Latest / The Financial Exchange Show / TikTok ban upheld by the Supreme Court. What's next for the app?

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TikTok ban upheld by the Supreme Court. What's next for the app? · The Financial Exchange Show

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  Speaker 1: This is the Financial Exchange with Chuck Zada and Mike Armstrong.
• 1:09
  Speaker 2: Chuck, Mike Tucker with you, and everything that we were
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  Speaker 2: gonna talk about today just got thrown out the window
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  Speaker 2: because at about ten am Eastern, the Supreme Court of
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  Speaker 2: the United States, also known as scoutis. Oh yeah, scotus. Uh,
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  Speaker 2: they came out with a ruling on the TikTok ban,
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  Speaker 2: and in a nine to oz ruling from the Supreme Court. Uh,
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  Speaker 2: they said that the ban can still be in place,
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  Speaker 2: and they sided. They basically sided with the government against TikTok,
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  Speaker 2: who was appealing this. And so it doesn't get more
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  Speaker 2: concrete than that when every single Supreme Court justice says, yeah,
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  Speaker 2: you you are wrong on this TikTok. You speech right,
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  Speaker 2: you are wrong, get out of our court. Uh.
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  Speaker 3: The Supreme Court isn't quite as bad as Congress. Like
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  Speaker 3: the Supreme Court can generally agree what day it is.
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  Speaker 3: And you know there are there are probably many cases
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  Speaker 3: where they go nine zero on or just declined to
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  Speaker 3: hear it unanimously nine times. But a nine zero ruling
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  Speaker 3: from the Supreme Court, well, it sets up to a
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  Speaker 3: lot of things, including a lot of pressure on the
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  Speaker 3: Trump administration if they're truly going to go forward with
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  Speaker 3: some sort of delay on this on this ban because
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  Speaker 3: clearly Congress and the Supreme Court tend to agree that
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  Speaker 3: the thing.
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  Speaker 1: Should be banned.
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  Speaker 2: So here's what the law actually says. Let's just kind
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  Speaker 2: of go through where this goes from here. So the
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  Speaker 2: law is called the Protecting Americans from Foreign Adversary Controlled
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  Speaker 2: Applications Act, or PAFACA, yes, as it's commonly referred to.
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  Speaker 2: It was signed into law in April of last year,
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  Speaker 2: and it grants the government the authority to ban foreign
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  Speaker 2: owned apps that it deems a threat to national security.
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  Speaker 2: And specifically, in there, it says that any entities it's
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  Speaker 2: illegal for them to distribute, maintain, or update any foreign
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  Speaker 2: adversary controlled applications. So basically all distribution and maintenance of
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  Speaker 2: these apps would have to cease. TikTok being the one
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  Speaker 2: that's there now, but there are others, by the way,
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  Speaker 2: including one call I think it's a Lemon eight that's
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  Speaker 2: run by byte Dance. So there are other byte Dance
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  Speaker 2: owned apps that are probably going to be in focus.
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  Speaker 3: I remember too a few like payment type apps that
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  Speaker 3: were Chinese Focus that were making their way into the
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  Speaker 3: United States here and there. For it seemed like mainly
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  Speaker 3: Chinese expats in the United States. I don't even know
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  Speaker 3: if they're still around, but yes, there would be more
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  Speaker 3: than one app that would be killed.
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  Speaker 2: As part of this. So the bank goes into effect
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  Speaker 2: on the nineteenth, which is the day before the inauguration.
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  Speaker 2: So the question is what does the incoming Trump administration do?
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  Speaker 2: And there are a few possibilities. The first is he
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  Speaker 2: could go to Congress and say, hey, undo this ban. Yeah,
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  Speaker 2: probably a tough putt to get there with razor thin
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  Speaker 2: majorities in Congress and something that was passed by broad
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  Speaker 2: bipartisan legislation. If you look at the data on like,
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  Speaker 2: it's not data, it's just hey, how did this end
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  Speaker 2: up passing? The House of Representatives passed this three hundred
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  Speaker 2: and fifty two to sixty five. Fifty Democrats and fifteen
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  Speaker 2: Republicans voted against the bill, so it's not like it
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  Speaker 2: It had stronger Republican support than Democrat Democrats support in
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  Speaker 2: the House, and in the Senate it passed seventy nine
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  Speaker 2: to eighteen. I don't have the exact breakdown as to
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  Speaker 2: Republicans versus Democrats, but this wasn't something that passed by
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  Speaker 2: like three votes. It passed by over one hundred in
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  Speaker 2: the House and by twenty in the Senate compared to
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  Speaker 2: the margin that you need to pass legislation. So I
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  Speaker 2: think it's it would be a tough put, in my opinion,
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  Speaker 2: for Congress to simply go back and be like, yeah,
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  Speaker 2: we're gonna over We're gonna undo this here. The second
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  Speaker 2: piece is, in theory, the president could go to the
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  Speaker 2: Justice Department and say, don't enforce the law here, don't
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  Speaker 2: enforce this, and so the question then becomes, Okay, just
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  Speaker 2: here's the hypothetical. Let's say that you are Bite Dance
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  Speaker 2: and the Trump administration decides not to enforce the law. Sure,
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  Speaker 2: four years from now, you have a new president that
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  Speaker 2: comes in who decides to enforce the law and back
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  Speaker 2: data in penalties to January twentieth and twenty.
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  Speaker 3: Something like five thousand dollars per user. Yes, the is
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  Speaker 3: the penalty potentially?
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  Speaker 1: He yes.
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  Speaker 2: So if you have you know, hundreds of millions of users,
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  Speaker 2: you have potentially you know, billions of dollars and fines
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  Speaker 2: that you are racking up. I'll take it a step
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  Speaker 2: further too. If you are Apple or Google here and
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  Speaker 2: the new potentially travaged.
