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The AI Boom Is Starting to Look Dangerous · The Financial Exchange Show

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1:02
Speaker 1: This is the Financial Exchange with Chuck Zada and Paul lane.
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Speaker 2: Yeah, it's Chuck, it's Paul, and it's Tucker with you.
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Speaker 2: And as we kick things off, we got stocks making
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Speaker 2: a big run to the top side here with all
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Speaker 2: your major US indices firmly in the green, which is
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Speaker 2: it's it's nice to see when the cute little Russell
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Speaker 2: two thousand, can you know, get up and you know,
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Speaker 2: follow the big brothers to uh well, whereever wherever it
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Speaker 2: is that they're going. I don't know, but in any case,
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Speaker 2: the S and P five hundreds up eighty eight points,
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Speaker 2: about one to quarter percent. The Dow is up six
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Speaker 2: hundred and fifty seven points about one point three percent.
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Speaker 2: NASDAK Composite up three hundred and sixty two points about
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Speaker 2: one point four to three percent. Fascinating thing. The Dow
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Speaker 2: still has not recaptured a new all time high from
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Speaker 2: earlier in the year because of its lack of technology exposure.
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Speaker 2: The other two new major indices are at all time
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Speaker 2: highs right now or you know, hit them today, but
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Speaker 2: the Dow not there yet. Tenuere Treasury down six point
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Speaker 2: two six point two basis points, reversing some of the
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Speaker 2: upward pressure on rates over the earlier part of the week.
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Speaker 2: Dollar index is down point five to three percent to
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Speaker 2: ninety seven to seventy nine, Gold up one hundred and
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Speaker 2: forty seven to sixty one ounce on that news to
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Speaker 2: forty seven sixteen and ten cents, and crude oil down
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Speaker 2: seven thirty nine a barrel on West Text Intermediate to
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Speaker 2: ninety four eighty eight. This on the back of airport
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Speaker 2: from Axios that the US and Iran may be nearing
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Speaker 2: a one page memorandum of understanding to begin negotiating on
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Speaker 2: things over the next thirty days or so. Again, whether
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Speaker 2: this turns into something or not, I don't know. We've
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Speaker 2: had a number of false starts over the last three
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Speaker 2: to four weeks. This that the initial reporting scene promising
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Speaker 2: and nothing came of it. Maybe this is different, maybe
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Speaker 2: it's not. I don't really know. We're gonna see exactly
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Speaker 2: what happens. But we do not have any movement through
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Speaker 2: the straight of horm moves just because of these headlines yet,
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Speaker 2: and ultimately that is what is going to drive the
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Speaker 2: economic impacts, either positive or negative. And so we'll have
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Speaker 2: to see what happens in the coming days and weeks
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Speaker 2: and whether this repute represents genuine progress or if this
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Speaker 2: is just kind of the latest in a couple of
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Speaker 2: false starts that we've seen in the last few weeks here.
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Speaker 2: So we'll keep you in the loop and keep you
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Speaker 2: informed on what is going on there. Speaking of what
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Speaker 2: artificial intelligence is, what it's what everyone wants to talk about,
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Speaker 2: except when we get sick of talking about it. But
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Speaker 2: we haven't talked about it yet today, so we're not
3:55
Speaker 2: sick of it yet. AI is forcing CEOs to make
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Speaker 2: a stark choice layoff worker, make them do more. That's
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Speaker 2: the headline from the Wall Street Journal. And I think
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Speaker 2: that that headline is bull loney. But because it's not forcing,
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Speaker 2: it's not forcing CEOs to do either of those things
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Speaker 2: you'd like. No ceo is sitting around right now saying, well,
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Speaker 2: my only two choices are make my employees do more,
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Speaker 2: get rid of them like that. That's just not how
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Speaker 2: it works. Number one. The second piece, most companies right now,
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Speaker 2: most companies aren't anywhere near skilled enough at using artificial
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Speaker 2: intelligence to even think about laying off workers because of
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Speaker 2: the games. And on top of that, the make them
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Speaker 2: do more piece, they're not great at that either. Like
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Speaker 2: we're not seeing this, you know, giant rise in productivity
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Speaker 2: across every industry. It's just not happening. So what I
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Speaker 2: do think is in like the the examples that are
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Speaker 2: brought up in this piece are companies like you know,
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Speaker 2: Meta that's laying people off and Coinbase that's laying people off.
