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What are the warning signs this record market is showing? · The Financial Exchange Show

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  Speaker 1: donation today. This is the Financial Exchange with Chuck Zada,
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  Speaker 1: and Mike Armstraw.
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  Speaker 2: Another new week here on the Financial Exchange was Chuck,
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  Speaker 2: Mike and Tucker with You, And last week was one
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  Speaker 2: of those weeks where an awful lot of movement from
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  Speaker 2: day to day, an awful lot of movement within each day,
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  Speaker 2: but ultimately not really much that actually happened in markets
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  Speaker 2: when you look at, you know, kind of the broader
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  Speaker 2: trends that we monitor. It was, you know, a case of, hey,
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  Speaker 2: you saw markets, you know, up one and a half
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  Speaker 2: percent during a day and then closing flat or down
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  Speaker 2: one and a half percent during a day and closing
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  Speaker 2: flat or Friday the case was, hey, you know, futures
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  Speaker 2: when I woke up, I mean, gosh, I saw futures
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  Speaker 2: S and P futures down ninety points.
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  Speaker 3: We ended up closing up thirty.
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  Speaker 2: So it's a two percent inter day Swingultimately not much movement.
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  Speaker 2: It was less than a half percent move on the
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  Speaker 2: S and P five hundred and so I think we
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  Speaker 2: come into this week, Mike still looking just for more
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  Speaker 2: information so that markets can try to, you know, more
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  Speaker 2: conclusively find out which direction they want to move in.
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  Speaker 3: And we're going to get a little bit more data
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  Speaker 3: this week.
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  Speaker 2: Last week the movements were happening on you know a
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  Speaker 2: bunch of different reports surrounding you know, potential events and
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  Speaker 2: things like that. This week we are going to get
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  Speaker 2: existing home sales data on Thursday, So that's nice just
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  Speaker 2: because again not a government report comes from. I believe
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  Speaker 2: that's National Association of Realtors is where that data set
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  Speaker 2: comes from. So that's nice that the realtors are still working.
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  Speaker 2: Always good to see. And then Friday, collegey willkers it's
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  Speaker 2: it's the white whale itself.
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  Speaker 3: We get the CPI report for September.
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  Speaker 2: The only reason why is because this is instrumental in
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  Speaker 2: setting the cost of living adjustment for Social Security and
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  Speaker 2: other programs for next year. And so the BLS said, hey, yeah,
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  Speaker 2: we'll recall the staffers that handle that stuff and we
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  Speaker 2: will get that September CPI report. So a couple data
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  Speaker 2: points that we get there. And also earning season really
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  Speaker 2: kicks into high gear the last week and a half.
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  Speaker 3: Banks.
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  Speaker 2: But this week we got Netflix, ge Aerospace, Coca Cola,
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  Speaker 2: Philip Morris raytheon Tesla IBM. I put it on the
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  Speaker 2: list just because they still exist but not instrumental in
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  Speaker 2: moving markets at this point. Blackstone gonna be interested to
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  Speaker 2: hear what they say about private credit these days, Intel, Honeywell, Union, Pacific, Procter,
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  Speaker 2: and Gamble. So you got earnings really kicking into gear
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  Speaker 2: this week, and so I think this will be kind
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  Speaker 2: of an informative week and potentially a week of change
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  Speaker 2: where we start to maybe get a sign of Hey,
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  Speaker 2: is there a clear direction that this market starts to
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  Speaker 2: take or is it just more chop?
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  Speaker 4: Yeah?
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  Speaker 5: I mean, look, two Fridays ago was the day that
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  Speaker 5: we saw market sell off by three percent. To your point,
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  Speaker 5: we've almost made up all of those losses, even with
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  Speaker 5: the chopping market of last week. I struggle to put
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  Speaker 5: my finger on exactly. You know, obviously what caused markets
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  Speaker 5: to sell off on Friday, or at least the big
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  Speaker 5: news at end of the day was increased tensions with
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  Speaker 5: China between President Hu Jumping and President Trump. Those have
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  Speaker 5: somewhat been alleviated. We have not seen much alleviated in
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  Speaker 5: terms of concerns about private credit and where that might
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  Speaker 5: be leaching into. And to a point that I think
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  Speaker 5: you made it. You know, last week, chuck was just
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  Speaker 5: seemed like a market that was going to get nervous
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  Speaker 5: about something. It was just a question of what the
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  Speaker 5: story was going to be. And so you know, we've
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  Speaker 5: seen some improvement on the China US narrative at least,
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  Speaker 5: but I'm not sure that's what's actually going to drive markets.
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  Speaker 3: Next.
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  Speaker 4: We've got the earnings that potentially can do that.
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  Speaker 3: So you've got that going on.
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  Speaker 2: Also this week, Kevin Hassett, the White House head of
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  Speaker 2: the Council of Economic Advisors, that he expects that the
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  Speaker 2: government's shutdown may end up ending sometime this week. Whether
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  Speaker 2: it actually does or not, I'll read his quote just
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  Speaker 2: because again I think it's informative. Now there's a shot
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  Speaker 2: this week that things will come together, the moderate Democrats
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  Speaker 2: will move forward and get us an open government, at
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  Speaker 2: which point we can negotiate whatever policies they want to
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  Speaker 2: negotiate with regular order. Whether this is posturing or if
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  Speaker 2: he actually believes that this is going to have, you know,
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  Speaker 2: some possibility, I think is an open question. What I
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  Speaker 2: can tell you is that betting markets, the online ones
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  Speaker 2: that follow this stuff are taking it somewhat seriously, and
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  Speaker 2: that Hey, last night Calshi had the average the government
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  Speaker 2: shutdown lasting forty four point four days. Today that estimate
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  Speaker 2: is down to thirty eight days now this week, Mike.
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  Speaker 3: How long is a week?
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  Speaker 4: Seven days?
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  Speaker 3: What's today's date?
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  Speaker 4: October twentieth.
