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Apple has lofty goals for iPhone production in India · The Financial Exchange Show

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  Speaker 2: Chuck, Mike and Tucker with you on the second hour
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  Speaker 2: of financial exchange, and stocks are not doing a whole
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  Speaker 2: bunch of anything. In the aggregate, the S and P
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  Speaker 2: five hundred is up point eight not point eight percent,
• 1:25
  Speaker 2: but point eight which is point zero two percent. So
• 1:29
  Speaker 2: the nice broad measure with the US stock market basically
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  Speaker 2: flat today on either side, it's flightked by the Dow,
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  Speaker 2: which is off about half a percent right now, down
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  Speaker 2: one hundred and ninety two points, and it is also
• 1:41
  Speaker 2: flanked by the NASDAC on the other side, up sixty
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  Speaker 2: points about a third of a percent. What is moving
• 1:47
  Speaker 2: those respective indices in those directions, Well, for the Dow,
• 1:50
  Speaker 2: it's the fact that Intel is a component, and so
• 1:53
  Speaker 2: is Verizon. They're two out of the three components. The
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  Speaker 2: United Health as well, and all three of those companies
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  Speaker 2: down about two and a half to six and a
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  Speaker 2: half percent. So that's not great. When you have, you know,
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  Speaker 2: ten percent of your components off that much, it tends
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  Speaker 2: to be bad for you. On the other side of things,
• 2:09
  Speaker 2: with the NASDAK, you have a case where gee, when
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  Speaker 2: some of your big stocks, like I don't know, Alphabet
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  Speaker 2: formerly known as Google, decide that they are going to
• 2:21
  Speaker 2: be moving around, you end up in a situation where, hey,
• 2:26
  Speaker 2: you've got some positive lift there, but overall not too
• 2:29
  Speaker 2: much movement in US equities today, same with US bonds.
• 2:33
  Speaker 2: Ten youre Treasury down two and a half basis points
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  Speaker 2: to four point two eight percent. Mortgage News Daily has
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  Speaker 2: the current thirty year fixed rate mortgage average at six
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  Speaker 2: point nine two percent, So still floating right around that
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  Speaker 2: seven percent range, not really getting any convincing movement lower.
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  Speaker 2: Despite the tenure Treasury coming down a bit over the
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  Speaker 2: last few days, You're just seeing a little bit of
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  Speaker 2: a widening of the spread there, and I think that
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  Speaker 2: reflects banks concerns that, hey, maybe this move in the
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  Speaker 2: ten years isn't legit and we want to build in
• 3:01
  Speaker 2: a little bit of extra cushion in our pricing. Should
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  Speaker 2: it change other things that we are seeing. Oil West
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  Speaker 2: Texas Intermediate is down forty cents a barrow the sixty
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  Speaker 2: two to thirty nine the TRIPAA national averageur gas prices
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  Speaker 2: down seven tens of percent to three sixteen and four tenths.
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  Speaker 2: We continue just to be stuck between three ten and
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  Speaker 2: three twenty nationally for gas prices and gold despite a
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  Speaker 2: rally yesterday, back in sell off mode today down sixty
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  Speaker 2: dollars and forty cents an ounce to thirty two eighty
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  Speaker 2: eight and twenty cents. I mentioned the Googs during that
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  Speaker 2: open there, and they reported earnings after the bell yesterday,
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  Speaker 2: or rather their parent company, Alphabets reported earnings after the bell,
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  Speaker 2: and what we saw from them was a really nice quarter.
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  Speaker 2: Quite honestly, in terms of current sales. Their ad business
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  Speaker 2: is still good. They got good growth in their cloud business,
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  Speaker 2: some slight misses with YouTube revenue, trafic acquisition costs were
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  Speaker 2: a little bit higher, but the stock after hours yesterday
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  Speaker 2: was about four and a half five percent today only
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  Speaker 2: up about two percent. So I do think it is
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  Speaker 2: informative when you have pretty good earnings and then a
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  Speaker 2: stock starts getting sold off over the course of the
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  Speaker 2: subsequent day. That kind of indicates a little bit about
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  Speaker 2: investor psychology. But overall, good quarter. They didn't have any
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  Speaker 2: real specific thoughts on, you know, how a potential trade
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  Speaker 2: war would impact their business. They had some general things like, yeah,
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  Speaker 2: some of the drop shipping companies from China obviously won't
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  Speaker 2: you know, advertise as much on us but it was
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  Speaker 2: not something where we got a ton of clarity as
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  Speaker 2: to what their outlook is for the rest of the year.
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  Speaker 3: You know what I expected.
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  Speaker 4: I mean, they had some I think general statements around Yeah,
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  Speaker 4: in the event of a recession, you could see advertising
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  Speaker 4: revenue drop.
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  Speaker 2: Sure, but really tell me more.
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  Speaker 4: But you know, their their direct impact from trade uncertainty
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  Speaker 4: is not terribly high. And you know, I don't think
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  Speaker 4: you see those advertising dollars drop off until you start
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  Speaker 4: seeing businesses really cut costs, which they are not cutting
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  Speaker 4: very deep if they are cutting it all. At this point,
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  Speaker 4: the interesting piece to me is just where Alpha that
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  Speaker 4: is today. So the stock is trading at around eighteen
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  Speaker 4: times projected earnings for the next four quarters. That compares
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  Speaker 4: with Microsoft's multiple of about twenty eight times. And granted,
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  Speaker 4: Microsoft is getting a big AI boost right now, both
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  Speaker 4: from their growth as well as you know, their valuation
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  Speaker 4: just being put up there for their exposure to AI
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  Speaker 4: that I don't think Google is really able to execute
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  Speaker 4: on at the moment. But how much of that is
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  Speaker 4: tied into the risk of AI for Google? Right We've
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  Speaker 4: talked about this, We talked about it yesterday on the
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  Speaker 4: program that you know, if I look at any single
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  Speaker 4: company that could be heavily impacted by AI, it's a
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  Speaker 4: company that does search.
