeah.
24:27
Speaker 2: This is a problem and we need to move on
24:30
Speaker 2: from it, and to less than a year from now,
24:34
Speaker 2: you know, be potentially kind of you know, wavering on
24:36
Speaker 2: it is bothersome to me. Now if the wavering is, hey,
24:39
Speaker 2: like it's going to end up being owned by you know,
24:42
Speaker 2: a US company or US, Isn't it okay?
24:45
Speaker 4: Fine?
24:45
Speaker 2: Like, but I mean you've had all this time to
24:49
Speaker 2: get there, Like, why haven't you done it to this point?
24:52
Speaker 4: So I don't want.
24:53
Speaker 2: This to become something where in perpetuity as well. We
24:55
Speaker 2: need another sixty days, now, we need another ninety days,
24:57
Speaker 2: and we're sitting here twenty years from now. Man, we
25:01
Speaker 2: really should have gotten rid of TikTok when we had
25:02
Speaker 2: the chance, right.
25:04
Speaker 3: And by the way, I keep bringing up this is
25:06
Speaker 3: not TikTok related, but the hacking, the successful expionage and
25:12
Speaker 3: hacking operations Salt Typhoon to people, and I keep getting
25:16
Speaker 3: weird looks like what are you talking about? And I
25:18
Speaker 3: don't know if it's because this broke right in between
25:21
Speaker 3: the Christmas and New Year's holidays and nobody paid attention
25:24
Speaker 3: to it or what. But all reporting indicates that the
25:29
Speaker 3: Chinese for years have been conducting the largest telecom hack
25:35
Speaker 3: in our nation's history, and to look at TikTok as
25:40
Speaker 3: any differently from that is just foolish to me. So
25:44
Speaker 3: if you are listening to me and you don't know
25:46
Speaker 3: what Salt Typhoon is, please go open a computer and
25:50
Speaker 3: read about it, because it is pretty horrifying what was
25:53
Speaker 3: conducted and the type of information that Chinese hackers are
25:57
Speaker 3: likely in possession of.
25:58
Speaker 4: Now, yeah, all kinds of stuff.
26:01
Speaker 2: And by the way, it's again, I just don't know
26:08
Speaker 2: what the justification is for. Yes, we want to let
26:14
Speaker 2: a foreign adversary operate a social media network that's accessible
26:19
Speaker 2: to our users, right, why would you do that?
26:24
Speaker 3: So if anybody changes, and I know there's been suggestions
26:27
Speaker 3: that Donald Trump would, but until he actually does something
26:31
Speaker 3: on that, I'm not going to hold him guilty for
26:33
Speaker 3: rumors around this. So, but if it does flop, or
26:37
Speaker 3: it does flip their perspective on that. Then yeah, there's
26:39
Speaker 3: some serious questions here because it's pretty abundantly clear the
26:45
Speaker 3: risks that exist on TikTok.
26:47
Speaker 2: Let's talk a little bit about the Google. A piece
26:50
Speaker 2: in the Wall Street Journal. Google thinks it has the
26:53
Speaker 2: best AI tech, but now it needs more users. Newsflash,
26:57
Speaker 2: if you think you need more users, you're not going
26:59
Speaker 2: to at them.
27:02
Speaker 5: And if you have and if you had the best
27:04
Speaker 5: AI tech, you'd have the users.
27:06
Speaker 4: Not true, Not true.
27:08
Speaker 2: There are plenty of instances where the best technology does
27:10
Speaker 2: not attract the most users.
27:12
Speaker 5: True.
27:13
Speaker 2: I say this is a proud user of Apple's ecosystem.
27:15
Speaker 2: They repeatedly do not have the best phones. They just have,
27:18
Speaker 2: you know, very accessible ones, but they're not the best.
27:20
Speaker 2: We can also get into like VHS versus Beta Max
27:23
Speaker 2: if you want to go back forty years or so.
27:25
Speaker 2: But you know that that's going back a little bit.
27:27
Speaker 2: But so Senapracha is like, hey, we want Gemini, which
27:30
Speaker 2: is Google's chatbot, to be used by five hundred million people. Well,
27:34
Speaker 2: I want to be six foot five and playing in
27:36
Speaker 2: the NBA and unfortunately not going to get there. And
27:41
Speaker 2: the the the thing with any of this is if
27:46
Speaker 2: you have to be like, hey, are product's so good,
27:48
Speaker 2: why aren't you using it?
