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Semiconductor Stocks Surge as Housing Stalls and AI Demand Grows · The Financial Exchange Show

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1:02
Speaker 1: This is the Financial Exchange with Chuck Zada and Paul Lane.
1:10
Speaker 2: It is Chuck and Paul, and we've got Tucker here
1:14
Speaker 2: too and kicking things off today. Market's pretty quiet to
1:18
Speaker 2: start the day. The S and P is up three points,
1:20
Speaker 2: the Dows down fifty three, Nasdaq down twenty five. It's
1:24
Speaker 2: not really any major movement on the surface. Under the surface,
1:28
Speaker 2: all kinds of movement, including semiconductor stocks now working on
1:31
Speaker 2: their eighteenth consecutive day in positive territory microprocesses, microprocesses, thank you.
1:39
Speaker 2: I don't know what the record is, but I gotta
1:41
Speaker 2: tell you it's kind of wild right now. That again,
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Speaker 2: I would be surprised if anything changes today. We're five
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Speaker 2: days away now from semiconductor stocks as a whole, the
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Speaker 2: S and P five hundred Semiconductor Index, or I think
1:55
Speaker 2: it's actually the Philly Semiconductor Index. We're five days away
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Speaker 2: from it going up every day in April. Now, I
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Speaker 2: know a lot can change in the next five days,
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Speaker 2: like I understand that, but it's eighteen days in a row.
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Speaker 2: That is insane. I have never seen anything like this,
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Speaker 2: And again, like someone out there can probably find the data,
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Speaker 2: but I haven't been able to. But just wild what
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Speaker 2: we're seeing there. Other things moving in markets ten of
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Speaker 2: US Treasury down four tenths of a basis point. I
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Speaker 2: hope you didn't put on a new shirt for that one.
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Speaker 2: You've got the dollar index off seven hundredths of a
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Speaker 2: basis point. That's useful. Again, don't even know why we
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Speaker 2: bother gold down ten cents an ounce? What is this
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Speaker 2: a move for ants?
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Speaker 3: Like?
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Speaker 2: What are we doing here? Oil West textas intermediate it's
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Speaker 2: up twenty six cents a barrel again. I know, after
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Speaker 2: you know the volatility we've seen. You know, don't look
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Speaker 2: a gift horse in the mouth, but I'm gonna do
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Speaker 2: exactly that. If you give me a horse, I'm looking
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Speaker 2: at it in the mouth, just to you know, make
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Speaker 2: sure everything's okay there. It's not much movement in across
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Speaker 2: major assic classes today. The big thing that we are
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Speaker 2: starting to see now the airlines are indicating, hey, these
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Speaker 2: higher jet fuel prices are putting some strain on us.
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Speaker 2: We're going to be canceling some flights in the coming months.
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Speaker 2: European airlines started saying it earlier this week. We've had
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Speaker 2: American in Southwest report now they're saying similar things. No
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Speaker 2: specifics on cancelations, but they're saying, look, we're going to
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Speaker 2: be able to pass you know, these higher fuel costs
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Speaker 2: onto the end consumers. And the two ways that you
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Speaker 2: do that are by raising prices and by basically cutting
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Speaker 2: routes that are not profitable. So this is where things
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Speaker 2: are going on the airline front piece in the Wall
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Speaker 2: Street Journal talking about housing in a slow market. Some
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Speaker 2: houses are still selling fast, Which ones.
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Speaker 4: Paul, The ones that are selling fast, Chuck, are recently
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Speaker 4: renovated their price the right way, and they have no
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Speaker 4: major repairs. So basically, what this piece in the Wall
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Speaker 4: Street Journal is outlining is that there is a gap
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Speaker 4: between homes that are being sold under con or going
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Speaker 4: under contract in the month of March versus the homes
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Speaker 4: that are just being listed of or over a period
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Speaker 4: of time. So homes that were listed under contract in
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Speaker 4: the month of March sold in a median of nineteen days,
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Speaker 4: so if they were agreed upon, they were sold quickly
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Speaker 4: after nineteen days. However, for just general homes that were
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Speaker 4: just listed during that period of time and not necessarily
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Speaker 4: going under contract, the average time there for listing was
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Speaker 4: about fifty six days, and so that thirty seven day
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Speaker 4: gap between markets homes that were on the market that
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Speaker 4: were sold versus the ones that were listed as the
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Speaker 4: why since we've seen in March since twenty twenty, and
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Speaker 4: really what it points to, like I was mentioned before,
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Speaker 4: is that if there's the right inventory out there that
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Speaker 4: is price right, that doesn't need a lot of worked
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Speaker 4: to it, buyers are willing to snap that up. But
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Speaker 4: if there are sellers out there who are anticipating that
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Speaker 4: they're going to see the bidding frenzy that they saw
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Speaker 4: in years past, or are too sort of attached to
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Speaker 4: perhaps prices that neighbors had received over preceding years, then
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Speaker 4: they've just seen that their homes have sat on the
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Speaker 4: market for a longer period of time. And even places
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Speaker 4: like Florida, which has obviously been taking the brunt of
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Speaker 4: the worst of the real estate market, has seen that
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Speaker 4: for the homes that do go under contract in the
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Speaker 4: Tampa area, they have gone on and been sold relatively quickly.
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Speaker 4: That's a small percent, but they are seeing that they
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Speaker 4: move quickly if it's the right inventory.
