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Markets Rebound, AI CapEx Reality Sets In & The Real Reason Cars Are So Expensive · The Financial Exchange Show

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Speaker 1: a donation today. This is the Financial Exchange with Chuck
1:05
Speaker 1: Zada and Mike Armstrong.
1:11
Speaker 2: Chuck, Mike and Tucker with you here. We've got a
1:14
Speaker 2: broad based rally taking place in markets, reversing much of
1:19
Speaker 2: or all of yesterday's losses. In some cases. The S
1:22
Speaker 2: and P five hundreds up ninety points, back above sixty
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Speaker 2: eight hundred, closing in on sixty nine hundred, about a
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Speaker 2: one point three percent move up. Today. Dow Jones Industrial
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Speaker 2: average is up eight hundred and eighty two points about
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Speaker 2: one point eight percent, and the Nasdaq composite of two
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Speaker 2: hundred and eighty five points about one and a quarter percent.
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Speaker 2: So tech still kind of the laggard out there, even
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Speaker 2: with some big names making big moves.
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Speaker 3: To the upside.
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Speaker 2: Tenure Treasury is up six tenths of a basis point
1:54
Speaker 2: to four point two to one six percent, so not
1:56
Speaker 2: much movement there. Dollar Index is down point two two
2:00
Speaker 2: two percent to ninety seven forty nine, and we've got
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Speaker 2: gold up seventy six eighty ounce to forty nine sixty
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Speaker 2: six and thirty cents. Crude oil up another seventy six
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Speaker 2: cents a barrel to sixty four to oh five triple a.
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Speaker 2: National avatur gas prices up another nine tenths of a
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Speaker 2: cent overnight to two ninety even now about eight and
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Speaker 2: a half cents over the last months, so about a
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Speaker 2: three percent move up in gas prices since the start
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Speaker 2: of the year, and that is what we are seeing
2:29
Speaker 2: moving in markets. Another big mover this morning, Amazon released
2:33
Speaker 2: earnings after the bell yesterday. Basically, the earnings were fine,
2:39
Speaker 2: their guidance was very heavy on capex, and much like
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Speaker 2: we've seen from other tech companies this week, Street didn't
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Speaker 2: love that, and so Amazon stocked down about eight percent
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Speaker 2: pre market, and despite that, most other tech companies chugging
2:52
Speaker 2: along today, and so that's why you've got this relief
2:54
Speaker 2: rally that's taking place after a sell off that has
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Speaker 2: uh few days here and again, we'll see where things
3:03
Speaker 2: end up going. I don't know if you know, we're
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Speaker 2: all done with this or if we're you know, loading
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Speaker 2: up for that next leg down, But we'll see how
3:12
Speaker 2: things go as we continue to get more economic data
3:16
Speaker 2: that comes in next week, as we're gonna have a
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Speaker 2: jobs report, we're gonna have a CPI, so pretty full
3:20
Speaker 2: week with both of those in the same week. Normally
3:23
Speaker 2: that doesn't happen, but with the government shutdown for a
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Speaker 2: couple of days. This is what we ended up with here.
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Speaker 4: By the way, that Amazon stock, as you mentioned, they
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Speaker 4: got beat up last year around the tariff releases back
3:33
Speaker 4: in April, made up all those losses, but the stock
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Speaker 4: is still down about fourteen percent over the last twelve months,
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Speaker 4: which again speaks to the renewed questions and challenges to
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Speaker 4: anybody operating in this AI build that space peace.
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Speaker 2: In Wall Street Journal, small companies still handing out raises.
3:53
Speaker 2: The National Federation of Independent Businesses said that in January,
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Speaker 2: seasonally adjusted net thirty two percent reported raising compensation, up
4:02
Speaker 2: one point from December. And again, I just don't know
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Speaker 2: like what the long term trend of this is, but
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Speaker 2: it's clear to me that at this point the labor
4:15
Speaker 2: market has been weakening for a decent chunk of time,
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Speaker 2: probably the last three years now, yep. And there are
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Speaker 2: some signs in January that maybe we're starting to see
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Speaker 2: things bottoming out in the labor market, but I'm not
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Speaker 2: confident that I can say that yet, and we need
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Speaker 2: a couple more months of data to be able to
4:34
Speaker 2: indicate that for sure.
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Speaker 4: Yeah, the weakening that we're talking about has come almost
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Speaker 4: entirely from the pace of hiring rather than the pace
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Speaker 4: of firing the job cutting rates that we got, for instance,
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Speaker 4: from the Joltz report on yesterday Wednesday, yes yesterday, because
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Speaker 4: of the delay, it indicated that, I mean, the firing's
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Speaker 4: rate is still very consistently low. The filings for unemployment,
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Speaker 4: while they did jump this week, they didn't jump to
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Speaker 4: all that concerning of a level. And so the data
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Speaker 4: on the labor market seems to indicate that, yeah, the
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Speaker 4: weakness that we're seeing is mainly just new entrants to
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Speaker 4: the labor force finding a job or people that lost
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Speaker 4: a job finding a new one, rather than mass layoffs
5:17
Speaker 4: affecting all sorts firms. In spite of headlines like whaty
5:20
Speaker 4: got from Challenger Gray and Christmas yesterday, which most experts
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Speaker 4: discount heavily in terms of any sort of indication for
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Speaker 4: the future of the labor market.
