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Bullish Sentiment Hits Its Highest Level Since 2021 · The Financial Exchange Show

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  Speaker 1: Zada and Mike Armstrong.
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  Speaker 2: It's Chuck, Mike and Ben with you here on a
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  Speaker 2: Jobs Friday at eight thirty am Eastern Time. The Bureau
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  Speaker 2: of Labor Statistics, or the BOS as we refer to them.
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  Speaker 3: They're part of the Department of Labor.
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  Speaker 2: So you know, you know how some sports stadiums, it's
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  Speaker 2: like so and so field at something park.
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  Speaker 4: Yeah, so this is the Bureau of Labor Statistics at
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  Speaker 4: the Department of Labor. Yes, Okay, do.
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  Speaker 3: They have an acronym that sits under them?
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  Speaker 4: Do we know who BLSDL. We've gotta find out.
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  Speaker 3: We'll see. We we'll do a little bit of research.
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  Speaker 2: But they came out with the job support twenty three
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  Speaker 2: thousand jobs lost for the month, so not great on
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  Speaker 2: terms of the headline number, but the rate dropped a
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  Speaker 2: four point one percent because the labor force shrunk three
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  Speaker 2: hundred and eighty one thousand people dropping out of the
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  Speaker 2: labor force. Some of them may have retired, some of
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  Speaker 2: them may no longer be in the country. Some of
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  Speaker 2: them may be looking at, you know, going back to
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  Speaker 2: college or something like that. So again, the story here
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  Speaker 2: is one that's been consistent this year in that the
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  Speaker 2: unemployment rate has been stable or declining over the course
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  Speaker 2: of twenty twenty six, despite relatively muted job growth, aside
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  Speaker 2: from a couple months in the spring that made it
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  Speaker 2: look like maybe we had some green shoots and were
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  Speaker 2: turning the corner. So I continue to grade the US
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  Speaker 2: labor market as slow but stable, and I think that's
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  Speaker 2: how I would characterize it.
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  Speaker 5: Overall.
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  Speaker 2: I probably give this report and again it's I know
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  Speaker 2: that with a headline number that has job loss, it's
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  Speaker 2: it's weird to say this. I still probably give it.
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  Speaker 2: Given the context of labor supply, which is shrinking, you
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  Speaker 2: probably give this report.
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  Speaker 4: To be my.
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  Speaker 2: Like, it's tough to be like this is a problem,
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  Speaker 2: because here's the example that I'll give to people. If
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  Speaker 2: you had one hundred people in your country and four
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  Speaker 2: of them were unemployed, you'd say, okay, great, we got
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  Speaker 2: four percent unemployment.
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  Speaker 3: That's good.
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  Speaker 2: If one of those people left who had a job,
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  Speaker 2: and now you've got ninety five people employed in ninety
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  Speaker 2: nine who not out of ninety nine total, you still
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  Speaker 2: have basically four percent unemployment. Did your economy worsen? Did
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  Speaker 2: the labor market worsen because that person left the country,
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  Speaker 2: Right not really like the problem that you do have
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  Speaker 2: is and this is an interesting question that matters for
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  Speaker 2: the future. Does it a fact, affect demand in such
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  Speaker 2: a way that then reduces labor demand in the future,
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  Speaker 2: and that Hey, let's say that that person who left,
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  Speaker 2: let's say they spend one hundred.
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  Speaker 4: Dollars a year in the economy.
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  Speaker 2: Okay, that's that's not a huge, you know impact, them
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  Speaker 2: leaving doesn't really change things. But what if that person
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  Speaker 2: who left, you know, who's no longer in the labor force,
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  Speaker 2: no longer you know, in your in your population. What
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  Speaker 2: if they spent a million dollars a year. Oh okay,
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  Speaker 2: maybe then a company doesn't have the same demand for
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  Speaker 2: its products and so they have to lay someone off
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  Speaker 2: in the future. So this is the question that we
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  Speaker 2: haven't had to deal with in the US because outside
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  Speaker 2: of the Great Financial Crisis, the labor force has been
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  Speaker 2: growing consistently since World War Two. We don't really know
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  Speaker 2: what it looks like if the labor force stops growing
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  Speaker 2: for any extended period of time.
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  Speaker 4: So we'll see, ye.
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  Speaker 2: But I can't look at this report and be like, well,
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  Speaker 2: it's bad, because it's it's just reflecting labor supply that
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  Speaker 2: is reduced. Now, how are markets responding to this? Stocks
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  Speaker 2: like it modestly, DAWs up about one hundred and thirty points,
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  Speaker 2: SMPS up about forty, Nasdaq can posite up to eighty eight,
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  Speaker 2: so kind of what we've been seeing the last couple
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  Speaker 2: of weeks.
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  Speaker 4: Ten year treasury.
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  Speaker 2: Initially you saw a big move into treasuries, probably because
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  Speaker 2: of that job loss on the headline number. At one
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  Speaker 2: point this morning, the ten year treasury was back down
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  Speaker 2: around four point six percent. It subsequently is rallied back
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  Speaker 2: to be at four point six five, so still down
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  Speaker 2: about two basis points, but not as big of a
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  Speaker 2: move as when we saw markets open. UH Dollar Index
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  Speaker 2: down zero point two eight percent to ninety nine to
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  Speaker 2: fifty one. The UH movement in gold very much reflective
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  Speaker 2: of rates coming down in dollar down, Gold up another
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  Speaker 2: one hundred dollars announced back to forty four hundred, so
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  Speaker 2: gold catching a bid this week after comping around four
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  Speaker 2: thousand for a couple months. And we've got crude oil
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  Speaker 2: back up another sixty nine cents a barrel to seventy
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  Speaker 2: seven ninety eight triple a national amateur gas price is
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  Speaker 2: catching up to the decline earlier in the week in
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  Speaker 2: crude down another two point one cents over nine to.
