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Where is Walmart raising prices? · The Financial Exchange Show

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Speaker 1: Zada and Mike Armstraw.
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Speaker 2: Alrighty, it is Chuck, Mike and Talker with you, and
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Speaker 2: we got stocks very modestly negative, very very modestly. There's
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Speaker 2: not much of anything going on today in the broad
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Speaker 2: end season at least yet, but it is options expiration day,
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Speaker 2: so you never know what you're gonna get. And we've
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Speaker 2: got the Dow Jones Industrial Average down about one hundred
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Speaker 2: and sixty points, the Standard and Poors five hundred is
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Speaker 2: down two points, and the Nasdaq is currently off about
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Speaker 2: twenty points, so anywhere from about a twentieth of a
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Speaker 2: percent down to a third of a percent. Dip happening
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Speaker 2: in markets today. Not much of a dip, more just
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Speaker 2: a ripple. At this point. We've got the ten year
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Speaker 2: treasury two point four basis points lower to four point
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Speaker 2: four to three nine percent. Mortgage News Day Ailey right
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Speaker 2: now has the national average for the thirty year fixed
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Speaker 2: rate mortgage at six point eight two percent. We have
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Speaker 2: just been stuck between six seven, five and seven for
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Speaker 2: quite some time now. It's just that there's not been
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Speaker 2: any meaningful movement in either direction. The lowest that we
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Speaker 2: got we got to six six seven on seven to
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Speaker 2: one and the highest we got was seven oh seven
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Speaker 2: on actually seven oh eight on five to twenty one.
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Speaker 2: But basically since mid February we've been about a quarter
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Speaker 2: percent range for mortgage rates. Aside from a couple of
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Speaker 2: daily outliers, uh here and there.
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Speaker 3: From what I hear, home buyers are not crazy about that.
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Speaker 2: No, they're not, they're not. They would prefer to have
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Speaker 2: rates in the twos, the Zeros.
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Speaker 3: Yeah, wasn't there somewhere, Yeah, wasn't there somewhere where in Europe?
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Speaker 3: They were offering a negative mortgage rate.
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Speaker 2: They were very briefly, but I still couldn't conceptualize how
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Speaker 2: that worked exactly. I guess if you just amortized it,
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Speaker 2: I guess you're just gonna end up paying out less
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Speaker 2: than the house is worth, correct, which what a deal?
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Speaker 1: Yeah?
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Speaker 2: I mean, hey, I'm buying this house for five hundred thousand,
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Speaker 2: I'm gonna give you a four to ninety over thirty years.
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Speaker 3: Yeah. It was a Danish bank. Uh, minus half a
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Speaker 3: percent a year was where it came out. But remember
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Speaker 3: that I don't believe that these oh no, yeah, uh
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Speaker 3: they were offering a twenty year fixed rate deal at
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Speaker 3: zero percent and a thirty year mortgage, okay, a ten
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Speaker 3: year mortgage at negative half percent, whereas twenty was at
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Speaker 3: zero and thirty was a half ten year at negative
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Speaker 3: point five. Ten year negative point five, Okay, I just
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Speaker 3: that stage. I just take the thirty year at half percent.
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Speaker 2: I just tried to plug it into my amortization calculator
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Speaker 2: and it just says, please provide a positive interest value.
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Speaker 2: So I don't even know how it would work from
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Speaker 2: an amortization like schedule. But I mean, you just think
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Speaker 2: about this. I'd like to be a cash buyer, sir. Sorry,
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Speaker 2: we got someone who's gonna take the mortgage negative point five.
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Speaker 2: They're actually more stable because they're gonna pay less over time. Yeah, Like,
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Speaker 2: are you actually at a disadvantage being a cash buyer
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Speaker 2: in that scenario?
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Speaker 3: I don't know.
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Speaker 2: Done of it made no sense.
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Speaker 3: What year was this?
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Speaker 2: This was in. It's gotta be twenty twenty or twenty one,
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Speaker 2: early twenty one.
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Speaker 3: Yeah, no, I think it was twenty nineteen. I don't know.
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Speaker 2: Anyways, we digress. We got some economic data this morning.
