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Inflation is eating the labor market · The Financial Exchange Show

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Speaker 2: Chuck, Mark and Tucker with you. We got equity markets mixed.
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1:49
Speaker 2: top store for this hour comes from Barons and the
1:53
Speaker 2: headline is one that I saw it, and I go, okay,
1:56
Speaker 2: what's what's this all about? Says inflation is eating labor.
2:00
Speaker 2: Market games are a mirage. Now, Mark, this comes on
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Speaker 2: the back of inflation right now. I checked just because
2:09
Speaker 2: I wanted to make sure that I had all of
2:10
Speaker 2: the data that I could. For the last twelve months,
2:13
Speaker 2: CPI is running two three five core. CPI is two
2:17
Speaker 2: seven seven, PCE is two three four, Core PCE is
2:22
Speaker 2: two six eight, and PPI is two six to two,
2:24
Speaker 2: with core PPI at three oh three. So help me
2:28
Speaker 2: make sense of why this article states alleges infers that
2:35
Speaker 2: inflation is eating the labor mine.
2:37
Speaker 3: I tell you, Chuck, I'm not gonna There are twenty
2:40
Speaker 3: five paragraphs in this article, no charts, no data, So
2:44
Speaker 3: I kind of my eyes gloss over about a third
2:46
Speaker 3: of the way into it. I don't there's not much
2:50
Speaker 3: of a Real wages have sputtered. We know that your
2:54
Speaker 3: wage growth has picked up over the Let me just
2:56
Speaker 3: state the facts as most I'm not a labor economist,
2:59
Speaker 3: but these facts are pretty well known among anyone paying
3:02
Speaker 3: attention to this. Like we have to real wages stat
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Speaker 3: I really, I mean inflation adjusted, which are a good
3:08
Speaker 3: measure of what you can actually afford your standard of living.
3:11
Speaker 3: Real wages stagnated in the first couple of years coming
3:13
Speaker 3: out of the COVID expansion. That's why that, among other reasons,
3:16
Speaker 3: is why people were really upset. Since then, real wage
3:20
Speaker 3: growth has picked up, but overall it's been pretty sluggish
3:23
Speaker 3: overall since twenty twenty. Real wage growth is measured by
3:27
Speaker 3: the change in average hourly earnings is I think a
3:30
Speaker 3: little over two percent. That's easy enough to verify. But
3:33
Speaker 3: I think I'm in the ballpark there, which by historical
3:36
Speaker 3: standards is terrible. This is kind of related to the
3:41
Speaker 3: article on hiring. I think that we might be covering
3:45
Speaker 3: employers over hired coming out of COVID bedtime. So one
3:49
Speaker 3: way to adjust gradually your labor force is to let
3:55
Speaker 3: real wages fall to hold your payroll costs and check.
3:59
Speaker 3: I should say it doesn't really adjust the labor force. Sure,
4:02
Speaker 3: it doesn't change how many people you have working for you,
4:04
Speaker 3: but let real wages fall while your profits rise. That's
4:08
Speaker 3: one way to compensate for your over hiring, if you will.
4:13
Speaker 3: I'm probably overgeneralizing there, but that's what it seems. That's
4:16
Speaker 3: that situation where we appear to be in. There's one
4:18
Speaker 3: way to compensate for that is to let real wages fall.
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Speaker 3: That's probably partly what's happening here.
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Speaker 2: And when we talk about where wage growth is right now,
4:28
Speaker 2: I often try to look at a few different indicators,
4:30
Speaker 2: just because they're all surveys of different kinds. None of
4:34
Speaker 2: them are, you know, perfect, We don't actually know anything
4:37
Speaker 2: for certain, so it's just okay, like tell me what's
4:40
Speaker 2: you know, what's what's happening here? And when we look
4:44
Speaker 2: at it a couple different ways that you can. You
4:46
Speaker 2: can look at this. The first each jobs report, we
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Speaker 2: get an average weekly earnings number. The hourly one matters,
4:52
Speaker 2: but if you're working, you know, a fewer hours each week,
4:54
Speaker 2: that plays into it as well. So for the most
4:57
Speaker 2: recent month, average weekly earnings for workers was twelve hundred
5:01
Speaker 2: and forty one dollars and forty six cents. A year
5:04
Speaker 2: ago it was twelve hundred dollars and fifty cents, So
5:07
Speaker 2: that tells you based on that number, wage growth over
5:10
Speaker 2: the last twelve months, if you believe the government jobs
5:12
Speaker 2: report was three point four percent. The Atlanta Fed also
5:16
Speaker 2: conducts a survey that they do. They follow specific individuals,
5:21
Speaker 2: so it's a longitudinal survey, which I think is nice
5:23
Speaker 2: because like you're interviewing the same people over and over,
5:25
Speaker 2: so it's a different methodology, different group of people. And
5:28
Speaker 2: they are showing four point two percent wage growth over
5:32
Speaker 2: the last twelve months, so a little bit higher than
5:34
Speaker 2: that three four but similar ballpark uh paychecks who is
5:40
Speaker 2: a again payroll processor, so they're pulling this from their
5:44
Speaker 2: own data, and this is specifically small business wage data.
5:48
Speaker 2: Their twelve month hourly earnings growth is two point seventy
5:52
Speaker 2: nine percent, So the range is like two eight to
5:55
Speaker 2: four to two the middle ones three to four. So again,
5:58
Speaker 2: we've wage growth over the last twelve months is probably
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Speaker 2: somewhere in the range of three and a quarter to
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Speaker 2: three and a half percent. Is that a fair statement? Mark, like,
6:09
Speaker 2: just to kind of put an easy number.