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  Speaker 2: End of the week is going to be the October
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  Speaker 2: twenty seventh, which means and again, really that's a week
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  Speaker 2: from now. So I'm even giving you know, the week
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  Speaker 2: the benefit of the doubt. So thirty eight is still
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  Speaker 2: more than twenty seven correct as far as I'm aware you,
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  Speaker 2: As far as we know, we've not seen any math
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  Speaker 2: to disprove that, and so betting markets are saying, yeah,
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  Speaker 2: we could buy that there's maybe a chance that this
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  Speaker 2: happens this week, but we're not buying it with one
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  Speaker 2: hundred percent confidence, certainly.
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  Speaker 5: Right, last big item on the calendar for this week, Chuck,
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  Speaker 5: that I can think of anyway. Tomorrow at Tucker eleven forty,
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  Speaker 5: Andrew Ross Sorkin, co host of CNBC Squakbox and author
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  Speaker 5: of a new book on the Great Depression nineteen twenty nine,
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  Speaker 5: will be joining us on the program. Like I said,
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  Speaker 5: I believe tomorrow at eleven forty Tucker, Yes, sake.
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  Speaker 3: Yes, love forty.
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  Speaker 2: So packed week, big week, so let's get into it.
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  Speaker 2: Wall Street Journal has a piece the Warning Signs lurking
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  Speaker 2: the surface of a record market. So a couple of
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  Speaker 2: things when we talk about this. The first is, yes,
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  Speaker 2: the headlines are designed to make you nervous. The second is,
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  Speaker 2: I do think there are actually some things that are
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  Speaker 2: worth being nervous about. But being nervous is different from
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  Speaker 2: actually taking action and provided that you, you know, set
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  Speaker 2: yourself up with a portfolio and risk tolerance that you
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  Speaker 2: are comfortable with, and you're not bungee jumping and not
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  Speaker 2: doing anything crazy. Regular market volatility is a feature of
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  Speaker 2: markets and not a bug. And markets cannot hit all
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  Speaker 2: new highs every single day. But the best predictor of
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  Speaker 2: new all time highs is hitting former all time is
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  Speaker 2: hitting you know, previous all time highs. And so I
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  Speaker 2: think that when we look at this piece, what it
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  Speaker 2: talks about is there's a few different things covered in it.
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  Speaker 2: The first is you've seen a rotation in the last
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  Speaker 2: week or so, even in the last month.
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  Speaker 3: Really from cyclical stocks towards more ones.
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  Speaker 2: Okay, well, is that really a warning sign or is
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  Speaker 2: that markets reacting to potential concern by trying to get
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  Speaker 2: ahead of it.
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  Speaker 5: Mike, yeah, I six to one a half dozen. The
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  Speaker 5: other right, I mean it all insinuates the same thing,
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  Speaker 5: which is, in some areas the markets, investors are expressing
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  Speaker 5: some degree of concern by voting with their wallet. And yeah,
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  Speaker 5: some of those cyclical cyclical areas that might be subject
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  Speaker 5: to defaults or problems and credit markets are being looked
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  Speaker 5: at more critically right now.
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  Speaker 4: I think that I'm not sure that that is.
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  Speaker 5: A symptom of a overheated market or a symptom of
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  Speaker 5: real news that's on the ground, given.
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  Speaker 4: What we're seeing in the auto industry.
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  Speaker 2: Yeah, and so I think the other piece that I
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  Speaker 2: will talk about on this, like when we're looking at
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  Speaker 2: it is ultimately, look, these things may or may not
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  Speaker 2: actually mean anything about where the economy is going to go.
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  Speaker 2: Case in point, So, like what this is talking about
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  Speaker 2: is like, hey, regional banks are struggling the last month,
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  Speaker 2: Crude oil struggling the last month. Home builders are sure,
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  Speaker 2: but healthcare utilities in gold have been rocking and rolling
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  Speaker 2: right yep. So you know, you look at this and
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  Speaker 2: you say, okay, let's let's go back and you know
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  Speaker 2: kind of see you know, some some historical examples and
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  Speaker 2: and see if this actually means anything or if it's
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  Speaker 2: just you know, kind of a bunch of hot air.
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  Speaker 2: And the case that I want to look at is, Tucker,
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  Speaker 2: can you fire up the time machine for us?
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  Speaker 1: Die?
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  Speaker 2: We got to get the Fox capacitor up to one
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  Speaker 2: point one jigawats. I also, by the way, just love
• 9:44
  Speaker 2: how back to the future it's jigawats, but everywhere else
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  Speaker 2: it's gigawatts, you know. But anyways, so we're back in
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  Speaker 2: twenty twenty three. It's not hot, Tucker, It's it's still
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  Speaker 2: pretty cold. It's the middle of March of twenty three,
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  Speaker 2: and the S and P Regional Bank fall twenty six percent.
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  Speaker 3: Yeah, that's right. It's actually a hot March.
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  Speaker 2: And the S the S ANDB Regional Bank ETF falls
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  Speaker 2: twenty six percent on fears that Silicon Valley Bank is
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  Speaker 2: not going to be the only bank that blows up.
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  Speaker 2: And it's true, it wasn't. There were a couple other
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  Speaker 2: ones that had to be you know, purchased and sold
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  Speaker 2: off and things like that Republic and what was the
• 10:22
  Speaker 2: other one? There was a New York one that was
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  Speaker 2: all cryptoie.
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  Speaker 5: Yeah, signature, that signature, it sounds right, Chuck, I think.
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  Speaker 3: That might be it.
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  Speaker 2: Yeah, So everyone was nervous that're like, oh, this is
• 10:33
  Speaker 2: gonna be like a whole thing for regional banks, and
• 10:34
  Speaker 2: it was for like three of them, but it really.
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  Speaker 3: Wasn't for anyone else.
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  Speaker 5: It did require a fair bit of government or FED
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  Speaker 5: intervention to get there though, totally.
