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Recession warnings are everywhere except in the data · The Financial Exchange Show

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Speaker 1: Chuck Zadath and Mike Armstrov.
1:09
Speaker 2: Chuck, Mike and Tucker kicking off our two on the
1:12
Speaker 2: Financial Exchange and big news today is we have it
1:17
Speaker 2: looks like an agreement on a few key items between
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Speaker 2: the US and UK, with further discussion still to come
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Speaker 2: as far as what the trade situation will look like
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Speaker 2: between the two countries going forward, but it does appear
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Speaker 2: that the ten percent baseline tariffs will be staying in
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Speaker 2: place for the time being. There are some adjustments where
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Speaker 2: we don't have all the details yet on things like autos, food, steel,
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Speaker 2: and aluminum in those areas, but still getting details coming out,
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Speaker 2: and I know that we'll have more reporting on that
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Speaker 2: as we go. But I did want to know that
2:01
Speaker 2: the President's team is currently speaking in the Oval Office
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Speaker 2: about the details of this deal, and so I know
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Speaker 2: that things will be trickling out over the next ten
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Speaker 2: to fifteen minutes, and we'll give you some updated reporting
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Speaker 2: on that as we get it from the White House.
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Speaker 3: Yeah, for what we know now, Chuck, this does not
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Speaker 3: look to be some fully ironed out, all encompassing trade
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Speaker 3: deal that would do anything to alleviate the reciprocal or
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Speaker 3: the ten percent baseline tariffsy It does not even seem
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Speaker 3: to have been spelled out when it comes to auto's
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Speaker 3: steel aluminum at this stage, although clearly they want to
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Speaker 3: focus on those items. Markets which have been up as
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Speaker 3: much as from what I saw nearly one percent in
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Speaker 3: pre market trading, are currently sitting up only about a
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Speaker 3: third of one percent and have been bouncing around between
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Speaker 3: those levels all day. But I don't think anything that's
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Speaker 3: been said thus far has been enough to surprise markets
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Speaker 3: to the upside nor really the downside. When it comes
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Speaker 3: to this deal. It seems to be about as expected,
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Speaker 3: but not by any means all encompassing or including everything
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Speaker 3: that they would hope to eventually iron out.
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Speaker 2: So you do have the doubt about one hundred and
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Speaker 2: sixty six points on this news, SMP's up twenty points,
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Speaker 2: Nasdaq up ninety six. On the ten year treasury, you've
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Speaker 2: got a little bit of a very modest selloff happening there,
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Speaker 2: with rates up about four basis points to four point
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Speaker 2: three one five percent. The Mortgage News Daily thirty year
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Speaker 2: fixed rate average nationally still hanging out right in that
3:31
Speaker 2: you know, six eight to sixty nine range was at
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Speaker 2: six eight six yesterday after rates moved down just to touch.
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Speaker 2: We've got oil today moving back up a bit, up
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Speaker 2: a dollar forty nine a barrel to fifty nine fifty six,
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Speaker 2: and so you know a little bit of a rebound
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Speaker 2: there after selling off earlier in the week. Triple A
3:49
Speaker 2: national average for gas prices down another two tenths of
3:51
Speaker 2: ascent to three fifteen and two tenths. Quite honestly, at
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Speaker 2: some point, I'm gonna just stop reporting on that because
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Speaker 2: it's just hanging out between three ten and three twenty
4:01
Speaker 2: and wasting fifteen seconds of all of our time. So
4:04
Speaker 2: I think I will I will not report the national
4:07
Speaker 2: averageur gas prices until it moves either below three ten
4:09
Speaker 2: or above three twenty. Deal, and we've got gold today
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Speaker 2: down thirty one eighty an ounce to thirty three sixty
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Speaker 2: and ten cents. Mike, I want to kick this hour
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Speaker 2: off talking about a piece that we didn't get.
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Speaker 4: To last hour.
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Speaker 2: It's from the New York Times, and I chuckle a
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Speaker 2: little bit just because it's chuckle worthy. Recession warnings are
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Speaker 2: everywhere except in the data.
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Speaker 4: That's the headline. So here, here's the thing.
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Speaker 2: If recession warnings aren't in the data, then are they
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Speaker 2: actually recession warnings. No, not really, because here's the thing,
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Speaker 2: and I'm not saying that we will or will not
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Speaker 2: go into recession.
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Speaker 4: I don't know.
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Speaker 2: Quite honestly, Like the recession versus slow down is also
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Speaker 2: not something that necessarily matters as well, Like we technically
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Speaker 2: didn't go into recession in the first half of twenty
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Speaker 2: twenty two. That economy still sucked. It was really bad,
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Speaker 2: really bad. So in any case, what we are seeing
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Speaker 2: here is a bunch of people saying that they're really
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Speaker 2: nervous about what the next six to nine months could
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Speaker 2: look like.
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Speaker 4: This can be anyone.
