Latest / The Financial Exchange Show / Apple and Google lose E.U. appeals and it could cost them billions

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Apple and Google lose E.U. appeals and it could cost them billions · The Financial Exchange Show

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Corporation DACE is the Financial Exchange with Mike Armstrong and
1:10
Paul Lane.
1:13
Speaker 2: Good morning, and welcome back to the Financial Exchange. We've
1:16
got markets that were strongly positive yesterday basically not moving
1:21
this morning. We've got the Dow to off one hundred
1:24
and eighty points four ten percent, SMP almost exactly flat,
1:28
the S and P five hundred up one point, the
1:31
NASDAC up thirty one points, basically one fifth of a percent.
1:36
In bond markets, we've got the yield and the ten
1:38
year Treasury continuing downwards to three point six seven to
1:41
two percent. And the best news of the day that
1:44
I can bring up would be crude prices. Crude prices
1:47
off another three point three percent, down below sixty seven
1:52
dollars per barrel. I've been noticing this at the gas station.
1:55
About you, Paul, I paid I think I paid under
1:57
three bucks a gallon the other day at beach. But yeah,
2:01
definitely seeing a distinct move in gas prices here and
2:04
and oil prices. Taking a look at gas prices throughout
2:08
the country, we're sitting on a national average of three
2:11
twenty six in Massachusetts and New Hampshire. You're sitting below
2:15
that average. Three twenty five here in Massachusetts, three twenty
2:18
one in New Hampshire, Maine, three two twenty nine, sorry,
2:23
three thirty five round properly, three thirty two in Vermont,
2:27
three twenty eight in Connecticut, and Rhode Island three dollars
2:33
and thirteen cents. So if you can make your way
2:36
through Rhode Island on the direction of wherever you're going,
2:38
then you can save a little bit on gas there
2:40
as well. But yeah, I mean, that's the one positive
2:43
thing I can look at as a global slowdown clearly
2:46
takes shape. And it's not just the United States that's
2:49
driving prices lower here. It's you know, certainly demand from
2:52
China impacting things. But we've had oil now under that
2:56
eighty bucks a barrel range for quite some time, and
2:59
we're seeing that, yeah, take shape in lower gas prices,
3:02
which I will take albeit not a great signal for
3:05
the state of the economy. Anything else catching your eyes
3:07
market wise this morning.
3:09
Speaker 3: Paul, No, nothing else out there.
3:10
Speaker 2: So let's talk about this Google and Apple case that
3:13
got handed down just this week. So these are not
3:19
recent cases, to be clear. These are rulings that came
3:22
from courts back in the twenty tens. In Apple's case,
3:26
I think it goes back to a case from twenty
3:27
sixteen where the European Union said, look, you know, Ireland's
3:31
tax code violated EU rules and you're going to be
3:36
forced to go and collect another fourteen point four billion
3:39
dollars in taxes that Apple had been appealing. They'd appealed
3:42
this all the way to this year, and final ruling
3:44
came down in Luxembourg saying no, yeah, Ireland, you got
3:48
to go collect this. I know you don't want to
3:49
collect this tax revenue because it's going to prohibit you
3:52
from you know, getting those new businesses that want to
3:55
do whatever, the reverse double Dutch Irish whatever crazy tax
4:01
loophole thing. But Ireland going to be collecting fourteen point
4:04
four billion dollars in back taxes and that's been sitting
4:07
in an escrow account as this lawsuit plays its way
4:10
through the European Union, which fourteen point four billion. I mean,
4:14
Apple's revenues are massive, but that's not an insignificant sum.
4:17
Speaker 4: That's a couple quarters.
4:18
Speaker 2: Of MAC revenue just being paid out in back taxes
4:21
by Apple here.
4:22
Speaker 3: Yeah, and that I from revenue maybe rack MAC revenue.
4:25
But it's interesting the EU has really been at the
4:29
forefront of being the technology watchdog out there. There are
4:33
several cases that it's had and finally in these two instances,
4:37
proving out that they can win out through the appeals process,
4:42
something that the US has really struggled with on the
4:44
antitrust side of things two different cases. Like Mike mentioned
4:48
the first one with Apple, they were upset because they
4:51
were claiming that they're basically being double tax They paid
4:54
taxes on the income already in the US, and now
4:57
the EU has come and said, no, you have to
5:00
pay taxes to Ireland for the European revenue generated well
5:04
as well. On the Google side of things, that was
5:07
much more of an antitrust ruling that the EU came
5:10
out with where they are assessed to pay a two
5:13
point four billion eurofine for a decision that was made
5:17
in twenty seventeen claiming that Google unfairly put its predominant
5:22
comparison shopping center over its competitors during that period of time.
