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Stocks to face major test when government data returns · The Financial Exchange Show

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Speaker 2: Chuck Paul Tucker with you here.
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Speaker 3: And again you take a look at what's on the
1:15
Speaker 3: docked this week for US, and pretty quiet as far
1:17
Speaker 3: as economic data and also earnings of which were now
1:22
Speaker 3: through ninety one percent of the S and P five hundred,
1:25
Speaker 3: So there's just not much juice left on that front.
1:28
Speaker 3: But the big news and what we're gonna be watching
1:30
Speaker 3: closely this week is do we end up getting a
1:33
Speaker 3: resolution to reopen the federal government. Late last night, the Senate,
1:40
Speaker 3: by a sixty to forty vote, did agree to take
1:43
Speaker 3: up a House passed bill that effectively is, you know,
1:49
Speaker 3: trying to make its way through Congress to reopen the
1:52
Speaker 3: federal government. But we still have a couple other steps
1:55
Speaker 3: that need to be done, including the final passage of
1:58
Speaker 3: that legislation in the Senate, and then they are likely
2:00
Speaker 3: to have some amendments relative to what the House passed,
2:03
Speaker 3: and so it's going to get kicked back to the
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Speaker 3: House where they will have to then approve it. So,
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Speaker 3: as we sit here right now on Monday the tenth,
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Speaker 3: the federal government still not reopened, but all signs point
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Speaker 3: to the likelihood that it reopens in the coming days,
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Speaker 3: probably by the end of this week, which would still
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Speaker 3: mean that we have now seen the longest shutdown on record,
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Speaker 3: topping forty days and potentially ending up somewhere like that
2:31
Speaker 3: forty three to forty five day window.
2:34
Speaker 1: Pall.
2:34
Speaker 4: Yeah, it's certainly something that is welcome to see some
2:38
Speaker 4: progress here in terms of the two sides coming close
2:41
Speaker 4: to reaching an agreement. Really, a lot of this was
2:45
Speaker 4: due to some debates regarding some of the ACA extensions
2:49
Speaker 4: of thirty billion dollars per year credits. It seems as
2:52
Speaker 4: if on the American Care Affordable Care Acts that the
2:58
Speaker 4: potential resolution for that is is to have the money
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Speaker 4: deposited into flexible savings accounts rather than sending the money
3:08
Speaker 4: out to insurance companies. So, just to back up for
3:11
Speaker 4: a second, these credits here are regarding offsetting the premium
3:15
Speaker 4: costs for people who are not covered by a typical
3:18
Speaker 4: employer sponsored plan on the healthcare side of things. This
3:21
Speaker 4: was something that was a huge area of contention between
3:24
Speaker 4: the Democrats and Republicans, and it appears as if this
3:27
Speaker 4: potential workaround which would need to be ironed out a
3:31
Speaker 4: little bit here because typically these flexible savings accounts are
3:34
Speaker 4: for someone who is with an employer and covered by
3:37
Speaker 4: and sport employer sponsor plan. On the healthcare side of things,
3:41
Speaker 4: these may be the area that would receive some of
3:44
Speaker 4: that funding rather than the insurance companies getting in general.
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Speaker 4: But again, still a lot to be done here. Obviously
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Speaker 4: the lead story here is some progress in this moving
3:53
Speaker 4: its way. The House would be welcome news if that
3:56
Speaker 4: is the case.
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Speaker 3: So I think, look, the assumption I am going to
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Speaker 3: make is that it's very likely that the federal government
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Speaker 3: reopens later this week, and so I'm not really going
4:09
Speaker 3: to discuss further machinations on that side of things. But
4:13
Speaker 3: now we get to the question of Okay, once you're
4:16
Speaker 3: through this, now we start to see if there was
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Speaker 3: any economic fallout as a result of it. And ultimately
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Speaker 3: that's gonna, you know, start to play out over the
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Speaker 3: next month or two. As we start to get the
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Speaker 3: government produced data coming back through, we'll start to see
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Speaker 3: what we're seeing on that side of things, and so
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Speaker 3: we'll get a little bit more accurate of a picture
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Speaker 3: as to where the US economy currently stands, just because
4:41
Speaker 3: as of right now, it's been kind of hard to
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Speaker 3: tell what's going on. I mean, certainly we do again
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Speaker 3: have some private data sets that are out there that
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Speaker 3: are made available, but ultimately you have a standard cadence
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Speaker 3: of releases that you expect and that you get in particular,
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Speaker 3: you know, in a few key areas, most notably jobs, inflation,
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Speaker 3: retail sales, I think are the three big ones that
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Speaker 3: I tend to look at, and so getting back to
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Speaker 3: that regularly published data will help to give us a
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Speaker 3: little bit of clarity as to exactly where the US
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Speaker 3: economy stands and answer the question of, hey, was this
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Speaker 3: just a minor disruption, you know, to the US economy?
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Speaker 3: Was there, you know, relatively minimal damage and things, you know,
5:25
Speaker 3: get back to normal pretty quickly, or because of the
5:28
Speaker 3: length of it again the longest one ever, was there
5:31
Speaker 3: some greater damage caused? And quite honestly, I don't know
5:34
Speaker 3: exactly what we're going to see. I leaned towards it
5:37
Speaker 3: still was probably short enough that it didn't cause any
5:40
Speaker 3: major damage to the broader economy. But we're gonna have
5:44
Speaker 3: to see how things evolve over the next couple of months,
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Speaker 3: and we'll see what we get on that side.
