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Bond Market Tests Warsh as Energy Prices Keep Climbing · The Financial Exchange Show

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  Speaker 1: is the Financial Exchange with Chuck Zada and Paul Lane.
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  Speaker 2: It's Chuck, it's Paul and Tucker with you here today.
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  Speaker 2: And as we kick things off, stock's still struggling to
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  Speaker 2: get off the mat here.
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  Speaker 3: It's just been.
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  Speaker 2: Again, kind of a meh start to September. Not bad
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  Speaker 2: by any means. But you've got the S & P
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  Speaker 2: off 32 points today. The Dow Jones Industrial Average is
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  Speaker 2: off 313. And the NASDAQ Composite off 150. So all
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  Speaker 2: in all, anywhere from about a 0.4% to 0.6% decline
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  Speaker 2: in the major U.S.
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  Speaker 3: Indices.
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  Speaker 2: Ten-year Treasury selling off as well, up 3.1 basis points
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  Speaker 2: to 4.835%. So yields continuing to creep up at the
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  Speaker 2: moment in terms of what we're seeing, not just domestically,
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  Speaker 2: you're seeing that across the board. Gold is up 2240
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  Speaker 2: an ounce despite yields moving up. And so gold still
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  Speaker 2: catching a bit of a bid here at the moment.
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  Speaker 2: And then we've got, let's see, West Texas Intermediate up $ 3.
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  Speaker 3: 27 a barrel to $ 96. 30. Brent Crude is now up $ 3.
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  Speaker 2: 29 a barrel to $ 101. 21, so back above $ 100 for
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  Speaker 2: Brent Crude. The AAA National Average for gas prices up $ 0.
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  Speaker 3: 07 overnight to $ 4.
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  Speaker 2: 22.
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  Speaker 3: Diesel up another $ 0. 04 to another all-time record of $ 5.
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  Speaker 2: 94. And front month diesel futures for October. up another
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  Speaker 2: 20 cents today to $ 4.
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  Speaker 3: 77.
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  Speaker 2: And so diesel very likely going to take out $ 6
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  Speaker 2: a gallon nationwide on the average sometime before the end
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  Speaker 2: of this week. And got to be honest, it's looking
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  Speaker 2: increasingly likely that we are heading for $ 7 a gallon
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  Speaker 2: diesel sometime, I would say, last week in September or
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  Speaker 2: first week in October if we still have the status
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  Speaker 2: quo in place. in the Middle East and between Russia
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  Speaker 2: and Ukraine over the next couple weeks here. That's where
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  Speaker 2: we are heading, unfortunately, is towards $ 7 diesel if this continues.
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  Speaker 2: Treasury Secretary Scott Besant had some remarks yesterday. This was
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  Speaker 2: at an event at SMU in Texas. And I got
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  Speaker 2: to tell you, the memes that have been floating around
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  Speaker 2: the internet as a result of this have been nothing
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  Speaker 2: short of exquisite. Besson's quote here, I am the house now,
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  Speaker 2: so when we intervene with the Japanese yen, I have
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  Speaker 2: pretty good insight into what the Japanese, what the Bank
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  Speaker 2: of Japan is going to do, what Japanese policymakers are
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  Speaker 2: going to do, and you can bet against me if
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  Speaker 2: you want. Now, Besson also had, like, he was part of,
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  Speaker 2: you know, a larger discussion, and most of it was
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  Speaker 2: pretty measured, but I gotta.
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  Speaker 3: Tell you, in finance....
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  Speaker 2: When you say things like, I am the house, it
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  Speaker 2: really just opens you up to everyone saying, okay, house,
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  Speaker 2: let me see how I can screw what you're trying
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  Speaker 2: to do. Like, that's kind of how it ends up going. Like,
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  Speaker 2: any kind of hubris just gets punished in financial markets. Now,
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  Speaker 2: Besson's not wrong.
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  Speaker 3: Like, the U.S. Treasury, when it comes to, like, you know.
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  Speaker 2: governments and and their purse strings yeah he's the biggest
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  Speaker 2: player out there but the real house if we're talking
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  Speaker 2: about like you know you know the idea of okay
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  Speaker 2: the house always wins it's the fed because the fed
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  Speaker 2: can print money whereas the treasury cannot so i i
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  Speaker 2: think that when we look at this besant you know
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  Speaker 2: coming out and saying i'm the house i i know
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  Speaker 2: what other people are going to do Well, you're not
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  Speaker 2: entirely wrong, but so is every other treasury secretary before you.
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  Speaker 2: And so I just I'm not entirely sure why you're
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  Speaker 2: saying this.
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  Speaker 4: It is sort of reminiscent in when you get really
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  Speaker 4: frustrated with your kids and you just tough talk them
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  Speaker 4: and just say, I'm the one in charge here. I
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  Speaker 4: make the rules. And it's one thing to do it
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  Speaker 4: with a child, but another when you're up against global
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  Speaker 4: markets where, yes, they have some ability to influence people.
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  Speaker 4: and be able to jump in like they have over
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  Speaker 4: the past month and purchase a significant amount of yen,
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  Speaker 4: though the amount I don't think was disclosed. The focus
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  Speaker 4: here has been a continued effort by the Treasury Department
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  Speaker 4: to try and keep interest rates under control. And in fact,
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  Speaker 4: we're just getting breaking news at the moment that the
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  Speaker 4: Treasury Department said it will buy back $ 6 billion of
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  Speaker 4: government debt. This was something that was mentioned before in
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  Speaker 4: an announcement on August 19th. But I believe I had
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  Speaker 4: had that initial buyback at $ 4 billion, I think that
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  Speaker 4: they had noted. And this flies in the face of
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  Speaker 4: A U.S. 10-year treasury that now has risen four basis
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  Speaker 4: points today to 4.85%.
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  Speaker 2: Paul, not just four basis points today.
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  Speaker 4: Maybe 10 from where it closed yesterday.