5:27
So that decision was upheld and so I'm.
5:29
Speaker 4: Just trying to think practically what that means.
5:31
Speaker 2: So I think what it means is if I Googled
5:34
a rain jacket, for example, in years past in the
5:38
European Union, instead of being directed towards eBay, Amazon, Nordstrum,
5:42
anywhere else, I would be driven to Google Shopping, where
5:46
they get presumably some advertising revenue from any of those
5:50
vendors who want to advertise on Google Shopping, which I'm
5:52
sure Amazon didn't, but Nordstrum I'm sure paid fees to
5:55
be filtered in through the Google Shopping network.
5:58
Speaker 3: Yeah, that's what it seems like here is kind of
6:00
funneling people into their price comparison stopping service over some.
6:04
Speaker 4: Of the rival offerings. Ye, that makes sense.
6:07
Speaker 2: I mean Google here has now faced a number of
6:11
successful anti trust it really you know, we're talking about
6:15
monopoly power cases both in the EU and domestically here
6:18
in the United States. We covered one yesterday, but they
6:22
just finished up and lost the case on monopoly power
6:26
on search, and at the same time Justice Department now
6:29
bringing a case for them on advertising revenue and the
6:33
interesting case this is a US case, not in the
6:35
U case, but the interesting piece on the advertising revenue
6:40
or the advertising you know, monopoly power piece one. It's
6:43
not terribly well known outside of you know, people that
6:46
work in tech advertising of how.
6:49
Speaker 4: That system works.
6:50
Speaker 2: It's not like the everyday person who does Google searches
6:53
understands the functionality.
6:54
Speaker 4: Of all that. But two, the lawsuits also.
6:57
Speaker 2: Coming at a time where Google's losing a lot of
6:59
that dominance. If you take a look at how Apple
7:03
and Amazon and Meta are pushing their way into the
7:06
online advertising market, they are directly taking dollars from Google
7:10
at the same time that they're facing this massive anti
7:12
trust case. So the the Quite honestly, I feel as
7:17
though the EU's way of doing things on a lot
7:20
of these cases makes hell of a lot more sense
7:23
than the way we handle privacy and tech on the
7:26
United States landscape. The one power that they're never going
7:29
to have, which the United States does have is to
7:31
say this.
7:32
Speaker 4: Is a monopoly, break it up, right, you know.
7:34
Speaker 2: For instance, their take the EU is taking Live Nation
7:38
to court I think this year over their monopoly power.
7:42
But worst case scenario, Live Nation faces a bunch of fines.
7:46
It's up to the United States to break up a
7:48
US company, which god, I wish they would in the
7:51
case of Life Passion. So yeah, interesting developing cases and
7:55
continue these big tech companies, you know, not as they
8:00
paid a ton of taxes over in the EU, but
8:01
if you want to have operations there becoming more and
8:05
more costly to do so on these lawsuits of what
8:09
in many cases I think is pretty founded abuse of
8:13
antitrust and anti competitive practices that Google, Apple and all
8:18
these others employ. There interesting piece here from the Census
8:23
Bureau before we go to break taking a look at
8:26
where incomes actually came in. So the US Census Bureau
8:31
puts together their data on all of this on a
8:34
regular basis, and new data out from the USNSUS Bureau
8:38
finally kind of proving out what I think most of
8:40
us had known, but that incomes did substantially rise. And
8:45
it's really the first time since the pandemic that you
8:47
can look at this on an inflation adjusted basis. Right,
8:50
Like we talked about this early on in twenty twenty
8:52
one and twenty two, which was hey, wages moving up,
8:55
but when you factor in inflation, people are still losing money.
8:59
And in twenty two twenty three it was the first
9:01
time that you saw real wages grow. So inflation adjusted
9:05
median household income was eighty thousand, six hundred and ten
9:09
dollars in twenty twenty three. So again that's inflation adjusted
9:12
median household income, so you know, oftentimes dual working household
9:18
that's up four percent from the twenty twenty two estimate,
9:21
which came in at seventy seven thousand and five forty,
9:24
which was again announced in its annual Report for Households
9:28
Financial Wellbeing. You know, this report comes at the same
9:30
time as others that we have seen looking at just
9:35
how dramatically we're seeing things like credit card.
9:38
Speaker 4: And auto loan default rates on the uptick here.