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Speaker 2: From households to business leaders, to politicians to economists and
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Speaker 2: everyone else in between. You know, you've got acrobats that
5:32
Speaker 2: are probably like, man, this could be a little bit
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Speaker 2: rough here, like you'll see how it goes. So I
5:39
Speaker 2: think that ultimately, fear of recession is not something that matters,
5:47
Speaker 2: because there have been plenty of times in particularly in
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Speaker 2: twenty twenty two, where you had, you know, Bloomberg had
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Speaker 2: its like Tracker or whatever saying that there was one
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Speaker 2: hundred percent probability of recession in the next twelve months.
5:58
Speaker 2: Jamie Diamond famous said, you know, there's a hurricane coming
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Speaker 2: for the US economy and then it ripped for the
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Speaker 2: next two years and got better. So predictions or fears
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Speaker 2: about recession are not particularly useful to me. I've kind
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Speaker 2: of gotten to the point where it's like someone says, oh, like,
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Speaker 2: I've changed my probability of recession from X to Y,
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Speaker 2: and I'm like, great, don't tell me. Like, it's just
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Speaker 2: not useful in any way, shape or form. What is
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Speaker 2: useful is the data that can potentially be leading indicators
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Speaker 2: of recession, and also understanding, hey, recessions don't usually develop
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Speaker 2: the exact same way.
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Speaker 4: They rhyme, but they don't match.
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Speaker 2: And so I think also understanding that they can come
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Speaker 2: from similar places but appear differently, and understanding how those
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Speaker 2: causes can happen is important. But ultimately, what you need
6:51
Speaker 2: to develop in order to have a recession is recessionary data,
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Speaker 2: and that's something that is in shorts apply right now.
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Speaker 2: We have areas of concern and data. We've talked about
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Speaker 2: the drop in imports coming into the US and how
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Speaker 2: that could potentially impact consumption and the trucking and logistics industry.
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Speaker 2: So there's some stuff there, you know, that's actual hard
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Speaker 2: data that's starting to show up. You have concerns about
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Speaker 2: you know, housing with inventories building and prices you know,
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Speaker 2: starting to fall in parts of the country that you're
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Speaker 2: you know, maybe a little bit concerned about as well.
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Speaker 2: But ultimately, when we talk about the stuff that is
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Speaker 2: going to have to happen if you want to declare
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Speaker 2: a full recession, it's usually industrial production is dropping. You've
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Speaker 2: got you know, job loss, you've got purchasing power going down,
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Speaker 2: retail sales falling. Like there's like a list of like
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Speaker 2: seven or eight things, and we're just not seeing those
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Speaker 2: right now. And it's still is something where because I
7:56
Speaker 2: don't have any particular insight in forecasting recession, it's not
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Speaker 2: something where I sit there and say I'm better at
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Speaker 2: it than anyone else. I kind of look at it
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Speaker 2: and say, hey, wait for the data to print and
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Speaker 2: see what happens, and don't spend so much time focusing
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Speaker 2: on is recession happening or not, but instead focus on, hey,
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Speaker 2: which way is the data trending? Is it moving differently
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Speaker 2: than it was previously, and if so, is it accelerating
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Speaker 2: or decelerating? And that'll tell you more about what you
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Speaker 2: need to know than these binary recession versus no recession calls, I'll.
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Speaker 4: Tell you, I'm with you.
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Speaker 3: I do have to give it though, to Alison Traeger,
8:35
Speaker 3: which kind of the next story up here that we
8:37
Speaker 3: had been looking at, where she just says, you know,
8:40
Speaker 3: tears me bad, but they won't cause a recession. In
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Speaker 3: a sea of economists and journalists predicting recession come twenty
8:49
Speaker 3: twenty five, she kind of stands out here and saying, no,
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Speaker 3: I don't think we're going to get one. And that's
8:55
Speaker 3: she could be utterly wrong. I think there's an entire possibility.
8:59
Speaker 3: But for her to come out and say no, I
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Speaker 3: don't think we're going to get it, and lays out
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Speaker 3: her arguments why, mainly that the US economy is in
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Speaker 3: a pretty strong starting point when we went into this
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Speaker 3: period of uncertainty, as well as just how well insulated
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Speaker 3: the United States economy is from trade. She lays out
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Speaker 3: a series of arguments that no, I don't think that,
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Speaker 3: and this is her words that I'm summarizing that. You know,
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Speaker 3: she does not believe the United States economy will sink
9:25
Speaker 3: into the into recession. It may slow, but not actually
9:29
Speaker 3: entering that recession territory.
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Speaker 4: I don't know.
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Speaker 3: I just found it refreshing and different compared to everything
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Speaker 3: else that we've been reading over the course of the
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Speaker 3: last two months.
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Speaker 4: Yeah, and look, Mark Fandetti talks about this a lot.
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Speaker 2: If you want the best predictor of where the economy
9:41
Speaker 2: is going to be next month, look at where the
9:43
Speaker 2: economy was last month. Because economic momentum is a thing.
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Speaker 2: It's as we've seen the last couple of years, it's
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Speaker 2: it's kind of hard to cause a recession. Actually, like
9:53
Speaker 2: it's it's kind of hard. I'm not saying that you can't,
9:56
Speaker 2: but generally recessions happen because of something breaking somewhere in
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Speaker 2: the system. That usually amounts to too much leverage or
10:04
Speaker 2: too much money chasing after you know, returns in one area.