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  Speaker 2: So here's something that's really interesting to me on that topic.
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  Speaker 2: We all see like the search engines now, where the
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  Speaker 2: first thing that the top thing is like an AI
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  Speaker 2: sum that's usually pretty crappy about whatever it is that
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  Speaker 2: you've asked it to find. Sometimes the thing that's really
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  Speaker 2: interesting to me is I generally think that there's AI
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  Speaker 2: summaries on Google or I'm personally a Duck dot Go
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  Speaker 2: guy now at this point.
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  Speaker 5: But the.
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  Speaker 2: AI summaries I don't think are very useful. But I
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  Speaker 2: do find when I go into an AI program, whether
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  Speaker 2: it be you know, Chat, GPT or Perplexity or wherever
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  Speaker 2: it might be, and I ask a specific question of
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  Speaker 2: those AI programs, I get much better results than search.
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  Speaker 2: And you can ask them now like cite your sources
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  Speaker 2: and please link your sites ye, and they will do
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  Speaker 2: that so that you can actually go and you know,
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  Speaker 2: follow me like is this accurate? So I find that
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  Speaker 2: to be interesting, and at some point this probably starts
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  Speaker 2: to impact Google's core search business. But remember that question.
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  Speaker 3: It might take a while. Check.
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  Speaker 4: I was talking about this yesterday right, like you and
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  Speaker 4: I when we were in middle school and high school.
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  Speaker 4: And I don't know exactly what time frame this took place,
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  Speaker 4: but like we would get trained on how to utilize
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  Speaker 4: Google to source things and find resources by a generation
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  Speaker 4: that was used to using printed encyclopedias. Sure, today, you
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  Speaker 4: know students in middle school and high school are likely
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  Speaker 4: learning how to use artificial intelligence they are to draw
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  Speaker 4: that same data out, and therefore I think it might
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  Speaker 4: take a little while before it gets fully played out
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  Speaker 4: that way. But the second piece about Alphabet that we
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  Speaker 4: didn't get into yet is the fact that two separate
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  Speaker 4: judges have now declared them to be a monopoly and
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  Speaker 4: up facing a massive threat from that portion of their
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  Speaker 4: business too. Right, Could the advertising business be broken up
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  Speaker 4: and spun off in some meaningful way? Could their search
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  Speaker 4: business be spun like These are big questions that are
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  Speaker 4: tough to answer and could dramatically reshape their profitability.
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  Speaker 2: One other piece that is interesting is this is the
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  Speaker 2: first quarter in a while where after reporting you haven't
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  Speaker 2: seen them guide towards a significantly higher capex, meaning you
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  Speaker 2: wonder if you're kind of reaching the peak as far
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  Speaker 2: as where they think their spending is going to be
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  Speaker 2: on AI chips and things along those lines. And granted
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  Speaker 2: that spending is still over you know, the next twelve
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  Speaker 2: months or so, it still is out there, but you
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  Speaker 2: do wonder what that means for in Vidio, who obviously
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  Speaker 2: has been a huge beneficiary of you know, the AI boom.
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  Speaker 2: I don't need to tell anyone listening about why that's
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  Speaker 2: the case, but it gets at that question, which is,
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  Speaker 2: look within videos. It's not like they're going to go
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  Speaker 2: out of business, but how does the growth trajectory for
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  Speaker 2: them look over the next three to five years, because
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  Speaker 2: it probably doesn't look like the last two to three
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  Speaker 2: just because there's not enough money in the world to
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  Speaker 2: spend to keep increasing your capex eighty percent a year
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  Speaker 2: in perpetuity. Likely's also not enough electricty in the world
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  Speaker 2: to provide to do that either.
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  Speaker 3: There's definitely not on that front either.
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  Speaker 4: It depends, you know, how wide does that customer base
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  Speaker 4: expand you know, you go from the Microsoft, Googles and
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  Speaker 4: apples out there that are buying the chips to everyday
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  Speaker 4: companies who are utilizing this in some new way that
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  Speaker 4: we're not thinking about. And today there's not much evidence of.
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  Speaker 2: That anything else on the Googles.
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  Speaker 3: No, I think we can move along.
• 9:21
  Speaker 2: Just take a quick break here. When we come back,
• 9:23
  Speaker 2: we'll do a little bit of trivia. Then we're talking
• 9:24
  Speaker 2: about Apple trying to relocate some supply chains. We'll tell
• 9:27
  Speaker 2: you where, why and how. Right after this, Tara.
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• 10:03
  Speaker 5: All right time for trivia here on the Financial Exchange
• 10:07
  Speaker 5: And today is al Pacino's eighty fifth birthday. The legendary
• 10:13
  Speaker 5: actor has been nominated nine times at the Academy Awards,
• 10:18
  Speaker 5: but has only come away with one win. So trivia
• 10:22
  Speaker 5: question today is what movie did al Pacino win his
• 10:25
  Speaker 5: only Academy Award for? Once again, what movie did al
• 10:30
  Speaker 5: Pacino win his only Academy Award? Four? Be the fourth
• 10:35
  Speaker 5: person today to text us at six one, seven, three,
• 10:38
  Speaker 5: six two thirteen eighty five with the correct answer, and
• 10:41
  Speaker 5: you'll win a brand new Financial Exchange Showed T shirt
• 10:44
  Speaker 5: once again. The fourth correct response to text us at
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  Speaker 5: six one seven three six two, thirteen eighty five will
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  Speaker 5: win that T shirt. See complete contest rules at Financial
• 10:54
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• 10:56
  Speaker 2: You know what the wild thing about Pacino is.
• 11:00
  Speaker 3: His name.
• 11:02
  Speaker 2: Aside from that, the wild thing about it is that
• 11:06
  Speaker 2: Pacina was basically a nobody when he was casting The Godfather.