27:50
Speaker 4: You're losing.
27:52
Speaker 3: Yeah, here's one thing I do suspect all of these
27:55
Speaker 3: products are starting to charge a fair bit of money
27:58
Speaker 3: for their use. I don't know what the chat GPT
28:00
Speaker 3: goes for. It's like twenty bucks a month, twenty bucks.
28:02
Speaker 3: So I would suspect that Google is about to come
28:05
Speaker 3: in and dramatically undercut even the very discounted rates that
28:09
Speaker 3: you're seeing from competitors' products. That's my main guess here
28:13
Speaker 3: is that if you want to use Google's products, it's
28:16
Speaker 3: to be pretty close to free for an extended period
28:18
Speaker 3: of time.
28:19
Speaker 2: It's and part of the reason why I think they're
28:22
Speaker 2: getting towards that if you look at like the incremental
28:24
Speaker 2: cost for running this stuff because you don't have to
28:27
Speaker 2: do as much training anymore. Like so quick primer on
28:32
Speaker 2: how these these work. There what are called large language models.
28:35
Speaker 2: You basically train them, You give them a data set,
28:37
Speaker 2: and what is called the neural network figures out. Okay,
28:41
Speaker 2: if the word the is in here, here are the
28:43
Speaker 2: words that come after the and here's how I use them,
28:46
Speaker 2: and here's the context, and it basically pieces together. It's
28:48
Speaker 2: it's like teaching a child language where basically pieced together.
28:52
Speaker 2: If I see X, then I could do you know
28:54
Speaker 2: A B or C, and I just need to pick
28:56
Speaker 2: the right ones for the situation. So the prem is
29:00
Speaker 2: you train this on a ton of different language and
29:02
Speaker 2: then you put it out into the wild and it'll,
29:05
Speaker 2: you know, spit out answers based on the questions.
29:07
Speaker 4: That you ask it.
29:09
Speaker 2: What they are starting to find out is that they're
29:13
Speaker 2: running out of training material for these large language models.
29:17
Speaker 2: There's just not much more that you can train them
29:18
Speaker 2: on at this point, and so the cost of doing
29:21
Speaker 2: so and the cost of like all of that background
29:24
Speaker 2: work is coming down dramatically. The other question that then
29:28
Speaker 2: it raises is Okay, if that's the case, that's where
29:32
Speaker 2: like the bulk of the heavy lifting is do you
29:35
Speaker 2: need all of these new processors that you are trying
29:38
Speaker 2: to order because you're not doing that, like you don't
29:42
Speaker 2: have to sort through infinitely more inputs in this than that.
29:45
Speaker 2: But I think ultimately the question that's still out there is, hey,
29:50
Speaker 2: how useful is this stuff going to be? And I
29:54
Speaker 2: raised a question with with Mark Fandetti yesterday. I want
29:56
Speaker 2: to ask it to you, Mike today. So you've got
30:00
Speaker 2: these companies that are not just talking about you know,
30:02
Speaker 2: chatbots anymore. But now the big thing that you're being
30:06
Speaker 2: sold is agents, which the idea of an agent is
30:10
Speaker 2: like an AI that can actually do something for you,
30:13
Speaker 2: not just answer questions that you're putting into it. If
30:17
Speaker 2: in theory, agents are so good at doing this stuff, Mike,
30:22
Speaker 2: how come big tech companies aren't cutting their head count more.
30:27
Speaker 5: Because they're not that good at doing it.
30:30
Speaker 4: That's kind of where I land.
30:31
Speaker 3: Yeah, they would trust me, like big tech would love
30:34
Speaker 3: to be the first innovator to say we're laying off
30:38
Speaker 3: this staff because we don't need them anymore.
30:39
Speaker 5: It's just not good enough. It's not there yet.
30:42
Speaker 4: And so I am.