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Speaker 2: Think tech bubble or housing bubble or SNL crisis like
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Speaker 2: things like that. That's usually what causes a recession. And usually,
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Speaker 2: quite honestly, it's also hey because the economy starts getting
10:19
Speaker 2: too hot, the FED starts ratcheting uprates, and that causes
10:22
Speaker 2: the economy to slow. If you have an economy that's
10:25
Speaker 2: relatively stable with the FED not making changes in policy,
10:29
Speaker 2: you need some kind of you know, external event to
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Speaker 2: end up causing it. Are tariffs possibly that event and
10:37
Speaker 2: you know, a reshuffling of global trade maybe, but also
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Speaker 2: maybe not. And we're just gonna have to see how
10:44
Speaker 2: the next three to six months play out and how
10:47
Speaker 2: the tariff situation evolves and what goes on there, because
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Speaker 2: none of this is certain. So sorry for being a
10:55
Speaker 2: broken record on this, but.
10:56
Speaker 4: We'll have to see. We don't know yet. We'll see.
11:00
Speaker 2: Take a quick break when we return. We've got some
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Speaker 2: trivia and then we'll talk about an announcement from the
11:05
Speaker 2: Trump administration on semiconductors yesterday and what it means for
11:09
Speaker 2: the sector going forward.
11:12
Speaker 1: Tara Feevery's in high gear. We've got the latest on
11:15
Speaker 1: what might be next and how long it might last.
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13:07
Speaker 2: Mike yesterday afternoon, I think it was maybe around three
13:12
Speaker 2: or three thirty, there was an announcement from the Trump
13:17
Speaker 2: administration that they were pulling back some of the chip
13:23
Speaker 2: curbs that the semiconductor curves that the Biden administration had
13:26
Speaker 2: put in place that had yet to actually go into effect.
13:31
Speaker 2: They were scheduled to start on May fifteenth, the week
13:34
Speaker 2: from today. And basically this was a quotea from Bloomberg
13:39
Speaker 2: just because I think it does a good job of
13:41
Speaker 2: summing it up. The repeal of the so called AI
13:44
Speaker 2: Diffusion Rule, which is not yet final, seeks to refashion
13:47
Speaker 2: a policy launched under President Biden that created three broad
13:51
Speaker 2: tiers of countries for regulating the export of chips from
13:54
Speaker 2: Nvidia Corporation and others. So basically, think of it like
13:58
Speaker 2: a traffic light. Green country trees had full access, yellow
14:01
Speaker 2: had limited access, Red would have you know, no or
14:04
Speaker 2: very limited access. And the Trump administration, it sounds like
14:08
Speaker 2: they don't want to simply allow for unfettered uh export
14:13
Speaker 2: of these chips to anyone, but rather they want to,
14:16
Speaker 2: like most things that the Trump Administration does, negotiate them
14:19
Speaker 2: on a one on one basis. And this could be
14:21
Speaker 2: something that ends up being lumped into trade negotiations as.
14:25
Speaker 4: We go forward here.
14:26
Speaker 3: So I think the temptation here is to call this
14:29
Speaker 3: out as as irresponsible or a massive change from the
14:33
Speaker 3: last administration. I have a takeaway here that chips and
14:37
Speaker 3: the AI industry, or that these chips are going to support,
14:41
Speaker 3: are going to change so quickly that these types of
14:44
Speaker 3: export restrictions are going to need to evolve rather rapidly
14:48
Speaker 3: as well. And I'm not any sort of expert to
14:51
Speaker 3: know whether it makes sense to have these restrictions in place.
14:53
Speaker 3: But for instance, was it just January of this year
14:57
Speaker 3: when we had the massive UH change on the AI
15:01
Speaker 3: front with the Chinese? What's the Chinese firm that deep
15:04
Speaker 3: deep seek? I mean that completely kind of upended UH
15:08
Speaker 3: where we were in terms of our knowledge of how
15:11
Speaker 3: quickly companies could develop an AI tool. And so I
15:15
Speaker 3: think the Trump administration is likely looking at all of
15:19
Speaker 3: this and saying, hey, are we best off in a
15:22
Speaker 3: place where we are severely restricting access to these chips
15:27
Speaker 3: or is that just going to accelerate the development of
15:29
Speaker 3: domestic industries in China and elsewhere to develop them on
15:33
Speaker 3: their own and not even rely on the United States
15:35
Speaker 3: at all? When it comes to the latest technology.
15:39
Speaker 4: I don't know if I I don't know if I
15:41
Speaker 4: agree with that. Again.
15:43
Speaker 3: I again, I think it's very difficult for anyone outside
15:47
Speaker 3: of that, outside of Nvidia, to fully know. But go on,
15:53
Speaker 3: what is it about that?
15:55
Speaker 4: You know?
15:55
Speaker 3: It kind of shakes you the wrong way?