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  Speaker 6: Four oh four.
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  Speaker 2: Probably have a little room to move down into like
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  Speaker 2: that three to ninety range if we hold in this
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  Speaker 2: range for pricing. But the same caveat's been in place
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  Speaker 2: for the last six months, which is, hey, we'll see
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  Speaker 2: what happens in hormus next week, because if it's good news,
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  Speaker 2: that can move down meaningfully. If it's bad news, it
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  Speaker 2: can move up meaningfully. And none of us have any
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  Speaker 2: idea what next week is going to bring in terms
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  Speaker 2: of Hormuz news, Hormons news like it. I'm gonna start
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  Speaker 2: using that a little bit more. Bank of America is
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  Speaker 2: a bank in America. They have a gauge that measures sentiment.
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  Speaker 2: They call it a sentiment gauge, and it has hit
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  Speaker 2: the most extreme bullish level since twenty twenty one.
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  Speaker 3: Michael, does that mean that.
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  Speaker 2: Everyone should just sell their stocks and cross their fingers?
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  Speaker 3: And I don't know what you do after that?
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  Speaker 4: Well, us some context here, we're saying that the BAA
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  Speaker 4: survey is telling us that it's extraordinarily bullish. Why should
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  Speaker 4: people sell their stocks? Well, it's actually a contrarian indicator.
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  Speaker 4: This survey has. I don't know how long it's been
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  Speaker 4: out there. I see data going back at least to
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  Speaker 4: the early two thousands, twenty five years. Yeah, it could
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  Speaker 4: have been longer, but generally speaking, Bank of America categorizes
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  Speaker 4: a reading of eight or above as while that signifies
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  Speaker 4: that fund managers and hedge funds and investors are positioned
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  Speaker 4: for stocks to go up extremely extremely bullishly, it's actually
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  Speaker 4: historically been a contrarian indicator. When everybody thinks things are positive,
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  Speaker 4: it has been an indication that things are about to
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  Speaker 4: fall apart. And we've seen this, you know, in a
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  Speaker 4: few specific cases that I can get a reading on
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  Speaker 4: right in February of twenty twenty, right before the COVID
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  Speaker 4: pandemic hit extreme bullishness in markets December of twenty twenty,
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  Speaker 4: and then we went on a slide right through twenty
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  Speaker 4: twenty two when inflation ticked up. So it's not a
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  Speaker 4: great timing indicator in all cases. But what I do
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  Speaker 4: like about it is it is not purely one of
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  Speaker 4: those surveys where you know a researcher is going out
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  Speaker 4: and asking people how they feel. They're actually measuring flows
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  Speaker 4: into funds, fund manager cash allocations, you know, what portion
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  Speaker 4: of the market is participating in a rally, and so
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  Speaker 4: I like it from that perspective, and I think it
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  Speaker 4: is of node that it is hitting a very very
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  Speaker 4: high level right now and partly explains why we've seen
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  Speaker 4: what the s and P up like three percent in
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  Speaker 4: five days. Now.
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  Speaker 2: Yeah, and look, you mentioned the SMP of three percent
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  Speaker 2: five days. Well, let's talk just about where indices are
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  Speaker 2: this year, just you know, again sometimes like we missed
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  Speaker 2: the big picture and getting bogged down a little bit.
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  Speaker 2: SMP's up about thirteen percent this year, DOWS up twelve
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  Speaker 2: and a half, NASDAG up fourteen and a half. Pretty
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  Speaker 2: close concentration there between the major US indices, a little
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  Speaker 2: different from what we've seen in prior years. And that yeah,
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  Speaker 2: things are like pretty close between them. It's not like
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  Speaker 2: one is just you know, driving the ship here. The
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  Speaker 2: Russell two thousand is actually up twenty one percent year
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  Speaker 2: to date. So small caps finally having their moment in
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  Speaker 2: the sun after you know, getting kind of beaten up
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  Speaker 2: for a little while, and so that's kind of fun
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  Speaker 2: to see as well. On the international side of things,
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  Speaker 2: remember last year was characterized by strong international outperformance. This
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  Speaker 2: year a little bit more mixed. Em still outperforming the US,
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  Speaker 2: which is again just not what you would expect, given uh,
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  Speaker 2: what's happened with the dollar and in the Middle East.
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  Speaker 2: But there's a caveat here. If you look at the
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  Speaker 2: MSCI Emerging Markets Index and what it actually represents. Here's
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  Speaker 2: the thing. Eighty percent of it is in Asia. Okay, fine,
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  Speaker 2: like I understand that. Like that's where you know, you've
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  Speaker 2: got a lot of you know, developing markets. I understand,
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  Speaker 2: I get that. Tell me more, Chuck, Well, here's the deal.
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  Speaker 2: Forty five percent of the MSCI Emerging Markets Index is
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  Speaker 2: South kore in Taiwan.
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  Speaker 3: Have chip stocks been doing okay this year? Michael?
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  Speaker 4: They certainly were at the beginning of this year.
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  Speaker 2: Ye, they certainly have, and even now like they're still
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  Speaker 2: up massively even with the pullbacks that they've seen. So
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  Speaker 2: this is one where you could look at that emerging
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  Speaker 2: market's performance this year and be like, wow, like emerging
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  Speaker 2: market economies must be doing great. No, they're actually kind
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  Speaker 2: of doing terribly. It's just that two of them have
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  Speaker 2: this huge waiting in the MSCI EM index, and so
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  Speaker 2: because the chip companies inside of those two are going gangbusters.