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  Speaker 3: Apartment says we're not going to enforce this now. I mean,
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  Speaker 3: one forget about a new administration. Do Apple and Google
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  Speaker 3: right now feel like they are really cozy with the
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  Speaker 3: incoming Trump administration and can trust them to not change
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  Speaker 3: their mind on this down the road that hey, we
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  Speaker 3: chose not to enforce now, but now we are enforcing
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  Speaker 3: and you have penalties. I think there would be because
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  Speaker 3: ultimately those are the gatekeepers of whether or not this
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  Speaker 3: app can be downloaded and updated onto US phones. Is
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  Speaker 3: Apple and Google primarily, so there's questions there.
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  Speaker 2: The only and seeming.
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  Speaker 3: Likely extension that we see here is apparently the law
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  Speaker 3: from what I'm from what I'm reading elsewhere, does allow
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  Speaker 3: for a president to grant a ninety day extension of
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  Speaker 3: the deadline if there's a viable deal that's being worked out.
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  Speaker 3: I guess that term viable can probably be pretty loose,
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  Speaker 3: would be my guess. But best case scenario from everything
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  Speaker 3: I'm reading, would be a ninety day extension unless can
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  Speaker 3: you go Do you have the quotes here on how
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  Speaker 3: it's determined to be a density of control, because I'm
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  Speaker 3: wondering how much authority is given to the executive branch
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  Speaker 3: on determining whether or not this.
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  Speaker 2: Is a threat. So the DJ gets to determine whether
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  Speaker 2: Bite Dance has engaged in a quote qualified divestiture of
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  Speaker 2: TikTok okay And again, what what qualifies as a qualified divestiture?
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  Speaker 2: No one knows. It's a brand new law and it
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  Speaker 2: has not been tested as far as what is or
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  Speaker 2: is not. And so that is something that would certainly
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  Speaker 2: be up to the Supreme Court. And you can certainly
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  Speaker 2: imagine a world where the Justice Department says, yes, they've
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  Speaker 2: engaged in a qualified divesture because of X, Y or Z,
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  Speaker 2: and someone who's upset with it, whoever, like someone who
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  Speaker 2: has it has to be someone who has standing. It
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  Speaker 2: can't just be it can't be me, since I don't
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  Speaker 2: have TikTok use TikTok, nor do I have any I have,
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  Speaker 2: I don't have standards to what I'm trying to say.
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  Speaker 2: But someone could say, yes, they haven't done this, and
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  Speaker 2: it gets run up to the Supreme Court again, like
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  Speaker 2: that's certainly something that's possible. To the fact of the
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  Speaker 2: matter is that absent any of those changes, TikTok is
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  Speaker 2: now going to effectively cease to be distributed in the
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  Speaker 2: United States in four days, three and a half. What
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  Speaker 2: do you count today when you're saying that I don't know,
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  Speaker 2: I don't either. On Monday, it will no longer be
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  Speaker 2: available on app stores, and TikTok or byte Dance rather
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  Speaker 2: will no longer support it. There's a chance the whole
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  Speaker 2: thing could go dark if they just want to pull
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  Speaker 2: the plug on it. Otherwise the app experience will gradually degrade.
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  Speaker 2: But that's that's where we are heading now that the
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  Speaker 2: Supreme Court has unanimously led to zero ruled that TikTok
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  Speaker 2: is in violating Like basically, they are in violation of
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  Speaker 2: this and they don't have a leg to stand on
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  Speaker 2: with the concerns they brought to the Supreme Court, pretty
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  Speaker 2: strong SmackDown of the arguments, strong condemnation of Again, I
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  Speaker 2: don't think the Supreme Court condemned TikTok. That's not what
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  Speaker 2: they They strongly upheld the way that Congress wrote the
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  Speaker 2: law and reaffirmed that TikTok you do not have free speech,
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  Speaker 2: which I think is great because honestly, TikTok should not
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  Speaker 2: operate in the United States in my humble opinion, so
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  Speaker 2: all on board, And look, I'm not saying I don't
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  Speaker 2: feel bad for the people that have built businesses on
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  Speaker 2: TikTok and things like that. I do. It's they're going
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  Speaker 2: to have to go through adjustments potentially, and we still
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  Speaker 2: don't know how this goes from here, but it's a
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  Speaker 2: it's a social media platform that has a direct line
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  Speaker 2: to the Chinese Communist Party if it ever requests it.
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  Speaker 2: That's that's not the bottomy I want operating in the
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  Speaker 2: United States, and I will stand by that regardless of
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  Speaker 2: what ends up happening over the next you know, sixty
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  Speaker 2: ninety hundred and twenty days, whatever ends up you know,
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  Speaker 2: going on here. So we've got that going on. That
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  Speaker 2: caught us all by surprise right as we kick things
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  Speaker 2: off today. But let's take a quick break and when
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  Speaker 2: we come back, let's talk a little bit about what
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  Speaker 2: has been going on in markets this week.
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  Speaker 1: Thankst us six one, seven, three, six, two thirteen eighty
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• 11:27
  Speaker 2: A little bit about what US stocks are doing this week,
• 11:32
  Speaker 2: because the answer, in my opinion, can best be you know,
• 11:38
  Speaker 2: best be described using the word chopping. They're just they
• 11:44
  Speaker 2: have no clear direction and they continue to have no
• 11:46
  Speaker 2: clear direction. So since the election, which was three and
• 11:51
  Speaker 2: a half months ago. I'm sorry, two and a half
• 11:53
  Speaker 2: months ago. Now, it was on November fifth, right, that
• 11:56
  Speaker 2: is correct, two and a half months. So on November fifth,
• 12:01
  Speaker 2: the S and P five hundred closed at fifty seven
• 12:04
  Speaker 2: eighty two. It has not gone any The lowest it's
• 12:09
  Speaker 2: been since then is fifty seven to seventy three, so
• 12:11
  Speaker 2: it basically was there. It reached a high of six
• 12:15
  Speaker 2: ninety nine and has just been chopping in a five
• 12:18
  Speaker 2: percentage point range, a few points up, a few points
• 12:21
  Speaker 2: down for the last two and a half months.
• 12:23
  Speaker 3: Now, true though that you asked about this week, and
• 12:26
  Speaker 3: this week in stocks.