• 11:11
  Speaker 3: Yeah, yeah, there a lot of question it was.
• 11:14
  Speaker 2: It was his i think second role in first major
• 11:17
  Speaker 2: one and you're you're like, okay, so we're just gonna,
• 11:22
  Speaker 2: you know, give Al Pacino the role in the in
• 11:26
  Speaker 2: you know, he's thirty two years old. He had done
• 11:28
  Speaker 2: nothing basically to that point, and obviously, you know, the
• 11:32
  Speaker 2: rest is history. But it's kind of remarkable just that,
• 11:35
  Speaker 2: you know, you would take a chance on someone like
• 11:38
  Speaker 2: that in that uh that film there and obviously uh
• 11:44
  Speaker 2: that all right. Funny thing about The Godfather. Did you
• 11:46
  Speaker 2: much much of cost to make The Godfather?
• 11:48
  Speaker 3: Probably cheap.
• 11:49
  Speaker 2: Wasn't a big budget film on seven million, you know
• 11:52
  Speaker 2: what it made at the box office two hundred and
• 11:55
  Speaker 2: fifty to two hundred and ninety one million.
• 11:57
  Speaker 3: How much it's made after that one good.
• 12:01
  Speaker 2: Amount peace from Bloomberg. Apple aims to build most iPhones
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  Speaker 2: for US in India by end of twenty twenty six,
• 12:09
  Speaker 2: which is did the math on this twenty months from now.
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  Speaker 2: So here's the thing that'd be pretty impressive. Apple right
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  Speaker 2: now makes somewhere between thirty and forty million iPhones a
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  Speaker 2: year in India. Okay, they are planning on somewhere in
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  Speaker 2: the ballpark of a ten to fifteen percent increase this
• 12:30
  Speaker 2: year in a subsequent ten to fifteen percent increase next year,
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  Speaker 2: getting them to somewhere around like fifty five million. They
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  Speaker 2: sell about sixty million a year in the United States.
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  Speaker 4: Okay, this is not as big of a leap as
• 12:43
  Speaker 4: a well Tenswich models, you are.
• 12:45
  Speaker 2: Here's the thing that they're going to have to end
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  Speaker 2: up doing is a getting the model mix right so
• 12:51
  Speaker 2: that right now, it's not like all of the iPhones
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  Speaker 2: that are made in India go to the US. They
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  Speaker 2: get scattered across the globe. I don't know where, I
• 12:57
  Speaker 2: don't know how, but they don't all come to the
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  Speaker 2: US now, So this would much more be Hey, everything
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  Speaker 2: that we make in India is gonna go to the
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  Speaker 2: United States. Right, The stuff that we're gonna continue to
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  Speaker 2: make in China can go elsewhere. And it's really about
• 13:12
  Speaker 2: kind of reorienting their internal supply chain, not so much
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  Speaker 2: to have a huge shift in strategy, because they've already
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  Speaker 2: been increasing iPhone production in India for the last three
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  Speaker 2: to four years now. This has been a pretty consistent
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  Speaker 2: theme for them for a little while, but much more, Hey,
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  Speaker 2: let's get the mixed set so that it's the ones
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  Speaker 2: that we're gonna send to the US, and that way
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  Speaker 2: we don't need to worry about what the China tariff
• 13:35
  Speaker 2: situation is coming into the United States.
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  Speaker 4: Which can we just talk about why this this whole
• 13:43
  Speaker 4: strategy on tariffs. If you are if your attempt is
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  Speaker 4: to oppose China in some meaningful way, this.
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  Speaker 3: Is not going to work.
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  Speaker 2: Well let's know, I'm I don't know not yet. Let's
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  Speaker 2: I'm willing to let that play out because I think
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  Speaker 2: tariffs are one part of the puzzle there.
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  Speaker 4: And it also if you now have the same level
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  Speaker 4: of manufacturing of iPhones in China or even a higher concentration,
• 14:08
  Speaker 4: because you know that everything you make in China is
• 14:10
  Speaker 4: going to everywhere but to the United States. If your
• 14:15
  Speaker 4: job is to oppose China, if the goal is to
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  Speaker 4: make reforms in the way that China does business, you
• 14:21
  Speaker 4: need to convince Europe to not buy any iPhones from China.
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  Speaker 2: So this is where I'm going with this. I'm somewhat
• 14:30
  Speaker 2: convinced that Europe is kind of a lost cause on this,
• 14:36
  Speaker 2: just because I think they're so dependent on China right now,
• 14:39
  Speaker 2: and quite honestly, there's some pretty strong signs that various
• 14:44
  Speaker 2: European governments are somewhat kind of compromised with regards to
• 14:49
  Speaker 2: their China views. That I just I don't know that
• 14:52
  Speaker 2: you're going to be able to get Europe on board there.
• 14:55
  Speaker 2: I do think when we talk about places like Japan,
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  Speaker 2: South Korea, India, okay, you can build a little bit
• 15:03
  Speaker 2: of a wall there. And I suspect and even on
• 15:06
  Speaker 2: some of the reporting, it's being reported that some of
• 15:09
  Speaker 2: the asks from the Trump administration in trade negotiations are, hey,
• 15:14
  Speaker 2: we want you to, you know, help us build this
• 15:17
  Speaker 2: wall against China as well. I won't call it the
• 15:19
  Speaker 2: Great Wall of China because they've already you know, done
• 15:21
  Speaker 2: that that was built, you know, by China. But Hey,
• 15:24
  Speaker 2: we want to kind of wall off the Chinese economy
• 15:26
  Speaker 2: where we can. Yeah, that's a big ask from the
• 15:29
  Speaker 2: US to a lot of these other countries. Will it
• 15:31
  Speaker 2: get over the finish line?
• 15:33
  Speaker 4: I don't know, but I I'm also not sure that
• 15:36
  Speaker 4: it is the end goal of these tariffs.
• 15:39
  Speaker 2: I think it absolutely is.