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  Speaker 2: They make the index look better than I think the
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  Speaker 2: economies and a lot of those countries actually are. Uh So,
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  Speaker 2: you know, Europe is up nine and a quarter percent
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  Speaker 2: this year for the MSCI Europe Index. So international more
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  Speaker 2: of kind of a mixed bag, but just interesting, you
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  Speaker 2: know what you're seeing given all of the global stories
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  Speaker 2: that we've.
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  Speaker 4: Been talking about. One other market construction item to note
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  Speaker 4: their checkie talk about how the Nasdaq and S and
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  Speaker 4: P are actually similarly performing this year. Important to point
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  Speaker 4: out that, you know, NASDAK typically that tech heavy sector.
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  Speaker 4: The overlap between the S and P five hundred and
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  Speaker 4: the NASDAK is quite a bit, what's the right way
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  Speaker 4: to put it heavier. There's more overlap today than there
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  Speaker 4: was three years ago. R walmarts on the NASDAK, and
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  Speaker 4: there's a heck of a lot more overlap than there
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  Speaker 4: was ten years ago. Part of that is inclusion of
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  Speaker 4: the NAZAK. Another big part is just the thing that's
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  Speaker 4: driven the entire market higher has been those tech heavy stocks,
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  Speaker 4: and so naturally those indices today are much more correlated
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  Speaker 4: than they were a decade ago when tech was a
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  Speaker 4: smaller portion of the market.
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  Speaker 2: To take a quick break. Here when we return, we're
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  Speaker 2: talking China and AI.
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  Speaker 3: Mike, we got a piece here from CNBC.
• 13:11
  Speaker 2: It's titled China is gaining ground in AI, but the
• 13:15
  Speaker 2: US still has a major advantage.
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  Speaker 4: What is the advantage the latest and greatest semiconductors?
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  Speaker 6: Oo.
• 13:24
  Speaker 4: So I like to believe that this is the case,
• 13:27
  Speaker 4: and it is the case that Chinese chips are not
• 13:33
  Speaker 4: as cutting edge as the US, and we have somewhat
• 13:35
  Speaker 4: successfully prevented them from getting at least large supplies of,
• 13:40
  Speaker 4: for instance, the latest and greatest in Nvidia semiconductors. Our
• 13:47
  Speaker 4: facts and evidence that AI model has developed here in
• 13:49
  Speaker 4: the United States are that much better than Chinese ones.
• 13:52
  Speaker 4: Because I'm not sure that I can come to that
• 13:54
  Speaker 4: conclusion right now.
• 13:56
  Speaker 2: No, but it's also what I what I'm also unclear
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  Speaker 2: about given just how the and again I am very
• 14:08
  Speaker 2: much in terms of like my AI knowledge, it probably
• 14:11
  Speaker 2: ranks like as three out of ten in terms of
• 14:13
  Speaker 2: like how much like you really need to know when
• 14:18
  Speaker 2: you will get a lot of the benchmark scores, a
• 14:19
  Speaker 2: lot of them are just kind of clustering and coalescing,
• 14:22
  Speaker 2: you know, kind of in pretty similar.
• 14:24
  Speaker 4: Areas, including Chinese made models.
• 14:27
  Speaker 2: Correct and and look, there's been a lot of chatter
• 14:29
  Speaker 2: in the last couple of weeks about like, hey, you're
• 14:31
  Speaker 2: Chinese models using what's called distillation, where basically what you
• 14:34
  Speaker 2: do is you take a US model, you ask it
• 14:37
  Speaker 2: millions of different questions to get the outputs, and then
• 14:40
  Speaker 2: from there you can say, okay, based on these outputs,
• 14:43
  Speaker 2: here the weights for the model as inputs, and you
• 14:46
  Speaker 2: basically back into trying to replicate the model, ie you
• 14:50
  Speaker 2: rip it.
• 14:50
  Speaker 4: Off, which is kind of the Chinese way of doing things.
• 14:53
  Speaker 2: Which is again very possible. The Chinese firms are doing that,
• 14:57
  Speaker 2: and again I think the expectation should be that they're
• 15:01
  Speaker 2: probably going to because we've seen Chinese abuses of US
• 15:06
  Speaker 2: intellectual property in many industries that they've entered.
• 15:09
  Speaker 4: Into, and in this case, I'm not even sure you
• 15:11
  Speaker 4: can claim that that's illegal in any way.
• 15:15
  Speaker 2: But the other place that I get to is, aside
• 15:17
  Speaker 2: from like very specific niche roles, does the average person
• 15:22
  Speaker 2: need the.
• 15:23
  Speaker 4: Best AI model? Does need anything closer?
• 15:27
  Speaker 2: Like if you're like asking your AI, hey, like, what's
• 15:32
  Speaker 2: the difference between like a big mac and a whopper?
• 15:37
  Speaker 3: You probably don't need to be running fable five.
• 15:39
  Speaker 4: In order to do that. If you're using it to
• 15:43
  Speaker 4: pretty up a presentation to see your management in PowerPoint.
• 15:47
  Speaker 4: You don't probably don't need the latest that's still you don't.
• 15:51
  Speaker 2: If you are trying to solve math problems that no
• 15:55
  Speaker 2: one's ever solved, you probably do. If most of us,
• 15:59
  Speaker 2: the most we do in a given day is hey,
• 16:02
  Speaker 2: you got the change wrong, right like that. That's about
• 16:06
  Speaker 2: as far as we typically go in a normal day
• 16:08
  Speaker 2: for math. So I look at this and I continue.
• 16:15
  Speaker 2: I know why the AI labs want to do this,
• 16:18
  Speaker 2: because they're trying to get to the point where the
• 16:20
  Speaker 2: models are self evolving and that you know, potentially speeds
• 16:24
  Speaker 2: things up and cuts cost dramatically.
• 16:28
  Speaker 3: But I just I don't know.
