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Why the stock market doesn't care about the world being a dumpster fire · The Financial Exchange Show

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Speaker 1: donation today. This is the Financial Exchange with Chuck Zada,
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Speaker 1: and Mike Armstrong.
1:09
Speaker 2: Chuck Mike Entucker with you here and as we kick
1:12
Speaker 2: things off, markets are rebounding from yesterday's wampwomp day.
1:18
Speaker 3: UH.
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Speaker 2: The S and P five hundred is up forty five points,
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Speaker 2: about two thirds of a percent, the Dow Jones Industrial
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Speaker 2: Average up three hundred and seventy seven points or about
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Speaker 2: three quarters of a percent, and we've got the Nasdaq
1:32
Speaker 2: bouncing back as well. Nasdak can Posite up two hundred
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Speaker 2: and fourteen points a little bit less than one percent,
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Speaker 2: and the Russell two thousand continues its strong starts of
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Speaker 2: the year, up another one percent as well, as it
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Speaker 2: has been outperforming all of its larger, more celebrated brethren
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Speaker 2: through the first couple weeks of the year. Tenure US
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Speaker 2: Treasury up two point two basis points to four point
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Speaker 2: one six two percent, Dollar Index up zero point two
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Speaker 2: seven percent to ninety nine seventeen. Gold is down fifteen
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Speaker 2: thirty and ounce to forty six twenty and forty cents,
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Speaker 2: and crude oil West Texas Intermediate sliding over four percent,
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Speaker 2: down two point seven two dollars and seventy five cents
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Speaker 2: to fifty nine twenty seven. Right now, this on the
2:15
Speaker 2: back of President Trump late yesterday indicating that he believed
2:22
Speaker 2: that Iran was cleaning up its act. I believe where
2:25
Speaker 2: was one of the terms used, and so maybe no
2:28
Speaker 2: military force needed by the United States. Obviously, these things
2:33
Speaker 2: can evolve quickly, and so we'll see what continues to
2:36
Speaker 2: happen there. But the story that we're gonna kick things
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Speaker 2: off with today is in barrens and the headline is
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Speaker 2: very simple. The world is a dumpster fire? Why the
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Speaker 2: stock market doesn't care? And couple things. The first thing
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Speaker 2: that we need to ask, Okay, is the world actually
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Speaker 2: a dumpster fire in the metaphorical sense? Obviously it's not
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Speaker 2: a literal dumpster fire, Otherwise you and I would be,
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Speaker 2: you know, Oscar the Grouts broadcasting from a flaming dumpster. Sure,
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Speaker 2: but I I don't think the world is a dumpster fire.
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Speaker 2: And what I mean by this is every single point
3:26
Speaker 2: in time has all kinds of crazy crap going wrong
3:29
Speaker 2: in it. And I pulled up the Wikipedia page for
3:33
Speaker 2: the twenty tens, which they have one, and I was like, oh, great,
3:37
Speaker 2: like the twenty tens, and you know, just to like
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Speaker 2: talk about the stuff that was going on then. And
3:43
Speaker 2: I'm gonna just go like in the order that they
3:45
Speaker 2: have different categories listed major international wars. You still had
3:52
Speaker 2: the Global War on Terror that was in place, so obviously,
3:56
Speaker 2: you know, you had US troops that were still fighting
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Speaker 2: abroad in a number of instances. Is this, you know,
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Speaker 2: kind of culminated in the twenty tens with the rise
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Speaker 2: of ISIS, which I don't think you can you know,
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Speaker 2: really look at a world in which like Isis was
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Speaker 2: starting to rise and be like not dumpster fire, and
4:12
Speaker 2: then look at today and be like dumpster fire. You know,
4:14
Speaker 2: like just like if we're talking about you know, different things.
4:17
Speaker 2: Russia in twenty fourteen also annexed the Korean Peninsula and
4:21
Speaker 2: was waging war in the Dambas same as like basically
4:24
Speaker 2: the same conflict that we are seeing today. The Saudis
4:28
Speaker 2: and Yumeni's decided, hey, we're gonna have you know, some
4:31
Speaker 2: direct conflicts and a bunch of proxy wars in the
4:33
Speaker 2: Middle East as well. Syria completely fell apart during the
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Speaker 2: twenty tens. Again, you had the Arab Spring movement throughout
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Speaker 2: the Middle East and Northern Africa as well. So like
4:46
Speaker 2: you had all kinds of internal political revolutions that were
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Speaker 2: going on.
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Speaker 3: You had Brexit, you had the Michael Michael, I'm not done.