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Speaker 4: If we were to get a resolution by the end
5:51
Speaker 4: of this week in terms of future jobs reports and
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Speaker 4: things like that. Would we get Novembers or we're too
5:57
Speaker 4: late because we're kind of in the middle of the
5:59
Speaker 4: month where they tip to collect that survey data, right,
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Speaker 4: So would we just be on December As to when
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Speaker 4: we potentially would get info.
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Speaker 3: Don't know, Yeah, don't know. What I do know is
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Speaker 3: what we will receive, like shortly after the reopening and authorization,
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Speaker 3: we are going to get the September jobs report them nice,
6:17
Speaker 3: which they had basically finished but couldn't release because of
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Speaker 3: the shutdown, So we will know what happened in September.
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Speaker 3: October most likely to wash out. November I think is
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Speaker 3: a toss up, So it's very possible we don't get
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Speaker 3: any up to date jobs data until early January, which
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Speaker 3: then also raises the question of this bill to reopen
6:39
Speaker 3: the federal government would only authorize funds through January thirtieth
6:43
Speaker 3: or thirty first. There is a non zero chance that
6:48
Speaker 3: we are back in this situation ninety days from now.
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Speaker 4: We should just save some of our segments, right tucking
6:57
Speaker 4: what are the.
7:00
Speaker 3: How do we like tape this so that we can
7:03
Speaker 3: play the last month again in February?
7:08
Speaker 5: Can recording now yeah, do we still do we have tapes?
7:11
Speaker 5: We're on YouTube, you can find it. Do they have
7:14
Speaker 5: tapes that yeah, I'm pretty sure they got tapes. They
7:16
Speaker 5: got tapes specifically, it's it's wonderful Beta Max. So I
7:21
Speaker 5: think that when we look at this, don't know exactly
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Speaker 5: what the economic fallout is going to be. I lean
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Speaker 5: towards this shutdown probably still wasn't long enough to cause
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Speaker 5: any lasting damage, but was starting to get close to
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Speaker 5: that point. And if it had gone on another week
7:41
Speaker 5: or two, I would have started to be concerned just
7:43
Speaker 5: because then you're talking about, you know, nearly a million
7:46
Speaker 5: workers missing potentially up to two months of pay. And yes,
7:49
Speaker 5: like they will get that back pay, but ultimately, if
7:53
Speaker 5: you're missing that much time, it can really cause some
7:57
Speaker 5: problems that can you know, become local and regional in nature,
8:02
Speaker 5: and then you know, does that become a national issue potentially.
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Speaker 5: So this is where we stand as we look at
8:09
Speaker 5: the shutdown side of things. While we're still waiting for
8:12
Speaker 5: a resolution. Air travel likely to continue to worsen because
8:15
Speaker 5: of reduced schedules. The latest numbers that I saw from
8:20
Speaker 5: over the weekend, we're pretty bad with on one day
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Speaker 5: over two thousand flights being canceled and upwards of seven
8:29
Speaker 5: thousand being delayed, so about a quarter to a third
8:32
Speaker 5: of all flights either delayed or canceled. To put that
8:36
Speaker 5: in perspective, in the last couple of years, remember you
8:39
Speaker 5: got three hundred and sixty five days out of any
8:41
Speaker 5: particular year, and that means in you know, two years,
8:44
Speaker 5: you've got about seven hundred days. Sunday was the seventy
8:48
Speaker 5: second worst day for.
8:49
Speaker 3: Cancelations out of the last two years, which means again
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Speaker 3: kind of a top ten percent day for cancelations and delays.
8:58
Speaker 4: Not horrible, horrible, horrible, but.
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Speaker 2: Not what you want to see.
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Speaker 3: It certainly is inconvenience, and that inconvenience is going to
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Speaker 3: still be there the next few days because you still
9:08
Speaker 3: don't have a full resolution on.
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Speaker 4: This, and it seems like this was likely one of
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Speaker 4: the catalysts to kind of get this over the finish
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Speaker 4: line in terms of the resolution for the Republicans Democrats
9:19
Speaker 4: to get the government reopened. And you it's something that
9:21
Speaker 4: I know for a fact that you had alluded to
9:23
Speaker 4: that twenty eighteen. It was a similar sort of cliff
9:26
Speaker 4: that we reached where once you start having eighteen of
9:28
Speaker 4: twenty two traffic controllers call out in Atlanta and the
9:32
Speaker 4: problem spreads out wider, then you're gonna have a lot
9:35
Speaker 4: of angry travelers and that will get hope. That's what's
9:39
Speaker 4: happened here. You've got some of the folks in Washington
9:42
Speaker 4: responding to this and trying to push this thing through.
9:45
Speaker 3: So again, expect to see some continued travel delays this week,
9:49
Speaker 3: might even persist into early next week, just because look,
9:53
Speaker 3: when you're trying to get equipment and crews from point
9:55
Speaker 3: A to point B, if you've got delays that lasts
9:57
Speaker 3: until this Friday, it might take until early next week
10:00
Speaker 3: to get things squared away. It'll take a few days
10:03
Speaker 3: after that. But it does look like again, assuming that
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Speaker 3: we get a deal later this week, which I think
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Speaker 3: is increasingly you know the case, it's very likely more
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Speaker 3: likely than not, unless we have some crazy weather, things
10:17
Speaker 3: should be in pretty good shape for actual Thanksgiving travel,
10:20
Speaker 3: you know, starting Monday, Tuesday of Thanksgiving Week's take a
10:24
Speaker 3: quick break here. When we come back, we're talking about
10:27
Speaker 3: the AI boom, that's how they pronounce it, and so
10:32
Speaker 3: we'll talk about whether it got a reality check last week.