• 16:30
  Speaker 2: That it's something where it's like, what if you get
• 16:33
  Speaker 2: there first and someone else gets there like three months later.
• 16:35
  Speaker 2: Is that a huge difference? I just I don't know,
• 16:39
  Speaker 2: And I'm okay acknowledging that.
• 16:42
  Speaker 4: Yeah. I again, I really want to believe that the
• 16:46
  Speaker 4: United States is going to keep its ground that it
• 16:49
  Speaker 4: has gotten by developing these latest and greatest semiconductors and
• 16:54
  Speaker 4: attracting the world's best talent in the spaces. But be honest,
• 17:00
  Speaker 4: that China has a lot of advantages that we just
• 17:03
  Speaker 4: don't in this space. One their means of developing. While
• 17:08
  Speaker 4: it wouldn't work for the US system of raising capital,
• 17:12
  Speaker 4: seem to benefit those AI labs. Right, it's basically a
• 17:15
  Speaker 4: communist method of Uh, you know, we're going to require
• 17:18
  Speaker 4: all these labs to share all their information with the
• 17:20
  Speaker 4: other labs so that they can all build upon themselves.
• 17:23
  Speaker 4: And the other big advantage they have in this case
• 17:25
  Speaker 4: is power. Just plain old electricity is needed for all
• 17:31
  Speaker 4: this stuff. And while I wouldn't want to live there,
• 17:36
  Speaker 4: there's no fights going on about building power plants in
• 17:39
  Speaker 4: the local municipality like there are here in the United States. No,
• 17:44
  Speaker 4: you don't hear those stories of you know, Methuin voters
• 17:48
  Speaker 4: lining up to block the next AI data centers. Uh,
• 17:52
  Speaker 4: there's not one in Methuin that I'm aware of. Loll.
• 17:54
  Speaker 4: There is, though, that doesn't happen in China because you
• 17:58
  Speaker 4: don't hear from those people.
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  Speaker 2: Correct, It's okay. The Chinese government says we're gonna build
• 18:03
  Speaker 2: five power plants here, and the Chinese people say where
• 18:07
  Speaker 2: would you like us to move?
• 18:08
  Speaker 4: Right?
• 18:09
  Speaker 2: You know, it's like again, not not great for the people,
• 18:14
  Speaker 2: but you understand why this can you know, make it
• 18:17
  Speaker 2: so that you can develop the infrastructure for data centers
• 18:21
  Speaker 2: more rapidly. So I think, look, everyone wants to phrase
• 18:26
  Speaker 2: this like put this as like, hey, it's this big
• 18:29
  Speaker 2: race to see who like gets to AGI first, you know,
• 18:32
  Speaker 2: artificial general intelligence. First of all, we don't even know
• 18:37
  Speaker 2: if this technology, with the way it's currently structured.
• 18:40
  Speaker 4: Can get you there.
• 18:42
  Speaker 2: And second, like I don't know if just by virtue
• 18:44
  Speaker 2: of being first, like do you what?
• 18:46
  Speaker 3: What do you win?
• 18:47
  Speaker 4: Then?
• 18:50
  Speaker 3: You know, like the the AGI kills you first.
• 18:54
  Speaker 4: Yeah, look first has mattered in some industries and not
• 18:58
  Speaker 4: at all in others. So yeah, I don't have a
• 19:03
  Speaker 4: firm answer there. Google was the first.
• 19:06
  Speaker 2: No, no good people, Goofer was like six years behind.
• 19:10
  Speaker 4: It was just better than everyone. If Facebook wasn't first, No,
• 19:14
  Speaker 4: that was my Space. Yeah, so whatever happened to that?
• 19:18
  Speaker 4: That was sold like five or six times, right, and yeah,
• 19:20
  Speaker 4: probably owned by like Verizon.
• 19:22
  Speaker 3: Justin Timberlake owned it at one point. Let's take a
• 19:25
  Speaker 3: quick break.
• 19:26
  Speaker 4: I think he did.
• 19:27
  Speaker 3: Let's take a quick.
• 19:28
  Speaker 2: Break, and when we come back, we've got the trivia
• 19:30
  Speaker 2: answer and we'll find out who owns my space.
• 19:38
  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.
• 19:46
  Speaker 4: Network, tell you now full wool.
• 19:50
  Speaker 1: Street Watch, treking the stocks, the data, and the headlines
• 19:53
  Speaker 1: driving markets so far today. Right here on the Financial
• 19:56
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• 19:59
  Speaker 5: Mar are still reacting to this morning's job Stata. That's
• 20:03
  Speaker 5: an unexpected drop of twenty three thousand jobs. Right now,
• 20:06
  Speaker 5: the Dow Jones is up seventy four points, or just
• 20:09
  Speaker 5: a little over one tenth of percent. The S and
• 20:11
  Speaker 5: P five hundreds, up just about fifty points, are a
• 20:14
  Speaker 5: little over six tenths of percent. The NASDAK is soaring
• 20:17
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• 20:21
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• 20:24
  Speaker 5: is up two point seventy three percent, while silver is
• 20:28
  Speaker 5: up three point seven six percent. Wendy's shares are up
• 20:33
  Speaker 5: just about two tenths of percent after it reported global
• 20:36
  Speaker 5: sales decreased by more than six percent, which was driven
• 20:39
  Speaker 5: by an eight point two percent decline in the US.