9:42
Speaker 2: So again, I don't think any of those things are
9:44
powerful enough to bring down the US economy and the
9:46
way the housing lunacy did of eight, but important to
9:51
look at when you consider the state of American households,
9:54
and you know, more and more consumers getting into default
9:57
on their credit cards and auto loans can't be really
10:00
seen as a good sign other than for anything other
10:03
than hey, maybe I can pick up a cheap used
10:05
vehicle sometimes in your future.
10:07
Speaker 3: Yeah, those delinquency rates. I was ready to sort of
10:09
poo poo them, But if you look back twelve years,
10:12
you know we're getting two levels. It's not eight oh
10:15
nine levels of craziness, but it is a little bit
10:19
more significant than what we've seen over the last ten
10:21
plus years or so. And this data on the income side,
10:24
to me is really helpful because of that inflation adjustment,
10:27
you know. Like you mentioned, we talked about how wage
10:29
growth peaked in twenty twenty two, but that was on
10:31
the heels of things costing. More helpful to get this
10:34
context that, hey, wages have come up even with the
10:38
substantial impacts of inflation that we've seen over the last.
10:41
Speaker 4: Couple of years. Let's take a quick break.
10:42
Speaker 2: When we come back, we're gonna have a little bit
10:44
of trivia and then we'll dive into a piece about
10:47
the Federal Reserve and why they need to be more bold.
10:50
That's next on the Financial Exchange.
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Today is Ali Baba founder Jack Ma's sixtieth birthday. Jack
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Ma and a group of seventeen others founded Ali Baba
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and ran the company until he resigned under suspicious circumstances
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back in twenty nineteen. Drew your question today, what year
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12:43
Speaker 2: I don't remember if it's airplane one or airplane two,
12:46
but there's a scene where they're covering the you know,
12:50
airplane that's gone rogue or an airplane two case, spaceship
12:54
that's gone rogue, and you know, it cuts from clip
12:56
to clip of news anchors across the world covering the story,
12:59
and one of them is meant to be the Soviet Union,
13:02
and there's just an off camera gun pointed at the
13:05
newscaster's head as he's doing the story. And that scene
13:09
right there just reminds me of the quote suspicious circumstances
13:13
under Jack Ma's resignation. It's like, yes, I'm writing this
13:16
resignation of my free will while there's a gun off
13:20
off camera pointed directly at my head.
13:22
Speaker 3: He hasn't been heard from ever.
13:24
Speaker 2: Agne, Yeah, why is that funny? That that's not funny?
13:29
It is genuinely terrifying. And the only reason that I
13:34
can fathom of that we we seem to know here
13:37
is that he was seen as too popular and too influential,
13:43
and anyone that gets too popular under this Chinese administration
13:48
of you know, taking influence away from the all powerful leader,
13:53
gets stuffed in a closet somewhere and you never hear.
13:56
Speaker 3: Well, they thought he was adversarial against their their their party.
13:59
Speaker 4: I'm not even sure it was that where you never
14:01
even said anything like that.
14:02
Speaker 3: I think he was just supporting.
14:05
Speaker 4: Hong Kong right independence, Yes.
14:08
Speaker 3: A little bit, I mean, but it doesn't take much
14:10
to your point.
14:11
Speaker 2: Yeah, My sense was just, you know, okay, if anybody
14:15
here is growing to the point where people listen to
14:18
them more than they listened to Shi Jingping, then you.
14:21
Speaker 4: Get stuffed in a closet somewhere and you're never heard
14:23
from the game I'm seeing.
14:24
Speaker 5: August tenth, he reappeared in public view for the first
14:27
time in months.
14:28
Speaker 4: Yeah, it was August tenth of this year, correct, Yeah, yeah,
14:33
when was the resignation.
14:35
Speaker 5: Oh boy, twenty nineteen, I think it was.
14:37
Speaker 2: Yikes, I mean he's made public appearances since then. No,
14:41
he had not been out in public for a very
14:43
long time the economy needs a bold FED, we won't
14:47
get it. That's an op ed from Larry Hathaway. He
14:51
is the co founder of the Jackson Hole Economics and
14:54
a former chief economist of UBS. And quite honestly, I
14:57
haven't read I don't recall having read any of his
15:00
prior to but he lays out an interesting argument, I think,
15:04
and it's one that we ourselves have debated on this
15:06
program before, but it had more. We previously debated it
15:10
when inflation was clearly getting out of control, and we said, well,
15:14
you know, clearly inflation's running wild. Why shouldn't the Fed
15:17
just increase interest rates by four percent all at once
15:21
and be done rather than this, you know, this slow
15:23
approach that they have. Wouldn't that be better for the economy?
