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Big Tech faces a major earnings test this week · The Financial Exchange Show

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Speaker 2: Chuck, Mark and Tucker with you here on a marathon
1:24
Speaker 2: Monday in the Boston area. Hope everyone listening had a
1:27
Speaker 2: great Easter weekend. If you happen to be off from
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Speaker 2: for your body all at the same time. So there's that. Uh.
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Speaker 2: Let's talk a little bit about this piece from Bloomberg.
2:02
Speaker 2: It's titled first shock Waves of Trump's tariffs are about
2:05
Speaker 2: to hit the world economy, And basically what it comes
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Speaker 2: down to is, look, the announcement for the tariffs was
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Speaker 2: on April second, which is three weeks ago on Wednesday,
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Speaker 2: and some of the tariffs that were announced that day
2:20
Speaker 2: went into effect on April fifth, others on April ninth,
2:25
Speaker 2: some on April third, as well, so it was kind
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Speaker 2: of staggered out there. But just because they went into
2:30
Speaker 2: place doesn't mean that you actually see any kind of
2:32
Speaker 2: immediate impact, because it actually takes time to send stuff
2:37
Speaker 2: from one place to another. You know, it takes anywhere
2:41
Speaker 2: from about two to three weeks to ship goods from
2:44
Speaker 2: Asia to the US, depending on the exact ports and
2:46
Speaker 2: exact transit that you're taking. It takes a couple of
2:50
Speaker 2: weeks for oil to make its way from the Middle
2:53
Speaker 2: East over to the United States. Takes about a week
2:56
Speaker 2: and a half for stuff to go from Europe to
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Speaker 2: the US and back and forth, and so on and
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Speaker 2: so forth. And so just because tariffs are imposed doesn't
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Speaker 2: mean that you initially see any change actually, and so
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Speaker 2: it's kind of something where if you're just walking around
3:11
Speaker 2: kind of doing what you normally do, you haven't really
3:14
Speaker 2: noticed much different at this point. I mean, I don't
3:18
Speaker 2: know about you guys, but I'm not seeing anything to
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Speaker 2: this point that is front and centers slapping me in
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Speaker 2: the face as far as changes and prices are availability
3:27
Speaker 2: at different stores. Cars. This like, it's there hasn't really
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Speaker 2: been much that has changed at this point. And this
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Speaker 2: is also you know, partly due to the fact that
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Speaker 2: we've had, you know, some notable discussion about both households
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Speaker 2: and businesses trying to front run tariffs and build up
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Speaker 2: inventories of things that they might want. Is that fair?
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Speaker 2: Have either of you noticed anything meaningfully different from a
3:51
Speaker 2: pricing or availability perspective yet.
3:54
Speaker 3: From a pricing perspective, no, But yesterday, as you mentioned, Chuck,
3:57
Speaker 3: was easter, and you know, you around a lot of
3:59
Speaker 3: family and there was multiple conversations about jumping to buy
4:04
Speaker 3: a product ahead of the tariffs, yep, whether that would
4:07
Speaker 3: be an oven or a car. Those conversations are happening,
4:11
Speaker 3: of trying to jump the gun.
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Speaker 2: And so this is one of the reasons why I think,
4:15
Speaker 2: quite honestly, if you like want to project the retail
4:18
Speaker 2: sales data for April and May, it's probably gonna be
4:21
Speaker 2: pretty good because I think those you know, those discussions
4:24
Speaker 2: are happening. The concern that's out there is that when
4:28
Speaker 2: you look at the data as it relates to freight
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Speaker 2: and things like that, basically the movement of goods around
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Speaker 2: the country, you're starting to see some concerning things. And
4:43
Speaker 2: again I am I will preface this by saying I'm
4:47
Speaker 2: not the freight and logistics expert. You will find people
4:51
Speaker 2: more qualified than me, and I generally try to find
4:53
Speaker 2: those people, you know, so that I can talk to
4:55
Speaker 2: them and understand what's going on. So there's a couple
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Speaker 2: of them that you know, roam around on different social
4:59
Speaker 2: media platforms. One of the ones I talked about on
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Speaker 2: Thursday of last week was a guy by the name
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Speaker 2: of Craig Fuller who runs a company called Freight Waves.
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Speaker 2: They they literally their entire business is data about how
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Speaker 2: freight is moving around the country and around the world,
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Speaker 2: so that companies that need to ship things can understand
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Speaker 2: what it looks like, or so that shippers can understand
5:25
Speaker 2: what it looks like. And I want to do I
5:27
Speaker 2: want want to give some you know, data that is
5:31
Speaker 2: his data. So this is like we've talked a lot
5:33
Speaker 2: about hard data versus soft data in that market. It's
5:37
Speaker 2: fair to say that most sentiment surveys are generally really
5:43
Speaker 2: bad right now. Yeah, unprecedented, borderline apocalyptic in some situations,
5:50
Speaker 2: like you have some readings that on some of these
5:52
Speaker 2: surveys that are the worst we've seen in thirty.
5:53
Speaker 4: Forty years, off the historical charts. Bad yeap.
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Speaker 2: So the hard data though to this point hasn't really
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Speaker 2: shown anything. And when I say hard data, I mean
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Speaker 2: like the big stuff that we normally look at, industrial production,
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Speaker 2: jobless claims, retail sales, take your pick, you know, housing,
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Speaker 2: Like nothing else has really shown any sort of meaningful.
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Speaker 4: Nor would we expect it to. It's low frequency, and
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Speaker 4: it's stale, and and also.