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Speaker 3: On it, h doesn't sound unreasonable. I can get you
6:14
Speaker 3: a more rigorous answer. Go ahead, I'll look it up.
6:17
Speaker 2: You rigorize while I'm doing some other stuff. So we've
6:20
Speaker 2: got wage growth running somewhere in the ballpark of three
6:25
Speaker 2: and a quarter to three and a half percent. Now,
6:26
Speaker 2: remember yeah, CPI and PP and PCE are running at
6:31
Speaker 2: about two point three two point four over that time,
6:34
Speaker 2: So that tells you that real wages over the last
6:37
Speaker 2: year or so are up one percent. So I think
6:41
Speaker 2: that what this is getting at here, what it's trying
6:44
Speaker 2: to get at, is that hiring is slowing as companies
6:48
Speaker 2: try to navigate potential higher input costs and things along
6:52
Speaker 2: those lines. Because the way that companies typically try to
6:54
Speaker 2: manage margins is through headcount. And the interesting thing so
6:59
Speaker 2: far is that we're not really seeing anything as far
7:02
Speaker 2: as higher layoffs. But I almost wonder are companies just
7:05
Speaker 2: getting better at managing the number of people they need
7:08
Speaker 2: to bring in so that they don't need to be
7:10
Speaker 2: doing layoffs down the road. Is this kind of the
7:13
Speaker 2: effect of that over hiring from twenty one to twenty two,
7:16
Speaker 2: where companies now are more hesitant to hire and so
7:20
Speaker 2: they don't need to be conducting as many layoffs. But
7:22
Speaker 2: also the other piece is how many companies are pushing
7:26
Speaker 2: these return to work mandates right now, and that's just
7:28
Speaker 2: causing people to leave look for and look for remote work,
7:31
Speaker 2: and so you don't need to see layoffs necessarily. It's
7:34
Speaker 2: just people leaving voluntarily because they don't want to be
7:37
Speaker 2: in person in white collar jobs. I throw a lot
7:40
Speaker 2: out here, Yeah, I think I think.
7:41
Speaker 3: My answer is yes. I think. Well, the whole economy
7:43
Speaker 3: has become less volatile really over the past seventy or
7:47
Speaker 3: so years, as we've shifted from manufacturing to services. That
7:52
Speaker 3: change is so conspicuous and was so substantial that economists
7:56
Speaker 3: gave it a name called the Great moderation Everything. The
8:00
Speaker 3: volatility of everything has declined since the end of the
8:03
Speaker 3: Second World War, GDP fluctuations and employment fluctuations and consumption
8:08
Speaker 3: fluctuations in inventory. You name it a macro economic so
8:12
Speaker 3: to speak, fancy way of saying that the whole economy
8:15
Speaker 3: a series variable over time, and it's volatility. It's the
8:21
Speaker 3: amount by which it moves up and down around its
8:24
Speaker 3: mean over time has come down. So yeah, I think
8:27
Speaker 3: that it's what you're describing is consistent with better headcount
8:32
Speaker 3: management that's accompanied better management of inventory and other things
8:37
Speaker 3: over the course of the past however, many decades.
8:40
Speaker 2: The piece that I think is going to be interesting
8:42
Speaker 2: to me is what happens with the overall job growth numbers,
8:48
Speaker 2: because one of the things that I've been seeing a
8:50
Speaker 2: bunch of different pieces on this over the last few
8:52
Speaker 2: weeks now, job growth is clearly slowing at the moment.
8:57
Speaker 2: But the interesting thing, and Mark, I'm curious if you've
9:00
Speaker 2: any literature on this, we're also seeing signs that labor
9:03
Speaker 2: force growth is slowing or in some cases there's some
9:07
Speaker 2: theories that it may even be shrinking, partly because of
9:09
Speaker 2: the crackdown on illegal immigrants, partly because of demographic trends
9:15
Speaker 2: with more boomers retiring, and so what you're seeing now is, hey,
9:19
Speaker 2: if you looked a couple of years ago, you needed
9:21
Speaker 2: one hundred and fifty thousand to two hundred job two
9:24
Speaker 2: hundred thousand jobs a month created in order to actually
9:27
Speaker 2: it's little hype about one hundred twenty five to one
9:29
Speaker 2: hundred and fifty thousand jobs created to break even and
9:32
Speaker 2: not have unemployment rise. Some of the estimates that I've
9:35
Speaker 2: been seeing now are that we might only need sixty
9:38
Speaker 2: to ninety thousand jobs added a month in order to
9:41
Speaker 2: not see unemployment rise because the demographic trends and you know,
9:46
Speaker 2: deportations are having that kind of impact on the labor force.
9:51
Speaker 3: Your thoughts, Yeah, so you brought up a couple different
9:54
Speaker 3: points there too, the number of jobs that you know,
9:57
Speaker 3: it's just a little tricky because we're talking about two
9:59
Speaker 3: different surveys here. You can just statistically try to answer
10:03
Speaker 3: the question what rate of payroll growth historically? And historically
10:09
Speaker 3: is a weasily termed because I could be looking at
10:10
Speaker 3: twenty twenty to present, two thousand to present. It depends
10:14
Speaker 3: has been what rate of change in the payroll survey
10:18
Speaker 3: the new jobs that we report every month. One hundred
10:21
Speaker 3: and forty seven thousand somewhere in that ballpark I think
10:24
Speaker 3: it was last month. What rate of increase is consistent
10:27
Speaker 3: with no change in the unemployment rate. That's a statistical question,
10:31
Speaker 3: and that's easy to do. If I start in two thousand,
10:33
Speaker 3: the answer is ninety three point two ninety three thousand
10:37
Speaker 3: new jobs must be created to keep the unemployer rate
10:40
Speaker 3: employment rate constant. If I start in twenty twenty, you
10:43
Speaker 3: could tell I was doing this exercise last week with
10:45
Speaker 3: Mike Armstrong because I have the code written and I
10:47
Speaker 3: can run it quickly. Here the number since twenty twenty.