30:43
Speaker 2: I'm wondering if a I can be perfectly like good
30:46
Speaker 2: at like certain things. And there's certain stuff that I
30:48
Speaker 2: think is great at. But I'm just wondering if this
30:53
Speaker 2: iteration is at a point where we're kinda eh, this
30:57
Speaker 2: is as far as it can go. Now, you've got
30:58
Speaker 2: all of Nvidia's new chips. They're gonna be delivered this year,
31:00
Speaker 2: and so maybe a year and a half from now,
31:02
Speaker 2: we're sitting there and we're like, Oh, here's all the
31:04
Speaker 2: stuff that AI can do now that it has all
31:06
Speaker 2: this extra computing power. I'm open to that as a
31:09
Speaker 2: possibility too sure. But hey, if if Salesforce is an
31:15
Speaker 2: example which is pushing these AI agents is, if they're
31:19
Speaker 2: so good at what they can do, why did Mark
31:21
Speaker 2: Benioff say that they want to hire two thousand more
31:23
Speaker 2: salespeople to help sell AI. Why why can't you just
31:27
Speaker 2: do it, boot up two thousand agents and sell the AI.
31:30
Speaker 2: So I think that's kind of what I'm wondering on
31:33
Speaker 2: this is, Hey, maybe these very much are tools that
31:36
Speaker 2: can enhance productivity, but maybe they're not going to be
31:39
Speaker 2: the employee replacers that have been talked about and promised
31:44
Speaker 2: and feared in a number of cases. Let's take a
31:48
Speaker 2: quick break. When we come back, Stack Roulette.
31:51
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Speaker 4: Mike, what do you got for stack Roulette?
33:01
Speaker 3: I want to talk about the complexities of price gouging.
33:05
Speaker 3: We talked a lot about price gouging last year during
33:07
Speaker 3: the presidential run when Kamala Harris talked a fair bit
33:10
Speaker 3: about it when it came to groceries, and we generally
33:12
Speaker 3: described it as not really price gouging. In California right now,
33:15
Speaker 3: we're seeing some things that I think would be more
33:17
Speaker 3: adequately described as price gouging. One family, Joe Thompson's family,
33:23
Speaker 3: after their home burned down, was looking for a place
33:25
Speaker 3: for their family to live. They found a five bedroom
33:27
Speaker 3: home in Santa Monica that had been put on the
33:29
Speaker 3: market the day before for twenty eight thousand dollars a month.
33:32
Speaker 3: That's more than double the rent that was posted a
33:35
Speaker 3: year ago and seems like a more accurate description of
33:39
Speaker 3: price gouging. There are laws in place in California to
33:42
Speaker 3: prevent that sort of thing. But I do go back
33:44
Speaker 3: to kind of a complicated question. Let's say you are
33:47
Speaker 3: the owner of an apartment that is for rent right now,
33:49
Speaker 3: are home a single family home that's for rent right
33:51
Speaker 3: now for ten thousand dollars a month? Yes, and you
33:54
Speaker 3: get thirty calls from people asking to demand, asking to
33:57
Speaker 3: rent that place, bidding up the price.
34:00
Speaker 5: What is your what is the moral answer to that?
34:04
Speaker 3: No, I'm just going to take the first person that
34:06
Speaker 3: called me at the price that I asked for. I
34:07
Speaker 3: suppose yes, yeah, not because.
34:10
Speaker 2: We wouldn't not even the first Like again, you might say, Okay,
34:12
Speaker 2: that person has bad credit or whatever, but like the
34:14
Speaker 2: first qualified person at the asking price. Yeah, is who
34:19
Speaker 2: you take. Otherwise you're effectively being pretty generally not a
34:27
Speaker 2: good human.
34:28
Speaker 5: Yeah. And but again I see that's.
34:31
Speaker 2: You're giving yourself a windfall based on someone else's misfortune.
34:35
Speaker 3: You are, and I can see why people would be
34:38
Speaker 3: doing it, like, oh man, this other guy offered me
34:40
Speaker 3: twice what this person is offering. But that is price gouging.
34:44
Speaker 3: And it doesn't matter if you're a larger small business.
34:46
Speaker 3: But we certainly wouldn't deem it acceptable if you walked
34:49
Speaker 3: into a supermarket and they said, hey, we're raffling off
34:51
Speaker 3: or no, we're we're auctioning off water to the highest
34:54
Speaker 3: bidder here. That's price gouging too, as it is with
34:58
Speaker 3: you know, trying to rent an apartment for twice which
35:00
Speaker 3: listed a year.
35:00
Speaker 4: Again.
35:01
Speaker 2: No, and if if there's like a regular auction for whatever,
35:05
Speaker 2: it's not price gouging, like it's just an auction based system.
35:08
Speaker 2: But if you have something that's listed at a certain
35:10
Speaker 2: price and a disaster happens and you say, well, I'm
35:15
Speaker 2: going to use this to make more, whether through you know,
35:18
Speaker 2: raising your listing price or through accepting a much higher bid.