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Speaker 2: It's we don't have any data from post April second yet, really,
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Speaker 2: I mean, yeah, yeah, So Craig Fuller again, he runs
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Speaker 2: this company called Freight Waves and here is the data
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Speaker 2: that he has, so outbound volume from Los Angeles Port
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Speaker 2: of Los Angeles Port a Long Beach basically like huge
6:37
Speaker 2: volumes of international shipments that go out from there, and
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Speaker 2: what we have right now, I'll quote from him. This
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Speaker 2: is from one thirty pm on April nineteenth, and this
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Speaker 2: was posted on x So if if anyone's looking, if
6:49
Speaker 2: you want to like pull the source to yourself, totally fine.
6:53
Speaker 2: He says. Domestic freight out of LA is at the
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Speaker 2: weakest levels it's been since twenty twenty. Up until now.
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Speaker 2: The tariffs have not been factor in declining volumes out
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Speaker 2: of Southern California. It's going to get worse. The reason,
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Speaker 2: he says, it hasn't been a factor to this point.
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Speaker 2: The first ships from China post tariff announcement are basically
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Speaker 2: arriving yesterday, today, and tomorrow, and so the drop off
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Speaker 2: in shipping volume is going to start to be realized
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Speaker 2: this week. The drop before is kind of what had
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Speaker 2: been going on, even you know, in advance of that, like, hey,
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Speaker 2: are we a little bit nervous about you know, what
7:26
Speaker 2: could could be coming here? In case you think it
7:29
Speaker 2: is just you know, something that's unique to Los Angeles.
7:33
Speaker 2: If you go about twenty five miles inland from there,
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Speaker 2: you get to what's called the Inland Empire of California.
7:39
Speaker 2: It is inland. It's not really an empire because it's
7:42
Speaker 2: mostly desert. Once you get past kind of like Ontario, California,
7:46
Speaker 2: you get to like it's basically everything that's north of
7:48
Speaker 2: Joshua Tree National Park, which is beautiful to visit, but
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Speaker 2: horribly desolate. There's just not much there, and so when
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Speaker 2: you look at it, the Inland Empire area is kind
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Speaker 2: of the gateway to the United States. Freight comes into
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Speaker 2: the Port of Los Angeles, heads to Inland Empire and
8:03
Speaker 2: then gets dispersed out to where it goes in the
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Speaker 2: rest of the United States. The volumes there right now.
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Speaker 2: Quote from him again, if pre stocking for tariffs was
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Speaker 2: going to save us from a trucking market tariff hangover,
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Speaker 2: you would see it out of Inland Empire. That isn't happening.
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Speaker 2: Trucking volumes out of Ontario and San Bernardino have dropped
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Speaker 2: to the COVID lows. So these are at the lowest level.
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Speaker 2: They're basically at where they were in April of twenty twenty,
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Speaker 2: and other things that you're seeing he quotes. Here's another
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Speaker 2: one from him, or I'll quote two twenty one PM
8:34
Speaker 2: on April nineteenth. If domestic manufacturing we're picking up the
8:37
Speaker 2: slack from declining imports, it would be reflected in the
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Speaker 2: trucking volumes out of a few major industrial markets. So
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Speaker 2: this is looking aside from California. Hey, the place is
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Speaker 2: where we do make a lot of stuff. In the US,
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Speaker 2: are we seeing increased shipments Atlanta trucking volumes down twelve
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Speaker 2: percent year over year, Dallas trucking volumes down thirteen percent
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Speaker 2: year over year, Houston trucking volumes down three percent year
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Speaker 2: over year. You're seeing declines in those different areas.
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Speaker 4: How could we shift production that quickly? To you? I mean,
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Speaker 4: we don't.
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Speaker 2: I think he's talking just like, are you, you know,
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Speaker 2: adding more workers to a shift, like you know, add it?
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Speaker 4: Like, but why would you expect that? In response to
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Speaker 4: he's just saying it's not happening. Okay, so he's going
9:18
Speaker 4: to keep an eye on that.
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Speaker 2: He was just saying it's it's not happening, yeap, which
9:22
Speaker 2: again I'm just I'm reporting what he's reporting because he
9:26
Speaker 2: knows me.
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Speaker 4: Shouting at your computer's not going to get him to answer.
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Speaker 2: No, I have no freaking clue. Like again, this is
9:31
Speaker 2: this is what he's saying is going on, like he's
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Speaker 2: the expert on this.
9:35
Speaker 4: League continue I will stop.
9:37
Speaker 2: Cleveland, Ohio down thirty five percent year over year, trade
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Speaker 2: trucking freight out of Chicago down nineteen percent year year
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Speaker 2: over year. So there's a pretty consistent theme. The one
9:46
Speaker 2: place where he does say things are moving faster Kansas
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Speaker 2: City and Omaha up seven percent and six percent respectively
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Speaker 2: year over year for trucking volume. It's not manufacturing, it's agriculture.
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Speaker 2: You're seeing a big bump up in agriculture volume that
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Speaker 2: is moving out these.
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Speaker 4: Weak for exports. Could countries be doing what we're doing?
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Speaker 4: Are they pulling demand forward to in the chance of
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Speaker 4: a trade war potentially?
