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Chuck sees a red flag that can't be ignored · The Financial Exchange Show

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  Speaker 1: donation today. This is the Financial Exchange with Chuck Zadath
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  Speaker 1: and Mike Armstrow.
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  Speaker 2: Friday here on the Financial Exchange. It is Chuck, Mike
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  Speaker 2: and Tucker with you and top story today. At eight
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  Speaker 2: thirty am this morning, we got the Personal Consumption Expenditures
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  Speaker 2: Inflation Report, that's PCE for those of you listening at home,
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  Speaker 2: in the car, or wherever you may be. And the
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  Speaker 2: PCE is the Fed's preferred measure of inflation. It's what
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  Speaker 2: they try to look at in order to gauge where inflation,
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  Speaker 2: you know, maybe going. Especially, they look at what's called
• 1:41
  Speaker 2: core PCE, stripping out food and fuel prices, and that's
• 1:44
  Speaker 2: generally what they view as kind of the gold standard
• 1:47
  Speaker 2: for inflation metrics. And what we saw this morning was
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  Speaker 2: the headline number came in at a point three percent
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  Speaker 2: month over month, reading in line with expectations. Twelve month
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  Speaker 2: PCE inflation came in at two point five percent, also
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  Speaker 2: in line with expectations. The core number came in a
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  Speaker 2: little bit hotter than expected, rounded up to point four.
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  Speaker 2: It was I think point three six' five to one
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  Speaker 2: was the unrounded, number and so that pushed the twelve
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  Speaker 2: month CORE pce from two point seven up to two
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  Speaker 2: point eight. Percent so, overall the stage continues to be
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  Speaker 2: set in a way, where, hey we have not yet
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  Speaker 2: gotten inflation down to the area where we'd like to see.
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  Speaker 2: It it is probably settling a little bit higher than. Ideal.
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  Speaker 2: Uh and it's not necessarily a problem if inflation just
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  Speaker 2: hangs out in the mid to high. Twos historically that's
• 2:42
  Speaker 2: kind of where it's. Been we have not had any
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  Speaker 2: extended period of time where inflation has consistently been at
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  Speaker 2: two percent or. Below and SO i think ultimately the
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  Speaker 2: question on this, Is, look this is for the month Of,
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  Speaker 2: february before additional tariffs On china And canada And mexico
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  Speaker 2: went into. Place what does the inflation picture look like
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  Speaker 2: now that those are in, place and with the potential
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  Speaker 2: for additional tariffs coming in the next, Week how does
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  Speaker 2: inflation continue to evolve over the course of the? Spring.
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  Speaker 3: Mic, YEAH i think this report on its own does
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  Speaker 3: not get far away from how The fed has described
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  Speaker 3: what we're seeing in inflation right. Now they've been calling,
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  Speaker 3: it once again transitory likely or you, know short term
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  Speaker 3: reaction to, tariffs AND i don't think there's anything in
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  Speaker 3: this one report that would dissuade them of.
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  Speaker 4: That do you.
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  Speaker 5: No.
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  Speaker 2: Here here's the one thing THAT i will say is
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  Speaker 2: we have gotten awfully forgiving of these high CORE pce. Prints,
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  Speaker 2: yeah and just to put this in perspective prior to twenty,
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  Speaker 2: Twenty i'm going back and looking at the data set
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  Speaker 2: dating back to where it. Begins it goes back to let's,
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  Speaker 2: See april of nineteen fifty nine is actually No march
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  Speaker 2: of fifty, Nine SO i got like eighty years here
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  Speaker 2: outside of like the nineteen eighties and early. Nineties here
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  Speaker 2: are the CORE pce prints of point four or. Above
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  Speaker 2: i've Got january of two, Thousand october of two thousand and,
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  Speaker 2: One january of, Five january of, seven And october of
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  Speaker 2: two thousand and. Nine that's five prints in basically twenty
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  Speaker 2: seven years that came in as hot as the one
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  Speaker 2: that we just got on CORE. Pcee. Yeah SO i
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  Speaker 2: do want to, say, hey like normally we wouldn't just
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  Speaker 2: say this is, okay because these kinds of prints on
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  Speaker 2: average happened once every five years from nineteen ninety three
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  Speaker 2: through twenty. Twenty.
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  Speaker 3: Yeah, Yeah I'm i'm coming at this FROM i have
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  Speaker 3: concerns about this print and should did it continue at this?
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  Speaker 3: Trend you've got a problem that The fed's going to
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  Speaker 3: need to address in and of. ITSELF i don't know
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  Speaker 3: that THE fed reacts to this one any differently than
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  Speaker 3: they would, anticipate but it, certainly you, know puts that
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  Speaker 3: pressure back on them to, Say, okay where are we
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  Speaker 3: going with rates? Next are we truly still planning to
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  Speaker 3: cut rates twice in twenty twenty?
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  Speaker 2: Five and will the data justify? That so, look this
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  Speaker 2: is where it is right. Now, AGAIN i think that we.
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  Speaker 2: Are you, know all the chatter today there's a few
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  Speaker 2: different investment banks out with notes on, hey you, know
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  Speaker 2: we're getting more of a stagflationary with in the air
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  Speaker 2: because the other data that we got WITH pce we
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  Speaker 2: also get personal income and personal, spending and personal income
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  Speaker 2: came in better than expected point eight percent for the
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  Speaker 2: month versus point. Four personal spending came in at point
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  Speaker 2: four percent versus negative point three previous and point five,
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  Speaker 2: Expected and most of that point four percent growth was
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  Speaker 2: where you guessed it in autos and related categor is
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  Speaker 2: with people trying to front run. Tariffs and so this
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  Speaker 2: is why even though CORE pc printed a little bit
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  Speaker 2: hotter than, expected Tenure treasury is not moving up in yield,
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  Speaker 2: today it's down nine basis points to four point two
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  Speaker 2: eight percent. Concern that is recession concern because when you
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  Speaker 2: have two months now where hey again it's it's two,
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  Speaker 2: months so it's not a trend, yet like it's it's a,
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  Speaker 2: line it's not a. Trend when you have two months
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  Speaker 2: here where your personal spending is increasing at an annualized
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  Speaker 2: rate of three quarters of a, percent that's not enough
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  Speaker 2: to keep THE us economy. Afloat given that consumer spending
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  Speaker 2: has been what's kept THE us economy afloat over the
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  Speaker 2: last six, months and that's why you have yields moving down.