• 20:42
  Speaker 5: The company also withdrew its twenty twenty six financial outlook,
• 20:45
  Speaker 5: but beat facts that consensus on earnings, revenue and adjusted
• 20:49
  Speaker 5: even a Shares for solar stocks increase after President Donald
• 20:53
  Speaker 5: Trump and post tariffs on products that are important to
• 20:55
  Speaker 5: make solar panels. First Solar jumped more than three percent,
• 20:58
  Speaker 5: Invesco Solar rows two percent, and Solar Edge Technologies gained
• 21:02
  Speaker 5: one percent. Air B and B surged over fifteen percent
• 21:06
  Speaker 5: after Airbnb posted second quarter earnings of a dollar thirty
• 21:09
  Speaker 5: seven per share on revenue of three point six to
• 21:12
  Speaker 5: one billion dollars that outpaced the earnings of a dollar
• 21:14
  Speaker 5: twenty five on revenues of three point five eight billion
• 21:19
  Speaker 5: forecasts by analysts. And finally, cloud Flair jumped more than
• 21:22
  Speaker 5: ten percent after issuing solid guidance for the full year.
• 21:25
  Speaker 5: In current quarter, cloud Flare expects adjusted earnings of thirty
• 21:28
  Speaker 5: four cents per share on revenue of seven hundred thirty
• 21:31
  Speaker 5: six to seven hundred and thirty seven million in the
• 21:33
  Speaker 5: third quarter. Second quarter results also surpassed estimates on the
• 21:37
  Speaker 5: top and bottom lines. I am Ben Kitchen and that
• 21:40
  Speaker 5: is Wall Street Watch. We have our trivia question. We've
• 21:44
  Speaker 5: got to get to. The question today was who was
• 21:48
  Speaker 5: Al Gore's running mate in the two thousand election. Your
• 21:51
  Speaker 5: answer was Joe Lieberman. Joe in South Yarmouth is our winner.
• 21:56
  Speaker 5: He will be taking home a Financial Exchange Show T shirt.
• 21:59
  Speaker 5: C Complete contest rules at Financial Exchange Show dot com.
• 22:03
  Speaker 4: Who owned MySpace, Chuck Mike.
• 22:05
  Speaker 2: I did a bit of research on this. So, first,
• 22:07
  Speaker 2: do you know when MySpace was.
• 22:09
  Speaker 4: Founded soon after the Internet was created?
• 22:12
  Speaker 3: No, this is what's so interesting.
• 22:14
  Speaker 2: My Space was only founded in August of two thousand
• 22:17
  Speaker 2: and three. I thought it was like a ninety nine
• 22:21
  Speaker 2: two thousand, you know type of deal. It was two
• 22:24
  Speaker 2: thousand and three, which was only like a year and
• 22:26
  Speaker 2: a half before Facebook, which is kind of interesting. So
• 22:30
  Speaker 2: it was founded in two thousand and three. Its first
• 22:32
  Speaker 2: sale took place in two thousand and five. Do you
• 22:34
  Speaker 2: know who bought it? I do, but only because I
• 22:36
  Speaker 2: looked it up. Oh, News Corporation bought it back in
• 22:40
  Speaker 2: two thousand and five for about five hundred and eighty
• 22:42
  Speaker 2: million dollars Old Rupert. Six years later, they sold it
• 22:46
  Speaker 2: to Justin Timberlake for thirty five million dollars.
• 22:48
  Speaker 4: Oh that's not the direction you want to go with that. No. Yeah,
• 22:51
  Speaker 4: that's usually the opposite of what you try and do
• 22:52
  Speaker 4: when you invest in a company. Uh.
• 22:54
  Speaker 2: They then four years later they rebranded the company that
• 22:58
  Speaker 2: had bought in the parent company to be called Voyant Technology,
• 23:03
  Speaker 2: and then they sold off MySpace to Time in twenty sixteen,
• 23:08
  Speaker 2: which apparently Time Incorporated still existed then who knew?
• 23:13
  Speaker 4: Uh?
• 23:14
  Speaker 3: And then in twenty.
• 23:15
  Speaker 2: Eighteen, Meredith Corporation bought Time, including the stake in Voyant
• 23:22
  Speaker 2: in MySpace, and then they spun it off a year
• 23:25
  Speaker 2: later into a company called Viyant Technology LLC, which then
• 23:29
  Speaker 2: went public in twenty twenty one. Because you could send
• 23:32
  Speaker 2: anything public in twenty twenty one, including the parent of MySpace,
• 23:37
  Speaker 2: and it's actually still a publicly traded company now you
• 23:40
  Speaker 2: can like Voyant Technology exists on public markets. My Space
• 23:45
  Speaker 2: is not like the like the big you know thing
• 23:48
  Speaker 2: for them, obviously, but it's kind of wild that it.
• 23:52
  Speaker 2: I had no idea it was actually part of a
• 23:54
  Speaker 2: publicly traded company.
• 23:56
  Speaker 4: Now, this thing's so unimportant that in according to Wikipedia,
• 24:01
  Speaker 4: in March or twenty nineteen, MySpace lost all of their
• 24:04
  Speaker 4: content before twenty sixteen after a faulty server migration, which, again,
• 24:09
  Speaker 4: thinking about MySpace, that means you lost all of your
• 24:11
  Speaker 4: content because nobody was posting post twenty sixteen. Nobody's posting
• 24:14
  Speaker 4: on MySpace posts like twenty eleven. So yeah, I'm not
• 24:18
  Speaker 4: sure that there's much value left there, doesn't seem like it.
• 24:21
  Speaker 4: In my view, Chuck, it seems yeah, it seems rather unlikely.
• 24:26
  Speaker 5: One day you're living in your own home, the next
• 24:29
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• 24:32
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• 24:34
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• 25:18
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• 25:20
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• 25:26
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• 25:30
  Speaker 2: Mike, I want to talk a little bit about Boeing,
• 25:33
  Speaker 2: which unfortunately back in the news for problems with the
• 25:36
  Speaker 2: seven thirty seven Max.
• 25:38
  Speaker 5: UH.
• 25:39
  Speaker 3: The seven thirty seven Max.