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Speaker 2: Yeah, okay, fine, Yes, you had Brexit. You had Greek
4:57
Speaker 2: debt crisis. This is before you even get to like
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Speaker 2: disasters and things like that. You know, the Haiti earthquake
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Speaker 2: that killed a quarter million people. You had gee, does
5:10
Speaker 2: everyone remember a little thing called Fukushima. You know, like
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Speaker 2: there's a reason why France decided to shut all of
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Speaker 2: their nuclear power plants down. Might not have been the
5:19
Speaker 2: right decision, but it was because people were nervous about
5:22
Speaker 2: you know, nuclear power. After the earthquake and tsunami near Japan,
5:29
Speaker 2: you had, you know, dozens of other major earthquakes. When
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Speaker 2: we talk about non natural disasters, I mean like some
5:38
Speaker 2: of the stuff that you saw in terms of you know,
5:40
Speaker 2: whether you're talking aviation disasters, there were a whole bunch
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Speaker 2: of them, including what two planes I think that were
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Speaker 2: shot down in twenty thirteen and fourteen another one that
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Speaker 2: just went missing. You had all kinds of issues with
5:54
Speaker 2: hurricanes over the course of the decade. And this is
5:57
Speaker 2: before you even get to you know, just a lot
5:59
Speaker 2: of you know, Adjiti that everyone had about you know,
6:03
Speaker 2: local and internal politics and stuff. Like that. So the
6:06
Speaker 2: point that I'm making is the same one that I
6:08
Speaker 2: come back to all the time, which is, yeah, if
6:10
Speaker 2: you look back in hindsight, if you're one of the
6:12
Speaker 2: people who's lucky enough to have lived through any of
6:14
Speaker 2: this stuff, you look back and you're like, oh, well,
6:17
Speaker 2: like we survived and it was fine, but at the time,
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Speaker 2: like things were a little nuts and you didn't know
6:22
Speaker 2: how it would work out. I even even in situations
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Speaker 2: where you're successful, by the way, you's a you hear
6:29
Speaker 2: people look back and they're like, well, you know, the US,
6:31
Speaker 2: Like the US survived the Civil War, and it's like, well,
6:34
Speaker 2: actually a lot of people didn't. So these things when
6:39
Speaker 2: you're going through all of them, like yeah, Like, it
6:44
Speaker 2: does feel like there's a lot that's on our plate
6:47
Speaker 2: as far as what's going on in the world, But
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Speaker 2: that's kind of the natural state of the world. I
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Speaker 2: wish it weren't. I wish things were different, but that
6:56
Speaker 2: doesn't change anything. The fact is there are all things
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Speaker 2: going on that can make the world seem like a
7:03
Speaker 2: crazy place because it kind of is. And I think
7:06
Speaker 2: part of it is just we have way more access
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Speaker 2: to information now than we ever have, even more than
7:12
Speaker 2: you know, four or five years ago, and so it's
7:16
Speaker 2: something where we just see all the stuff that's going
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Speaker 2: wrong at a level that we didn't previously. I mean,
7:21
Speaker 2: if if you had freaking Twitter during World War Two,
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Speaker 2: there'd be some guy on Omaha Beach standing there like
7:29
Speaker 2: a French dude, being like, hey, I see all these
7:31
Speaker 2: boats coming in. What do you think that is? And
7:34
Speaker 2: maybe things would have turned out differently?
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Speaker 3: Like Unfortunately, so information and disinformation in today's society may
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Speaker 3: be more of what's to blame here. I mean, the
7:42
Speaker 3: Russia Ukraine conflict war, whatever invasion, first real military action
7:48
Speaker 3: that has just been entirely, almost entirely live streamed. Never
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Speaker 3: never in history have we had something akin to that.
7:57
Speaker 3: And I'll admit it does seem that we are more
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Speaker 3: politically divided, at least in the United States than ever.
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Speaker 3: But I don't know how you measure those things, you know,
8:05
Speaker 3: I don't know how you measure if we are in
8:07
Speaker 3: fact more politically divided. And so I think that media
8:10
Speaker 3: and social media particularly might have a lot to do
8:13
Speaker 3: with that. But you know, even if I could compile
8:16
Speaker 3: an index of geopolitical tensions and put us on a
8:20
Speaker 3: chart somewhere, and even if it turned out that we
8:23
Speaker 3: are in a moment of particularly high geopolitical tensions, I'm
8:26
Speaker 3: not sure that the stock.
8:27
Speaker 4: Market would have cared historically.
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Speaker 3: So I guess that's my answer is there have been
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Speaker 3: plenty of moments that are quite dumpster fire esque and
8:38
Speaker 3: markets haven't historically cared a whole lot.
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Speaker 2: We should create a dumpster fire index, and I don't
8:47
Speaker 2: know what we would do with it, but it would
8:48
Speaker 2: be fun to look at. Let's take a quick break here.
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Speaker 2: When we come back, we're gonna be joined by Michael
8:53
Speaker 2: san Totally from CNBC. We're gonna talk a little bit
8:56
Speaker 2: about what's been moving in markets to kick off the year.
8:59
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9:43
Speaker 2: As promised, We're now joined by Michael Santoli from CNBC
9:47
Speaker 2: here to talk about what's been moving in markets. Michael,
9:51
Speaker 2: thank you so much for joining us today.
9:53
Speaker 5: Oh glad to be with you.
9:54
Speaker 6: Thank you.
9:54
Speaker 2: It's been a little bit of a complicated market to
9:57
Speaker 2: get a read on to start the year. It's only
9:59
Speaker 2: in the last couple days that I feel like I'm
10:01
Speaker 2: starting to get a handle on it. What have been
10:03
Speaker 2: some of the key themes in your mind over the
10:06
Speaker 2: first couple of weeks.
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Speaker 6: You know, I agree with you that it's been very active,
10:11
Speaker 6: with a lot of sort of cross coming currents. Some
10:13
Speaker 6: of that is just normal kind of first of the
10:17
Speaker 6: year new flows, last year's winners come under pressure, last
10:21
Speaker 6: year's laggards get bought. But I think broadly speaking, the
10:24
Speaker 6: theme is the market is broadening out from the kind
10:30
Speaker 6: of narrow leadership of the AI trade. Largely that has
10:34
Speaker 6: been as investors position for reacceleration and growth in the
10:37
Speaker 6: first quarter of this year for the US economy is
10:41
Speaker 6: a massive, crowded contensus that this is about to happen.