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  Speaker 2: But is that what always happens in crises? Like, yeah,
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  Speaker 2: it always bothers me when when it's kind of like
• 10:51
  Speaker 2: the people that root for the hurricane to like wipe
• 10:53
  Speaker 2: out an entire state, It's like people complain, They're like, oh, well,
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  Speaker 2: the FED didn't let everyone fail. It's like no, because
• 11:00
  Speaker 2: like they didn't want you know, they didn't want till
• 11:03
  Speaker 2: that nine people right now.
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  Speaker 3: I'm sorry that they didn't want a giant run on banks.
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  Speaker 1: You know.
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  Speaker 2: It's it's like okay, like, yes, the hurricane didn't wipe
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  Speaker 2: everything out, Sorry that everyone got to live or like
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  Speaker 2: that a lot of people did. I just I can't
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  Speaker 2: stand the people that root for doom. It's it's just
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  Speaker 2: not sure healthy. So regional banking TA falls twenty six percent.
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  Speaker 2: Utilities and I'm looking at March seventh through the end
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  Speaker 2: of April, Okay, utilities up five and a half percent,
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  Speaker 2: consumer staples up seven and a half, gold up nine
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  Speaker 2: point six. Mike, did this mean that anything bad happened
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  Speaker 2: in the stock market over the rest of twenty twenty three.
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  Speaker 5: No, it's actually pretty good. No, it was pretty good
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  Speaker 5: to you because the crisis contained correct.
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  Speaker 2: So I think that when you look at you know,
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  Speaker 2: signals like this and and and read a piece like this, yes,
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  Speaker 2: this could mean something, but there's also examples where it
• 11:53
  Speaker 2: doesn't mean anything. And I think that, you know, the
• 11:56
  Speaker 2: human mind is conditioned to look for patterns and be
• 11:58
  Speaker 2: like uh zoomer staples and you know, healthcare and utilities
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  Speaker 2: being bought in, regional banks being sold. Market knows something, well, No,
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  Speaker 2: the market's trying to figure out what's going on, and
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  Speaker 2: sometimes it's right, sometimes it's not.
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  Speaker 3: That's the deal.
• 12:16
  Speaker 2: Quick break here. When we return, let's talk about how
• 12:20
  Speaker 2: the economy is actually doing. This was talking about how
• 12:22
  Speaker 2: the market's doing. Now let's talk about how the economy
• 12:24
  Speaker 2: is doing. We got a piece in Bloomberg Opinion the
• 12:27
  Speaker 2: glass half full. Economy has rarely looked so good. We'll
• 12:30
  Speaker 2: discuss when we return.
• 12:32
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• 13:32
  Speaker 3: Mike, we get a.
• 13:32
  Speaker 2: Piece in the Bloomingberg glass half full. Economy has rarely
• 13:36
  Speaker 2: looked so good, Mike.
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  Speaker 3: How full? What's the fullest in economy's glass? Has ever been?
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  Speaker 4: Ninety nine? Maybe?
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  Speaker 5: Maybe what percentage? Like the point that I guess I'll
• 13:49
  Speaker 5: make in twenty twenty one, I would say it was
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  Speaker 5: spilling over.
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  Speaker 3: It was overfull.
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  Speaker 2: Okay, yeah, so so we do have situations where that
• 13:58
  Speaker 2: can happen. Aside that, like I would make the case
• 14:01
  Speaker 2: that like the fullest in economy gets is like eighty
• 14:05
  Speaker 2: percent full.
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  Speaker 4: I don't even really know what that means.
• 14:09
  Speaker 2: There's always something wrong, as the point I'm trying to make, Okay,
• 14:12
  Speaker 2: like there's ever an economy where everything's right, even though whe.
• 14:14
  Speaker 3: Where it's overflowing. Sure like that that's not right.
• 14:17
  Speaker 2: It's like okay, now, h hold, never spilled milk, you know,
• 14:20
  Speaker 2: like it's a it's a problem. So you know again
• 14:24
  Speaker 2: it's it's in the twenty tens. Oh, these interest rates
• 14:27
  Speaker 2: are too low. No one can save any money. In
• 14:29
  Speaker 2: the twenty twenties. Interest rates are too high. No one
• 14:31
  Speaker 2: can borrow any money, like okay, pick one, like it
• 14:33
  Speaker 2: can't Like there's no mythical perfect interest rate. So what
• 14:38
  Speaker 2: is the case that's being made by this piece about
• 14:40
  Speaker 2: where the economy sits today?
• 14:42
  Speaker 5: Spending is pretty good there, you know, we are growing
• 14:47
  Speaker 5: the economy at a more reasonable pace. There doesn't seem
• 14:50
  Speaker 5: to be a real threat of inflation at this point
• 14:53
  Speaker 5: in time. And so while again I think the main
• 14:57
  Speaker 5: thing you can point to as problems under the surface,
• 14:59
  Speaker 5: would the state of about half of the consumers in
• 15:02
  Speaker 5: this country not being able to afford a whole lot.
• 15:04
  Speaker 5: But when you look at broad snapshots of what we
• 15:07
  Speaker 5: can actually measure when it comes to economic growth productivity,
• 15:11
  Speaker 5: things look reasonable, not overly heated, and like they could,
• 15:19
  Speaker 5: I guess, represent a relatively sustainable, growing economy that was
• 15:25
  Speaker 5: jumbled there for a minute there, I guess I'm struggling
• 15:28
  Speaker 5: to come up with why people might consider this to
• 15:30
  Speaker 5: be perfect.
• 15:31
  Speaker 3: Do you buy that as the case right now?
• 15:37
  Speaker 5: I do, while acknowledging the threats from a lot of
• 15:41
  Speaker 5: debt having been issued over the last few years and
• 15:44
  Speaker 5: still existing trade threats that I think that are out there, and.
• 15:48
  Speaker 2: We still have inflation, you know, kind of not. I
• 15:52
  Speaker 2: don't think that we can say inflation is conclusively not
• 15:54
  Speaker 2: a problem.
• 15:55
  Speaker 4: I agreed.