• 12:27
  Speaker 2: Has done the same thing. I mean, we started this week. Okay,
• 12:30
  Speaker 2: this month has done the same This month has done
• 12:33
  Speaker 2: the same thing.
• 12:33
  Speaker 3: Yet this week we started the S and P five
• 12:35
  Speaker 3: hundred below fifty eight hundred, were sitting close to six thousand,
• 12:38
  Speaker 3: and that came off of one well, no, actually, this week,
• 12:43
  Speaker 3: if I'm focusing just on this week, a couple of
• 12:48
  Speaker 3: just fine inflation reports. Yeah, just fine exactly, not something
• 12:53
  Speaker 3: you're write home about, but not devastatingly bad. And this
• 12:58
  Speaker 3: is what this is what the market's been doing week
• 12:59
  Speaker 3: to week rightside it three percent down, three percent up,
• 13:02
  Speaker 3: three percent down. And Friday of last week you had
• 13:04
  Speaker 3: one of those downs because you had a again better
• 13:07
  Speaker 3: than expected jobs report. But in the new environment of
• 13:09
  Speaker 3: good news equals bad news, too good it was too
• 13:12
  Speaker 3: good for markets exactly, and so h I also haven't
• 13:16
  Speaker 3: seen much in the way of changes of expectations for
• 13:19
  Speaker 3: the Fed over the last month. Again, it's been wavering
• 13:22
  Speaker 3: it up and down. But uh, you know, taking a
• 13:25
  Speaker 3: look at the January meeting, there's almost no chance of
• 13:28
  Speaker 3: a rate cut that's occurring on January twenty ninth.
• 13:31
  Speaker 2: When I go out to.
• 13:32
  Speaker 3: March nineteenth, there's currently a seventy percent chance again that
• 13:36
  Speaker 3: the Fed does nothing and keeps things right where they are.
• 13:39
  Speaker 3: I suppose a month ago it was a lot more
• 13:41
  Speaker 3: likely that they do cut rates. So that explains some
• 13:44
  Speaker 3: of that chop. Is rates are now assumed higher for longer.
• 13:48
  Speaker 3: As we've been talking about.
• 13:49
  Speaker 2: I think a lot of is we just need to
• 13:50
  Speaker 2: all chill out a little bit. I don't do well
• 13:53
  Speaker 2: with that. You'd like to unchill, you'd like to thaw
• 13:57
  Speaker 2: more stress, you're looking best, You're looking oil a little
• 14:00
  Speaker 2: bit here. Yeah, I could see that on the topic
• 14:03
  Speaker 2: of linguistics. I know, like we talked about how the
• 14:06
  Speaker 2: the job support it was. It was better than we thought.
• 14:07
  Speaker 2: Why do we not say gooder? It's one that's always bothered.
• 14:11
  Speaker 2: We can start that. No, my my four year old
• 14:13
  Speaker 2: says it, and I love like I love it's what
• 14:16
  Speaker 2: it should be like. Oh, this is the goodest, Yes,
• 14:19
  Speaker 2: it is the goodest. It's not the best, so my
• 14:24
  Speaker 2: six year old says in Dartmouth Education, folks, I know
• 14:28
  Speaker 2: you know the rules and you're just explaining why they're silly.
• 14:31
  Speaker 2: But yeah, so I have something actually from Silly Linguistics
• 14:35
  Speaker 2: dot com on this topic. Wait, what, it's a Friday,
• 14:38
  Speaker 2: have at it? That's a that's a website. Are Silly
• 14:42
  Speaker 2: Linguistics dot com? I'm there right now. So the word
• 14:45
  Speaker 2: good comes from it. It's a Germanic word godas, which
• 14:50
  Speaker 2: is from us. Its stem is basically like to unite,
• 14:54
  Speaker 2: and I guess uniting things was good. So over time
• 14:58
  Speaker 2: good got associated with like things are desirable rather than uniting,
• 15:02
  Speaker 2: and so that's where it came from. But the question
• 15:05
  Speaker 2: is where does the word better or best come from?
• 15:09
  Speaker 2: And where do those words come from? And the answer,
• 15:11
  Speaker 2: according to Silly linguistics is it comes from boot, right,
• 15:16
  Speaker 2: not what you wear on your foot, okay, but rather
• 15:21
  Speaker 2: think of it like this. If you say that someone
• 15:24
  Speaker 2: is good at something, but they are also blank to boot,
• 15:28
  Speaker 2: that's where it comes from. And so it's, hey, they're
• 15:32
  Speaker 2: good at this, but on top of that, here's something
• 15:34
  Speaker 2: that's even better boot. And so that is why apparently
• 15:39
  Speaker 2: we say good better best is because someone somewhere got
• 15:44
  Speaker 2: these ideas all mixed up and they've just stuck now.
• 15:48
  Speaker 2: And that is why we're here in the English language. Wonderful.
• 15:51
  Speaker 2: Let's talk about California wildfires. Piece in the Wall Street
• 15:55
  Speaker 2: Journal ensures rule change put California homeowners on hook for
• 15:58
  Speaker 2: the LA fire. And here is basically what Here's basically
• 16:06
  Speaker 2: what is happening now is California, for the longest time
• 16:10
  Speaker 2: forty some odd years, has said that they are not
• 16:14
  Speaker 2: going to allow homeowners' insurance premiums to rise by more
• 16:18
  Speaker 2: than seven percent a year. Yeah. So instead, what's happened
• 16:21
  Speaker 2: in recent years where homeowners insurance companies have had huge
• 16:24
  Speaker 2: losses in the state, they just said, fine, we're pulling out,
• 16:28
  Speaker 2: and a bunch of people went on to what's called
• 16:30
  Speaker 2: the California Fair Plan, which is the states insurer of
• 16:33
  Speaker 2: last resort.
• 16:34
  Speaker 3: Can't get a policy anywhere else, come get it here.
• 16:37
  Speaker 3: So what did you have was a concentration of insured
• 16:40
  Speaker 3: homes in high risk areas.