35:24
Speaker 2: When you're getting a ton of others because there's obviously
35:26
Speaker 2: a disaster going on.
35:29
Speaker 4: That's price gouging. Yep.
35:30
Speaker 2: You know, like to use the water example, Let's say
35:33
Speaker 2: that you are in a hurricane affected area and you
35:35
Speaker 2: know there's no water that's drinkable, and so everyone's buying
35:37
Speaker 2: bottled water. If you've got if you're at a gas station,
35:41
Speaker 2: you've got the last thing of bottled water for sale,
35:44
Speaker 2: and it's normally been going for you know, a dollar
35:46
Speaker 2: ninety nine, and some guy picks it up and the
35:48
Speaker 2: guy behind him says, I'll give you one hundred dollars
35:51
Speaker 2: for that. Would anyone look at that and be like, yeah,
35:54
Speaker 2: I should take that hundred dollars. No, No, Like, that's
35:58
Speaker 2: that's wrong. That's immoral and unethical and you should not
36:02
Speaker 2: be doing that.
36:02
Speaker 3: And it's also completely different from what drove up grocery
36:06
Speaker 3: prices over the last three years. Yes, so corrice gouging
36:10
Speaker 3: is one of those weird things where you know it
36:12
Speaker 3: when you see it, and you're seeing some of it
36:14
Speaker 3: in California right now.
36:15
Speaker 4: Yeah.
36:16
Speaker 2: I think it's it's very clear, and I hope that
36:19
Speaker 2: the people who are participating in the price gouging have
36:23
Speaker 2: those extra profits taken from them and given back to
36:27
Speaker 2: the people that lost their homes and maybe shouldn't have,
36:31
Speaker 2: you know, the extra money taken from them because they
36:35
Speaker 2: need a place to live. Right now, My goodness, my goodness,
36:39
Speaker 2: I'm going to talk about this piece of the New
36:41
Speaker 2: York Times. It's a good time to be making mocktails,
36:44
Speaker 2: the juice mocktails. Okay, it sounds more adult when you
36:49
Speaker 2: say that. When you say juice, you sounds like a
36:52
Speaker 2: three year old, which is fine, But in any case,
36:55
Speaker 2: it's talking about, Hey, you've got this new Surgeon General
36:58
Speaker 2: warning about, you know, considered about the fact that alcohol,
37:03
Speaker 2: you know, can cause cancer, which again, for anyone who
37:05
Speaker 2: has been drinking for any extended period of time, you
37:08
Speaker 2: know this already and still decide to I would find
37:11
Speaker 2: it hard to believe that many individuals do not know that.
37:13
Speaker 4: Who are you drinkers?
37:15
Speaker 2: But I guess what I come back to is the
37:19
Speaker 2: first premise of this, which is that this Surgeon General
37:21
Speaker 2: warning is going to somehow shift behavior.
37:25
Speaker 4: And I just don't know that I buy that.
37:28
Speaker 3: I think around the edges it might. There's a lot
37:30
Speaker 3: of stupid people that you forget about. Depends what they
37:32
Speaker 3: do too. You know when it comes to things like this.
37:35
Speaker 3: They've shown at length that images of for instance, skulls
37:39
Speaker 3: and crossbones, uns and all sorts of things do a
37:42
Speaker 3: much better job of dissuading people from consumption compared to
37:46
Speaker 3: just a text warning. So I obviously think it depends
37:49
Speaker 3: what format you take. But there's probably some idiot out
37:52
Speaker 3: there that doesn't know that drinking a lot it's going
37:54
Speaker 3: to cause them cancer. So here's the counterpoint to that.
37:58
Speaker 3: One of the fastest growing new bottled waters on the
38:01
Speaker 3: planet in the last couple of years. It is called
38:02
Speaker 3: the Liquid Death and feature skulls all over it.
38:05
Speaker 5: Good point.
38:07
Speaker 2: I don't know what to make of any of this.
38:10
Speaker 2: I don't know what to make of it, but humans
38:13
Speaker 2: are complicated.
38:13
Speaker 4: Film at eleven.
38:14
Speaker 2: Let's take a quick break here for the rest of
38:16
Speaker 2: the day. We are back at it tomorrow to finish
38:18
Speaker 2: up the week.
38:19
Speaker 4: We'll see you Friday.