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Speaker 2: Building permits came in flat month over month, housing starts
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Speaker 2: bumped up a little bit, so some good news on
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Speaker 2: the start side of things we still are seeing in
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Speaker 2: terms of overall construction numbers, a slowdown that's happening there
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Speaker 2: just as units that were started in the last couple
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Speaker 2: of years are finished. The other thing that I will
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Speaker 2: say the number of single family completed units new ones
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Speaker 2: that are still outstanding that are for sale. That number
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Speaker 2: continues to grow when we look at it, and this
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Speaker 2: is something that is kind of interesting at this point,
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Speaker 2: just because you continue to see these numbers creeping up
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Speaker 2: and they're now at a place that we haven't seen
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Speaker 2: in quite a while. If you look at completions for
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Speaker 2: sale right now, you're seeing nationally about one hundred and
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Speaker 2: nineteen thousand units on the market that are listed for sale,
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Speaker 2: like recently completed units that are for sale. It's the
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Speaker 2: highest since two thousand and nine. So to tell you
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Speaker 2: how slow the new home market has gotten. The next
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Speaker 2: closes that we had, you know, pre pandemic, we got
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Speaker 2: to like seventy five thousand, So we're running like forty
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Speaker 2: percent above pre pandemic levels of new home inventory out
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Speaker 2: there and continuing to grow as well. The peak that
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Speaker 2: we ever saw, by the way, on this number was
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Speaker 2: just shy. Have two hundred thousand units back in seven
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Speaker 2: oh eight, right before the world blew up. I'm not
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Speaker 2: suggesting that's where we're heading, because there's nothing out there
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Speaker 2: that suggests that, quite honestly. But what I am saying
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Speaker 2: is there's gonna be more downward pressure on housing on
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Speaker 2: a national level. Obviously, all real estate is local. So
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Speaker 2: if you talk to anyone who lives, you know, inside
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Speaker 2: of the ninety five loop in Massachusetts, where the median
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Speaker 2: price of a home just crossed a million dollars for
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Speaker 2: the first time, they'll tell you what are you talking about.
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Speaker 2: Things are not, you know, loose in the housing market
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Speaker 2: at all. If you go down to Cape Coral, Florida,
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Speaker 2: they'll be like, please take my house so I can
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Speaker 2: stop paying the taxes and insurance.
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Speaker 3: Insurance, particularly check. I got bad news for you me.
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Speaker 3: I can't get over this negative interest thing. I don't
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Speaker 3: think the term negative interest rate is actually a description
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Speaker 3: of what it means. I think you have to call
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Speaker 3: it like a subsidy. Well, it depends. Interest means somebody
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Speaker 3: is earning something the bank in the case of a mortgage,
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Speaker 3: or you in the case case positive This is more
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Speaker 3: like a a charge. I don't know, it's a discount. No,
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Speaker 3: I don't have a word to describe it. I suppose,
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Speaker 3: because if you think about the other side of it, right,
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Speaker 3: if you're deposit your funds in a bank with a
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Speaker 3: negative interest rate, you're basically paying them a storage fee
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Speaker 3: for your money.
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Speaker 2: I'm gonna try another amortization calculator. No, it won't even
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Speaker 2: let me put in a minus. Yeah.
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Speaker 3: No, interest is not the term to describe negative interest rates.
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Speaker 3: We need to come up with a nude word. I'll
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Speaker 3: work on it.
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Speaker 2: Disinterest. Yeah, I'll go with disinterest. We'll stick with that.
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Speaker 2: Let's talk a little bit about American Express earnings. I
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Speaker 2: believe that's where we're going. Sure, yes, so AMX. If
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Speaker 2: you're not familiar with them, they are a payment network.
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Speaker 2: They I know everyone thinks of like, oh, I'm gonna
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Speaker 2: put it on my AMEX card, like they're lending you
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Speaker 2: the money. They're not some bank is somewhere. Uh. And
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Speaker 2: so when you look at it, the big thing that
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Speaker 2: AMEX has is just a treasure trove of data, specifically
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Speaker 2: on what high end customers are doing. Just because they're
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Speaker 2: their cards tend to target higher income markets. And so
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Speaker 2: what we are seeing from AMEX is that in those
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Speaker 2: high income markets. There are no signs of consumer weakness.
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Speaker 2: The only thing they're saying is that people are spending
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Speaker 2: less on travel. Okay, great, we've known that for the
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Speaker 2: last four months. You're not telling us anything new. Everything
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Speaker 2: else that we're seeing from them is good volume, you know,
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Speaker 2: stronger than a expected. They do have, you know, some
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Speaker 2: expenses that are growing, so you know, you look at
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Speaker 2: that and it is something where you know, they've got
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Speaker 2: some additional costs that they're dealing with. But ultimately the
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Speaker 2: company is another one that just continues to click on
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Speaker 2: all cylinders. The stocks down three percent today, mostly because,
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Speaker 2: just like in the case of Netflix, the thing had rallied,
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Speaker 2: you know, thirty forty percent off its bottom. And so
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Speaker 2: I look at this and while the stock is down today,
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Speaker 2: there are no signs of weakness in the business. And rather,
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Speaker 2: I think what we're seeing is just hey, as we
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Speaker 2: get to second quarter earnings, the earning story is just
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Speaker 2: kind of pulling some companies back down to earth for
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Speaker 2: a market that admittedly was starting to look a little
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Speaker 2: bit overheated.
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Speaker 3: Here, Yeah, I don't think this really contradicts much of
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Speaker 3: what we've heard, but I put it as another kind
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Speaker 3: of feather in the cap of the argument that if
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Speaker 3: tariffs don't blow up the world, we are likely to
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Speaker 3: see more of this high income, high net worth spending
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Speaker 3: led economy. It's what we were seeing for a good
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Speaker 3: portion of the last couple of years. We've cited the
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Speaker 3: statistic where what was it, half of total consumer spending
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Speaker 3: was coming from the top ten percent of income earners.
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Speaker 3: They seem, you know, kind of primed and ready to
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Speaker 3: continue that type of spending so long as that tariff
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Speaker 3: threat doesn't follow through.