• 16:43
  Speaker 2: And so basically what you have here is that the
• 16:47
  Speaker 2: Fare Plan has somewhere around two hundred million dollars in
• 16:51
  Speaker 2: cash on hand in about two and a half billion
• 16:52
  Speaker 2: dollars in reinsurance according to data that was reported last year.
• 16:56
  Speaker 3: So if you come up with a loss of greater
• 16:58
  Speaker 3: than two point seven billion dollars in this hypothetical than
• 17:03
  Speaker 3: Fair insurance, the Fair Plan has no more money.
• 17:05
  Speaker 2: It is bankrupt. The estimate from Evercore ISI as of
• 17:09
  Speaker 2: right now, and again the fires are still present in
• 17:11
  Speaker 2: some parts. They're more controlled than they've been in recent days,
• 17:14
  Speaker 2: but they're still burning. The estimate is about six billion
• 17:18
  Speaker 2: dollars in claims are going to be filed against the
• 17:22
  Speaker 2: Fair Plan, which obviously correct me.
• 17:23
  Speaker 3: If I'm wrong. That's bigger than two point seven hold
• 17:26
  Speaker 3: on carry this seven.
• 17:31
  Speaker 2: Yes, yeah, yep, yep, it's big. It's bigger than two
• 17:33
  Speaker 2: point seven probably, So we got that. So here's the deal.
• 17:37
  Speaker 2: There are two ways that this gets solved. The first
• 17:40
  Speaker 2: is that California raises taxes in order to raise more
• 17:44
  Speaker 2: money for the Fair Plan after issuing a bunch of
• 17:47
  Speaker 2: bonds to cover the immediate outlay. That's I think, on
• 17:51
  Speaker 2: something of this scale, given how big California's economy is,
• 17:54
  Speaker 2: I think that's probably likely to a certain extent. The
• 17:59
  Speaker 2: other possibility is that the Fair Plan ends up getting
• 18:03
  Speaker 2: bailed out by the federal government.
• 18:06
  Speaker 3: Well, so here are the changes that went into place
• 18:09
  Speaker 3: with the Fair Plan this year. That is also a
• 18:12
  Speaker 3: likely scenario. So the rule change that was put into
• 18:15
  Speaker 3: place by the Insurance Commissioner last year requires the other
• 18:20
  Speaker 3: insurers in the state to bail out the Fair Plan
• 18:23
  Speaker 3: if the losses exceed this. Now, obviously, if you're insurer
• 18:26
  Speaker 3: in the state, you're going to say, well, that's not
• 18:28
  Speaker 3: a great deal. I chose to not cover those areas
• 18:31
  Speaker 3: and so, but they are likely to be required to
• 18:34
  Speaker 3: do so. And so the rule also states that if
• 18:37
  Speaker 3: they have to, those insurers who bail out the state's
• 18:41
  Speaker 3: insurance plan can hit up their customers for half of
• 18:45
  Speaker 3: the first billion dollars that they have to give up
• 18:47
  Speaker 3: to the Fair Plan and one hundred percent of any
• 18:49
  Speaker 3: amount over that. So you can if you live in
• 18:52
  Speaker 3: San Diego, if you live in San Francisco, if you
• 18:54
  Speaker 3: live in areas that were not affected by the fire.
• 18:57
  Speaker 3: It now seems very very likely that not only are
• 18:59
  Speaker 3: your premiums are going to go through the roof, but
• 19:01
  Speaker 3: you're gonna be hit with a one time assessment of
• 19:04
  Speaker 3: probably a lot of money over the course of the
• 19:07
  Speaker 3: next year to bail out the fair plan is what
• 19:09
  Speaker 3: it's looking like.
• 19:09
  Speaker 2: California insurance premiums are going to do what Florida's have
• 19:12
  Speaker 2: done over the last four to five years, which is
• 19:14
  Speaker 2: probably double to quadruple depending on exactly where you live.
• 19:17
  Speaker 3: Yeah, that's where you're heading on this Again, I'm going
• 19:21
  Speaker 3: to take a bit of good news. I don't think
• 19:25
  Speaker 3: based on all of this that the US government's getting involved.
• 19:29
  Speaker 2: We'll say so far, let's take a quick break here
• 19:32
  Speaker 2: when we come back wet Wall Street Watch, and then
• 19:34
  Speaker 2: we'll talk about what's going on in the California real
• 19:36
  Speaker 2: estate market as well.
• 19:42
  Speaker 1: Like us on Facebook and follow us on Twitter at
• 19:44
  Speaker 1: TFE show. Breaking business news is allways first right here
• 19:49
  Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
• 19:54
  Speaker 1: Street Watch, a complete look at what's moving market. So
• 19:57
  Speaker 1: far today right here on the Financial Extra Change Radio network.
• 20:01
  Speaker 4: Well markets are seeing another strong push into the green today,
• 20:05
  Speaker 4: where the Dow and SMP five hundred are on pace
• 20:08
  Speaker 4: for their biggest weekly gain since November. At the moment,
• 20:12
  Speaker 4: the Dow is up by over three quarters of a percent,
• 20:15
  Speaker 4: or three hundred and sixty eight points, SMP five hundred
• 20:18
  Speaker 4: is up nearly one percent or fifty seven points, and
• 20:21
  Speaker 4: the Nasdaq is up over one on a third percent,
• 20:24
  Speaker 4: or two hundred and sixty eight points. Russell two thousand
• 20:27
  Speaker 4: is up by over two thirds of a percent, ten
• 20:30
  Speaker 4: Your Treasure Reeled is flat at four point five nine percent,
• 20:34
  Speaker 4: and crude oil is down nearly two thirds of a percent,
• 20:37
  Speaker 4: trading just above seventy eight dollars a barrel. The big
• 20:40
  Speaker 4: news as about half an hour ago, the Supreme Court
• 20:44
  Speaker 4: upheld a federal law requiring the Chinese owners of TikTok
• 20:48
  Speaker 4: to sell or shut down the social media app by
• 20:51
  Speaker 4: this Sunday, siding with Congress's national security concerns over the platform. Meanwhile,
• 20:58
  Speaker 4: according to Bloomberg, as Glen Core and Rio Tinso held
• 21:01
  Speaker 4: early stage talks about merging, the potential merger would immediately
• 21:06
  Speaker 4: put it in competition with long standing industry titan BHP Group.