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Speaker 3: Yeah.
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Speaker 2: Big thing that you got to remember on all this
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Speaker 2: is that look, pricing changes very quickly in different markets.
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Speaker 2: A year and a half ago, we were talking about
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Speaker 2: how Florida you had, you know, prices were in free
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Speaker 2: fall because inventory was building and you had all kinds
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Speaker 2: of issues because of that extra inventory. Today, prices aren't
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Speaker 2: really in free fall across Florida anymore. They've stabilized in
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Speaker 2: the last couple of months. It's not to say that
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Speaker 2: they're going up, you know, crazily or anything, but we've
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Speaker 2: worked through some of those problems there. You know, just
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Speaker 2: because a neighbor had, you know, a certain transaction a
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Speaker 2: year ago. It's a very different market in a rather
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Speaker 2: short period of time because of all these dislocations that
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Speaker 2: we've seen, and so you need to be cognizant of
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Speaker 2: that when you're talking about either buying or selling a home.
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Speaker 2: Right now, what I can tell you is, ultimately, and
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Speaker 2: I was saying this last year, Hey, it's going to
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Speaker 2: take a couple of years for things to normalize on
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Speaker 2: the housing things as far as supply and demand, we
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Speaker 2: are getting closer there. I do think twenty seven or
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Speaker 2: twenty eight those are going to be years where you're
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Speaker 2: in a pretty good spot. And there's a combination of
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Speaker 2: factors there. The first is number one, some of the
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Speaker 2: big price moves are out of the way as far
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Speaker 2: as you know what we've seen in Florida and Texas
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Speaker 2: and things like that. Number Two, people get you know,
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Speaker 2: adapted to higher insurance rates and things like that, and
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Speaker 2: they get used to seeing those instead of the sticker
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Speaker 2: shock that they may have seen. The other piece is
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Speaker 2: every quarter that goes by, there are fewer people with
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Speaker 2: mortgage rates below where mortgage rates are today because you
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Speaker 2: always have some forced sales that happen. You got to
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Speaker 2: move for work, or there's the five d's divorce, downsizing, diapers,
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Speaker 2: diamonds and death and dodge and dodge, yes and dodge.
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Speaker 2: So ultimately, like these are the things that force you know,
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Speaker 2: different transactions to happen. And so every quarter you've got
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Speaker 2: more and more people that, well, yeah, we've got our
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Speaker 2: mortgage at four percent, but the company wants to move
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Speaker 2: me to San Antonio and they're gonna pay for this
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Speaker 2: and that, so we'll do that and you take out
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Speaker 2: the mortgage at six and a half and call to
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Speaker 2: day Like these things happen. And so what that means
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Speaker 2: then is for future housing, you know, busy housing seasons,
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Speaker 2: there are fewer people that are mortgage locked that can
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Speaker 2: then list and move more easily in the future. And
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Speaker 2: so we're getting to a point where that's you know
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Speaker 2: becoming you know, critical mass, where it allows you to
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Speaker 2: kind of get that flywheel spooled up and okay, like
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Speaker 2: things really get moving there. So I think housing activity
8:23
Speaker 2: again this year looked like things were gonna be pretty
8:25
Speaker 2: good until the Iran War started and then that just
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Speaker 2: combination of higher interest rates and warfare spooked the spring
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Speaker 2: housing market. And so transaction volumes, they're not falling off
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Speaker 2: a cliff. They're just gonna be what they were the
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Speaker 2: last couple of years, around four million existing home sales
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Speaker 2: per year. I know a lot of people were hoping
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Speaker 2: to see that go up to like four and a
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Speaker 2: half four point six million. Doesn't look like it's gonna
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Speaker 2: happen this year, but continuing to set the stage for
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Speaker 2: future years. So we'll see where things go. Quick break
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Speaker 2: when we come back. We've got trivia next.
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Speaker 2: Piece in the Financial Times, Paul, It's titled high Earners
10:53
Speaker 2: race ahead on AI as workplace divide widens. Tell me
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Speaker 2: what's going on here.
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Speaker 4: This is a poll that the Financial Times did in
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Speaker 4: the US and the UK trying to get a sense
11:04
Speaker 4: for I believe they do this on a monthly basis
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Speaker 4: the adoption of AI. And what they found was that
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Speaker 4: more than sixty percent use AI daily for those higher
11:16
Speaker 4: income earners, compared with just sixteen percent of the lower
11:20
Speaker 4: income owners. And so the piece goes on to theorize
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Speaker 4: whether this divide that you have that higher income workers
11:27
Speaker 4: with potentially a more sophisticated educational background are going to
11:31
Speaker 4: become more proficient or start using the technology more heavily
11:35
Speaker 4: than those in lower income tiers, and this will create
11:38
Speaker 4: this gap and divide something that you know, we talked
11:42
Speaker 4: about a little bit on yesterday's program. Not overly concerned
11:45
Speaker 4: with this. I mean the areas that it's being used
11:48
Speaker 4: now primarily are for the large languid models, kind of
11:52
Speaker 4: like we talked about replacing the search engines. So those
11:56
Speaker 4: white collar jobs, which tend to be a little bit
11:58
Speaker 4: more higher paying, whether it's a lawyer or an account
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Speaker 4: are going to be a little bit more apt to
12:03
Speaker 4: start using AI in terms of queries for work and
12:06
Speaker 4: things like that, versus perhaps some of the lower income
12:10
Speaker 4: earning jobs, whether it's in leisure and hospitality services, whatever
12:14
Speaker 4: area you're looking at, it doesn't have as much use there.