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Speaker 2: Is and I guess where I get to then, is
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Speaker 2: given the level of wealth disparity in the United States
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Speaker 2: and level of income disparity, which admittedly has been narrowing
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Speaker 2: a little bit the last couple of years now with
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Speaker 2: low unemployment, I guess the question that I raise is,
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Speaker 2: can you have any kind of deep recession if that
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Speaker 2: upper income household is still spending money. It's hard to write.
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Speaker 2: I'm not saying it's impossible, but it's it's harder to.
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Speaker 3: It seems it seems like it. And then we get
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Speaker 3: completely surprised by something.
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Speaker 2: Of course, yeah, it.
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Speaker 3: Can't possibly have a recession. Then tomorrow, I don't know,
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Speaker 3: something happens this.
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Speaker 2: I guess what I'm saying. Yeah, yeah, look, everyone feels
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Speaker 2: invincible right before they fall off the cliff. Yeah, you know,
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Speaker 2: And I'm not saying that that's where we're going. But
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Speaker 2: what is interesting to me is, look, you had two
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Speaker 2: big bell Weather companies report earnings, AMEX and Netflix. And
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Speaker 2: the piece that is interesting to me. Netflix right now
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Speaker 2: is down five percent. Amx is down three percent. That
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Speaker 2: tells you on good earning. So it does tell you
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Speaker 2: a little bit about what is needed to drive this
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Speaker 2: market forward. Good earnings are not enough. You got to
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Speaker 2: have knock the cover off the ball earnings. That's where
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Speaker 2: you gotta be. Or a good macro story, yeah, or
11:56
Speaker 2: or you got to be somehow involved in artificial intelligence.
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Speaker 2: Even though none of those companies are reported yet, right,
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Speaker 2: but yeah, Well, we'll see what happens with Google next week.
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Speaker 2: They're the first of the big AI companies that's going
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Speaker 2: to be reporting. I say big AI, I mean they're
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Speaker 2: at least involved in that space. I'll be interested to
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Speaker 2: see kind of what goes on there, just in terms
12:16
Speaker 2: of what they report and how they trade. Just because
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Speaker 2: with Netflix ynamics, good earnings did not equate to good
12:21
Speaker 2: earnings day performance quick break. Here we have trivia. Next.
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Speaker 4: All right, let's do a little bit of trivia here
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Speaker 4: on the Financial Exchange and last night, in case you missed,
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Speaker 4: a news broke that CBS will be canceling The Late
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Speaker 4: So chrivir question today, who is the host of CBS's
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14:25
Speaker 2: Mike, let's talk a little bit about uh Walmart. There
14:28
Speaker 2: is a piece on CNBC. So here's where Walmart prices
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Speaker 2: are changing and staying the same as Trump tariffs hit.
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Speaker 2: And basically what they did is they tracked a bunch
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Speaker 2: of different products across different categories and they said, okay,
14:45
Speaker 2: like where have we seen changes? And so just as
14:48
Speaker 2: an example, like they've they tracked these from May twentieth
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Speaker 2: through July seventh, and what you see on on some
14:57
Speaker 2: of the ones that are are listed here. So they
14:59
Speaker 2: had a twelve peace pots and pans set from Beautiful
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Speaker 2: by Drew Barrymore. Indeed, and on May twentieth it was
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Speaker 2: listed for ninety nine dollars. On July seven it was
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Speaker 2: one hundred and forty nine, so that's a fifty one
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Speaker 2: percent change. They had a ceramic non stick twelve inch
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Speaker 2: fry pan, also from the same collection. Why, I don't know,
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Speaker 2: up twenty eight percent over the same time period, went
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Speaker 2: from twenty five dollars to thirty two. The folder's Classic
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Speaker 2: Roast coffee that went from sixteen forty three to nineteen
15:31
Speaker 2: twenty four and seventeen percent increase. They had a gallon
15:33
Speaker 2: of milk that went up by six dollars. They had
15:37
Speaker 2: not six dollars six six percent six percent. They had
15:42
Speaker 2: men's genes that went up by four percent. On the
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Speaker 2: other hand, swim Barbie went from seven ninety seven to
15:48
Speaker 2: five ninety seven to twenty five percent savings. A dozen
15:51
Speaker 2: eggs went from three forty seven to two seventy two,
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Speaker 2: a twenty two percent savings.
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Speaker 3: Can we call this analysis for what it is?
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Speaker 2: What? Not helpful?
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Speaker 3: What does this tell us about anything?
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Speaker 2: Well, it does tell us that prices are changing. Sure,
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Speaker 2: do you think it's useless? Like completely useless? I think
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Speaker 2: it's kind of interesting. I do I discuss, discuss, enlighten me.
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Speaker 3: So one, you have no control group, right, so you
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Speaker 3: can't tell me. For example, how did the same bucket
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Speaker 3: of prices change in May to July of twenty twenty four?
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Speaker 3: Could this be seasonal price changes that Walmart always does.
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Speaker 2: I don't know. I have no idea.
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Speaker 3: Also, a group of fifty products from one single retailer
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Speaker 3: on an arbitrary set of days, is there anything unique
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Speaker 3: about May twentieth and July seventh?