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  Speaker 3: Is that right? No, it's four.
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  Speaker 2: But it's four basis points since the treasury announcement happened.
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  Speaker 3: Right.
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  Speaker 2: Since that $ 6 billion buyback announcement happened like five minutes ago.
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  Speaker 2: This is the treasury market saying, okay, you're going to
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  Speaker 2: try to cap yields in the long-term treasuries?
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  Speaker 3: Good luck. Right.
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  Speaker 2: Now, the interesting thing for me is last Friday, we
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  Speaker 2: had a jobs report. The jobs report, good or bad, Paul?
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  Speaker 3: Very good report.
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  Speaker 2: Pretty darn tootin', right? It was pretty good. And on
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  Speaker 2: that jobs report, the interesting thing was normally, okay, good
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  Speaker 2: jobs report. You'd see yields move up pretty significantly, right?
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  Speaker 2: we saw like a one to two basis point move
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  Speaker 2: in yields. It was basically nothing, but now on the
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  Speaker 2: actual action from the treasury, you get the market pushing
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  Speaker 2: back against it saying, uh, so I said on Friday, okay,
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  Speaker 2: like if yields can't go up when you get a
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  Speaker 2: good jobs report, it's kind of an interesting signal just
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  Speaker 2: about how everyone's positioned. Like it's, Is that the market signaling, hey,
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  Speaker 2: everyone who wants to be short yields already is? Today,
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  Speaker 2: so that's one kind of news failure that you can
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  Speaker 2: look at. You say, okay, like, bang up, you know,
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  Speaker 2: jobs report, yields should move up because of higher growth,
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  Speaker 2: and they didn't.
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  Speaker 3: That's interesting.
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  Speaker 2: But then today, you get, hey, U.S. Treasury goes through
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  Speaker 2: $ 6 billion buyback instead of the four that they had
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  Speaker 2: previously discussed, and yields go up. It's the exact opposite
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  Speaker 2: kind of news failure. So I've said this before. Anytime
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  Speaker 2: that you get a new Fed chair, markets like to
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  Speaker 2: pressure them.
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  Speaker 3: And the U.S.
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  Speaker 2: Treasury, remember, can only do so much. The Fed is
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  Speaker 2: really who has the unlimited firepower. Besson is saying, I'm
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  Speaker 2: going to use my more limited firepower, albeit he's the house.
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  Speaker 2: And I got to tell you, the memes are just great.
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  Speaker 2: The best one that I've seen, you know Captain Phillips,
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  Speaker 2: the movie Tom Hanks?
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  Speaker 5: Yes.
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  Speaker 3: I'm the captain now?
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  Speaker 4: Yes, yes.
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  Speaker 3: So there's a new one.
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  Speaker 2: They've superimposed Besson's face on the Somali guy. And it's
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  Speaker 2: got a Japanese flag in the background. And it just goes,
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  Speaker 2: I'm the house now. It's good. I appreciate it. So
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  Speaker 2: in any case, the market's going to push back on
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  Speaker 2: Besson because Besson doesn't have unlimited firepower. Besson and Warsh
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  Speaker 2: are also at odds because Warsh has said, hey, I
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  Speaker 2: want the market to do the speaking for us. I
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  Speaker 2: don't want to be telling the market what we're going
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  Speaker 2: to do.
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  Speaker 3: And meanwhile, Besson's out there saying, I'm the house.
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  Speaker 4: I'm the house.
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  Speaker 3: Cross me if you dare.
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  Speaker 2: And so the market is literally now, the place that
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  Speaker 2: I've gotten to on this, it's throwing it over to
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  Speaker 2: Warsh and saying, hey, this guy's trying to do what
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  Speaker 2: you do. We're going to check to you. Are you
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  Speaker 2: really going to let yields continue to go up? And
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  Speaker 2: that's what this is basically saying. It's calling both of
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  Speaker 2: their bluffs. Number one, that the Treasury is going to
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  Speaker 2: be able to have enough firepower to do this.
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  Speaker 4: Which they do not.
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  Speaker 2: And number two, that Warsh is actually not going to
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  Speaker 2: get the Fed involved if yields continue to blow out topside.
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  Speaker 2: So I don't know what's going to happen, but it's... Again,
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  Speaker 2: we are living in.
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  Speaker 4: Compelling drama for next week.
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  Speaker 3: Right.
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  Speaker 2: Next week on the most dramatic season of the Fed ever,
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  Speaker 2: just watch what Kevin Warris does.
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  Speaker 3: So this is where we are, and.
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  Speaker 2: I'm here for it because this is kind of like
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  Speaker 2: historic stuff that you're seeing. It's going to be really interesting.
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  Speaker 2: There are going to be books written about what happens here,
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  Speaker 2: and I'm very interested in how it plays out. I
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  Speaker 2: don't know that it's going to go either way necessarily,
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  Speaker 2: but The bond market is absolutely going to test Warsh,
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  Speaker 2: and it is now, saying, okay, your guy in the
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  Speaker 2: Treasury is saying that he can do enough.
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  Speaker 3: Maybe he can. And we're going to bet that he
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  Speaker 3: can't and throw it over to you, Kevin. Your move.
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  Speaker 3: Let's take a quick break here.
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  Speaker 2: When we return, an anthropic researcher quits over out-of-control AI fears.
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  Speaker 3: Great headline. We'll discuss next.
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• 11:24
  Speaker 3: Peace here in the Wall Street Journal.