• 15:57
  Speaker 5: I mean, the biggest threat that I can see to
• 16:00
  Speaker 5: the overall economy and is just a very very expensive
• 16:07
  Speaker 5: stock market and a lot of speculation in other markets
• 16:10
  Speaker 5: that are marginally attached to the stock markets, such as
• 16:13
  Speaker 5: crypto commodities and you know, anything tangentially attached to our
• 16:17
  Speaker 5: official intelligence.
• 16:19
  Speaker 2: And look, I think that when we talk about where
• 16:22
  Speaker 2: the economy sits right now.
• 16:24
  Speaker 3: Again, there's always stuff that's wrong. So, like, I don't
• 16:28
  Speaker 3: think that you.
• 16:28
  Speaker 2: Can just be like, oh like that, can you really
• 16:31
  Speaker 2: like quantify is there more or less wrong aside from
• 16:35
  Speaker 2: you know, if there's actually a recession? Well no, Like
• 16:39
  Speaker 2: if you were to sit down and be like, compare
• 16:41
  Speaker 2: this economy to twenty sixteen, you'd be like, like, can
• 16:46
  Speaker 2: you quantitatively be like one is better or worse?
• 16:50
  Speaker 5: You have to be willing to choose a series of
• 16:53
  Speaker 5: data points ahead of time to compare them. I mean,
• 16:55
  Speaker 5: we've talked about things like the misery index. I think
• 16:58
  Speaker 5: that's as good a measurement as many There's you basically
• 17:01
  Speaker 5: add together the unemployment rate plus the inflation rate, and
• 17:04
  Speaker 5: there's your misery index. So are we higher or lower
• 17:07
  Speaker 5: on that than we were in twenty sixteen?
• 17:10
  Speaker 3: Probably about the same, I would think.
• 17:12
  Speaker 5: So four point three plus three seven point three percent.
• 17:16
  Speaker 5: Twenty sixteen inflation was probably closer to two, but in
• 17:19
  Speaker 5: unemployment was higher. Like, yeah, I think there's a lot
• 17:23
  Speaker 5: of things that you can say our comparison points, but
• 17:28
  Speaker 5: it's tough to say if this economy is definitively better
• 17:31
  Speaker 5: or worse than a previous period of time.
• 17:33
  Speaker 2: What I think you can say this economy is very dynamic,
• 17:37
  Speaker 2: it's very resilient, but there are questions that still need
• 17:41
  Speaker 2: to be answered. There are always questions that need to
• 17:43
  Speaker 2: be answered, and so as such, like, I don't think
• 17:46
  Speaker 2: you can look at what we're seeing right now and
• 17:48
  Speaker 2: you know, say that it's inherently there's nothing that points
• 17:52
  Speaker 2: to it being like inherently worse than you know prior times.
• 17:55
  Speaker 2: There's certainly I think if you're talking best economies, this
• 18:00
  Speaker 2: is not late nineties or late twenty tens. Agreed, you know,
• 18:04
  Speaker 2: it's it's not twenty eighteen right now, and it's not
• 18:08
  Speaker 2: nineteen ninety eight. But those are pretty high benchmarks because
• 18:12
  Speaker 2: in my opinion, the twenty seventeen twenty eighteen economy and
• 18:16
  Speaker 2: ninety six through ninety nine are the the cream of
• 18:20
  Speaker 2: the crop.
• 18:21
  Speaker 5: So if we're making these comparisons to twenty twenty three
• 18:23
  Speaker 5: for a moment, here we were just were about the
• 18:25
  Speaker 5: banks and some potential concerns with debt. What are the
• 18:28
  Speaker 5: differences between that and now right we're not seeing a
• 18:31
  Speaker 5: great question, We're not seeing a bank run at all.
• 18:34
  Speaker 2: Here are the differences. Unemployment is starting from a more
• 18:37
  Speaker 2: normalized place than the absolutely red hot labor market that
• 18:41
  Speaker 2: we had in twenty one and twenty two. Yep, so
• 18:43
  Speaker 2: we're start starting from a different place there. Consumer spending
• 18:46
  Speaker 2: as well. Consumers are more tapped out now than they
• 18:49
  Speaker 2: were back in twenty three, So that's a difference. Companies
• 18:55
  Speaker 2: when we talk about, you know, how they're you know,
• 18:57
  Speaker 2: talking about hiring and things like that, you do find
• 19:01
  Speaker 2: that they're talking differently now.
• 19:02
  Speaker 4: Yeah, also more tapped out, correct.
• 19:05
  Speaker 2: You know, the layoffs that we saw in twenty three
• 19:07
  Speaker 2: were from a period where companies admitted they hired too much.
• 19:11
  Speaker 2: Now it's companies saying they don't want to hire anymore,
• 19:15
  Speaker 2: and so I think there's some differences. Another big one housing,
• 19:20
  Speaker 2: Housing is in a much weaker spot now than two
• 19:22
  Speaker 2: years ago. But that's, you know, kind of that that
• 19:26
  Speaker 2: was the point of raising interest rates to a certain extent.
• 19:29
  Speaker 2: Quick break here, when we come back, we got Wall
• 19:31
  Speaker 2: Street Watch, and then we're talking about while why your
• 19:34
  Speaker 2: Alexa wasn't working this morning?
• 19:38
  Speaker 1: Like us on Facebook and follow us on Twitter at
• 19:41
  Speaker 1: TFFE show. Breaking business news is always first right here
• 19:45
  Speaker 1: on the Financial Exchange Radio Network. Time Now for Wall
• 19:50
  Speaker 1: Street Watch, A complete book and what's moving market so
• 19:54
  Speaker 1: far today right here on the Financial Exchange Radio Network.