15:26
And at the time, so Chuck was really landing in
15:29
that argument of hey, why not, like we know that's
15:31
where interest rates need to go long term, why not
15:34
just bump them up all at once, by like four
15:36
percentage points and just see what happens. And my my
15:39
main argument against that was I would imagine that there's
15:42
a whole bunch of banks and investment companies that would
15:44
just overnight fail if that were the case if you
15:47
had rates going up, I have a tougher time making
15:50
that same argument on the way down. I don't know
15:53
who would fail if rates moved down by three percentage
15:56
points overnight. I'm sure there's somebody making some crazy bet
16:00
like the Japanese carry trade that would blow them out
16:02
overnight and to make it not doable. But that's the
16:07
argument that Larry's making here is, Look, the Federal Reserve
16:10
knows or has a very strong sense that their policy
16:14
right now is restrictive in terms of you know, in
16:19
terms of growth and inflation. According to them and most critics,
16:24
is really an issue of the past. So why are
16:26
we taking this twenty five or fifty basis point approach
16:30
to interest rates? Why shouldn't we just say, hey, we
16:34
know rates are too high, bring them down to four
16:35
percent immediately, and then we'll go from there.
16:38
Speaker 3: My argument would be, and I'm not gonna be able
16:41
to back this up with any type of numerical data,
16:44
but let's say they do step in and do one
16:47
fifty like that, you know, next meeting, all of a sudden,
16:50
We've talked about Mike, you know, Mike conundrum before about
16:53
not even looking at a whole echuy line of credit
16:55
to do a renovation on a porch because the interest
16:58
rates were just too high. But all, all of a sudden,
17:00
immediately overnight, that helock that I could get. Let's say
17:04
it's six and a half or seven today, and overnight
17:06
defence is we're cutting one hundred and fifty base spoorts,
17:09
So one point five percent, all of a sudden, that's
17:11
gonna sit in let's call it the five percent ballpark.
17:15
Does that do enough to stoke inflation that me and
17:18
every other Joe Schmoe collectively out there, or there's just
17:21
a tremendous amount of focus now on home improvement barring
17:26
that puts inflationary pressure in the economy. I don't know,
17:29
but that would be perhaps my guess, and the trickle
17:32
down impact they could have to the housing market. I'm
17:35
talking about the short end of the curve with the
17:36
helocks there, but maybe the ten yure moves in lockstep
17:40
as well and it comes down significantly.
17:41
Speaker 4: I would agree.
17:42
Speaker 1: Yeah.
17:42
Speaker 2: See, like Larry pits this piece out and makes the
17:46
assumption that inflation is one hundred percent defeated and it's gone,
17:50
it's behind.
17:50
Speaker 4: Us, and I think so. But you know, the worst
17:57
possible outcome you.
17:58
Speaker 2: Can have is stagflation, right where the stagnating and inflation
18:01
is taken off. I don't think we can possibly head
18:03
for their based on current policy. But if the FED
18:05
all of a sudden cut rates by two percent or
18:07
one and a half percent, do I have some twinge
18:11
of concern that inflation.
18:12
Speaker 4: Could take back off.
18:13
Speaker 1: Yeah?
18:14
Speaker 2: Absolutely, Like I think that most of the inflation we
18:16
saw was due to supply chains, was more due to
18:18
supply constraints than it was to surge and demand.
18:22
Speaker 4: But clearly it was a little bit of both, right
18:25
and and so, and.
18:27
Speaker 3: What if you have you know, you cut the rates immediately,
18:29
you stoke up demand, and then you have a commodity
18:32
shock that is unexplained out there, whether it's some global
18:35
event that just you can't plan for. And you have
18:37
the two of those combined, and that cocktail leads to
18:40
inflation rearing its head again. Your pot committed. You can't
18:43
just flip back and go another one hundred basis points
18:45
back in the other directions. So that's why they likely
18:49
take the gradual approaches that it allows for them to
18:51
time to sit and process and react.
18:54
Speaker 2: Now the question will be basis, I want to replay
18:58
this tape. If six months from now we're sitting here
19:01
with unemployment up over five percent, then.
19:05
Speaker 3: Well that's the Monday Morning quarterback everyone's gonna do if
19:09
they don't get it right.