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Speaker 3: All right. Wall Street Journal has a piece it's titled
11:28
Speaker 3: the Week the AI Boom got a reality check on
11:32
Speaker 3: Wall Street And we actually sent Tucker down to Wall
11:34
Speaker 3: Street with a microphone to go and get a little
11:37
Speaker 3: bit of audio of what was going on there. And
11:39
Speaker 3: so he's going to play that for you right now.
11:41
Speaker 4: And Boom goes to Dynamite.
11:43
Speaker 3: That's exactly what happened there. So here's the thing. The
11:47
Speaker 3: last week and a half couple weeks has been not
11:50
Speaker 3: great for tech stocks. In fact, it's been quite bad
11:55
Speaker 3: for a number of them. If we look at one
11:57
Speaker 3: week performance in video even with a re bound today
12:00
Speaker 3: still down about six percent, Oracle down about six, Palenteer
12:03
Speaker 3: down about eight, am D down about five, Tessel down
12:06
Speaker 3: about six, Qualcom down five, Salesforce down nine. You know,
12:10
Speaker 3: it's it's been kind of gross out there. And remember
12:13
Speaker 3: this is happening with like a two to three percent
12:15
Speaker 3: rebound in a lot of these prices today. So I
12:20
Speaker 3: think the question is, and it's the same question that
12:23
Speaker 3: always matters in investing, is what we saw the start
12:30
Speaker 3: of a new longer term shift? Is what I'm seeing
12:33
Speaker 3: something permanent or is it temporary? And you know, ultimately
12:38
Speaker 3: it's going to be determined by two things as it
12:41
Speaker 3: relates to these tech companies and artificial intelligence. The first
12:46
Speaker 3: thing is going to be, hey, can you continue to
12:51
Speaker 3: grow your earnings in such a way that all that
12:54
Speaker 3: CAPEX doesn't matter? And the second piece is, well, if
12:59
Speaker 3: you can't, what does the rest of your business you know,
13:03
Speaker 3: look like then in terms of its growth. I maintain
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Speaker 3: I don't know how these questions are going to be resolved,
13:10
Speaker 3: but twenty six and twenty seven are going to be
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Speaker 3: the years in which these are answered. You know, all
13:15
Speaker 3: these companies are trying to be like, hey, our twenty
13:17
Speaker 3: thirty revenue is gonna be this and that, and it's like, guys,
13:19
Speaker 3: don't give me five year revenue projections. That's like the
13:22
Speaker 3: guy who walks into a presentation with a bunch of
13:25
Speaker 3: vcs being like, well, the total available market for TAM,
13:29
Speaker 3: the TAM for people who exercises two hundred million people,
13:33
Speaker 3: and if we get just one percent of that, it's
13:37
Speaker 3: like okay, Like you can take that. It's not even
13:40
Speaker 3: worth the paper it's printed on, Like go just flush it,
13:42
Speaker 3: like call it a day. So tell me next year, Hey,
13:47
Speaker 3: we're investing five hundred billion dollars in AI data centers.
13:51
Speaker 3: What kind of revenue you're gonna be able to get
13:52
Speaker 3: from that? Because that depreciation is gonna start hitting your
13:55
Speaker 3: financial statements pretty heavy in about twelve to eighteen months.
14:00
Speaker 4: Be able to deal with That's that's exactly the story here,
14:03
Speaker 4: and it's going to continue to be publicized over the
14:05
Speaker 4: course of the next six to twelve months. Ultimately there
14:09
Speaker 4: will be become a breaking point one way or another
14:11
Speaker 4: where companies, like you said, are going to have to
14:14
Speaker 4: point to what type of revenue growth are they going
14:16
Speaker 4: to get from it? Mark Zuckerberg had a quote on
14:18
Speaker 4: this whole subject of just the front loading of investment
14:21
Speaker 4: of building out capacity, where he basically mentioned aggressivelly front
14:25
Speaker 4: loading building capacity for computing demand is preparing for the
14:29
Speaker 4: most optimistic case with AI, and if for some reason
14:34
Speaker 4: that doesn't formalize, then the slow building now of new
14:37
Speaker 4: infrastructure will grow into it and that ladder sentiment of okay,
14:42
Speaker 4: if it doesn't hit our most optimistic use case here,
14:46
Speaker 4: then we've kind of built out for new infrastructure. That
14:49
Speaker 4: would be kind of the worst case scenario for markets.
14:52
Speaker 4: And when you'd see a lot of bludgeoning on some
14:55
Speaker 4: of these companies if for some reason of the course
14:57
Speaker 4: of the next twelve to eighteen months, there was any
15:00
Speaker 4: indicator that the cart was truly put in front of
15:03
Speaker 4: the horse and that all of this capital expenditures are
15:06
Speaker 4: for something that's going to take longer to materialize in
15:10
Speaker 4: terms of revenue impact. That's that's the story here, and
15:13
Speaker 4: I don't know the answer to it.