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Speaker 2: And so again, this is what you know Craig is
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Speaker 2: saying out there. And Craig's someone who i've i've you know,
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Speaker 2: followed in different social media stuff for you know, five six,
10:20
Speaker 2: like basically since like supply chains were a thing back
10:22
Speaker 2: in twenty twenty. And this is, you know, someone who's
10:27
Speaker 2: I don't even I'm not even gonna say, pretty neutral
10:29
Speaker 2: from a political perspective, So he's not putting his own
10:31
Speaker 2: stuff in there. This is someone who was basically campaigning
10:34
Speaker 2: to be like the Secretary of Commerce or transportation in
10:38
Speaker 2: the Trump administration. I'll quote here from him yesterday. I
10:42
Speaker 2: enthusiastically supported Trump's victory in the November election. I thought
10:46
Speaker 2: I was voting for pro business policies and small targeted
10:49
Speaker 2: incremental tariffs that would encourage the production of strategic industries
10:52
Speaker 2: to return to the Americas. I did not vote for
10:55
Speaker 2: a neutron bomb to wipe out supply chains in small
10:57
Speaker 2: businesses one hundred days in Okay. This is someone who
11:00
Speaker 2: not only knows the business but supported the Trump administration
11:05
Speaker 2: with what he thought were their goals, and he's basically
11:08
Speaker 2: saying that the trucking industry is on the verge of
11:10
Speaker 2: being devastated if these are still in place for several
11:13
Speaker 2: more weeks.
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Speaker 4: Yeah, one wonders what he was listening to during the campaign,
11:18
Speaker 4: because I think this was all clear, but his again's
11:21
Speaker 4: antenna defects aside.
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Speaker 2: I'm using him as it just again, he knows this
11:26
Speaker 2: space better than I do. And so when you talk
11:28
Speaker 2: about the potential impacts and what we are going to
11:31
Speaker 2: see ultimately, you take the logical extension is hey, if
11:35
Speaker 2: there's not going to be as much stuff being shipped
11:37
Speaker 2: around the country in the next few weeks, it's in
11:41
Speaker 2: the latter part of May that you start to see
11:44
Speaker 2: the weird stuff happening in terms of dislocations and supply
11:48
Speaker 2: and demand. Do we not have enough stuff for this
11:50
Speaker 2: good or that good in the right place? This is
11:53
Speaker 2: where that stuff starts to show up, is probably as
11:56
Speaker 2: we get to that Postmother's Day period, So you've got
12:00
Speaker 2: a couple weeks to kind of get things, you know,
12:02
Speaker 2: squared away. But again he's kind of saying, look that
12:06
Speaker 2: there's a real problem here and it's going to start
12:09
Speaker 2: showing up probably in the next two to three weeks
12:11
Speaker 2: because supply chains are starting to break again. Let's take
12:14
Speaker 2: a quick break. When we return, let's talk a little
12:17
Speaker 2: bit about earnings. We got some big ones coming out
12:19
Speaker 2: this week and we'll discuss that right after this.
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13:27
Speaker 2: Got some earnings action that's going to be happening this week,
13:31
Speaker 2: which is always fun. When we get to actually hear
13:33
Speaker 2: from companies about what they are seeing in the economy
13:36
Speaker 2: because they know their businesses way better than Mark and
13:39
Speaker 2: I do obviously, for you know a number of different things.
13:43
Speaker 4: Better than I do.
13:43
Speaker 2: So in terms of what is on tap this week, uh,
13:48
Speaker 2: looking at the numbers overall, you got again about one
13:54
Speaker 2: hundred or so S and P five hundred companies maybe
13:56
Speaker 2: one hundred and twenty of them that are going to
13:59
Speaker 2: be reporting. Most of them, you know, most of most
14:04
Speaker 2: people don't pay attention to quite honestly, just because they're
14:06
Speaker 2: not really big enough to move the market. But there's
14:09
Speaker 2: some that are either big enough to move the market
14:11
Speaker 2: or in a strategic enough location in the economy where
14:14
Speaker 2: you're kind of like, oh, like this could mean something.
14:16
Speaker 2: Let's see what's going on here. So Tuesday, terms of companies,
14:21
Speaker 2: I kind of look, you know, one hundred billion dollars
14:22
Speaker 2: is just the arbitrary market cap that I market cap
14:25
Speaker 2: line I draw just to you know, see what's important
14:28
Speaker 2: and what isn't. You got a bunch of companies Tuesday.
14:30
Speaker 2: You got Tesla, which is obviously going to be very
14:32
Speaker 2: closely watched, General Electric, Verizon, Intuitive Surgical, raytheon Technologies, Dana Hurt, Chubb,
14:38
Speaker 2: Lockheed Martin. Those are your one hundred billion dollar plus
14:42
Speaker 2: companies reporting. Then, so let's start on Tesla. This is
14:45
Speaker 2: one where I think the expectations are pretty low, just
14:48
Speaker 2: because the sales numbers that we've seen already missed expectations.
14:51
Speaker 2: Odds are the margin numbers aren't going to be very good,
14:54
Speaker 2: and I think, you know, we're just looking for indications
14:57
Speaker 2: of how the business may be continuing to evolve. And
15:00
Speaker 2: of course, anytime Tesla reports earnings, you certainly expect to
15:03
Speaker 2: see some kind of elon you know, dog and Pony
15:06
Speaker 2: show about hey, you know, are we going to be
15:08
Speaker 2: releasing the cyber cab you know, this week, this month
15:11
Speaker 2: or whatever it is. And so that'll be something that
15:14
Speaker 2: that people pay attention to as well. But I think
15:16
Speaker 2: that's probably gonna be what dominates the news tomorrow afternoon
15:19
Speaker 2: when when they report any thoughts there.
15:22
Speaker 4: Yeah, this article calls them policy related headwinds Tesla's challenges.
15:27
Speaker 4: It's not policy related, it's personality and preoccupation, or I'll
15:32
Speaker 4: just alliterate and say it's preoccupation with government stuff when
15:35
Speaker 4: he ought to be running. Is that seems to be
15:37
Speaker 4: analysts who cover this company are looking for him to
15:40
Speaker 4: show a recommitment.
15:42
Speaker 2: To the company. Just I'm going to spend my time
15:45
Speaker 2: back at the company.
15:45
Speaker 4: Start doing with shareholders and what the board is fiduciari
15:50
Speaker 4: is expect you to do. I can't believe they let Well,
15:52
Speaker 4: he's uniquely positioned, obviously, but yeah.