19:10
Speaker 2: I recognize that, but you know that's the exact morning
19:13
quarterback that the Fed themselves should be doing to say, hey,
19:17
if we do end up in recession here, what mistakes
19:19
were made and should we be acting more boldly rather
19:22
than just trying to be ultra predictable, which is what
19:25
drum Powell has tried to be ultra predictable in terms
19:28
of action. Quick break, we're gonna have the trivia winner
19:30
for you next, and then some EV discussion, especially what's
19:33
coming out of China right now.
19:34
Speaker 4: That's next.
19:40
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Speaker 5: That trivia question today was what year did Jack mad
20:09
launch Ali Baba? That'll be nineteen ninety nine winner today
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only Paul.
20:39
Speaker 2: For the last let's see year and half, the place
20:44
to have your money arguably has been high yield savings
20:48
accounts because they've been paying a good deal of interest,
20:52
more interest generally speaking, than any longer duration type products
20:56
like a three year CD or anything like that. It's
21:00
pretty clear that next week rates on those types of
21:02
products are going to start coming down. If you haven't
21:05
been participating, you know, you should know that. Yeah, there's
21:07
high yield savings out there with FDIC insurance paying highest
21:12
one I'm seeing right now is five point three percent.
21:15
That's according to bankreat dot com. My expectation would be
21:18
that sometime next week that probably gets cut down by
21:21
a quarter percent, and people are finally starting to question, Okay,
21:26
what do I do if rates are going to start
21:29
coming down? Is there a better place for my cash?
21:32
What do I do with it? And unfortunately, this might
21:35
be another one of those stories where the time to
21:37
act might have been several months ago.
21:40
Speaker 3: Yeah, at some point here. The solutions that are proposed
21:44
to perhaps extend the yield party a little bit longer
21:48
to collect safely some interest on the excess cash that
21:51
you have are really all short term options, Mike, in
21:54
terms of looking at CDs or even the one. Your
21:57
treasuries have come down significantly there as well. Even if
22:01
you are to jump into the let's say that five
22:03
point three percent savings that you're mentioning, that's truly temporary
22:07
in nature. Some banks out there are still gonna be
22:09
a little late to lower those rates down as they're
22:12
trying to attract deposits, but they move very swiftly to
22:15
change those And they mentioned the idea of divin in stocks.
22:19
You know, that's also a risky proposition too, because you
22:22
have the loss.
22:23
Speaker 2: Going from FDIC insurance to oh A or a basket
22:28
of dividend paying stocks like Okay.
22:31
Speaker 3: I was speaking with a listener the other day, a
22:33
perspective client who had, you know, a significant sum in
22:36
Verizon and in AT and T, and was you know,
22:40
lauding their the divinend that they pay, which is high
22:43
in terms of percentage, But you have to be clear
22:45
that stock like AT and T and Verizons down twenty
22:48
percent over the last five years in terms of your principle.
22:50
So yeah, it's great you put in one hundred grand
22:52
and you got paid six or seven percent, But when
22:54
your one hundred grand is valued at eighty after that
22:57
period of time, yeah, the percentage you're getting paid is higher,
22:59
but you've you've effectively lost that twenty percent principle. Temporarily,
23:04
you know, the stock will go up and down, but
23:05
that's something important to note. I mean maybe temporarily, yeah,
23:08
who knows. Yeah, right, it could be and it could
23:10
be further. You could take it further hit. So big
23:13
distinction between divid and stocks and a CD or money market.
23:17
But I would say that, well.
23:20
Speaker 2: It all comes down to a core thing that we've
23:23
talked about over and over, diversification and also aligning your
23:27
assets with your goals, right, Like you know, if this
23:30
money was money that you want to permanently have generating interest,
23:34
then all of it shouldn't have been in highyield savings
23:36
to begin with. Right as recently as April of this year,
23:39
you would have been able to lock in a loan
23:41
to the United States government for four point seven percent.
23:44
Speaker 4: Right, it's looking pretty good.
23:46
Speaker 2: Now if you go take a look at that back
23:48
in October of last year, you could have done it
23:49
at five. So, I mean, you know, it has to
23:52
do again with putting all of your eggs in one basket,
23:56
and we're seeing the pitfalls of that now where hey, yeah,
23:59
you can continue to you know, if you had done that,
24:03
you've continued to outperform from the yield on that savings
24:07
account being over five percent, but you're about to very
24:10
likely see that take a pretty persistent hike over the
24:14
cut over the next twelve months.
24:15
Speaker 4: Would be my guess.