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Speaker 2: So I think next week's jobs report does take on
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Speaker 2: you're kind of a heightened importance. Then again, just because
5:36
Speaker 2: is this something that's going to confirm some of the
5:39
Speaker 2: other surrounding data that is indicating maybe the labor markets
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Speaker 2: starting to you know, bottom out and improve, or does
5:48
Speaker 2: it come out and say no, actually, things are continuing
5:51
Speaker 2: to worsen there. The expectations are for between forty and
5:54
Speaker 2: seventy thousand jobs created, unemployment rates staying between four four
5:58
Speaker 2: and four five gily, earnings zero point three percent, and
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Speaker 2: you know those are kind of the big ones that
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Speaker 2: we'll be looking at. And that report, by the way,
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Speaker 2: against on Wednesday because of the government shutdown, and then
6:11
Speaker 2: on Friday we get CPI, so it's by the way,
6:15
Speaker 2: next next week is great for economic data every day,
6:18
Speaker 2: but Monday there's something interesting. Tuesday, we've got retail sales
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Speaker 2: for December. Wednesday, jobs report for January, Thursday, existing home
6:29
Speaker 2: sales for January, Friday, CPI. It's a fun little run
6:34
Speaker 2: that you've got there on the earning side of things.
6:38
Speaker 2: When we take a look at what is in the pipeline.
6:41
Speaker 2: We're through the big tech guys this week, so there's
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Speaker 2: not much excitement on that front. But you got Coca
6:47
Speaker 2: Cola next week. You got robin Hood CVS Marriot, so
6:51
Speaker 2: you know there's some interesting stuff that you can glean
6:53
Speaker 2: from them. You've got McDonald's next week, which again we've
6:57
Speaker 2: talked about now how McDonald's brings in less revenue than
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Speaker 2: uber which is just shocking. But that's the world that
7:03
Speaker 2: we live in.
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Speaker 4: A company that makes the food brings in less revenue
7:07
Speaker 4: than the company that delivers it to your home.
7:10
Speaker 2: It's kind of the experience, right, Mike. I've said this
7:13
Speaker 2: for a long long time. Laziness is the mother of invention.
7:19
Speaker 2: You gotta embrace the laziness, not as you know, a person,
7:24
Speaker 2: not as not as a lifestyle, but as a view
7:28
Speaker 2: as to you know how, there's the thing in physics,
7:31
Speaker 2: all things ten towards entropy. Sure, all things ten towards laziness.
7:37
Speaker 2: That that's that's where we're actually, you know going. It's
7:40
Speaker 2: we're gonna be those guys from Wally sitting in the
7:43
Speaker 2: chairs while the food gets delivered to us, while the
7:45
Speaker 2: show's beamed into our eyes.
7:47
Speaker 3: Do you like that vision? You know?
7:48
Speaker 2: It's it's it's where we're going.
7:50
Speaker 3: I could use an extra forty or fifty pounds, you could.
7:53
Speaker 2: You've been looking at a little scrawny these days.
7:55
Speaker 3: Man.
7:55
Speaker 2: You gotta you gotta beef up by it's the winter.
7:57
Speaker 2: You gotta stay warm. In any case, this is what
8:00
Speaker 2: we have on deck here. Let's take a quick break
8:03
Speaker 2: when we come back. Why are new cars so expensive
8:06
Speaker 2: right now? We'll discuss that. We've also got trivia right
8:09
Speaker 2: after this.
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Speaker 2: Piece in Bloomberg it's titled very simply, why are new
10:16
Speaker 2: cars so expensive in the US? Now? And I'll quote
10:21
Speaker 2: a couple things here. The average figure broke fifty thousand
10:24
Speaker 2: dollars for the first time last September hit fifty three
10:27
Speaker 2: hundred and twenty six dollars in December according to the
10:30
Speaker 2: Kelly Bluebook car Buying Guide. Researcher Edmunds dot com calculates
10:36
Speaker 2: that the average has risen sixty one percent since twenty ten.
10:40
Speaker 2: So sixty one percent in fifteen years is about a
10:44
Speaker 2: three and a half percent annual price increase if you're
10:46
Speaker 2: compounding it there, which is again high, but a lot
10:51
Speaker 2: of that was concentrated in a couple of years, and
10:53
Speaker 2: I'm guessing if you stripped out twenty one and twenty two,
10:55
Speaker 2: you're probably looking at like two and a half percent
10:57
Speaker 2: annual price inflation, which is not crazy.
11:00
Speaker 4: But does run in contrast to other I'm just thinking about,
11:03
Speaker 4: like other products that we use on a daily basis,
11:06
Speaker 4: to think about what's happened with televisions and all the
11:08
Speaker 4: stuff that's manufactured in China. It's gotten substantially cheaper over
11:11
Speaker 4: the same timeframe, and so this one does stand out
11:13
Speaker 4: in people's minds, both given the price point and the
11:16
Speaker 4: pace of inflation.
11:17
Speaker 2: So the question is why are new cars so expensive
11:21
Speaker 2: all of us? And the example is the answer is
11:23
Speaker 2: because we want them to be so.
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Speaker 4: In twenty ten, according to JD Power forty seven percent
11:30
Speaker 4: of vehicle sales were cars in twenty twenty one, which
11:35
Speaker 4: is the most reason data Jdpower had data on it
11:38
Speaker 4: was twenty one and a half percent.
11:39
Speaker 2: We're cars, you're saying, cars versus trucks and service.
11:42
Speaker 4: So we have gone from a market where yeah, half
11:46
Speaker 4: of vehicle sales in fifteen years ago were trucks and SUVs.
11:50
Speaker 4: Now something like eighty percent of them are trucks or SUVs.
11:54
Speaker 3: So guess what. Those are more expensive? Guess what.