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Speaker 2: The tariffs had not yet been in place long enough
16:48
Speaker 2: on May twentieth. On July seventh, they might have been Yeah,
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Speaker 2: I guess you know. It's just it seems rather unscientific
16:56
Speaker 2: and I don't know.
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Speaker 3: For instance, again, we only have a highlight here of
17:03
Speaker 3: the prices that did change. They didn't highlight the ones
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Speaker 3: that stayed the same.
17:06
Speaker 2: Correct, But why are.
17:08
Speaker 3: You going through a Walmart and selecting three different varieties
17:12
Speaker 3: of milk and five different variety to coffee? So I
17:15
Speaker 3: just I don't think it was a useful study.
17:17
Speaker 2: Yeah, that I did find problematic because so they listed like,
17:21
Speaker 2: you know, twenty products or so maybe fifteen products where
17:23
Speaker 2: the price is changed, but they were all in like
17:25
Speaker 2: four categories, and so that was one thing that I
17:28
Speaker 2: had noted. I'm like, okay, like, you got to tell
17:31
Speaker 2: me more. So I don't think it's like you can't
17:35
Speaker 2: calculate the inflation rate from this. Obviously no, and you'd
17:40
Speaker 2: like a broader set of prices, but I think it's
17:43
Speaker 2: at least indicative of Okay, there's clearly some price changes
17:46
Speaker 2: that are happening. And if we're being one hundred percent honest,
17:51
Speaker 2: like twenty to thirty percent upward shifts and prices aren't
17:55
Speaker 2: things that you normally see. Sure, yeah, when's the last
18:01
Speaker 2: time you looked at a product and it was just boom,
18:05
Speaker 2: twenty percent more expensive? Aside from like food and fuel,
18:07
Speaker 2: which obviously plan.
18:09
Speaker 3: Plane tickets, that's the only other way that's not a good,
18:12
Speaker 3: that's not a product. Sure, Like I'm talking like, when's
18:14
Speaker 3: the last time you looked at like you walked into
18:16
Speaker 3: a store and you're like, man, like, how did how
18:19
Speaker 3: did that go from twenty dollars to twenty five? You're right, yeap,
18:22
Speaker 3: that's fair, you know, so I do think it's at
18:25
Speaker 3: least indicative of something, just because you don't normally see that.
18:31
Speaker 3: Like even in you go back to twenty two when
18:33
Speaker 3: when prices were going up, you know, rapidly, and even
18:37
Speaker 3: there it was like, okay, it was in like five
18:39
Speaker 3: percent increments.
18:40
Speaker 2: That you would typically see it. It was really uncomfortable
18:43
Speaker 2: because you saw several of those five percent increments, you know,
18:45
Speaker 2: as you went through the year. But like it wasn't
18:49
Speaker 2: just hey, you know what, your car is twenty percent
18:52
Speaker 2: more expense what? Yeah, cars a bad example because you
18:55
Speaker 2: only buy you don't buy those that off I guess.
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Speaker 3: My problem with this is that I can't glean anything
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Speaker 3: about the larger suite of products that Americans buy. I
19:05
Speaker 3: can definitively say from this study that the dozen or
19:08
Speaker 3: so products that CNBC chose to track have changed over
19:13
Speaker 3: the course of a few months, but I have no
19:16
Speaker 3: evidence that that is happening anywhere else or with other
19:19
Speaker 3: types of products.
19:20
Speaker 2: Yeah, so I think you take it for what it's worth,
19:23
Speaker 2: which is okay, it's an interesting anecdote. It doesn't actually
19:27
Speaker 2: give you any insight as to what's happening in the
19:30
Speaker 2: aggregated quick break here when we come back. We get
19:33
Speaker 2: the trivia answer in Wall Street Watch.
19:40
Speaker 5: Bringing the latest financial news straight to your radio. Every day.
19:45
Speaker 5: It's the Financial Exchange on the Financial Exchange Radio Network.
19:51
Speaker 5: Time now for Wall Street Watch.
19:53
Speaker 1: A complete look at what's moving market so far today
19:56
Speaker 1: right here on the Financial Exchange Radio Network.
19:59
Speaker 4: Mar gets mostly quiet as we put a bow on
20:02
Speaker 4: this week as traders sift through a new batch of
20:04
Speaker 4: economic data points in addition to more second quarter earnings.
20:09
Speaker 4: Right now, the Dow is off by three tenths of
20:12
Speaker 4: one percent, or one hundred and thirty five points, SMP
20:15
Speaker 4: five hundred is up one point, and the Nasdaq is
20:18
Speaker 4: up twelve points higher mostly flat as well. Russell two
20:21
Speaker 4: thousand is only off by four points. Ten year Treasure
20:24
Speaker 4: reeled down four basis points at four point four to
20:27
Speaker 4: two three percent, and crude oil is off modestly, trading
20:31
Speaker 4: at sixty seven dollars in thirty nine cents a barrel.