• 25:40
  Speaker 2: Is being ordered by the FAA to be inspected due
• 25:44
  Speaker 2: to cracks appearing in some of the older models of
• 25:48
  Speaker 2: the aircraft.
• 25:49
  Speaker 7: UH.
• 25:50
  Speaker 2: The directive applies to four hundred and seventy one jets
• 25:52
  Speaker 2: in the United States, covering with certain Boeing seven thirty seven, eight,
• 25:56
  Speaker 2: seven thirty seven nine, and seven thirty seven eighty two
• 25:59
  Speaker 2: hundred models. And it's just like one thing after another
• 26:04
  Speaker 2: on these guys.
• 26:05
  Speaker 4: Yeah, I'm not sure how important these cracks are and
• 26:11
  Speaker 4: how what they signify, but the FAIA is doing the
• 26:14
  Speaker 4: right thing by basically indicating that there are no excuses
• 26:19
  Speaker 4: for this company anymore.
• 26:21
  Speaker 2: Yeah, and look the way that these things are typically found.
• 26:24
  Speaker 4: It's one of two things.
• 26:25
  Speaker 2: Every pilot when they're flying a plane, they do a
• 26:27
  Speaker 2: walk around before and after the flight. And then also
• 26:31
  Speaker 2: you have larger maintenance cycles that happen on these planes
• 26:35
  Speaker 2: depending on the number of hours flown. And so it's
• 26:38
  Speaker 2: either hey, like more than one pilot noticed something and
• 26:43
  Speaker 2: so like this all goes into a database and they say, okay,
• 26:46
  Speaker 2: like this is a thing, or like during the larger
• 26:48
  Speaker 2: inspections and you know, maintenance cycles, something was noticed by
• 26:52
  Speaker 2: the maintenance teams and that's how this stuff gets noticed
• 26:55
  Speaker 2: and that's why you do this. So the good news
• 26:59
  Speaker 2: the system is working as intended in this case in
• 27:02
  Speaker 2: that it picked up these problems before a seven thirty
• 27:06
  Speaker 2: seven Max crash. Remember the stuff that happened in sure
• 27:08
  Speaker 2: was like twenty eighteen and nineteen. Those were problems with
• 27:12
  Speaker 2: the basically the autopilot system pitching the nose down, you know, unexpectedly,
• 27:18
  Speaker 2: and that was causing the crashes. This is not a
• 27:21
  Speaker 2: related issue here, but again this stuff does happen from
• 27:26
  Speaker 2: time to time on different planes.
• 27:29
  Speaker 3: Case in point.
• 27:30
  Speaker 2: Again just to make like again Boeing doesn't want to
• 27:33
  Speaker 2: hear this, but this is not like only something that
• 27:35
  Speaker 2: happens to Boeing planes. There's an issue on Airbus A
• 27:39
  Speaker 2: three twenty family aircraft I think about a year and
• 27:41
  Speaker 2: a half ago where a I think it was a
• 27:46
  Speaker 2: Jet Blue flight unexpectedly dipped like six thousand feet mid
• 27:49
  Speaker 2: flight and they were like, okay, like we're going to
• 27:52
  Speaker 2: you know, see what's going on, and so they ordered
• 27:55
  Speaker 2: inspections of you know, various different systems and what they
• 27:58
  Speaker 2: think happened, this has happened a few times on planes.
• 28:01
  Speaker 2: They think it was literally cosmic radiation that hit a
• 28:03
  Speaker 2: specific like part of a system that flipped like one
• 28:07
  Speaker 2: little bit of information and changed how the plane flew.
• 28:11
  Speaker 2: And Okay, they cleared it to resume flying and it
• 28:15
  Speaker 2: was no problem. So it's not to say that like
• 28:18
  Speaker 2: the seven thirty seven Max has this flawless track record
• 28:21
  Speaker 2: and like everything is is great. But the reason why
• 28:25
  Speaker 2: FAA directives like this are issued and the reason why
• 28:28
  Speaker 2: this is actually evidence that the system is working, is
• 28:30
  Speaker 2: that it was caught before it caused any problems that
• 28:34
  Speaker 2: led to injuries or deaths.
• 28:35
  Speaker 4: Yeah, all well and good, and we probably wouldn't be
• 28:38
  Speaker 4: talking about this story if it weren't the seven thirty
• 28:40
  Speaker 4: seven Max from Boeing.
• 28:41
  Speaker 2: Yeah, I think that's fair reality, Yeah, I think that's fair.
• 28:45
  Speaker 2: Let's take a quick break and when we come back.
• 28:47
  Speaker 4: We'll do a little bit of stack roulettes and.
• 28:49
  Speaker 1: Here the Financial Exchange. Every day from eleven to noon,
• 28:52
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• 28:56
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• 29:01
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• 29:05
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• 29:23
  Speaker 1: Radio Network. Ladies and gentlemen, the weekend.
• 29:28
  Speaker 7: All right, we are now joined by the one and
• 29:38
  Speaker 7: only Paulmonica here to talk a little bit about what's
• 29:41
  Speaker 7: going on with SpaceX in their post earnings and post
• 29:46
  Speaker 7: initial lock up expiration period.
• 29:49
  Speaker 4: Paul, how you doing today?
• 29:51
  Speaker 6: On good Thanks, how you guys doing. It's been a
• 29:53
  Speaker 6: wild ride for SpaceX this week.
• 29:55
  Speaker 3: It has been. It's it really has.
• 29:57
  Speaker 2: I mean, look, it's been a wild ride since they ipoed,
• 30:00
  Speaker 2: but in terms of what we've seen this week, first
• 30:03
  Speaker 2: week that it's really been able to kind of find
• 30:05
  Speaker 2: its footing, uh in the UH in the public markets.