10:50
Speaker 3: Let me do twenty twenty one instead, because twenty twenty
10:52
Speaker 3: was Haywire. The numbers two hundred and sixty five. If
10:56
Speaker 3: I and I'm gonna, I promise this will be the
10:58
Speaker 3: last number I'll throw at you. If I do it.
11:00
Speaker 3: Since twenty twenty four not a big sample. The number
11:04
Speaker 3: is one hundred and thirty thousand. That's the number of
11:06
Speaker 3: new jobs associated with no change in the unemployment rate.
11:10
Speaker 3: The calculation you mentioned, Chuck's a little bit more sophisticated,
11:12
Speaker 3: and I don't have a good answer for it, which is,
11:14
Speaker 3: how does the reduction in labor force. Additions to labor
11:19
Speaker 3: force that come from stricter enforcement of our immigration laws
11:23
Speaker 3: affect that will surely it must push it down, right,
11:26
Speaker 3: But that's an all lseqal answer, and I don't know
11:29
Speaker 3: the best way to account for what else needs to
11:32
Speaker 3: be held equal there.
11:33
Speaker 2: You're talking about the overall growth rate of the US economy.
11:36
Speaker 3: I'm talking with people who the way I just did it,
11:39
Speaker 3: the estimation technique I just used is just fine assuming
11:43
Speaker 3: no structural changes in the labor force. I'm very comfortable
11:45
Speaker 3: with saying the statistical answer is one hundred and thirty
11:47
Speaker 3: thousand jobs to keep unemployment okay, constant. But you're asking,
11:51
Speaker 3: and Mike asked last week, but what if the labor
11:53
Speaker 3: force is changing because of stricter enforcement of immigration laws,
11:57
Speaker 3: or what if it's changing because of some demographic shift
11:59
Speaker 3: more stay at home spouses entering the workforce or something.
12:04
Speaker 3: It's difficult to adjust the simple calculation I did for
12:08
Speaker 3: those more sophisticated questions.
12:11
Speaker 2: It also gets I think the question then of inflation
12:14
Speaker 2: versus growth over kind of the next ten years. Where okay,
12:18
Speaker 2: so if you have fewer people coming into the labor
12:20
Speaker 2: force and a smaller population to sell to. But you
12:27
Speaker 2: also still need people in certain jobs in order to
12:31
Speaker 2: do certain things, you know, think about construction and so
12:33
Speaker 2: on and so forth. Could you see a scenario where
12:36
Speaker 2: wages need to go up in order to fill those
12:38
Speaker 2: jobs because of a lack of workers, but there's less
12:41
Speaker 2: stuff being built? And does that give a more stagflationary
12:44
Speaker 2: tilt to the economy. I don't know, but it's just
12:47
Speaker 2: something that rattles around in my head from time to time.
12:49
Speaker 3: I'm sorry to hear that.
12:50
Speaker 2: And now it's in your head too. So let's take
12:53
Speaker 2: a quick break. When we return, we're gonna be joined
12:56
Speaker 2: by Ted Rossman from bank Rate talking about their side
12:59
Speaker 2: hustle survey. Right after this.
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Speaker 2: Ted Rossman from Bank Right Now joins us to talk
14:02
Speaker 2: a little bit about their recent side hustle survey they
14:05
Speaker 2: conducted Ted how are you.
14:07
Speaker 5: I'm doing well, Thanks for having.
14:08
Speaker 2: Me absolutely Ted. When you look at the overall numbers,
14:11
Speaker 2: what percentage of Americans have a side hustle today, and
14:14
Speaker 2: how does that compare to the last several years.
14:18
Speaker 5: Twenty seven percent of US adults have a side hustle.
14:21
Speaker 5: That's the lowest since twenty seventeen. It's actually down nine
14:25
Speaker 5: percentage points from a year ago. It's down twelve percentage
14:28
Speaker 5: points from two years ago. Really, what's happening here is
14:32
Speaker 5: that fewer people are needing to side hustle as wage
14:36
Speaker 5: growth catches up with inflation. We've had three years now
14:39
Speaker 5: where wage growth is outpaced inflation. I know that things
14:43
Speaker 5: still feel expensive, but we should also point out that
14:46
Speaker 5: the job market's been solid. A lot of people feel
14:49
Speaker 5: like they're catching up a bit. Side hustling is declining.
14:53
Speaker 5: I don't think the trend is dead. I do think
14:55
Speaker 5: that side hustling will pick up again in the future,
14:58
Speaker 5: but at least for now, it's taking a bit of
15:00
Speaker 5: a pause.
15:01
Speaker 2: What about Demographically, is there a certain age band or
15:05
Speaker 2: certain type of person that tends to participate in side
15:08
Speaker 2: hustles more than others?
15:10
Speaker 5: Young adults stand out. About a third of Gen z
15:13
Speaker 5: ers and millennials have side hustles, versus a little under
15:16
Speaker 5: a quarter of Gen X and boomers. Some of this
15:19
Speaker 5: reflects changes in the workforce. It's not fifty years and
15:23
Speaker 5: a gold watch and a pension anymore. A lot of
15:26
Speaker 5: young people are side hustling out of necessity, but also
15:29
Speaker 5: because they want to. There's this kind of passion project
15:32
Speaker 5: idea that maybe you're trying something out. In my twenties,
15:36
Speaker 5: I wrote part time for a fantasy sports website, and
15:39
Speaker 5: I always thought maybe I'd want to go down that
15:41
Speaker 5: career path I decided not to. But still, while it lasted,
15:44
Speaker 5: it was fun. I made some extra money, had a
15:47
Speaker 5: line on my resume if I chose to explore that further.