• 21:11
  Speaker 4: Glen Core shares are up by about one percent.
• 21:13
  Speaker 2: On that news.
• 21:14
  Speaker 4: The Wall Street Journals reporting that activist investors Starboard Value
• 21:18
  Speaker 4: has built a seven point seven percent stake, and ship
• 21:20
  Speaker 4: maker Corvo that stock up by twelve percent. Elsewhere, shares
• 21:25
  Speaker 4: a Nova nor Disk down by over three percent. After
• 21:27
  Speaker 4: the Biden administration unveiled the next fifteen prescription drugs that
• 21:32
  Speaker 4: will be subject to price negotiations between manufacturers and Medicare
• 21:37
  Speaker 4: that aims to make costly medications more affordable for seniors.
• 21:40
  Speaker 4: Weight management drugs Ozepic and WeGo v were on that list.
• 21:45
  Speaker 4: Trucking in logistics company JB Hunt, which is seen as
• 21:48
  Speaker 4: a bellweather for the freight sector, posted a higher quarterly
• 21:52
  Speaker 4: profit but lower revenue. That stock down by six percent.
• 21:56
  Speaker 4: And ev maker Rivian closed a loan agreement with the
• 21:59
  Speaker 4: Energy Department for up to six point six billion dollars
• 22:02
  Speaker 4: to help build a new manufacturing site. Rivine shares are
• 22:06
  Speaker 4: up two percent so far today. I'm Tucker Silvan, that's
• 22:10
  Speaker 4: Wall Street Watch.
• 22:11
  Speaker 2: Talking further about the Los Angeles fire. So piece in
• 22:15
  Speaker 2: the Wall Street Journal that you're seeing these popping up
• 22:17
  Speaker 2: all over the place. But because you have so many
• 22:21
  Speaker 2: people that are displaced, the estimate now is that twelve
• 22:23
  Speaker 2: three hundred structures have been destroyed as part of this.
• 22:28
  Speaker 2: You have, again those just structures. Some of those might
• 22:32
  Speaker 2: be multifamilies, so you've three to five x that.
• 22:35
  Speaker 3: In terms of people would be my bare minimum.
• 22:37
  Speaker 2: Guess it might even be higher. I mean you might
• 22:39
  Speaker 2: have seventy five thousand to one hundred thousand people, Like
• 22:42
  Speaker 2: some of these could be like three unit places. Well,
• 22:45
  Speaker 2: and that's just destroyed ones.
• 22:46
  Speaker 3: That doesn't include areas that weren't destroyed that you still
• 22:49
  Speaker 3: had to evacuate.
• 22:49
  Speaker 2: Yes, so you have tens of thousands of people that
• 22:54
  Speaker 2: have been displaced here, and obviously there's nowhere in the country.
• 22:57
  Speaker 2: There's nowhere in the world where you just have ten
• 23:00
  Speaker 2: thousand empty houses that are lying around because you don't
• 23:04
  Speaker 2: build empty houses. Like there is no reasonable case for
• 23:09
  Speaker 2: surplus housing capacity. There's a case to be made that
• 23:12
  Speaker 2: we should probably build more than we do, but nowhere
• 23:15
  Speaker 2: is there. Hey, we should just have like an extra
• 23:17
  Speaker 2: two percent of housing stocking case something happens. There's no
• 23:21
  Speaker 2: reasonable case for that, right, But what you are seeing
• 23:24
  Speaker 2: is the worst impulses of a whole bunch of greedy
• 23:27
  Speaker 2: people that are popping up in terms of the profiteering,
• 23:32
  Speaker 2: the price gouging and stuff like that, and it's just
• 23:37
  Speaker 2: something where, honestly I find it quite despicable people accepting
• 23:43
  Speaker 2: some of these ridiculous offers for their places. And yeah,
• 23:47
  Speaker 2: the accepting part is the I don't blame people for
• 23:51
  Speaker 2: offering tons of money to try to get into a
• 23:53
  Speaker 2: place because you're desperate. I understand that.
• 23:56
  Speaker 3: That's where I land is, Like, you know, I would
• 23:57
  Speaker 3: probably offer darn near anything to put a roof over
• 24:01
  Speaker 3: my three kids' heads. Totally, But if you are accepting
• 24:04
  Speaker 3: it is pretty rough.
• 24:06
  Speaker 2: If you're a person who, again, let's say that you
• 24:08
  Speaker 2: have a place that's been listed in LA for four thousand,
• 24:10
  Speaker 2: someone comes to you and says, hey, you know, they're
• 24:12
  Speaker 2: the first person in the line. They're qualified. They say, hey,
• 24:14
  Speaker 2: I'm gonna give you eight thousand for this. Well, no,
• 24:17
  Speaker 2: you're gonna give me four thousand for this, because here's
• 24:19
  Speaker 2: the thing, And people be like, well, no, like this
• 24:22
  Speaker 2: is your chance to make a No, you are then
• 24:25
  Speaker 2: profiting off of other people's misery because, for whatever reason,
• 24:30
  Speaker 2: this particular act of God happened to hit their house
• 24:33
  Speaker 2: instead of yours, and the embers carried this way because
• 24:37
  Speaker 2: of the wind instead of that way, and so you
• 24:40
  Speaker 2: were spared. And so if you use the sheer luck
• 24:44
  Speaker 2: that you are experiencing in not having your place destroyed
• 24:48
  Speaker 2: while theirs was to make a few extra bucks, screw you.
• 24:53
  Speaker 2: You're a horrible human being. Period. You don't profit off
• 24:59
  Speaker 2: other people pople's misery. Because here's what I know about life.
• 25:04
  Speaker 2: We all kind of walk our own little pass through
• 25:06
  Speaker 2: and none of us know exactly how it's gonna go.