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  Speaker 2: Today and this also then gets it the question Of,
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  Speaker 2: look stagflation is something that everyone you know loves to talk,
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  Speaker 2: about is, like, oh it's my greatest fear of, stagflation
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  Speaker 2: even more than, Snakes like, yeah so scared of. Stagflation
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  Speaker 2: it's generally impossible for stagflation to occur over any meaningful
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  Speaker 2: period of time because typically when the economy, stagnates the
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  Speaker 2: stag and stagflation people, decide, look i'm gonna sit this
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  Speaker 2: out as far as buying new, stuff and so price
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  Speaker 2: hikes don't. Take and so that's Why you rarely see
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  Speaker 2: the combination of you, know rising in high inflation and
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  Speaker 2: a weak economy is because usually the weak economy kills,
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  Speaker 2: inflation which is why the prescription for high inflation is
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  Speaker 2: raise interest rates and basically slow the economy so that you,
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  Speaker 2: know it kills. Inflation that's that's why it works that. Way,
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  Speaker 2: yeah the.
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  Speaker 3: Reason it happened in the seventies was a system wide.
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  Speaker 3: Shock the shock was. Oil the question THAT i think
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  Speaker 3: economists are raising is could terriffs be that shock in
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  Speaker 3: twenty twenty.
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  Speaker 2: Five and the answer is it's. Possible but there's also
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  Speaker 2: a path, where, hey if the economy slows, enough consumers
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  Speaker 2: just say, No i'm not going to pay for these
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  Speaker 2: price hikes OR i can't pay for these price. Sikes
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  Speaker 2: so that's why the movement that you're getting today in
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  Speaker 2: stocks and, bonds you get stock selling off in bonds.
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  Speaker 2: Rallying that is not a stagflationary. Signal the stagflationary signal
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  Speaker 2: is what we saw in the first half of twenty twenty,
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  Speaker 2: two which is stock selling off and bond selling. Off
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  Speaker 2: that is the stagflationary. Signal so again we're gonna have
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  Speaker 2: to see where this all evolves and where it. Goes
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  Speaker 2: but this inflation print hotter than you'd like to, see
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  Speaker 2: but also already stale because lots changed in the last four.
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  Speaker 4: Weeks, yeah lot's.
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  Speaker 2: Changed and this is A.
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  Speaker 3: February, report so we'll keep that in. Mind AND i
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  Speaker 3: don't think this necessarily diverges from the opinion that if
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  Speaker 3: you have, expressed which, is, Hey january And february spending
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  Speaker 3: data is just gonna be lousy because of a combination
• 8:50
  Speaker 3: of wildfires and cold. Weather you could still blame that
• 8:56
  Speaker 3: on those. Two you could still blame this report on those.
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  Speaker 2: Actors, here here's the. Deal the next three months of
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  Speaker 2: DATA q two data this year is and those of
• 9:06
  Speaker 2: you who listen to our, show like you know, THAT
• 9:09
  Speaker 2: i try to tell it how it, is like how
• 9:11
  Speaker 2: many jobs reports do we go? Into And i'm, like
• 9:13
  Speaker 2: probably not the most important jobs? Report like you can
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  Speaker 2: you can sit this one out for?
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  Speaker 3: Him And tucker's listening on the, sideline, like, guys we're
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  Speaker 3: trying to get people to listen to this showy not
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  Speaker 3: do that?
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  Speaker 2: PLEASE i, MEAN i think it was like last week
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  Speaker 2: WHERE i was like last, WEEK i was, like, guys
• 9:26
  Speaker 2: this isn't the best show we're gonna. Do you don't
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  Speaker 2: need to stick around for this. One we don't sugarcoat.
• 9:31
  Speaker 2: It here's WHAT i am going to tell. You the
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  Speaker 2: next three months of data that we get on the
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  Speaker 2: economy probably the most important that we've had in a
• 9:40
  Speaker 2: couple of, years i'd say SINCE q three of twenty twenty.
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  Speaker 2: Three and it's because this is how this is when
• 9:46
  Speaker 2: we're actually going to see how the economy is responding
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  Speaker 2: to potential changes to trade, policy fiscal, policy labor, market
• 9:53
  Speaker 2: all these things coming together over the next three, months
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  Speaker 2: and so we're going to have a really good sense
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  Speaker 2: by fourth Of july where the economy is. Going because right,
• 10:04
  Speaker 2: Now i'll be completely, honest it's kind of a, wildcard
• 10:08
  Speaker 2: could go either way at this. Point that there's a
• 10:10
  Speaker 2: path where the economy skates through any confusion and, says,
• 10:14
  Speaker 2: yep we're just gonna continue on our merry. Way there's
• 10:16
  Speaker 2: a path where the economy slows. Down there's a path
• 10:18
  Speaker 2: where inflation becomes a. Problem so we're gonna have to
• 10:21
  Speaker 2: see how it plays. OUT i don't, have you, know
• 10:24
  Speaker 2: the super secret crystal ball WHERE i can say here's
• 10:27
  Speaker 2: exactly how this is gonna be. Navigated but we got
• 10:29
  Speaker 2: some stuff that the market's gonna try to sort, through
• 10:31
  Speaker 2: and that the economy's, gonna you, know show, Us, hey
• 10:33
  Speaker 2: here's what's going, on and the next three months are
• 10:37
  Speaker 2: gonna tell us the answer on that side of, things
• 10:39
  Speaker 2: in my, opinion anything else that you want to add
• 10:42
  Speaker 2: on the inflation side of, Things, Michael, no let's move. Along,
• 10:45
  Speaker 2: okay let's take a quick break. Here when we come.