• 11:25
  Speaker 2: It's titled, Anthropic Researcher Quits Over Out-of-Control Fears. A guy
• 11:33
  Speaker 2: by the name of Jacob Coxon, who is a 27-year-old
• 11:36
  Speaker 2: from the UK, and his quote, we're on track for
• 11:40
  Speaker 2: a lot of the most aggressive of these scenarios, where
• 11:43
  Speaker 2: by the end of next year, things could be out
• 11:45
  Speaker 2: of control already, Coxon said, adding that the safety trade-offs
• 11:49
  Speaker 2: are inevitable when companies are competing against one another and
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  Speaker 2: Chinese upstarts. Anthropic did not comment on this. There was
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  Speaker 2: also another guy yesterday, or something yesterday, I forget who
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  Speaker 2: it was. I'll see if I can pull it just
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  Speaker 2: to get the accurate quote on it that said basically
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  Speaker 2: there's a 10 percent chance that AI wipes out humanity
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  Speaker 2: in the next decade, which is which is good, which
• 12:15
  Speaker 2: is good. Like that's that's what you want to see
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  Speaker 2: from emerging new technologies is the ability to get rid
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  Speaker 2: of all of us.
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  Speaker 3: That's that's obviously it. Here we go.
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  Speaker 2: This was... Actually, no, sorry. It was November of 25.
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  Speaker 2: A panel of AI experts said that there was a
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  Speaker 2: 10% chance that you would see.
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  Speaker 3: No, hang on. This is.
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  Speaker 2: Another anthropic guy. This is Evan Hubinger. Hubinger, Hubinger, whatever.
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  Speaker 2: Jacob is correct. We do earnestly believe AI could kill
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  Speaker 2: all humans. I personally think it's greater than 10% within
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  Speaker 2: the next decade. That's from someone else at Anthropic.
• 12:59
  Speaker 3: So... Look, I mean... I just... Here's the thing.
• 13:07
  Speaker 2: The reason why people hate data centers is not because
• 13:10
  Speaker 2: of the actual data center. I think we're generally fine
• 13:13
  Speaker 2: with that. People are like, oh, it's too noisy. Use
• 13:16
  Speaker 2: the water. Honestly, we do lots of things that are
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  Speaker 2: noisy and use lots of water.
• 13:21
  Speaker 3: Have you ever been.
• 13:22
  Speaker 2: You ever been to a golf course? You want to
• 13:23
  Speaker 2: talk about not a productive use of water? And I
• 13:25
  Speaker 2: say this as someone who likes golf. But man, what
• 13:29
  Speaker 2: a bad use of water, if we're being honest. You
• 13:33
  Speaker 2: just don't need to go that route. So it's not
• 13:36
  Speaker 2: data centers are noisier. Oh, data uses too much water.
• 13:40
  Speaker 2: Here's the reason why people hate data centers. Number one,
• 13:44
  Speaker 2: we don't trust tech companies because for the last 15 years,
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  Speaker 2: we're convinced that they're screwing us because they generally are.
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  Speaker 3: Number one.
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  Speaker 2: Number two, if the people that work at your companies
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  Speaker 2: keep quitting and telling us that this is going to
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  Speaker 2: kill us, why do we want to put it in
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  Speaker 2: our backyard? So we already don't trust you, and now
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  Speaker 2: you're telling us you're going to kill us, but we
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  Speaker 2: have to keep moving forward anyways.
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  Speaker 3: What are we doing here, guys?
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  Speaker 5: Yeah, I mean, this is... quite viral I don't know
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  Speaker 5: if you're on X at all today.
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  Speaker 3: Chuck oh yeah it's everywhere it is it's everywhere.
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  Speaker 5: Everywhere and that one clip of like oh it's gonna
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  Speaker 5: destroy humanity is obviously the you know the attention grabber
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  Speaker 5: oh yeah I just how about this can we just
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  Speaker 5: not can we just stop it right just unplug it let's.
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  Speaker 3: We've gone too far down the road you know.
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  Speaker 4: Now humanity's at risk two faces out of the two
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  Speaker 4: let's uh.
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  Speaker 5: I don't know stop just a thought.
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  Speaker 4: It begs an interesting question along those lines, Tucker. I
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  Speaker 4: sit sort of conflicted on this, where certainly I recognize
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  Speaker 4: how scary it is to hear this commentary from someone
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  Speaker 4: who is on the cutting edge and is really astute
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  Speaker 4: to what is going on with the models, where I
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  Speaker 4: sit far removed from that. I try to keep up
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  Speaker 4: with it, but it's impossible. And while... Government intervention is
• 15:07
  Speaker 4: the thing that most everyone would point to here to
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  Speaker 4: try and slow down the pace of it. You have
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  Speaker 4: these conflicting items where you're competing against China, and it's
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  Speaker 4: this debate of, do you want to lose out to
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  Speaker 4: them or take the forefront?
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  Speaker 3: What does that mean? This is what no one's been
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  Speaker 3: able to explain to me.
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  Speaker 5: It's the big race.
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  Speaker 2: What happens if you lose to China in... Something related
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  Speaker 2: to AI.
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  Speaker 4: They have control of artificial super intelligence and.
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  Speaker 3: But apparently they won't. Because we're all going to die.
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  Speaker 4: Well, in that case, we're just all screwed.
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  Speaker 1: But.
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  Speaker 4: I just, I'm conflicted. Do you want, and I pose
• 15:51
  Speaker 4: it to you, Chuck, because I don't have a great
• 15:52
  Speaker 4: answer on it. I want technology to develop and to
• 15:56
  Speaker 4: have productivity enhancements go through. But obviously, I fully acknowledge
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  Speaker 4: the risk that is being mentioned here in this viral
• 16:03
  Speaker 4: post is enough to scare the crap out of me.
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  Speaker 4: But I just don't know where I sit between do
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  Speaker 4: you want intervention or do you want technology to continue
• 16:12
  Speaker 4: to evolve? I sit in the middle between the two.
• 16:14
  Speaker 4: It's hard to take a stance one way or the other.
• 16:17
  Speaker 3: Well, here's the thing.
• 16:19
  Speaker 2: There are technologies that we say are too dangerous for
• 16:23
  Speaker 2: private citizens and companies to operate without government regulation. Namely,
• 16:28
  Speaker 2: nuclear power technology. One cannot simply walk into any retailer
• 16:34
  Speaker 2: of metals and say, Jimbo... Give me three kilos of
• 16:39
  Speaker 2: your finest uranium today.
