Latest / The Financial Exchange Show / We've never seen markets do this before

Transcript

We've never seen markets do this before · The Financial Exchange Show

0:00
Speaker 1: The Financial Exchange is produced by Money Matters Radio and
0:02
Speaker 1: is hosted by employees of the Armstrong Advisory Group, a
0:05
Speaker 1: registered investment advisor. All opinions expressed are solely those of
0:08
Speaker 1: the hosts. Do not reflect the opinions of Armstrong Advisory
0:11
Speaker 1: or anyone else. Investments can lose money. This program does
0:14
Speaker 1: not offer any specific financial or investment advice. Please consult
0:17
Speaker 1: your own financial, tax, and estate planning advisors before making
0:20
Speaker 1: any investment decisions. Armstrong Advisory and the advertisers heard on
0:23
Speaker 1: this program do not endorse each other or their services.
0:26
Speaker 1: Armstrong and Money Matters Radio do not compensate each other
0:28
Speaker 1: for referrals and are not affiliated. This is the Financial
0:34
Speaker 1: Exchange with Chuck Zada and Mike Armstrong, Your exclusive look
0:38
Speaker 1: at business and financial news affecting your day, your city,
0:42
Speaker 1: your world. Stay informed and up to date about economic
0:46
Speaker 1: and market trends plus breaking business news every day. The
0:50
Speaker 1: Financial Exchange is a proud partner of the Disabled American
0:53
Speaker 1: Veterans Department of Massachusetts. Help us support our great American
0:57
Speaker 1: heroes by visiting dav five K Boston and making a
1:01
Speaker 1: donation today. This is the Financial Exchange with Chuck Zada,
1:06
Speaker 1: and Mike Armstraw.
1:09
Speaker 2: Hour two on the Financial Exchange, and it's Chuck, Mike
1:13
Speaker 2: and Tucker with you. We got stocks continuing to rally.
1:17
Speaker 2: Golly g Willakers, they just keep chugging along. I did
1:22
Speaker 2: a little bit of math Michael, Oh yeah, I did
1:26
Speaker 2: occasionally in my spare time. I like two maths, some
1:29
Speaker 2: good old radio. I do enjoy mathing. If we stay
1:34
Speaker 2: positive for the day, which again barring any kind of
1:37
Speaker 2: catastrophic collapse, since the S and P five hundreds now
1:40
Speaker 2: up one and a half percent, the dows up three
1:41
Speaker 2: n and sixty five points in the nasdacs up two
1:43
Speaker 2: and a half percent. But barring any kind of you know,
1:46
Speaker 2: collapse today this would now be eight straight days of
1:52
Speaker 2: gains for the S and P five hundred since last Monday, Solid, Tuesday, Wednesday, Thursday, Friday,
2:01
Speaker 2: and then Monday, Tuesday, Wednesday, Thursday. Now this starts getting
2:04
Speaker 2: to the point where again, like stocks typically don't just
2:06
Speaker 2: go up until he starts saying, okay, where is this
2:08
Speaker 2: too extended? But stocks have not run out of fuel
2:11
Speaker 2: to this point at least, and so you've had a
2:14
Speaker 2: really strong relief rally to the point where the S
2:17
Speaker 2: and P five hundred is now just a quarter percent,
2:19
Speaker 2: i'm sorry, half percent below where it was where it
2:24
Speaker 2: peaked on April second, just before the Tarif announcement. So
2:30
Speaker 2: pretty remarkable resilience in this market. And I think a
2:34
Speaker 2: good reminder of hey, when you start getting nervous about
2:38
Speaker 2: you know, stocks, you know when they're down, selling everything
2:44
Speaker 2: when you're most nervous is not really the best thing
2:46
Speaker 2: to do. So it's not to say that, hey, you
2:50
Speaker 2: can't make adjustments here and there as you go, but
2:53
Speaker 2: when it comes to, you know, pushing that button and saying, oh,
2:56
Speaker 2: I'm just gonna sell everything, you never know what's around
2:59
Speaker 2: the corner. It could be good, it could be bad. Likewise,
3:02
Speaker 2: we're sitting here today right now talking like this. Three
3:05
Speaker 2: weeks from now, the SMP could be at six thousand,
3:07
Speaker 2: it could be back down to forty eight hundred. Sure,
3:09
Speaker 2: I have no idea what it is going to do, agreed,
3:15
Speaker 2: But I think a few things are true.
3:17
Speaker 3: And this doesn't indicate Again, this doesn't indicate anything about
3:20
Speaker 3: the direction of the stock market in a few weeks.
3:22
Speaker 3: But I think it's important to contextualize most everyone out
3:26
Speaker 3: there has increased their risk of recession in twenty twenty five.
3:31
Speaker 3: You need project like people who like quantify that stuff, right,
3:34
Speaker 3: people who do this for a living, Economists or whether
3:40
Speaker 3: that's you know, research economists, whether it is economists at
3:43
Speaker 3: publicly traded companies and banks. Pretty much everybody has dramatically
3:46
Speaker 3: increased their risk of recession in twenty twenty five. And
3:51
Speaker 3: that's just the context under which we are operating right now.
3:54
Speaker 3: Markets now at this stage, and that's another piece to
3:58
Speaker 3: contextualize from they are all time highs ever, which were
4:02
Speaker 3: reached in February.
4:03
Speaker 2: Maybe you have this right at the top of your head.
4:05
Speaker 2: I'm guessing we're.
4:06
Speaker 3: Right around down seven percent off of those all time
4:10
Speaker 3: highs that were reached mid February. So it's been, you know,
4:14
Speaker 3: pretty wild path to get to that point because stocks
4:17
Speaker 3: we were down about twenty but we're down single digits
4:21
Speaker 3: percentage points from those all time highs. I do have
4:24
Speaker 3: to say, like the the stuff that we are seeing
4:28
Speaker 3: in markets right now. Again I noted earlier in April,
4:32
Speaker 3: you know.