15:14
Speaker 3: The and and look, I've said this before. I understand
15:17
Speaker 3: the financial incentives for Zuck and not just Zuck, but
15:21
Speaker 3: for you know, Sadni Nadella and Sundaprachai and like you
15:24
Speaker 3: go through the whole list of them. I get it.
15:26
Speaker 3: It's okay. I could spend two hundred and fifty billion
15:31
Speaker 3: dollars over the next five years, and if this works out,
15:36
Speaker 3: I have a multi trillion dollar opportunity in front of me.
15:42
Speaker 3: If it doesn't work out, stock price is gonna get
15:45
Speaker 3: hit pretty hard. But I'm not gonna go out of business.
15:47
Speaker 3: Like it's not you know, something that ends my company.
15:51
Speaker 1: And so.
15:53
Speaker 3: Yeah, I'll take that chance. Like that, that's how they're
15:55
Speaker 3: thinking about it. For someone like Sam Altman, it's even
15:58
Speaker 3: like more clear. It's like, hey, I don't have anything
16:02
Speaker 3: right now, and this is my chance. And if I
16:06
Speaker 3: can get all these other people to commit to giving
16:08
Speaker 3: me their money so that this could work out, I
16:11
Speaker 3: could be a multibility you know out a four hundred
16:13
Speaker 3: billionaire and this and that, Like.
16:15
Speaker 4: Yeah, it doesn't have any he has a lot, but
16:18
Speaker 4: he's got to keep it going, keep the momentum going.
16:20
Speaker 3: Most of the skin in the game is not his,
16:22
Speaker 3: Like it's ultimately, if it doesn't work, Sam goes back
16:25
Speaker 3: to being the same person he was before all this.
16:28
Speaker 3: You know, it's like it's not his money that they
16:31
Speaker 3: don't have the revenue in order to spend this money,
16:33
Speaker 3: so it's not their own. So like you understand the
16:37
Speaker 3: financial incentives for all these people, and objectively it's the
16:43
Speaker 3: right move for all of them to make, but we
16:46
Speaker 3: can still look at it and be like, ooh, this
16:49
Speaker 3: might not go well. And this is even before you
16:51
Speaker 3: get to the fact that these are not people that
16:57
Speaker 3: have proven they can ethically steward this kind of power.
17:04
Speaker 3: And it's pretty clear with how poorly these this new
17:09
Speaker 3: technology is being shepherd did in terms of, you know,
17:15
Speaker 3: what they're finding important in terms of how they're building
17:19
Speaker 3: it now. I mean again you talk about like the
17:21
Speaker 3: AI erotica stuff that they started talking about a couple
17:24
Speaker 3: of weeks ago, You've got multiple pieces that are out
17:27
Speaker 3: now that quite honestly, if you haven't read them, just
17:29
Speaker 3: like Google around, they're out there on cases where people
17:35
Speaker 3: and kids have been told to know uncertain terms that
17:37
Speaker 3: they should take their own lives by these artificial intelligence platforms,
17:42
Speaker 3: And quite honestly, like the fact that there aren't congressional
17:45
Speaker 3: hearings about this is kind of ridiculous. That like technology
17:49
Speaker 3: is actively telling people to hurt themselves and no one
17:52
Speaker 3: seems to care is kind of wild to me. So
17:56
Speaker 3: I'm just not sure that these are the people that
17:58
Speaker 3: you want shepherding something with this kind of power, because
18:00
Speaker 3: they don't really seem to care about humans very much,
18:06
Speaker 3: you know, like they just don't. But it is what
18:11
Speaker 3: it is. So we'll know in the next two years
18:14
Speaker 3: whether AI is going to work out as you know,
18:17
Speaker 3: a viable, large scale business with this kind of investment
18:22
Speaker 3: or not. I think it's very likely that we continue
18:26
Speaker 3: to use more and more AI in our daily lives.
18:29
Speaker 3: But we use the internet a whole lot more than
18:30
Speaker 3: we did twenty five years ago. And a lot of
18:32
Speaker 3: the companies that started the Internet they're no longer here
18:35
Speaker 3: because they spent too much money and it didn't work
18:38
Speaker 3: in that in those finances, in those terms. So that's
18:41
Speaker 3: kind of where we are. Let's see other things that
18:44
Speaker 3: I do want to get to. We're ninety one percent
18:47
Speaker 3: through corporate earnings for Q three now, and the Q
18:52
Speaker 3: three earnings.
18:53
Speaker 4: Are really really good.
18:57
Speaker 3: But why are we not seeing individual companies being rewarded
19:04
Speaker 3: the same way that we have been when earnings are
19:07
Speaker 3: normally good? Like, what have we actually been seeing in
19:10
Speaker 3: response to that? Let's take a quick break, and then
19:12
Speaker 3: when we come back, we're going to cover this Q
19:15
Speaker 3: three earning season, which has been really good, but for
19:17
Speaker 3: the average company it hasn't really meant really good things
19:21
Speaker 3: for their stock price. Why the divergence. We'll discuss after this.
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20:00
Speaker 5: Markets are rebounding and rallying after seeing the tech having
20:04
Speaker 5: NASDAK log its worst week since April. Sentiment was lifted
20:08
Speaker 5: last night after Senate lawmakers cleared a major hurdle toward
20:13
Speaker 5: potentially ending the historic government shutdown. Right now, the Dow
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Speaker 5: is up nearly three tenths of one percent, or one
20:22
Speaker 5: hundred and twenty six points. S and P five hundred
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Speaker 5: up one point one percent or seventy nine points higher,
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Speaker 5: Nasdaq up just over two percent higher four hundred and
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Speaker 5: sixty six points, RUSSED two thousand, up eight percent. Tenure
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Speaker 5: Treasury yield is currently up one basis point at four
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Speaker 5: cents a barrel, well after initially opening the day higher.