• 19:57
  Speaker 6: Investors turning the page to a new week ahead of
• 20:00
  Speaker 6: a new batch of third quarter earnings. Wall Street's also
• 20:03
  Speaker 6: rating for a significant inflation reading on Friday, ahead of
• 20:07
  Speaker 6: the Fed's October meeting next week. Right now, the Dow
• 20:12
  Speaker 6: is up seven tenths of one percent, or three hundred
• 20:16
  Speaker 6: and eighteen points. Hire SMP five hundreds up nearly nine
• 20:20
  Speaker 6: tenths of one percent or fifty eight points higher, Nasdaq
• 20:23
  Speaker 6: up one point two percent or two hundred and seventy
• 20:26
  Speaker 6: nine points higher. We're else in two thousand also up
• 20:29
  Speaker 6: one point two percent ten, You're treasurreeled down one basis
• 20:32
  Speaker 6: point at three point nine nine to five percent day,
• 20:35
  Speaker 6: and crude oil down one percent today, trading just below
• 20:39
  Speaker 6: fifty seven dollars a barrel. A widespread out is linked
• 20:42
  Speaker 6: to Amazon's web services has impacted several companies early this morning,
• 20:46
  Speaker 6: including Amazon, Snapchat, Disney Plus, Reddit, Coinbase, and Robinhood. Airline
• 20:52
  Speaker 6: websites including Delta and United were also among those impacted. However,
• 20:56
  Speaker 6: many sites are now showing signs of recovery. On Stock
• 21:00
  Speaker 6: by the way is up over one percent. Meanwhile, Cleveland
• 21:03
  Speaker 6: Cliff stock is jumping sixteen percent after the steel company
• 21:07
  Speaker 6: beat third quarter expectations. The company also issued capital expenditures
• 21:13
  Speaker 6: guidance of around five hundred and twenty five million dollars
• 21:16
  Speaker 6: for the year, less than a prior forecast of six
• 21:19
  Speaker 6: hundred million dollars. Elsewhere, shares in Cooper Companies climbing over
• 21:24
  Speaker 6: four percent after Reuters reported that activist investor Jana Partners
• 21:29
  Speaker 6: has built a stake in the medical device maker. Bank
• 21:33
  Speaker 6: of America upgraded AMD's price target to three hundred dollars
• 21:36
  Speaker 6: per share from two hundred and fifty dollars per share.
• 21:39
  Speaker 6: AMD stock is rising three percent and taking a look
• 21:43
  Speaker 6: at the earnings calendar for this week. Tomorrow, we'll see
• 21:46
  Speaker 6: GE Aerospace, Coca Cola, Philip Morris, and RTX report in
• 21:50
  Speaker 6: the morning, followed by Netflix after the bell. Wednesday, we'll
• 21:54
  Speaker 6: see Thermo, Fisher, AT and T ahead of the opening bell,
• 21:58
  Speaker 6: fall by Tesla, SAP and IBM after the close. Thursday,
• 22:03
  Speaker 6: we'll see results from T Mobile, Intel, Union Pacific, and Honeywell.
• 22:07
  Speaker 6: And on Friday, we'll see Procter and Gamble and Sonify
• 22:11
  Speaker 6: report their third quarter results. I'm Tucker Silvan. That is
• 22:16
  Speaker 6: Wall Street Watch Mike Sos.
• 22:18
  Speaker 2: Tucker mentioned Amazon Web Services AWS.
• 22:21
  Speaker 3: Or as I like to call it OZ.
• 22:24
  Speaker 2: They have reported an outage as of early this morning.
• 22:30
  Speaker 2: They have indicated that they are trying to make a recovery.
• 22:35
  Speaker 2: I've personally now actually seen a resurgence in a couple
• 22:37
  Speaker 2: of these AWS issues over the last hour, and so
• 22:42
  Speaker 2: I've also seen a couple of reports come out that
• 22:44
  Speaker 2: says that they are still having some problems, so they're
• 22:49
  Speaker 2: not fully back up to speed.
• 22:51
  Speaker 3: And so a couple questions on this.
• 22:54
  Speaker 5: Should they get rid of their president and instead name
• 22:57
  Speaker 5: a wizard of OZ?
• 23:00
  Speaker 4: Was that your question?
• 23:01
  Speaker 5: Uh?
• 23:02
  Speaker 3: That that would be fun? I would enjoy that.
• 23:04
  Speaker 2: My question was going to be, has anyone seen Tim
• 23:07
  Speaker 2: Cook and is he just you know, running around northern
• 23:11
  Speaker 2: Virginia pulling you know, cables out of a w WES
• 23:15
  Speaker 2: you know, like him? Him and Bill Gates is running
• 23:17
  Speaker 2: around in ski mask pulling out you know, Ethernet cords.
• 23:21
  Speaker 2: I think it could be fun, like you do, you
• 23:23
  Speaker 2: could do a nice little buddy comedy that way.
• 23:25
  Speaker 5: I think, yeah, yeah, Microsoft, it's actually really them and
• 23:29
  Speaker 5: Google would be the other one that would be interested
• 23:31
  Speaker 5: in seeing this one single.
• 23:32
  Speaker 2: Yeah, I guess Tim Cook wouldn't really care, but uh,
• 23:35
  Speaker 2: who's uh suer per Chai? Yeah yeah, him and him
• 23:38
  Speaker 2: and Bill could run around and you know that'd be
• 23:40
  Speaker 2: a It wouldn't be as entertaining as Tim Cook. I
• 23:43
  Speaker 2: don't think.
• 23:44
  Speaker 4: I'm still running.
• 23:47
  Speaker 2: I like the idea of Tim Cook and Bill Gates
• 23:50
  Speaker 2: trying to be funny, but like it'll be unintentional comedy.
• 23:55
  Speaker 5: So these services, you know, Amazon Web Service dominates. According
• 23:59
  Speaker 5: to Synergy Group, Amazon Web Service currently has a thirty
• 24:03
  Speaker 5: percent market share of global cloud infrastructure, Microsoft Deserve with
• 24:07
  Speaker 5: twenty percent, and then Google Cloud with about twelve percent
• 24:11
  Speaker 5: market share.
• 24:11
  Speaker 4: And so yeah, when Amazon and we don't know what.
• 24:14
  Speaker 5: Caused this, by the way, right, no, could be a
• 24:17
  Speaker 5: fat finger in the code. We've seen that takedown things
• 24:21
  Speaker 5: as complicated as this before. It could be a hack
• 24:25
  Speaker 5: attack on these services. We aren't really certain. I'm sure
• 24:29
  Speaker 5: we will get some data on it over the course
• 24:30
  Speaker 5: of the next few weeks. But when somebody with thirty
• 24:33
  Speaker 5: percent market share in basically hosting a third of the
• 24:38
  Speaker 5: websites out there goes down, it leads to some noticeable problems.