11:56
Speaker 4: It's what Americans want to drive. They also are buying
11:59
Speaker 4: more in the way of electric vehicles, which tend to
12:01
Speaker 4: run a higher price point, arguably lower maintenance cost depending
12:04
Speaker 4: on who you ask. And there you have it. Cars
12:08
Speaker 4: are way more expensive because of our buying habits. We
12:11
Speaker 4: want bigger, more expensive cars, full stop. And by the way,
12:15
Speaker 4: if you want those, the banking and finance industry will
12:19
Speaker 4: absolutely find ways for you to be able to buy
12:22
Speaker 4: them and come up with different maneuvers in the finance
12:27
Speaker 4: sector to be able to make it so that you can.
12:31
Speaker 4: I don't think they make them affordable, but so that
12:33
Speaker 4: you can actually make the monthly payment on a regular basis.
12:36
Speaker 2: Because look, here's what the car companies have figured out.
12:40
Speaker 2: People want to pay for nice stuff in their cars.
12:46
Speaker 2: That's the deal. I'm on Toyota's website right now, and
12:50
Speaker 2: I use them as the example just because they're one
12:52
Speaker 2: of the few car companies that still actually makes cars,
12:55
Speaker 2: not just SUVs. Remember four doesn't make them anymore. GM
12:58
Speaker 2: doesn't make them anymore.
13:00
Speaker 4: You know, Jim make some cars, don't they? I don't
13:03
Speaker 4: think so I'll get back to you on that.
13:05
Speaker 2: You can take a look. Maybe there's still like one
13:07
Speaker 2: model that they have, not not many in any case.
13:10
Speaker 2: So let's say that you wanted to buy an suv
13:12
Speaker 2: and you're on the Toyota website, which I'm on right now.
13:16
Speaker 2: There are plenty of options that you can buy for
13:18
Speaker 2: under fifty thousand dollars, even in the suv you know area,
13:23
Speaker 2: even if you're talking big SUVs. Toyota's Grand Highlander, which
13:26
Speaker 2: is like almost two hundred inches long, it's a three
13:28
Speaker 2: row suv that's you know, pretty significant, starts at forty
13:33
Speaker 2: one and sixty dollars. That's MSRP. So I'm sure that
13:38
Speaker 2: you can probably go you know, a couple grand under that.
13:40
Speaker 2: When you're finally negotiating the thing. But does anyone buy
13:44
Speaker 2: you know, the base model with you know, the cloth seat. No,
13:48
Speaker 2: it's oh I gotta have the limited edition and that
13:52
Speaker 2: well it's got a panoramic moon roof. Okay, yeah it
13:59
Speaker 2: it really bright up the cabin. Okay. And and the
14:03
Speaker 2: first you know, eighty years of cars that didn't have that.
14:06
Speaker 2: That was a problem that Like, when I'm driving, I'm
14:11
Speaker 2: looking forward, man, I don't care how light the cabin
14:14
Speaker 2: is behind me, And I'm sure my passengers are just
14:18
Speaker 2: fine not being able to look up and be like, oh,
14:21
Speaker 2: look there's a cloud that looks like Mickey, like nice
14:24
Speaker 2: is reflecting off your skin? So nice. It's easy, it's
14:27
Speaker 2: so wonderful. So like I just I'm sorry. The reason
14:31
Speaker 2: why cars are so expensive is because we want them
14:34
Speaker 2: to be.
14:35
Speaker 4: By the way, GM's only sedans that they still make
14:38
Speaker 4: are under the Cadillac brand.
14:39
Speaker 2: If you want to get a cheap SUV from Toyota, okay,
14:42
Speaker 2: there you go too, right, No suv anyans? Okay, If
14:47
Speaker 2: you want to get a cheap suv, you can do again.
14:49
Speaker 2: I just gave you like a Grand Highlanders, a big
14:52
Speaker 2: old truck. Thing is not small. You can get one
14:55
Speaker 2: for forty one thousand dollars. Do people know they spend
14:58
Speaker 2: sixty thousand on them. If you want to cheap little one,
15:00
Speaker 2: you can get yourself a nice little base level rav
15:03
Speaker 2: four for about thirty grand. Does anyone No, They gear
15:07
Speaker 2: it up and it's cost you them forty two thousand
15:09
Speaker 2: dollars in order to do it. And ultimately, look, everyone
15:15
Speaker 2: has stuff that they spend on that's not in their
15:18
Speaker 2: best financial interest. I do too. The problem is that
15:22
Speaker 2: when we see people buying these cars and then can't
15:25
Speaker 2: afford to buy them and default on them, it makes
15:29
Speaker 2: me hurt because it's entirely an avoidable proposition because they're
15:33
Speaker 2: always cheaper cars available. We're just talking new ones. If
15:37
Speaker 2: you want to buy a used one, you can get
15:40
Speaker 2: all kinds of cheaper stuff. But the people who buy
15:43
Speaker 2: new cars are generally wealthy. They want to spend the
15:46
Speaker 2: money on it, and they're comfortable doing it, even if
15:50
Speaker 2: it may result in them eventually defaulting on those loans.
15:54
Speaker 4: By the way, Bloomberg's piece here they call out like
15:56
Speaker 4: everything other than what we just talked about. The last
15:59
Speaker 4: item on their lift is list is bigger featured loaded vehicles,
16:02
Speaker 4: which I think is the majority of the increase. They
16:04
Speaker 4: talk about the EV bump, the tarif effects, the pandemic effects, Like,
16:08
Speaker 4: that's not what drove nice is up by sixty percent
16:11
Speaker 4: over fifteen years.
16:11
Speaker 3: No.