• 15:41
  Speaker 4: Again, Yeah, I just when there's so many other objectives
• 15:46
  Speaker 4: tossed out there, I just start to get confused.
• 15:49
  Speaker 2: The reason that I'm a big believer in yes, like,
• 15:52
  Speaker 2: listen to what people say, but ultimately pay attention to
• 15:54
  Speaker 2: what people do. On April ninth, what happened, Hey, all
• 15:59
  Speaker 2: reciprocal tariffs are being pulled back except for China. Yeah,
• 16:03
  Speaker 2: that's the signal to me, right, Like that is the
• 16:06
  Speaker 2: clear signal. By the way, early February imposing tariffs on Mexico, China,
• 16:12
  Speaker 2: and Canada, what happened Canada?
• 16:15
  Speaker 3: Mexico gone, Yes.
• 16:16
  Speaker 2: Then in early March, what happened parts of Canada, Mexico
• 16:20
  Speaker 2: pulled back. China, we're ratcheting you up another ten percent
• 16:23
  Speaker 2: to twenty percent.
• 16:23
  Speaker 3: Yep.
• 16:24
  Speaker 2: So I think from the actions it's clear to me, Hey,
• 16:29
  Speaker 2: we want to try to isolate China, And maybe there's
• 16:31
  Speaker 2: just all this noise, because hey, if you're making all
• 16:34
  Speaker 2: this noise, okay, fine, like you won't pay attention to
• 16:36
  Speaker 2: what's actually happening. And then, hey, look, China is isolated
• 16:39
  Speaker 2: and we've done it. Is it the best way to
• 16:42
  Speaker 2: go about it? You can obviously have like real conversations
• 16:45
  Speaker 2: about that and come to a pretty clear understanding where
• 16:47
  Speaker 2: I'd probably be like it, probably wouldn't do it this way,
• 16:50
  Speaker 2: But I think there's a clear message in the actions
• 16:53
  Speaker 2: of yes, we want to try to isolate China on
• 16:56
  Speaker 2: the global stage. Will it work. We can't answer that
• 17:00
  Speaker 2: question this week, this month, or even this year. This
• 17:02
  Speaker 2: is going to play out over a decade in order
• 17:05
  Speaker 2: for us to actually find out this stuff does not
• 17:08
  Speaker 2: move quickly.
• 17:09
  Speaker 4: One other thing about China, just outside of all the
• 17:11
  Speaker 4: tariff talk, for reality to set in here too, Fifty
• 17:16
  Speaker 4: years from now, China is unrecognizable based on their demographic
• 17:22
  Speaker 4: issues that they have.
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  Speaker 2: It's gonna be half the size of what it is today.
• 17:24
  Speaker 2: It's going to go from being twenty five percent of
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  Speaker 2: the world's population to ten. Now, maybe they completely change
• 17:29
  Speaker 2: their views on things to allow a bunch of migration
• 17:32
  Speaker 2: into the country, and probably not, But I very much
• 17:34
  Speaker 2: doubt that that is not a big part of really
• 17:38
  Speaker 2: any country, especially China. But many Asian countries have a
• 17:43
  Speaker 2: very different view on migration into their country. This this
• 17:49
  Speaker 2: threat from China that we all see now, that still
• 17:51
  Speaker 2: exists because when you know, when oppressors like Chijing Ping
• 17:57
  Speaker 2: get pushed into a corner, I don't want to even
• 18:00
  Speaker 2: think about what happens there. But China is not this
• 18:05
  Speaker 2: big looming concern out there in my personal view on this,
• 18:09
  Speaker 2: because yeah, fifty years from now they are, like you said,
• 18:14
  Speaker 2: half the population that they are today. They cannot support
• 18:16
  Speaker 2: the same manufacturing that they do today. Sorry, fifty years
• 18:19
  Speaker 2: from now it's gonna be about three quarters of the
• 18:21
  Speaker 2: population of today. Eighty years from now, it's gonna be
• 18:24
  Speaker 2: half the population. I misspoke. This is according to projections
• 18:27
  Speaker 2: from the UN.
• 18:30
  Speaker 3: So there's that.
• 18:32
  Speaker 4: It's just a good reminder because I feel like whenever
• 18:33
  Speaker 4: we talk about China, it's look at how much more
• 18:36
  Speaker 4: efficient they are, look at how much better they are
• 18:38
  Speaker 4: at this or that, look at how powerful they are.
• 18:41
  Speaker 4: And I'm not sure I agreed with that before, but
• 18:45
  Speaker 4: I definitely don't see it today.
• 18:48
  Speaker 3: I mean, look, they are like.
• 18:49
  Speaker 2: The Chinese government and by virtue of that, like the
• 18:52
  Speaker 2: Chinese economy is really good at some things.
• 18:55
  Speaker 3: Yep.
• 18:55
  Speaker 2: There is nowhere in the world you can go and
• 18:58
  Speaker 2: get a They get the cooperation from the government to
• 19:03
  Speaker 2: get you the people, land and resources you need to
• 19:06
  Speaker 2: if you treat them right.
• 19:08
  Speaker 3: Yep.
• 19:09
  Speaker 2: The obvious like if there is, hey, you've got to
• 19:12
  Speaker 2: play nce with the Chinese government and what they want
• 19:14
  Speaker 2: you to do, which can be problematic because of some
• 19:16
  Speaker 2: of the things that they do. But there's a reason
• 19:20
  Speaker 2: why so many companies go to China manufacture. It's not
• 19:24
  Speaker 2: just the cost, it's the skill and efficiency of the
• 19:27
  Speaker 2: whole system that ends up being built there. Just take
• 19:29
  Speaker 2: a quick break. When we come back, we're gonna talk
• 19:32
  Speaker 2: about tomatoes after this.