4:32
Speaker 2: Kind of as things were near the bottom, Hey like this,
4:36
Speaker 2: you know, two and three day stretches amongst the worst
4:38
Speaker 2: two and three day stretches that we've ever seen we're
4:42
Speaker 2: also seeing some stuff now in markets that is stuff
4:49
Speaker 2: that I've never seen in the opposite direction, and not
4:52
Speaker 2: just stuff I've never seen, but like stuff that again
4:55
Speaker 2: doesn't really happen very often, right, and so like just
4:59
Speaker 2: if you look at this as an example, not to
5:03
Speaker 2: get too technical, we talk about the VIC sometimes it's
5:06
Speaker 2: Wall Street's fear gauges is how it's referred to. Basically,
5:10
Speaker 2: it's a measure of implied volatility for the s and
5:13
Speaker 2: P five hundred for the next month, how much traders
5:16
Speaker 2: expect markets to move on a daily basis over the
5:19
Speaker 2: next thirty days. And you can't actually, like, the VIX
5:23
Speaker 2: is not an index that you can buy, Like just
5:25
Speaker 2: like most in disease, you can't invest in it. In fact,
5:27
Speaker 2: there you know, there's no really reliable way to purchase
5:31
Speaker 2: it in any way, shape or form. You can't do it.
5:34
Speaker 2: But what you do have are VIX futures, which basically
5:38
Speaker 2: help markets to price out where they think volatility is
5:41
Speaker 2: going to be in the future. The normal shape of
5:46
Speaker 2: that VIX futures curve. I promise I won't make this
5:48
Speaker 2: too too weird. Normally there is less volatility priced in
5:52
Speaker 2: today than there is in the future, meaning VIX futures
5:55
Speaker 2: are at a higher price than they are today, the
5:57
Speaker 2: reason being you don't know what's gonna happen to me,
6:00
Speaker 2: so you price in more uncertainty later on. Right now,
6:05
Speaker 2: we still have a situation where the VIX curve is inverted,
6:10
Speaker 2: meaning it's pricing in more volatility now than it is
6:13
Speaker 2: in the future. This normally occurs like at or around
6:16
Speaker 2: market bottoms, just because you're pricing in the volatility that's
6:20
Speaker 2: happening right now with the assumption it'll get better. What's
6:23
Speaker 2: really wild right now? And this is data from Lukawa
6:27
Speaker 2: from Sherwood News prior to this stretch here for the
6:34
Speaker 2: last twenty years. They changed the VIX methodology about twenty
6:37
Speaker 2: years ago. So I'm not going to go back further,
6:38
Speaker 2: and he does neither. But prior to this stretch here,
6:44
Speaker 2: the longest that we had ever gone the most days
6:46
Speaker 2: in a row where the S and P was up
6:47
Speaker 2: with the VIX curve inverted was six days, and it
6:52
Speaker 2: was back sometime in twenty eighteen. I think it was
6:54
Speaker 2: right at the It was right at the beginning with
6:56
Speaker 2: vaal Mageddon, when like a bunch of option sellers blew
6:59
Speaker 2: up in everything, and that was that we're now closing it.
7:03
Speaker 2: It'll be eight days, which is two days longer than
7:05
Speaker 2: the previous record that we've seen. So we're seeing some
7:09
Speaker 2: stuff that we ain't never seen before.
7:12
Speaker 3: Is the mix that you go through that complex explanation
7:16
Speaker 3: of everything, citing some pretty reliable resources about the curve
7:19
Speaker 3: of the vics, and then summarize it with.
7:22
Speaker 2: We're seeing some stuff we ain't never seen before. That's
7:26
Speaker 2: just a wonderful mishmash of language. I try to reach everyone.
7:30
Speaker 2: I want to reach the nerds. I want to reach
7:32
Speaker 2: the common folk. I want to reach everyone in between.
7:34
Speaker 2: Like it, and so you got to just you know,
7:37
Speaker 2: get yourself out there and just just go for it. Uh,
7:41
Speaker 2: let's see, forget GDP. It's the jobs report that matters.
7:45
Speaker 2: That is the headline in the Wall Street Journal.
7:48
Speaker 3: So I don't necessarily disagree, but this implies the GDP
7:51
Speaker 3: doesn't matter.
7:52
Speaker 2: Why do they argue it doesn't matter? Who cares? Here's
7:58
Speaker 2: the thing. I'm not sure that this job's report matters
8:00
Speaker 2: a ton too unless it comes in really negative, because
8:05
Speaker 2: then it shows an economy that's already weakening in advance
8:09
Speaker 2: of tariffs. Right, because This isn't gonna capture tariff impact
8:12
Speaker 2: because the survey for this month's job report, for the
8:14
Speaker 2: April jobs report, it was done the week after tariffs
8:16
Speaker 2: were implemented. Raise your hand if your company immediately upon
8:20
Speaker 2: you know, seeing the tariff news, said fired, we're laying
8:24
Speaker 2: people off. No, most companies said, all right, we need
8:27
Speaker 2: to take a couple of weeks to understand this, and
8:29
Speaker 2: maybe we'll pause some projects and slow down and reassess,
8:32
Speaker 2: you know, what things look like. I've yet to talk
8:35
Speaker 2: to anyone, even people in directly impacted industries, who immediately said,
8:39
Speaker 2: that's it, twenty percent head count reduction, call it a day.
8:43
Speaker 2: So I don't think that you're gonna see anything shocking
8:46
Speaker 2: from this, and even if you do, quite honestly, it's
8:49
Speaker 2: just one report. The issue with it if it is
8:52
Speaker 2: a week report is okay, if you have a week
8:56
Speaker 2: jobs report, and I'd qualify week as I think the
8:58
Speaker 2: expectations are like somewhere between like one hundred and one
9:01
Speaker 2: hundred and fifty thousand is where most estimates are. I'd
9:04
Speaker 2: qualify week as under fifty not fifty jobs, fifty thousand jobs, right,
9:10
Speaker 2: just because generally there's there's a pretty wide range of revisions.