15:55
Speaker 2: Dan ives who is a he runs like the technology
15:59
Speaker 2: depart I been in an investment firm called web Bush Securities.
16:02
Speaker 2: I think he has like the best line, which is, look,
16:05
Speaker 2: Tesla is Elon Musk, and Elon Musk is Tesla. Like
16:10
Speaker 2: I've heard some people say, like, look, why doesn't the
16:12
Speaker 2: board you know, try to move on from you know,
16:14
Speaker 2: Musk if if they think the stock performance isn't doing well,
16:16
Speaker 2: and the answer is it's because without Elon Musk there,
16:21
Speaker 2: I'm not sure what there is, Like, isn't he the
16:23
Speaker 2: whole driving factor behind the stock good or bad throughout
16:27
Speaker 2: its entire you know run.
16:30
Speaker 4: Yeah, if the premium is it's a Musk premium innovation,
16:33
Speaker 4: a Musk innovation, a Musk genius, just to be cheric
16:36
Speaker 4: about it. Premium. Yet by definition he's important to.
16:40
Speaker 2: That, so they're obviously going to be you know, kind
16:42
Speaker 2: of a big driver there. Do we get anything interesting
16:45
Speaker 2: from like General Electric? Probably not. Maybe a little bit
16:48
Speaker 2: around the edges in terms of what's happening with supply
16:50
Speaker 2: chains in the airplane space. But actually no, GE Aviation
16:54
Speaker 2: was spun off, correct, they're no longer with Yeah, I'm
16:58
Speaker 2: trying to trying to remember GE. Yeah, it's GE Aerospace.
17:02
Speaker 2: So they were spun off. So General Electric's not gonna
17:04
Speaker 2: tell us anything you know, particularly interesting there. Verizon phone
17:09
Speaker 2: lines are not really a factor, intuitive surgical, not raytheon.
17:13
Speaker 2: Maybe get some commentary about you know, defense spending from
17:15
Speaker 2: Europe and if they're seeing, you know, any other interest
17:17
Speaker 2: in drumming up business there. Chubb Big Insure. This is
17:21
Speaker 2: one that I'm really interested in hearing from both on
17:24
Speaker 2: the home insurance side and auto insurance. How how are
17:28
Speaker 2: tariffs potentially impacting their look at premiums but also outlays.
17:33
Speaker 2: I think that's gonna be something that's gonna watching.
17:36
Speaker 4: To that at this point. Do we know enough?
17:38
Speaker 2: Don't know, but I'm gonna be interested to see if
17:40
Speaker 2: they say something. I'm not saying they will. It's more
17:43
Speaker 2: just hey, can you give us some context?
17:44
Speaker 4: Yeah, they've got to be thinking about it.
17:46
Speaker 2: Wednesday we get Phil Morris International IBM AT and T
17:49
Speaker 2: thermofish Or Scientific Service Now Boston Scientific Next Era Energy,
17:53
Speaker 2: Texas Instruments and Boeing. Boeing obviously gonna be one that
17:57
Speaker 2: people focus on in terms of you know, hey, what
18:00
Speaker 2: are you seeing now that you know China's you know,
18:02
Speaker 2: literally sending airplanes that you shipped back to you. So
18:06
Speaker 2: those I think are gonna be good conversations just that
18:09
Speaker 2: we hear about. And then on Thursday, the big one
18:11
Speaker 2: is gonna be Alphabet Google and specifically the only thing
18:16
Speaker 2: there are two numbers that matter with Google in my opinion,
18:18
Speaker 2: and I'm not the only one with this opinion, so
18:20
Speaker 2: it's it's not really unique. Number one, what are they
18:24
Speaker 2: seeing in terms of ad spend? Because a lot of
18:27
Speaker 2: ad spend the last few years has come from Chinese
18:30
Speaker 2: based e commerce companies think Timu and Shine and companies
18:33
Speaker 2: like that. What kind of impact are they saying seeing
18:35
Speaker 2: there are other retailers pulling back ad spend and things
18:39
Speaker 2: along those lines. But the other one, and the one
18:41
Speaker 2: that means more for this market, I think, is what
18:45
Speaker 2: are they doing with Capex in the AI space? Are
18:48
Speaker 2: they cutting CAPEX in AI or are they maintaining their
18:53
Speaker 2: previous CAPEX guidance, because that means that tells you it's
18:58
Speaker 2: kind of a marker that's laid down for Hey, what
19:00
Speaker 2: does this mean for Nvidia and their revenues? What does
19:03
Speaker 2: it mean for the overall investment trend in the AI space?
19:07
Speaker 2: Is it still as robust as we thought it was
19:10
Speaker 2: three six, nine months ago? So I think that'll be
19:14
Speaker 2: a really big one that we get there. Other companies
19:16
Speaker 2: reporting Thursday, Procter and Gamble, T Mobile, Merk, Pepsi. Procter
19:19
Speaker 2: and Gamble and Pepsi. Interested to see what they're saying
19:21
Speaker 2: about consumer spending and if there'sn't been any change in
19:24
Speaker 2: the last few weeks.
19:25
Speaker 4: I'm still on Philip Morris.
19:26
Speaker 2: And let's talk about them when we come back. Okay,
19:29
Speaker 2: we got Wall Street Watch. Then we'll talk Philip Morris
19:31
Speaker 2: after this.
19:42
Speaker 1: Like us on Facebook and follow us on Twitter at
19:44
Speaker 1: TFE show. Breaking business news is always first right here
19:49
Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
19:53
Speaker 1: Street Watch, a complete look at what's moving market so
19:57
Speaker 1: far today right here on the Financial Exchange Radio Network.