15:50
Speaker 2: I would urge.
15:51
Speaker 5: People to follow their passion when it comes to side hustling.
15:54
Speaker 5: Maybe you love pets, or maybe you love photography, or
15:58
Speaker 5: you know, whatever it is, there are a lot of
16:00
Speaker 5: things you can do to make some extra money that
16:03
Speaker 5: maybe freeze up room in your budget. Maybe it helps
16:05
Speaker 5: you pay off debt or save or invest more. Side
16:08
Speaker 5: hustling can be a very good thing.
16:11
Speaker 2: When you look at how much people are earning from
16:13
Speaker 2: these side hustles, would you find it's.
16:16
Speaker 5: Not that much. To be honest, the median is two
16:18
Speaker 5: hundred dollars a month. I mean, hey, not to sneeze
16:21
Speaker 5: at an extra twenty four hundred dollars a year. That
16:23
Speaker 5: could help with vacation expenses or breathing room in the budget,
16:27
Speaker 5: or maybe that can pay off some credit card debt
16:30
Speaker 5: or something like that, but it's certainly not enough to
16:32
Speaker 5: live on. The average is a bit higher. The average
16:35
Speaker 5: side hustler is making about nine hundred dollars a month.
16:38
Speaker 5: That's driven up by some higher earners. Sometimes, though, a
16:42
Speaker 5: side hustle means that you get back what you put
16:45
Speaker 5: in in terms of a lot of these are more
16:47
Speaker 5: hourly kind of things that if you're ride sharing or
16:51
Speaker 5: doing food delivery, I mean, the more hours you put in,
16:53
Speaker 5: the more you're going to get out of it. But
16:55
Speaker 5: for many people it's kind of a smaller supplement. It's
16:59
Speaker 5: not you know, enough to live on by any means.
17:02
Speaker 2: Fantastic, Ted, appreciate you joining us today. Thanks so much
17:04
Speaker 2: for the time, of course, thank you all right.
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Speaker 2: Mark, do you want to talk about housing or autos?
17:53
Speaker 2: You pick? No, you pick? You love.
17:58
Speaker 3: You always have interesting things to say about housing. Let's
18:00
Speaker 3: do housing first.
18:01
Speaker 2: I do like this housing piece, so it's in Bloomberg Opinion.
18:04
Speaker 2: It's titled the Key to more profitable home Building Cheaper Land,
18:07
Speaker 2: and I'm gonna read something here. Something has to give.
18:10
Speaker 2: Builders need relief on the cost front to keep breaking
18:12
Speaker 2: new ground if prices are falling. That relief is unlikely
18:16
Speaker 2: to come from construction costs, which last year climbed to
18:18
Speaker 2: sixty four point four percent of the final price, up
18:21
Speaker 2: from fifty six percent twenty seventeen. Land is the other
18:24
Speaker 2: big cost, at thirteen point seven percent in twenty twenty four.
18:28
Speaker 2: With home builders set to exhaust the cheap blots they
18:30
Speaker 2: acquired prior to the run up in land prices, they
18:32
Speaker 2: can't afford to keep paying up for land in an
18:35
Speaker 2: environment of sluggish demand and profitability. So what this is
18:39
Speaker 2: talking about is that this year, the big thing that
18:42
Speaker 2: we're seeing is home builders are scaling back their production
18:44
Speaker 2: numbers because they can't sell the homes that they want
18:46
Speaker 2: to at the prices they need to in order to
18:48
Speaker 2: be profitable and construction costs they don't really have, you know,
18:52
Speaker 2: much control over, just because it's gonna be basically set
18:55
Speaker 2: by the market whenever you know they're buying. But if
18:58
Speaker 2: people are willing to unload the land more cheaply, it
19:02
Speaker 2: potentially gives them those extra percentage points in margin to
19:06
Speaker 2: be able to build homes, which we still are not
19:08
Speaker 2: building enough of so to this point we're not really
19:12
Speaker 2: seeing any signs of that. But this gets at kind
19:16
Speaker 2: of the problem that we're facing, which is, look, home
19:18
Speaker 2: prices are starting to fall nationwide in a number of
19:21
Speaker 2: markets because people can't afford them. How do you build
19:25
Speaker 2: in a market where people can't afford the prices that
19:27
Speaker 2: are already out there? Becomes pretty challenging. Quick break here.
19:32
Speaker 2: When we come back, we got the trivia answer in
19:34
Speaker 2: Wall Street Watch.
19:41
Speaker 1: Bringing the latest financial news straight to your radio. Every day,
19:45
Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
19:51
Speaker 1: Time now for Wall Street Watch a complete look at
19:54
Speaker 1: what's moving markets so far today right here on the
19:57
Speaker 1: Financial Exchange Radio Network.
20:00
Speaker 4: REIFF News for Wall Street. After President Trump announced to
20:03
Speaker 4: fifty percent teriff on Brazilian goods and also said the
20:06
Speaker 4: fifty percent tariff on imported copper will take effect on
20:11
Speaker 4: August first. Right now, mixed territory for markets. The Dow
20:15
Speaker 4: is up by six tenths of one percent, or two
20:18
Speaker 4: hundred and sixty five points. S and P five hundred
20:21
Speaker 4: is up two tenths of one percent or twelve points
20:23
Speaker 4: in the Nasdaq, retreating by one tenth of a percent.