16:12
Speaker 4: Yeah, they went and got more expensive during COVID, but
16:14
Speaker 4: so did everything else. The reason that cars are having
16:18
Speaker 4: an outsized and larger than average inflation effect is because
16:23
Speaker 4: of buying habits. And if you want to buy cheap cars,
16:26
Speaker 4: you can still go and buy a Jetta, you can
16:28
Speaker 4: still go and buy a Civic, you can still go
16:30
Speaker 4: buy a Corolla.
16:32
Speaker 3: But that's not really what we tend to buy.
16:35
Speaker 2: No, again, there are plenty of vehicles in the twenty
16:40
Speaker 2: five to thirty five thousand dollars price range that you
16:42
Speaker 2: can buy new. We decide not to, And look, that's fine,
16:49
Speaker 2: but if you buy that expensive vehicle, Like, if you
16:52
Speaker 2: buy the car for seventy thousand dollars, please don't tell
16:56
Speaker 2: me you're making seventy thousand dollars a year. I was
16:59
Speaker 2: gonna go, you can't complain about the payment. Yeah, that's
17:04
Speaker 2: a you problem then, because no one made you buy
17:07
Speaker 2: that vehicle. You know, it's one thing. Hey, if you're
17:11
Speaker 2: trying to live in an expensive area and the rent
17:14
Speaker 2: is too high because of you know, blah blah blah,
17:16
Speaker 2: and this is where your job is. I get it,
17:18
Speaker 2: Like you're not, like there's only so many places that
17:21
Speaker 2: you can live. We've talked about this. Sure, if you're
17:23
Speaker 2: trying to buy a vehicle, there's always a cheaper option.
17:28
Speaker 2: You can't complain about the payment.
17:30
Speaker 4: Yeah, that is a pretty important distinction. Like, you know,
17:33
Speaker 4: the argument of rent is too high, Like what are
17:35
Speaker 4: you gonna do move away from your family and not
17:38
Speaker 4: live in the area anymore. Like that is a genuine
17:40
Speaker 4: issue that I think people should complain about.
17:43
Speaker 3: The I mean they.
17:46
Speaker 4: Should complain about that they can complain about without me
17:49
Speaker 4: getting too frustrated. I think that the proposals that they
17:52
Speaker 4: will throw out there to solve the housing problem is
17:55
Speaker 4: a different story. But if you want to make cars
17:58
Speaker 4: less expensive, it's super easy.
18:00
Speaker 2: Right, go on to Carvon or car max or whatever.
18:04
Speaker 2: Search for cars under fifteen thousand dollars and you will
18:07
Speaker 2: be able to buy something. Now you might be like, oh,
18:11
Speaker 2: well that doesn't fit my needs, then don't complain to
18:13
Speaker 2: me about the price.
18:15
Speaker 4: By the way, I love that every single year I
18:17
Speaker 4: keep getting more and more confirmation that people are back
18:21
Speaker 4: into minivans. I feel like I've been touting this thing
18:24
Speaker 4: for ten years now, and minivan sales through the roof.
18:30
Speaker 4: I'm like twenty percent or something this year. It's wild.
18:33
Speaker 2: It's because they're fantastic vehicles.
18:34
Speaker 4: Actually, they're top notch. They don't look great, No, they
18:38
Speaker 4: look very silly, but who cares? But so do I
18:40
Speaker 4: not trying to look cool, you know. Get like again,
18:43
Speaker 4: I drive a super Uo out back. It's not the
18:45
Speaker 4: coolest looking car. I'm a big loser, but you know
18:49
Speaker 4: why I like it because it's not as expensive as
18:52
Speaker 4: these other ones and it gets me around New England
18:54
Speaker 4: in the winter.
18:55
Speaker 2: That's fine, It's fine with me.
18:58
Speaker 4: Yeah, Minivan sales up percent in twenty twenty five, three
19:01
Speaker 4: hundred ninety five thousand of these things.
19:03
Speaker 3: Now, it's a huge increase.
19:05
Speaker 2: If you'll like the expensive carna'sy thing, that's totally fine.
19:08
Speaker 2: But don't complain about the payment.
19:10
Speaker 3: Agreed.
19:10
Speaker 2: Yeah, markets remain heavily in positive territory. We got the
19:15
Speaker 2: S and P five hundred. It's out ninety one point
19:17
Speaker 2: of Rooneyes right now. That feels pretty good. After the
19:20
Speaker 2: bludgeoning we took yesterday. We're going to take a quick
19:23
Speaker 2: break right now. When we return, we've got the trivia answer,
19:27
Speaker 2: We've got Wall Street Watch, and then we got a
19:31
Speaker 2: bad case of Stilanthus.
19:39
Speaker 1: Bringing the latest financial news straight to your radio every day.
19:43
Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
19:49
Speaker 1: Time now for Wall Street Watch. A complete look at
19:52
Speaker 1: what's moving market so far today right here on the
19:55
Speaker 1: Financial Exchange Radio Network.
20:02
Speaker 5: Well I was seeing a strong rebound today after this
20:05
Speaker 5: week's wildness and tech sell office investors have been concerned
20:08
Speaker 5: about significant spending on AI. Right now, the Dow is
20:12
Speaker 5: up one point eight percent, or eight hundred and ninety
20:15
Speaker 5: two points higher, SMB five hundred, up nearly one and
20:18
Speaker 5: a half percent, NASDAC also up over one and a
20:22
Speaker 5: half percent, or three hundred.
20:23
Speaker 3: And fifty four points.
20:24
Speaker 5: Russell two thousand, up nearly three percent higher. Ten year
20:28
Speaker 5: treasure reeled is mostly flat, trading at four point two
20:31
Speaker 5: to one eight percent, and crewde oil up one and
20:34
Speaker 5: a quarter percent, trading just above sixty four dollars a barrel.