15:57
Speaker 2: No, well, I I guess what I'm saying. I don't
15:59
Speaker 2: agree with that as the reasoning. I don't know if
16:02
Speaker 2: that reasoning makes sense. Yeah, because like just because you say, like, oh,
16:07
Speaker 2: then they'll have to develop their own domestic capabilities. Well great,
16:10
Speaker 2: then they have to go through all that trouble yep,
16:12
Speaker 2: like it's and by the way, it's not. It does
16:14
Speaker 2: not seem I'll quote here again. Trump officials intend to
16:18
Speaker 2: impose curbs on countries that have diverted chips to China,
16:21
Speaker 2: including Malaysia and Thailand, one of the people said. In
16:24
Speaker 2: the meantime, the Commerce Department will continue to strictly enforce
16:26
Speaker 2: existing chip export rules. According to people who has not
16:29
Speaker 2: to be identified because the plans are not yet public,
16:31
Speaker 2: so I don't think it's Hey, the chip technology is
16:35
Speaker 2: going to evolve and so this is not the framework
16:37
Speaker 2: we want to use. I think they don't necessarily view
16:40
Speaker 2: it as an effective framework for restricting what China is
16:45
Speaker 2: going to.
16:46
Speaker 4: Get access to.
16:47
Speaker 2: Ye like that That's more the read that I get,
16:52
Speaker 2: because again, I don't think that the Trump administration suddenly
16:56
Speaker 2: pivoted on China and says, hey, everything's fine, like it's cool,
17:00
Speaker 2: like let's let's go have some beers.
17:02
Speaker 4: Like.
17:03
Speaker 2: I don't think that's the case. I think it's much
17:07
Speaker 2: more they're trying to craft something that they think will
17:10
Speaker 2: be more effective. We have no idea what that next
17:13
Speaker 2: something looks like, but it is clear that you have
17:17
Speaker 2: had countries that have basically been conduits for chips heading
17:20
Speaker 2: into China in the past, and the Trump administration wants
17:24
Speaker 2: to find a way to improve that.
17:26
Speaker 3: And in either case, yesterday at around three thirty, in
17:29
Speaker 3: Vidia shares shot up by about four dollars per share,
17:33
Speaker 3: from one thirteen to one seventeen, presumably on this announcement
17:37
Speaker 3: of some degree of change of restrictions on their types
17:40
Speaker 3: of chips that they export.
17:42
Speaker 2: Which to me, I kind of look at that and
17:43
Speaker 2: I'm like, I'm not sure they understand what's being said here.
17:47
Speaker 2: It feels like the market looked at this and said, oh,
17:50
Speaker 2: it's gonna be more lenient, and I'm not sure that's
17:52
Speaker 2: the case.
17:52
Speaker 3: It's gonna be different, but yeah, it's unclear to me
17:55
Speaker 3: how much more lenient it ends up being.
17:58
Speaker 4: So we'll see there. Let's see.
18:01
Speaker 3: We're continuing to get just kind of announcements and you know,
18:05
Speaker 3: stuff coming out from the press conference which is still
18:07
Speaker 3: ongoing from the White House on the US UK trade deal.
18:12
Speaker 3: The President was asked specifically about the movie industry because
18:15
Speaker 3: on Monday we heard the announcement of one hundred percent
18:17
Speaker 3: tariffs on films presumably filmed abroad. Really unclear how that's
18:24
Speaker 3: going to work. He did say that they will be
18:26
Speaker 3: working on that separate sector of the economy separately and
18:31
Speaker 3: deliberately with the United Kingdom. He also has asked about
18:34
Speaker 3: a US China trade deal and acknowledge that tariff rates
18:38
Speaker 3: could come down after this weekends negotiations if they go well.
18:43
Speaker 3: So again, I'm trying to kind of read through this
18:45
Speaker 3: and understand what might be moving markets up closer to
18:47
Speaker 3: one percent again today, and those are two pieces that
18:51
Speaker 3: have come across the screen here in this press conference
18:54
Speaker 3: so far.
18:55
Speaker 2: So again, continuing just to get some some details on
18:58
Speaker 2: all of this, We'll see where it ends up going here,
19:03
Speaker 2: But to this point, I think it's now all eyes
19:06
Speaker 2: going to be focused on those US China talks this weekend,
19:10
Speaker 2: and hey, what happens to tariffs as we get into
19:14
Speaker 2: next week?
19:15
Speaker 4: That is going to be the big question.
19:17
Speaker 2: Is Mike mentioned stocks rallying over the last fifteen to
19:20
Speaker 2: twenty minutes down now up almost four hundred points, the
19:23
Speaker 2: S and P of about fifty points, and the NASDAK
19:26
Speaker 2: up two oh six, so about a one percent rally
19:28
Speaker 2: for US equities as we head.
19:30
Speaker 4: Towards the bottom of the hour. Quick break here.
19:32
Speaker 2: When we come back, we get the trivia answer and
19:34
Speaker 2: we're talking some tech and AI after this.
19:40
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Speaker 5: Star Wars, Harry Potter and James Bond. Winner today of
20:22
Speaker 5: the Financial Exchange Show t shirt was Steve from Wearing Mask.