20:01
Speaker 3: Well, traders are returning from the holiday weekend and markets
20:03
Speaker 3: are selling off as investors monitor a falling US dollar
20:07
Speaker 3: that has hit its lowest level since twenty twenty two
20:11
Speaker 3: as a result of increased tensions tensions between President Trump
20:15
Speaker 3: and the Fed. Wall Street is also rating for a
20:17
Speaker 3: new batch of first quarter earnings from several companies this week,
20:21
Speaker 3: including Tesla and Alphabet. At the moment, the Dow is
20:25
Speaker 3: down by nearly two percent, or seven hundred and sixty
20:28
Speaker 3: eight points. SMP five hundred also down by two percent
20:32
Speaker 3: or one hundred and eleven points, in the tech heavy
20:35
Speaker 3: Nasdaq selling off by two point six percent or four
20:38
Speaker 3: hundred and twenty points. Russell two thousand is off by
20:41
Speaker 3: one point six percent. Ten year treasure reeled is now
20:44
Speaker 3: at four point three three percent, pretty flat so far today,
20:48
Speaker 3: and crude oiled down two and a half percent, trading
20:51
Speaker 3: just above sixty three dollars a barrel. Tesla shares down
20:55
Speaker 3: by seven percent after Barclay's cut its price target, citing
20:59
Speaker 3: confusing visibility into first quarter earnings. Separately, Webbush analyst Dan
21:04
Speaker 3: Ives called for Elon Musk to leave his controversial work
21:07
Speaker 3: with Doze and refocus his attention on Tesla. Meanwhile, after
21:12
Speaker 3: their impressive earnings and revenue b for the first quarter
21:14
Speaker 3: on Thursday. Netflix shares are reacting to that, up one
21:18
Speaker 3: percent today with markets being closed this past Friday. The
21:21
Speaker 3: streaming giant also noted it sees no significant impact from tariffs.
21:25
Speaker 3: Several Wall Street analysts also increased their price targets of
21:28
Speaker 3: the stock. Capital One up by one percent after bank
21:32
Speaker 3: regulators approved its thirty five billion dollar acquisition of rival
21:36
Speaker 3: credit card issuer Discovery or excuse me, Discover on Friday. Elsewhere,
21:41
Speaker 3: after its huge rally last week, her shares are retreating
21:45
Speaker 3: by about twelve percent today. The stock scored last week
21:48
Speaker 3: after billionaire investor Bill Ackman disclosed his stake in the
21:52
Speaker 3: rental car company. Checking in on Apple and the tech
21:55
Speaker 3: giants uncertainty surrounding tariffs, that stock down by over two
21:59
Speaker 3: percent and is now down more than eleven percent so
22:01
Speaker 3: far in April, and Amazon is down by over three
22:05
Speaker 3: percent after Raymond James downgraded the stock to outperforms from
22:09
Speaker 3: strong by citing headwinds tied to tariffs and economic backdrop concerns.
22:14
Speaker 3: The firm also cut its price target. I'm Tucker Silvan,
22:18
Speaker 3: that's Wall Street watch Mark.
22:19
Speaker 2: You mentioned philp.
22:21
Speaker 4: Were fascinated by the path of different metrics on Philip
22:25
Speaker 4: Morris over the last twenty five years. We all know
22:28
Speaker 4: what the larger social trends are. They have four percent
22:30
Speaker 4: as many employees the company is now all Tree, of course,
22:33
Speaker 4: four percent as many employees as they had twenty five
22:35
Speaker 4: years ago.
22:36
Speaker 2: Wait twenty Wait, they've downsized their staff by ninety six percent.
22:41
Speaker 4: I'm looking at white charts, our internal tool white charts.
22:44
Speaker 4: The head count went from one hundred and sixty some
22:46
Speaker 4: thousand and two about six some odd thousand. Tell me
22:49
Speaker 4: if I'm misreading this. It's pretty straightforward, though. You don't
22:52
Speaker 4: have to be an analyst. So it's been a dramatic fall.
22:56
Speaker 4: Maybe there's something wrong with this data. I'm not counting
22:58
Speaker 4: for spin offs, but this is the Altria Aggregated Data revenue,
23:03
Speaker 4: So I.
23:04
Speaker 2: Have getting different numbers at other sort like Wikipedia, just
23:07
Speaker 2: as an example has them in eighty three thousand.
23:09
Speaker 4: Okay, yeah, I mean, hold one.
23:15
Speaker 2: There's gotta be something the metrics. Should we work employees? Yeah?
23:19
Speaker 4: Maybe we Maybe this is a sidebar, not a live
23:21
Speaker 4: radio discussion. I'm looking at the right year, right, yeah,
23:24
Speaker 4: the right, Yeah, yeah, yeah.
23:26
Speaker 2: I'm showing eighty three thousand here, so.
23:29
Speaker 4: Sixty well, okay, so it's nevertheless okay, so I suppose
23:33
Speaker 4: it's dropped by half, which is actually more plausible. Revenues
23:35
Speaker 4: are down by over sixty percent, yep, not a huge surprise,
23:39
Speaker 4: but profitability and I'm using now, this is the same
23:42
Speaker 4: source that said they had about a tenth as many
23:44
Speaker 4: people as they may actually have. So I guess the
23:47
Speaker 4: whole thing is, this whole exercise is now suspect, but
23:50
Speaker 4: I'm gonna roll with it because we're too far into it.
23:53
Speaker 4: Their profit though, I'm using a bit da here. I
23:56
Speaker 4: don't know that's for YadA, YadA, YadA. I don't know
23:58
Speaker 4: if it's quite the right measure for a company with
24:00
Speaker 4: their portfolio businesses. But profitability wise, they in nominal terms. Now,
24:05
Speaker 4: I'm not adjusting for inflation here, so the picture is
24:06
Speaker 4: different when you do that. But they they're about as
24:09
Speaker 4: profitable as they were with call it, half as many employees.