• 25:09
  Speaker 2: And my life might be fine today, but who knows
• 25:12
  Speaker 2: what I face tomorrow. And so if I have raised,
• 25:18
  Speaker 2: you know, accepted some crazy high offer because it gave
• 25:21
  Speaker 2: me a few extra dollars you know, in my pocket
• 25:24
  Speaker 2: for you know, a month or two because someone else
• 25:27
  Speaker 2: was miserable, when when I go and I need help,
• 25:31
  Speaker 2: how do I want people to treat me when I
• 25:33
  Speaker 2: am at my most vulnerable? And so this is beyond
• 25:37
  Speaker 2: like trying to run a business or have you know, passiving. No,
• 25:42
  Speaker 2: you have to treat people who are going through something
• 25:46
  Speaker 2: horrible like this with the same respect that you would
• 25:49
  Speaker 2: want them to treat you. And that means not accepting
• 25:53
  Speaker 2: extra money because of their misery and pain that they
• 25:57
  Speaker 2: are going through.
• 25:58
  Speaker 3: So beyond all of this, the next steps in all
• 26:02
  Speaker 3: of this, uh, you know, are are going to be
• 26:04
  Speaker 3: one getting this fire under control. Beyond that, it's going
• 26:09
  Speaker 3: to be this long, laborious process of getting payouts from
• 26:12
  Speaker 3: insurance companies, identifying which properties have been destroyed haven't been destroyed,
• 26:17
  Speaker 3: and that long battle with those insurers in the meantime, Like,
• 26:21
  Speaker 3: you know, we talk a lot about the insurance market,
• 26:23
  Speaker 3: but you think about the personal situation, right, Like we
• 26:27
  Speaker 3: talk a lot about personal finance and the show and
• 26:29
  Speaker 3: Raindy Day funds. Nobody builds a financial preparation for their
• 26:34
  Speaker 3: entire home being destroyed and being displaced for We can't
• 26:37
  Speaker 3: multiple years, you can't, and insurers don't cover it either.
• 26:39
  Speaker 3: It's not as though most insurance policies say, hey, your
• 26:42
  Speaker 3: home was destroyed, so here's you know, four thousand dollars
• 26:45
  Speaker 3: a month for rent payments that you're going to need
• 26:47
  Speaker 3: to come up with. This is going to be very
• 26:50
  Speaker 3: destructive to the individuals who are affected, even when the
• 26:54
  Speaker 3: insurance companies are easy to deal with. And then the
• 26:57
  Speaker 3: final piece, which we again just focusing on the finance
• 27:00
  Speaker 3: side of this for a moment. We talked about this
• 27:02
  Speaker 3: during the most recent segment. But according to the new
• 27:05
  Speaker 3: rules that govern the California insurance market, the fair plan
• 27:09
  Speaker 3: should it go belly up, which it appears that they
• 27:13
  Speaker 3: do not have enough money to cover all of these losses,
• 27:16
  Speaker 3: will be assessing in all likelihood the other insurers still
• 27:19
  Speaker 3: doing business in the state of California, who will then
• 27:22
  Speaker 3: go and assess their own customers and maybe in future
• 27:25
  Speaker 3: times pull out of the market entirely based on the
• 27:27
  Speaker 3: rules that they are assessed on.
• 27:29
  Speaker 2: And again going it's going to be in a lot
• 27:35
  Speaker 2: of cases, it's going to be the better part of
• 27:39
  Speaker 2: five to ten years before these properties are rebuilt if
• 27:43
  Speaker 2: they are. If you look at the track record on
• 27:45
  Speaker 2: other California wildfires that have gone through over the last
• 27:49
  Speaker 2: decade and how much rebuilding has actually happened. Just as
• 27:54
  Speaker 2: an example, and this is from NBC News, So six
• 27:59
  Speaker 2: years ago, there a whole set of fires in Paradise,
• 28:04
  Speaker 2: which is an actual place it is, So it's in California.
• 28:09
  Speaker 2: I think it's near San Diego. Actually I don't know
• 28:13
  Speaker 2: exactly where it is. No, it's not Sorry, it is
• 28:17
  Speaker 2: up further north. My Bad and Paradise had eighteen thousand
• 28:22
  Speaker 2: structures that were destroyed in these fires. Six years ago.
• 28:26
  Speaker 2: Ninety percent of the town was wiped out by them.
• 28:29
  Speaker 2: And what you have seen now, So it's six years
• 28:32
  Speaker 2: later and they're building about five hundred homes a year,
• 28:36
  Speaker 2: and a third of the homes have been rebuilt. The
• 28:38
  Speaker 2: population of the town went from twenty six thousand before
• 28:41
  Speaker 2: them to eleven thousand today. So this is not something
• 28:46
  Speaker 2: where you simply pop everything back up. And some of this, again,
• 28:51
  Speaker 2: it is due to how California builds like it, admittedly,
• 28:54
  Speaker 2: but part of it is also Rebuilding from fire is
• 28:58
  Speaker 2: incredibly difficult, not just because of these structures, but because
• 29:02
  Speaker 2: of the fire damage to things like utilities, you know,
• 29:05
  Speaker 2: water lines and things that are damaged by the extreme
• 29:07
  Speaker 2: heat and stuff like that. There's a ton of work
• 29:10
  Speaker 2: that you have to do in order to get that
• 29:12
  Speaker 2: back to normal. And so it's going to be the
• 29:16
  Speaker 2: better part of a decade before you see a lot
• 29:20
  Speaker 2: of this stuff rebuilt. Yeah, you'll have some that starts
• 29:23
  Speaker 2: to you know, go forward and everything. But look if
• 29:28
  Speaker 2: instead of raising you know, rents on people and everything, Look,
• 29:32
  Speaker 2: this is the time where you have to be like
• 29:34
  Speaker 2: trying to actually help people. There are going to be
• 29:37
  Speaker 2: people that need housing, and if you are in the
• 29:39
  Speaker 2: out area, find ways to take them in. There are
• 29:42
  Speaker 2: people that are gonna need food, Donating to local food
• 29:44
  Speaker 2: banks and things like that great thing to do. Also,
• 29:48
  Speaker 2: the idea that it should just be hey, you know,
• 29:51
  Speaker 2: I can make some more money on this because someone's
• 29:53
  Speaker 2: out of a house. I find that pretty utterly despicable,
• 29:58
  Speaker 2: quite honestly. So again, let's all try to do a
• 30:02
  Speaker 2: little bit to help out, you know, people that are
• 30:04
  Speaker 2: clearly struggling, because hey, who knows if this ends up
• 30:07
  Speaker 2: happening to us at some point, not necessarily with wildfires,
• 30:09
  Speaker 2: even though they've been in the northeast this you know,
• 30:12
  Speaker 2: you never know when something's gonna happen to you and
• 30:16
  Speaker 2: to you know, I just find it hard to believe
• 30:19
  Speaker 2: that this is what we're seeing. I guess I don't
• 30:22
  Speaker 2: because listen, there in any disaster, they're both, you know,
• 30:26
  Speaker 2: people that are helping and people that are hurting the situation.