10:44
Speaker 6: I mean, the fiscal story is part of that, but
10:46
Speaker 6: I do think we've kind of paid up for that
10:48
Speaker 6: trade in advance and the latter part of last year
10:51
Speaker 6: and then the early part of this year. And I
10:53
Speaker 6: think the AI piece of it is, you know, mag
10:56
Speaker 6: seven pulled forward the I think a lot of the
11:00
Speaker 6: ways we wanted to capitalize on the big AI thems,
11:03
Speaker 6: and now the AI excitement and the fast money has
11:05
Speaker 6: moved to Asia where the memory chip and Chinese IPOs
11:08
Speaker 6: are flying, and also down into the other food chain
11:12
Speaker 6: players below, you know, the nvidios of the world and
11:15
Speaker 6: broad cooms. That's largely speaking where we are. I think
11:19
Speaker 6: all that's got to get tested now. You're also seeing
11:22
Speaker 6: some odd ball stuff like yesterday and the day before.
11:25
Speaker 6: You know, consumer staples, which nobody wanted last year and
11:28
Speaker 6: has been hated and under owned rip. Why is that?
11:31
Speaker 6: Probably because big quant funds don't own enough of it
11:34
Speaker 6: and it's kind of a pain trade, so it is
11:37
Speaker 6: a little bit dicey. Interestingly, the S and P five
11:40
Speaker 6: hundred is basically as it closed yesterday where it was
11:43
Speaker 6: in late October, but the average stock is up. Banks
11:46
Speaker 6: are up, industrials up, so you know, it's kind of
11:48
Speaker 6: going according to that script.
11:51
Speaker 2: So this is where I have to, like, I got
11:53
Speaker 2: it down some cold water on this and get your
11:55
Speaker 2: opinion on it.
11:56
Speaker 6: Yeah.
11:57
Speaker 2: The last couple of times that the market's tried this
11:59
Speaker 2: broadening out summer of twenty four and spring of twenty five,
12:04
Speaker 2: things didn't end particularly well. Is it different this time.
12:08
Speaker 6: I don't know that it's proven it's different. I'm with you,
12:10
Speaker 6: by the way. In general, I constantly for two years
12:13
Speaker 6: have said a broader market is not as safe for
12:15
Speaker 6: a more rewarding market. Okay, what it is is it's
12:19
Speaker 6: professional stock pickers who believe that they're fighting against an
12:22
Speaker 6: unbeatable S and P. Five hundred when the market's narrow,
12:26
Speaker 6: like the idea of a broader market, because in theory
12:29
Speaker 6: they have an ability to kind of pick the better
12:32
Speaker 6: stocks and have more hunting to do. But I do
12:36
Speaker 6: agree that without the sponsorship of the heavy market cap
12:39
Speaker 6: names and the fact that this is an AI Bowl market. Okay,
12:43
Speaker 6: it started over three years ago because of AI, we
12:46
Speaker 6: kind of jumped the gun on that. It's very unlikely
12:50
Speaker 6: that we have a wholesale passing of the baton to
12:53
Speaker 6: a different kind of stocks leading the way in a
12:55
Speaker 6: sustainable way and have the index performed very well. So
12:58
Speaker 6: I've been like, fine, you want a broader market, this
13:00
Speaker 6: could be what it looks like. SMP does not much
13:02
Speaker 6: of anything. In the best case scenario, the average stock
13:05
Speaker 6: out performs for a phase. But I don't know how
13:07
Speaker 6: far that gets you, because if you want to meet
13:09
Speaker 6: the consensus SMP target for the end of this year
13:12
Speaker 6: of like seventy six hundred on the SMP, it's like
13:14
Speaker 6: everything but the MAG seven's got to be up twenty percent, right,
13:17
Speaker 6: It's just the only way the mask can work.
13:19
Speaker 2: And let's talk about those MAGS seven names, because I
13:21
Speaker 2: was looking at a lot of these charts this morning
13:24
Speaker 2: and in videos basically been range bound for the last
13:27
Speaker 2: you know, six months now. Microsoft has been in a
13:30
Speaker 2: steady decline since August. Meta has been you know, steady
13:35
Speaker 2: declined since August is well, you know, punctuated by a
13:38
Speaker 2: couple of sharp moves. It's it's just not pretty there.
13:41
Speaker 2: How do these stocks get out of their funk? And
13:45
Speaker 2: can they get out of their funk the same way
13:47
Speaker 2: they did last April.
13:48
Speaker 6: I think the bowl case is that even within the
13:51
Speaker 6: Mag seven. It's been a story of rotation. You know,
13:55
Speaker 6: obviously Alphabet's been carrying way more than its weight in
14:00
Speaker 6: in getting that part of the market to stay supported. Broadcom,
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Speaker 6: you know, basically is the eighth in the mag eight.
14:07
Speaker 6: I mean you can't, you know, only only by circumstances
14:10
Speaker 6: is it excluded. That's been a strong stock. And then
14:13
Speaker 6: Tesla's just does its own thing and it's kind of
14:15
Speaker 6: random and it's not really connected to all the AI themes,
14:19
Speaker 6: but it's sort of held in there. I don't know
14:21
Speaker 6: that there would be a catalyst aside from this general impulse.
14:26
Speaker 6: And this is the way the market's traded. It seems
14:28
Speaker 6: collectively investors want to stay fully invested. Exposures to equities
14:32
Speaker 6: are very high right now across all types of investors,
14:35
Speaker 6: and yet they're just willing to grab at the last
14:37
Speaker 6: stick that the thing that seems kind of under exploited
14:40
Speaker 6: or due to bounce or something like that. I find
14:43
Speaker 6: it fascinating Microsoft just cannot get out of its own way.