24:16
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25:21
Speaker 2: Paul, I'll to talk a little bit about EV's I
25:24
know you guys are gonna find this hard to believe,
25:26
but as it turns out, some of the big car
25:30
companies commitments that they made just a few years ago
25:34
to only make evs forever may have been a little
25:38
bit overstated. Vol those the most recent to back away
25:41
from their pretty heavily promoted commitment to only building EV's
25:47
by twenty thirty, citing a need to be pragmatic and
25:50
flexible amid demand that just hasn't really been a thing
25:57
so far. And yeah, we're continuing to see this that. Yeah,
26:01
the car companies who had previously been saying no, no,
26:04
we're we're only going to make evs five years from now,
26:06
We're going to sell eighty percent of our fleet being
26:09
electric ten years from now are realizing that A the
26:13
cost to make that transition is very, very significant, and
26:19
B that's not really what the consumer wants, unless I
26:24
think there could be a scenario where that's where the
26:25
consumer wants, but the federal government is going to need
26:28
to be heavily involved, or someone's going to need to
26:30
be heavily involved in building out the charging infrastructure, which
26:33
is just not there.
26:34
Speaker 3: Yeah, we've talked about this a lot for a long
26:36
period of time where there was a significant amount of
26:40
enthusiasm wherein borrowing costs were low, for these companies on
26:44
the manufacturing side to get out there and say we're
26:46
going to invest billions of dollars to build out these
26:48
factories to produce electric vehicles. But as you mentioned, the
26:51
demand has lagged and a lot of that ties into
26:55
the infrastructure. If you issues, and you're right, it's going
26:58
to be something that is going to require a significant
27:00
amount of government intervention and subsidy. Difficult in a time
27:05
where the government is running at a very significant deficit
27:09
as it is, and it's harder to make those investments
27:14
when the market share is so minimal that the electric
27:17
vehicles make up of the overall vehicle market in the
27:21
United States, and you're trying to reverse one hundred and
27:23
thirty year trend. It's hard to sell to consumers that
27:26
way if you haven't built out the infrastructure.
27:29
Speaker 2: I mean gas, Look, fueling a car has always been
27:33
this kind of lost leading proposition, right. I mean, when
27:37
gas stations were initially opened up, they were heavily subsidized
27:41
and invested in by big oil as well as car
27:45
companies because they recognize, like, hey, we've got this fantastic
27:48
new product, but nobody's gonna buy it unless they can
27:50
buy gasoline somewhere, and so these were the reason that
27:55
every gas station you visit also has a convenience store
27:58
in other ways of making money is because selling gas
28:00
is not such.
28:02
Speaker 3: A low margin business. Yeah, I don't think people realize
28:04
how low margin it is for the gas station own.
28:06
Speaker 2: And so then take that and make the problem worse, right,
28:10
because you can fill up your tank. I can fill
28:12
up my tank in no more than five minutes, so
28:14
long as you know four people aren't also using the station.
28:18
Take that and exacerbate it to the point where, okay,
28:21
it's going to take me, what a minimum of thirty
28:24
minutes more to fully charge most electric vehicles, even in
28:28
a high capacity charger. And you can envision a scenario
28:32
where it's not as though we just need to build
28:34
out a whole bunch of gas stations that have ev
28:36
charging stations. We need to completely rethink the process there,
28:39
because you need something to do for half an hour
28:41
while your car charges, And I don't think it's going
28:44
to be sitting in the seven eleven staring at the
28:45
revolving hot dog.
28:47
Speaker 3: Yeah, when you were up against I just was looking
28:49
at you know, we've got one hundred and fifty thousand
28:52
or two hundred thousand retail gas stores in the United States,
28:55
depending on what numbers you look at. To replicate that
28:58
to the point where you anywhere close, it just takes you.
29:01
Speaker 2: Know, that's an important distinction, Like, I know people think
29:04
about it that way, but you don't need to replicate
29:06
that because.
29:07
Speaker 3: You're going to have the home charging.
29:08
Speaker 2: Now, seventy five eighty percent of charging happens at home, right,
29:11
and so that's that's where most of this is happening.
29:14
Speaker 3: But you need some percentage closer to that.
29:17
Speaker 2: Right, You need critical routes of you know, EV charging networks,
29:22
and you need enough of them so that when everyone
29:25
goes to Vermont for the solar eclipse, they actually have
29:29
a method of charging their car afterwards and getting down.
29:33
And you know that's not a problem for gas stations.