• 10:49
  Speaker 2: Back peace in The Wall Street journal that seems mad
• 10:52
  Speaker 2: about something for REASONS i don't.
• 10:54
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  Speaker 2: Five all, Right, So, mike there's a lot of different
• 12:02
  Speaker 2: questions out there about you, know tariffs and trade policy
• 12:06
  Speaker 2: in the labor market and this and. That, TikTok. TikTok,
• 12:10
  Speaker 2: sure there's all kinds of stuff going on right, now you,
• 12:12
  Speaker 2: know reciprocal tariffs next, Week there's all kinds of stuff out.
• 12:15
  Speaker 4: There Liberation, day we get this piece.
• 12:18
  Speaker 2: From The Wall Street, Journal The Federal reserve Owes america an. Explanation,
• 12:25
  Speaker 2: Okay I'm i'm. Interested you, know those of you who
• 12:28
  Speaker 2: have listened for a while you know, that you know
• 12:30
  Speaker 2: there have been times where we've been pretty critical of THE.
• 12:34
  Speaker 2: Fed what's the quote That fandetti had a couple of years, Ago, tucker.
• 12:39
  Speaker 5: And if he, fails he'll be one of the biggest
• 12:42
  Speaker 5: monetary whimps in.
• 12:43
  Speaker 2: History, right it's. Failure but when you get called a
• 12:47
  Speaker 2: monetary wimp By Mark, fandetty it means. Something those are
• 12:50
  Speaker 2: the terms that we throw around, loosely. FAILURE i really
• 12:55
  Speaker 2: would like a shirt with it just says monetary wimp
• 12:59
  Speaker 2: on the front of, it And i'll the back it's
• 13:00
  Speaker 2: Got fandetti's head just saying. Failure SO i see this
• 13:06
  Speaker 2: piece from The Wall Street, JOURNAL i, go, okay what
• 13:08
  Speaker 2: is The Federal reserve O america an explanation? About And i'm,
• 13:11
  Speaker 2: like is it you know why inflation was too? High
• 13:15
  Speaker 2: is it you know why they're not cutting right? Now,
• 13:17
  Speaker 2: like what's what's the thing that they're that this is
• 13:20
  Speaker 2: about where the Fedo's america and Explanation and it talks
• 13:27
  Speaker 2: about how they're stopping the runoff of their balance sheet
• 13:30
  Speaker 2: because they're nervous that it may affect financial stability if
• 13:33
  Speaker 2: they go. Further AND i sit there AND i, go, oh, okay,
• 13:38
  Speaker 2: okay let's see if there's any meat on this, Bone
• 13:41
  Speaker 2: like let's let's pick at it a little. Bit and
• 13:44
  Speaker 2: the answer is, no there's no meat on this. Bone
• 13:48
  Speaker 2: it's it's not causing any problems at the. Moment The
• 13:51
  Speaker 2: fed is actually acting proactively because they've seen it at
• 13:54
  Speaker 2: the end of twenty eighteen that, hey when we take
• 13:55
  Speaker 2: our balance sheet run off too far and pull too
• 13:58
  Speaker 2: many reserves out of the banking systm can destabilize banks
• 14:02
  Speaker 2: and the financial, system and we don't want to do.
• 14:04
  Speaker 2: That and this piece is making the case, that, hey
• 14:07
  Speaker 2: because you're slowing the level of quantitative, tightening it's actually quantitative,
• 14:11
  Speaker 2: easing which is bowl. Loney it's not what those things.
• 14:15
  Speaker 2: Are it's not quantitative. Easing is the act of The
• 14:18
  Speaker 2: Federal reserve buying. Bonds this is The Federal reserve selling fewer.
• 14:23
  Speaker 2: Bonds those are different. Things SO i look at this
• 14:29
  Speaker 2: AND i don't know how this is anything that's worthy
• 14:35
  Speaker 2: of news at the moment because it just doesn't make.
• 14:39
  Speaker 3: Sense, YEAH i was trying to figure out AND i
• 14:44
  Speaker 3: read the whole thing To, chuck just wondering, Like, okay
• 14:47
  Speaker 3: where's the big, reveal where's the big, question where's the big.
• 14:50
  Speaker 2: Right it's gonna be, like IS J powell made out of?
• 14:52
  Speaker 2: Bonds like.
• 14:55
  Speaker 4: Or even like a weight. On, okay you, know, hey
• 14:58
  Speaker 4: the size of the balance sheet over all is too?
• 15:02
  Speaker 4: Big too?
• 15:02
  Speaker 2: Big chair that?
• 15:03
  Speaker 4: Thing how can you not stare at?
• 15:05
  Speaker 2: It?
• 15:07
  Speaker 4: Yeah That where do you just have these lined up
• 15:11
  Speaker 4: for us ready to? Go uh.
• 15:13
  Speaker 3: Failure there's no big reveal here of, oh and this
• 15:17
  Speaker 3: is the danger to the financial system if The fed
• 15:20
  Speaker 3: doesn't explain how they're. Going there was none of that in.
• 15:22
  Speaker 3: Here they also then completely miscategorized the latest meeting in
• 15:26
  Speaker 3: the very first sentence of this whole. Thing the main
• 15:29
  Speaker 3: news from last Week's Federal Open Market committee meeting was
• 15:33
  Speaker 3: the escalating war of words Between Federal Reserve Chairman Jerome.
• 15:36
  Speaker 2: Powell.
• 15:37
  Speaker 4: President, no it. Wasn't did you listen to?
• 15:40
  Speaker 2: It there was one question and he basically was, LIKE
• 15:42
  Speaker 2: i already answered. This I'm i'm not getting. Involved there
• 15:45
  Speaker 2: was no war of.
• 15:46
  Speaker 3: Words J powell was extremely careful to not factor in
• 15:52
  Speaker 3: or answer any questions about what the president, thinks what
• 15:55
  Speaker 3: should happen with interest, rates whether or not he can be,
• 15:57
  Speaker 3: removed or What doje's, doing very specifically, said it's none
• 16:01
  Speaker 3: of my. BUSINESS i don't weigh in on this. Stuff stop.