20:34
Speaker 4: So yes, mostly quiet out there, to say, the least
20:37
Speaker 4: significant news out of the energy sector this morning, after
20:40
Speaker 4: an arbitration panel cleared the way for Chevron to close
20:43
Speaker 4: its fifty three billion dollar acquisition of Hess after Exon
20:47
Speaker 4: Mobile tried to pre empt the deal. Chevron is up
20:50
Speaker 4: over half a percent. Meanwhile, Netflix hiked its annual revenue
20:54
Speaker 4: in operating margin forecasts after posting better than expected second
20:58
Speaker 4: quarter results. The streaming and said member editions, price increases
21:02
Speaker 4: and its growing ad business drove revenue in the previous quarter. However,
21:07
Speaker 4: that stock is down by about five percent. Elsewhere, American
21:11
Speaker 4: Express report is stronger than expected second quarter revenue, driven
21:15
Speaker 4: by a twenty percent jump in card fees. The company's
21:18
Speaker 4: chief executive said it saw record spending from card members
21:21
Speaker 4: during the quarter with strong demand for its premium products.
21:25
Speaker 4: AMX is down three percent. According to the Wall Street Journal,
21:29
Speaker 4: railroad operator Union Pacific is in talks to acquire Norfolks.
21:33
Speaker 4: Southern Norfolk is up over two percent, while Union Pacific
21:37
Speaker 4: stock is down about one and a half percent and
21:40
Speaker 4: shares in three M falling four percent so far today.
21:43
Speaker 4: Despite the industrial conglomerate raising its annual earnings outlook after
21:47
Speaker 4: posting quarterly results that beat forecasts, I'm Tucker Silva, and
21:51
Speaker 4: that is Wall Street Watch.
21:53
Speaker 2: Mike. We got a piece here from Bloomberget's titled Carmaker's
21:57
Speaker 2: face uncertainty as tariffs and earnings collide. What how do
22:02
Speaker 2: two intangible objects collide?
22:06
Speaker 3: Seems like a question for a quantum physicist.
22:09
Speaker 2: I don't know.
22:10
Speaker 3: I do think, well, two things. I think One, it
22:14
Speaker 3: sure does suck to be an automaker.
22:16
Speaker 2: What a bad I mean, it always does, even in
22:18
Speaker 2: the places, even in the best of times. It's like, hey,
22:21
Speaker 2: we had a good quarter. Hope it doesn't like fall
22:24
Speaker 2: apart next week.
22:25
Speaker 3: So a few things that are going to particularly be
22:29
Speaker 3: difficult for European and American automakers as far as I
22:32
Speaker 3: can tell. One, good luck competing in China or with
22:36
Speaker 3: Chinese made vehicles that are sold anywhere.
22:38
Speaker 2: Else in the world.
22:40
Speaker 3: Good luck, it's gonna be really rough because they're getting
22:43
Speaker 3: pretty darn good at it, and by all accounts, they're
22:45
Speaker 3: making them cheaper and better than a lot of American
22:47
Speaker 3: and European automakers.
22:49
Speaker 2: Not always better, but sometimes for a long second. Yeah,
22:52
Speaker 2: because on the cheaper point, if I receive the amount
22:55
Speaker 2: of money in state subsidies that Chinese car makers, sure
22:59
Speaker 2: I could make a cheap car. I could make a
23:01
Speaker 2: car for ten thousand dollars. That's pretty good. Also, yep,
23:04
Speaker 2: because these are not companies that are designed to make profit. Now,
23:08
Speaker 2: these are companies that are designed to put other companies
23:11
Speaker 2: out of business, using states, using state subsidies. Two.
23:15
Speaker 3: I don't know how much they have invested, but it
23:17
Speaker 3: seems to me that both European and American automakers have
23:20
Speaker 3: invested heavily in electric vehicle production, whether it be the
23:26
Speaker 3: battery production capabilities or just the the manufacturing process to
23:32
Speaker 3: make these cars. And there does not seem to be
23:35
Speaker 3: as much demand for at least here in the States,
23:37
Speaker 3: as everybody was thinking. So that's a big mismatch that
23:42
Speaker 3: is going to take a little while to I think
23:43
Speaker 3: figure out unwind. So those two factors are going to
23:47
Speaker 3: be a real challenge, not for just the next quarter
23:51
Speaker 3: or two. This is a several year problem that these
23:55
Speaker 3: automakers I think are going to need to navigate. And
23:57
Speaker 3: I'm not going to.
23:58
Speaker 2: Ower than that. I mean, you talk about like the
24:01
Speaker 2: capex that these companies are spent, you know, trying to
24:05
Speaker 2: build out EV production capacity that's not needed. Yeah, it's
24:08
Speaker 2: gonna take them a decade to get out of this.
24:11
Speaker 2: It's gonna be a long slow path. And this is
24:14
Speaker 2: before you even get into the tariff piece.
24:16
Speaker 3: Right right, Yeah, all of those problems have nothing to
24:18
Speaker 3: do with their actual inability to source material, build cars,
24:24
Speaker 3: sell them into different markets because the threats of tariffs.
24:27
Speaker 3: So good luck.