9:13
Speaker 2: So if it comes into like eighty nine, it's not
9:15
Speaker 2: jobs miss, Like, I don't consider that a miss. That's
9:18
Speaker 2: just within the margin of error. But if you come
9:22
Speaker 2: in at like twenty two thousand jobs or even worse,
9:23
Speaker 2: like if you have negative unexpectedly, you kind of sit
9:27
Speaker 2: there and you're like, all right, so the economy was
9:29
Speaker 2: the jobs market was worsening in April. Is there anything
9:35
Speaker 2: that has been done since then that would improve the
9:39
Speaker 2: prospect for jobs in the short term? And the answer
9:42
Speaker 2: is a resounding no. Basically, every business survey that's out
9:46
Speaker 2: there is like, yeah, we're pausing hiring and we're slowing
9:48
Speaker 2: it down, and we're gonna take a little bit to
9:50
Speaker 2: figure out what happens. So I think that would be
9:54
Speaker 2: the concern is if you already have a negative reading here,
9:57
Speaker 2: there is no immediate catalyst for a bounce, and do
10:00
Speaker 2: you start to see things spiral. The counterpoint to this
10:04
Speaker 2: is it's pretty unlikely that you get a reading that
10:07
Speaker 2: week just because weekly jobless claims have been low. You've
10:10
Speaker 2: seen a little bit of an uptick in continuing claims
10:13
Speaker 2: that we discussed, so that could you know, show some
10:15
Speaker 2: weakness here, But overall, there hasn't been any real shift
10:20
Speaker 2: in the data that we've seen in real time indicators
10:23
Speaker 2: for the jobs market, and so it would be a
10:27
Speaker 2: pretty big surprise if you get a significantly weak reading
10:30
Speaker 2: here tener Gree Just take a quick break. When we
10:33
Speaker 2: come back, we'll do a little bit of trivia and
10:36
Speaker 2: then we'll talk about gen Z and their place in
10:39
Speaker 2: the labor market. After this, the.
10:42
Speaker 1: Global trade war is in full swing. How long will
10:44
Speaker 1: it last? Is anyone's gas? Keep it here for the
10:47
Speaker 1: most up to date information plus breaking news every day
10:51
Speaker 1: right here on the Financial Exchange Radio Network. Find daily
10:55
Speaker 1: interviews and full shows of the Financial Exchange on our
10:58
Speaker 1: YouTube page. Like a on YouTube and get caught up
11:01
Speaker 1: on anything and everything you might have missed. This is
11:04
Speaker 1: the Financial Exchange Radio Network.
11:09
Speaker 4: The Financial Exchange is a proud partner of the Disabled
11:12
Speaker 4: American Veterans Department of Massachusetts. And you can register right
11:15
Speaker 4: now for this year's five K at Castle Island by
11:19
Speaker 4: visiting DAV five K dot Boston. The event will sell
11:22
Speaker 4: out again, so if you're interested in participating, now's the
11:26
Speaker 4: time to reserve your spot, Come out and help support
11:29
Speaker 4: our great American heroes. By joining us for the DAV
11:32
Speaker 4: five k. There's a DAV five k dot Boston to
11:35
Speaker 4: register or to make a donation today. That's DAV five
11:39
Speaker 4: k dot Boston. Time for trivia here on the Financial
11:43
Speaker 4: Exchange And on this day. In nineteen thirty nine, Batman
11:47
Speaker 4: made his first appearance in a comic book. Batman comics
11:50
Speaker 4: have sold over four hundred and eighty million copies worldwide.
11:55
Speaker 4: There have been eleven Batman movies over the years. Trivy
11:59
Speaker 4: question today which actor is currently playing the role of Batman?
12:04
Speaker 4: Once again? Which actor is currently playing the role of Batman?
12:08
Speaker 4: Be the fourth person today to text us at six
12:11
Speaker 4: one seven three six two thirteen eighty five with the
12:14
Speaker 4: correct answer, and you win a brand new Financial eks
12:17
Speaker 4: Change showed T shirt. Once again. The fourth correct response
12:20
Speaker 4: to text us at six one seven three six two
12:22
Speaker 4: thirteen eighty five will win that T shirt. See complete
12:25
Speaker 4: contest rules at Financial Exchange Show dot com.
12:29
Speaker 2: Pea's in Bloomberg Opinion today, gen Z's hole in the
12:31
Speaker 2: labor market could soon grow so uh. For those who
12:34
Speaker 2: aren't familiar with gen Z, they are the new millennials,
12:37
Speaker 2: and by that I mean they are now the young
12:40
Speaker 2: people that you can make fun of because they are
12:45
Speaker 2: young and none of us are anymore.
12:46
Speaker 4: So leave us alone. You're not gen z No. But
12:49
Speaker 4: people always blame millennials still, which is not accurate.
12:53
Speaker 2: And it drives me. I do feel like people just
12:55
Speaker 2: use the term millennials to describe anyone who's twenty three
12:57
Speaker 2: drives me insane, which is just not what it is.
13:01
Speaker 2: It's fine, look, no it's not. I eat my avocado
13:04
Speaker 2: toast proudly. I only drink the finest craft beers. I
13:10
Speaker 2: live in Brooklyn and commute to Massachusetts every day. You
13:14
Speaker 2: have a beard, I do have a beard. So to
13:16
Speaker 2: grizzly atoms flannels, I'm actually anti flannel, believe it or not.
13:20
Speaker 4: Very tight flannel.
13:22
Speaker 2: I used to. I used to be pro flannel in
13:24
Speaker 2: my twenties, but I just I like something that's got
13:29
Speaker 2: a little bit more stretches. I get older and flannels don't.
13:32
Speaker 2: Don't do that.
13:32
Speaker 4: Just found a good flannel, chuck, That's all.
13:34
Speaker 2: I've spent a lot of money on flannels, and I
13:37
Speaker 2: regret it. I feel like we honed in on hipsters
13:40
Speaker 2: here instead of millennials. What's the difference? Fair enough?
13:44
Speaker 4: Sorry?
13:44
Speaker 2: Continue anyways, So here's the interesting thing that we're seeing
13:47
Speaker 2: in the Great Financial Crisis, in the aftermath of it,
13:51
Speaker 2: new college grads had a an unemployment rate that was
13:55
Speaker 2: one to two percentage points under the national average. Actually why,
14:00
Speaker 2: I you know, you can kind of speculate, but basically
14:04
Speaker 2: it was, Hey, they were just coming out like they
14:06
Speaker 2: were cheap labor. It was you know, they weren't coming
14:09
Speaker 2: from other positions and needing to you know, reassess, so
14:12
Speaker 2: they went out they took any and every job that
14:14
Speaker 2: they could, regardless of the pay, and they generally were
14:17
Speaker 2: able to get those jobs.