• 16:04
  Speaker 3: Asking there was no war of. Words this is just the.
• 16:08
  Speaker 2: Question the question that's asked here like the third to last,
• 16:12
  Speaker 2: paragraph which again like why the main question shows up?
• 16:15
  Speaker 2: There who knows under what circumstances might might the ample
• 16:20
  Speaker 2: reserve system that requires a much LARGER fed balance sheet
• 16:23
  Speaker 2: come into conflict with the inflation control half of The
• 16:25
  Speaker 2: fed's mandate From. Congress so, basically what the question that
• 16:28
  Speaker 2: he's asking, is you're telling me that inflation is a,
• 16:31
  Speaker 2: problem why are you not running the balance sheet off?
• 16:34
  Speaker 2: Further and the answer is because we're worried about destabilizing
• 16:39
  Speaker 2: the financial. System and he's basically, saying, okay, well you have,
• 16:42
  Speaker 2: more you, know the balance sheets bigger than it was
• 16:46
  Speaker 2: five years ago pre. Pandemic why is that the? Case
• 16:49
  Speaker 2: and one easy answer, is, okay look at cumulative inflation since,
• 16:53
  Speaker 2: then and where are we at now in terms of
• 16:56
  Speaker 2: cumulative inflation since, then probably like twenty four to twenty five.
• 16:58
  Speaker 4: Percent, yeah somewhere in that jump in that.
• 17:01
  Speaker 2: Ballpark so basic back of The napkin math is if
• 17:04
  Speaker 2: you take it was four and a half trillion dollars
• 17:07
  Speaker 2: before and multiply by one point twenty, five you get
• 17:10
  Speaker 2: five point six. Trillions so even holding everything else completely,
• 17:14
  Speaker 2: stable you Say, okay in order to maintain a similar
• 17:17
  Speaker 2: level of reserves relative to where inflation is, today you'd
• 17:21
  Speaker 2: probably need five point six trillion instead of four point.
• 17:23
  Speaker 2: Five you're at six eight right, now and by the,
• 17:26
  Speaker 2: way still continuing to run, off just more slowly than.
• 17:29
  Speaker 2: Before and so, okay, yeah it's something where THE fed
• 17:34
  Speaker 2: balance sheet might be bigger than it was. Previously it's
• 17:37
  Speaker 2: not some. Secret it's it's it's it's disclosed there EVERY
• 17:43
  Speaker 2: i don't know if it's every week or every, quarter
• 17:45
  Speaker 2: but it's it's literally put out there for people to
• 17:47
  Speaker 2: see exactly what The fed. Owns i'm actually gonna check
• 17:52
  Speaker 2: it right now.
• 17:54
  Speaker 3: While you're checking cumulative, inflation. Uh measured BY, cpi the
• 17:59
  Speaker 3: consumer price in From february of twenty twenty five is
• 18:02
  Speaker 3: twenty three point three percent higher than it was In
• 18:05
  Speaker 3: february of twenty, twenty right before the.
• 18:07
  Speaker 2: Pandemic there you, Go, Okay so, Actually i'm, sorry we
• 18:10
  Speaker 2: don't get. It, yeah we get it every week from The.
• 18:12
  Speaker 2: Fed they tell us exactly how big the balance sheet.
• 18:15
  Speaker 2: Is SO i Guess i'm kind of looking at this
• 18:19
  Speaker 2: going are what do we do of all the things
• 18:23
  Speaker 2: that are out there right? Now americans need to be
• 18:26
  Speaker 2: concerned about the size of The fed's balance. Sheet their
• 18:29
  Speaker 2: TikTok's about to, disappear. Folks come, on we don't need
• 18:32
  Speaker 2: to be worrying about The fed's balance. Sheet. GOSH i
• 18:35
  Speaker 2: just this is one where again at a different place in.
• 18:39
  Speaker 2: Time you, know, sure maybe we could have discussions about,
• 18:42
  Speaker 2: this BUT i don't know that this makes my top
• 18:45
  Speaker 2: fifty list for you, know things to wonder about and
• 18:50
  Speaker 2: be curious about over the next you, know six to twelve.
• 18:52
  Speaker 2: Months it's just it's a non. Factor it's just not
• 18:55
  Speaker 2: something THAT i think is particularly important, Here. Mike one
• 19:00
  Speaker 2: of the things that is wild and we have to
• 19:02
  Speaker 2: come back to this. SITE i know that there's some
• 19:04
  Speaker 2: other stuff that we're going to talk about in, markets
• 19:06
  Speaker 2: but after this next, BREAK i want to go back
• 19:10
  Speaker 2: to this core WEAVE ipo that is happening. Today, yeah
• 19:13
  Speaker 2: just because it's happening today now at a time where
• 19:17
  Speaker 2: markets are dodgy to say the. LEAST i, mean you
• 19:21
  Speaker 2: got all through major industries off more than one percent right,
• 19:24
  Speaker 2: now and SO i JUST i want to talk a
• 19:27
  Speaker 2: little bit more about this because there is meat on
• 19:30
  Speaker 2: that bone and that's interesting to, Me.
• 19:40
  Speaker 1: Like us On facebook and follow us On twitter AT tfe.
• 19:43
  Speaker 1: Show breaking business news is always first right here on
• 19:47
  Speaker 1: The Financial Exchange Radio. Network time now For Wall. Street
• 19:53
  Speaker 1: watch a complete look at what's moving markets so far
• 19:56
  Speaker 1: today right here on The Financial Exchange Radio.