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25:27
Speaker 2: Mike there's a great piece here from Bloomberg on GE
25:33
Speaker 2: Aerospace and the business that they have. It's titled GE
25:38
Speaker 2: Aerospace Investors don't realize they have a cash machine. I'd
25:42
Speaker 2: love to have a cash machine. It sounds they'll be sweet,
25:45
Speaker 2: it sounds nice money printer go burr. Right. So I
25:52
Speaker 2: just need to read this part because I just it's
25:56
Speaker 2: not unexpected, but it's kind of wild just to see
25:58
Speaker 2: it described this way. Uh again, it's it's GE has
26:04
Speaker 2: become the supplier aircraft engines. Okay, I get that three
26:08
Speaker 2: fourths of commercial flights now powered by GE engines with
26:10
Speaker 2: forty nine thousand service and that number is growing. Sounds good.
26:16
Speaker 2: This is important because GE earns much more money from
26:20
Speaker 2: servicing engines than it does from selling them. That is
26:23
Speaker 2: the most I ever heard. It's not just the most
26:26
Speaker 2: Ge thing that you've ever heard, Mike. This is the
26:29
Speaker 2: This is the business model of auto dealers. This is
26:32
Speaker 2: the business model of HP inkjet printers. Like this is
26:37
Speaker 2: this is just like you think about it, And what's
26:41
Speaker 2: kind of wild to me is this has kind of
26:42
Speaker 2: gone under the radar, pun intended, just because like who
26:47
Speaker 2: actually pays attention, Like do any of US interact with
26:50
Speaker 2: jet engines on a daily basis. Yeh no. But obviously
26:55
Speaker 2: if you are you know, the United CEO or the
26:57
Speaker 2: Delta CEO, you realize it's okay, like this is a thing,
27:02
Speaker 2: but you can't really do anything about it because there
27:04
Speaker 2: are pretty much two engine makers in the.
27:07
Speaker 3: World Rolls Royce, ge that's it.
27:10
Speaker 2: And no one else can really get into this business because, Mike,
27:15
Speaker 2: if you and I tried to build a geared turbofan engine,
27:20
Speaker 2: no one would fly on our planes. Yeah.
27:23
Speaker 3: I mean, it's not dissimilar from the Boeing airbus conundrum.
27:26
Speaker 3: There rest nobody that can enter that market, and the
27:30
Speaker 3: same goes for this, which you know, good on GE
27:34
Speaker 3: for finally, you know, taking twenty five years to identify
27:36
Speaker 3: that they had a cash machine and splitting it out.
27:40
Speaker 3: I don't know what the rest of the other two
27:41
Speaker 3: businesses are doing that they split off, but this one, yeah,
27:45
Speaker 3: just seems like a well oiled and well run machine
27:47
Speaker 3: that doesn't need to be dragged down by long term
27:49
Speaker 3: care insurance policies.
27:50
Speaker 2: Multiple puns intended, and so I think the problem here
27:54
Speaker 2: that I see is, Look, it's I'm not saying that
27:58
Speaker 2: you want companies like to go out of business or
28:01
Speaker 2: anything like that. But what is the path for ge
28:06
Speaker 2: aerospace to have any competition that starts to eat into margins.
28:11
Speaker 3: China's got to basically decide that they want to do
28:14
Speaker 3: this and they want to subsidize it. That's it.
28:15
Speaker 2: They can't do it. I'll I'll be one hundred percent honest.
28:18
Speaker 2: They can't do it. They've tried. They've been trying for
28:22
Speaker 2: the last two decades to build commercial airliners. They've built
28:25
Speaker 2: five of them. Yeah, and like it's not models, no,
28:30
Speaker 2: like literally five, it's it's the same reason, like it's
28:35
Speaker 2: it's really hard to build reliable, efficient, safe, and cost
28:42
Speaker 2: effective commercial airliners. It's really hard to do. It's the
28:46
Speaker 2: it's the exact same thing as well, it's not the
28:49
Speaker 2: exact same because if it were, then it would just
28:51
Speaker 2: be a commercial airliner. It's the same problem facing China
28:54
Speaker 2: with aircraft carriers. They really struggle to build them. And
28:58
Speaker 2: this despite China having all kinds of shipbuilding prowess, they
29:03
Speaker 2: really struggle with large nuclear powered aircraft carriers. It's not
29:06
Speaker 2: something they've been able to really crack the code on
29:10
Speaker 2: to this point. So I don't know, look in a
29:13
Speaker 2: perfect world. I just it's not that I want to
29:16
Speaker 2: see Geero Space do badly, but I think we all
29:20
Speaker 2: benefit from more competition. It's been like kind of my
29:22
Speaker 2: guiding principle on a lot of this stuff, which is,
29:25
Speaker 2: if you have more competition, you get better outcomes for
29:29
Speaker 2: the population as a whole, even if individual companies may
29:32
Speaker 2: struggle more, because that struggle produces better outcomes as companies
29:36
Speaker 2: have to actually compete. And whenever I hear about a
29:39
Speaker 2: company that makes most of its revenue servicing the products
29:44
Speaker 2: that it makes, doesn't it make you feel kind of icky?