14:46
Speaker 6: It's a proxy for open ai. If we decide that
14:48
Speaker 6: this is kind of zerosome game stuff in AI, and
14:52
Speaker 6: open Ai doesn't have the juice there's a lot of
14:55
Speaker 6: stuff that's going to have to, you know, be repriced
14:57
Speaker 6: for that. So I do think that's kind of sort
15:00
Speaker 6: of a fascinating dynamic. I don't know that we can
15:02
Speaker 6: extrapolate what's happened from here, but it is quite interesting.
15:06
Speaker 6: I think we all have to keep in mind what
15:07
Speaker 6: happened in the alphabet versus meta trade like nine months ago.
15:11
Speaker 6: You know, it was kind of like one hundred and
15:13
Speaker 6: eighty degree switch almost overnight.
15:16
Speaker 2: I want to talk about two other markets that are
15:18
Speaker 2: kind of moving in opposite directions. The bond market hasn't
15:22
Speaker 2: really done much of anything for five months, despite all
15:24
Speaker 2: kinds of headlines on labor inflation and the FED. On
15:29
Speaker 2: the other hand, you've got precious metals markets that are
15:31
Speaker 2: just going absolutely nutty for the last two two and
15:34
Speaker 2: a half months. Now. Are they basically acting as their
15:37
Speaker 2: release valve for any of these concerns or is there
15:40
Speaker 2: something else afoot here.
15:42
Speaker 6: I think that's a good assumption, is that they actually
15:44
Speaker 6: are acting as largely the release valve for global concerns
15:50
Speaker 6: about overdependence on US treasuries or US assets, global concerns
15:55
Speaker 6: about general fiscal over extension by governments, and therefore, I mean,
16:02
Speaker 6: if you're a large investor, I think people have decided
16:05
Speaker 6: that they prefer, you know, gold plus some other commodity
16:09
Speaker 6: stuff as a greater part of their portfolio ballast than
16:15
Speaker 6: government bonds. Right, You're always gonna be making more government bonds,
16:18
Speaker 6: They're not gonna be making as much more of the
16:20
Speaker 6: other stuff. I also think it's obviously become a momentum trade.
16:23
Speaker 6: We know central banks are pricing sensitive buyers. They're buying
16:25
Speaker 6: more gold and not buying as many treasuries. So it
16:28
Speaker 6: is interesting that that's where it's gone. Silver is just
16:30
Speaker 6: sort of like the manic little brother of gold, and
16:35
Speaker 6: it becomes very speculative, very fast, and it's gotten completely
16:39
Speaker 6: you know, overplayed. But we'll see how that goes.
16:42
Speaker 2: Fantastic, Michael, appreciate you joining us, and I hope you
16:45
Speaker 2: have a great rest of the week. We'll catch up soon.
16:47
Speaker 6: Great appreciate it. Thank you.
16:48
Speaker 2: That is Michael Santotally from CNBC discussing markets all right.
16:53
Speaker 5: Time for trivia here on the Financial Exchange, And on
16:56
Speaker 5: this day back in two thousand and nine, Chesley Sullenberger
16:59
Speaker 5: landed US Airways Fly fifteen forty nine on the Hudson
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Speaker 5: Rivers shortly after takeoff from La Guerdia Airport in New
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Speaker 5: York City. All passengers and crew survived in what became
17:11
Speaker 5: known as the Miracle on the Hudson so trivia question today,
17:15
Speaker 5: which actor portrayed Sully in the twenty sixteen movie Sully
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Speaker 5: once again, which actor portrayed Chesley Sullenberger in the twenty
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Speaker 5: us at six one seven three six two thirteen eighty
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17:52
Speaker 2: Let's see what do we want to talk about here?
17:54
Speaker 2: Let's talk about this Verizon outage from yesterday. Oh that's fine,
17:57
Speaker 2: that was great to either of you use Verizon? Yes, yep,
18:00
Speaker 2: both of you do. Yeah.
18:01
Speaker 5: I noticed I hadn't the old lessels uh iPhone specific thing.
18:07
Speaker 5: I think it I think so okay, yeah, just it.
18:09
Speaker 2: Uses morse code when you can't do anything else.
18:11
Speaker 5: No signal whatsoever. So I just assumed it was my phone.
18:14
Speaker 5: So I left here and it was like hour two
18:17
Speaker 5: of not having any cell signals. So I just stopped
18:20
Speaker 5: off at Apple on the way home. I was like, hey,
18:23
Speaker 5: what what the deal man, and he was like, yeah,
18:25
Speaker 5: the Verizon they got an outage. I was like, oh, oh, okay, neat.
18:29
Speaker 4: Yeah, so infected all sorts of stuff.
18:31
Speaker 3: If you, h we and our in our company use DocuSign.
18:35
Speaker 3: To get into DocuSign or any other multi factor authentication,
18:38
Speaker 3: you need to receive a text message.
18:40
Speaker 4: Those weren't working.
18:41
Speaker 2: Uh.
18:42
Speaker 3: And then I received like four or five text messages
18:46
Speaker 3: towards the middle of the night last night from people
18:48
Speaker 3: who yeah, clearly sent them prior to.
18:52
Speaker 2: I gotta tell you, it's not really reassuring that simple.
19:00
Speaker 2: Having like one cell network go down can be as
19:03
Speaker 2: disruptive right as it was.
19:05
Speaker 5: Do you see the map, what map of the US
19:09
Speaker 5: of the outages?
19:11
Speaker 1: Well?
19:11
Speaker 2: Yeah, it was.
19:11
Speaker 4: Primarily East coast focused.
19:13
Speaker 2: Yeah.