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Speaker 4: So I'm not really concerned greatly as this divide that
12:22
Speaker 4: they outline here is something that's concerning. Perhaps if it
12:25
Speaker 4: persisted for a long period of time, you'd be concerned.
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Speaker 4: But it's supposed to democratize intelligence, and ultimately, when that occurs,
12:35
Speaker 4: it should benefit everyone. Everyone should have equal access to intelligence.
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Speaker 4: Right now, it's primarily through the form of a search engine,
12:44
Speaker 4: and so as a result of that, you have white
12:46
Speaker 4: collar workers using it more than perhaps lower income workers
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Speaker 4: who may not be in those more traditional white collar gigs.
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Speaker 2: I want to move on to again, we've talked about
12:58
Speaker 2: that at LENT yesterday. I want to move on to
12:59
Speaker 2: talk about this piece here from Bloomberg Opinion. It's titled
13:04
Speaker 2: our government is ignoring obvious affordability solutions. What are those solutions, like,
13:12
Speaker 2: what are the obvious affordability solutions?
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Speaker 4: To me, I've been sort of frustrated by this idea
13:20
Speaker 4: that the government can step in and make significant impacts
13:25
Speaker 4: on pricing for beef, eggs, and fertilizers. You know. This
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Speaker 4: Bloomberg opinion piece goes on to say that they have
13:33
Speaker 4: the tools to reform international trade policies and reduce important barriers,
13:39
Speaker 4: but they're not champion because there's protectionist policies and other
13:44
Speaker 4: sort of concentrated benefits that don't allow for them to
13:49
Speaker 4: actually get through and diffuse costs to consumers. But my
13:53
Speaker 4: belief ultimately on this is that when you're dealing with
13:56
Speaker 4: all of these commodities, and we've seen it extensively of
14:00
Speaker 4: the course of the last five six years, with all
14:01
Speaker 4: the global supply chain disruptions, there's only so much an
14:05
Speaker 4: administration can do to impact pricing. If there's a bird
14:08
Speaker 4: flu that breaks out and impacts egg prices, I'm not
14:12
Speaker 4: really sure what the responsibility of the administration is to
14:16
Speaker 4: adjust that. The same thing can be said for be
14:19
Speaker 4: for some of these other food cost areas. I'm just
14:23
Speaker 4: not sure as much as affordability and inflation are something
14:27
Speaker 4: that is on the forefront of all voters and consumers' minds.
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Speaker 4: That is the job of the Federal Reserve to use
14:34
Speaker 4: its monetary tools as best it can to try and
14:36
Speaker 4: keep that under control. But drilling down specifically to food prices,
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Speaker 4: I just don't know if there can be as much
14:42
Speaker 4: impact had there.
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Speaker 2: Yeah, Look, I gotta tell you, governments generally do the
14:50
Speaker 2: exact wrong thing when trying to deal with affordability. They say, oh,
14:54
Speaker 2: this is too expensive, Well, let's either cap those prices
14:58
Speaker 2: or give you more money for that, and neither of
15:00
Speaker 2: that fixes it. Because here's the thing. When we look
15:04
Speaker 2: at any of this, it is ultimately boiling down to
15:07
Speaker 2: where supply and demand intersect. And remember that there are
15:11
Speaker 2: multiple intersecting supply and demand curves. If we're talking about housing,
15:15
Speaker 2: just as an example, you have, Okay, here is the
15:19
Speaker 2: supply of housing at various prices, and here's the demand
15:23
Speaker 2: for it at various prices too. That demand curve is
15:26
Speaker 2: going to be based on supply and demand for labor
15:30
Speaker 2: how much you know, effectively, it's okay, like, what are
15:33
Speaker 2: wages that allow people to buy those homes? Then? So ultimately,
15:38
Speaker 2: where I tend to land on this is in the
15:42
Speaker 2: exact opposite side of politicians. I guess this is nice
15:46
Speaker 2: because look, I'm not a politician, so if like I
15:49
Speaker 2: don't have constituents to get upset at me for saying
15:54
Speaker 2: or doing the wrong thing, I'm just me. And so
15:59
Speaker 2: with that mind, the answer on these things is not
16:02
Speaker 2: to give people more money for Let's use housing and
16:05
Speaker 2: or college as examples. If you give people more money
16:09
Speaker 2: to go to college, but colleges keep the same number
16:12
Speaker 2: of spots available, generally, what happens is the cost of
16:16
Speaker 2: college goes up and it remains unaffordable because you haven't
16:20
Speaker 2: changed the supply and demand and balance in the right way.
16:22
Speaker 2: In fact, you've just added more demand, which is why
16:25
Speaker 2: they can now fill those spots at those higher prices. Likewise,
16:28
Speaker 2: for housing, a couple of years ago, we were talking
16:31
Speaker 2: about the Harris campaign proposal for what was it give
16:35
Speaker 2: like every first time home buyer, like ten thousand or twenty.
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Speaker 4: Five twenty five k, something like that, ten twenty five K.