20:25
Speaker 5: Congrats to Steve, and we play trivia every day here
20:28
Speaker 5: on the Financial Exchange See complete contest rules at Financial
20:32
Speaker 5: Exchange Show dot com. Almost feels too expansive to be
20:36
Speaker 5: called a film franchise, right, how do you mean? Well,
20:41
Speaker 5: I guess like it's it's such a big universe that
20:44
Speaker 5: you can just like keep including like you can go forever.
20:47
Speaker 4: It's a big bucket. Yeah, yeah, you know.
20:49
Speaker 2: It's like there's there's a lot of superheroes in that
20:52
Speaker 2: Marvel universe, is all I'm saying.
20:55
Speaker 4: You know what he is.
20:57
Speaker 2: There's only one Pete Mitchell in top Gun. It's not
21:00
Speaker 2: really a fair contest. Okay, that's all I'm saying. Apple's
21:05
Speaker 2: Wandering Eye is good for everyone, but Google Peace and
21:08
Speaker 2: Bloomberg opinion. And this gets at Yesterday, Apple's senior vice
21:13
Speaker 2: president of Services atie Q said that for the first
21:18
Speaker 2: time ever ever in April, remember the iPhone has been
21:22
Speaker 2: around for eighteen years now, he said, for the first
21:27
Speaker 2: time ever, we saw a decline in Google searches on Safari. Now,
21:32
Speaker 2: remember when you if you own an iPhone, the default
21:36
Speaker 2: search engine that you use is Google. You can change it,
21:39
Speaker 2: you got to go into all the settings. But Google
21:40
Speaker 2: pays Apple about twenty billion dollars a year for the
21:43
Speaker 2: privilege of being the default search engine. And so Q said, hey,
21:49
Speaker 2: this was the first time we've ever seen a monthly
21:52
Speaker 2: decline in searches, and so a couple things that are
21:56
Speaker 2: just really impressive about that. The first thing is, obviously
21:59
Speaker 2: Apple's ECO system has been growing over the last twenty years,
22:02
Speaker 2: but probably even within that, like users have been you know,
22:05
Speaker 2: using search more and more as they use it for
22:07
Speaker 2: you know, more things.
22:09
Speaker 3: So they're doing more search on mobile device as well.
22:12
Speaker 4: Correct.
22:13
Speaker 2: So on this news, Google promptly felt like seven percent.
22:16
Speaker 2: Apple was down a couple as well, because there's two
22:18
Speaker 2: ways to interpret it. And he also, you know, talked about, hey,
22:20
Speaker 2: we're thinking about incorporating AI search in the future, and
22:23
Speaker 2: you know, we want to do this. We want to
22:25
Speaker 2: do that. Two very straightforward ways that you can look
22:29
Speaker 2: at this. One, Chat, GPT and other AI engines are
22:35
Speaker 2: taking queries away from conventional search yep. Number two is
22:42
Speaker 2: Apple is seeing less engagement overall with its devices. Maybe
22:46
Speaker 2: either one of those as possible, don't know, but obviously
22:48
Speaker 2: yesterday markets bought the the Google side of things.
22:51
Speaker 3: I have a pretty tough time believing the second one.
22:53
Speaker 3: Why like give me any sort of I just have
22:56
Speaker 3: a tough time putting a reason behind why people would
22:59
Speaker 3: be engaged aging less frequently with their iPhones.
23:03
Speaker 2: Maybe they're losing market share in China and so, like
23:05
Speaker 2: there's fewer devices in use there.
23:07
Speaker 3: Don't know Chinese phones know way that they have Google
23:10
Speaker 3: as a search option.
23:11
Speaker 4: I'm just spit blind. I know, I'm just in there.
23:14
Speaker 3: I'm just trying to like get around it, and and
23:17
Speaker 3: I'm I'm not getting there, which is why I keep
23:20
Speaker 3: leading back to the this is a real problem.
23:22
Speaker 2: For Google or is it a little bit of scratch
23:29
Speaker 2: my back, I'll scratch yours?
23:31
Speaker 4: And what I mean by this? Right now, Google.
23:35
Speaker 2: Is involved in an anti trust trial, two of them
23:38
Speaker 2: actually that they've lost, yes, and remedies are being discussed.
23:42
Speaker 2: The remedy trial for the first one, I think, is
23:44
Speaker 2: scheduled for September right now.
23:47
Speaker 4: In order for Google to appear as.
23:51
Speaker 2: Not as unmanopolistic as possible, it's in their best interest
23:56
Speaker 2: for the Apple deal to look as useless as possible
24:00
Speaker 2: for them, and for Apple, it's also an Apple's best interest,
24:05
Speaker 2: Otherwise they wouldn't be doing it, by the way, to
24:08
Speaker 2: receive twenty billion dollars a year from Google to be
24:11
Speaker 2: the exclusive default search option on Apple devices.
24:17
Speaker 3: Yeah, it's twenty billion dollars for doing nothing.
24:19
Speaker 4: Correct.
24:19
Speaker 2: They don't have to do it any Oh you mean
24:21
Speaker 2: we just got to like check a box.