19:13
Speaker 3: I mean, Chuck, you bring up a valid point. There
19:17
Speaker 3: are three providers out there. Everybody else runs off of
19:20
Speaker 3: those towers of those three providers.
19:22
Speaker 2: If like, I'm just trying to think of this from
19:24
Speaker 2: a resilience perspective.
19:26
Speaker 4: Not great.
19:27
Speaker 2: If the US economy is dependent on those companies to function,
19:30
Speaker 2: it's not great. Quick break, we got Wall Street watching
19:35
Speaker 2: the Trivia Answer Next or Trivia.
19:36
Speaker 1: Next, bringing the latest financial news straight to your radio.
19:44
Speaker 1: Every day. It's the Financial Exchange on the Financial Exchange
19:48
Speaker 1: Radio Network. Time now for Wall Street. Watch a complete
19:53
Speaker 1: look at what's moving markets so far today right here
19:57
Speaker 1: on the Financial Exchange Radio Network.
20:00
Speaker 5: The markets are bouncing back after yesterday's loss, driven by
20:04
Speaker 5: rebound in the tech sector on the heels of impressive
20:08
Speaker 5: quarterly results from Taiwan Semiconductor. Wall Street's also sifting through
20:12
Speaker 5: more bank earnings. Right now, the Dow is up eight
20:14
Speaker 5: tenths of a percent, or four hundred and two points
20:17
Speaker 5: higherr SMP five hundred, up two thirds of a percent,
20:20
Speaker 5: NASDAC up nearly nine tenths of a percent. Russell two
20:23
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20:27
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20:31
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20:35
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20:40
Speaker 5: gains of six percent after it posted another record quarter,
20:43
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20:46
Speaker 5: quarter profit amid demand for its AI chips. Other chip
20:50
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20:54
Speaker 5: posted stronger than expected earnings, although its profit fell. Goldman
20:58
Speaker 5: Sachs also beat earnings four and posted record annual revenue.
21:02
Speaker 5: In Morgan Stanley's profit and revenue beat expectations, all three
21:05
Speaker 5: stocks jumping over three percent higher. Spotify announced it would
21:10
Speaker 5: raise its subscription price one dollars twelve dollars and ninety
21:13
Speaker 5: nine cents a month. Shares in the audio streaming in
21:16
Speaker 5: podcast company are down down by three percent, and Barclay's
21:21
Speaker 5: upgraded Dell Technologies to overweight from EQO weight, citing the
21:24
Speaker 5: strength of Dell's AI server orders. Dell shares are up
21:28
Speaker 5: about four percent on that news. I'm Tucker Silvan. That
21:32
Speaker 5: is Wall Street watching. In the previous segment, we asked
21:34
Speaker 5: you the trivia question which actor portrayed Chesley Sullenberger in
21:38
Speaker 5: the twenty sixteen movie Sully. That would, of course be
21:42
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21:55
Speaker 2: Can I ask a Spotify question, Sure, go for it.
21:59
Speaker 2: Why do they not just ripple their price?
22:02
Speaker 4: I would leave.
22:03
Speaker 5: Yeah, that's a lot so that.
22:07
Speaker 3: I get emails from Amazon every day saying, hey, you
22:10
Speaker 3: can listen to podcasts here. You're already paying in this
22:13
Speaker 3: in your prime membership. I used to have Pandora. I
22:17
Speaker 3: I think that that is not as sticky as maybe
22:22
Speaker 3: you think.
22:24
Speaker 2: The reason why I think it think it is sticky
22:27
Speaker 2: is twofold number one. As someone who has switched music
22:33
Speaker 2: services once in the past, it sucks like like just
22:40
Speaker 2: trying to like rebuild what you had the other place. Yeah,
22:43
Speaker 2: it's like, okay, I've got to like get my playlists rebuilt.
22:47
Speaker 2: I can't remember what I had in my library. Like
22:50
Speaker 2: it's it's just a slog number one. The other piece
22:54
Speaker 2: that I think Spotify has at this point are the
22:58
Speaker 2: network effects.
22:59
Speaker 4: Sure.
23:00
Speaker 3: Yeah, they do have their own dedicated stuff that you
23:02
Speaker 3: can't get elsewhere.
23:03
Speaker 2: Well, and just like your friends are on it, they
23:05
Speaker 2: make a playlist like you listen to that plately, Like
23:07
Speaker 2: you can listen to that playlist. Do that stuff? What's that?
23:10
Speaker 4: Do you do that? I never do that.
23:13
Speaker 5: I got a couple of save playlists. Yeah yeah, oh definitely.
23:16
Speaker 2: Yeah. So I think I don't know. If if I
23:21
Speaker 2: were running Spotify, and look, there's probably a reason why
23:24
Speaker 2: I'm not probably many, I would just be like, you
23:27
Speaker 2: know what, we're gonna raise the price to forty dollars
23:31
Speaker 2: and you know that's still pretty cheap each month for
23:34
Speaker 2: access to all the music in the world.
23:36
Speaker 5: I understand your point. I think that's you know, being aggressive.
23:40
Speaker 5: But if if Spotify came out tomorrow, like they said, hey,
23:44
Speaker 5: we're gonna be the same price as Netflix, I'd still stay.
23:48
Speaker 2: On right Like this, maybe I was a little too aggressive,
23:53
Speaker 2: but like I do that you're gonna raise the price
23:57
Speaker 2: a dollar a month, man, You'll you'll only get so
24:00
Speaker 2: many bites of the apple raise it five. I'm not
24:02
Speaker 2: saying this is like good for consumers or anything, but
24:05
Speaker 2: I think like people just be like, Okay, that's how
24:08
Speaker 2: it is, because that's what they've done with Netflix.