20:40
Speaker 5: Amazon stock sinking eight percent after the e commerce and
20:43
Speaker 5: tech China now is a year sixty percent increase on
20:46
Speaker 5: AI capital spending to two hundred billion dollars. Furthermore, excuse me,
20:53
Speaker 5: Amazon Web Services revenue grew slower than its competitors Microsoft
20:57
Speaker 5: and Alphabet. Meanwhile, jeep Makers still a reported charges of
21:01
Speaker 5: about twenty six billion dollars as it scales back a
21:04
Speaker 5: push into electric vehicles that stock down by twenty three percent. Elsewhere,
21:09
Speaker 5: Roadblock shares rallying eleven percent now after the video game
21:13
Speaker 5: company said revenue could grow by as much as twenty
21:16
Speaker 5: nine percent this year, lifted by higher bookings and daily
21:19
Speaker 5: active users and read at beat fourth quarter earnings forecasts.
21:23
Speaker 5: The social network also offered an optimistic twenty twenty six
21:27
Speaker 5: guidance and announced a one billion dollars share buy back program. However,
21:32
Speaker 5: shares are off by about one percent. I'm Tucker Silvan
21:36
Speaker 5: and that is Wall Street Watch. On the previous segment,
21:38
Speaker 5: we asked you the trivia question, what is the name
21:41
Speaker 5: of the Super Bowl where Super Bowl sixty will be
21:43
Speaker 5: played this Sunday. It's going to be Levi Stadium. Jeff
21:47
Speaker 5: from Bill Record Mass is our winner today, taking home
21:50
Speaker 5: a Financial Exchange Show T shirt. Congrats to Jeff, and
21:53
Speaker 5: we play trivia every day here in the Financial Exchange
21:56
Speaker 5: See complete contest rules at Financial Exchange show dot com.
22:00
Speaker 3: It's pronounced Bella Rica.
22:02
Speaker 2: Bill Erica, bill Rica, bill Erica. Yeah, it's bill Rica.
22:07
Speaker 4: I love when my Midwestern family comes to visit and
22:11
Speaker 4: talk about ald.
22:13
Speaker 2: Right, they're like, oh, yeah, I went from bill Erica
22:14
Speaker 2: into Woburn and then uh hang ham, Yeah, then we
22:20
Speaker 2: went to Borchester to Worcester and then Peabody. After that,
22:24
Speaker 2: Let's talk a little bit more about Stilantis. So they're
22:27
Speaker 2: taking this twenty six billion dollar charge because lo and behold,
22:30
Speaker 2: not everyone wants to own e V's. And when we
22:34
Speaker 2: talk about corporate lemming ship, this is what we're talking about,
22:38
Speaker 2: is that all of these legacy automakers saw Tesla stocks
22:44
Speaker 2: surging in twenty twenty one, and we're like, hey, like,
22:47
Speaker 2: what's the secret sauce? Oh, they make EV's, we should
22:50
Speaker 2: do that too, And they came up with these wildly
22:53
Speaker 2: optimistic projections as to you know, how many Americans would
22:56
Speaker 2: buy EV's, and as it turns out, those were all,
22:59
Speaker 2: you know, really too aggressive. And by the way, the way,
23:01
Speaker 2: Tesla the reason Tesla stock was up was because of
23:03
Speaker 2: Elon Musk, not because like of the evs and so
23:08
Speaker 2: they kind of missed the boat because Elon Musk doesn't
23:11
Speaker 2: run any of these companies.
23:12
Speaker 4: By the way, I haven't talked about my new car
23:14
Speaker 4: that we bought because my wife just started a new commute.
23:16
Speaker 4: We bought a Ford Mustang Machi, which I'm very happy with.
23:20
Speaker 4: Carbon copy of a Tesla.
23:21
Speaker 2: Yeah, it's basically the same.
23:23
Speaker 4: Every way shape or form. They very easily copied it.
23:26
Speaker 4: The battery, the driving style. It is a carbon copy
23:32
Speaker 4: of a Tesla suv in every way.
23:34
Speaker 2: So what we ended up with here in a span
23:37
Speaker 2: of this five year period is these companies had to
23:40
Speaker 2: take huge write downs and losses because this stuff ultimately
23:44
Speaker 2: is not going to come to fruition. I say this
23:48
Speaker 2: because when we talk about the AI space again like
23:51
Speaker 2: it it feels similar in some respects there just in
23:55
Speaker 2: terms of the scale of the build out in the
23:56
Speaker 2: corporate lemming ship that we're seeing. But the difference there
24:01
Speaker 2: is I do see a path to all of us
24:03
Speaker 2: in the aggregate using way more AI in the next
24:07
Speaker 2: ten years. Where's the evpie? So I was kind of like, okay,
24:10
Speaker 2: like there's clearly like more demand than what was there
24:13
Speaker 2: in twenty twenty, But is it gonna be like thirty
24:16
Speaker 2: percent of all vehicles by twenty twenty eight, like they
24:18
Speaker 2: were suggesting. No, clearly it's not. So just like when
24:23
Speaker 2: you want evidence that CEOs tend to look at like
24:26
Speaker 2: what's going on around them and say, oh, let's do
24:28
Speaker 2: that because it's working. This is the classic example of it.
24:31
Speaker 2: And now basically everyone but Toyota who stayed.
24:35
Speaker 4: Yeah, by the way, hats off to CEO and leadership
24:37
Speaker 4: at Toyota for they saw resisting the trend.