16:40
Speaker 2: And I simply said, okay, great. If I'm a home
16:42
Speaker 2: seller and I know that you're giving people an extra
16:44
Speaker 2: twenty five thousand, I'm raising my price by twenty five thousand,
16:47
Speaker 2: right like that, you didn't make more homes or anything.
16:50
Speaker 4: Not to mention you gotta have to do that five
16:51
Speaker 4: years later. You know it's right one time to keep going,
16:54
Speaker 4: you know.
16:55
Speaker 2: So here's the thing. The way to improve this is
16:58
Speaker 2: to do one of two things. Number One, you can
17:02
Speaker 2: reduce demand for things. That's generally a bad strategy because
17:06
Speaker 2: it involves either taking like money away from people or
17:11
Speaker 2: be telling them that they don't want something and like
17:15
Speaker 2: convincing them of that. It's kind of hard to convince
17:17
Speaker 2: people they don't want housing or food or things.
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Speaker 4: Like that, and also bad for your economy to discourage
17:22
Speaker 4: compensation consumption not company.
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Speaker 2: We let mean look like again, you tell someone, hey,
17:27
Speaker 2: you don't really need that food, They're gonna be like, man,
17:30
Speaker 2: what are you smoking? Like you've got to be kidn me. No,
17:34
Speaker 2: you don't want that house? Houses are you want? You
17:36
Speaker 2: want that nice cave? Okay, if the cave is so nice,
17:40
Speaker 2: why don't you take it? Then? You know, like so,
17:43
Speaker 2: like that doesn't work. So the other thing that you
17:46
Speaker 2: can do, if you don't want to reduce demand, you
17:49
Speaker 2: can increase supply, and unfortunately, uh in basically every industry
17:55
Speaker 2: because of either a lack of competition, or in some
17:58
Speaker 2: cases government mandate and rules that restrict the supply of
18:02
Speaker 2: new whatever it might be, you end up with less
18:07
Speaker 2: supply of what people want to buy, and so prices
18:11
Speaker 2: and salaries get out of whack. And I'll even make
18:14
Speaker 2: a point this is a tangentile one, but in today's world, man,
18:18
Speaker 2: everyone's just got to make a return on their investment.
18:20
Speaker 2: You can't just like operate a business for the sake of,
18:22
Speaker 2: you know, providing a service. It's got to be well,
18:25
Speaker 2: I needed to go up by x percent per year,
18:27
Speaker 2: and you're like, no, no one just runs a bakery
18:29
Speaker 2: to sell bread anymore. It's all freaking pe backed, you know.
18:33
Speaker 4: There's a lot of that.
18:34
Speaker 2: Yeah, think about like the childcare space just as an example,
18:36
Speaker 2: and how many like pe backed like childcare companies there
18:39
Speaker 2: are where it's like, well, like, you know, we've got
18:42
Speaker 2: to raise the prices this year in order to get
18:44
Speaker 2: our guys out.
18:44
Speaker 4: Or infiltrate the trades too.
18:46
Speaker 2: It's everywhere, right, you see these PEA companies buying up
18:49
Speaker 2: like dentist office and consolidating them like h vackets. It's
18:52
Speaker 2: freaking everywhere, and ultimately you're not like, get more competition
18:59
Speaker 2: into everywhere, lower barriers to doing business, and you can
19:02
Speaker 2: get rid of a lot of these conversations, in my opinion,
19:05
Speaker 2: because companies will have to do one of two things.
19:08
Speaker 2: Either a lower their prices. Look at what's happened with
19:11
Speaker 2: corporate margins by the way, they've gone from like seven
19:13
Speaker 2: percent in the nineteen eighties and nineties up into the
19:16
Speaker 2: mid double digits. Now, okay, Like, where do you think
19:20
Speaker 2: that's coming from. There's only one answer, And so if
19:22
Speaker 2: you had more competition, it's going to reduce corporate profits.
19:25
Speaker 2: But also it's gonna drive up compensation because you can
19:27
Speaker 2: job hop more easily to other competitors, more competitions. Basically
19:32
Speaker 2: my answer to everything. Let's take a quick break. When
19:35
Speaker 2: we come back, we get the trivia answer in Wall Street.
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Speaker 3: off by twenty seven points. SMP five hundred is up
20:15
Speaker 3: eight points, or about a tenth of a percent, NASDAC
20:19
Speaker 3: dipping by only four points. Russell two thousand is up
20:22
Speaker 3: about a third of a percent. Tenure Treasure reeled flat
20:25
Speaker 3: at four point two nine to two percent, in Oil
20:30
Speaker 3: up about a half a percent, trating at ninety three
20:33
Speaker 3: dollars a barrow. American Airlines is the latest carrier to
20:36
Speaker 3: reduce its twenty twenty six earnings forecast, citing a surge
20:40
Speaker 3: and fuel costs adding to its expenses this year. However,
20:44
Speaker 3: the stock is up by four percent. Meanwhile, Tesla stock
20:47
Speaker 3: now down two percent after the ev maker beat first
20:51
Speaker 3: quarter earnings expectations. However, the company said it plans twenty
20:55
Speaker 3: five billion dollars on capital expenditures this year as a
20:59
Speaker 3: percent use its AI ambitions Elsewhere. IBM reported rising revenue
21:04
Speaker 3: and a higher profit in the previous quarter. However, the
21:07
Speaker 3: tech firm disappointed Wall Street by keeping its revenue guidance unchanged,
21:11
Speaker 3: sending shares plunging by eight percent. American Express reported a
21:16
Speaker 3: higher first quarter profit on the back of continued spending
21:19
Speaker 3: from upper income customers. AMEX shares are down by three
21:23
Speaker 3: percent in after today's closing bell, Intel will post their
21:28
Speaker 3: first quarter earnings. Procter and Gamble will follow tomorrow morning.