20:53
Speaker 5: Airline stocks, including American United and Delta Airlines, are now
20:57
Speaker 5: dipping into negative territory. Meanwhile, Taiwan Semiconductor saw its sales
21:02
Speaker 5: climb last month at the slowest pace since February twenty
21:05
Speaker 5: twenty four, but remained in double digits, that stock rising
21:09
Speaker 5: by three percent. Elsewhere, drugmaker Pfizer agreed to buy weight
21:13
Speaker 5: loss startup met Sarah in a deal that could be
21:16
Speaker 5: worth more than ten billion dollars. Met Sarah's stock is
21:20
Speaker 5: falling fifteen percent, while Pfizer shares are down about half
21:24
Speaker 5: eight percent. Shares in video sharing platform Rumble surging nearly
21:28
Speaker 5: ten percent after the company secured at one hundred million
21:31
Speaker 5: dollar advertising commitment from Tether, while also announcing the deal
21:35
Speaker 5: to buy German AI firm Northern Data for about seven
21:39
Speaker 5: hundred and sixty seven million dollars. In Stackhart edging higher
21:43
Speaker 5: after the grocery delivery company posted stronger than expected quarterly
21:47
Speaker 5: results after its eleven percent tumble last week over high
21:51
Speaker 5: valuation concerns. Pall Andeer shares rebounding eight percent today and
21:55
Speaker 5: after today's closing bell, we'll see earnings from Core Weave
21:59
Speaker 5: and oxid Dental Petroleum. I'm Tucker Silva, and that is
22:02
Speaker 5: Wall Street Watch.
22:06
Speaker 3: Okay, let's get to earnings. I have some other things
22:09
Speaker 3: that are on my mind, but let's talk a little
22:12
Speaker 3: bit a bit about earnings, just because I did tease it.
22:15
Speaker 3: So we're through ninety one percent of corporate earning season
22:18
Speaker 3: for the S and P five hundred, and according to
22:21
Speaker 3: fact Set, who is a data aggregator, ninety percent of
22:25
Speaker 3: those companies have reported, and the year over year earnings
22:27
Speaker 3: growth rate for the S and P five hundred and
22:29
Speaker 3: thirteen point one percent, which is pretty darn toutin like
22:32
Speaker 3: that is solid. Despite that the S and P five
22:38
Speaker 3: hundred has risen one point three percent since the kickoff
22:41
Speaker 3: of earning season, what gives Paul?
22:44
Speaker 4: Ultimately, it's to me, it's evaluation story. You had a
22:48
Speaker 4: market that has run up significantly this year, and while
22:52
Speaker 4: using ratios like price to earnings and you know, press
22:55
Speaker 4: to booker press the sales, they're not great short term predictors.
22:59
Speaker 4: It does seem like that the reaction from investors and
23:04
Speaker 4: analysts out there is when you see these types of
23:07
Speaker 4: earnings numbers that we're seeing for Q three it was
23:11
Speaker 4: more and this is quoting directly from the Wall Street
23:13
Speaker 4: Journal piece, a sigh of relief than actually a positive
23:18
Speaker 4: surprise that provides more upward mobility to some of these stocks.
23:22
Speaker 4: We've talked about it a lot on this program before,
23:24
Speaker 4: but whatever valuation metric you want to look at, stocks
23:28
Speaker 4: are really pricey right now. And the numbers that we're
23:31
Speaker 4: seeing here in the current quarter earning season being reported
23:35
Speaker 4: because we've seen such a run up this year in
23:38
Speaker 4: terms of stock growth and valuations of the tech companies,
23:41
Speaker 4: it's really just almost hey, few they they actually are growing,
23:46
Speaker 4: rather than oh, this is tremendous, the stock value should
23:49
Speaker 4: increase even more. It's sort of my short takeaway.
23:53
Speaker 3: When we look at the S and P five hundred
23:55
Speaker 3: and this is I want to look at this in
23:58
Speaker 3: two different areas. First, talk about just profit growth, so
24:02
Speaker 3: if you will get year over your profit growth, and
24:03
Speaker 3: I have this broken out by industry, No surprise, tech
24:07
Speaker 3: has the greatest profit growth out of any of the
24:09
Speaker 3: eleven S and P five hundred sectors for this quarter
24:12
Speaker 3: twenty seven point one percent profit growth, which is I
24:16
Speaker 3: believe the technical term is enfuego. It's good financials with
24:20
Speaker 3: all the trading that's going on, all the M and
24:22
Speaker 3: A activity, this and that of twenty three percent as
24:25
Speaker 3: far as their earnings, utilities twenty three point two percent.
24:30
Speaker 3: Kind of surprising. But then when you think about all
24:31
Speaker 3: these data centers and this and that and gee, like,
24:34
Speaker 3: if you're an American who's kind of upset about your
24:36
Speaker 3: electricity price, you're sitting there going like, oh, utilities, you know,
24:39
Speaker 3: their earnings were twenty three percent year over year, Man,
24:42
Speaker 3: so did my electric bill?