14:18
Speaker 3: I definitely feel as though my first job was doing
14:22
Speaker 3: work that was replacing somebody who was in their later
14:26
Speaker 3: end of their career.
14:28
Speaker 2: And doing it for half the cost half the cost.
14:30
Speaker 3: Probably not quite as well as that person that was
14:32
Speaker 3: doing it, but eventually I got there.
14:34
Speaker 2: Sure. The interesting thing that we're seeing now is because
14:38
Speaker 2: of the way the job market is today where there's
14:41
Speaker 2: not really much in the way of layoffs that's been
14:42
Speaker 2: happening the last couple of years, but also hiring rates
14:45
Speaker 2: have slowed down considerably as well. You now have a
14:48
Speaker 2: situation where younger people college grads even have a higher
14:53
Speaker 2: unemployment rate than the broad labor market as a whole.
14:58
Speaker 2: And so this is, you know, kind of an interesting
15:01
Speaker 2: conundrum that is facing us right now, because look, I
15:06
Speaker 2: gotta tell you, every week I see more and more
15:08
Speaker 2: companies saying, oh, we're doing you know, return to office
15:10
Speaker 2: this and that, and all I see when I see
15:12
Speaker 2: return to office now is we want to lay people
15:15
Speaker 2: off without having to pay severence. Yeah, we want you
15:17
Speaker 2: to leave, like, we want you to get upset and
15:19
Speaker 2: be like I'm leaving and then actually do it right.
15:23
Speaker 2: And so I'm trying to figure out when this turns,
15:27
Speaker 2: but it's probably not until hiring picks up, which again
15:31
Speaker 2: you don't know exactly when it's gonna happen, but you
15:33
Speaker 2: figure you've got to get through this tariff, you know,
15:35
Speaker 2: uncertainty first. Then the questions of hey, did the tariff
15:38
Speaker 2: uncertainty cause a recession? You might be looking out to
15:43
Speaker 2: like later there like Q four of this year, a
15:46
Speaker 2: Q one of next year, before the worm starts to
15:48
Speaker 2: turn on this maybe.
15:49
Speaker 3: Yeah, it definitely is a tough labor market out there
15:52
Speaker 3: for twenty two year olds and around that age demographic
15:57
Speaker 3: that have never worked before. If you graduated a few
15:59
Speaker 3: years ago and got that job, it's probably just fine.
16:02
Speaker 3: But if you are graduating in May of this year,
16:05
Speaker 3: it is a challenge. I'm trying to think of takeaways
16:08
Speaker 3: that you know, our generation had from graduating into the
16:12
Speaker 3: Great Recession, and you're right, it is different because at
16:15
Speaker 3: that point the unemployment rate for that demographic was actually
16:18
Speaker 3: lower than the overall but it was still considerably higher
16:22
Speaker 3: than even what I think gen Z is facing right now.
16:25
Speaker 3: And so my main takeaway would just be, when you
16:29
Speaker 3: get hit with a labor market like one of these,
16:31
Speaker 3: you kind of have to put your pride in your
16:33
Speaker 3: back pocket for a little bit and just do the
16:35
Speaker 3: job that you get, not necessarily a job that you want,
16:37
Speaker 3: which sucks yeeah, especially if you just spent a quarter
16:42
Speaker 3: million dollars on your education. It sure would be nice
16:44
Speaker 3: to get the job that you want. That's just not
16:47
Speaker 3: always how it works out.
16:49
Speaker 2: I did come across one statistic that I wanted to
16:52
Speaker 2: dig in on a little bit more here, which is
16:56
Speaker 2: I really need to actually click through the link on
16:58
Speaker 2: this piece, but the the the Bureau of Labor Statistics
17:04
Speaker 2: puts something out called the American Time Use Survey Atus
17:10
Speaker 2: or ATTUS for those of us in the biz. And
17:15
Speaker 2: here here's what the statistic I found interesting. I'll quote
17:22
Speaker 2: apparently basically, men, is it men? Yes, it's men. Men
17:27
Speaker 2: ages fifteen through twenty four spent less time playing video
17:31
Speaker 2: games in twenty twenty three, down from an all time
17:34
Speaker 2: high of one hundred and nine minutes a day in
17:36
Speaker 2: twenty twenty two to eighty eight minutes a day in
17:40
Speaker 2: twenty twenty three. Now, a couple things. That fifteen to
17:43
Speaker 2: twenty four demographic that they survey is, you know, kind
17:50
Speaker 2: of a weird demo because it includes people that just
17:54
Speaker 2: started high school but also people that have graduated college.
17:59
Speaker 2: So the interesting I mean, look, I don't know about
18:02
Speaker 2: you guys, but at my peak in high school and
18:07
Speaker 2: maybe even into like parts of college, there was a
18:11
Speaker 2: pretty good chance I was playing like two to four
18:13
Speaker 2: hours of video games.
18:14
Speaker 4: A day, oh easily, easily, and on like.
18:17
Speaker 2: A rainy weekend day, the entire day. Yep, I'm playing
18:22
Speaker 2: through like four seasons of Madden in a day. Sure,
18:25
Speaker 2: no problem, not even a question. Just put some fans
18:29
Speaker 2: on the xbox, it'll be fine.
18:30
Speaker 4: Oh what's your point though?
18:32
Speaker 2: My point on this is just that I didn't know
18:35
Speaker 2: how much we played on average, that was it, but
18:39
Speaker 2: also that Hey, by the time I started working at
18:42
Speaker 2: twenty four, I went to playing like fifteen to twenty
18:47
Speaker 2: minutes a day at that point, And so I don't
18:51
Speaker 2: know how much of this is. Hey, young men spent
18:55
Speaker 2: way too much time playing video games as opposed to Okay,
18:59
Speaker 2: this just capturing a bunch of high schoolers that play
19:02
Speaker 2: more video games now than they used to because it's
19:04
Speaker 2: more socially acceptable.