• 19:42
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• 20:38
  Speaker 2: All right, let's talk tomatoes here. There's a piece in
• 20:42
  Speaker 2: the Bloomberg titled what the tomato? Or tomato if you
• 20:46
  Speaker 2: will teaches us about free trade? And I'm gonna quote
• 20:51
  Speaker 2: the first two sentences here. Most tomatoes from Mexico will
• 20:55
  Speaker 2: face a twenty one percent tariff effect of July fourteenth,
• 20:58
  Speaker 2: US Department of Commerce last week.
• 21:00
  Speaker 3: Why most which tomatoes are they exempting?
• 21:03
  Speaker 6: Michael heir Loom.
• 21:05
  Speaker 2: I'm not getting into it. I don't want to go there.
• 21:07
  Speaker 2: I'm not getting into confused. Ironically, the love apple who
• 21:12
  Speaker 2: calls it tomato? I love apple has ever been a thing?
• 21:17
  Speaker 4: It was apparently well, according to my AI overview, the
• 21:21
  Speaker 4: term originated in France PALMD.
• 21:27
  Speaker 5: No.
• 21:29
  Speaker 2: So in any case, here's the deal. Is Clearly in
• 21:34
  Speaker 2: New England you cannot grow tomatoes most of the year.
• 21:39
  Speaker 3: Wrong.
• 21:39
  Speaker 4: Backyard Farms, Madison, Main based agricultural company, has been growing
• 21:44
  Speaker 4: tomatoes in winter in their greenhouses for years.
• 21:48
  Speaker 2: That's fine, It's just you can't grow enough tomatoes to
• 21:51
  Speaker 2: feed all of New England and all of you know,
• 21:56
  Speaker 2: right like you're gonna turn the entire state of made
• 21:58
  Speaker 2: into a greenhouse. I'm as big a fan actually backyard
• 22:01
  Speaker 2: farms fantastic. Still big littlely farms. Guy for lettuce only,
• 22:06
  Speaker 2: let us all buy. But again, you just you can't
• 22:09
  Speaker 2: get these greenhouses big enough to supply all of the needs.
• 22:13
  Speaker 2: So a couple of things that you have here is that, look,
• 22:17
  Speaker 2: you can grow tomatoes throughout the United States, and obviously
• 22:21
  Speaker 2: we do, but it's a lot easier to grow them
• 22:25
  Speaker 2: in Mexico in winter. It gets really pricey because you're
• 22:28
  Speaker 2: competing with actually building houses in a lot of these
• 22:31
  Speaker 2: areas in anywhere in that you can grow these year round.
• 22:36
  Speaker 2: In the United States, well, Florida is an example. Here
• 22:39
  Speaker 2: in California. Have you seen what land values have done
• 22:41
  Speaker 2: there the last twenty years?
• 22:42
  Speaker 4: Well plus in Florida. I mean, California's a different story,
• 22:45
  Speaker 4: but in Florida, the growing conditions for tomatoes are apparently
• 22:47
  Speaker 4: not terribly good. You don't love a bunch of humanity
• 22:50
  Speaker 4: because community is not good. Pest fungus, all sorts of
• 22:52
  Speaker 4: stuff that they don't have to deal with in Mexico. Now, counterpoint,
• 22:55
  Speaker 4: the Mexican government apparently subsidizes the construction of these greenhouses
• 22:59
  Speaker 4: that they use to make these tomatoes. I kind of
• 23:02
  Speaker 4: get why you don't want to compete with that if
• 23:04
  Speaker 4: you are a Florida tomato grower. But as a policy,
• 23:09
  Speaker 4: do I really care if Mexico wants to subsidize the
• 23:12
  Speaker 4: cost of tomatoes coming into my country?
• 23:14
  Speaker 2: I do, Okay, there's some things that I don't mind substance,
• 23:17
  Speaker 2: like like illegal subsidies. If someone wants to subsidize the
• 23:22
  Speaker 2: heck out of T shirt production, give me all the
• 23:26
  Speaker 2: three dollars T shirts I can get, because ultimately there's
• 23:30
  Speaker 2: no national security risk there. Now you may say, hey,
• 23:33
  Speaker 2: look with tomatoes, like, there's.
• 23:36
  Speaker 3: Plenty of substitutes, so it's not one.
• 23:37
  Speaker 2: But if you do that across the food change, right,
• 23:39
  Speaker 2: you can't do it with food all over the place
• 23:41
  Speaker 2: because then you run into problems. So food is something
• 23:45
  Speaker 2: where I kind of look at it and I go, yeah,
• 23:47
  Speaker 2: if you want to make a case, hey, we need
• 23:49
  Speaker 2: to have some imports of you know, key areas that
• 23:53
  Speaker 2: aren't subsidized by other, you know, economies, because you just
• 23:56
  Speaker 2: need to be able to have these things year round. Like,
• 23:58
  Speaker 2: totally agree. But when you start getting into foreign government
• 24:03
  Speaker 2: subsidizing production of food that they're going to export, starts
• 24:07
  Speaker 2: to get a little dangerous for.
• 24:08
  Speaker 1: Me, you know.
• 24:10
  Speaker 4: And that is according to Bloomberg, what has happened. Mexican
• 24:13
  Speaker 4: growers have perfected the use of greenhouses, often erected with
• 24:16
  Speaker 4: government subsidies. And I would, yeah, totally understand that if
• 24:21
  Speaker 4: I were a Florida tomato grower. On the other hand,
• 24:24
  Speaker 4: if I've been at Florida tomato grower, I've been able
• 24:27
  Speaker 4: to sell my land for tens or hundreds of millions
• 24:30
  Speaker 4: of dollars over the last few years for real estate development,
• 24:33
  Speaker 4: so I'm probably not that upset about it anymore.
• 24:35
  Speaker 2: There was a family that had a three hundred and
• 24:38
  Speaker 2: thirty two acre tomato, squash and pepper farm that they
• 24:42
  Speaker 2: sold a couple of years back to Gail Homes for
• 24:45
  Speaker 2: two hundred and fifteen million dollars. Good money if you
• 24:48
  Speaker 2: can get it.