24:43
Speaker 2: That doesn't feel so hot.
24:45
Speaker 3: Granted the average electric bill is not up that much,
24:47
Speaker 3: but you're still kind of like, like, what gives materials
24:51
Speaker 3: earnings up twenty percent year over year, industrials up fifteen.
24:55
Speaker 3: Then you get to the ones that are moving more slowly,
24:57
Speaker 3: consumer discretionary up e eight percent. Now, remember when we
25:01
Speaker 3: talk about consumer discretionary, the companies that have an outsize
25:06
Speaker 3: impact there are Amazon and Tesla, So you know you
25:11
Speaker 3: do have to worry about like what concentration in some
25:13
Speaker 3: of these sectors tells you. Real estate earnings up six
25:16
Speaker 3: point one percent, healthcare five point two, consumer staples down
25:20
Speaker 3: point one percent, energy down half a percent, communication services
25:24
Speaker 3: down seven point one These are the earnings year over year.
25:28
Speaker 3: So you look at this and you're like, okay, it's
25:31
Speaker 3: again no surprise, like tech's been what's been growing fastest,
25:34
Speaker 3: and you get it there. The piece that is really
25:39
Speaker 3: interesting to me is what's going on in terms of
25:43
Speaker 3: revenue growth because obviously, look, tech revenue is up fifteen
25:47
Speaker 3: point four percent year over year. It's the fastest growing
25:49
Speaker 3: even by revenue. Healthcare is next to ten point three.
25:52
Speaker 3: But remember healthcare profits only grew at five point two
25:55
Speaker 3: percent year over year, so there's, you know, a margin
25:57
Speaker 3: issue that's happening there. Communications services revenue up ten point
26:01
Speaker 3: one percent. Remember earnings were down. There's there's a problem there,
26:04
Speaker 3: but really it's specific to Amazon and just how some
26:07
Speaker 3: things were realized. Financial is up nine point four percent
26:10
Speaker 3: for revenue, and everything else is basically up one to
26:13
Speaker 3: seven and a half percent revenue wise. So you look
26:18
Speaker 3: at the story here and it's basically for tech and
26:23
Speaker 3: financials and utilities, margins are expanding and revenue is growing
26:29
Speaker 3: just fine. For everything else, revenue is growing, but margins
26:33
Speaker 3: are feeling some pressure there. And this gets it what
26:36
Speaker 3: we're seeing today in markets, specifically in my opinion, which
26:39
Speaker 3: is look you've got the idea that hey, the US
26:42
Speaker 3: government's going to reopen, and so you've got, you know,
26:44
Speaker 3: this exuberance that's going forth right now in markets today,
26:49
Speaker 3: S and P five hundred is up one point oh
26:53
Speaker 3: seven percent, like okay, like you know, the US is back, baby,
26:57
Speaker 3: Like we're back. The S and P five hundred equal
27:02
Speaker 3: weight is actually down point one five percent right now.
27:09
Speaker 3: Investors might want to own US stocks, but they don't
27:14
Speaker 3: want to own the US economy. Like that's the message
27:18
Speaker 3: that I get from today. They want to buy tech
27:20
Speaker 3: and all that stuff. Investors are not interested in staples,
27:26
Speaker 3: real estate, energy, industrials, all that stuff that actually makes
27:31
Speaker 3: the economy work. They don't want to own. And by
27:35
Speaker 3: the way, if you go and take a look this
27:38
Speaker 3: year at what's going on in markets aside from you know, utilities,
27:43
Speaker 3: which is the outlier because of its you know, data
27:46
Speaker 3: center adjacent position that it runs. In energy this year
27:50
Speaker 3: up about seven percent, lagging the broader index. Real estate
27:55
Speaker 3: up three percent, lagging the broader index, Consumer staples down
27:58
Speaker 3: half a percent, materials up the three percent, healthcare OP seven,
28:02
Speaker 3: consumer discretionary of five, like the stuff that actually makes
28:06
Speaker 3: the economy hum isn't humming in the market this.
28:10
Speaker 4: Year, Paul, relative to what you know, the tech sector
28:13
Speaker 4: and some of the other big performance.
28:15
Speaker 3: Yeah, the stuff that's cranking again this year, it is
28:17
Speaker 3: tech communication services, which is really basically.
28:20
Speaker 4: Amazon and Google.
28:22
Speaker 3: Uh. And then you've got utilities, which is again adjacent.
28:26
Speaker 3: We've talked about that and why that's the case, and
28:29
Speaker 3: so you kind of look at it, it's like, yeah, like
28:31
Speaker 3: even even the stock market is kind of k shaped, right.
28:37
Speaker 4: Yeah, that's a fair assessment.
28:39
Speaker 3: You know, like even the stock market, you got tech
28:41
Speaker 3: and all this stuff flying, and the other half of
28:44
Speaker 3: stuff is just kind of treading water up very modestly.
28:47
Speaker 3: And I think it's pretty representative of what we're seeing
28:51
Speaker 3: this year broadly in the economy. To take a quick break,
28:54
Speaker 3: when we come back, President Trump over the weekend put
28:57
Speaker 3: out a social media post saying that he wanted to
29:00
Speaker 3: make two thousand dollars payments from tariff revenue to individuals.
29:05
Speaker 3: We will discuss after.