20:27
Speaker 4: Ten year Treasury yield is up two basis points at
20:32
Speaker 4: four point three six percent. Crude oil is down nearly
20:35
Speaker 4: two percent lower, trading just above sixty eight dollars a barrel,
20:40
Speaker 4: and I skipped the Russell two thousand there that is
20:42
Speaker 4: up by half a percent or twelve points higher. Big
20:45
Speaker 4: news in packaged foods this morning after the Italian candy
20:48
Speaker 4: maker behind Ferrero agreed to buy cereal giant w K
20:52
Speaker 4: Kellogg for about three point one billion dollars. Wk Kellogg
20:56
Speaker 4: is known for making childhood staples, including fruit loops and
20:59
Speaker 4: frosted flakes that stock. Today, wk Kellogg is surging by
21:04
Speaker 4: thirty percent. Meanwhile, the Defense Department will become the largest
21:08
Speaker 4: shareholder in rare Earth minor MP materials after agreeing to
21:11
Speaker 4: buy four hundred million dollars of its preferred stock shares
21:15
Speaker 4: in MP Materials jumping over forty percent. Delta Airlines reported
21:21
Speaker 4: earnings ahead of the open this morning that beat analysts expectations,
21:24
Speaker 4: where it's quarterly profit was up sixty three percent from
21:27
Speaker 4: a year ago. Delta also reinstated its twenty twenty five
21:31
Speaker 4: profit outlook. Delta up by twelve percent, while other airlines
21:35
Speaker 4: are seeing games as well, including United Airlines, also up
21:38
Speaker 4: by over twelve percent. AMD up over four percent after
21:43
Speaker 4: the chip maker was upgraded to a buy at HSBC,
21:46
Speaker 4: where it's higher than expected pricing for its newest AI
21:49
Speaker 4: chip could add significant upside. Two revenue and shares in
21:53
Speaker 4: Canagara brands down by two percent after the maker of
21:56
Speaker 4: slimgym and Swiss miss Hot chocolate posted disappointed quarterly results
22:01
Speaker 4: in an annual outlook that missed expectations. I'm Tucker Silva
22:06
Speaker 4: and that is Wall Street Watch, and I'm gonna get
22:10
Speaker 4: my old trivia here. Left it on the desk to
22:13
Speaker 4: the right. There, there we go. We got it. A
22:16
Speaker 4: trivia question we asked was which country did the Bahamas
22:19
Speaker 4: declare their independence from? That would be the UK. K
22:24
Speaker 4: from Osterville is our winner today. Taking on the Financial
22:27
Speaker 4: Exchange show t shirt and we play trivia every day
22:30
Speaker 4: here on the Financial Exchange. See complete contest rules at
22:34
Speaker 4: Financial Exchange Show dot com.
22:36
Speaker 2: If you're not sure, isn't the answer to the best
22:39
Speaker 2: answer to give always the UK? Give you, like, you know,
22:44
Speaker 2: given how much they controlled at one point in history.
22:47
Speaker 2: If you're not sure what country they rebelled against, it's
22:49
Speaker 2: probably the.
22:50
Speaker 4: UK, right, probably, Yeah, that makes sense.
22:52
Speaker 2: That'd be my guess at least. Let's see. I want
22:55
Speaker 2: to talk about this piece from the Wall Street Journal.
22:57
Speaker 2: It's near and dear to my heart. Actually, I'm not
23:00
Speaker 2: how Volkswagen's electric bus went from American flagship to flop.
23:06
Speaker 2: So back when they announced this, which was Tucker, When
23:09
Speaker 2: did they first put this out? Was it like twenty nineteen, twenty.
23:11
Speaker 4: Twenty, somewhere in that range, And you were extremely excited
23:14
Speaker 4: for it?
23:15
Speaker 2: Well, because I love the overall design of it, Like
23:18
Speaker 2: it's big, it's airy, it feels kind of surfy, even
23:20
Speaker 2: though I don't surf. It's like okay, like I feel
23:23
Speaker 2: like I could get into this, and I was really
23:26
Speaker 2: excited about it.
23:26
Speaker 4: Yeah, and they spent like significant money in marketing, like
23:29
Speaker 4: they had a Super Bowl ad I believe, right, they
23:31
Speaker 4: did a ton on the Californians.
23:34
Speaker 2: Yeah, yeah, and then they released it. I think it
23:38
Speaker 2: was either earlier this year, maybe late last year, I
23:41
Speaker 2: can't remember exactly when. And I looked at it online
23:45
Speaker 2: and I go, this is not great. It only gets
23:49
Speaker 2: two hundred and fifty miles a charge in perfect conditions,
23:52
Speaker 2: which for those of us who live, you know, in
23:54
Speaker 2: the New England region where we broadcast our show out
23:57
Speaker 2: of New england's not really known for great conditions all
24:00
Speaker 2: the time. Twinter tends to get a little dodgy.
24:03
Speaker 4: Here and there, or summer apparently today.