24:23
Speaker 4: That's it. Fine, Like we'll check that box, man, you
24:26
Speaker 4: got it.
24:27
Speaker 2: So I kind of look at this, and on one hand, yes,
24:31
Speaker 2: it could be Apple signaling something about where they think
24:33
Speaker 2: search is going, and maybe it's bad for Google. On
24:37
Speaker 2: the other hand, Apple has a pretty vested interest in
24:41
Speaker 2: being able to keep Google as their default search engine. Sure,
24:44
Speaker 2: they get twenty billion reasons why each year? That's I
24:48
Speaker 2: mean again, you do the math. That's two hundred billion dollars,
24:51
Speaker 2: not accounting for the fact that this deal goes up
24:53
Speaker 2: every year, two hundred billion dollars over ten years in
24:57
Speaker 2: free money for Apple. So part of me looks at
25:00
Speaker 2: this and goes, Okay, is this actually something that is meaningful.
25:11
Speaker 4: Or is this.
25:11
Speaker 2: Apple just trying to play this up so that Google,
25:14
Speaker 2: at their trial in September can say, hey, you know,
25:19
Speaker 2: Apple now the last you know, three or four months,
25:21
Speaker 2: because they'll have more months of data then has said that,
25:23
Speaker 2: you know, they're not getting as much coming from search here.
25:27
Speaker 2: You know, Search has to be compared with AI now,
25:30
Speaker 2: and so we're not as monopolistic. So don't don't break
25:33
Speaker 2: that off because we that's not really what it is.
25:36
Speaker 3: Yeah, I suppose it could be either, but I also
25:40
Speaker 3: suspect that Apple is not making the story up.
25:44
Speaker 4: They're not making it up. But why are they.
25:46
Speaker 3: Saying why are they stressing it?
25:47
Speaker 4: Not even why are they stressing? Why are they saying it?
25:51
Speaker 3: Because there's maybe they're not required to disclose this day.
25:53
Speaker 2: Apple gets all kinds of data on what we use
25:55
Speaker 2: on our phones all the time.
25:57
Speaker 3: Why did they say tell us about it ever?
26:00
Speaker 4: Right? Why did they tell us this?
26:02
Speaker 2: If if they wanted to ink a deal where caud
26:06
Speaker 2: or a no caud is anthropic, where you know caud
26:09
Speaker 2: or perplexity is now available as like a default search
26:12
Speaker 2: option on your phone, you wouldn't hear them talk. They
26:16
Speaker 2: just be like, fine, like we just we heard you,
26:19
Speaker 2: we listened, and now here it is. So I find
26:24
Speaker 2: it interesting that they told us this because they're under
26:26
Speaker 2: no obligation to tell us anything relating to this, and
26:30
Speaker 2: have we ever heard anything on this topic from them before?
26:33
Speaker 4: No?
26:34
Speaker 2: No, Hence hence my whine now and my my antenna
26:37
Speaker 2: are up a little bit on this, and I will
26:39
Speaker 2: be eagerly watching that remedy trial for Google in the
26:42
Speaker 2: fall to see if they happen to bring this.
26:44
Speaker 4: Up, folks.
26:45
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28:11
Speaker 2: Anything else on the AI and search side that you
28:14
Speaker 2: want to talk about, Mike.
28:17
Speaker 3: I don't know that there's much else there. This story
28:19
Speaker 3: is pretty interesting, and look, I think everyone right now
28:25
Speaker 3: is finding themselves using artificial intelligence far more frequently, even
28:30
Speaker 3: with basic things, even those who do not have a
28:33
Speaker 3: subscription or even open the chat GPT app. Every time
28:37
Speaker 3: I google something, I'm getting an AI summary of my search.
28:40
Speaker 3: Sometimes it's garbage, sometimes it's useful, but I can tell
28:43
Speaker 3: you it's being used quite frequently, even for those who
28:46
Speaker 3: are still conducting their search on Google.
28:50
Speaker 4: Yeah, and it's you know, it's here's the thing.
28:54
Speaker 2: Just as an example, I was looking up a topic
28:57
Speaker 2: yesterday and I plugged it in to chat GPT just
29:01
Speaker 2: to see what it would say in addition to Google,
29:03
Speaker 2: and it was ninety five percent correct. The five percent
29:08
Speaker 2: that was wrong was kind of an important thing. It
29:09
Speaker 2: was it was a dollar figure related to the tax code,
29:13
Speaker 2: and it was one where the only reason that I
29:16
Speaker 2: knew it was wrong was because the page that I
29:21
Speaker 2: went to from the the search result was the IRS
29:24
Speaker 2: dot gov page for you know, the relevant section of
29:27
Speaker 2: the tax code, and I compared it and I'm like,
29:30
Speaker 2: chat GPT, you had almost everything right, but one of
29:32
Speaker 2: your numbers was wrong.
29:33
Speaker 4: Now do I know why that was wrong? No? I don't.
29:38
Speaker 2: But this is why, like it requires some supervision still,
29:42
Speaker 2: and why I'm still not really on board.