24:40
Speaker 2: Yeah, they were like, no, we're not going to do this,
24:43
Speaker 2: and it turned out to be the right move. So
24:47
Speaker 2: we'll see how this ends up playing out. But right
24:50
Speaker 2: now Apple has kind of been occupying the Toyota lane,
24:53
Speaker 2: if you will, and saying no, like we're not going
24:56
Speaker 2: to spend on this crazy build out and we're gonna
25:00
Speaker 2: see you in the next few years if that's the
25:01
Speaker 2: right move for them. So there's not but stillantis twenty
25:06
Speaker 2: six billion dollars right off doesn't feel good.
25:10
Speaker 5: Estate planning is about more than just deciding who inherits what.
25:14
Speaker 5: It also shapes how your assets are treated over time.
25:17
Speaker 5: And that's a key point from the estate planning attorneys
25:20
Speaker 5: at Cushing and Dolan. Without a clear plan and a
25:23
Speaker 5: state can't face significant tax exposure as well as long
25:27
Speaker 5: term care costs that can put pressure on your savings.
25:31
Speaker 5: Trust often play an important role in your overall plan
25:34
Speaker 5: because they can help address tax concerns and long term
25:38
Speaker 5: care planning while still allowing you to retain control during
25:42
Speaker 5: your lifetime. Cushing and Dolan have put together a guide
25:46
Speaker 5: called back to the Basics, a complete guide to an
25:50
Speaker 5: estate in Asset protection plan. It walks through how these
25:54
Speaker 5: planning pieces fit together and what to consider as you
25:57
Speaker 5: prepare for the years ahead. To get your cop call
26:00
Speaker 5: eight sixty six eight four eight five six nine nine.
26:03
Speaker 5: That's eight sixty six eight four eight five six nine nine,
26:07
Speaker 5: or you can request it from their website legal exchange
26:11
Speaker 5: show dot com.
26:12
Speaker 1: The proceeding was paid for and the views expressed are
26:14
Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
26:16
Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
26:19
Speaker 1: Cushing and Armstrong do not endorse each other and are
26:21
Speaker 1: not affiliated.
26:23
Speaker 2: Piece in the Wall Street Journal, the credit card rate
26:25
Speaker 2: cap has stalled and issuers are doing just fine. I'm
26:29
Speaker 2: not really sure there was really ever a great effort
26:32
Speaker 2: from banks and credit card issuers to you know, do
26:35
Speaker 2: anything to change credit card interest rates. There has not
26:39
Speaker 2: been any effort from Congress to do so.
26:41
Speaker 4: I was going to say the effort that credit card
26:43
Speaker 4: companies put on was lobbying the living heck out of
26:45
Speaker 4: it was no, we're not going to do this, and
26:47
Speaker 4: saying if you do this, it'll be a catastrophe, so
26:49
Speaker 4: don't do it. And they appear to have won by
26:51
Speaker 4: flushing that idea down the toilet, which is frankly where
26:55
Speaker 4: it belonged. I don't I'm not applotting all of us,
26:58
Speaker 4: for you know, half of America is carrying credit card balances.
27:01
Speaker 4: I think that is bad, and I would like them
27:04
Speaker 4: to pay that debt down. But there was only one
27:06
Speaker 4: likely outcome if Congress actually passed a law incorporating a
27:11
Speaker 4: ten percent limit on credit card interest rates, which was
27:14
Speaker 4: a shortage in credit availability.
27:16
Speaker 3: So so that idea is that, and I'm sure we will.
27:21
Speaker 2: I did like.
27:23
Speaker 4: I did like Jamie Diamond's idea for this, yes, which
27:28
Speaker 4: was okay, if you think this is such a great idea,
27:30
Speaker 4: why don't you just go test it out in Massachusetts
27:32
Speaker 4: and Vermont, where two lawmakers, are you know, really running
27:36
Speaker 4: with the idea.
27:37
Speaker 3: Let's see how it goes there and then we can talk.
27:39
Speaker 4: About implementing it nationwide. Pretty tongue in cheek, smart idea there, Jamie.
27:44
Speaker 2: Cheaper tequila and canned cocktails were the only bright spots
27:48
Speaker 2: for booze during a rough twenty twenty five. Spirits revenue
27:51
Speaker 2: in the US fell to thirty six point four billion dollars,
27:56
Speaker 2: but spirits base ready to drink canned cocktail revenue was
27:59
Speaker 2: up sixteen four percent to three point eight billion.
28:01
Speaker 4: Of them in that camp, which camp buying. Pre Canned
28:05
Speaker 4: cocktails were definitely a big spending area for the Armstrong
28:11
Speaker 4: household in twenty twenty five. Cheaper tequila, by the way,
28:14
Speaker 4: just the title cheaper tequila makes me think of some
28:18
Speaker 4: of the worst hangovers in my life, so that that
28:20
Speaker 4: doesn't really appeal to me. But the if you go walk,
28:25
Speaker 4: you know, down the Spirit's aisle of Total Wine, you
28:28
Speaker 4: will see a massive section now dedicated to pre bottled
28:32
Speaker 4: and pre canned cocktails. That is definitely a growing segment.
28:35
Speaker 4: But honestly, all of the I feel like all of
28:38
Speaker 4: the trends from twenty twenty five are indicating people more
28:43
Speaker 4: interested in their health and that has spoken to declining
28:46
Speaker 4: alcohol sales across multiple segments, and same thing kind of
28:51
Speaker 4: being mirrored in some parts of the food industry as well.
28:53
Speaker 2: Let's take a quick break. When we return, we are
28:56
Speaker 2: joined by Paul Lamonica from Baron's.
28:58
Speaker 1: Right after this, daily interviews and full shows of the
29:01
Speaker 1: Financial Exchange on our YouTube page. Like us on YouTube
29:05
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29:08
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29:13
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29:16
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29:19
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29:25
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29:29
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29:32
Speaker 1: one thirty two. This is the Financial Exchange Radio Network.