• 30:09
  Speaker 2: And I talked to yesterday about how this is kind
• 30:12
  Speaker 2: of a common thing that you see with IPOs where
• 30:15
  Speaker 2: a lot of times you see selling right into the
• 30:17
  Speaker 2: lock up expiration, and then a little bit of buying
• 30:20
  Speaker 2: strength returns over the next month or two, and then
• 30:23
  Speaker 2: you can kind of see where things go. Is that
• 30:26
  Speaker 2: the sense that you get in terms of what we're
• 30:27
  Speaker 2: seeing here.
• 30:29
  Speaker 6: That seems to be what's happening.
• 30:31
  Speaker 8: You know, obviously there was a significant amount of selling
• 30:35
  Speaker 8: heading into.
• 30:37
  Speaker 6: Yesterday's first lock up expiration. You know, part of that,
• 30:41
  Speaker 6: I think being the reaction to.
• 30:44
  Speaker 8: Earnings, and even though your revenue top forecast, I think
• 30:46
  Speaker 8: investors are rightfully concerned about the massive amounts of capital expenditures.
• 30:52
  Speaker 8: You know, Space expending a lot like many other companies.
• 30:56
  Speaker 6: You know, they have the double dose of.
• 30:59
  Speaker 8: Bad things if you will, you know, bad might be
• 31:02
  Speaker 8: overstating it, but a double dose of concerns about their
• 31:05
  Speaker 8: spending because they're spending not just on the rocket launch
• 31:08
  Speaker 8: and starlink business, but also on AI initiatives.
• 31:11
  Speaker 6: Uh so, you know, not a huge surprise SpaceX stock fall.
• 31:16
  Speaker 6: But the bigger concern I think now going forward is
• 31:19
  Speaker 6: that the lockup isn't over.
• 31:21
  Speaker 8: It's staggered, and they have all these tranches with so
• 31:25
  Speaker 8: many more shares. It's set to hit the market by
• 31:28
  Speaker 8: the end of the year. You could see this happen
• 31:30
  Speaker 8: periodically with investors selling SpaceX stock ahead of lock up expirations.
• 31:36
  Speaker 2: I've said, you know, since SpaceX iPod, if you're trying
• 31:39
  Speaker 2: to judge it based on fundamentals, that's kind of the
• 31:42
  Speaker 2: you know, the wrong conversation to be having, because Elon
• 31:44
  Speaker 2: Musk's companies don't often trade on a fundamental basis. They
• 31:48
  Speaker 2: trade off of things entire that are entirely different.
• 31:51
  Speaker 6: There Musky things.
• 31:53
  Speaker 2: Do you is there ever a point where like, how
• 31:57
  Speaker 2: will we know when it's time for the actual dollars
• 32:01
  Speaker 2: to start mattering? I made the point that is Tesla
• 32:03
  Speaker 2: was going through the Model three launch, it seemed like
• 32:06
  Speaker 2: they got to that point just because they were running
• 32:09
  Speaker 2: out of cash. Actually if things didn't get executed, uh properly,
• 32:13
  Speaker 2: and it turned out they executed well and got out
• 32:15
  Speaker 2: of those problems, When will we know if SpaceX is
• 32:20
  Speaker 2: going to run into a similar situation, like they don't
• 32:22
  Speaker 2: have like a.
• 32:23
  Speaker 3: New model that they're you know, releasing.
• 32:25
  Speaker 2: I guess, like, how do we know when it's it's
• 32:28
  Speaker 2: potentially an issue?
• 32:29
  Speaker 6: Yeah, that's a great question.
• 32:31
  Speaker 8: I think you know, this is obviously different from Tesla
• 32:34
  Speaker 8: in the sense of that are not churning out you know,
• 32:36
  Speaker 8: new model vehicles per se. But what I do think
• 32:39
  Speaker 8: is interesting is that SpaceX obviously known for the rocket
• 32:43
  Speaker 8: launching business, but don't forget about and now that they've
• 32:48
  Speaker 8: folded Xai in as well, but don't forget Starlink because
• 32:52
  Speaker 8: of the fact that starlank has a real tangible consumer service.
• 32:59
  Speaker 8: There are legitimate worries on the part of investors for
• 33:03
  Speaker 8: AT and T, Verizon, Tea Mobile. My colleague Gal Root
• 33:06
  Speaker 8: wrote about that for Barons this week, that those stocks
• 33:09
  Speaker 8: have been hit and a large part of that I
• 33:12
  Speaker 8: think are worries that Starlink will eat into their subscriber gains.
• 33:17
  Speaker 6: It's possible. I mean, you drive around America.
• 33:19
  Speaker 8: There are definitely many places in oral and ex urban
• 33:23
  Speaker 8: spots where you're not really getting cell phone service and
• 33:26
  Speaker 8: Starlink can serve.
• 33:27
  Speaker 6: A legitimate customer need there.
• 33:29
  Speaker 8: So that could be the next catalyst if SpaceX really
• 33:33
  Speaker 8: is able to show strong growth and justify the worries
• 33:38
  Speaker 8: that these telecom investors have.
• 33:40
  Speaker 2: The piece that everyone's wondering about now, and it's been
• 33:43
  Speaker 2: mentioned a few times in the last week, is hey,
• 33:46
  Speaker 2: when are SpaceX and Tesla going to emerge. Any indications
• 33:50
  Speaker 2: as to whether or not that's a serious consideration and
• 33:53
  Speaker 2: what a potential timeline could look like.
• 33:55
  Speaker 8: Yeah, Al wrote about that also recently a cover Sorcer Barons.
• 34:01
  Speaker 8: I'm not sure it's something that's imminent, but it is
• 34:05
  Speaker 8: obviously in the back of investors' minds and analyst minds,
• 34:10
  Speaker 8: just because of the common denominator in the equation that
• 34:15
  Speaker 8: is Elon Musk. So I don't think you could ever
• 34:19
  Speaker 8: rule out the possibility that those two could get rolled
• 34:23
  Speaker 8: in together into one larger conglomerate, whether or not it
• 34:28
  Speaker 8: would keep.