29:44
Speaker 4: With Like we covered the piece last week.
29:46
Speaker 2: You know, should you you know companies were trying to
29:49
Speaker 2: build AI agents that will have access to your credit cards. No,
29:53
Speaker 2: I'm just not sure that's what I want. If it
29:58
Speaker 2: can't get you know, basic acts correct with one hundred
30:02
Speaker 2: percent accuracy, then it's like you'll be like, Okay, book me,
30:07
Speaker 2: you know, flights from Boston to.
30:13
Speaker 4: I don't know what's what's like a place.
30:17
Speaker 2: That has two names or something like two places that
30:20
Speaker 2: share a name that have airports. There's got to be
30:24
Speaker 2: like a place in the Caribbean that has the name
30:25
Speaker 2: of like a US airport.
30:27
Speaker 4: Also Geneva. There's a New York and Switzerland.
30:30
Speaker 2: Which one you go into like and all of a
30:33
Speaker 2: sudden it ends up booking me on a train to Geneva,
30:35
Speaker 2: New York when I'm trying to go to Switzerland.
30:37
Speaker 4: Yea be problem.
30:38
Speaker 2: Train in Switzerland, I'm taking the chunnel. It's it's a
30:42
Speaker 2: big chunnel. It's the it's the Atlantic. They wouldn't even
30:45
Speaker 2: call it the chunnel. It's the the Aunnel or something
30:50
Speaker 2: like that.
30:51
Speaker 4: Yeah.
30:51
Speaker 2: So this is the stuff where if it can't give
30:55
Speaker 2: me one hundred percent accurate information about the tax code,
30:59
Speaker 2: I don't want it making those big decisions for me.
31:02
Speaker 3: There's a Boston, England, So maybe you're going to book
31:04
Speaker 3: a flight from Boston, England to Geneva, Switzerland, or to Austin, Massachusetts.
31:08
Speaker 2: Yes, we could try that one. Let just take a
31:11
Speaker 2: quick break when we come back.
31:14
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32:10
Speaker 4: Mike, what you got for me? For stack Roulette?
32:13
Speaker 3: I have three separate stories that are all falling into
32:15
Speaker 3: the same category for me, which is a bunch of
32:19
Speaker 3: different companies in very different areas of the market blaming
32:24
Speaker 3: tariff related concerns on slowdowns and sales, and so the
32:30
Speaker 3: New York Times has one, MarketWatch has one, Bloomberg has
32:33
Speaker 3: one here, and many different companies are seeing slowdowns in sales.
32:37
Speaker 3: But I just have a tough time buying. For example,
32:40
Speaker 3: that Mulson Thanks sales are declining because of concerns about
32:46
Speaker 3: the tariffs and economy.
32:48
Speaker 4: I called bull crap right away. I saw this.
32:50
Speaker 3: You have an execution problem. There's something else going on.
32:53
Speaker 3: I don't know what it is with you Molson Cores.
32:55
Speaker 3: But if I am miserable and worried about losing my job,
33:00
Speaker 3: what I'm doing is drinking a whole bunch more Molson
33:02
Speaker 3: course or cheap.
33:04
Speaker 5: Or just downgrading to a cheaper beer. Right, No, there's yeah,
33:09
Speaker 5: there might be from like a crap beer guy. Right right,
33:12
Speaker 5: You're you're going to.
33:13
Speaker 4: Downgrade a course.
33:14
Speaker 3: And we saw this, by the way, during twenty twenty
33:17
Speaker 3: two and twenty twenty three, when consumers were really concerned
33:20
Speaker 3: about inflation, what did they do. They moved over from
33:24
Speaker 3: the shopping at Whole Foods and moved down to Walmart
33:27
Speaker 3: where they could get cheaper or at least perceived cheaper
33:30
Speaker 3: prices on groceries. And I that's why I keep coming
33:34
Speaker 3: back to look, if this was a real concern across
33:37
Speaker 3: the board for Americans, then companies like Burger King, who, again,
33:41
Speaker 3: like McDonald's, reported same store sales declines, would be experiencing
33:46
Speaker 3: an uptick in sales from those high you know, higher
33:50
Speaker 3: income consumers who are shifting down because of concerns about
33:53
Speaker 3: inflation in the economy, and so there's clearly some concern
33:58
Speaker 3: about this by CEOs. I think we're seeing a pullback
34:02
Speaker 3: in business travel, and we're seeing that in bookings at
34:05
Speaker 3: Delta Airlines. But on the other hand, Disney reported earnings
34:09
Speaker 3: this week, and you know, bookings at their theme parks
34:12
Speaker 3: are pretty darn good, and so we may eventually fall
34:17
Speaker 3: into this period of concern and recession where consumers are
34:20
Speaker 3: pulling back, but it's not happening across the board. I
34:22
Speaker 3: think we're seeing some real stress for lower income Americans
34:26
Speaker 3: who are you know, perhaps not even finding enough money
34:29
Speaker 3: in the paycheck to go to McDonald's. But I don't
34:32
Speaker 3: see this as a uniform across the economy situation. What
34:35
Speaker 3: are your takeaways on this, Chuck, because I'm left a
34:37
Speaker 3: little bit confused by.