• 19:59
  Speaker 5: Network markets aren't selloff mode as traders react to the
• 20:02
  Speaker 5: CORE pce index posted earlier this, morning The fed's preferred
• 20:06
  Speaker 5: measure of, inflation which came in slightly hotter than, expected
• 20:10
  Speaker 5: climbing two point eight percent year over, year higher than
• 20:13
  Speaker 5: estimates of two point seven. Percent right, now The dow
• 20:17
  Speaker 5: off by over one, percent or four hundred and seventy seven,
• 20:20
  Speaker 5: POINTS smp five hundred down nearly one and a half
• 20:24
  Speaker 5: percent or eighty three, points in The nasdaq selling off
• 20:28
  Speaker 5: by two percent or three hundred and fifty. Points russell
• 20:31
  Speaker 5: two thousand is down one and a third percent or
• 20:34
  Speaker 5: twenty seven. Points ten year treasuryil down by nine basis
• 20:37
  Speaker 5: points now at four point two seven, percent and crude
• 20:41
  Speaker 5: oil down about half a, percent trading at sixty nine
• 20:44
  Speaker 5: dollars in fifty two cents a. Barrel lululemon shares down
• 20:48
  Speaker 5: by over fifteen percent after the aft of activewear company
• 20:52
  Speaker 5: said it expects sales growth to slow this year as
• 20:56
  Speaker 5: consumers hold back on spending amid macro economic Uncertain, meanwhile
• 21:00
  Speaker 5: auto stocks continued to be monitored Following President trump's latest
• 21:04
  Speaker 5: tariff announcement from imported. Autos according To The Wall Street,
• 21:08
  Speaker 5: Journal trump earlier this month Warned american automakers not to
• 21:12
  Speaker 5: raise prices due to. Tariffs General motors in four down
• 21:15
  Speaker 5: by two, percent While tesla down by three. Percent, Elsewhere
• 21:19
  Speaker 5: shares in mobile advertising technology company App lovin are up
• 21:23
  Speaker 5: four percent so far, today following their seventeen percent tumble,
• 21:27
  Speaker 5: yesterday driven by a negative report from short selling Firm
• 21:30
  Speaker 5: Muddy Waters. RESEARCH us steel shares up nearly two percent
• 21:34
  Speaker 5: following a report That Nippon steel is willing to invest
• 21:37
  Speaker 5: as much as seven billion dollars in The american steelmaker
• 21:40
  Speaker 5: to Obtain President trump's approval of their, merger and. Shares
• 21:44
  Speaker 5: an eyehealth Company bosch And lom down by six percent
• 21:48
  Speaker 5: one day after the company announced a voluntary recall of
• 21:51
  Speaker 5: certain implantable eye lenses following reports of. Complications Wells fargo
• 21:56
  Speaker 5: also downgraded the stock to equal, weight citing the. Recall
• 22:00
  Speaker 5: I'm Tucker, Silvan That's Wall Street.
• 22:02
  Speaker 2: Watch, mike when we look at the LAST i don't,
• 22:06
  Speaker 2: know three, years is there any area of the market,
• 22:12
  Speaker 2: that in your, opinion has been hotter than artificial? Intelligence the.
• 22:24
  Speaker 3: Only area you could even compare to would be some
• 22:28
  Speaker 3: areas of the crypto, market but those Not it hasn't
• 22:31
  Speaker 3: been quite as pervasive as artificial.
• 22:34
  Speaker 2: Intelligence And i'm, talking you, know real. Economy, yeah, fair you,
• 22:39
  Speaker 2: know like the the crypto economy is not the real.
• 22:43
  Speaker 2: Economy i'm not saying that people haven't made significant gains.
• 22:45
  Speaker 2: There i'm, saying, like when you talk about investible themes
• 22:49
  Speaker 2: in publicly traded, companies is there anything again the last
• 22:54
  Speaker 2: year it's cooled, off but anything in the last three
• 22:55
  Speaker 2: years that's been hotter THAN?
• 22:57
  Speaker 4: Ai.
• 22:59
  Speaker 2: No the only other, thing in my opinion that's kind
• 23:02
  Speaker 2: of close is the companies that have THE glp one,
• 23:06
  Speaker 2: drugs the weight loss. Drugs there's been like the two
• 23:09
  Speaker 2: biggest hype areas that have actually delivered for. Investors so
• 23:14
  Speaker 2: you've got this, company Core, weave that is going through
• 23:17
  Speaker 2: AN ipo today and, GOSH i really don't think this
• 23:23
  Speaker 2: could go worse for. Them quite, honestly we covered this.
• 23:26
  Speaker 2: Yesterday Core weave is AN ai cloud. Provider, basically they
• 23:30
  Speaker 2: bought two hundred and fifty thousand In vidio chips and
• 23:32
  Speaker 2: they licensed the use of them out to third parties
• 23:35
  Speaker 2: that want to use. Them their biggest, Customers, microsoft who
• 23:39
  Speaker 2: has about sixty two percent of their revenue in the
• 23:41
  Speaker 2: trailing twelve, months and they wanted to do this two
• 23:45
  Speaker 2: point seven billion DOLLAR. Ipo two point seven billion DOLLAR
• 23:48
  Speaker 2: ipo means they're gonna raise two point seven billion dollars based,
• 23:52
  Speaker 2: on you, know the amount of shares they release and
• 23:55
  Speaker 2: the price of those. Shares they had to pretty much
• 23:57
  Speaker 2: cut both the price and the amount of shares by
• 24:01
  Speaker 2: about twenty percent. Each the number of shares actually was
• 24:03
  Speaker 2: cut a little bit more than, that but, there their
• 24:07
  Speaker 2: two point seven billion DOLLAR ipo got cut to a
• 24:09
  Speaker 2: one and a half billion DOLLAR. Ipo you, say, okay
• 24:12
  Speaker 2: like forty five percent, smaller you, know, sure that's not
• 24:15
  Speaker 2: a great sign for. Demand it then was announced yesterday
• 24:19
  Speaker 2: that In, vidia who remember they've bought the chips, from
• 24:24
  Speaker 2: is taking two hundred and fifty million dollars of their
• 24:26
  Speaker 2: money that basically they had given To invidia for the
• 24:30
  Speaker 2: chips in order to backstop THE. Ipo so a full
• 24:35
  Speaker 2: seventeen percent almost of THE ipo is being bought By
• 24:39
  Speaker 2: nvidia because there still wasn't enough demand. Elsewhere don't make
• 24:44
  Speaker 2: this more complicated than it needs to. Be if you're
• 24:46
  Speaker 2: thinking about all. This, yes it is the giant customer
• 24:51
  Speaker 2: of the company that is being publicly, traded that is
• 24:54
  Speaker 2: going and buying their shares to make sure that this
• 24:56
  Speaker 2: thing doesn't fall apart and get a bunch of negative
• 24:59
  Speaker 2: media about artificial intelligence stocks going. Public it's the snake
• 25:02
  Speaker 2: eating its own. Tail, yeah so this thing is trying
• 25:07
  Speaker 2: TO ipo today and, again well we'll see what, happens
• 25:11
  Speaker 2: but it's also trying to go off into a market
• 25:15
  Speaker 2: that doesn't really want to perform. Today and normally in
• 25:19
  Speaker 2: these kinds of, situations the underwriters for THE, ipo the
• 25:24
  Speaker 2: big investment, banks who get, paid you, know a fee
• 25:26
  Speaker 2: basically to raise the money in the in the public.