• 16:41
  Speaker 5: Thank you, good sir.
• 16:42
  Speaker 3: Yes, the yellow cake over there. That'd be quite nice.
• 16:46
  Speaker 2: And can you wrap it up with a little box
• 16:47
  Speaker 2: of plutonium for my niece as well? She's got a
• 16:50
  Speaker 2: birthday coming up, and I'd like to give her something
• 16:52
  Speaker 2: to celebrate. We don't allow average humans to just possess
• 17:00
  Speaker 2: and do stuff with these things because it's inherently dangerous. Now,
• 17:04
  Speaker 2: it's also, if we're being honest about this, It's a
• 17:07
  Speaker 2: lot harder to regulate what's going on inside a computer
• 17:12
  Speaker 2: than to keep track of nuclear material. Nuclear material shows
• 17:17
  Speaker 2: up in various different scans and things like that. You
• 17:20
  Speaker 2: can pick it up depending on what you're looking for.
• 17:25
  Speaker 2: Different imagery, different scans. You can't inherently tell what a
• 17:29
  Speaker 2: computer is doing while it's just doing it. So we
• 17:34
  Speaker 2: might be too far along at this point.
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  Speaker 3: Uh, but.
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  Speaker 2: I, I just, I, I just don't know what it
• 17:45
  Speaker 2: is that we're trying to do here. And, and, and
• 17:47
  Speaker 2: just like in terms of like what other people are
• 17:49
  Speaker 2: just using this stuff for now, have you heard about the, uh,
• 17:52
  Speaker 2: the latest big thing is instinct, which is a, uh,
• 17:55
  Speaker 2: I think it's an invite only, uh, AI agent that
• 17:59
  Speaker 2: you can basically tell it to like do stuff for you.
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  Speaker 2: And it's gotten to the point now where, like, restaurant
• 18:08
  Speaker 2: reservation systems, this is what people are deciding they want
• 18:10
  Speaker 2: to do. They're like, oh, like, I want a reservation
• 18:13
  Speaker 2: at this place, so I'm going to use my bot
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  Speaker 2: to do it because it's, you know, hard to get in.
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  Speaker 3: Mm-hmm.
• 18:17
  Speaker 2: And so people are getting banned from, like, OpenTable and
• 18:20
  Speaker 2: Resi because their bots are submitting, like, thousands of requests
• 18:24
  Speaker 2: to try to, like, take up all the reservations.
• 18:27
  Speaker 3: And it's like, guys, like.
• 18:28
  Speaker 5: Call up the restaurant and make the reservation yourself.
• 18:30
  Speaker 3: Right, like.
• 18:32
  Speaker 3: What are we actually doing here?
• 18:34
  Speaker 4: I don't have time for that.
• 18:35
  Speaker 2: We keep trying to make life easier for ourselves, and
• 18:38
  Speaker 2: we're just making more suck. And so I say this unironically.
• 18:42
  Speaker 2: It's going to be wild when we tell our grandkids
• 18:46
  Speaker 2: that phones used to be used for more than just
• 18:48
  Speaker 2: calling people. Because we're going to ruin technology. We are
• 18:53
  Speaker 2: going to ruin it. Already it's at the point... It
• 18:56
  Speaker 2: was bad 10 years ago. You can't trust any picture
• 18:59
  Speaker 2: or video that you see online now.
• 19:01
  Speaker 4: That's definitely true.
• 19:03
  Speaker 3: You can't trust any of them. And it's only going
• 19:06
  Speaker 3: to get worse. It's only going to get worse.
• 19:08
  Speaker 2: The other thing that people have brought up that I
• 19:10
  Speaker 2: hadn't thought of, guys, they're going to be just like
• 19:12
  Speaker 2: wild AI agents roaming around different systems that we don't
• 19:16
  Speaker 2: know about and don't have control over.
• 19:20
  Speaker 3: We're just cool with this?
• 19:22
  Speaker 5: Yep.
• 19:23
  Speaker 3: Let's take a quick break and hopefully... Coming back after this.
• 19:27
  Speaker 2: Coming up next, a heartwarming story about a golden retriever
• 19:31
  Speaker 2: and a well.
• 19:32
  Speaker 3: We'll be back next.
• 19:40
  Speaker 1: Bringing the latest financial news straight to your radio every day.
• 19:44
  Speaker 1: It's the Financial Exchange on the Financial Exchange Radio Network.
• 19:50
  Speaker 1: Time now for Wall Street Watch. Tracking the stocks, the data,
• 19:54
  Speaker 1: and the headlines driving markets so far today. Right here
• 19:57
  Speaker 1: on the Financial Exchange Radio Network.
• 20:00
  Speaker 5: The markets are accelerating into negative territory now with Brent
• 20:06
  Speaker 5: crude topping $ 100 for the first time. Since July, as
• 20:10
  Speaker 5: the tit-for-tat attacks between the U.S. and Iran continued overnight,
• 20:14
  Speaker 5: right now the Dow is down 0.8% to 422 points off.