24:12
Speaker 4: Their stock price and I think everybody knows this astronomical
24:16
Speaker 4: through the roof. I'm the they outperformed the broader market
24:22
Speaker 4: by well, the actual figure is four hundred some odd
24:27
Speaker 4: percent for the broader market versus seventeen some odd seventeen
24:30
Speaker 4: thousand excuse me some odd percent for the stock. So
24:32
Speaker 4: if you had told somebody twenty five years ago, this
24:35
Speaker 4: company's going to lose half its employees, more than half.
24:37
Speaker 2: Its right, are you looking at the right company?
24:40
Speaker 4: Altria?
24:42
Speaker 2: Oh, you said Film? This is Film fors International. This
24:46
Speaker 2: is why we have different numbers. Oh so you will
24:51
Speaker 2: well you told me Philip Morris.
24:53
Speaker 4: Oh, I'm sorry, I'm looking at ticker m O.
24:56
Speaker 2: Thank you everyone for listening for the last ten minutes.
24:58
Speaker 2: We appreciate you sticking with us.
25:00
Speaker 4: I'll be looking for a new fill in host. Please
25:01
Speaker 4: send your applications to Tucker Silva at this is fan
25:05
Speaker 4: Eddy's Day, Last day dot com. I should I should
25:08
Speaker 4: have given you the ticker first m O. What would you?
25:10
Speaker 2: Well, I don't know. I said that Philip Morris International reporting.
25:13
Speaker 4: Okay, so my numbers were right. Well, but it didn't
25:16
Speaker 4: affect who's on first?
25:19
Speaker 1: Who?
25:20
Speaker 4: Oh? I caught Philip Morris and I just went with
25:24
Speaker 4: my fascination with what's happened to that? When is Philip Morris?
25:26
Speaker 4: When does Altrea report?
25:28
Speaker 2: No idea?
25:30
Speaker 4: When they do, these numbers will become very relevant.
25:34
Speaker 2: Well tune in next week, and we'll discuss that they're
25:36
Speaker 2: going to report at some point in the next couple
25:38
Speaker 2: of weeks. I hope, So I'll be Tucker. Can we
25:41
Speaker 2: just play a tape of that segment?
25:43
Speaker 1: Then?
25:43
Speaker 2: Yeah, let's talk a little bit about the FED. We
25:46
Speaker 2: got Bill Dudley who used to be the president of
25:49
Speaker 2: the Federal Reserve Bank of New York. Uh, he now
25:53
Speaker 2: works for I have a question when these guys retire
25:56
Speaker 2: from the FED, why do they go work somewhere else
25:58
Speaker 2: aside from getting paid like a bunch of money to
26:01
Speaker 2: basically liaise with the FED. Keep it busy, you just
26:04
Speaker 2: answer to your own But they got enough money at
26:06
Speaker 2: that like, don't just want to be out of the
26:07
Speaker 2: game at that point.
26:08
Speaker 4: I wouldn't say they have. I could retire money. They've
26:12
Speaker 4: probably been an academic.
26:13
Speaker 2: I mean, the speaking circuits pretty good for ex FED members.
26:17
Speaker 2: It is.
26:19
Speaker 4: They don't get like Barack Obama on our area though
26:22
Speaker 4: they probably get ten to twenty thousand.
26:25
Speaker 2: Berneki's a two fifty.
26:26
Speaker 4: Well, he's a Nobel laureate and was FED chair.
26:29
Speaker 2: I bet if you're on like again, even if you're
26:30
Speaker 2: getting you know, twenty grand per final, I'll do ten
26:33
Speaker 2: speeches a year and get two under Grand Bill.
26:35
Speaker 4: Dudley gets his parking validated in a sandwich and maybe
26:38
Speaker 4: gets his room for what.
26:39
Speaker 2: Kind of sandwich? Yeah yeah, So anyways, Dudley is he's
26:43
Speaker 2: now at ubs and also he's also a member of
26:48
Speaker 2: Coinbase Globals Advisory Council. So boy, again, it's just like.
26:53
Speaker 4: They don't make a lot of money as academics and
26:55
Speaker 4: his FED researchers, they must make enough, not enough to retire.
26:59
Speaker 2: I guess, I guess I'm sorry. Anyways, Dudley as a
27:04
Speaker 2: piece in Bloomberg Opinion. It's titled the four Reasons why
27:07
Speaker 2: the Fed will be patient on rates and basically talking
27:11
Speaker 2: about Look, the Fed's not going to try to jump
27:13
Speaker 2: the gun here, and I'll quote from him. First, the
27:16
Speaker 2: economic outlook is unusually cloudy. True, you don't know exactly
27:19
Speaker 2: what's going to come out of the next three to
27:22
Speaker 2: six months from an inflation and growth perspective. Second, the
27:26
Speaker 2: growth potential of the US has fallen abruptly and sharply. Okay,
27:28
Speaker 2: so you've got the potential growth being down. That would
27:31
Speaker 2: seem to be something that leans in favor of cutting correct.
27:36
Speaker 4: If potential growth is well, then that might lead you
27:40
Speaker 4: to believe the economy is running that there's more juice
27:45
Speaker 4: in the economy than you're currently getting out of it.
27:47
Speaker 4: So if potential growth is fallen and inflation remains where
27:50
Speaker 4: it is today.
27:51
Speaker 2: No backwards from what I just said, then.
27:55
Speaker 4: Yeah, because you're overestimating the productive capacity of the economy
28:00
Speaker 4: and you think it's not running too hot when it
28:03
Speaker 4: really is.