• 34:28
  Speaker 6: The SpaceX name, Tesla something entirely new. Who knows, but
• 34:34
  Speaker 6: you know that may put a floor on Tesla stock.
• 34:38
  Speaker 8: But for the time being, it looks like SpaceX and
• 34:40
  Speaker 8: Tesla moving in lockstep, and you know that's largely been
• 34:44
  Speaker 8: lower as of late.
• 34:46
  Speaker 2: Very good, Paul, appreciate you joining us today. Thank you
• 34:48
  Speaker 2: so much for the time, and I hope you have
• 34:51
  Speaker 2: a great weekend.
• 34:52
  Speaker 6: Thanks and you guys.
• 34:54
  Speaker 3: That is paul A.
• 34:55
  Speaker 2: Monica talking about SpaceX. Mike, what do you got for
• 34:58
  Speaker 2: us for stack?
• 34:59
  Speaker 4: Roulett Chuck, have you heard of Egan Jones?
• 35:02
  Speaker 6: Yes?
• 35:03
  Speaker 4: I have the bond rating agency. Yeah, so they are
• 35:06
  Speaker 4: a somewhat lesser known bond rating agency. They are not
• 35:11
  Speaker 4: the top one that comes to mind for most people.
• 35:14
  Speaker 4: But they're being accused of great inflation and conflicts of
• 35:19
  Speaker 4: interest by a number of regulators and apparently being investigated
• 35:23
  Speaker 4: by the SEC. There's two former employees there who brought
• 35:28
  Speaker 4: up allegedly brought up concerns about their own conflicts of
• 35:32
  Speaker 4: interest on their compensation to the SEC, and we're later
• 35:35
  Speaker 4: allegedly terminated. Egan Jones debates all this, saying that those
• 35:39
  Speaker 4: two people actually just wanted to go start their own company.
• 35:43
  Speaker 4: In either case under scrutiny, and I think worth bringing
• 35:47
  Speaker 4: up at this point in time because we haven't had
• 35:49
  Speaker 4: a nice conversation about the private credit space in a
• 35:52
  Speaker 4: little while. It was big topic that we were talking
• 35:58
  Speaker 4: about a lot in twenty twenty five. Is that is
• 36:01
  Speaker 4: that when we were Yeah, it was last year. Yeah,
• 36:03
  Speaker 4: there are a few blow ups in the space and
• 36:05
  Speaker 4: some big questions, And where the questions led people to was,
• 36:10
  Speaker 4: oh wow, insurance companies seem to own a whole lot
• 36:13
  Speaker 4: of this stuff. I wonder how safe it is. And
• 36:17
  Speaker 4: this story is not answering that question, but it is
• 36:20
  Speaker 4: throwing another, uh, another straw on the camel's back here,
• 36:26
  Speaker 4: of yeah, these insurance companies own a lot of really
• 36:29
  Speaker 4: opaque stuff that they themselves might not know how risky
• 36:34
  Speaker 4: it is, based on the the allegations against Egan Jones here,
• 36:39
  Speaker 4: I think this.
• 36:40
  Speaker 2: Is anything unique, you know, Like, here's the thing. If
• 36:43
  Speaker 2: you're depending on ratings agencies to tell you when there's
• 36:46
  Speaker 2: a problem, you probably shouldn't be running a fixed income book, agreed,
• 36:51
  Speaker 2: you know, like that that's how it is, Like they
• 36:54
  Speaker 2: are always late to the game, Like it wasn't the
• 36:58
  Speaker 2: ratings agencies that moved into thousand and seven in two
• 37:00
  Speaker 2: thousand and eight and they're like, hey, this could be
• 37:03
  Speaker 2: an issue, Like no, like the market moved and then
• 37:05
  Speaker 2: they downgraded after that.
• 37:07
  Speaker 3: So I don't think this is unique.
• 37:09
  Speaker 2: It's always been an a potential conflict of interest that hey,
• 37:14
  Speaker 2: you want to get the business of the company or
• 37:16
  Speaker 2: the municipality, and how do you do that while still
• 37:19
  Speaker 2: rating the company appropriately? Always a question, you know, So
• 37:25
  Speaker 2: I think that it's one where I don't know, is
• 37:30
  Speaker 2: there like a potential conflict of interest here? Of course,
• 37:33
  Speaker 2: but if you're depending on the ratings agency to tell you, you know,
• 37:37
  Speaker 2: how high quality a bond is. I don't know, you
• 37:41
  Speaker 2: like that's kind of problematic, Yes, Like if you're doing that,
• 37:46
  Speaker 2: it's it's.
• 37:47
  Speaker 4: Not a great sign. I think the question would be
• 37:52
  Speaker 4: were some of these bonds only allowed to be purchased
• 37:55
  Speaker 4: by the insurance companies per their board or regulations because
• 37:59
  Speaker 4: of the Egan Owns rating. That is now being called
• 38:01
  Speaker 4: into question. But yeah, to your point.
• 38:03
  Speaker 2: Yeah, viable, like reasonable question. Uh, let's take a quick
• 38:08
  Speaker 2: break for the entire weekend, the whole weekend. Yep, we're
• 38:12
  Speaker 2: gonna take a couple of days off. It's it's it's nice,
• 38:15
  Speaker 2: we like it. And then we're gonna be back on Monday.
• 38:19
  Speaker 2: And we get a busy week next week, including CPI
• 38:21
  Speaker 2: data coming out, and so we'll be discussing that and
• 38:24
  Speaker 2: everything else.
• 38:26
  Speaker 4: Make sure you tune in.