24:10
Speaker 3: By the way, Yeah yeah, maybe they occupy that space
24:13
Speaker 3: for more people than I realized. I would make a
24:15
Speaker 3: switch only because I've had Pandora before. I was really
24:18
Speaker 3: happy with it. I made the switch because I wanted
24:21
Speaker 3: more podcasts Pandora's Box I did. Yeah, cool, Yeah, I did.
24:27
Speaker 3: That's precisely what happened.
24:28
Speaker 2: Actually, yeah, let's see, what do we want to talk
24:31
Speaker 2: about now? Food prices?
24:33
Speaker 3: Or maybe I do want to talk a little bit
24:35
Speaker 3: about food prices, because this is obviously top of mind
24:39
Speaker 3: for everybody, and I think throwing some data behind it
24:44
Speaker 3: is useful. So the main source that we go to
24:46
Speaker 3: for food prices, specifically food at home, so grocery prices,
24:52
Speaker 3: is the Consumer Price Index. They have data on this
24:54
Speaker 3: going back to the nineteen fifties, so like pretty nice
24:58
Speaker 3: data set to look at. For some context here, I'm
25:02
Speaker 3: annualizing all this. The highest rate of increase that we've
25:06
Speaker 3: got at grocery prices in recent history came in August
25:10
Speaker 3: of twenty twenty two, when food prices were up for
25:13
Speaker 3: the year over thirteen and a half percent. The only
25:16
Speaker 3: time in US measured history that we have going back
25:19
Speaker 3: to the fifties where it was worse than that was
25:20
Speaker 3: the early seventies when they were up to twenty three percent.
25:24
Speaker 3: But it has calmed down quite a bit from those highs.
25:29
Speaker 3: If we take a look at food prices in twenty
25:32
Speaker 3: twenty four, just calendar year twenty twenty four, they were
25:35
Speaker 3: up one point seven percent. I think the problem is
25:40
Speaker 3: one nobody thinks about it this way. They always think
25:42
Speaker 3: about it compared to what they bought five years ago
25:45
Speaker 3: in their grocery bag. Two, that pace of change has
25:51
Speaker 3: bumped back up again. So for twenty twenty five calendar year,
25:54
Speaker 3: we're now up to two point four percent increase. And
25:57
Speaker 3: so this has shifted in the wrong direction for I
26:02
Speaker 3: mean a number of different reasons that I can think
26:04
Speaker 3: of off the top of my head. You have cattle, you know,
26:07
Speaker 3: meat prices through the roof. You have a weakening dollar,
26:10
Speaker 3: so those imports are costing more, and you've got tariffs
26:13
Speaker 3: on some of these products as well. So it is
26:16
Speaker 3: trending in the wrong direction as of late.
26:19
Speaker 2: The big thing is, and I come back to this
26:22
Speaker 2: all the time, with the vast majority of this, the
26:26
Speaker 2: President in Congress don't really have anything to do with it.
26:29
Speaker 2: Absolutely not like I said this during the Biden administration.
26:32
Speaker 2: I say it now during the Trump administration. The president
26:35
Speaker 2: has nothing to do with beef prices. It just persons
26:40
Speaker 2: has nothing new with the lettuce being up seven point
26:42
Speaker 2: three percent, you know, and there's very trust he can
26:47
Speaker 2: do to affect that. I mean, they've been dreaming up
26:50
Speaker 2: these ideas, but all of this stuff has negative impacts
26:54
Speaker 2: somewhere else. Right, If you want to let in Argentinian cattle,
26:57
Speaker 2: then you're going to you know, ruined the domestic cattle business.
27:01
Speaker 2: You know, frozen fish up eight point six percent. Point
27:04
Speaker 2: me to the policy that causes that that. There is
27:08
Speaker 2: none likes. A lot of this is just stuff that happens,
27:12
Speaker 2: and it's you know, it's just how it goes. So
27:15
Speaker 2: I think that when you look at this, the big
27:18
Speaker 2: thing is when you look at the long term trend,
27:24
Speaker 2: one of the big things that's been in place over
27:25
Speaker 2: the last sixty years is that as a percentage of income,
27:29
Speaker 2: Americans pay way less than they did in the fifties, sixties,
27:33
Speaker 2: and seventies. That trend has been interrupted in the last
27:37
Speaker 2: couple of years. And that's why people are stressed about
27:39
Speaker 2: food prices, is because for their entire adult lives, the
27:45
Speaker 2: general trend has been, Hey, food is getting more affordable
27:49
Speaker 2: as a percentage of my income, and now you've got
27:53
Speaker 2: that being disrupted, and I don't know how you fix this.
27:58
Speaker 2: I don't know that you can fix this because there
28:01
Speaker 2: are so many different proximate causes and I don't think
28:04
Speaker 2: there's anything that you can do on this. But ultimately,
28:08
Speaker 2: that's why people are saying they're stressed out about grocery prices.
28:11
Speaker 2: It's not just because they're going up, because, quite honestly,
28:13
Speaker 2: aside from like a couple of small little blips, grocery
28:17
Speaker 2: prices always go up, you know, unless you want to count.
28:21
Speaker 2: Here are the blips in the last thirty years. Okay,
28:25
Speaker 2: just after desert Storm, just after the Great Financial Crisis,
28:30
Speaker 2: and in twenty sixteen when Russia flood of the world
28:34
Speaker 2: with cheap energy and basically the prices of everything were,
28:36
Speaker 2: you know, sliding down. Then other than that, grocery prices
28:40
Speaker 2: always go up. And so what we're seeing now is
28:45
Speaker 2: incomes in the last five years have not kept up
28:48
Speaker 2: with grocery prices, and that is why people are stressed
28:51
Speaker 2: about it. And I don't know how you change that.