• 20:16
  Speaker 5: S & P 500 down 0.5%, 38 points lower. NASDAQ
• 20:17
  Speaker 5: down about 0.7% to 186 points lower. Russell 2000 down
• 20:19
  Speaker 5: over 1%. Ten-year Treasury yield now up three basis points
• 20:20
  Speaker 5: at 4.839%. And crude oil is up nearly 4% trading
• 20:39
  Speaker 5: at $ 96 a barrel, while Brent is at $ 101. Several
• 20:44
  Speaker 5: energy stocks seen gains in reaction to that climb in oil. ExxonMobil, Chevron,
• 20:49
  Speaker 5: and Oxidol Petroleum are all up over 1%. Meanwhile, KC's
• 20:54
  Speaker 5: General Store posted mixed quarterly results where its earnings and
• 20:57
  Speaker 5: revenue beat estimates, but reported positive. A 0.3% year-over-year decline
• 21:04
  Speaker 5: in fuel sales. That stock is down 15%. Elsewhere, Chime
• 21:08
  Speaker 5: Financial jumping 4% after the fintech company agreed to pay
• 21:13
  Speaker 5: $ 590 million in cash to acquire lender Stride Bank. And
• 21:17
  Speaker 5: Apple down 1% ahead of its anticipated product event this afternoon,
• 21:23
  Speaker 5: where the company will unveil its first foldable iPhone that
• 21:26
  Speaker 5: has been in the making for a decade. The event
• 21:29
  Speaker 5: will also be a first for new CEO John Ternes.
• 21:34
  Speaker 5: I'm Tucker Silva, and that is Wall Street Watch.
• 21:37
  Speaker 2: Paul, we've got a Fed meeting coming up next Wednesday,
• 21:41
  Speaker 2: so we're a week out.
• 21:43
  Speaker 3: And we've got a piece here.
• 21:45
  Speaker 2: It's titled The Fed's Three Choices as Warsh's Honeymoon Ends.
• 21:49
  Speaker 2: And this is not a Warsh thing. specific thing. This
• 21:53
  Speaker 2: is just like every Fed chair we've talked about this.
• 21:55
  Speaker 2: They get tested usually during their first six to nine
• 21:58
  Speaker 2: months in the big seat.
• 22:00
  Speaker 3: So they lay out three scenarios. Number one, the Fed
• 22:02
  Speaker 3: hikes without Warsh.
• 22:05
  Speaker 2: I find that one hard to believe just because Warsh
• 22:07
  Speaker 2: isn't going to want the optics of the Fed committee
• 22:11
  Speaker 2: basically overruling him. So I find that one to be
• 22:15
  Speaker 2: a very small chance. I'd price that at like a
• 22:17
  Speaker 2: 5% possibility.
• 22:19
  Speaker 4: Yeah, that hasn't happened where you've had the Fed members
• 22:23
  Speaker 4: go against the Fed chair in really the modern sort
• 22:26
  Speaker 4: of structure of the Fed. So very low probability on
• 22:32
  Speaker 4: that one, you'd think.
• 22:33
  Speaker 2: Option two, policymakers stay on hold. They don't hike interest rates.
• 22:38
  Speaker 2: This obviously, unfortunately, it seems like it's going to depend
• 22:41
  Speaker 2: on the inflation data that we get the next couple
• 22:43
  Speaker 2: of days. But this is possibility number two. And possibility
• 22:47
  Speaker 2: number three is that Warsh— supports a hike that the
• 22:52
  Speaker 2: Fed ends up doing. Right now, the market, as of today,
• 22:56
  Speaker 2: is pricing in a 62% chance that there's a hike
• 23:01
  Speaker 2: and a 37% chance that there's no hike. So here's
• 23:06
  Speaker 2: the point that I will make that I think is
• 23:08
  Speaker 2: really important for everyone to grasp here. If the Fed
• 23:13
  Speaker 2: doesn't hike, that is not just not hiking. Because the
• 23:18
  Speaker 2: market is not pricing in them staying. The Fed not
• 23:21
  Speaker 2: hiking is implicit easing because it is more dovish than
• 23:27
  Speaker 2: the probabilities that are currently priced. And so as such,
• 23:31
  Speaker 2: if the Fed ends up not hiking here, you've got
• 23:35
  Speaker 2: to watch out on the long end in the short term.
• 23:38
  Speaker 2: Because the message that's being sent then is despite the
• 23:40
  Speaker 2: hawkish talk from Warsh, despite the hawkish talk from Waller,
• 23:44
  Speaker 2: Despite the talk from other Fed members, I think it
• 23:47
  Speaker 2: was Beth Hammock also had a piece recently. OK, if
• 23:52
  Speaker 2: you're just going to talk tough but not do anything. Well,
• 23:56
  Speaker 2: then you're not being serious.
• 23:58
  Speaker 1: Right.
• 23:58
  Speaker 2: And so that's the risk that's potentially out there and
• 24:02
  Speaker 2: looming if the Fed does nothing here.
• 24:05
  Speaker 4: Yeah, it will certainly be an interesting setup. Obviously, you
• 24:07
  Speaker 4: do have the backdrop where the president has been extremely
• 24:11
  Speaker 4: vocal in his desire for rates to be cut, and
• 24:15
  Speaker 4: that complicates Warsh's job even further. This isn't the first
• 24:20
  Speaker 4: time that a president has tried to curry favor with
• 24:25
  Speaker 4: the Federal Reserve, but it's the most public that I
• 24:28
  Speaker 4: can at least recall that we've seen the president really
• 24:32
  Speaker 4: being forceful about the idea of lowering interest rates. Ultimately,
• 24:37
  Speaker 4: what is most important for us, for those who follow
• 24:40
  Speaker 4: the economy and investors, is that the Federal Reserve's job
• 24:44
  Speaker 4: is to keep inflation under control, the two tenets of it,
• 24:47
  Speaker 4: and keep the labor market under control. You have inflation
• 24:50
  Speaker 4: that has been exceeding their target for the last few
• 24:55
  Speaker 4: years here. It is clearly a set of circumstances at
• 24:59
  Speaker 4: the moment that I feel it's hard to argue that
• 25:01
  Speaker 4: there isn't inflationary pressure out there. So it's their time.
• 25:06
  Speaker 4: Warsh talked tough at the Jackson Hole Symposium. Now we
• 25:10
  Speaker 4: get to see Warsh and his members if they deliver.
• 25:15
  Speaker 4: And to your point, Chuck, if we were to see
• 25:18
  Speaker 4: them stay pat I do think that that would spell
• 25:22
  Speaker 4: some interesting volatility in the bond market. I'm right with
• 25:25
  Speaker 4: you there.