21:34
Speaker 3: I'm Tucker Silvan. That is Wall Street Watch, And on
21:36
Speaker 3: the previous segment, we asked you the trivia question who
21:39
Speaker 3: has granted the second most wishes in Make a Wish's history?
21:45
Speaker 3: John Cena was number one, Justin Bieber is number two.
21:49
Speaker 3: Doug in Wilmington, Mass is our winner today taking on
21:52
Speaker 3: the Financial Exchange Show T shirt. Congrats to Doug. We
21:55
Speaker 3: play trivia every day here in the Financial Exchange. See
21:59
Speaker 3: complete on test rules at Financial Exchange Show dot com.
22:03
Speaker 2: Tuck you a big Bieber fan? No, I mean, I
22:06
Speaker 2: just don't listen to his music. That's all I've I've
22:09
Speaker 2: become pro beabes as I've gotten older, So I'm with it.
22:14
Speaker 2: You know, I got some good songs.
22:15
Speaker 3: I yeah, I just don't listen to any pop music. Really,
22:18
Speaker 3: that's fine.
22:19
Speaker 2: I'm so cool. Yeah, I know, I know, very alternative.
22:22
Speaker 2: Let's talk a little bit the machine gun. Yeah it man,
22:26
Speaker 2: Let's let's let's talk a little bit about this story.
22:30
Speaker 2: Out of META from yesterday. So they have a new
22:34
Speaker 2: employee tracking tool called the Model Capability Initiative h MC
22:39
Speaker 2: I uh if you are keeping track at home, and
22:42
Speaker 2: the goal of this is to basically capture employee keystrokes
22:48
Speaker 2: and mouse clicks on different websites and services to figure
22:53
Speaker 2: out how they use them. Now, I a couple of
22:57
Speaker 2: things on this. First, this is dystopian, but not in
23:01
Speaker 2: the way that you think it is. It's not because
23:04
Speaker 2: they want to know who's spending the most time on ESPN,
23:08
Speaker 2: Wikipedia or ESPN. It's because they want to know how
23:12
Speaker 2: humans are using different websites and pieces of software so
23:16
Speaker 2: that they can use that in order to train AI
23:19
Speaker 2: agents to do the same thing. So you've got META
23:23
Speaker 2: staffers that are upset about this because they're like, well,
23:26
Speaker 2: like you're just watching us all the time, or like
23:29
Speaker 2: it's gonna be a security risk or our personal information's
23:33
Speaker 2: gonna get out or guys, it's it's simpler than that.
23:39
Speaker 2: They're just trying to replace you. Yeah, they're just trying
23:43
Speaker 2: to replace you. And the reason why this is the
23:46
Speaker 2: case is that ultimately what any AI system needs in
23:51
Speaker 2: order to actually do what you want it to do
23:55
Speaker 2: is what's called context, which, look, it's no different from
23:58
Speaker 2: how we think of context in our own lives. If
24:02
Speaker 2: I see I'm watching a basketball game and I see someone,
24:06
Speaker 2: you know, score a basket, I don't immediately sit up
24:09
Speaker 2: and cheer as loud as I can because I know
24:12
Speaker 2: that it's the first shot of the first quarter and
24:15
Speaker 2: there's a long game ahead. I have that context and
24:18
Speaker 2: AI system watching its first game of basketball ever and
24:21
Speaker 2: being told like, hey, cheer when something good happens. We'll
24:24
Speaker 2: be like yeah, like you scored, and it's like, dude,
24:27
Speaker 2: there's like forty eight. Let's take it easy. So context,
24:32
Speaker 2: when we talk about, you know, computers, is okay, what
24:35
Speaker 2: do I need to use? Why do I need to
24:37
Speaker 2: use it? And the idea is that just through watching
24:40
Speaker 2: the actions of employees using these different sites, then you'll
24:44
Speaker 2: be able to have computers and for okay, when I
24:46
Speaker 2: go to this site, here's the common workflow and here's
24:49
Speaker 2: what I do and here's why I do it, as
24:51
Speaker 2: opposed to having to tell them in written instruction to
24:55
Speaker 2: do so. So. Ultimately, this is because all these AI
24:59
Speaker 2: systems are learning that context is king again, not content,
25:03
Speaker 2: but context. This is where this is going is how
25:06
Speaker 2: can I get as much context into the AI system
25:08
Speaker 2: as possible, as cheaply as possible, so that I'm using
25:13
Speaker 2: less compute power to actually get what i need done done.
25:18
Speaker 4: Yeah, that I think it's a great summary of what's
25:20
Speaker 4: gone on here. I'd like to step back on a
25:22
Speaker 4: bigger point with meta in general, is they're making a
25:25
Speaker 4: huge pots obviously to catch up to some of the
25:27
Speaker 4: big players in the foundational model business, and I just
25:31
Speaker 4: wonder if that's the way that they should be playing it.