24:05
Speaker 2: Yeah, summer. Occasionally you get you know, some flash floods
24:08
Speaker 2: and things like that, like it's it's not really you know,
24:11
Speaker 2: southern California. So there's that the range was bad. On
24:16
Speaker 2: top of that, the thing was incredibly not was is
24:22
Speaker 2: incredibly expensive for what you get. So if you wanted
24:27
Speaker 2: to look right now, and I'm just I pulled up
24:28
Speaker 2: the inventory page just to see, you know, what was
24:31
Speaker 2: what was out there, and what you find is the
24:36
Speaker 2: cheapest version that it offered right now. You know, like
24:40
Speaker 2: if you're going through and kind of shorting in that direction,
24:44
Speaker 2: you're out the door for around sixty thousand dollars and
24:46
Speaker 2: you're very easily getting close to the mid seventies. Yeah, pass,
24:50
Speaker 2: And it's just like it doesn't work for that car
24:56
Speaker 2: for what you get. And the thing that's surprising to
24:58
Speaker 2: me about this is Vita has some other electric vehicles
25:03
Speaker 2: that are out there. They've got their ID four, which
25:06
Speaker 2: again different vehicle, YadA, Yeah, like I understand that, but
25:10
Speaker 2: that's priced in the mid forties generally, and yeah, like
25:14
Speaker 2: still not you know, a cheap car by any means,
25:17
Speaker 2: and you can get up into the high fifties if
25:18
Speaker 2: you're going for like the top you know, heavy heavy
25:21
Speaker 2: duty models, but you kind of figured this would be
25:23
Speaker 2: an improvement on it. Instead, it's less range, twenty to
25:26
Speaker 2: thirty percent more cost. And on top of that, this
25:29
Speaker 2: is before you even get into the fact that, Okay,
25:32
Speaker 2: they made the thing with a back seat that was
25:34
Speaker 2: too big for the number of seat belts that they have,
25:37
Speaker 2: and so they had to retrofit it and take space
25:39
Speaker 2: out of the back seat in order to make it
25:43
Speaker 2: work in the American market. And this not their fault.
25:47
Speaker 2: They're making the thing in Germany, which means it's subject
25:49
Speaker 2: to the twenty five percent auto tariff that the Trump
25:51
Speaker 2: administration is imposed. But they've only sold like five hundred
25:57
Speaker 2: of these things to this point, and I think it's because,
26:00
Speaker 2: quite honestly, at that price point, it's not competitive with
26:03
Speaker 2: the other evs that are out there, and it seems
26:07
Speaker 2: just like a huge swing and a miss for them
26:09
Speaker 2: because it's too expensive and doesn't have enough stuff smart.
26:13
Speaker 3: Yeah, they weren't expecting I'd drive a VW. I saw
26:16
Speaker 3: one of these when I went in for service eighteen
26:18
Speaker 3: months ago, twenty four months ago when they first came
26:20
Speaker 3: on the lot, and the take of the sales guy
26:24
Speaker 3: I was talking to is that they're not intended to
26:27
Speaker 3: be a mass market vehicle offering, rather a sort of
26:31
Speaker 3: a novelty thing to keep the brand conspicuous. That made
26:36
Speaker 3: sense to I thought the price was appalling, and I
26:38
Speaker 3: was disappointed in the appearance the rain.
26:41
Speaker 2: It doesn't look as good in person.
26:43
Speaker 3: It looks it looks, it looks, it looks kind of weird.
26:47
Speaker 3: The are but some people, you know, VW has a
26:50
Speaker 3: reputation for appealing to quirky people. Maybe I qualify. I
26:54
Speaker 3: don't know, but I'm not that quirky. It's more of
26:58
Speaker 3: a conversation piece was the consensus at the dealership that day.
27:02
Speaker 3: Then it is something that's practical, and particularly the economy
27:07
Speaker 3: is slowing, the idea that something like that could catch
27:10
Speaker 3: on was probably a bit of wishful thinking. I was disappointed.
27:14
Speaker 3: As a consumer.
27:16
Speaker 2: I was too. I thought this would be really interesting,
27:19
Speaker 2: and instead I came away just really disappointed by the
27:23
Speaker 2: whole thing. So it's kind of a sad one.
27:26
Speaker 3: Yeah, Like, not all publicity is good publicity when you're
27:30
Speaker 3: selling a durable good Americans, particularly maybe here in New England,
27:33
Speaker 3: where you see a lot of cars that have a
27:35
Speaker 3: reputation for just being afford good value for money and reliable.
27:42
Speaker 3: But there are a lot of BW drivers here proportionately
27:44
Speaker 3: more than in other parts of the country, maybe with
27:46
Speaker 3: the exception of California. Just just a big, big missfire.
27:50
Speaker 2: Really is, really is.
27:51
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27:55
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27:58
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Speaker 2: Cushing and Dolan.
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28:47
Speaker 1: The proceeding was paid for and the views expressed are
28:49
Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
28:52
Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
28:55
Speaker 1: Cushing and Armstrong do not endorse each other and are
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Speaker 1: not affiliated.
28:59
Speaker 2: Mark. I want to talk a little bit about one
29:01
Speaker 2: of these AI pieces because I think it's gonna be
29:03
Speaker 2: something we're dealing with. Unfortunately for a while. It's it's
29:07
Speaker 2: from the Wall Street Journal. It's titled was that amazing
29:10
Speaker 2: video in your Feed? Real? Or AI? Tech platforms are
29:13
Speaker 2: struggling to let you know, and look, this is gonna
29:16
Speaker 2: be a real problem. And I think where we're heading
29:18
Speaker 2: with this is people are just gonna trust the Internet
29:20
Speaker 2: even less because up until this point it's kind of
29:23
Speaker 2: been you know, picture it didn't happen, And now it's
29:26
Speaker 2: possible that the pics didn't happen just because photorealistic AI
29:30
Speaker 2: pictures and video are here, and I don't know. I mean,
29:35
Speaker 2: I know why they're here, because look, if you have
29:37
Speaker 2: seven billion people on the planet, like one of them
29:39
Speaker 2: is gonna build the tool to do this. I think
29:40
Speaker 2: it's kind of dumb just because we don't need it.