34:38
Speaker 4: These So, look, if you can blame it on tariffs
34:41
Speaker 4: you're going to right, like, yep.
34:43
Speaker 3: Yeah, if you can find that scapegoat, you will do it.
34:45
Speaker 2: Now, there are a number of areas that are seeing definite,
34:49
Speaker 2: broad based slow downs and spending. You mentioned travel, Yep,
34:54
Speaker 2: We're definitely seeing a slowdown in travel spend because every
34:59
Speaker 2: single area lines talking about it. They're saying it's more
35:02
Speaker 2: pronounced coming from international into the US yep. And that
35:06
Speaker 2: you know, other stuff's holding up better in some respects.
35:08
Speaker 2: But the thing I didn't realize. So whenever I book
35:11
Speaker 2: a trip, I guess I'm the weird. I book like
35:14
Speaker 2: six to nine months in advance. I just want to
35:17
Speaker 2: be done and know that, like I don't have to
35:18
Speaker 2: worry about it. And apparently the vast majority of booking
35:22
Speaker 2: I was reading through the was it MGM or C.
35:25
Speaker 2: It was one of the casinos, Win, it was Win.
35:29
Speaker 2: I was reading through the Win conference call, and they
35:32
Speaker 2: said that seventy five percent of their bookings are two
35:34
Speaker 2: to three weeks out. Now, granted that's like for casinos,
35:37
Speaker 2: which I can understand probably has like a little shorter
35:40
Speaker 2: window on some of this stuff. But I was like, wow,
35:43
Speaker 2: like that, so like a ton of your business is
35:46
Speaker 2: dependent on people booking really close to when they're going.
35:51
Speaker 2: Of course, there wouldn't be a problem in March or
35:53
Speaker 2: April because nothing really changed for most people yet.
35:56
Speaker 4: Sure, so I think there's definitely something happening in travel.
36:00
Speaker 2: There's absolutely something happening in fast food real p like McDonald's, Wendy's,
36:05
Speaker 2: Burger King, Taco Bell. I mean, like it's basically every
36:10
Speaker 2: major fast food chain is saying we've got negative year
36:13
Speaker 2: over your comps. So there's something happening there some upscale
36:17
Speaker 2: food Chipotle, Starbucks. How much of that is execution versus uh,
36:23
Speaker 2: you know, a real slowdown mixed because then you also
36:25
Speaker 2: got Chili's coming through with the thirty one percent plus
36:28
Speaker 2: year over year comp right, So again you kind of
36:32
Speaker 2: look at this and you say, there's there's something in
36:34
Speaker 2: fast food the rest of food.
36:36
Speaker 4: It's amazing.
36:37
Speaker 2: Then you get to the stuff where in this New
36:39
Speaker 2: York Times piece, you know, Coorox said that sales in
36:42
Speaker 2: uh fell eight percent in Q one. Okay, so so
36:46
Speaker 2: people in January are worried about tariffs that haven't been implemented,
36:50
Speaker 2: so they buy less bleach. I'm gonna say no, So,
36:57
Speaker 2: like you you kind of work through this, and some
36:59
Speaker 2: of it is company trying to blame tariffs for their
37:02
Speaker 2: own struggles.
37:03
Speaker 4: Some of it you can.
37:04
Speaker 2: Say, there's absolutely something that's legit here related to tariffs,
37:08
Speaker 2: and some of it you can say there's a a
37:11
Speaker 2: weakening of Look, all the data's pointing towards a weakening
37:16
Speaker 2: of the low end consumer. I think that's pretty clear. Fair, Yeah,
37:22
Speaker 2: and that's regardless of tariffs or not. So there are
37:25
Speaker 2: a few different things going on here. It's not all
37:28
Speaker 2: tariffs and separating that is, you know, it's kind of
37:33
Speaker 2: the fun of this is trying to figure out, like
37:35
Speaker 2: what's going on.
37:36
Speaker 3: Because I think like there's a case that what we're
37:39
Speaker 3: seeing from the airlines and hotels could be business travel
37:43
Speaker 3: drying up rapidly at maybe temporarily, maybe maybe longer term.
37:47
Speaker 3: Because that Disney one just kind of threw me for
37:49
Speaker 3: a loop. I was expecting them to have pretty bad
37:52
Speaker 3: bookings and they frankly weren't.
37:55
Speaker 2: No, it's yeah again, the data from them was really good,
38:00
Speaker 2: quite honestly, which is why they were up like ten
38:02
Speaker 2: percent yesterday.
38:03
Speaker 4: Taking a look at.
38:04
Speaker 2: Markets as we head towards the top of the hour,
38:06
Speaker 2: downs up five hundred and twenty seven points now SMP
38:08
Speaker 2: up sixty nine, NASDAC up two eighty six, so about
38:11
Speaker 2: a one a quarter to one and a half percent
38:12
Speaker 2: gain across major US markets. Done for the day, back
38:16
Speaker 2: tomorrow and we will finish up the week