• 24:42
  Speaker 2: And look, the fact of the matter is that if
• 24:49
  Speaker 2: there is good evidence out there that if Amazon Web
• 24:52
  Speaker 2: Service has ever had any kind of extended outage, I'm not.
• 24:57
  Speaker 3: Really sure how well we do here.
• 24:59
  Speaker 5: Micro Well, go take a look over in the UK
• 25:02
  Speaker 5: right now and just a much smaller example of this,
• 25:05
  Speaker 5: land Rover had a hack to their systems.
• 25:09
  Speaker 4: Is it fair to call it that? A cyber attack
• 25:11
  Speaker 4: on their systems?
• 25:11
  Speaker 5: That took that Absolutely, they were unable to produce cars
• 25:17
  Speaker 5: for a couple of months.
• 25:19
  Speaker 4: I know it was over thirty days. Yeah, I was
• 25:20
  Speaker 4: going to say over a month.
• 25:23
  Speaker 5: Like this stuff is a serious risk to the system,
• 25:27
  Speaker 5: and I think national security advisors and such are aware
• 25:30
  Speaker 5: of that. But I don't really see any great solutions,
• 25:34
  Speaker 5: right I mean, Amazon Web Services still has a one
• 25:36
  Speaker 5: third market share in hosting all of these sites.
• 25:40
  Speaker 2: There are plenty of solutions, but none that anyone wants
• 25:43
  Speaker 2: to pay for.
• 25:44
  Speaker 4: Yeah, I'm sure they'd be quite costing in terms of.
• 25:46
  Speaker 2: Again, the solution to every problem is basically redundancy.
• 25:51
  Speaker 3: And the fact is.
• 25:53
  Speaker 2: That we've you know, trained, our are our best and
• 25:56
  Speaker 2: brightest to be like, no, you have to be as
• 25:58
  Speaker 2: lean and mean as possible, which means no redundancy. Either
• 26:01
  Speaker 2: in terms of personnel or in terms of systems. And
• 26:06
  Speaker 2: go back a couple of years ago. You remember the
• 26:07
  Speaker 2: Colonial pipeline when that got hacked. Couldn't get the oil
• 26:11
  Speaker 2: to flow from one end to the other. You know,
• 26:14
  Speaker 2: you can't just like push it through with a giant plunger.
• 26:17
  Speaker 3: You know.
• 26:18
  Speaker 4: Well, I guess here's the question that I have, though, Chuck.
• 26:20
  Speaker 5: So big company sites got taken down, like Facebook, Snapchat,
• 26:24
  Speaker 5: Amazon was temporarily available, coinbased robin Hood, Venmo experienced some disruptions.
• 26:29
  Speaker 5: I don't see Bank of America on this list. I
• 26:32
  Speaker 5: don't see Fidelity or Schwab on this list. And I'm
• 26:35
  Speaker 5: you know, maybe it's just luck of the draw, right,
• 26:36
  Speaker 5: that's oftentimes the case.
• 26:38
  Speaker 3: Well, maybe they're just not on the list because you
• 26:39
  Speaker 3: can only write so many names.
• 26:41
  Speaker 5: Again, we'll find out. But I'm actually wondering if large
• 26:46
  Speaker 5: important institutions are actually focusing on redundancy here, right, Like
• 26:51
  Speaker 5: did the Pentagon get taken down as part of this
• 26:54
  Speaker 5: or do they actually have the appropriate redundancies built in
• 26:57
  Speaker 5: to make sure that that doesn't happen. Do large finance
• 27:00
  Speaker 5: institutions have backup plans that allow them to continue to operate.
• 27:04
  Speaker 3: I hope.
• 27:04
  Speaker 4: So I don't.
• 27:04
  Speaker 5: I don't know so, but I'm not seeing a list
• 27:07
  Speaker 5: of companies here that I would say are well known
• 27:12
  Speaker 5: for their well No, I've.
• 27:14
  Speaker 2: Seen like there's been reports of sporadic like trading issues
• 27:17
  Speaker 2: getting into different platforms and stuff this morning.
• 27:22
  Speaker 5: Okay, yeah, okay, you know, I'll pull some of them up.
• 27:26
  Speaker 2: I don't have them offhand, but I can pull them up, yep.
• 27:29
  Speaker 2: So I don't think financial companies are the only ones
• 27:32
  Speaker 2: that are like, hey, we're gonna be redundant, you know,
• 27:35
  Speaker 2: like we've had financial trading platforms go down punting completely,
• 27:40
  Speaker 2: and so I get I'm not gonna I can't just
• 27:43
  Speaker 2: believe that they're the only ones that are smart enough
• 27:46
  Speaker 2: to you know, have redundancy, like I I don't.
• 27:51
  Speaker 3: I don't know.
• 27:54
  Speaker 2: But the other thing is, look, it can just be
• 27:56
  Speaker 2: complete lucky the draw yet. Do you remember a couple
• 27:58
  Speaker 2: of years ago when uh it was Southwest had that
• 28:01
  Speaker 2: big thing where like their planes were a.
• 28:04
  Speaker 3: Mess for like a week.
• 28:05
  Speaker 5: Yeah, because it wasn't because their planes, it was because
• 28:07
  Speaker 5: of their It was a nice storm in like Dallas.