29:43
Speaker 2: But that's neither here nor there. There's plenty of dumb
29:45
Speaker 2: things that we don't need this one. I think it's
29:47
Speaker 2: gonna further eroad trust and basically everything that we see online.
29:51
Speaker 2: And I kind of wonder if the Internet's just gonna die,
29:55
Speaker 2: Like it's kind of where I'm going, just because it
29:58
Speaker 2: feels like we're getting to the point where you just
30:01
Speaker 2: don't really know if you can trust anything online. And
30:04
Speaker 2: I wonder if we're just gonna kind of end up
30:07
Speaker 2: killing it as a means of communication and sharing stuff.
30:12
Speaker 2: And instead it becomes, you know, something for more productive
30:16
Speaker 2: uses like it was originally intended, just because I don't
30:19
Speaker 2: know what to trust online at this point quite honestly.
30:22
Speaker 4: I mean, whenever I'm browsing social media, whether it's Instagram
30:26
Speaker 4: or x, I'm always on high alert to look out
30:31
Speaker 4: for fake information or fake videos. And even I who
30:37
Speaker 4: going with there's awareness get fooled once in a while
30:40
Speaker 4: by some once a week. Yeah, I'm like, oh, oh
30:44
Speaker 4: this is this isn't real at all. This is AI.
30:46
Speaker 4: So for somebody who has this high awareness for spotting
30:49
Speaker 4: that I'll still get fooled by, it.
30:53
Speaker 3: Could be easy to fool that too.
30:55
Speaker 4: That very well could be a possible.
30:56
Speaker 2: No, I've don't tuck her a while. That's not one
30:58
Speaker 2: of his attributes.
30:59
Speaker 4: Yeah. Also, are you seeing more and more commercials come
31:02
Speaker 4: out with AI? Did you see the Liquid Death commercial?
31:06
Speaker 4: Do you know Liquid death the water commercial mark? Have
31:09
Speaker 4: you seen this liquid death thing?
31:11
Speaker 3: No? I haven't.
31:12
Speaker 4: It's a big can with the skull on it.
31:14
Speaker 2: It's literally just.
31:15
Speaker 3: What I'm aware of the product. I haven't. Are you
31:17
Speaker 3: referring to some sort.
31:18
Speaker 4: Of hooks, No, it's it's a commercial completely generated by
31:22
Speaker 4: AI and It could have been actors for all I know,
31:26
Speaker 4: but it was amazing.
31:28
Speaker 2: It's yeah, it's it's really kind of a problem at
31:32
Speaker 2: this point. And I think the big thing that I
31:36
Speaker 2: struggle with is just a we're going to continue to
31:38
Speaker 2: lose confidence that what we're seeing is real, and b
31:43
Speaker 2: like knowing some people that work like just talking about
31:45
Speaker 2: the video side things, Knowing some people that work in
31:47
Speaker 2: the film industry not gonna be good for them.
31:51
Speaker 3: Yeah, well, these are these are growing pains. I think
31:53
Speaker 3: every industry, every new technology gets contaminated at some point
31:57
Speaker 3: by bad actors. People modify their behavior, They go only
32:02
Speaker 3: to trusted sources, for example banks. We think of banks
32:07
Speaker 3: as on par with like the government in terms of trustworthy.
32:11
Speaker 3: I don't mean trustworthiness is and we trust politicians. I
32:13
Speaker 3: just mean, for example, US treasuries are always viewed as
32:16
Speaker 3: money good, that type of stuff. Most people aren't suspicious
32:19
Speaker 3: of banks these days. But it took a while to
32:22
Speaker 3: get to this point. It was the wild West for
32:24
Speaker 3: a long time. You had to learn how to separate
32:27
Speaker 3: the not just the week from the chaff, but those
32:30
Speaker 3: people who were good actors from those who just wanted
32:32
Speaker 3: to steal your money. At some point, we'll only trust
32:34
Speaker 3: a few sources, is the point I'm trying to make
32:36
Speaker 3: to wrap up here. We'll only trust a few sources
32:38
Speaker 3: for information. Maybe they'll be associated with the major news networks.
32:42
Speaker 3: I don't know who will earn that good housekeeping seal
32:46
Speaker 3: of approval so as to earn our trust, and we'll
32:49
Speaker 3: just filter out all the other stuff. Right now, we're
32:51
Speaker 3: still in the wild West stage of social media.
32:55
Speaker 2: It's wild, it really is. Let's take a quick break here.
32:58
Speaker 2: When we come back, we'll do little bit of stack rules.
33:02
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33:05
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33:08
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33:12
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33:24
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33:30
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33:33
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33:41
Speaker 2: Mark what you got for me for stack Roulette.
33:44
Speaker 3: Chuck and tuck here for a few quick coffee facts.
33:47
Speaker 2: Coffee might be.
33:48
Speaker 3: Getting more mister coffee. Yeah right, I think that name's taken.
33:52
Speaker 3: But us is the second. This comes from USDA. They've
33:56
Speaker 3: got some awesome facts about all the commodities that we
33:58
Speaker 3: can consume. I'll just give you a few that surprised
34:00
Speaker 3: me a little bit. Second leading importer of coffee. I
34:03
Speaker 3: might have guessed, I don't know, to Turkey. Their population
34:07
Speaker 3: is small, and that's not a great example. But I
34:09
Speaker 3: was a little surprised by that both. I'm not okay, okay.
34:13
Speaker 2: I always think that you can tell an awful lot
34:15
Speaker 2: about a culture by the drugs they choose to use. Hell, yeah, yeah,
34:20
Speaker 2: we are America is coffee in the morning, alcohol in
34:23
Speaker 2: the evening. Now transitioning a little bit to cannabis. But
34:27
Speaker 2: America likes to get up and move and then just
34:30
Speaker 2: pass out.