• 25:26
  Speaker 2: Folks, the Armstrong Advisory Group has a guide available this month.
• 25:30
  Speaker 2: It is titled The Hidden Costs, The Five Hidden Costs, Actually,
• 25:34
  Speaker 2: of Saving Too Much for Retirement. And there are two
• 25:38
  Speaker 2: ways that you can request this guide. The first is
• 25:41
  Speaker 2: by calling 800-393-7000. The second is by going to armstrongadvisory.com.
• 25:48
  Speaker 2: What this guide talks about is, hey, obviously everyone wants
• 25:52
  Speaker 2: to save as much as possible for retirement, but is
• 25:55
  Speaker 2: it possible to over-save, and then what are the consequences
• 26:00
  Speaker 2: as a result of it? Again, the guide is titled
• 26:02
  Speaker 2: The Five Hidden Costs of Saving Too Much for Retirement,
• 26:05
  Speaker 2: and the two ways that you can request it are
• 26:08
  Speaker 2: by calling 800-393-4001 or by visiting armstrongadvisory.com.
• 26:16
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 26:18
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 26:21
  Speaker 1: Armstrong guide is specific financial, legal, or tax advice. Consult
• 26:24
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 26:27
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 26:30
  Speaker 1: advisory services.
• 26:32
  Speaker 2: Peace and CNBC that's trying to get everyone all fired
• 26:34
  Speaker 2: up about problems in the housing market that don't exist. Again,
• 26:39
  Speaker 2: one can be concerned about different parts of the economy
• 26:41
  Speaker 2: without having to make up stuff in headlines. Demand for
• 26:45
  Speaker 2: riskier mortgages rises again, along with interest rates. So what
• 26:49
  Speaker 2: it's talking about is that adjustable rate mortgages in the
• 26:53
  Speaker 2: last week made up 8.5% of all applications, up from
• 26:57
  Speaker 2: 8% the previous week. And during the first few years
• 27:01
  Speaker 2: out of the pandemic, arms were only about 3% of
• 27:04
  Speaker 2: all mortgages. So it's like, oh, we should be concerned
• 27:08
  Speaker 2: about this because, I.
• 27:11
  Speaker 3: Don't know. Here's the deal.
• 27:13
  Speaker 2: Back during the run-up to the financial crisis, arms did
• 27:16
  Speaker 2: make up anywhere from like 40% to 50% of all
• 27:19
  Speaker 2: new mortgages that were underwritten. So it's like way more
• 27:22
  Speaker 2: than what we have now. On top of it, Paul,
• 27:24
  Speaker 2: were the underwriting standards better or worse during the 2005
• 27:27
  Speaker 2: to 2007 period than they are today?
• 27:28
  Speaker 3: They were far worse.
• 27:29
  Speaker 5: Correct.
• 27:29
  Speaker 1: Correct.
• 27:33
  Speaker 2: You had the ninja loans, no income, no job verification
• 27:36
  Speaker 2: loans that you could get basically just by saying, hey,
• 27:41
  Speaker 2: I've got a pulse and that's a house I want
• 27:43
  Speaker 2: to buy. Give me 110 percent loan to value.
• 27:46
  Speaker 3: And banks would. Today, you can't do that. So I do.
• 27:51
  Speaker 2: Think that, yeah, if you want to have a conversation about, hey,
• 27:56
  Speaker 2: here are the pros and cons of taking out adjustable
• 27:59
  Speaker 2: rate mortgages and here's what can go on, blah, blah, blah.
• 28:02
  Speaker 3: That's fine.
• 28:04
  Speaker 2: But the headlines like demand for riskier mortgages rises again. Well, yeah,
• 28:10
  Speaker 2: but it's still 80% below what we saw during the
• 28:14
  Speaker 2: financial crisis.
• 28:16
  Speaker 4: The 8% to 8.5% jump, not enough for you?
• 28:19
  Speaker 3: No.
• 28:19
  Speaker 4: Not big enough? I'm with you.
• 28:20
  Speaker 2: No.
• 28:21
  Speaker 4: I'm with you on that front. The underwriting standards for
• 28:26
  Speaker 4: an adjustable rate mortgage are far tighter than those for
• 28:29
  Speaker 4: a 30-year fix. They do a much better job, to
• 28:33
  Speaker 4: your point, of trying to suss out the borrowers for
• 28:36
  Speaker 4: that type of arm. You really have to have a
• 28:38
  Speaker 4: lot of income in order to get those. They just
• 28:42
  Speaker 4: need to crank out content here at CNBC. Interest rates
• 28:45
  Speaker 4: have risen on the 30-year fix, so all of a
• 28:47
  Speaker 4: sudden the arm becomes a more beneficial option for those
• 28:53
  Speaker 4: people who can afford it and make it work. But
• 28:55
  Speaker 4: nothing to see here. I'm with you.
• 28:58
  Speaker 2: Yeah, if you want to talk about the things that, like,
• 29:00
  Speaker 2: actually worry me about the economy right now? AI killing
• 29:04
  Speaker 2: us all is at the top of the list. Can't
• 29:07
  Speaker 2: have an economy with no people. You could try.
• 29:11
  Speaker 3: The agents?
• 29:13
  Speaker 4: The agents will just have their own economy after we
• 29:15
  Speaker 4: are gone.
• 29:16
  Speaker 2: I watched the third Matrix. It didn't end well. It
• 29:19
  Speaker 2: wasn't a nice place. So I think, look, the stuff
• 29:24
  Speaker 2: that I'm actually worried about, before the end of the year,
• 29:28
  Speaker 2: I think the situation in energy products is approaching critical
• 29:31
  Speaker 2: levels and is really dangerous for what that means for
• 29:35
  Speaker 2: pricing in the next three months.
• 29:39
  Speaker 3: I think that....