29:36
It's a massive problem for EV charging stations. So there's
29:40
I said at the time, right when the when the
29:42
Biden administration was passing these new tax breaks for producing
29:49
and selling electric vehicles, as like you're you're subsidizing this
29:55
part of the business, but that's not where it needs
29:57
to be subsidized, right, Like you cannot have I have
30:00
the sale of those vehicles without the investment and the
30:03
charging infrastructure, and in my mind, one of them really
30:06
needs to come before the other if you're going to
30:08
create the demand for these things. And we're just not
30:11
seeing that investment yet, not to say it won't come later,
30:14
and you know, Tesla's playing a big role in that,
30:18
but unless the other manufacturers get on board, I just
30:21
don't really see it happening. And then also there's the
30:24
bigger question of is this what the federal government has
30:27
any business in doing.
30:28
Speaker 4: So let's take a quick break. When we come back,
30:30
Stack Roulette.
30:32
Speaker 1: Breaking business and financial news first throughout the day, only
30:37
here on the Financial Exchange Radio Network. Miss any of
30:41
the show. The Financial Exchange Show podcast is available on Apple, Spotify,
30:46
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30:49
five star review. This is the Financial Exchange Radio Network.
30:59
Speaker 4: Time for a bit of stack rou Lett. Paul. I'm
31:01
gonna kick things off here with.
31:04
Speaker 2: What I find to be almost a laughable story, but
31:06
I want to just compare and contrast what I'm hearing
31:09
from the auto industry coming out of China, which is
31:12
just the Chinese Communist Party, and then what I'm hearing
31:15
out of American car makers, and just think about this
31:19
in terms of whether you're gonna be able to sell
31:21
cars globally. China's BYD is pushing out some electric vehicles
31:28
these days that sell for as little as thirteen to
31:30
fifteen thousand dollars.
31:32
Speaker 4: They are incredibly basic.
31:34
Speaker 2: I was listening on a podcast about one of these
31:36
things that does not even have air conditioning in the
31:38
back seats.
31:39
Speaker 4: It's a five seater, gets about a.
31:41
Speaker 2: Two hundred and thirty mile range, does not have any
31:44
even radio or electronics in the front. It is so
31:47
stripped down in basic to get this price points down
31:50
that it is just purely a vehicle of function designed
31:53
for a working class Chinese citizen primarily, although they're also
31:58
selling these things in Brazil and Mexico, you know, in
32:00
other emerging markets countries, and so, you know, low cost,
32:03
practical ev for for working class. Ford, on the other hand,
32:08
just patented an in car system that eavesdrops on you
32:11
so it can play you ads. And I'm you know, granted,
32:15
they haven't actually ruled this out. It's just a patent.
32:17
But the message that I'm hearing from Ford is Facebook.
32:20
But listen here here's the catch on wheels.
32:26
Speaker 4: If you are a you know, individual, I get that.
32:30
Speaker 2: You know, in the United States, you're not gonna be
32:32
buying a Chinese made ev But if you are anywhere in.
32:35
Speaker 4: The world, which one of these is more appealing to you?
32:38
Speaker 5: Right?
32:38
Speaker 2: Like, why if I live in India, would I even
32:42
entertain buying a Ford vehicle or anything other than like
32:49
in I get in India, why you wouldn't want to
32:51
buy a Chinese made electric vehicle either? But if I'm
32:55
living in Brazil, if I'm living in Mexico and I've
32:57
got two big producers who do not make cars in
33:02
my country. By the way, I know, Ford probably has
33:04
plants in Brazil, but definitely in Mexico. But I have
33:08
the option of buying, hey, a really stripped down basic
33:12
car from China that is going for next to nothing,
33:16
and yeah, it might spy on me, it might do
33:18
some nasty things and it's certainly subsidized by the Chinese government.
33:21
Or I can go buy an American made car. I
33:24
just don't understand why anyone out there would be doing so.
33:27
And what's really disappointing to me here is just like
33:31
all the innovation that I'm seeing, I'm not saying that
33:33
these are well made cars. I'm sure that at the
33:36
pace they in China are, you know, putting these cars
33:39
through and getting them out there on the market, there
33:41
are going to be quality issues. I'm sure there are
33:44
fires and other issues like we see here in the
33:46
United States. But I see innovation there. And just if
33:52
this is the innovation we're getting in the US car
33:54
market is hey, we're going to listen to your conversation
33:56
and deliver you ads while you're driving, then we are in.
33:59
Speaker 4: For some serious problems in the US.
34:02
Speaker 3: Yeah, you have to think about it. How does that
34:04
benefit the end consumer FORD at all? You know, first
34:07
of all people.