34:32
Speaker 3: In twenty twenty three, about eighty percent of US roasted
34:35
Speaker 3: coffee imports came from Latin America. That's five billion dollars
34:39
Speaker 3: worth principally from and this is the point of sharing
34:43
Speaker 3: this with you, principally from Brazil about forty percent, the
34:48
Speaker 3: rest from Colombia and elsewhere. So the economic impact of
34:54
Speaker 3: these tariffs chuck sort of like you were talking about
34:57
Speaker 3: that at the end of the first hour. That took
34:59
Speaker 3: me several minutes to absorb. If no other price is
35:04
Speaker 3: changed and the price of coffee goes up food and
35:07
Speaker 3: thus headline inflation will rise, if only temporarily.
35:12
Speaker 2: I got a fun one here. Have either of you
35:15
Speaker 2: heard of Varda Space Industries?
35:18
Speaker 1: No?
35:18
Speaker 3: Yeah, just right now, there's some dude on Bloomberg talking
35:20
Speaker 3: about it.
35:21
Speaker 2: How about that? Look at look at that. This is
35:24
Speaker 2: you know, it's us in Bloomberg. So they are a
35:27
Speaker 2: company that just raised about two hundred million dollars in
35:30
Speaker 2: capital and their goal. What they do is they build
35:35
Speaker 2: little space ships, like I don't know if they build
35:38
Speaker 2: the rockets or just the capsules that go up on them,
35:40
Speaker 2: but they build them for the purpose of making drugs
35:45
Speaker 2: in space. So I looked at this at first, and
35:49
Speaker 2: I'm like, okay, like is this just something that's kind
35:51
Speaker 2: of dumb, Like what's the point of this? And the
35:55
Speaker 2: big reason why they're trying to do this is because
35:58
Speaker 2: in the zero gravity environment and in different pressure situations,
36:04
Speaker 2: the medicines crystallize differently, which has the potential to allow
36:09
Speaker 2: them to make drugs that they can't make with full
36:12
Speaker 2: gravity on Earth, which I think is really cool. That
36:15
Speaker 2: it's like, Hey, you've got these ideas that you think
36:18
Speaker 2: would work for drugs, but we can't make them here
36:20
Speaker 2: because of gravity. Great, let's make them in space. Wow,
36:25
Speaker 2: which I think is kind of cool. I don't know
36:27
Speaker 2: if it's actually going to work or not, but I
36:29
Speaker 2: found the idea really interesting that gravity might be one
36:33
Speaker 2: of the things that's keeping us from making life saving
36:35
Speaker 2: medicines in certain situations.
36:38
Speaker 3: I assume they stay intact when you bring them back
36:41
Speaker 3: into an environment with more intense gravity.
36:43
Speaker 2: I would imagine after the lapse. Look, I'm not a
36:48
Speaker 2: chemical engineer. I'm not excited to spot, but from what
36:51
Speaker 2: I know, you know, once you're in solid form, bonds
36:54
Speaker 2: tend to be pretty stable unless there's an outside catalyst.
36:58
Speaker 2: Is gravity is strong enough catalyst in order to uh?
37:01
Speaker 3: I don't think so, no do anything. So I wouldn't
37:03
Speaker 3: think so.
37:04
Speaker 2: You never know.
37:05
Speaker 3: Now it would just be a bummer if you had
37:07
Speaker 3: to go into space to take the medicine, is all
37:08
Speaker 3: I'm saying. Hey, great, we've got a cure, a wonderful
37:12
Speaker 3: thanks Doc. Bad news is you've got to fly one
37:16
Speaker 3: of SpaceX's Ricketty rockets to get up there?
37:20
Speaker 2: Have you? Uh? Mark? Are you? Are you? Are you
37:22
Speaker 2: pro space or anti space? For yourself?
37:26
Speaker 1: Like?
37:26
Speaker 3: Do I want to be shot? Do I want my
37:27
Speaker 3: ass you shot into space? What I like to see?
37:29
Speaker 2: Would you, ever, while alive, want to go to space?
37:31
Speaker 3: If there was an urgent need tourism?
37:33
Speaker 2: Mark?
37:33
Speaker 3: Like, is there is there a business opportunity?
37:35
Speaker 2: Would you take the bezos blaster up into space?
37:38
Speaker 3: Wouldn't any curious person?
37:41
Speaker 2: Wait? Hold on? Is it? Hold on? And what?
37:44
Speaker 3: At what cost?
37:46
Speaker 2: Bag of chips?
37:48
Speaker 3: Yeah? Sure?
37:48
Speaker 2: Yeah? Five bucks and you get to go to space?
37:51
Speaker 3: Yeah? I want to get my affairs in order first.
37:53
Speaker 2: You're anti space?
37:54
Speaker 4: Yah, I'm good. I'm good. Yeah, I'll see it from
37:56
Speaker 4: down here.
37:58
Speaker 2: You know what am I gonna do? Why?
38:00
Speaker 3: Tucker, there's no Wi Fi. You're afraid you're worried about
38:03
Speaker 3: the risk of malfunction. I'm good on scheduled disassembly.
38:07
Speaker 2: Extream Netflix up there.
38:09
Speaker 3: I need to sit on that enough enough pot on
38:12
Speaker 3: the moon?
38:13
Speaker 2: The hell? The bandwidth is week?
38:15
Speaker 3: I'm sorry, Tucker.
38:17
Speaker 2: All right, anyways, We're going to take a quick break
38:19
Speaker 2: for the rest of the day and we will see
38:21
Speaker 2: you tomorrow to finish up the week,