29:48
Speaker 3: Oh yeah, yeah, yeah, I mean, but only also because
29:52
Speaker 3: it's been joked about a whole lot, Like there were
29:55
Speaker 3: jokes on NBC programs in the day. Thirty Rock comes
29:58
Speaker 3: to mind, in particular, where the whole objective of the
30:01
Speaker 3: company was to build a bad microwave that frequently broke
30:05
Speaker 3: down so that they could charge a bunch of money
30:07
Speaker 3: for either new microwaves or servicing the microwaves, and like.
30:11
Speaker 2: That's they ended up building this. This is not that
30:13
Speaker 2: because ge obviously makes good engines. The reason why you
30:16
Speaker 2: know two why three quarters of planes fly them is
30:20
Speaker 2: because they're reliable, they're safe and they're efficient, so full
30:23
Speaker 2: stop like ge Aerospace makes good products. But the fact
30:29
Speaker 2: that so much of the revenue comes from servicing suggests
30:34
Speaker 2: that there's not enough competition in the business. True. Yep,
30:38
Speaker 2: let's take a quick break here. When we return, let's
30:41
Speaker 2: do a little bit of stack roulette.
30:43
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31:18
Speaker 2: The weekend.
31:22
Speaker 4: Now, it's a great time to register for the DAV
31:25
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31:29
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31:45
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31:50
Speaker 4: Sign up now at DAV five k dot Boston. Earlier
31:54
Speaker 4: this hour, we asked you the trivia question, who is
31:57
Speaker 4: the host of CBS's late night time show from nineteen
32:01
Speaker 4: eighty nine to nineteen ninety That would be Pat Sajack
32:05
Speaker 4: Winter Today of the Financial Exchine Show T shirt was
32:07
Speaker 4: Norman from Portland, Maine. Congrats Norm, and we played trivia
32:12
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32:15
Speaker 4: rules at Financial Exchine Show dot com.
32:18
Speaker 2: What do you got for Stack? Rule at Mike Counterfeit.
32:21
Speaker 3: Social media shopping so might be foreign concept to some
32:25
Speaker 3: that are listening, but lots of social media platforms, including Facebook,
32:28
Speaker 3: now offer you the ability to watch a video or
32:32
Speaker 3: someone pushing a product and quickly make the purchase through
32:36
Speaker 3: the app in many cases and buy all sorts of goods.
32:39
Speaker 3: This story covers a number of subjects, but in particular
32:43
Speaker 3: a Maryland woman, a thirty year old Maryland woman who
32:46
Speaker 3: ordered some watches from Etsy last year to give her
32:49
Speaker 3: fiance father and father in law as gifts for their wedding.
32:53
Speaker 3: They looked like very nice watches. She spent six hundred
32:57
Speaker 3: and fifty dollars on these watches. They were seized by
33:00
Speaker 3: customs as designer knockoffs between July and August, and then
33:05
Speaker 3: it got worse for this woman, who was already out
33:07
Speaker 3: six hundred and fifty dollars. In September, the government revoked
33:10
Speaker 3: her global entry program because she had violated customs violations
33:14
Speaker 3: unknowingly by ordering these watches. Now, I would hope that
33:18
Speaker 3: there's a little bit more to it, and it was
33:20
Speaker 3: pretty obvious that these were, you know, knockoff watches that
33:23
Speaker 3: she was ordering.
33:24
Speaker 2: I don't know the details of it.
33:25
Speaker 3: The article doesn't get into it, but it speaks a
33:28
Speaker 3: lot about the number of knockoffs that are out there
33:31
Speaker 3: and the frankly inadequate laws that we have in place
33:34
Speaker 3: to go after any of this stuff. The brands themselves
33:38
Speaker 3: are in a really big disadvantage to go after what
33:42
Speaker 3: are probably mostly Chinese manufactured knockoffs of their products. There
33:46
Speaker 3: are no laws on the books that can hold, for instance,
33:49
Speaker 3: Etsy or Facebook liable for allowing these things on their platform,
33:53
Speaker 3: and so you're left in a position where you know,
33:56
Speaker 3: occasionally Nike you'll try and you know, find the knockoffs
34:00
Speaker 3: them off the website to the supplier. But it's this
34:02
Speaker 3: giant game of whack a mole where ultimately the consumer
34:07
Speaker 3: is responsible if they buy the thing that's a knockoff,
34:10
Speaker 3: and none of the big companies that actually allow for
34:14
Speaker 3: it to be sold to American consumers have any sort
34:16
Speaker 3: of liability, Which is kind of a story that describes
34:18
Speaker 3: the Internet in general, which.
34:20
Speaker 2: Is a problem.
34:21
Speaker 3: Seems like it to me the most horrifying piece in
34:24
Speaker 3: here that does not have to do with individual consumers.
34:26
Speaker 3: Though counterfeit airplane parts and airbags can have even more
34:31
Speaker 3: dire consequences. Obviously, fake parts have been linked to fatal
34:34
Speaker 3: car crashes in the past, and we're found in more
34:35
Speaker 3: than one hundred engines after an investigation in twenty twenty three.