• 24:48
  Speaker 4: But this is the trade off that is being discussed
• 24:50
  Speaker 4: and what it likely means were they to stay in
• 24:53
  Speaker 4: place for a significan period of time would be tomatoes
• 24:56
  Speaker 4: costing more in the winter than they do in the summer, which, frankly,
• 25:00
  Speaker 4: I can.
• 25:01
  Speaker 2: They probably should. Yeah, I can live with that, you know,
• 25:03
  Speaker 2: like they probably should.
• 25:06
  Speaker 4: It's harder to grow them, you do, think about, right,
• 25:09
  Speaker 4: you know, go talk to somebody who's been grocery shopping
• 25:11
  Speaker 4: for sixty years. It's not like you were getting avocados
• 25:15
  Speaker 4: in January in Minnesota.
• 25:17
  Speaker 7: No.
• 25:17
  Speaker 2: Look, I still talk to my parents and they're like, oh,
• 25:19
  Speaker 2: like it's grape season, like it, I don't know, like
• 25:22
  Speaker 2: it's always grape season now exactly. Like the world has
• 25:25
  Speaker 2: changed a lot in the last eighty years, mostly for
• 25:28
  Speaker 2: the better, but you still need to, you know, find
• 25:29
  Speaker 2: some ways to make sure that, gee, if there is
• 25:32
  Speaker 2: like some kind of outbreak of international conflict or tradelines
• 25:35
  Speaker 2: get snarled, that you can still feed your people. And
• 25:38
  Speaker 2: that's why a view food is something very different from
• 25:41
  Speaker 2: tickle me.
• 25:41
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• 26:45
  Speaker 2: Mike, you big Chili's guy, have not been in years?
• 26:48
  Speaker 2: Don't lie? Have not been to Chili's. You've not been
• 26:51
  Speaker 2: a big not been to Chili's in years, So there's
• 26:54
  Speaker 2: a piece of the wall. I haven't either. Honestly, I
• 26:56
  Speaker 2: can't tell you the last time I went to Chile's
• 26:59
  Speaker 2: tuck probably call shed right.
• 27:01
  Speaker 6: I wish it'd gone sooner. It's pretty sweet.
• 27:05
  Speaker 2: While ago, so piece in the Wall Street Journal how
• 27:08
  Speaker 2: Chili's won when America raged about fast food prices, And
• 27:14
  Speaker 2: basically what they did was they said, look, we've got
• 27:18
  Speaker 2: stuff that's better than fast food at only slightly higher prices.
• 27:23
  Speaker 2: Come eat here and like things that they're advertising again,
• 27:26
  Speaker 2: They've got an advertisement right now advertising what they're calling
• 27:30
  Speaker 2: their big QP burger. What does QP stand for quarter pounder?
• 27:35
  Speaker 2: How can it have eighty five percent more beef than
• 27:37
  Speaker 2: a quarter pounder? It's not a quarter pounder, And just, yeah,
• 27:39
  Speaker 2: it's confusing to me. Then what am I actually getting?
• 27:42
  Speaker 2: Like eighty five percent more beef than a quarter pounder?
• 27:45
  Speaker 2: So quarter pound is four ounces, so four times one
• 27:50
  Speaker 2: point eight five, I'm getting a seven point four ounce burger.
• 27:54
  Speaker 2: Who's asking for that? But apparently a lot of people
• 27:56
  Speaker 2: because they're actually, you know, operating pretty well well in
• 28:00
  Speaker 2: a parent company, Brinker is finding that, hey, we're able
• 28:05
  Speaker 2: to compete well. And before all the tariff stuff, they
• 28:07
  Speaker 2: actually had raised their revenue and profit guidance for the year.
• 28:10
  Speaker 2: While fast food has you know, kind of been trying
• 28:13
  Speaker 2: to find its way a little bit.
• 28:14
  Speaker 4: This must be playing incredibly well in California, where they
• 28:17
  Speaker 4: have the fast fed minimum wage, for example. So I'm
• 28:20
  Speaker 4: sure that's doing quite well there. I wonder about here, right, like,
• 28:24
  Speaker 4: what is the real price differential? I'm on their site
• 28:27
  Speaker 4: and that big QP burger with fries is going to
• 28:29
  Speaker 4: cost you fourteen bucks? Down in Braintree, Massachusetts. Here's what
• 28:33
  Speaker 4: can I get a quarter pound or for at the
• 28:35
  Speaker 4: McDonald's on the highway. It is probably more than ten bucks.
• 28:38
  Speaker 2: I think the thing that's interesting. Chile's is a sit
• 28:40
  Speaker 2: down restaurant. Yeah, so I'm getting sit down service for
• 28:44
  Speaker 2: a price that is comparable to even a little bit
• 28:47
  Speaker 2: less than a Chipotle, right, Like that's the vats composition.
• 28:51
  Speaker 3: Yeah, it is compelling.
• 28:52
  Speaker 2: I'm gonna sit down, I'm gonna have someone weighed on me.
• 28:54
  Speaker 3: Now.
• 28:55
  Speaker 2: Granted I do have to then tip differently than I
• 28:57
  Speaker 2: would add a Chipotle.
• 28:59
  Speaker 4: Although that's now so part of that culture too that
• 29:02
  Speaker 4: you know, how many times do you go to Chipotle
• 29:04
  Speaker 4: and tip twenty percent?
• 29:05
  Speaker 2: Honestly, haven't been to Chipotle in probably a year, Tucker
• 29:08
  Speaker 2: never never.
• 29:09
  Speaker 6: Yeah, why would I tip at Chipotle?
• 29:11
  Speaker 4: I because they turned that pad around to you, and
• 29:14
  Speaker 4: I think a lot of people end up tipping. If
• 29:16
  Speaker 4: I were at Chipotle and they turned that pad around,
• 29:18
  Speaker 4: I'm probably tipping minimum of ten percent.