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Speaker 2: And look, here's the deal. The companies that are laying
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Speaker 2: people off and citing AI generally hired way too many
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Speaker 2: people in twenty twenty one to twenty two to begin with,
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Speaker 2: and are on the cutting edge of AI and tech,
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Speaker 2: and so they might have the experience to be able
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Speaker 2: to say, yes, it's because of this as well. If
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Speaker 2: you were to go to John Q law firm or
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Speaker 2: John Q you know, plumbing firm, or you know, any
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Speaker 2: other business that's not a bunch of people sitting at
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Speaker 2: screens coding and stuff like that, they probably didn't overhire
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Speaker 2: back in twenty one and twenty two and they probably
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Speaker 2: don't have the AI experience now to say that it's
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Speaker 2: worth laying people off.
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Speaker 3: Yeah, that is accurate from a broad perspective. But ultimately,
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Speaker 3: when you're reading publication like the Wall Street Journal and
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Speaker 3: doing what we do on a daily basis, what you
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Speaker 3: care about the most is the market and the s
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Speaker 3: and P five hundreds, the best bestly tracked or the
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Speaker 3: best benchmark that you can track to kind of gauge
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Speaker 3: market performance. Tech is thirty plus percent waiting in the
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Speaker 3: s and P five hundreds. So that's why it gets
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Speaker 3: so much focus, is that these companies that are on
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Speaker 3: the cutting edge that actually can probably maybe attribute some
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Speaker 3: productivity enhancements or just are so far entrenched in this
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Speaker 3: technology of AI that they may have this decision to
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Speaker 3: make far quicker than, like you said, a regular law firm.
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Speaker 3: That's why to me it's of interest, and I agree
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Speaker 3: with you. It's not a binary path. Nothing ever is that, hey,
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Speaker 3: we either keep workers or fireworkers with AI. That's not
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Speaker 3: how you necessarily need to play it. But it is
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Speaker 3: an interesting strategic decision as to what these companies do,
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Speaker 3: but a lot of it depends on sort of where
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Speaker 3: their business stands. Meta is spending billions of dollars to
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Speaker 3: build out their AI infrastructure, and so as a result,
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Speaker 3: it makes sense for them to probably cut headcount a
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Speaker 3: little bit. Every business is different. I agree it's probably
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Speaker 3: too easy just say it's one way or another. But
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Speaker 3: I think the reason that it's it's worth talking about
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Speaker 3: is because tech is such a big waiting.
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Speaker 4: In the market.
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Speaker 3: Though, if you just look at the mass labor market,
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Speaker 3: I agree with you, companies are far far away from
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Speaker 3: this binary decision.
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Speaker 2: The other piece that bothers me just about this framing
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Speaker 2: is like, okay, so you can either lay off workers
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Speaker 2: or make them do more. Paul. When's the last time
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Speaker 2: a boss went to an employee and said, you're doing
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Speaker 2: too much? Steve, CALLI come over here. I'd like you
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Speaker 2: to do less. I'd like you to do less.
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Speaker 4: Oh, I don't know. I work too hard. I'm too productive.
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Speaker 2: Right, Like, even without AI, like there's never been a
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Speaker 2: boss in history was like, hey, you know what you
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Speaker 2: gotta do. You got to produce less output from me?
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Speaker 2: They like you might have a boss who like cares
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Speaker 2: about is like, man, you're working too hard, Like you're
8:06
Speaker 2: gonna burn yourself out. Like sure that happens, but it's
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Speaker 2: never Hey, do less for me. You're producing too much.
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Speaker 3: You know you do far too much new business, right
8:18
Speaker 3: you are too good at your job.
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Speaker 2: Try to be worse. I'll take that in my banks, coach,
8:24
Speaker 2: whatever you say. So, Like, even without AI, bosses always
8:28
Speaker 2: want people to do more. You're always trying to find
8:31
Speaker 2: better and newer and faster ways to do things. He
8:34
Speaker 2: is just another iteration of that. Is the AI improvement
8:38
Speaker 2: cycle faster than other ones that we've seen. Yeah, I'd
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Speaker 2: say that, but I just it feels like very much
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Speaker 2: a false choice that's being presented in this piece to me,
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Speaker 2: and so I didn't enjoy that that false choice. I
8:55
Speaker 2: prefer true choices, all else being equal, Let's take a
8:58
Speaker 2: quick break. When we come back, We've got some trivia,
9:03
Speaker 2: and then let's talk about what we're seeing in chip
9:05
Speaker 2: makerstocks right after.
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Speaker 2: Probably got a pcre from Bloomberg The AI booms chip
10:56
Speaker 2: maker moment ignores history? What what exactly is ignoring?