34:40
Speaker 3: That's terrifying. Yeah, not ideal, Yeah, that I mean, you know,
34:45
Speaker 3: silly watches that were knockoffs. You know, I've been to
34:48
Speaker 3: New York City. I bought a you know, fake Rolex
34:51
Speaker 3: when I was in seventh grade or something like that
34:53
Speaker 3: that broke like two days later. When you talk about
34:56
Speaker 3: things that are going into vehicles that could somehow be knockoffs.
34:59
Speaker 3: That is quite frightening. Honestly, Uh, I.
35:02
Speaker 2: Have three stories that I want to get to, so
35:04
Speaker 2: we get one minute for each.
35:05
Speaker 3: Sounds good. I'm gonna take a nap uh first the French,
35:10
Speaker 3: I I love this story. Here, Uh, work more to
35:13
Speaker 3: earn less France's new Revolution. There's been only one topic
35:17
Speaker 3: of conversation in France this week, Prime Minister by Ru's
35:20
Speaker 3: proposal to scrap two of three public holidays in the
35:22
Speaker 3: month of May to contain the spiraling budget deficit. In
35:25
Speaker 3: the land of the thirty five hour workweek, this is
35:27
Speaker 3: tantamount to treason. Most of the public seems to hate it.
35:30
Speaker 2: Unions have called it a declaration of war, and the
35:32
Speaker 2: fall right far right has called it a provocation. I
35:36
Speaker 2: just I love this. I like French. Oh, only in
35:39
Speaker 2: France do you get well, we're gonna reduce number of
35:41
Speaker 2: holidays by two per year and you get union this
35:45
Speaker 2: is a declaration of war. Like it's it's it's just
35:48
Speaker 2: it's fantastic. Now, look, I think there's probably, you know,
35:54
Speaker 2: some some ground that we can find where it's like, hey,
35:57
Speaker 2: maybe we shouldn't be sending emails to each other for
35:59
Speaker 2: war at like nine pm on a Friday, and it's
36:03
Speaker 2: a declaration of war to have two fewer holidays a year.
36:06
Speaker 2: There's probably some middle ground between those things, but I
36:10
Speaker 2: always like to know kind of where where you can
36:12
Speaker 2: go like as far as possible on Hey, I want
36:16
Speaker 2: to work, but not that much, but still pay me
36:19
Speaker 2: next story, next story. The economics of do it yourself.
36:23
Speaker 2: There's like a whole, like eight hundred word piece in
36:25
Speaker 2: the Wall Street Journal that talks about like, hey, you
36:27
Speaker 2: only have so much time in the day. Occasionally have
36:29
Speaker 2: to pay people for other stuff. Here's the real simple thing,
36:32
Speaker 2: you do only have so much time in the day.
36:34
Speaker 2: If you're gonna pay someone to do something for you,
36:36
Speaker 2: it's gonna cost you three times what it costs to
36:38
Speaker 2: do it yourself. And you have to judge where you
36:40
Speaker 2: have either the talent lack of talent and time to
36:44
Speaker 2: do the things that you want to do because you
36:45
Speaker 2: can't do everything, or can you just YouTube it? Well, yeah,
36:48
Speaker 2: but it still is something where Look I can YouTube
36:51
Speaker 2: some things on plumbing. Done it when it gets past
36:54
Speaker 2: when it gets past installing a toilet, Yeah, I'm not
36:56
Speaker 2: doing it because if it goes wrong. The cost is
36:59
Speaker 2: gonna be way more than what I pay someone to
37:01
Speaker 2: do it. On the other hand, I'll paint anything, I'll
37:04
Speaker 2: do anything outside because if I mess it up, whatever
37:07
Speaker 2: I can try again. It's still cheaper than as final story.
37:11
Speaker 2: Final story. Uh peace in Fox Business Report rates ranks
37:15
Speaker 2: ten top top ten unhealthy fast food chains in the US.
37:18
Speaker 2: Now I know where I'm going for lunch the next
37:20
Speaker 2: ten days. Number one Wendy's. Number two Sonic. Gotta say,
37:26
Speaker 2: underwhelmed by Sonic the one time I went there. Number
37:29
Speaker 2: three Taco Bell always a hit. Dairy Queen been a while,
37:34
Speaker 2: been a while, KFC fine, you know, not the best
37:40
Speaker 2: budget fried chicken quite honestly, if you want my pick
37:44
Speaker 2: in the fried chicken space either, you've ever been to
37:46
Speaker 2: a Krispy Crunchy Chicken? Nice Krispy Crunchy. They're only co
37:50
Speaker 2: located in gas stations and other similar establishments, but it
37:54
Speaker 2: is fantastic. Quizno's didn't even know this still existed. They
37:59
Speaker 2: went bank. I guess someone must have bought the brand.
38:02
Speaker 2: McDonald's always a favorite smash burger. Don't know if I've
38:05
Speaker 2: ever been, to be honest, Little Caesars pass Chick fil
38:10
Speaker 2: A Sign me up. We close the day with markets
38:13
Speaker 2: basically flat, the dows off one hundred and fifty one points,
38:16
Speaker 2: the S and P is up to NASDAC up twenty one.
38:19
Speaker 2: Done for the day, Done for the week. Big earnings
38:21
Speaker 2: week on tap next week. We will see you that