19:05
Speaker 4: Yeah, but they're just taking that time and applying it
19:07
Speaker 4: to TikTok you know, could.
19:10
Speaker 2: Be Yeah, you know, it's if there's one thing that
19:13
Speaker 2: I believe young people should do, waste a bunch of
19:17
Speaker 2: their time, Yes, you should, Like it doesn't all have
19:22
Speaker 2: to be about work, Like wasting time is how you
19:25
Speaker 2: kind of figure out. I don't know lots of stuff,
19:28
Speaker 2: but whatever, take a quick break. Here we got the
19:31
Speaker 2: answer to trivia after this.
19:41
Speaker 1: Bringing the latest financial news straight to your radio every day,
19:46
Speaker 1: it's the Financial Exchange on the Financial Exchange Radio Network.
19:51
Speaker 1: Text us six one, seven, three, six, two thirteen eighty
19:55
Speaker 1: five with your comments and questions about today's show and
19:58
Speaker 1: let us know what you think about the story we
20:00
Speaker 1: are covering. This is the Financial Exchange Radio Network.
20:12
Speaker 4: All Right, tribute questions today was which actor is currently
20:16
Speaker 4: playing the role of Batman? Now be Robert Pattinson. Tim
20:21
Speaker 4: from Westford, mass is our winner today, taking over a
20:24
Speaker 4: brand new Financial Exchange Show t shirt. Congrats to Tim.
20:28
Speaker 2: And we play trivia every day here.
20:30
Speaker 4: On the Financial Exchange See complete contest rules at Financial
20:35
Speaker 4: Exchange Show dot com. And I want to bring up
20:37
Speaker 4: a text in regards to our conversation on video games
20:41
Speaker 4: in the previous segment here gentlemen, text out of the
20:44
Speaker 4: nine seven eight saying, and when you were over seventy
20:47
Speaker 4: years old, you will play even more hours of video games.
20:49
Speaker 4: I probably play three to four hours of Candycruss soda.
20:53
Speaker 4: There you go.
20:54
Speaker 2: It's wonderful. Is there a Lego Batman sequel coming out?
20:58
Speaker 3: Because I would have liked to accept Arnett for uh
21:03
Speaker 3: who's currently playing Batman as an alternative option.
21:05
Speaker 2: Okay, well that's why you don't run trivia. I know.
21:09
Speaker 2: Let's talk about McDonald's. Yeah, let's go there. They reported
21:13
Speaker 2: earnings this morning and the same store sales came in
21:17
Speaker 2: at a three point six percent year over year decline.
21:22
Speaker 2: Which couple things here, like there's a few different ways
21:26
Speaker 2: that you can read this. The first is is questions
21:29
Speaker 2: that you need to ask. Number one, is McDonald's having
21:32
Speaker 2: trouble executing? Number two, If they are, where's the problem?
21:37
Speaker 2: Number three? If not, what's causing this? So I think
21:42
Speaker 2: it's some of both. I think they are having some
21:44
Speaker 2: trouble executing because the price competitiveness for them relative to
21:50
Speaker 2: other options, the gap is narrowing.
21:53
Speaker 3: Especially in the most populated state in the country. The
21:56
Speaker 3: gap is narrowing. There things I don't buy Reuter's reporting
22:01
Speaker 3: McDonald's global sales post surprise drop as tariff chaos hurts
22:04
Speaker 3: consumer confidence.
22:05
Speaker 2: Just no, no freaking way, absolutely not. Not what's happening?
22:09
Speaker 2: Absolutely not. Like does anyone sit there in March of
22:13
Speaker 2: this year or in January of this year and go, hmm,
22:17
Speaker 2: I think there might be reciprocal tariffs coming in April.
22:21
Speaker 2: No McDonald's for me, definitely not. No, Like, no one
22:24
Speaker 2: does that. No weather, what about whether do people eat
22:27
Speaker 2: lest McDonald's when it's high I'm asking, Yeah, I don't know.
22:30
Speaker 3: We've blamed weather on a whole bunch of other things
22:32
Speaker 3: in Q one, Uh you I recognize all of that.
22:36
Speaker 3: I'm just I'm curious because I've seen it brought up
22:39
Speaker 3: that maybe weather was a contributing factor between wildfire's cold,
22:43
Speaker 3: flu season, et cetera in the first quarter. I had
22:47
Speaker 3: a tough time connecting the dots there, But I mean,
22:50
Speaker 3: I hate to throw it out as an impossible theory.
22:53
Speaker 2: Here's the thing. If it were weather, we specifically targeted
22:55
Speaker 2: February there, right, yep, on the conference call, wouldn't they
22:58
Speaker 2: have just said, yeah, we had a bad February because
23:01
Speaker 2: of weather. Probably we don't think this is anything meaningful.
23:05
Speaker 2: They didn't say that, which to me means that's not
23:07
Speaker 2: the case, because generally you try to explain bad numbers.
23:11
Speaker 2: So here's the other thing. If you look at US
23:16
Speaker 2: restaurants and there comps this quarter that we've gotten McDonald's
23:20
Speaker 2: down three point six, Starbucks down one, Chipotle down point four,
23:27
Speaker 2: Pizza Hut down five, KFC down one. Where was Domino's?
23:31
Speaker 2: Domos is bad too, Dominoes was up. I think Domino's
23:34
Speaker 2: same store sales comps. Let me see Domino's two point
23:40
Speaker 2: seven percent? Oh no, hang on, that's international. Let me
23:44
Speaker 2: see US growth lags. Let me hang on, I gotta
23:48
Speaker 2: da same. Okay, here we go. So for us, it
23:55
Speaker 2: was a point four percent rise compared to expectations of
23:59
Speaker 2: like a three to three and a half percent rise.
24:01
Speaker 2: So I guess what I'm getting at here is these companies,
24:07
Speaker 2: I mean, like Chipotle, McDonald's, Pizza Ut, KFC, like they
24:09
Speaker 2: don't have a ton in common. They're different price points
24:12
Speaker 2: to the different customers. Starbucks is an entirely different one as well.