29:07
Speaker 1: This breaking business news as it happens only here on
29:12
Speaker 1: the Financial Exchange Radio Network. The Financial Exchange streams live
29:17
Speaker 1: on YouTube. Like our page and stay up to date
29:20
Speaker 1: on breaking business news all morning long. This is the
29:23
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29:38
Speaker 3: All Right, so over the weekend, President Trump posted on
29:43
Speaker 3: truth Social quote people that are against tariffs are fools.
29:47
Speaker 3: We're now the richest most respected country in the world
29:49
Speaker 3: with almost no inflation and a record stock market price.
29:52
Speaker 3: A dividend of at least two thousand dollars a person,
29:55
Speaker 3: not including high income people, will be paid to everyone.
29:59
Speaker 3: So this is obviously like we're getting back to stimulus
30:04
Speaker 3: checks now for the economy, which again, now I'm really
30:08
Speaker 3: starting to feel like we're back in like twenty twenty one. Now.
30:11
Speaker 3: I mean, it's just, you know, give me a little
30:13
Speaker 3: bit of deja vu here on this. And here's the thing.
30:17
Speaker 3: If you take in two hundred billion dollars in tariff
30:22
Speaker 3: revenue and then pay out two thousand dollars to one
30:26
Speaker 3: hundred million people, you effectively have not made any net
30:31
Speaker 3: revenue change to the federal government. On top of this,
30:35
Speaker 3: if you continue to you know, run six to eight
30:38
Speaker 3: percent annual deficits, you continue to you know, grow the
30:42
Speaker 3: deficit year over year, both relative to GDP and in
30:45
Speaker 3: you know, nominal terms. And so I think, a, I'm
30:50
Speaker 3: really just not sure that there's a ton of appetite
30:53
Speaker 3: out there right now for two thousand dollars stimulus checks
30:56
Speaker 3: to be like handed out. I just don't know. And
31:01
Speaker 3: I think the other piece is, Okay, if all the
31:05
Speaker 3: tariff revenue is just going to end up being taken
31:07
Speaker 3: and given back to people, then what did we actually.
31:14
Speaker 2: Do here?
31:17
Speaker 4: I'm right with you. It seems like you have a
31:21
Speaker 4: couple risks that could come from this one potentially creating
31:25
Speaker 4: kind of more inflationary pressure by giving one hundred million people.
31:29
Speaker 4: Did you just ballpark that number because it's just it
31:31
Speaker 4: was yeah, because it was unclear. It just said like
31:34
Speaker 4: no high incomers. But I wasn't sure if there had
31:36
Speaker 4: been a number sort of projected out there. But yeah,
31:38
Speaker 4: that hypothetically that same exercise, you're putting two thousand dollars
31:41
Speaker 4: in everyone's pocket. We know what happened last time with
31:45
Speaker 4: the COVID stimulus checks. Those certainly allowed for a lot
31:48
Speaker 4: of people to spend more freely than they would have normally.
31:51
Speaker 4: So that's one aspect of things. And the second impact
31:54
Speaker 4: impact is my view on terrorists, if they could go
31:57
Speaker 4: down to pay down some of our debt, that to
32:00
Speaker 4: me would be encouraging. It's something that certainly I could
32:03
Speaker 4: get behind. From a fiscal monetary perspective, you could argue
32:06
Speaker 4: as to how much of a deen it makes when
32:07
Speaker 4: you're running six to eight percent deficit each year and
32:10
Speaker 4: it's two trillion dollars, But hey, two to three hundred
32:13
Speaker 4: billion to pay that off is better than nothing. I
32:15
Speaker 4: would like that more so to go into that direction
32:18
Speaker 4: than a stimulative effort to individuals out there.
32:22
Speaker 3: No one wants to be serious about the deficit. Yeah,
32:25
Speaker 3: it's been like the last time anyone was serious about
32:28
Speaker 3: the deficit. You got to go back almost thirty years.
32:32
Speaker 3: I mean you're talking nineteen eighties, nineteen nineties, when again
32:36
Speaker 3: members of both parties voted against kind of like their
32:39
Speaker 3: own like platforms and interests. People forget like Reagan raised taxes,
32:44
Speaker 3: Bush One raised taxes, Clinton cut spending. Those are not
32:48
Speaker 3: normal things from the respective parties that you're talking either side. Yeah,
32:51
Speaker 3: and they ultimately did it because they know it was
32:55
Speaker 3: the right thing to do. Now it's just well, you know,
32:58
Speaker 3: here's you know, the this and spend on that and
33:01
Speaker 3: cut this and cut It's like, okay, Like the reason
33:05
Speaker 3: why we're here is because no one wants to do
33:06
Speaker 3: the hard stuff. And until proven otherwise, that's kind of
33:11
Speaker 3: the case.
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34:24
Speaker 3: I got a bone to pick with Google.
34:26
Speaker 2: Oh yesterday, at four seventeen pm Eastern time, I received
34:36
Speaker 2: an email from YouTube TV, who is owned by Google.
34:40
Speaker 3: In case you didn't know, Hi, Chuck, who they know
34:43
Speaker 3: my name?
34:45
Speaker 4: Wow?
34:47
Speaker 3: Wonderful they spelled it right too. We have been working
34:50
Speaker 3: in good faith to negotiate a deal with Disney that
34:52
Speaker 3: pays them fairly for their content and returns their programming.
34:55
Speaker 2: To YouTube TV.
34:56
Speaker 4: Good for you.