• 29:22
  Speaker 2: No matter what you're doing. Take away, yeah, if someone's
• 29:26
  Speaker 2: handy you cotton candy.
• 29:27
  Speaker 4: I don't think Chotle has a tablet you're talking about now,
• 29:30
  Speaker 4: They don't know, all right, fair enough.
• 29:32
  Speaker 6: They just have a standard cash register with no tablet.
• 29:36
  Speaker 6: No tablet, no tablet. Yeah, I don't think. Maybe I'm wrong.
• 29:39
  Speaker 2: Lots of dimes, lots of that Nichols occasional penny all
• 29:44
  Speaker 2: cash operation.
• 29:45
  Speaker 3: Yeah.
• 29:46
  Speaker 2: Well, hey, listen, they their whole thing is like there's
• 29:49
  Speaker 2: there's no cans, like, nothing's pre made, everything's fresh, Like
• 29:52
  Speaker 2: give me some fresh pennies then right, nope, I wait, wait,
• 29:57
  Speaker 2: it's not the US mint. My bad. Let's take a
• 29:59
  Speaker 2: quick break when we're joined. After this break, we're going
• 30:02
  Speaker 2: to be joined by Paul Monica from Barons. Right after this.
• 30:05
  Speaker 1: Market volatility is at its highest point since the pandemic.
• 30:09
  Speaker 1: Keep it here for the most comprehensive coverage of the
• 30:11
  Speaker 1: global trade war. This is the Financial Exchange Radio Network.
• 30:16
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• 30:20
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• 30:23
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• 30:28
  Speaker 1: Ladies and gentlemen.
• 30:30
  Speaker 3: The weekend.
• 30:38
  Speaker 5: The Financial Exchange is proud of our partnership with the
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  Speaker 5: Disabled American Veterans Department of Massachusetts and this year's five
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• 31:09
  Speaker 2: As promised, we're joined by the one and only Paul
• 31:12
  Speaker 2: Lamonica right now here on the show and we're talking
• 31:15
  Speaker 2: Coca Cola with him. Paul, How you doing today?
• 31:21
  Speaker 3: Oh?
• 31:21
  Speaker 2: Paul?
• 31:21
  Speaker 3: You there? All right?
• 31:24
  Speaker 2: Paul is not there them? Okay, We're gonna try to
• 31:27
  Speaker 2: get Paul. In the meantime, let's talk a little bit
• 31:32
  Speaker 2: about should we talk about anything? Gen Z workers, you
• 31:35
  Speaker 2: want to tell a joke.
• 31:38
  Speaker 3: Uh, no, I don't have one. Just ready to go here?
• 31:40
  Speaker 2: Oh okay, what do you say when you lose twenty
• 31:42
  Speaker 2: five percent of your roof?
• 31:44
  Speaker 3: Oof? Good? Good?
• 31:47
  Speaker 2: Still no, Paul, Okay, still no, Paul. Let's talk about
• 31:50
  Speaker 2: gen Zu. Gen Z is the generation that is younger
• 31:53
  Speaker 2: than millennials. So for everyone complaining about twenty year olds
• 31:56
  Speaker 2: that are lazy, that's them, not us anymore.
• 31:59
  Speaker 3: Got it.
• 32:00
  Speaker 2: Glad we've gotten that out of the way. Gen Z
• 32:02
  Speaker 2: workers are increasingly opting out of college and into the trades.
• 32:05
  Speaker 2: This according to a piece from CNBC.
• 32:09
  Speaker 4: Two million fewer students in traditional four year universities now
• 32:13
  Speaker 4: compared to twenty eleven and interesting, peace in my mind,
• 32:16
  Speaker 4: this was all well, partially at least cost related. The
• 32:19
  Speaker 4: annual cost of attendance of a four year in state
• 32:22
  Speaker 4: public college increase by about thirty percent from twenty eleven
• 32:25
  Speaker 4: to twenty twenty three CPI closer to forty to cost.
• 32:29
  Speaker 2: College actually has been going up more slowly than overall inflation.
• 32:32
  Speaker 4: Now, granted, it was doing like ten percent a year
• 32:35
  Speaker 4: back in the eighties and nineties. That was it couldn't
• 32:38
  Speaker 4: have kept that pace forever, But that surprised me a
• 32:40
  Speaker 4: little bit to look at that cost of attendance increasing
• 32:43
  Speaker 4: by only thirty percent, which is a lot, but everything's
• 32:47
  Speaker 4: gone up by thirty forty percent over the course of
• 32:49
  Speaker 4: the last decade and a half.
• 32:51
  Speaker 2: Now, there are obviously varied, you know, levels of success
• 32:55
  Speaker 2: with anything, whether you're going to college or not. Going
• 32:57
  Speaker 2: to college is not the only determine it. But you
• 33:01
  Speaker 2: do have some people that, look, they started their business
• 33:03
  Speaker 2: when they were eighteen, and like they've built it over
• 33:05
  Speaker 2: five six years. Now we're making real solid money because hey,
• 33:09
  Speaker 2: there still aren't enough trades people in a lot of cases.
• 33:11
  Speaker 2: We are now joined by Paul L. Monica here to
• 33:13
  Speaker 2: talk a little bit about Coca Cola. Paul, how are
• 33:16
  Speaker 2: you doing.
• 33:17
  Speaker 7: I'm good. Thanks, Yeah, I don know. I don't know
• 33:19
  Speaker 7: what happened there.
• 33:20
  Speaker 2: It's it's us not you don't worry about it. I'm
• 33:23
  Speaker 2: one hundred percent sure that it's something I did specifically.
• 33:26
  Speaker 2: So in any case, let's talk a little bit about
• 33:31
  Speaker 2: Coca Cola, because you know, this is one of the
• 33:33
  Speaker 2: few stocks that is in a pretty good spot this year.