28:04
Speaker 2: Third, with inflation on track to exceed the fed's two
28:06
Speaker 2: percent objective for the fifth consecutive year, policy makers need
28:10
Speaker 2: to be careful to avoid making a mistake they could
28:13
Speaker 2: cause inflation anchors to become unanchored. So basically saying, hey,
28:17
Speaker 2: Powell wants to try to finish the job on inflation
28:19
Speaker 2: before moving on to unemployment. In a perfect world.
28:23
Speaker 4: They recognize that keeping expectations static at around two percent
28:27
Speaker 4: is critical to not having to make a bigger sacrifice
28:32
Speaker 4: down the road by getting inflation under control at the
28:35
Speaker 4: cost of economic growth once it gets away from you. Sorry,
28:37
Speaker 4: that's the yeah, as short winded explanation as I could give.
28:41
Speaker 2: Fourth, the need for patients is also higher given President
28:44
Speaker 2: Donald Trump's attacks on the Fed's independence. So basically saying, hey,
28:48
Speaker 2: the FED doesn't want to be seen as doing any
28:50
Speaker 2: president's bidding, simply because it undermines the idea that they're
28:54
Speaker 2: making decisions regardless of any political consequences out there.
28:58
Speaker 4: That's a wild card. I don't know how you model
29:00
Speaker 4: that in conventional You can't.
29:02
Speaker 2: Just get it's a game of chicken. You can't model
29:04
Speaker 2: it of these four the dudly lists, which like if
29:08
Speaker 2: you were ranking them in terms of what you think
29:10
Speaker 2: the FED is prioritizing, which one is the most important,
29:14
Speaker 2: which one is the least important.
29:16
Speaker 4: Well, paramount in the fed's mind is always are we
29:18
Speaker 4: at the right balance between the forces of inflation and unemployment.
29:21
Speaker 4: You have to keep that framework in mind. It underpins
29:24
Speaker 4: all the big sophisticated models they use that very simple idea.
29:28
Speaker 4: It's a simple idea, but in practice it's very difficult.
29:30
Speaker 4: For reasons we were kind of hinting at when we
29:33
Speaker 4: were talking about potential growth. Following that me if the
29:37
Speaker 4: productive capacity the economy is shrinking because of tariffs and
29:40
Speaker 4: because of the inefficiencies that result when you force us
29:44
Speaker 4: to produce things that we were relatively less good at producing,
29:48
Speaker 4: that gives the FED less, not more, wiggle room that's
29:50
Speaker 4: one of the many things that they're considering, which is
29:52
Speaker 4: most important, Chuck, It's hard to say, because in some environments,
29:57
Speaker 4: expectations drive the process of inflation, and you have to
30:01
Speaker 4: get those under control using forward guidance and jaw boning
30:04
Speaker 4: and other tools. At the Fed's disposal and other environments,
30:07
Speaker 4: it's the so called output gap, which is directly affected
30:10
Speaker 4: by that point you made about lower potential growth. It's
30:15
Speaker 4: hard to say.
30:15
Speaker 2: Let's take a quick break here. When we come back,
30:17
Speaker 2: we'll talk the US and China.
30:19
Speaker 1: Right after this, Tara Spears continue to grip markets. Get
30:23
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30:26
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30:43
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30:47
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31:01
Speaker 2: Oh, I'm supposed to start talking, got it piece in
31:05
Speaker 2: the Wall Street Journal breakdown in US China. You said
31:09
Speaker 2: something to me before. I was kind of paying attention,
31:11
Speaker 2: and I just, for some reason, thought you were gonna
31:13
Speaker 2: be talking about you.
31:14
Speaker 4: Weren't one of us, Like, God forbid, I help out.
31:17
Speaker 4: I'm staring out.
31:18
Speaker 2: The window, stark going at the cock like do we
31:21
Speaker 2: need to stop yet? I'm like, Mark, we haven't started.
31:25
Speaker 2: The pieces titled breakdown in US China relations raised a
31:28
Speaker 2: specter of new Cold War. It's in the Wall Street Journal,
31:31
Speaker 2: and I don't think this is getting the the neither
31:34
Speaker 2: the headline nor the story is right. Uh, this is
31:37
Speaker 2: not a new Cold War between the United States and China.
31:41
Speaker 2: I think you could effectively make the case that since
31:45
Speaker 2: the start of the first Trump administration there's kind of
31:47
Speaker 2: been somewhat of and there's been a more adversarial posture
31:54
Speaker 2: than any point in the previous forty years of that relationship.
31:58
Speaker 2: And that continued through the the Biden administration, by the way,
32:01
Speaker 2: like it was something where sure tariffs were kept in place,
32:05
Speaker 2: like you didn't see any change that were further semiconductor restrictions.
32:08
Speaker 2: And I don't think this is characterizing this correctly because
32:15
Speaker 2: I think, quite honestly, you have more potential now for
32:21
Speaker 2: an actual kinetic conflict to occur than at any point
32:25
Speaker 2: in the last fifty years. And that is not a
32:27
Speaker 2: Cold War. It might be through you know, an involving
32:29
Speaker 2: third parties such as Taiwan and things like that. But
32:33
Speaker 2: I think very much this is not you know, a
32:37
Speaker 2: new Cold War that we are seeing that is suddenly
32:40
Speaker 2: developing here. I think this has kind of been the
32:43
Speaker 2: state of play for the last eight to nine years.
32:44
Speaker 2: Quite honestly.