34:08
Speaker 4: It doesn't. It's gonna drive up the profit margin of Ford.
34:10
Speaker 3: Yeah, it's just it's just crazy. That's not the focus
34:14
when you drive around. First of all, you don't want
34:16
your conversations to be listening to the privacy issue there.
34:19
Speaker 2: Is And I love, by the way, that like a
34:21
big reason that we've talked about on this show of
34:23
not allowing Chinese made evs into this country is oh
34:26
what about privacy concerns? Yeah, for it's talking about listening
34:31
to your conversation so that they can better deliver ads
34:33
to you talking about privacy concerns, are you are you
34:37
kidding me?
34:38
Speaker 3: Absolutely insane, it's uh. But rather at least on the
34:42
Chinese side, you can make there, Hey, they're providing something
34:44
that is that is lower costs. Now, granted they're subsidized,
34:47
and the heck out of that intera.
34:48
Speaker 2: It's only lower cost because if you go to work
34:52
for one of these Chinese manufacturers, you are making about
34:55
three bucks an hour. You're living in government subsidized housing
34:59
at the factory to work sixty seven hours a week.
35:01
Like I get all the right right, Like, it is
35:04
absolutely subsidized, and it's also you know, really off putting
35:10
labor practices.
35:11
Speaker 4: Right, You're literally living.
35:12
Speaker 2: At your factory in uh factory owned subsidized housing and
35:17
being if you want that job, you're making about one
35:20
thousand bucks a month and you're expected to work sixty
35:23
plus hours a week with a day and a half
35:26
off per.
35:26
Speaker 4: Month something along those lines. It's insane.
35:30
Speaker 2: We would never agree to that here. But that's why
35:34
these things are so cheap. That's I mean, you know,
35:37
that's the result of it. It's not as though the
35:39
Chinese government is you know, just setting the price for
35:42
these it's just providing massive incentives and requirements of people
35:46
to you know, work specific schedules, and they've got the
35:49
people that are desperate to do it.
35:51
Speaker 3: I've got Mike here, Red Lobster. We've got the rise
35:54
and fall of the chain that was once valued at
35:57
two billion dollars just ten years ago. Now house selling
36:00
in bankruptcy court for a dizzying three hundred and seventy
36:04
five millions, significantly lower than what it was worth ten
36:07
years ago. And there's a longer piece here that goes
36:10
through the whole history where Red Lobster had developed a
36:13
really strong foothold in areas of the country that are
36:16
landlocked and don't have the access that many of our
36:19
listeners do on the New England region to seafood readily.
36:22
Speaker 4: Or the Portland, Oregon region. Thank you Portland Oregon. Yeah,
36:26
we picked up Porland organ all.
36:28
Speaker 3: Right, all right for them too. But now you've got
36:33
to a point where the ultimate demise came on the
36:37
backs of them offering free shrimp all day, every day
36:41
throughout many of their change, which created all sorts of
36:44
staffing issues, chaos, and restaurants customers that were taking advantage
36:49
of the offering to the company's detriment as prices in
36:53
some areas of the country there weren't offset the subsidy
36:57
in New York versus you know, in a rural area,
36:59
and it's it just became a absolute disaster as they
37:02
closed one hundred and forty restaurants and posted a seventy
37:05
six million dollar net loss in twenty twenty three with
37:07
a billion dollars of debt. It'll be interesting to see
37:11
if they can continue to scrape along after what's been
37:15
a very tumultuous ride over the last couple of years.
37:18
Speaker 2: I got to say, I think perhaps the most impressive
37:21
part of this whole thing is that The New York
37:23
Times managed to write a seventeen page article about Red Lobster.
37:28
Speaker 3: Some of the tidbits on the hiring front were just incredible,
37:31
where they were meeting with sixteen people a week, hiring everyone,
37:35
but then hoping just two or three of them would
37:37
show up during the free shrimp craze. A company that
37:40
has just been really taken out and cracked.
37:45
Speaker 2: Yeah a part. Yeah. Markets moving more into negative territory.
37:51
As we close out the show today, the Dow now
37:53
off three hundred points three quarters of one percent. The
37:56
s and p off fifteen points or one quarter of one,
38:00
and the NA NASDAC now down twenty eight points, a
38:04
little bit less than one fifth of a percent. We
38:06
will be back at it tomorrow, folks, breaking down the
38:09
results of the debate, and then we also have inflation
38:13
data coming out tomorrow, So big show tomorrow, Tune in
38:16
and have a great rest of your day.