24:15
Speaker 2: There's weakness across the board there. McDonald's is the worst
24:18
Speaker 2: out of any of them. So a couple things that
24:20
Speaker 2: I think you can read through on this. The first is, hey,
24:23
Speaker 2: maybe you do have people, you know, trying to front
24:26
Speaker 2: run tariffs and stockpiling some goods. Maybe they're not eating
24:29
Speaker 2: out as much.
24:30
Speaker 3: But again, if I'm struggling with financials, I'm going to
24:33
Speaker 3: McDonald's more.
24:36
Speaker 2: Except what group is struggling with financials the most low income,
24:43
Speaker 2: and that is right in McDonald's wheelhouse. And so I
24:47
Speaker 2: think I think it might be some macro stuff combined
24:51
Speaker 2: with some execution there. And I don't know, Again, none
24:56
Speaker 2: of us know any of this for certain, but there's
24:58
Speaker 2: a pretty broad based trend that that's happening with the
25:00
Speaker 2: food reporting that we're getting, and it's it wasn't good.
25:05
Speaker 2: In Q one, I mentioned California specifically.
25:07
Speaker 3: I didn't say California by name, but I mentioned California
25:10
Speaker 3: there in particular because remember the fast food minimum wage
25:15
Speaker 3: law that is in effect in California. Now, that price
25:18
Speaker 3: differential between like an Applebee's and a McDonald's, especially in
25:22
Speaker 3: California right here, I think it's probably still going to
25:25
Speaker 3: be fairly different. But if you're going to go for
25:27
Speaker 3: a sit down meal at some of these restaurants, sit
25:30
Speaker 3: down restaurants that are trying to really drive value, that
25:35
Speaker 3: gap between a McDonald's in LA and an apple bee
25:38
Speaker 3: and chilis too Chili's that yeah, I'm using Applebee's as
25:41
Speaker 3: you know. Chili's, I think was the story that we covered.
25:45
Speaker 3: That gap has to be really narrow.
25:47
Speaker 2: Well, here, here's the question is is everyone just going
25:50
Speaker 2: to Chili's? Is that the answer? Because again Chili same
25:54
Speaker 2: store sales numbers, they are the outlier. They were up
25:57
Speaker 2: thirty one point six percent on organic traffic growth of
26:02
Speaker 2: twenty one percent. That's where all of our customers went.
26:05
Speaker 2: So what the heck is happening here?
26:07
Speaker 4: I mean, well, they're offering a better burger at a
26:10
Speaker 4: similar price.
26:10
Speaker 2: Point right, So I do wonder if like this, this
26:13
Speaker 2: is the thing here is they've got this ten ninety
26:15
Speaker 2: nine meal deal that they're offering, and quite honestly, at McDonald's,
26:20
Speaker 2: you probably somewhere in like the eight to nine dollars
26:22
Speaker 2: range most times, in other expensive parts of the country,
26:25
Speaker 2: probably close to ten for a meal. Are you going
26:29
Speaker 2: to Chili's, you know, for one dollar more? You might be? Yeah,
26:35
Speaker 2: So I don't know. That's maybe everyone's just going to Chili's.
26:39
Speaker 2: Is that where they do the the In the first
26:42
Speaker 2: episode of The Office where they go to do the awards,
26:44
Speaker 2: that a Chili's The.
26:46
Speaker 4: First good trivia question the Dundees the Dundee's Dude, Yeah,
26:50
Speaker 4: I believe it was a chili.
26:51
Speaker 2: I think it's a Chili's.
26:52
Speaker 1: Yeah.
26:52
Speaker 2: Yeah.
26:54
Speaker 4: The United States Virgin Islands is consistently voted one of
26:57
Speaker 4: the top Caribbean destinations, and recently two of their beaches,
27:00
Speaker 4: Trunk Bay in Saint John and may Gun's Bay in
27:03
Speaker 4: Saint Thomas, were voted a top ten best beach in
27:06
Speaker 4: the Caribbean at the twenty twenty five Travelers Choice Best
27:10
Speaker 4: of the Best awards. From the Pristine Beaches to its
27:14
Speaker 4: world class dining, rich history, incredible golf in perfect weather.
27:18
Speaker 4: The US Virgin Islands has everything you need to make
27:22
Speaker 4: memories that will last a lifetime. From the moment you arrive,
27:26
Speaker 4: you'll fall naturally in rhythm with the heartbeat of the islands.
27:29
Speaker 4: There's no money to exchange, and travel from New England
27:32
Speaker 4: could not be easier. Whether you're looking for a romantic
27:35
Speaker 4: get away or family vacation, the US Virgin Islands is
27:39
Speaker 4: the perfect place for your next adventure. Go to visit
27:42
Speaker 4: USVII dot com right now for more information and to
27:46
Speaker 4: book your trip. The USVII is America's Caribbean paradise. Go
27:50
Speaker 4: to visit USVII dot com today. That's visit USVII dot com.
27:56
Speaker 2: Home Builders piling on the discounts as they struggle to
27:58
Speaker 2: entice buyers. It's headline the Wall Street Journal. We talked
28:01
Speaker 2: about this when we got the home builders earnings reports
28:04
Speaker 2: that came out maybe a month or so ago, that
28:06
Speaker 2: you're seeing a huge uptick in the level of discounts
28:10
Speaker 2: that they are needing to push in order to sell
28:14
Speaker 2: these homes. And look, we got the data from the
28:18
Speaker 2: big home builders, but this is something where they have
28:20
Speaker 2: deeper pockets to be able to absorb this than small
28:24
Speaker 2: you know, homebuilders who might build you know, five or
28:26
Speaker 2: six homes a year, or two or three homes a year.
28:28
Speaker 2: The ones that are building twenty thousand a year, they
28:31
Speaker 2: have more cushion to be able to absorb you know,
28:33
Speaker 2: these kinds of things. But it points towards a difficult
28:36
Speaker 2: year for home construction at the moment, right, And this
28:39
Speaker 2: is before you even get into margins being impacted by
28:42
Speaker 2: the cost of your materials going up.
28:44
Speaker 3: Yeah, Look, the situation here is that the homes that
28:49
Speaker 3: are being built are in areas where a lot of
28:52
Speaker 3: people are trying to sell right now, and rates are
28:55
Speaker 3: not where they expected.