32:45
Speaker 4: Yeah, we nurtured China for decades were the relationship was
32:49
Speaker 4: symbiotic and mutually beneficial and being redundant. But they exported
32:55
Speaker 4: stuff to us that we didn't want to make here,
32:59
Speaker 4: or we chose non tool that wasn't a conscious choice,
33:03
Speaker 4: and we exported to them services and investments. One way
33:10
Speaker 4: to think about it is you bought something at a
33:12
Speaker 4: big box home improvement retailer made in China. We've all
33:15
Speaker 4: done it. We all do it all the time. Those
33:17
Speaker 4: dollars go to China. China recycles them into treasuries and investments.
33:23
Speaker 4: That's the capital account where we have a surplus. No
33:26
Speaker 4: one ever talks about it, at least in the media.
33:28
Speaker 4: We have a capital account surplus because we're an attractive
33:31
Speaker 4: investment venue. Our treasuries are or were any way attractive
33:34
Speaker 4: as a safe haven investment and just as an investment
33:36
Speaker 4: on their own merits, and we have lots of attractive
33:38
Speaker 4: investment opportunities. If you remember Japan buying a lot of
33:41
Speaker 4: US assets in the late eighties, everybody's freaking out. Oh
33:43
Speaker 4: my god. They bought Columbia Pictures, they bought Nakotomi Plaza
33:47
Speaker 4: that maybe from a movie, I'm not sure it is,
33:50
Speaker 4: that's from Diehard, But they actually did buy some real
33:52
Speaker 4: estate and alpt or.
33:53
Speaker 2: Did Diehard take place on WHOA.
33:55
Speaker 4: That's a good question. It was high, I know that
33:58
Speaker 4: because they couldn't jump. They were way up there, sixty something.
34:01
Speaker 2: For Nope, not that high.
34:05
Speaker 4: Forty fourth also wrong, a wrong, Okay, we both had
34:10
Speaker 4: a one and one hundred chance and we could be here.
34:12
Speaker 2: Third floor. No, it was not on the third floor.
34:15
Speaker 2: In fact, what floor was it. It was the thirtieth floor.
34:18
Speaker 5: Okay, yeah, so but there was there was a reason
34:22
Speaker 5: that that movie at the time involved Japanese owners of
34:29
Speaker 5: la real estate, et cetera, because there was there was paranoia,
34:32
Speaker 5: there was.
34:33
Speaker 4: Okay, So the point that we had a trade deafsit
34:36
Speaker 4: with Japan. We still do, we have trade surpluses with
34:38
Speaker 4: other countries. What what subject we start this conversation. I've
34:42
Speaker 4: already lost and brought up Diehard and now I'm just
34:45
Speaker 4: thinking of Brus.
34:45
Speaker 2: We're talking to Capital Plus. Okay.
34:47
Speaker 4: So we had this mutually beneficial relationship with China for decades.
34:51
Speaker 4: Then they started to get really strong and assertive, which
34:53
Speaker 4: I guess was inevitable, and we are asking how do
34:55
Speaker 4: we contain them well?
34:57
Speaker 2: And I think the piece to be clear this is
35:02
Speaker 2: it's a it's an authoritarian regime that is now trying
35:07
Speaker 2: to export that authoritarianism abroad. Do you see it?
35:09
Speaker 4: Are they really like the Common Turn tried to do
35:12
Speaker 4: under Stalin? Do you see them actively?
35:14
Speaker 2: Okay, in several different ways, both in terms of trying
35:17
Speaker 2: to largely influence the operations of not operations, but like
35:22
Speaker 2: the governance of other emerging markets countries in order to
35:27
Speaker 2: you know, make them more friendly to China and against
35:30
Speaker 2: free speech for you basically like stuff that we hold
35:33
Speaker 2: dear to us in the US. The other place that
35:35
Speaker 2: you see it is not even trying to influence other governments,
35:40
Speaker 2: but trying to influence multinational companies. There's a big thing
35:43
Speaker 2: a few years ago about you know, they were basically
35:45
Speaker 2: forcing Microsoft to censor stuff on LinkedIn and so these
35:49
Speaker 2: are social networks that do not operate within China, like
35:52
Speaker 2: they don't operate there, but even trying to in order
35:56
Speaker 2: for Microsoft to be able to operate in China, basically
35:59
Speaker 2: trying to push for censorship abroad of anti China topics.
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37:05
Speaker 2: Sticking with the US China topic peace in the Wall
37:07
Speaker 2: Street Journal, how China's Boeing band threatens to backfire on
37:11
Speaker 2: its own plane maker. So China has a very very nascent,
37:18
Speaker 2: you know, very very undeveloped commercial airplane maker by the
37:25
Speaker 2: name of Comak. It stands for I think like China.
37:28
Speaker 2: I forgot it. It's an acronym, but don't worry about it.
37:32
Speaker 2: They've made sixteen commercial airplanes, not like sixteen different ones,
37:36
Speaker 2: but sixteen of the same model, so they don't make
37:39
Speaker 2: very many of them. They've been trying to get the
37:41
Speaker 2: company off the ground pun intended for you know, decades
37:45
Speaker 2: at this point, and they finally started delivering like a
37:47
Speaker 2: couple planes a year recently. Here's the catch. In order
37:51
Speaker 2: to actually make these planes, they import a bunch of
37:54
Speaker 2: stuff from ge Aerospace, Honeywell, and raytheon. In order to
37:58
Speaker 2: actually build these planes. If China says we're not going
38:01
Speaker 2: to take delivery of Boeing airplanes, the US, and theory
38:04
Speaker 2: could say, fine, ge honeywell raytheon. You're not allowed to
38:08
Speaker 2: send any stuff to China's commercial aviation manufacturer anymore. Things
38:14
Speaker 2: can get kind of, you know, kind of ugly here.
38:16
Speaker 2: Let's take a quick break. When we come back, we
38:18
Speaker 2: got more financial exchange coming up.