• 28:10
  Speaker 2: You know, Yeah, and they were like the whole thing
• 28:13
  Speaker 2: just got snarled there, and I said at the time, like, look,
• 28:15
  Speaker 2: this could happen to any airline. Is just where this,
• 28:18
  Speaker 2: you know, happened to be. We've seen it with other
• 28:20
  Speaker 2: ones where you know, Delta has it because Atlanta has
• 28:23
  Speaker 2: a nice storm, or you know, Chicago has something and
• 28:26
  Speaker 2: United is a mess for you know, three or four days,
• 28:29
  Speaker 2: and this could just be hey, yeah, maybe you didn't
• 28:31
  Speaker 2: hear about you know, Morgan Stanley or Fidelity because they
• 28:35
  Speaker 2: are on Google's cloud and not on Amazon, Like I
• 28:38
  Speaker 2: don't know who they use, but it just happened to
• 28:41
  Speaker 2: be that, Hey, Google's cloud is fine and Amazon's the
• 28:44
  Speaker 2: one that got hit, or you know you've got so
• 28:47
  Speaker 2: and so's on Microsoft.
• 28:48
  Speaker 3: Deserve could be lucky, yes, you know, like it's you
• 28:53
  Speaker 3: just don't know on this stuff.
• 28:54
  Speaker 2: So but I have seen reports of issues getting into
• 28:59
  Speaker 2: Brokera over the course of the morning as well. So
• 29:02
  Speaker 2: I don't think it's as squeaky clean. I think it's
• 29:06
  Speaker 2: more just hey, you can list like you know, a
• 29:09
  Speaker 2: dozen names in any report like yeah, here, like this
• 29:13
  Speaker 2: is the one from CNBC.
• 29:15
  Speaker 3: Robin Hood's on the list. Who else is there but Chuck?
• 29:19
  Speaker 5: That's kind of my point is that Robin Hood's on
• 29:21
  Speaker 5: the list, and Fidelity and Schuab or not, and you
• 29:24
  Speaker 5: know Bank of America and Morgan Stanley aren't on the list.
• 29:27
  Speaker 5: That's precisely My point is when I look at this
• 29:29
  Speaker 5: list of companies, I don't think of them as mature,
• 29:34
  Speaker 5: giant institutions that are critical to Again, people would disagree
• 29:40
  Speaker 5: here because Delta Airlines is on the list, But I'm
• 29:42
  Speaker 5: looking at Epic Games, Fortnite, Lift Max, McDonald's like, none
• 29:46
  Speaker 5: of these.
• 29:47
  Speaker 2: To me are pretty mature again, mature company global like
• 29:51
  Speaker 2: Phone Systems United. But if Eisen But.
• 29:53
  Speaker 5: If I'm looking at as you know, as CEO of
• 29:55
  Speaker 5: that company and my app goes down for it, I
• 30:00
  Speaker 5: guess I'm devastated. The app goes down for a day,
• 30:02
  Speaker 5: even at McDonald's. But my point is that there are
• 30:04
  Speaker 5: big institutions that I don't see on this list that
• 30:06
  Speaker 5: I'm curious about.
• 30:08
  Speaker 2: Yeah, yep, just take a quick break. When we return,
• 30:11
  Speaker 2: Let's talk China.
• 30:14
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• 30:17
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• 30:51
  Speaker 3: Peace and Bloomberg.
• 30:52
  Speaker 2: President Trump wass top demands on China before trade talks resume.
• 30:57
  Speaker 3: Three key things laid out.
• 30:59
  Speaker 2: Number one, stop playing games with rare earth's Number two,
• 31:05
  Speaker 2: crack down on FENTNL exports and fentanyl precursor exports. Number three,
• 31:10
  Speaker 2: start buying our soybeans again. Your thoughts, Michael, Yeah, I'm
• 31:13
  Speaker 2: trying to.
• 31:14
  Speaker 5: In my mind, I was thinking through like what would
• 31:16
  Speaker 5: each party come away from negotiations. I'm not talking about
• 31:19
  Speaker 5: just these ones, but over the course of the next
• 31:21
  Speaker 5: twelve months with as a win. And it does not
• 31:26
  Speaker 5: seem like it's dramatic change to trade policy. To your point, yeah,
• 31:29
  Speaker 5: buy some of our stuff. I think the Chinese would
• 31:31
  Speaker 5: be quite content if the official tariff rate ended up
• 31:36
  Speaker 5: somewhere in the twenty to thirty percent range. And I
• 31:39
  Speaker 5: think we would be quite content if we had the
• 31:42
  Speaker 5: flow of rare earths continuing into the United States. Is
• 31:46
  Speaker 5: there really much anything else that I think, is it,
• 31:48
  Speaker 5: like in a best case scenario in your mind? Shock,
• 31:50
  Speaker 5: Is there anything else that gets agreed to as part
• 31:52
  Speaker 5: of this.
• 31:54
  Speaker 2: No, And I'm pretty unconvinced that gets agreed to. I
• 31:59
  Speaker 2: was talking about this last week and this is again
• 32:02
  Speaker 2: I come back to China over and over and like,
• 32:06
  Speaker 2: China's at the precipice of things getting kind of gnarly demographically,
• 32:10
  Speaker 2: Like they're already there to a certain extent. Yes, but
• 32:14
  Speaker 2: you can make a real case in my opinion, that
• 32:17
  Speaker 2: the convergence of hey, G's getting older and wants to
• 32:21
  Speaker 2: do some stuff before he dies, China's getting older and
• 32:25
  Speaker 2: is going to lose some of the advantage that they
• 32:27
  Speaker 2: have had historically as a result of that. And you
• 32:32
  Speaker 2: couple that with the fact that the US and everyone
• 32:34
  Speaker 2: else now recognizes, Gee, we can't just rely on China
• 32:38
  Speaker 2: to produce rare earths and all this other stuff because
• 32:40
  Speaker 2: if they decide that they're going to not cooperate, were
• 32:46
  Speaker 2: you know, up poop creek and that doesn't smell very good.
• 32:48
  Speaker 2: And so I think that when when you look at this,
• 32:53
  Speaker 2: it's something where I'm more convinced than ever that China
• 32:59
  Speaker 2: wants to try to use the next five years or
• 33:02
  Speaker 2: so to really push to cement the position that G
• 33:05
  Speaker 2: wants it to be in.
• 33:06
  Speaker 3: And here's my question is, which is what what do
• 33:10
  Speaker 3: you mean?