29:36
Speaker 6: Ladies and gentlemen, the weekend, as promised, we're now joined
29:51
Speaker 6: by the one and only Paul Amonica from Barons.
29:56
Speaker 2: Here talk a little bit about legal Zoom today. Paul,
29:59
Speaker 2: how you doing, I'm good. Thanks, how you guys doing.
30:02
Speaker 2: We're doing well? So legal Zoom basically since ipoing has
30:07
Speaker 2: not had a very good time, but this year it's
30:12
Speaker 2: had a bad time as well, down about twenty one
30:16
Speaker 2: year to date. What has happened in the first month
30:18
Speaker 2: of the year that has investors concerned about Legal Zoom.
30:23
Speaker 7: Yeah, a big part of that selloff was really concentrated
30:27
Speaker 7: in this week the news that Anthropic, the big AI
30:33
Speaker 7: large language model company that's going to be potentially going
30:37
Speaker 7: public later this year, their claud Ai tool is adding
30:42
Speaker 7: some legal functionality into it, which begs the question of,
30:47
Speaker 7: you know, do you really need a company like legal
30:51
Speaker 7: Zoom to do mundane legal tasks like setting up a
30:56
Speaker 7: will or other estate planning, you know, trying to incorporate
31:00
Speaker 7: rate a business divorce for you know, sadly the half
31:03
Speaker 7: of the marriages in America that that wind up ending
31:06
Speaker 7: that way. You know, you could just use maybe AI
31:10
Speaker 7: for that. And that's one of the reasons why the
31:12
Speaker 7: stock has taking a big tumble. It could be an overreaction.
31:15
Speaker 7: I spoke to the CEO today and obviously it's you know,
31:19
Speaker 7: he's talking his own book, but you know he thinks
31:21
Speaker 7: that Wall Street's missing the boat a little bit here
31:23
Speaker 7: because they are actually partnering, not necessarily with Anthropic, but
31:27
Speaker 7: with some of the other AI giants like Perplexity and
31:29
Speaker 7: open AI. So it's not like they're ignoring AI.
31:33
Speaker 1: No.
31:33
Speaker 2: The question that I guess I have when I look
31:36
Speaker 2: at them is it's a company with very thin margins
31:39
Speaker 2: for exactly so some reason you know you're talking net
31:42
Speaker 2: income was twenty two million dollars on seven hundred and
31:45
Speaker 2: twenty seven million in revenue. It doesn't seem like there's
31:48
Speaker 2: much wiggle room where if there's even marginal disruption, it
31:51
Speaker 2: does seem like they could be in some trouble.
31:54
Speaker 7: No, without question, and I think that is one of
31:57
Speaker 7: the reasons why the stock took such a big hit
32:00
Speaker 7: as it did this week, and it will probably remain fragile.
32:04
Speaker 7: I mean, you look at Wall Street, they're not overly
32:10
Speaker 7: optimistic either. There are more hold ratings and even a
32:14
Speaker 7: cell rating or two on the stock than there are
32:17
Speaker 7: buy ratings. It's clear that you know this is a
32:22
Speaker 7: company that AI is disrupting it maybe more for the
32:27
Speaker 7: negative then for the positive. And as you point out,
32:31
Speaker 7: with low margins, it might be difficult to see how
32:36
Speaker 7: the stock can move significantly higher in the near.
32:38
Speaker 2: Tun When we look at this I know that you
32:41
Speaker 2: mentioned Anthropic rolling out potentially some legal tools on their platform.
32:47
Speaker 2: Is this also one where someone might be able to
32:49
Speaker 2: build a cheaper competitor to legal Zoom using AI tools
32:53
Speaker 2: as well, and that could be a threat to them.
32:55
Speaker 7: It's possible. I mean, you know, is there the equivalent
32:59
Speaker 7: of you know, deep Seek. You know that, you know,
33:03
Speaker 7: the Chinese tech company that disrupted the Nvidia and the
33:07
Speaker 7: whole chip sector last year before those stocks came up.
33:11
Speaker 7: You're roaring back. I think it's possible. I think the
33:13
Speaker 7: bigger issue isn't necessarily that legal Zoom faces a you know,
33:19
Speaker 7: pure play AI competitor, as it is that AI just
33:24
Speaker 7: makes legal Zoom, if not obsolete, less important in a
33:29
Speaker 7: world where people might just use Anthropic Claud or eventually
33:34
Speaker 7: open AI chat GPT to do some of these legal
33:38
Speaker 7: tasks that are you know, you know, less complicated. I mean,
33:43
Speaker 7: you know, setting up your will isn't the same thing
33:46
Speaker 7: as you know, a Supreme Court case. You know about
33:50
Speaker 7: the future of tariffs.
33:52
Speaker 2: Fair let's take a quick breaktion, We're not going to
33:55
Speaker 2: take a quick break. What was I saying here, Paul,
33:57
Speaker 2: We're gonna be we got to move on. But appreciate
33:59
Speaker 2: you joining us and have a fantastic weekend. Enjoy the
34:03
Speaker 2: super Bowl too. I hope you're who you're pulling for.
34:07
Speaker 7: You're you're not gonna like my answer, I.
34:09
Speaker 2: Mean maybe I will.
34:11
Speaker 7: I'm a Giants fan, So nfcin a boom two point.
34:18
Speaker 2: Zero, see what it is. Okay, we'll chat next week,
34:21
Speaker 2: as we do every week. We will indeed, all right, Paul,
34:25
Speaker 2: appreciate you joining us today. Thanks so much for the time.