34:57
Speaker 3: We know it's been disappointing to lose Disney content. We
35:00
Speaker 3: want you to know that we deeply appreciate your patience.
35:03
Speaker 3: Oh thanks, put me on hold. In light of the disruption,
35:06
Speaker 3: we're offering our subscribers to twenty dollar credit. It's great. Like,
35:09
Speaker 3: I'm just I'm gonna get twenty dollars off my next bill.
35:12
Speaker 3: Over the next few days, you will receive a follow
35:14
Speaker 3: up email with instructions for how to redeem your twenty
35:16
Speaker 3: dollars credit for YouTube TV. So you bunched like greedy
35:22
Speaker 3: little like gremlins.
35:24
Speaker 4: Like, what the heck?
35:25
Speaker 2: You say?
35:26
Speaker 3: You want to give me a credit? But I got
35:28
Speaker 3: to freaking opt into the credit. That's right, because you
35:31
Speaker 3: just want to be like, oh, someone out there isn't
35:33
Speaker 3: gonna figure out how to probably because hey, maybe they're
35:37
Speaker 3: not the most tech savvy and maybe their kids set
35:40
Speaker 3: this up for them, and so they're gonna miss out
35:42
Speaker 3: on the twenty dollars credit because you need that twenty
35:45
Speaker 3: dollars to fund some data center of your buildings that's
35:47
Speaker 3: gonna eat all of our electricity and water. So, like,
35:50
Speaker 3: my goodness, now here's the thing. To anyone listening who
35:54
Speaker 3: subscribes to YouTube TV. Go onto TV dot YouTube dot com,
35:59
Speaker 3: click on your like sign in, and then go to
36:02
Speaker 3: the settings menu. It's in the top right.
36:04
Speaker 5: Somebody steps already exactly, it's in the top right.
36:06
Speaker 3: Then once you're in the settings, men, you click on
36:08
Speaker 3: the updates selection and then you can redeem your credit there.
36:12
Speaker 5: Like that's simple, But to go through all those steps
36:15
Speaker 5: is aggravating it. A lot of people are just gonna
36:17
Speaker 5: punt on.
36:18
Speaker 3: Google's gonna end up making millions of dollars because they
36:21
Speaker 3: made the like credit claiming process too difficult. So like
36:26
Speaker 3: this again. It sometimes I like when we talk about like,
36:31
Speaker 3: you know, greedflation in this and that, I like to
36:33
Speaker 3: poo pooh because I'm like Look, greed didn't cause inflation.
36:35
Speaker 3: Companies are always greedy, and like there's not always you know,
36:38
Speaker 3: high inflation. But when someone says, hey, we're not giving
36:42
Speaker 3: you the product you signed up for and we want
36:45
Speaker 3: to give you a credit, and then they make you
36:47
Speaker 3: go through like a four menu screen to go and
36:50
Speaker 3: authorize the credit, that's greedy and it sucks, and yeah,
36:55
Speaker 3: just do it. I don't like it. Just Just give
36:57
Speaker 3: me the freaking credits.
36:59
Speaker 5: Just discount everybody you know, like I to it.
37:03
Speaker 2: I just don't get it.
37:05
Speaker 4: Not everyone's gonna want that Zucker they got hopped in.
37:08
Speaker 3: This is where you get like the social media influencers.
37:10
Speaker 3: I was born tough and that's why not only did
37:13
Speaker 3: I opt out, I emailed YouTube to see if they
37:15
Speaker 3: charged me twenty dollars extra this month.
37:18
Speaker 4: So they're pushing back against Disney and all the channels
37:23
Speaker 4: that go underneath that in terms of what they want
37:24
Speaker 4: to charge in the upcoming cycle to be on YouTube TV. Basically,
37:27
Speaker 4: they're they're claiming it.
37:29
Speaker 3: Look, they can fight it out, like it's fine, Like
37:30
Speaker 3: I understand it, Like I don't have a problem there.
37:32
Speaker 3: But if you're gonna say, hey, you're not getting the
37:35
Speaker 3: product that you signed up for, and here's a credit.
37:38
Speaker 3: Don't make me sign up for the credit.
37:40
Speaker 4: You don't.
37:41
Speaker 2: You don't make me.
37:41
Speaker 3: Sign up for YouTube tv every month, right because you
37:45
Speaker 3: want the recurring subscription revenue. So don't make me sign
37:49
Speaker 3: up for the credit. Just give me the freaking twenty dollars,
37:53
Speaker 3: you greedy little like like Gerbils, Like what are you doing?
37:58
Speaker 3: You people?
37:59
Speaker 4: So no money, no foot for you tonight. Basically unless
38:01
Speaker 4: they get during the day, bed.
38:03
Speaker 3: Before then anyways, unless it's the pats like I do
38:05
Speaker 3: not make it past eight thirty. So it's it's fine.
38:08
Speaker 4: But they're number four now, they got ten million subscribers
38:11
Speaker 4: YouTube They're they're pretty serious player YouTube TV.
38:13
Speaker 5: They're not tiny, Yeah, Tucker, we supposed to have some,
38:15
Speaker 5: but there it is. Nope, Yeah, they're it's just you know,
38:18
Speaker 5: being stupid.
38:19
Speaker 4: Okay, got it.
38:20
Speaker 3: I thought we were done. We're gonna take a quick break.
38:22
Speaker 3: Now we're done for the hour and we'll be back
38:26
Speaker 2: In just a bit.