• 25:28
  Speaker 2: Listing most of the, time if you see something like this,
• 25:31
  Speaker 2: developing you're, like, hey pull it and we'll try again
• 25:34
  Speaker 2: in six. Months so there's a couple of things THAT
• 25:37
  Speaker 2: i find interesting about. This the first is that they
• 25:39
  Speaker 2: haven't pulled. It and WHY i find that interesting is
• 25:44
  Speaker 2: because usually the reason that you say pull it will
• 25:46
  Speaker 2: try again in six. Months is because if your business
• 25:49
  Speaker 2: is fundamentally that, strong you, say, okay there's no harm in.
• 25:53
  Speaker 2: Waiting let's let's not devalue you, know the company by
• 25:56
  Speaker 2: more than we need to in terms of how much you,
• 25:58
  Speaker 2: know we need to value the shares at it and
• 26:00
  Speaker 2: how we're going to raise the. Money you, say, fine,
• 26:02
  Speaker 2: like we'll do it in six, months maybe a, year
• 26:04
  Speaker 2: whatever it might. Be if you're not pulling, it doesn't
• 26:10
  Speaker 2: that kind of indicate that you might think things might
• 26:14
  Speaker 2: be worse than six months for how your business. Looks
• 26:17
  Speaker 2: then it's.
• 26:17
  Speaker 3: An easy interpretation like you don't know unless you are
• 26:21
  Speaker 3: obviously in the c suite and making these.
• 26:24
  Speaker 4: Decisions but it. Does that is a potential read.
• 26:28
  Speaker 2: Of, it, Obviously LIKE i know that If i'm trying
• 26:30
  Speaker 2: to sell something AND i send someone out to, MARKET
• 26:34
  Speaker 2: i get A i've got a bunch of, avocados AND i, Say,
• 26:39
  Speaker 2: BILL i want you to go out to market and
• 26:42
  Speaker 2: sell these hundred avocados for one hundred dollars. Wholesale, Yeah
• 26:47
  Speaker 2: And bill comes back to me and, goes, chuck there's a.
• 26:49
  Speaker 2: Problem people don't want this many avocados at that. PRICE
• 26:52
  Speaker 2: i Go, Okay, like what's the. Deal he, goes they
• 26:54
  Speaker 2: want eighty avocados at eighty. Cents M, well Now i'm
• 26:59
  Speaker 2: getting sixty four dollars for my product instead of one.
• 27:03
  Speaker 2: Hundred in like in the avocado, CASE i have a
• 27:07
  Speaker 2: decaying asset because my avocados are going to be mush
• 27:11
  Speaker 2: in six, months, yes, right like, that they are going
• 27:13
  Speaker 2: to be.
• 27:14
  Speaker 3: Useless there's six, months only a three hour time frame
• 27:17
  Speaker 3: where that avocado is gonna be useful for.
• 27:18
  Speaker 2: You, Correct and SO i have to sell those avocados
• 27:21
  Speaker 2: or make. QUAKAMU i can't make that. MUCH i could
• 27:25
  Speaker 2: make that much. QUAK i can't eat that much. QUAWK
• 27:28
  Speaker 2: i sell the avocados BECAUSE i have. To they're going
• 27:31
  Speaker 2: to go. Bad If i'm not selling avocados but Instead
• 27:34
  Speaker 2: i'm selling gold or steel or whatever it, IS i might, say,
• 27:40
  Speaker 2: No i'm not gonna take a thirty six percent haircut
• 27:42
  Speaker 2: on my. Sale i'm gonna hold on until someone Says
• 27:46
  Speaker 2: i'm gonna pay you market value for. This and in
• 27:48
  Speaker 2: the case of a company and a good, Company mike.
• 27:51
  Speaker 2: Isn't the general theory behind why investors want to own
• 27:55
  Speaker 2: stocks is because they're a creative, overtime and they should
• 27:58
  Speaker 2: earn more money and become more valuable if they.
• 28:00
  Speaker 3: Execute, well, yeah they're generally not decaying, assets.
• 28:04
  Speaker 2: Correct like the reason people have historically own stocks in
• 28:07
  Speaker 2: THE us is because they've gone, up not, down like
• 28:10
  Speaker 2: a basic simple. Thing so this to me is we've
• 28:17
  Speaker 2: talked a lot about how there have been like some
• 28:18
  Speaker 2: yellow flags here and there on different. Things THIS ipo
• 28:23
  Speaker 2: and the way it's going off is a screaming red
• 28:24
  Speaker 2: flag to, Me like it's just like it's in my,
• 28:28
  Speaker 2: face like right. There AND i don't know exactly how
• 28:33
  Speaker 2: it's going to end up playing, out because you never
• 28:34
  Speaker 2: do with these kinds of, things but, gosh you can't
• 28:37
  Speaker 2: imagine it going any more poorly than it has gone
• 28:43
  Speaker 2: to this. Point AND i don't, Know we're gonna have
• 28:48
  Speaker 2: to see what happens over the next six months or.