34:28
Speaker 7: Thank you appreciate it.
34:30
Speaker 2: That is paul A Monica from Baron's talking about Legal.
34:33
Speaker 4: Zoom super Bowl ads, which are going for about eight
34:37
Speaker 4: million dollars per this year, are going to be healthier
34:41
Speaker 4: than ever and follows into that same trend we're just
34:44
Speaker 4: talking about with alcohol sales. Clearly we have seen drop
34:48
Speaker 4: offs there, wine, beer, even spirits now seeing that impact
34:52
Speaker 4: and I'm just kind of fascinated to see what we're
34:56
Speaker 4: going to be presented with because Pepsi is apparently doing
35:00
Speaker 4: as they always do, but they are highlighting their Pepsi
35:03
Speaker 4: zero sugar, their Poppy brand sodas, which I kind of
35:06
Speaker 4: forgot that they owned. But these are sure low calorie,
35:08
Speaker 4: low sugar sodas that are out there and then they
35:11
Speaker 4: will have a lazed potato chip ad. But I'm wondering
35:14
Speaker 4: what they're I think didn't they do a campaign highlighting
35:16
Speaker 4: that potato chips are potatoes at some point, So I'm
35:20
Speaker 4: guessing it's something healthful.
35:21
Speaker 2: Which is just a horrible ad campaign. I recognize that potatoes,
35:27
Speaker 2: but oh, they're natural, they're vegetables, they're good for you.
35:30
Speaker 2: Like okay, like we've been down this road before.
35:33
Speaker 4: You will also be hearing about a company that you know,
35:37
Speaker 4: wants you to mail in all sorts of health self
35:41
Speaker 4: at home health testing ads, hymns and hers I think
35:45
Speaker 4: will be out there as well, even though they're facing
35:47
Speaker 4: lawsuits about their you know, knockoff drugs that they're throwing
35:52
Speaker 4: out there.
35:52
Speaker 3: And so yeah, I you know.
35:55
Speaker 2: What's one thing I would never do? Mail my blood.
36:00
Speaker 3: I mail my blood all over the place.
36:03
Speaker 2: Seems awfully messy. But like again, they're talking about like
36:06
Speaker 2: mail order blood tests for stuff. I'm not going to
36:09
Speaker 2: mail my blood anywhere.
36:11
Speaker 4: So one the only part of that that would have
36:13
Speaker 4: me concerned would be that I don't I wouldn't feel
36:15
Speaker 4: comfortable taking my own blood, and so that part is
36:19
Speaker 4: freaking me out. The idea of dropping in the mail.
36:22
Speaker 4: Like I, I'm not too worried about somebody intercepting my
36:25
Speaker 4: blood and doing something with it.
36:27
Speaker 2: No one makes me mail my own blood.
36:31
Speaker 3: No one puts.
36:33
Speaker 2: So I got a real problem with mailing blood. I'm
36:37
Speaker 2: sorry if that makes me, you know, kind of a
36:39
Speaker 2: funny duddy. But uh, that's kind of where my limit is.
36:44
Speaker 2: I don't mail blood.
36:46
Speaker 3: Don't you think the doctor mails your blood?
36:49
Speaker 2: Well, no, this is a take home blood.
36:51
Speaker 4: I understand, But, like you know, is the problem mailing
36:54
Speaker 4: your own blood?
36:55
Speaker 3: Or is the problem because I would imagine go to
36:57
Speaker 3: the doctor.
36:58
Speaker 2: The lab is down the hall from the doctor.
37:00
Speaker 3: Not always.
37:01
Speaker 4: I'd be willing to bet there's some mail out blood
37:02
Speaker 4: orders that are going for certain tests.
37:04
Speaker 2: You make sure they are not mailed at all.
37:07
Speaker 3: Yeah.
37:07
Speaker 2: I specifically picked my doctor because they don't mail blood,
37:10
Speaker 2: not mail blood. You got a big sign on the door,
37:13
Speaker 2: we don't mail blood.
37:15
Speaker 3: Really interesting line to draw.
37:18
Speaker 2: I don't like. Listen. When I had my appendix out
37:23
Speaker 2: thirteen years I.
37:24
Speaker 3: Get the privacy stuff. I understand.
37:27
Speaker 2: Here's where I comes from.
37:29
Speaker 4: Drones near your house. The blood in the mail thing
37:31
Speaker 4: just has me scratching my head.
37:33
Speaker 2: Thirteen years fourteen years ago, I had my appendix taken
37:35
Speaker 2: out to mail it. No, but I got a I
37:39
Speaker 2: got I got a bill from my insurance company for
37:41
Speaker 2: like one hundred dollars. I'm like, oh, great, like this
37:43
Speaker 2: is wonderful, like appendix out and it's only one hundred bucks.
37:45
Speaker 2: This is this is amazing bargain.
37:47
Speaker 3: Do you ever play that game?
37:48
Speaker 2: Operation A month later, I get a check from the
37:51
Speaker 2: insurance company for two hundred dollars, which leads me to
37:54
Speaker 2: believe my appendix ended up somewhere. I got paid one
38:00
Speaker 2: hundred dollars to have my appendix taken out. Something doesn't
38:04
Speaker 2: add up here. So I've been looking for that thing
38:07
Speaker 2: ever since.
38:08
Speaker 3: Let's take a.
38:11
Speaker 2: Yeah, it's an antique. Let's take a no joke the
38:15
Speaker 2: doctor when he takes it out, he's talking to me
38:18
Speaker 2: after your appendix not very impressive. We're done for the weekend.
38:22
Speaker 2: Have a great weekend, enjoy the super Bowl. We'll see
38:24
Speaker 2: you Monday.