• 30:28
  Speaker 2: And unfortunately it's it's just it's not very good in
• 30:31
  Speaker 2: California right now. Let's take a quick break. When we
• 30:34
  Speaker 2: come back we'll talk about Capital One having a wee
• 30:36
  Speaker 2: bit of a tough time, you know, acting like a
• 30:38
  Speaker 2: bank over the last couple of days.
• 30:41
  Speaker 1: This is your home for the most comprehensive coverage of
• 30:44
  Speaker 1: the economy and the trends on Wall Street. This is
• 30:47
  Speaker 1: the Financial Exchange Radio Network. Find daily interviews and full
• 30:52
  Speaker 1: shows of the Financial Exchange on our YouTube page. Like
• 30:55
  Speaker 1: us on YouTube and get caught up on anything and
• 30:58
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• 31:01
  Speaker 1: Radio Network.
• 31:14
  Speaker 2: Alrighty, so Capital One was going through something right now.
• 31:21
  Speaker 2: They said, an unspecified technical issue is preventing their users
• 31:27
  Speaker 2: from completing some transactions that they would like to. This
• 31:30
  Speaker 2: is really interesting to me, actually, because on Wednesday we
• 31:34
  Speaker 2: covered a report that I forget who it was, it
• 31:36
  Speaker 2: might have been the CFPB was suing Capital One for
• 31:39
  Speaker 2: the deceptive marketing they did around their interest rates offered
• 31:43
  Speaker 2: on their deposit accounts.
• 31:44
  Speaker 3: Yeah, if you missed this, they offered an interest rate,
• 31:47
  Speaker 3: got a bunch of customers signed up, and then offered
• 31:49
  Speaker 3: a similar product with a similar name, but lowered the
• 31:52
  Speaker 3: interest rate on the old one.
• 31:54
  Speaker 2: Yeah. And I was one of those people, and I
• 31:56
  Speaker 2: was kind of upset when I learned like what had happened,
• 31:58
  Speaker 2: but ultimately I didn't do anything. On Wednesday, they responded
• 32:01
  Speaker 2: to the CFPB lawsuit or whatever, saying, hey, like, we
• 32:06
  Speaker 2: appropriately notified customers about this, blah blah blah. I'm sitting there.
• 32:09
  Speaker 2: I'm like, look, I'm pretty plugged into this stuff. I'm
• 32:11
  Speaker 2: no dummy, and I had no idea that this was happening.
• 32:14
  Speaker 2: What was going on. So, in full disclosure, I decided
• 32:18
  Speaker 2: on Wednesday, you know what, I'm gonna move my money
• 32:21
  Speaker 2: away from Capital One that I've kept there. Now. I
• 32:24
  Speaker 2: have like a couple CDs and things that are there
• 32:26
  Speaker 2: that I'm gonna wait until they mature. So it's gonna
• 32:28
  Speaker 2: be like a kind of multi year process for me
• 32:30
  Speaker 2: to get there. But I started it on Wednesday, just
• 32:33
  Speaker 2: with the stuff that was liquid. I was like, yeah,
• 32:34
  Speaker 2: you know what, they haven't treated me great. Now they're
• 32:36
  Speaker 2: like saying that, oh, like we actually did treat you great.
• 32:39
  Speaker 2: That doesn't sit well with me. I'm gonna move you away.
• 32:43
  Speaker 2: The money hasn't moved yet. It's been two days since
• 32:45
  Speaker 2: I submitted the request and it has not left Capital One. Now.
• 32:48
  Speaker 2: I don't think anything the ferries is going on they've
• 32:50
  Speaker 2: basically said, look, we do business with a third party
• 32:53
  Speaker 2: who helps process these transactions. That vendor is a company
• 32:57
  Speaker 2: by the name of Fidelity Information Services. They are not
• 33:01
  Speaker 2: related to Fidelity Investment correct, they are not, to my knowledge.
• 33:04
  Speaker 2: So they said that they were working to fix this
• 33:07
  Speaker 2: and it was basically caused by a power outage at
• 33:10
  Speaker 2: one of their data centers. Apparently why they don't have redundancy,
• 33:14
  Speaker 2: I don't know, but you know whatever, I've been waiting
• 33:16
  Speaker 2: for two days for money whatever use service banks, right, like,
• 33:20
  Speaker 2: FDIC is going to have something to say about this. Yeah,
• 33:22
  Speaker 2: there's gonna be a problem there. And so I'm sitting
• 33:25
  Speaker 2: here on Friday morning, two days after I requested the transaction,
• 33:28
  Speaker 2: and it still has not moved at this point and
• 33:32
  Speaker 2: is showing no indication of moving at this point. I
• 33:34
  Speaker 2: will say there is little.
• 33:38
  Speaker 3: That is scarier than feeling as though you don't have
• 33:41
  Speaker 3: access to your money. Yeah, right, Like I mean wildfires
• 33:46
  Speaker 3: in California would.