• 28:50
  Speaker 2: So but just screaming red flag right in my face
• 28:55
  Speaker 2: right now about, something whether it's ai the market as a,
• 28:58
  Speaker 2: WHOLE i don't know, what but it's just.
• 29:02
  Speaker 3: Flashing AND i know you've probably never heard of this
• 29:05
  Speaker 3: company prior to this, week if you're listening right, now
• 29:08
  Speaker 3: but the message is that it's not in some tiny
• 29:11
  Speaker 3: corner of the market that nobody cares. About this is
• 29:14
  Speaker 3: front and center in the artificial intelligence, market which has
• 29:18
  Speaker 3: driven the entirety of the market for the last two.
• 29:21
  Speaker 2: Years let's take a quick break when we come. BACK
• 29:24
  Speaker 2: i have One, Sorry, MIKE i have to go off grid.
• 29:27
  Speaker 2: AGAIN i got to talk a little bit more about
• 29:29
  Speaker 2: Some university Of michigan sentiment survey data that we, got
• 29:33
  Speaker 2: AND i want to talk about what we're seeing on that,
• 29:36
  Speaker 2: front BECAUSE i saw a couple other, things and then
• 29:38
  Speaker 2: maybe we'll get to some other stuff about. Stocks we
• 29:41
  Speaker 2: could Talk, lululemon because yoga pants always a fun discussion
• 29:45
  Speaker 2: here on The Financial exchange given how Frequently mike AND
• 29:48
  Speaker 2: i wear.
• 29:48
  Speaker 3: Them, yes and so you can only see my top,
• 29:50
  Speaker 3: half but the bottom is obviously In lululemon yoga.
• 29:53
  Speaker 2: Pants we'll discuss those and more when we.
• 29:56
  Speaker 1: Return thanks to us six, one, seven, three, six two
• 30:00
  Speaker 1: thirteen eighty five with your comments and questions about today's,
• 30:03
  Speaker 1: show and let us know what you think about the
• 30:05
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• 30:09
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• 30:13
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• 30:16
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• 30:18
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• 30:21
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• 30:25
  Speaker 1: Exchange Radio.
• 30:26
  Speaker 2: Network all, Right, MIKE i wanted to touch on one
• 30:36
  Speaker 2: other piece of The university Of michigan Consumer sentiment. Survey
• 30:40
  Speaker 2: the first version came out last. Week we got the
• 30:42
  Speaker 2: final numbers this. WEEK i do have an interesting. Question,
• 30:48
  Speaker 2: So university Of, michigan they published their Consumer sentiment, survey
• 30:50
  Speaker 2: and then a week later they published the revisions of.
• 30:52
  Speaker 2: It it's a sentiment, Survey so what are you? Revising,
• 30:56
  Speaker 2: yeah just Like i'm sure that there's a reasonable. Explanation it's, probably,
• 31:01
  Speaker 2: hey we got more responses that came in over you,
• 31:04
  Speaker 2: know the subsequent days or.
• 31:05
  Speaker 3: Something but that's got to me the only and hopefully
• 31:08
  Speaker 3: that's the only thing they were, Advised, like you don't
• 31:10
  Speaker 3: go through and you're, like, well let's adjust it, that you, Know,
• 31:13
  Speaker 3: Like i'm sure that it's something that's.
• 31:14
  Speaker 2: Legit BUT i just always find it humorous, that you.
• 31:17
  Speaker 2: KNOW i look at my calendar And i'm, like didn't
• 31:18
  Speaker 2: they just do? That i'm, Like, oh it's the. Revision
• 31:20
  Speaker 2: why are they doing a revision of a? Survey. Yeah,
• 31:24
  Speaker 2: anyways one of the things that they ask people, is you,
• 31:27
  Speaker 2: know do you expect to have a higher income next?
• 31:31
  Speaker 2: Year and here's one of the things that's really interesting
• 31:34
  Speaker 2: on this is during the pen and generally in healthy,
• 31:37
  Speaker 2: economies it's usually about a fifty to fifty. Split fifty
• 31:41
  Speaker 2: percent of people say, yes fifty percent of people say.
• 31:43
  Speaker 2: No even during the depths of you, Know march twenty,
• 31:47
  Speaker 2: twenty and even during twenty twenty, two when the economy
• 31:51
  Speaker 2: was stagflationary for the first half of the, year you
• 31:55
  Speaker 2: never got below forty five. Percent the only time that
• 31:57
  Speaker 2: you dip below there was Literally march of twenty, twenty
• 32:00
  Speaker 2: where surprised that it wasn't.
• 32:02
  Speaker 3: Worse but before, that to get below forty five, percent
• 32:06
  Speaker 3: you were looking at you, know twenty twenty, two thousand
• 32:09
  Speaker 3: and eight through twenty, thirteen when anybody listening now probably
• 32:13
  Speaker 3: remembers the economy back, then.
• 32:15
  Speaker 2: The numbers on this just got to thirty six and
• 32:17
  Speaker 2: a half, percent which is again in the realm of
• 32:23
  Speaker 2: where we were in twenty eight to twenty, Twelve and
• 32:27
  Speaker 2: you could look at this and you could be, like, oh,
• 32:29
  Speaker 2: well you, know these surveys are showing you, know this
• 32:30
  Speaker 2: huge partisan bias in YadA. YadA they may be partisanally,
• 32:34
  Speaker 2: biased but they were partisanally biased back in twenty twenty
• 32:37
  Speaker 2: two and never got this. Bad and so does this mean?
• 32:41
  Speaker 2: Anything not, necessarily but it's another data point that you
• 32:45
  Speaker 2: throw on the fire and, say, hey this could be
• 32:48
  Speaker 2: something and we'll have to see how it. Goes the
• 32:51
  Speaker 2: interesting piece is this has never been. Something and this
• 32:54
  Speaker 2: is WHY i think you just, say, hey throw it
• 32:56
  Speaker 2: on the, pile and you, know see what happens when
• 32:59
  Speaker 2: it dipped back during the you, know two thousand and
• 33:02
  Speaker 2: nine and subsequent recession and afterwards in the, recovery it
• 33:06
  Speaker 2: wasn't a leading. Indicator you. Know you look at where
• 33:10
  Speaker 2: the dip occurred and it was late eight early.