28:55
Speaker 2: I have no good ideas.
28:58
Speaker 4: No, it is large out of the control.
29:00
Speaker 3: And again, which directions the dollar going to go? Which
29:05
Speaker 3: direction are some of these other things going to be
29:07
Speaker 3: to break those trend lines?
29:10
Speaker 4: It's a fair question, but I think the data is useful.
29:12
Speaker 6: Right.
29:13
Speaker 3: You know, prices for groceries are not coming down that
29:16
Speaker 3: they are not cheap and than they were a year ago,
29:18
Speaker 3: and they will not come down provably more expensive like that.
29:22
Speaker 3: They only typically go down when something either very bad
29:25
Speaker 3: is happening or has just happened, and now you're getting,
29:28
Speaker 3: you know, the eventual relief from that.
29:30
Speaker 2: Yeah.
29:30
Speaker 3: The unfortunate thing is also the pace of increases is
29:33
Speaker 3: what's increasing. Yeah, you don't like to see grocery prices
29:37
Speaker 3: aren't never going to go down, but you hope that
29:39
Speaker 3: the rate of increase slows.
29:41
Speaker 2: Yeah, yep, that's fair. Take a quick break. When we
29:45
Speaker 2: come back, we'll do a little bit of stack roulette.
29:47
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31:00
Speaker 2: Mike, do you mind if I kick stack rule it
31:02
Speaker 2: off today? I would love that, Chuck, we got to
31:05
Speaker 2: talk about sports gambling doozy today.
31:09
Speaker 5: Huh.
31:09
Speaker 2: We've got a problem here. So first we've got and
31:14
Speaker 2: I haven't been able to watch it because we've been
31:17
Speaker 2: you know, doing this show here. But federal prosecutors have
31:20
Speaker 2: now charged twenty six people in an alleged point shaving
31:23
Speaker 2: scheme involving dozens of college basketball players on seventeen different
31:29
Speaker 2: NCAA Division One men's basketball teams attempting to fix twenty
31:33
Speaker 2: nine different games between September of twenty two and February
31:36
Speaker 2: of twenty five. So this is bad to begin with.
31:42
Speaker 2: And this is before you even get to you know,
31:45
Speaker 2: the things like the threats being made against both amateur
31:50
Speaker 2: and professional athletes, the harassment that goes on on social
31:55
Speaker 2: media surrounding them when they you know, don't hit you know,
31:59
Speaker 2: a prop bet that someone had made. And I gotta
32:04
Speaker 2: tell you, we're kind of proving that we can't handle it. Yeah,
32:07
Speaker 2: And I'm not against having sports betting, you know, being
32:12
Speaker 2: legal overall, but I quite honestly think that the the
32:18
Speaker 2: mobile apps should not be allowed because a like, it
32:22
Speaker 2: just makes it too easy for you to fall into
32:23
Speaker 2: a very bad hole and be it enables like this
32:26
Speaker 2: behavior when you're able to basically tweet at the same
32:29
Speaker 2: person that you're betting on on the same device, Like
32:31
Speaker 2: that's just a little, you know, not great. So look,
32:35
Speaker 2: if you want to gamble on sports, I think you
32:37
Speaker 2: should have to go to a casino that has a
32:39
Speaker 2: you know, sports book. And other than that, I think
32:41
Speaker 2: we're proving that we're not really adults enough to be
32:43
Speaker 2: able to handle it. And this goes for the prediction
32:46
Speaker 2: markets that are trying to get into this stuff too.
32:48
Speaker 3: I was gonna ask, so, can you help me understand
32:50
Speaker 3: what the difference is between the NC doublea's control over
32:53
Speaker 3: betting platforms versus prediction markets, because it's it seemed insinuated
32:58
Speaker 3: to me that the NC double A can kind of
33:01
Speaker 3: influence what types of bets exist on a sports book,
33:04
Speaker 3: whereas the the the futures trading staff, prediction markets are
33:10
Speaker 3: just whatever you want to do, completely unre.
33:12
Speaker 2: Prediction markets are they're well, they're regulated by the CFTC,
33:15
Speaker 2: the Commodity Futures Trading Commission. They're not part of the
33:19
Speaker 2: gambling regulating regulate regulatory apparatus, and so the NCAA doesn't
33:25
Speaker 2: have any direct control or influence in there. So, quite honestly,
33:30
Speaker 2: I gotta tell you, I just don't think we can
33:33
Speaker 2: handle this. And I say this, by the way, as
33:35
Speaker 2: someone who tonight I am going to be going to
33:39
Speaker 2: a casino actually that has a sports book. So I'm
33:42
Speaker 2: not anti gambling or anti casino. I simply am of
33:47
Speaker 2: the opinion that when it comes to the betting apps,
33:52
Speaker 2: We're we're not really doing a good job of saying that, yes,
33:56
Speaker 2: we deserve to have access to this.
34:00
Speaker 4: Yeah.
34:00
Speaker 3: I continue to be completely torn on it, but all
34:02
Speaker 3: the evidence suggests that you're right about it. Like, I
34:06
Speaker 3: wish we were better at handling ourselves, but this is
34:09
Speaker 3: getting pretty ugly, and it especially bothers me that the
34:14
Speaker 3: leagues themselves have literally no control over it.
34:18
Speaker 2: They don't want control over it, Mike, there's too much money.
34:20
Speaker 3: Clearly the NCAA wants some degree of influence here.