• 33:47
  Speaker 1: Be one of them.
• 33:47
  Speaker 3: But yeah, there are a few things that you can
• 33:49
  Speaker 3: look at and say, oh, yeah, I requested money and
• 33:52
  Speaker 3: it didn't show up, and I can't really get an answer.
• 33:56
  Speaker 3: That is among the scariest things that go on there,
• 33:59
  Speaker 3: and it does kind of dovetail nicely into Armstrong's guide
• 34:05
  Speaker 3: for this month about financial scams and frauds. And if
• 34:09
  Speaker 3: you're listening and you haven't heard about this one, it's
• 34:11
  Speaker 3: because it's brand new for the month of January. But
• 34:13
  Speaker 3: we actually go through seven common financial scams and frauds,
• 34:17
  Speaker 3: of which this capital one issue is not one of them.
• 34:19
  Speaker 3: This is a technical issue that they are experiencing. But
• 34:23
  Speaker 3: I'll tell you firstthand that the volume of these has
• 34:27
  Speaker 3: been increasing across the board. I see them all the time.
• 34:31
  Speaker 3: Chuck brought one to me this morning on a you know,
• 34:34
  Speaker 3: dream job offer that he's getting that was gonna work
• 34:36
  Speaker 3: one hour.
• 34:37
  Speaker 2: A day and get paid three thousand dollars a day.
• 34:40
  Speaker 2: I mean, seems like a heck of a deal.
• 34:43
  Speaker 3: These things are common, and when we talk about them
• 34:46
  Speaker 3: like this, seem pretty easy to detect. But with the
• 34:50
  Speaker 3: amount of data that has been breached over the years,
• 34:54
  Speaker 3: the ability for someone to for instance, steal your identity
• 34:57
  Speaker 3: and pretend to be you with one of these large
• 34:59
  Speaker 3: financial institutions and request cash from your account, it's become
• 35:03
  Speaker 3: a lot easier for the fraudsters. The banks have been
• 35:05
  Speaker 3: trying to keep up. The financial institutions have been trying
• 35:07
  Speaker 3: to keep up with ways to prevent it, not always successfully.
• 35:11
  Speaker 3: And what I have seen in my experience in this
• 35:14
  Speaker 3: industry is that most people absolutely don't fall victim to this.
• 35:19
  Speaker 3: It is when they're at the most vulnerable, when they're
• 35:22
  Speaker 3: letting their guard down because they've lost a loved one,
• 35:26
  Speaker 3: or because they're going through a divorce, or they're going
• 35:28
  Speaker 3: through a medical treatment, and as terrible as that sounds,
• 35:32
  Speaker 3: that's when the scammers get in. That's when the fraudsters
• 35:34
  Speaker 3: get in. Our guide this month all about the seven
• 35:37
  Speaker 3: most common types of financial frauds and scams, tips that
• 35:41
  Speaker 3: you can take home to protect yourself from them, and
• 35:45
  Speaker 3: what we're seeing out there in the latest and greatest scams.
• 35:49
  Speaker 3: If you want a copy of our call of our
• 35:51
  Speaker 3: brand new guide on this subject, call your Armstrong Advisor
• 35:54
  Speaker 3: Group at eight hundred three nine three four zero zero one. Again,
• 35:59
  Speaker 3: that is our brand new January guide on seven common
• 36:02
  Speaker 3: financial scams and frauds. Call us to get your copy
• 36:06
  Speaker 3: eight hundred three nine three for zero zero one.
• 36:10
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 36:13
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 36:15
  Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
• 36:18
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 36:21
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 36:24
  Speaker 1: advisory services.
• 36:26
  Speaker 2: One thing that I wanted to touch on today Today
• 36:29
  Speaker 2: the Biden administration unveiled the next fifteen prescription drugs that
• 36:33
  Speaker 2: will be subject to price negotiations for Medicare. The first
• 36:37
  Speaker 2: one went through last year, I believe, and on the
• 36:41
  Speaker 2: list this year a few of the obese drugs ozembic,
• 36:46
  Speaker 2: wegov and something called Verbelsis, which I'm not as familiar with.
• 36:49
  Speaker 2: That one hasn't been in the news quite as much.
• 36:51
  Speaker 3: Yeah, Tucker Match, one of the stocks, was down a
• 36:53
  Speaker 3: good what five percent this morning.
• 36:56
  Speaker 2: There is also Trilogy Ellipta, which used for copd X
• 37:01
  Speaker 2: Tandy or ex Tandy. It's a prostate cancer drug Pomelist,
• 37:06
  Speaker 2: which is a treatment for multiple myeloma, iberrants or iborants,
• 37:12
  Speaker 2: which is a treatment for breast cancer OFEV, which is
• 37:15
  Speaker 2: used to treat chronic lung disease lenses, which is for
• 37:18
  Speaker 2: irritable bow syndrome calquins, which is for certain types of
• 37:21
  Speaker 2: blood cancer ostato or ostido which is for Huntington's disease,
• 37:27
  Speaker 2: braio ellipta which is used to treat COPD, tragenta for
• 37:31
  Speaker 2: type two diabetes, z Faxin for irritable bow syndrome, Raylar
• 37:38
  Speaker 2: for schizophrenian bipolar, genimate for type two diabetes, and Otesla
• 37:43
  Speaker 2: for plaque pariasis. So those are the ones that the
• 37:48
  Speaker 2: Biden administration has sent in order to have those manufacturers
• 37:53
  Speaker 2: negotiate with Medicare on pricing. And the theory on this is, look,
• 37:57
  Speaker 2: if if Medicare is covering you know, basically every senior
• 38:02
  Speaker 2: over age sixty five, hey we've got some pricing power
• 38:05
  Speaker 2: and we want to use it. You can't just charge,
• 38:07
  Speaker 2: you know, list prices and things like that. So that
• 38:10
  Speaker 2: is just some news of note. I thought, let's take
• 38:14
  Speaker 2: a quick break hour or two coming up in just
• 38:16
  Speaker 2: a little bit on the financial exchange,