• 29:42
  Speaker 2: Honestly, that's kind of the only thing. The labor market,
• 29:44
  Speaker 2: I think, is fine. It's not great, but it's fine.
• 29:48
  Speaker 2: Housing is slow, but it's been the same level of
• 29:51
  Speaker 2: slow for the last four years. The AI bubble is
• 29:54
  Speaker 2: not popping in terms of new development, at least.
• 29:58
  Speaker 3: In the next four months.
• 30:00
  Speaker 2: We know this because we see the construction backlog that's
• 30:02
  Speaker 2: out there. It's not to say that AI stocks might
• 30:05
  Speaker 2: not have fluctuations or get hit, but the amount of
• 30:09
  Speaker 2: construction going on there is not something that.
• 30:11
  Speaker 3: Worries me before the end of the year.
• 30:14
  Speaker 2: The only thing that I think is really on my
• 30:17
  Speaker 2: bingo card is energy prices. Even there, I don't know
• 30:23
  Speaker 2: exactly how the next few months is going to play out.
• 30:26
  Speaker 2: Let's take a quick break. When we return, we'll do
• 30:28
  Speaker 2: a little bit of Stack Roulette next.
• 30:31
  Speaker 1: From markets to money to business and financial news, watch
• 30:34
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• 30:38
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• 30:41
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• 30:49
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• 30:52
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• 31:05
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• 31:09
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• 31:12
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• 31:15
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• 31:18
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• 31:25
  Speaker 3: Paul, what do you got for Stack Roulette?
• 31:27
  Speaker 4: Chuck, there is this golf organization that you may have
• 31:31
  Speaker 4: heard of over the last few years. That's not the PGA,
• 31:34
  Speaker 4: but Live Golf that was supposed to take the PGA
• 31:38
  Speaker 4: Tours lunch. They have filed for Chapter 11 bankruptcy. So
• 31:43
  Speaker 4: for those players who made the migration over to Live Golf,
• 31:46
  Speaker 4: they are owed quite a bit of money from Live.
• 31:51
  Speaker 4: Live had tried to raise... A investor roadshow to raise
• 31:55
  Speaker 4: up to $ 350 million earlier this year. The bankruptcy deal
• 32:00
  Speaker 4: for Live will need court approval, but the venture is
• 32:04
  Speaker 4: expected to be majority owned by its players. So interesting
• 32:09
  Speaker 4: to see what will happen with this. This is something
• 32:11
  Speaker 4: that had taken a big shot at the PGA Tour,
• 32:15
  Speaker 4: but clearly not enough to take its lunch entirely.
• 32:21
  Speaker 2: No, I think the interesting thing will be what happens
• 32:24
  Speaker 2: to the golfers that are currently stranded at live. The
• 32:29
  Speaker 2: PGA Tour earlier this year, before the 2026 season kicked off,
• 32:34
  Speaker 2: they basically offered, hey, if you're.
• 32:37
  Speaker 3: At live and you want to pay... Tucker, what was
• 32:41
  Speaker 3: it that... that, uh, what's his name? Um, I'm blanking
• 32:45
  Speaker 3: on it. Brooks Koepka.
• 32:46
  Speaker 2: What did he have to, it was like $ 5 million
• 32:48
  Speaker 2: to a PGA charity, I think. And he had to
• 32:50
  Speaker 2: like pay back some winnings also.
• 32:52
  Speaker 5: I don't know the exact amount, but yeah, the PJ
• 32:54
  Speaker 5: was like, yeah, you gotta pay up for this.
• 32:56
  Speaker 2: And they basically have said like, that's off the table now.
• 32:59
  Speaker 2: So if you look at the golfers that are still
• 33:03
  Speaker 2: stranded there again, like the vast majority of them are
• 33:07
  Speaker 2: not going to be, uh, you know, they wouldn't be
• 33:12
  Speaker 2: PGA golfers anyways, just cause they, they don't meet, you know, the,
• 33:15
  Speaker 2: the standard there, but you got some big names that
• 33:17
  Speaker 2: are still floating around there where you're like, Oh, like, okay,
• 33:21
  Speaker 2: what is going to happen to John Rom? What's going
• 33:23
  Speaker 2: to happen to Bryson to Shambo? Uh, you know, those
• 33:26
  Speaker 2: are probably the two biggest that are out there. Dustin Johnson,
• 33:30
  Speaker 2: basically his, his game seems like it's over at this point.
• 33:33
  Speaker 1: Right.
• 33:34
  Speaker 5: He was kind of cooked before Liv.
• 33:36
  Speaker 2: Yeah, so there's a couple out there, though, where John Rahm,
• 33:39
  Speaker 2: I think at the time that he went over, was what,
• 33:41
  Speaker 2: like the number two ranked golfer in the world?
• 33:43
  Speaker 1: Yeah.
• 33:44
  Speaker 2: So I think it's going to be interesting to see
• 33:47
  Speaker 2: what comes out of that, but it's pretty clear that, hey,
• 33:51
  Speaker 2: despite bringing some big names, Liv Golf was... Flat out
• 33:56
  Speaker 2: just not successful after operating for a few years here.
• 34:00
  Speaker 4: Yeah, it is worth noting that they are going to
• 34:02
  Speaker 4: try to restructure things and continue on with the next
• 34:06
  Speaker 4: chapter of Live Golf.
• 34:08
  Speaker 3: I'm going to try to restructure my hairline. It's not
• 34:11
  Speaker 3: going well.
• 34:12
  Speaker 4: Well put.
• 34:12
  Speaker 2: It's not going well. Paul, both of you are Apple guys, right,
• 34:17
  Speaker 2: for your phones?
• 34:18
  Speaker 4: Yes.
• 34:19
  Speaker 2: Do you have any interest in a folding iPhone, even
• 34:22
  Speaker 2: regardless of price?