28:56
Speaker 2: Them to be this time. Here. Yeah, the data on this,
28:59
Speaker 2: by way, the average sales incentive to move a home
29:04
Speaker 2: seven point two percent in the first two weeks of April.
29:07
Speaker 2: That's up from six point one percent in January. Just
29:11
Speaker 2: take a quick break here. When we come back, we'll
29:13
Speaker 2: do a little bit of stack Root Nett.
29:16
Speaker 1: Tara Fevery's in high gear. We've got the latest on
29:19
Speaker 1: what might be next and how long it might last.
29:22
Speaker 1: Only here on the Financial Exchange Radio Network. Miss any
29:26
Speaker 1: of the show. The Financial Exchange show podcast is available
29:30
Speaker 1: on Apple, Spotify, and iHeartRadio. Hit the subscribe button and
29:34
Speaker 1: leave us a five star review. This is the Financial
29:37
Speaker 1: Exchange Radio Network.
29:48
Speaker 4: This segment of the Financial Exchange is brought to you
29:51
Speaker 4: and Bart by Margaritaville Resort, Cape Cod. In Hyannas, looking
29:55
Speaker 4: for a great vacation spot, look no further than Margarita
29:58
Speaker 4: Deville Resort, Cape Cod, located just off Route six. Margaritaville Resort,
30:03
Speaker 4: Cape Cod is perfect for a weekend getaway or a
30:07
Speaker 4: fun filled family vacation. You'll enjoy first class accommodations and
30:11
Speaker 4: dining are incredible, fins up water park, and of course
30:15
Speaker 4: the gorgeous pageantry of the Cape. Visit Margaritaville Resorts, Capecod,
30:19
Speaker 4: dot com reservations and more information.
30:24
Speaker 2: All right, I want to kick things off here because
30:25
Speaker 2: there's a great piece that I want to cover. It's
30:28
Speaker 2: titled Visa wants to give Artificial intelligence agents your credit card.
30:32
Speaker 2: It's in the Boston Globe and talking about on their
30:35
Speaker 2: earnings call, they were talking about this, and I'll just
30:38
Speaker 2: read a couple sentences here. Visa wants to give AI
30:42
Speaker 2: agents your credit cards. Set a budget and some pre
30:45
Speaker 2: define and some it's got to tear the staple out here. Sorry,
30:50
Speaker 2: set a budget and some preferences, and those AI agents
30:54
Speaker 2: successors to chat GPT and its chatbot peers could find
30:57
Speaker 2: and buy a sweater, weekly growthroceries, or an airplane tickets.
31:01
Speaker 2: So a couple things on this what I understand the
31:05
Speaker 2: idea behind this. I do get it because look, as
31:09
Speaker 2: much as I actually enjoy grocery shopping, there are plenty
31:13
Speaker 2: of people who don't, and there are plenty of people
31:15
Speaker 2: who don't want to spend the time doing it. Fair yes,
31:19
Speaker 2: So the idea of hey, most people are not wealthy
31:23
Speaker 2: enough to have their own personal assistant doing their grocery shopping.
31:27
Speaker 2: Give like your general preferences to an AI bought and
31:30
Speaker 2: it does your grocery shopping sounds really attractive to me.
31:34
Speaker 2: The problem is, well, there are numerous ones. The first is,
31:39
Speaker 2: let's say that it buys something I don't want. Who's liable?
31:45
Speaker 2: Who right? Who's on the hook for it? Is it me?
31:47
Speaker 2: Is it the AI bought? Is it the interchange company?
31:51
Speaker 2: Is it? The issue?
31:52
Speaker 1: Like?
31:53
Speaker 2: Who is it? That's problem number one. Problem number two is, okay,
31:58
Speaker 2: let's say that to get around that, you say well
32:00
Speaker 2: you have to approve all purchases. Well, then am I
32:02
Speaker 2: basically just doing the shopping anyways? All right, here's how
32:05
Speaker 2: it could be useful because like what if I say no,
32:07
Speaker 2: I don't want this, then every time it comes back
32:09
Speaker 2: to me, I'm kicking back like no, no, no, as
32:11
Speaker 2: opposed to me just going on the Macy's website and
32:13
Speaker 2: buying whatever I was gonna buy. Yeah, I think this
32:16
Speaker 2: is a dumb idea. Here's where I think it could
32:17
Speaker 2: be useful.
32:19
Speaker 3: AI could have the ability, for instance, to dramatically search
32:23
Speaker 3: the web rather quickly and find the lowest price, best
32:26
Speaker 3: quality item across a segment like groceries. So hey, take
32:30
Speaker 3: me to Whole Food's, Walmart and what's the big grocery
32:33
Speaker 3: delivery application shop? Which one we were all using it
32:40
Speaker 3: during CODR Thank you? And you know, find me a
32:43
Speaker 3: grocery basket at the lowest price for these recurring items
32:47
Speaker 3: that I want Or I do want that green sweater,
32:50
Speaker 3: So go find me, you know, the cheapest one across
32:52
Speaker 3: all the different platforms and bring it back to me.
32:55
Speaker 3: The idea that it's going to yeah, build their own
33:00
Speaker 3: card and actually order with my credit card on file.
33:04
Speaker 3: I think is no that is missing the boat. And frankly,
33:08
Speaker 3: it sounds to me a lot like Amazon's high hopes
33:10
Speaker 3: when they rolled out all of the Alexa devices that oh,
33:13
Speaker 3: everybody's gonna start ordering in volumes way higher than that
33:17
Speaker 3: because oh, you can do it by talking to your
33:20
Speaker 3: voice assistant. And it didn't happen, because people actually like
33:23
Speaker 3: to shop.