• 33:10
  Speaker 5: What is that position that G wants China to be in.
• 33:14
  Speaker 5: I think, you know, they would love more territory, they
• 33:16
  Speaker 5: would love more control over Taiwan. I'm just not sure
• 33:19
  Speaker 5: what that position actually looks like that he is hoping to.
• 33:22
  Speaker 3: I think he wants control over Taiwan.
• 33:25
  Speaker 2: And I think he wants the Chinese form of government
• 33:29
  Speaker 2: to be recognized as like the pre eminent form throughout
• 33:33
  Speaker 2: the world, because he sees himself as trying to pick
• 33:37
  Speaker 2: up the mantle for the defeat of communism in the
• 33:40
  Speaker 2: mid twentieth century. And these are things that you can
• 33:44
  Speaker 2: get from like his speeches and books and not that
• 33:47
  Speaker 2: he like, you know, sits down and writes like his memoirs.
• 33:49
  Speaker 2: That's not really you know, G, but you know, from
• 33:52
  Speaker 2: his speeches and writings and stuff like that, that's that's
• 33:55
  Speaker 2: kind of what I think is important to him.
• 33:57
  Speaker 5: And so in my mind, the relationship just kind of
• 34:00
  Speaker 5: so along here because we both realize that we're reliant
• 34:02
  Speaker 5: on each other. Yeah, they want to run out the
• 34:05
  Speaker 5: clock on us. We need their rare earths, they need
• 34:10
  Speaker 5: some things from us, largely our consumer and so you
• 34:13
  Speaker 5: just have these two countries that are kind of relatively
• 34:15
  Speaker 5: dependent on each other but are generally uncomfortable with each other.
• 34:18
  Speaker 5: And in a worst case, that really blows up, like
• 34:20
  Speaker 5: it did over the course of this year. But in
• 34:22
  Speaker 5: a best case, I think it just kind of limps
• 34:23
  Speaker 5: along as the status quo, which is not great for farmers.
• 34:26
  Speaker 5: It's not really great for the pace at which we
• 34:29
  Speaker 5: need to develop some of these rare earth things. But
• 34:31
  Speaker 5: I don't see how it dramatically improves.
• 34:34
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• 34:37
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  Speaker 6: Gifting Assets. You can get it by calling eight six
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• 35:42
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• 35:44
  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
• 35:46
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• 35:50
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• 35:53
  Speaker 2: Mike, we got continued problems in the auto sector, and
• 35:57
  Speaker 2: it's it's coming in a wide varray of different wide
• 36:00
  Speaker 2: array of different places. Number one piece in the Wall
• 36:03
  Speaker 2: Street Journal. First Ford now Jeep automakers hit by a
• 36:06
  Speaker 2: lack of parts, apparently in a Michigan factory for Jeep.
• 36:13
  Speaker 2: They have had to stop producing vehicles last week and
• 36:17
  Speaker 2: won't resume production till early next month because they have
• 36:21
  Speaker 2: a shortage of aluminum four to stop production at three
• 36:24
  Speaker 2: plants for the same reason. And so you've got a
• 36:27
  Speaker 2: bunch of people sitting there saying, Okay, I'm collecting unemployment
• 36:30
  Speaker 2: for the short term.
• 36:31
  Speaker 3: Next one, low.
• 36:32
  Speaker 2: Income Americans are missing car payments. This is something we've
• 36:34
  Speaker 2: talked about, subprime defaults on auto loans creeping up, and
• 36:39
  Speaker 2: this one on Friday I sent your way primaal end.
• 36:45
  Speaker 2: Do we have any idea who they actually are before
• 36:47
  Speaker 2: this piece was written.
• 36:48
  Speaker 5: Mike did not know of them on Thursday of last week,
• 36:50
  Speaker 5: knew about them on Friday.
• 36:52
  Speaker 2: Basically, they are a company that provides financing to dealerships
• 36:56
  Speaker 2: that cater to subprime borrowers. Creditors of them are talking
• 37:01
  Speaker 2: about whether or not they want to push the company
• 37:03
  Speaker 2: to file for bankruptcy because they haven't gotten paid for months.
• 37:08
  Speaker 2: Something reeks in the auto sector, Michael, and it like
• 37:11
  Speaker 2: it's this is not a one off here, like this
• 37:14
  Speaker 2: is now like three, four or five things that we're
• 37:17
  Speaker 2: getting to in a month. There is something stinky in autos.
• 37:20
  Speaker 4: Yeah, at least we know what it is.
• 37:22
  Speaker 3: Right. It's too much debts, too much debt.
• 37:24
  Speaker 5: Too much debt on the part of consumers, too much
• 37:26
  Speaker 5: debt on the part of the companies that are involved
• 37:28
  Speaker 5: in the manufacturing and lending in the industry.
• 37:31
  Speaker 4: So there's too much debt generally.
• 37:33
  Speaker 5: And then there are still all sorts of supply chain snaffoos,
• 37:36
  Speaker 5: part of which are caused by tariffs, part of which
• 37:40
  Speaker 5: are just random chance. I mean, the New York aluminum
• 37:43
  Speaker 5: factory going down has now brought down two automakers and
• 37:46
  Speaker 5: their ability to produce.
• 37:48
  Speaker 2: So what do you do when you have too much debt, Michael,
• 37:51
  Speaker 2: You go and rob a bunch of royal jewels from
• 37:53
  Speaker 2: the louver.
• 37:53
  Speaker 5: Yes, yes, so you're completely stories orchestrated by automakers.
• 37:58
  Speaker 2: No, probably not dead. But the wild story broad daylight.
• 38:02
  Speaker 2: It was nine to thirty am yesterday and apparently a
• 38:06
  Speaker 2: bunch of jewels were stolen from the louver in broad
• 38:09
  Speaker 2: daylight by a bunch of people that went in and
• 38:13
  Speaker 2: took them.
• 38:14
  Speaker 3: Wild stuff. Let's take a quick break here. When we
• 38:17
  Speaker 3: come back, we had hour two coming up in a
• 38:18
  Speaker 3: bit