25:34
Speaker 4: They get a tremendous amount of benefits from AI today,
25:37
Speaker 4: I think that's worth making that distinction. That all of
25:40
Speaker 4: the algorithms and the information put together for suggested ads
25:44
Speaker 4: on your profile and mind on Instagram, whatever else out there.
25:48
Speaker 4: They've been using them for years and for great success
25:52
Speaker 4: and have been very profitable doing so. But this idea
25:55
Speaker 4: of chasing the foundational model, they've already had a couple
25:57
Speaker 4: of failures the metaverse. How's that going on? Know if
26:00
Speaker 4: that's still even active, or how real estate prices are doing.
26:03
Speaker 4: They're doing there, but I'm just not sure. They built
26:08
Speaker 4: their business on the backs of the Internet revolution and
26:12
Speaker 4: just this business that was extremely easy to scale their
26:17
Speaker 4: amount of users to build a network that was unparalleled
26:22
Speaker 4: in terms of what we've seen. They built the social network,
26:25
Speaker 4: and now to do this intensive CAPAC spend to build
26:28
Speaker 4: out a foundational model against other peers that have made
26:32
Speaker 4: significant in rows in the space. I'm just not sure
26:33
Speaker 4: if that's the way that they should be playing it,
26:36
Speaker 4: rather than just leveraging the technology to their existing networks.
26:41
Speaker 3: Yeah.
26:41
Speaker 2: I mean, look, the reason why people have loved these
26:44
Speaker 2: tech businesses for the last fifteen to twenty years is
26:47
Speaker 2: because they didn't require a ton of capital expenditure and
26:52
Speaker 2: they had very consistent revenue sources that were predictable. And
26:55
Speaker 2: now you're talking about okay, now we got to spend
26:57
Speaker 2: all this money here guys. Look I said at the
27:01
Speaker 2: beginning top of the hour, look what's going on with semiconductors.
27:05
Speaker 2: They're up eighteen days in a row right now if
27:08
Speaker 2: you look at the last let's just look at the
27:10
Speaker 2: last week just as an example. And I'm looking just
27:14
Speaker 2: at the tech space and what's been doing well and
27:17
Speaker 2: what hasn't. And I've got Broadcom up seven and a
27:20
Speaker 2: half percent, Micron up six, AMD up ten, Texas Instruments
27:25
Speaker 2: up twenty five analog devices up fifteen, monolithic power systems
27:31
Speaker 2: up fourteen, microchip technology up seventeen. So that's my semispace, right.
27:37
Speaker 2: Microsoft's up half a percent even in video. Again, part
27:40
Speaker 2: is just they're the big dog in the room. They're
27:41
Speaker 2: up two percent, Apple's up four Software is getting bludgeoned.
27:45
Speaker 2: You look at other computer hardware. Sand Disc is up
27:48
Speaker 2: five percent. You know, Like what you're seeing here, and
27:52
Speaker 2: what I think is interesting to watch is, you know,
27:57
Speaker 2: the last couple of years, if we look like at
27:59
Speaker 2: the last you know, three years or so, yes, Nvidia
28:02
Speaker 2: has been a story obviously like semis have, but the
28:05
Speaker 2: last you know couple of years, it's been okay, like
28:07
Speaker 2: Microsoft is getting this AI boost and Google's getting this
28:09
Speaker 2: AI boost and Meta is too. What if the interesting
28:14
Speaker 2: feature that like we run into here is hey, there's
28:17
Speaker 2: big CAPEX intensive businesses. Yeah, like they might have something
28:22
Speaker 2: that can work. But like again that the semis might
28:25
Speaker 2: be telling you the thing right now, which is, yeah,
28:28
Speaker 2: you need more compute and the rest of it's kind
28:30
Speaker 2: of uncertain if Microsoft and Google and Meta are gonna
28:32
Speaker 2: make the money. And ultimately, look, as we've said all along,
28:36
Speaker 2: every semiconductor cycle ends the same way with investors crying,
28:40
Speaker 2: because eventually you get to a point where the capex
28:42
Speaker 2: can't go up anymore and people are like, Nope, we're
28:45
Speaker 2: done and that's it. But that could be three months
28:48
Speaker 2: from now, three years, it could be three years from now,
28:50
Speaker 2: it could be thirty like, I have no idea. And
28:54
Speaker 2: until the last month again, even though like everyone kind
28:57
Speaker 2: of thought the AI trade was done, and then it
28:59
Speaker 2: turns out that like, oh, like everyone's using CODs so
29:02
Speaker 2: much that they're restricting access to it because they don't
29:05
Speaker 2: have enough compute power, and that semi trade is just
29:08
Speaker 2: back on now. Yeah, so this can all change very quickly,
29:11
Speaker 2: Like we can get to July fourth and it's like, hey,
29:14
Speaker 2: Claud's got enough compute power now and we're good. I
29:17
Speaker 2: have no idea how this is gonna go, But what
29:20
Speaker 2: I can tell you right now from what the market
29:22
Speaker 2: is saying is Yep, there's still not enough compute power there.
29:26
Speaker 2: And all these companies that are spending on it. Yeah,
29:29
Speaker 2: they might make some money on and they're gonna need
29:32
Speaker 2: to if you want that capex to continue. But for
29:35
Speaker 2: right now, everyone's just looking at the lack of compute
29:37
Speaker 2: power and saying that's what matters today.
29:39
Speaker 4: Yeah, who's supplying? Can that compute?