33:25
Speaker 2: Right, like you enjoy the at a certain point, Like
33:27
Speaker 2: some of this is just called being human. Yeah, and
33:31
Speaker 2: like you just you know this would be like, hey, AI,
33:34
Speaker 2: show me like a picture of what it looks like
33:36
Speaker 2: from the top of Mount Everest. Well you didn't freaking climate,
33:39
Speaker 2: so you're not gonna get the same thing. Likewise, there
33:42
Speaker 2: are plenty of people I know who again I'm not
33:45
Speaker 2: one of them. Well, I am in certain circumstances. I'll
33:47
Speaker 2: give you an example. This time of year. You know
33:50
Speaker 2: what I like to do on the weekends. I go
33:52
Speaker 2: to the nursery and I look around for, you know,
33:53
Speaker 2: stuff to plant in the yard. I don't want AI
33:56
Speaker 2: to be like, well, the soil density says that this
34:00
Speaker 2: is what you should plant, and it's this time of
34:02
Speaker 2: year in the lights at this angle. So no, like
34:05
Speaker 2: I want to go and talk to the person at
34:07
Speaker 2: the nursery and be like, Hey, how's the garlic looking, Jimmy?
34:10
Speaker 2: You know, give me, give me some of that.
34:13
Speaker 3: You know, is anyone else's guests sit in a fold
34:16
Speaker 3: out chair in his underwear and throw empty beer kansa cars.
34:19
Speaker 2: No, that's not Sundays, that's Tuesdays. It's the middle of
34:22
Speaker 2: the week. Okay, what do you think we do? Yeah?
34:25
Speaker 2: Come on, so, yeah, like some of this is just
34:28
Speaker 2: being human. Now, if you could get Ai to sit
34:33
Speaker 2: in traffic for me, would love it, But I don't
34:37
Speaker 2: know how you would do that. Sure, Elon Musk is
34:40
Speaker 2: working on it, but I don't want to sit in
34:42
Speaker 2: the traffic. Yeah, and the problem is I have to.
34:44
Speaker 2: So there's that.
34:45
Speaker 3: What else you got, Mike, Google's uh, not terribly happy
34:49
Speaker 3: with the Department of Justice's breakup proposal on the company,
34:52
Speaker 3: And for for anyone hoping that the Trump administration's Justice
34:56
Speaker 3: Department was going to have a big pivot when it
34:58
Speaker 3: came to big tech that I think they're going to
35:00
Speaker 3: be disappointed the proposal. Just so everyone is on the
35:04
Speaker 3: same page about this, is for Google to be forced
35:07
Speaker 3: to sell their entire Chrome browser, and then also provide
35:10
Speaker 3: user data like search histories to rivals, which.
35:16
Speaker 2: That part.
35:17
Speaker 3: I see why they need to go about it that way,
35:20
Speaker 3: But I don't really love the idea that Google would
35:22
Speaker 3: be forced by the government to sell my search history
35:25
Speaker 3: to a bunch of other companies. I don't love that
35:29
Speaker 3: Google has it in and of themselves, and I don't
35:31
Speaker 3: really want every other seller of merchandise to own it either.
35:35
Speaker 3: But these would be very extraordinary measures that Google would
35:38
Speaker 3: need to go through. If they end up sticking. I'm
35:41
Speaker 3: sure it'll get watered down in some way, but that
35:44
Speaker 3: would be pretty substantial.
35:45
Speaker 2: I would rather have more things broken off, Like so,
35:48
Speaker 2: I've talked about my idea for the geographic breakup, which
35:51
Speaker 2: I know will never happen. But let's say you wanted
35:54
Speaker 2: to actually like break Google up to the point where
35:57
Speaker 2: it can't put itself back together. Peel off Chrome, yep,
36:02
Speaker 2: peel off YouTube and YouTube TV, and peel off the
36:07
Speaker 2: programmatic programmatic ads business from search for businesses, search ads,
36:15
Speaker 2: streaming and browser. Yeah, they're not asking for nearly that
36:19
Speaker 2: much from Google. That's the way I would do it personally.
36:23
Speaker 2: The yeah, the giving the needing to turn over the
36:28
Speaker 2: data from the search engine. I'm trying to figure out
36:33
Speaker 2: in what world that makes any sense. But it might
36:35
Speaker 2: just be that that's you know, the crazy ass from
36:37
Speaker 2: the DJ. So they end up meeting somewhere in the
36:39
Speaker 2: middle and just the Chrome browser gets spun off and
36:41
Speaker 2: everyone looks like they met in the middle. Maybe that's it.
36:46
Speaker 2: So there's that going on right now, But again we'll
36:50
Speaker 2: have to see, you know, what ends up happening there.
36:52
Speaker 2: Story that dropped from the Wall Street Journal last night
36:54
Speaker 2: that I got a chuckle out of. It was a
36:57
Speaker 2: Wall Street Journal exclusive saying that the Tesla board sometime
37:00
Speaker 2: in April opened a search for a CEO to succeed
37:04
Speaker 2: Elon Musk. The board and Elon Musk have now both
37:06
Speaker 2: subsequently denied it, but Wall Street Journal reporting it. They
37:12
Speaker 2: have some credibility on stuff like this, So I suspect
37:16
Speaker 2: there was something that was going on. Did it ever
37:19
Speaker 2: get to the point where you know they were actually
37:22
Speaker 2: actively looking to do anything engaging with search firms. I
37:26
Speaker 2: highly doubt it.
37:28
Speaker 3: Frankly, if you are a member of that board, I
37:32
Speaker 3: would be worried about getting sued by a shareholder if
37:34
Speaker 3: I'm not opening up that search. If the guy hasn't
37:36
Speaker 3: been at work in six six months.
37:38
Speaker 2: The only reason that company both has value and or
37:42
Speaker 2: loses values because of Elon Musk. Great, it's kind of
37:45
Speaker 2: wild it at least has the value it does, because
37:47
Speaker 2: otherwise it's just another part company. Like we've talked about
37:50
Speaker 2: the margins and everything. So it's one of those things where,
37:54
Speaker 2: even if you're on the board and you don't necessarily
37:56
Speaker 2: like Elon Musk, I'm not really sure that you can
37:58
Speaker 2: get rid of him and still have the company continue
38:02
Speaker 2: to exist quite honestly afterwards, just because like, how much
38:06
Speaker 2: of your core customer base do you alienate just by
38:08
Speaker 2: the very fact of doing that. Let's take a quick
38:13
Speaker 2: break for the rest of the day, but tomorrow Big One,
38:15
Speaker 2: we got Job report and Amazon and Apple report after
38:18
Speaker 2: the bell today will fill you in on what they
38:20
Speaker 2: said tomorrow