• 34:23
  Speaker 4: I was thinking about that during the break, and other than,
• 34:27
  Speaker 4: I guess, the size increasing more than your original iPhone,
• 34:31
  Speaker 4: but allowing to fold it, making it more convenient, that's
• 34:33
  Speaker 4: the only hook I could see to maybe being interested
• 34:37
  Speaker 4: to it, but not immediately jumping for joy on this one.
• 34:41
  Speaker 4: You guys?
• 34:43
  Speaker 5: If it looks... When you unfold it, if it looks
• 34:47
  Speaker 5: like it's a tablet, that somewhat interests me, but my
• 34:51
  Speaker 5: initial gut reaction is like, no, I'm not really interested
• 34:54
  Speaker 5: in this, especially with the price point.
• 34:56
  Speaker 3: It's supposed to look like a tablet.
• 34:58
  Speaker 2: It's using OLEDs for the lighting in it, and so
• 35:02
  Speaker 2: it should be like a seamless view. I guess you
• 35:07
  Speaker 2: think about it, and okay, when would I want my
• 35:10
  Speaker 2: phone to become bigger to be a tablet?
• 35:13
  Speaker 3: Airplane. Airplane.
• 35:14
  Speaker 2: Airplane or subway, taking the train to work and stuff
• 35:18
  Speaker 2: like that, those are the only places where that potentially
• 35:21
  Speaker 2: makes sense.
• 35:22
  Speaker 3: But here's the thing.
• 35:24
  Speaker 2: The chatter is that this is going to be priced,
• 35:26
  Speaker 2: base model, somewhere around $ 2, 200 and the bigger storage ones
• 35:30
  Speaker 2: close to $ 3, 000. If I am a human being, which
• 35:35
  Speaker 2: I am, even if I wanted to buy the nicest
• 35:39
  Speaker 2: iPhone out there, maybe not the nicest, but like a
• 35:42
  Speaker 2: the iPhone, you know, 18 pro I can get that
• 35:46
  Speaker 2: for a thousand and I can get an iPad for
• 35:47
  Speaker 2: like three, 400 bucks and I'm coming out ahead.
• 35:51
  Speaker 5: Right.
• 35:51
  Speaker 3: Right. Why do I need the phone to transform into
• 35:55
  Speaker 3: the tablet? Convenient.
• 35:57
  Speaker 2: People say, okay, like you can carry it around anywhere. Well,
• 36:00
  Speaker 2: if I'm on a plane or on a train, I'm
• 36:04
  Speaker 2: usually carrying some kind of bag.
• 36:06
  Speaker 3: Am I not? Yes. Why do I need it to
• 36:10
  Speaker 3: be the same device? I can't get there.
• 36:15
  Speaker 4: Yeah.
• 36:16
  Speaker 3: This feels floppy to me.
• 36:17
  Speaker 4: If you were doing either of those two things extremely frequently,
• 36:21
  Speaker 4: the train or the airplane travel, maybe it's easier just
• 36:25
  Speaker 4: to have one device to pack versus two. But that's
• 36:29
  Speaker 4: a small niche that we're talking about here. That's not everybody.
• 36:35
  Speaker 3: I just.
• 36:37
  Speaker 4: I just can't seem to really get behind it being
• 36:40
  Speaker 4: a game changer that you need to have because the
• 36:42
  Speaker 4: iPad kind of sits in that spot. But maybe I'm
• 36:46
  Speaker 4: missing something. This is a big deal for the new
• 36:49
  Speaker 4: CEO for Ternus to be able to announce that. That's
• 36:51
  Speaker 4: going to be basically, I believe, in the next hour
• 36:54
  Speaker 4: or so, what it looks like and what the reception
• 36:58
  Speaker 4: is to it. They're anticipating six and a half million
• 37:00
  Speaker 4: units for the first fiscal quarter for Apple that will
• 37:05
  Speaker 4: be of the new devices here that we're talking about.
• 37:08
  Speaker 4: What are they even calling these? I know it's a
• 37:09
  Speaker 4: foldable phone, but is there even a name for them?
• 37:13
  Speaker 4: I haven't even seen that.
• 37:14
  Speaker 5: Oh, I saw it this morning. I don't think it
• 37:17
  Speaker 5: was confirmed.
• 37:17
  Speaker 3: iPhone Fold is what I'm seeing. Oh, I forget what
• 37:21
  Speaker 3: it was. iFold?
• 37:23
  Speaker 5: Oh, iPhone Duo. I think that's what it's going to
• 37:26
  Speaker 5: be called.
• 37:26
  Speaker 4: Yeah, got it.
• 37:27
  Speaker 3: Yeah, you wouldn't call it iFold. That's too much like
• 37:29
  Speaker 3: a losing hand in poker.
• 37:31
  Speaker 1: Yeah.
• 37:34
  Speaker 4: Yeah.
• 37:34
  Speaker 3: iPhone duo. I don't, I don't know.
• 37:38
  Speaker 2: Look, the name isn't going to matter. What's going to
• 37:40
  Speaker 2: matter is whether or not it's actually any, any good. Uh,
• 37:43
  Speaker 2: but at, at $ 2, 000, it's a big time purchase. I mean, again,
• 37:48
  Speaker 2: you buy a thousand dollar iPhone to begin with. That's
• 37:50
  Speaker 2: a big time purchase. Now you're talking about doubling that
• 37:53
  Speaker 2: get steep in a hurry.
• 37:54
  Speaker 3: So we'll see.
• 37:55
  Speaker 2: Uh, again, I've been proven wrong before on this, but
• 37:59
  Speaker 2: It's iffy, in my opinion. As we finish up today,
• 38:07
  Speaker 2: stocks still down about half a percent to three quarters
• 38:09
  Speaker 2: of a percent on the major indices. Ten-year treasury up
• 38:11
  Speaker 2: four and a half basis points. So we'll see where
• 38:14
  Speaker 2: things go heading into tomorrow. Make sure you tune in
• 38:18
  Speaker 2: then for more.