29:42
Speaker 2: Yes? And eventually people are gonna ask, okay, can you
29:45
Speaker 2: make money off of this? We're gonna have to figure
29:48
Speaker 2: that out. But that's the market saying. Don't worry about
29:51
Speaker 2: that today, worry about that tomorrow. Quick break. Here, we've
29:54
Speaker 2: got stack Roulette next.
29:57
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30:01
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30:04
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30:09
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30:13
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30:16
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30:22
Speaker 3: Before we get to stack Roulette, wanted to have a
30:25
Speaker 3: follow up text to our conversation last hour, which was
30:29
Speaker 3: about how Chuck just doesn't understand hot drinks. Yeah, so
30:33
Speaker 3: we had a texture out of the five away texts
30:36
Speaker 3: to the number six one, seven, three, six to two
30:39
Speaker 3: thirteen eighty five with the correct way to make hot chocolate. Okay,
30:44
Speaker 3: it's to dissolve a teaspoon of Dutch process cocoa and
30:48
Speaker 3: six ounces of eggnog and heat it up to one
30:52
Speaker 3: hundred and fifty degrees fahrenheit in the microwave not too hot.
30:56
Speaker 3: And of course eggnog is just an excuse to drink
30:59
Speaker 3: melted vanilla ice cream. That is a tasty method that
31:03
Speaker 3: sounds delicious.
31:05
Speaker 2: How do you know how warm you're heating it in
31:06
Speaker 2: the microwave? You can't put a thermometer in there, it'll
31:08
Speaker 2: blow up.
31:09
Speaker 3: Well, no, you would gauge the amount of time you're
31:12
Speaker 3: heating it up in the microwave, take it out, and
31:15
Speaker 3: then put a probe in and see what it comes
31:17
Speaker 3: in at.
31:17
Speaker 2: It feels like I got to do a lot of
31:19
Speaker 2: work to get there.
31:19
Speaker 3: Well, you know, you're very picky with your hot chocolate,
31:23
Speaker 3: and this is a solution that the listeners.
31:24
Speaker 2: I'm not picky with it. I just don't do it.
31:26
Speaker 2: I'm just like, you're just a chocolate girls. You can
31:28
Speaker 2: have the hot chocolate, just chrying. Like, I'll sit here
31:30
Speaker 2: and just eat the chocolate bar. It's fine. I just
31:33
Speaker 2: wanted to pass that text along. The Dutch process, by
31:37
Speaker 2: the way, was developed around two hundred years ago, just
31:39
Speaker 2: so you know, by as you would expect Dutch chocolate maker.
31:44
Speaker 4: Oh, I thought I was one seventy five, one hundred
31:48
Speaker 4: and seventy five.
31:50
Speaker 2: That was a guess on the price of chocolate.
31:53
Speaker 4: Possibly, but how do we get the microwave to one fifty? Yeah,
31:56
Speaker 4: forget it. Huh was it like one hundred.
31:59
Speaker 2: And fifty hot chocolate?
32:01
Speaker 3: As long as we're doing this, yeah, but the microwave
32:03
Speaker 3: needed to get there, right. But you'd be like, Okay,
32:05
Speaker 3: let's see what a minute does. Take it out pro
32:08
Speaker 3: a bit and be like, okay, we're at one hundred
32:10
Speaker 3: and twenty five thirty seconds.
32:12
Speaker 2: Okay, long time ago, back shortly after college. I lived
32:16
Speaker 2: on the thirty sixth story of a building in a
32:20
Speaker 2: city that's pretty high. And the rule if someone happened to,
32:25
Speaker 2: you know, lose the game or whatever, you had to
32:28
Speaker 2: do what was called a hot beer, which was you
32:31
Speaker 2: take it, pour it into a cup, put in the
32:34
Speaker 2: microwave for thirty six seconds, one second for every floor
32:37
Speaker 2: that you were up, and then he had to chug
32:39
Speaker 2: the beer after it came out of the microwave. Don't
32:41
Speaker 2: know how it got but that was the appropriate amount
32:44
Speaker 2: of time. Oh cod, And so you had to do
32:46
Speaker 2: a hot beer. I feel like they would do something
32:48
Speaker 2: chemically to the beer. It did. Actually, the interesting thing,
32:51
Speaker 2: I don't know how we're like, I'm sure, some physicists
32:54
Speaker 2: will be able to tell me this, but the uh,
32:57
Speaker 2: the microwaving got rid of the car nation, so it
33:00
Speaker 2: actually went down pretty easily.
33:03
Speaker 4: I was gonna say that probably had prompted your concerns
33:06
Speaker 4: on hot drinks, but no.
33:07
Speaker 2: No, it was fine. It was fine. Haven't done one
33:10
Speaker 2: in a while.
33:11
Speaker 3: Yeah, accelerates aging when you heat up beer.
33:14
Speaker 2: Yeah, it's it's like you're drinking an aged beer. That's
33:18
Speaker 2: exactly it. What do you got from me, Paul for
33:21
Speaker 2: stack Roulette.
33:23
Speaker 4: We've got less business travel these days, Chuck. People aren't
33:26
Speaker 4: getting out there and hidden the roads on those business trips.