34:24
Speaker 2: The nc DOUBLEA I don't think actually wants anything. I
34:26
Speaker 2: think they want to make some noise to show that
34:28
Speaker 2: they're trying to protect their players. Ultimately, like I don't
34:32
Speaker 2: think they actually want to restrict.
34:35
Speaker 3: Well they should, because if it continues this direction, nobody's
34:39
Speaker 3: gonna want to watch a basketball game that you know
34:41
Speaker 3: is fixed well and well again, I don't want to
34:45
Speaker 3: watch a college basketball game to begin with. So I'm
34:47
Speaker 3: not a great person to poll on this, but I
34:49
Speaker 3: would I would suggest that yeah, if you Obviously, the
34:52
Speaker 3: fixing of sports is the least of my concerns.
34:56
Speaker 2: Like, as someone who doesn't bet, I don't care if
35:00
Speaker 2: it's fixed or not, Like I know that that's kind
35:03
Speaker 2: of a weird opinion. Ultimately, like I root for my teams,
35:06
Speaker 2: but it's entertainment. Like if if I wake up on
35:09
Speaker 2: Monday morning and the New England Patriots have lost on Sunday,
35:13
Speaker 2: my life is not different in any way, shape or form.
35:17
Speaker 2: I say this having lived through you know enough championships
35:20
Speaker 2: that my teams have won to know that, Hey, like
35:23
Speaker 2: it feels great and you can always talk about the
35:25
Speaker 2: ride getting there, but ultimately, like it doesn't change my life.
35:28
Speaker 2: I'm not one of the players, I'm not one of
35:30
Speaker 2: the coaches, and I don't gamble on it, so like,
35:32
Speaker 2: my life is no different as a sports fan. What
35:36
Speaker 2: I do know is that for the players that get
35:40
Speaker 2: harassed because some guy bet that they were gonna make
35:43
Speaker 2: eight three pointers and they only made seven, and now
35:46
Speaker 2: he's yelling at them that he's gonna like come find
35:48
Speaker 2: their family on Twitter, Like what are we doing here, man.
35:53
Speaker 3: Especially from a non professional athlete. And I'd get that
35:56
Speaker 3: they get paid now and it's a little bit different
35:58
Speaker 3: than it was a decade ago, but I mean, you're
36:01
Speaker 3: talking about harassing nineteen year olds, like.
36:04
Speaker 2: Like you shouldn't harass thirty year olds in that fashi shit.
36:07
Speaker 3: It's just as different when it's an adult. It just is,
36:11
Speaker 3: And it's just yeah, unseemly. When I when I think
36:14
Speaker 3: about all this stuff, I.
36:15
Speaker 2: Just don't think we can handle it. So the fixing, Like, sure,
36:18
Speaker 2: it's unseemly and everything, but ultimately, like I watch sports
36:22
Speaker 2: to see great athletes perform you know, crazy feats if
36:27
Speaker 2: they win or lose. Like again, I say, this is
36:30
Speaker 2: a big sports fan, but like I've just found, it
36:32
Speaker 2: doesn't affect my life that much, Like it doesn't solve
36:35
Speaker 2: my money problems that I might have. It doesn't you know,
36:38
Speaker 2: help me communicate with my Patriots.
36:41
Speaker 4: Winning fixed my marriage.
36:42
Speaker 2: You know, like right things no one has ever said.
36:45
Speaker 3: For twenty eleven Bruins Championship, twenty eleven Bruins Championship helped
36:49
Speaker 3: me lose fifteen pounds.
36:50
Speaker 4: Like yeah, you're right, Yeah, yeah, no, you're right, Chuck.
36:56
Speaker 2: That's it. So I'm more concerned about just the so
37:00
Speaker 2: so fabric being torn because we're viewing athletes as the
37:05
Speaker 2: way for us to make money as opposed to I
37:08
Speaker 2: want to be entertained, and I just think we're we're
37:13
Speaker 2: getting a little bit out of whack on it, and
37:15
Speaker 2: I know that.
37:15
Speaker 3: This might be some problem that solves itself, Chuck, because
37:18
Speaker 3: very soon the people that bite on this stuff are
37:20
Speaker 3: going to rapidly run out of money to do their betting.
37:22
Speaker 4: From everything that I've seen.
37:24
Speaker 2: There's always there's always new ones coming up, you know,
37:27
Speaker 2: and there's always another paycheck, and like it's.
37:29
Speaker 4: There's always another sucker again.
37:31
Speaker 2: I know that I sound like the old fuddyduddy, and
37:33
Speaker 2: I guess I am, but someone's got to play that role. Yeah,
37:36
Speaker 2: and just call me doctor fuddy Duddy. Yeah, doctor dudds.
37:41
Speaker 2: This is what happens when you give us nice things. Yeah.
37:45
Speaker 2: So in any case, markets right now, Dow is up
37:48
Speaker 2: four hundred and two points s and P's up forty
37:49
Speaker 2: seven as that can posite up to seventy I'm sorry,
37:52
Speaker 2: to nineteen. So we've got all three major US indices
37:56
Speaker 2: in the green. Russ two thousand and one quarter percent
37:58
Speaker 2: as well. So you go today, Russell two thousand, you go,
38:03
Speaker 2: let's take a quick break for the whole rest of
38:05
Speaker 2: the day. We are going to be back tomorrow. I
38:07
Speaker 2: will let you all know how my little casino trip goes.
38:11
Speaker 2: Last time I went, I made five dollars in three hours,
38:14
Speaker 2: so who yeah, but again entertainment. Let's take a quick break.
38:19
Speaker 2: We'll see it tomorrow on the Financial Exchange.