• 33:37
  Speaker 2: It's up eighteen percent so far. They report earnings next Tuesday.
• 33:42
  Speaker 2: I believe what's been working for them in a world
• 33:46
  Speaker 2: in which a lot of companies have really seen their
• 33:49
  Speaker 2: stocks struggle to start the year.
• 33:51
  Speaker 7: Yeah, that is a great question. I think that investors are,
• 33:56
  Speaker 7: you know, appreciating they the kind of space haven status
• 34:02
  Speaker 7: that comes with owning Coca Cola. You've got a nice, solid,
• 34:08
  Speaker 7: steady dividend that yields just under three percent. That's nice
• 34:13
  Speaker 7: during these market balls at times. And you know, let's
• 34:16
  Speaker 7: be honest, I mean, Coke is not going to make
• 34:20
  Speaker 7: anyone forget the growth rates that we still have from
• 34:24
  Speaker 7: a lot of that different seven companies. But you know,
• 34:28
  Speaker 7: while those companies have taken it, you're partly due to
• 34:31
  Speaker 7: concerns about valuations and you know what's going to happen
• 34:35
  Speaker 7: in that trade war. I think Coke has been a
• 34:38
  Speaker 7: steady performer and has even gotten a bit of a
• 34:42
  Speaker 7: premium to the market because of its stability, and it's
• 34:46
  Speaker 7: held up better from a fundamental standpoint than rivals like PEPSI,
• 34:50
  Speaker 7: you know, which is you know, just reported earnings that
• 34:52
  Speaker 7: we're a little disappointing, and a lot of us to
• 34:55
  Speaker 7: do with Coke expanding beyond carbonated better bridges. Fair Life
• 35:01
  Speaker 7: has been a huge success for them, an acquisition that
• 35:04
  Speaker 7: they did, you know, the milk brand you know a
• 35:07
  Speaker 7: couple of years ago, that's still growing.
• 35:08
  Speaker 2: Pretty rap in terms of potential headwinds for them. What
• 35:13
  Speaker 2: are things that investors may be concerned about and how
• 35:15
  Speaker 2: are they trying to address them?
• 35:17
  Speaker 7: Yeah, I think investors are obviously worried about the new
• 35:24
  Speaker 7: administration r K Junior in particular, and the crackdown on
• 35:29
  Speaker 7: things that might not be considered as healthy. And I
• 35:32
  Speaker 7: think you know one, you know, even Warren Buffett, despite
• 35:37
  Speaker 7: the fact that the Berkshire Hathaway chairman and you know
• 35:43
  Speaker 7: lover of both coke as a product and the stock
• 35:47
  Speaker 7: has been drinking it for decades and it's still with
• 35:50
  Speaker 7: us in you know, mid to late nineties. Coke is
• 35:54
  Speaker 7: not a healthy product per se if it's over So
• 36:00
  Speaker 7: I think, you know, any sort of regulatory crackdowns could
• 36:04
  Speaker 7: be an issue. But I think that is one of
• 36:06
  Speaker 7: the reasons why Coke has made this push into the
• 36:11
  Speaker 7: milk business with Fair Life, which again is growing rapidly.
• 36:14
  Speaker 7: It's got you know, the uh you know, the laptos,
• 36:17
  Speaker 7: free milk, the protein shapes as well. It is a
• 36:21
  Speaker 7: brand that I think a lot of investors may not
• 36:24
  Speaker 7: have realized is part of the Coke portfolio now and
• 36:29
  Speaker 7: it really has helped boost the performance with regards to revenue.
• 36:34
  Speaker 2: When you look at Coke and kind of compare them
• 36:37
  Speaker 2: to other companies in the space. I know Pepsi reported
• 36:40
  Speaker 2: earnings yesterday. What can Pepsi's earnings tell us about what
• 36:43
  Speaker 2: we may expect for Coke next week? Any strengths, weaknesses
• 36:46
  Speaker 2: or anything like that that you saw.
• 36:49
  Speaker 7: Yeah, I mean Pepsi is a bit even though it's
• 36:52
  Speaker 7: obviously the company that investors inevitably compare Coke to. You
• 36:58
  Speaker 7: have to remember that Pepsi all so has the the
• 37:01
  Speaker 7: snacks business. Coke really doesn't have any presence in food,
• 37:06
  Speaker 7: so you know, that is something. But I think what
• 37:09
  Speaker 7: Pepsi did with its guidance, you know, concerns about tariffs
• 37:14
  Speaker 7: obviously that is going to be something that investors need
• 37:17
  Speaker 7: to you know, see what CEO James Quincy has to say.
• 37:23
  Speaker 7: Just because we know the Coke is a multinational giants,
• 37:27
  Speaker 7: it could come in the crossers of countries like China,
• 37:32
  Speaker 7: you know, and even some of our allies because of
• 37:36
  Speaker 7: the concerns about tariffs in the trade war right now.
• 37:39
  Speaker 7: So that's something I think investors will be watching, but
• 37:43
  Speaker 7: you know, Coke has been resilient and I think the
• 37:47
  Speaker 7: the strength and a lot of its core brands will
• 37:50
  Speaker 7: show through even if there is some soft short term volatility.
• 37:55
  Speaker 5: Due to the tariffs.
• 37:57
  Speaker 2: Very good, Paul. We've got to run, but appreciate you
• 37:58
  Speaker 2: joining us and have a great weekend.
• 38:02
  Speaker 7: Thanks a lot.
• 38:04
  Speaker 2: That is Paul Monica from Baron's talking about Coke. We're
• 38:07
  Speaker 2: done for the day, done for the week. Dow currently
• 38:09
  Speaker 2: off one hundred and sixty nine points, s and p
• 38:11
  Speaker 2: up three, NASDA c ups sixty three, so relatively quiet,
• 38:15
  Speaker 2: mixed markets. See what happens this weekend. We're back on Monday.
• 38:19
  Speaker 2: Make sure you tune in. We'll see you then.