33:29
Speaker 4: Companies are cutting back on travel. We've seen that over
33:33
Speaker 4: the course of the last six years or so, really
33:35
Speaker 4: post COVID that we've had a significant drop off six
33:39
Speaker 4: years straight of American companies green lighting fewer domestic business trips,
33:44
Speaker 4: and they're budgeting less money for those trips. In travel
33:48
Speaker 4: across the board, and an interesting piece in the Wall
33:50
Speaker 4: Street Journal is sort of arguing that the merits of
33:54
Speaker 4: business travel and certainly it's not really part of our industry.
33:58
Speaker 4: I guess we do travel to differ and auscil's locations,
34:01
Speaker 4: but not flying around the country that face to face
34:03
Speaker 4: exposure I still value quite a bit. I do feel
34:06
Speaker 4: like it is important when you're meeting with clients to
34:08
Speaker 4: try and see in face face. You don't have to.
34:10
Speaker 4: Certainly zooms made it a lot easier to do it remotely,
34:13
Speaker 4: but there for some businesses out there, it is important
34:16
Speaker 4: to have that exposure. And this given the fuel costs
34:19
Speaker 4: that we're seeing now in airfares, it seems like it's
34:21
Speaker 4: going to be a continued trend where sort of the
34:25
Speaker 4: millennial generation of working and traveling for business, they're just
34:29
Speaker 4: not seeing nearly as much on the corporate travel side
34:32
Speaker 4: of things. They're really trying to rain in those expenses.
34:34
Speaker 4: And this is probably a direct impact from COVID that
34:38
Speaker 4: we saw.
34:39
Speaker 2: Folks want to talk to you about the retirement planning
34:43
Speaker 2: seminar that the Armstrong Advisory Group is going to be
34:46
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34:52
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34:58
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35:01
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35:05
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35:13
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35:19
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35:27
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35:47
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35:57
Speaker 2: All right, So every so often you get a piece
35:59
Speaker 2: like this where it's like, okay, this is just you know,
36:02
Speaker 2: completely out of touch with how humans have operated for
36:04
Speaker 2: thousands of years. Drinks are so expensive that grown ups
36:08
Speaker 2: are pregaming like they did in college, And basically it's
36:10
Speaker 2: saying like, oh, like if you go to a major
36:11
Speaker 2: sporting event or a concert. Now it costs like fifteen
36:15
Speaker 2: to twenty dollars for a drink, which is is true.
36:18
Speaker 2: The fact is, like I can remember like the stories
36:21
Speaker 2: of you know, like my grandfather's brothers and stuff that
36:25
Speaker 2: used to like bring drinks into like Yankee Stadium back
36:27
Speaker 2: into like the forties because like oh, like yeah, they
36:29
Speaker 2: brought their flaskin and this and that, and this piece
36:32
Speaker 2: is trying to make it seem like this is new
36:33
Speaker 2: because people are talking about like, hey, how do you
36:36
Speaker 2: hide like a flask in your clothes? On Reddit? Like, No,
36:40
Speaker 2: this has been going on as long as there have
36:42
Speaker 2: been big places to watch people run into each other,
36:44
Speaker 2: tale as old as time. I'm sure that if you
36:46
Speaker 2: went back into the coliseum twenty five hundred years ago,
36:49
Speaker 2: as they were romans being like Jimmy, you got the
36:52
Speaker 2: bag of wine, Yeah, I gotta. I got a full
36:54
Speaker 2: sheepskin of it under my coat, don't worry about it,
36:57
Speaker 2: Like yeah, that's that's how. I'm sure that this is
37:00
Speaker 2: exactly how it's always been because even when I was
37:03
Speaker 2: a kid. Again you go back to like the nineteen nineties,
37:06
Speaker 2: I don't know like the exact numbers, but I'm sure
37:09
Speaker 2: that if you like looked at a beer at Fenway
37:11
Speaker 2: Park then and it was seven dollars, people be like, man,
37:14
Speaker 2: what a ripoff? Seven dollars? Like I get that for
37:18
Speaker 2: like two I at the bar across the street. Okay,
37:21
Speaker 2: like I get. This is how it's always been.
37:24
Speaker 4: Yeah, the one area I did one semester study A
37:27
Speaker 4: brought it in Europe and they don't. They're not about
37:30
Speaker 4: having drinks at the house before. They're much more going
37:33
Speaker 4: to local places and purchasing drinks there. Oh yeah, the pubs,
37:37
Speaker 4: Yeah exactly. Well mine was different area, but yeah, it's uh,
37:41
Speaker 4: I feel like very much in the United States, that's
37:43
Speaker 4: always been our mo is to try and do anything
37:46
Speaker 4: that we can to avoid paying those crazy prices at
37:50
Speaker 4: any major sporting.
37:50
Speaker 2: Even I mean, guys, that's that's why the Boston Tea
37:53
Speaker 2: Party happens. Okay, people forget, Actually it wasn't. People always forget.
37:58
Speaker 2: The Boston Tea Party happened because the English government lowered
38:03
Speaker 2: tariffs on tea coming into the US so that the
38:06
Speaker 2: Dutch East India Company could ship tea more cheaply than
38:08
Speaker 2: the smugglers could smuggle it. It was a bunch of
38:11
Speaker 2: Boston smugglers that got upset because they wouldn't have a
38:13
Speaker 2: market anymore. You're welcome. Let's take a quick break and
38:18
Speaker 2: we'll see it tomorrow on the Financial Exchange