• 33:15
  Speaker 3: Nine, yeah it was, coincident happened at the same time
• 33:18
  Speaker 3: as a big dip in economic.
• 33:20
  Speaker 2: Activity so trying to make sense out of like could
• 33:24
  Speaker 2: this be a leading? Indicator? NOW i have no. Idea
• 33:28
  Speaker 2: there's been so much this business cycle that has been
• 33:30
  Speaker 2: different from what we have seen. Previously BUT i looked
• 33:34
  Speaker 2: at this AND i saw, it AND i, said, oh,
• 33:35
  Speaker 2: like that's that's kind of. Notable who knows exactly what it?
• 33:39
  Speaker 2: Means but throw it on the pile and we'll see what.
• 33:41
  Speaker 4: Happens, folks we are nearing the end Of march.
• 33:43
  Speaker 3: Meeting we are nearing the end of time to get
• 33:45
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• 33:48
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• 33:52
  Speaker 3: exactly what it is that they. Do we're seeing a
• 33:56
  Speaker 3: market today that's playing out very differently than what we've
• 33:58
  Speaker 3: seen over the last Couple the same ideas and movers
• 34:02
  Speaker 3: of markets that really worked for the last few are
• 34:04
  Speaker 3: not working in twenty twenty. Five and there's a lot
• 34:08
  Speaker 3: also changing or on the cusp of, changing when it
• 34:10
  Speaker 3: comes to tax, policy employment to the federal, level and
• 34:14
  Speaker 3: just what could be next when it comes to, hey
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• 34:22
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• 34:28
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  Speaker 1: One the proceeding was paid for By Armstrong Advisory, group
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  Speaker 1: a registered investment. Advisor nothing in the ad or in
• 35:24
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  Speaker 1: consult your own financial tax into state planning advisors before
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• 35:32
  Speaker 1: investment advisory.
• 35:33
  Speaker 2: Services Lulu lemon they missed their outlook and expect their
• 35:38
  Speaker 2: sales growth to slow this. Year they're expecting their sales
• 35:42
  Speaker 2: derice five to seven percent in twenty twenty, five down
• 35:44
  Speaker 2: from ten percent growth last, year and as a, result
• 35:48
  Speaker 2: the stock is currently down about fifteen percent in trading.
• 35:52
  Speaker 2: Today what makes this interesting to me is we've been
• 35:55
  Speaker 2: talking a lot about the kind of this bifurcated economy where,
• 35:58
  Speaker 2: hey the high end consumer hasn't really stopped, spending the
• 36:02
  Speaker 2: low end consumer is feeling, stressed, stretched and is you,
• 36:06
  Speaker 2: know really you, know kind of tapped out at this.
• 36:08
  Speaker 2: Point And lululemon their stuff is not only not, cheap
• 36:13
  Speaker 2: it is very. Expensive it Is and this to me
• 36:17
  Speaker 2: raises an interesting question because, it's, hey is this an
• 36:21
  Speaker 2: execution issue With Lulu? Lemon or is, this you, know
• 36:26
  Speaker 2: one of those signs that the top end consumer may
• 36:28
  Speaker 2: be pulling back to this. POINT i think it probably
• 36:30
  Speaker 2: falls closer towards the, former meaning an execution issue on their,
• 36:37
  Speaker 2: side just because we're not really seeing too much else
• 36:40
  Speaker 2: here right. Now the only other place that you're starting
• 36:43
  Speaker 2: to see this develop is with, airlines where they are
• 36:46
  Speaker 2: indicating in the last day or so now after some
• 36:50
  Speaker 2: warnings a couple of weeks, ago they're now starting to
• 36:52
  Speaker 2: pull back capacity for flights over subsequent. Quarters so they
• 36:57
  Speaker 2: are again airlines don't do that unless they say we're
• 36:59
  Speaker 2: not going to be able to fill these and so
• 37:01
  Speaker 2: you are starting to see signs from airlines that they
• 37:04
  Speaker 2: are seeing weakening. Demand so there's a few things that
• 37:07
  Speaker 2: are out there that are starting to be. Concerning on
• 37:11
  Speaker 2: the consumer spending, Side it's still not really making its
• 37:14
  Speaker 2: way into the hard economic, data but you got a
• 37:18
  Speaker 2: couple anecdotes that are piling up now for the high end,
• 37:20
  Speaker 2: consumer whereas before this was mostly relegated to lower income. Customers,
• 37:25
  Speaker 2: Yeah i'm with.
• 37:26
  Speaker 3: YOU i Think i'm much more willing to trust what
• 37:29
  Speaker 3: that could mean from an airline perspective THAN i am
• 37:31
  Speaker 3: with a fashion, brand because there is so much execution
• 37:33
  Speaker 3: risk on, fashion right.
• 37:35
  Speaker 4: That tells What lululemon.
• 37:37
  Speaker 3: Is and you, know we have seen big name fashion
• 37:40
  Speaker 3: brands have their moments and then fade into the sunset rather,
• 37:43
  Speaker 3: quickly and that could, be you, know some execution problems
• 37:47
  Speaker 3: for Lul. Lemon it could, be as you, mentioned to
• 37:49
  Speaker 3: pull back in higher end consumer.
• 37:50
  Speaker 2: Spending so you've got that going on With lululemon, here
• 37:56
  Speaker 2: and how much of their stuff costs these, days.
• 38:01
  Speaker 4: If you have to, ask you can't afford, It, chuck.
• 38:04
  Speaker 2: Honestly. Probably, right let's take a quick. Break we had
• 38:08
  Speaker 2: hour two coming, up a whole bunch more to cover
• 38:10
  Speaker 2: on The Financial exchange