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Speaker 3: So basically, what's happened here over the course of particularly
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Speaker 3: this has been evident over the course of the last
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Speaker 3: month or so. There is an index out there that
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Speaker 3: tracks the semiconductors, and we've just seen that index absolutely roar.
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Speaker 3: It's up about I think fifty percent over the course
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Speaker 3: of the last month and one hundred and forty four
11:19
Speaker 3: percent over the course of the past year. And so
11:22
Speaker 3: initially when CHATCHIBT was released back in November of twenty
11:26
Speaker 3: twenty two, we saw all these huge hyperscalers that we
11:29
Speaker 3: talked about on the show so frequently their stocks just
11:32
Speaker 3: tremendously appreciate Nvidia being the biggest benefactor, but others too,
11:37
Speaker 3: like Alphabet and in Amazon and Meta. But what has
11:42
Speaker 3: happened more recently is there's just been these absolutely meteoric
11:47
Speaker 3: rises of companies like Micron and sand Disk, and those
11:51
Speaker 3: are ones that are more integral in terms of producing
11:54
Speaker 3: memory and other really key inputs to everything that goes
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Speaker 3: into semiconductor production and manufacturing. And so what this piece
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Speaker 3: points out in Bloomberg is that you're seeing margins in
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Speaker 3: this semiconductor space that are reaching about forty four percent.
12:11
Speaker 3: And typically for listeners out there that just know the
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Speaker 3: semiconductor space in general or have followed it maybe back
12:18
Speaker 3: into the late nineties, it's a boom and bus cycle.
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Speaker 3: You know, the margins tend to go very high, as
12:23
Speaker 3: high as sixty percent in times when there's tremendous demand
12:26
Speaker 3: for chips, and as low as thirteen percent when the
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Speaker 3: cyclicategic nature kind of ebbs and flows and changes the
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Speaker 3: market dynamics so that there's too much supply out there.
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Speaker 3: And so the parallel that's are the the warning I
12:38
Speaker 3: guess that's being made here is that, yes, there is
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Speaker 3: tremendous demand for the semiconductors and what they produce today.
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Speaker 3: That's not to say that they're going to command these
12:48
Speaker 3: margins in the future. And so really what the debate
12:50
Speaker 3: comes down to, which which isn't necessarily covered in this
12:53
Speaker 3: piece here, is how long does this momentum last?
12:55
Speaker 1: Check?
12:56
Speaker 3: You know, without semiconductors in the market in the S
12:59
Speaker 3: and P five hundred year to date, without them we
13:01
Speaker 3: be up two point two percent. We sit up at
13:04
Speaker 3: about six percent year to date, So they've been a
13:06
Speaker 3: huge contributor. The question is how long can this momentum sustain.
13:10
Speaker 3: From everything I've read, there is still a tremendous amount
13:13
Speaker 3: of appetite for the semiconductors. There's a tremendous shortage and
13:17
Speaker 3: a lot of key components so it seems like there's
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Speaker 3: a momentum through twenty seven. But it's a good point
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Speaker 3: to make that, Hey, we've seen these high margins before.
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Speaker 3: It can be a boom and bus cycle, so just
13:27
Speaker 3: be investor beware.
13:29
Speaker 4: I guess yeah.
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Speaker 2: I think the two things that are true right now.
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Speaker 2: There's clearly not enough computing power to be able to
13:39
Speaker 2: deal with all of the artificial intelligence need, and so
13:42
Speaker 2: semiconductors are in crazy demand right now, and we're absolutely
13:49
Speaker 2: going to need more of them in the future than
13:50
Speaker 2: we currently have produced. Yep. The second piece that is
13:54
Speaker 2: ultimately true is that every single semiconductor cycle end the
14:00
Speaker 2: same way with shareholders in tears eventually, because these are
14:05
Speaker 2: not companies that just you know, this is not an
14:09
Speaker 2: index that corrects by like, you know, ten percent, and
14:13
Speaker 2: it's like, oh, like everything's fine. Like no, Like when
14:16
Speaker 2: you take a look at the draw downs that we've
14:19
Speaker 2: seen from the Philadelphia Semiconductor Index, which goes back to
14:24
Speaker 2: we pull the data on this, the oh no, this
14:26
Speaker 2: is not the full data set. You're showing me garbage.
14:29
Speaker 2: Come on, when we look at it. The data that
14:33
Speaker 2: I have here goes back I think it's thirty two
14:37
Speaker 2: years but let me take a look. Yeah, we go
14:39
Speaker 2: back to nineteen ninety four. Uhh, when you look at
14:43
Speaker 2: the corrections that we have seen, uh you know over
14:48
Speaker 2: that time, it's one where again like forty to eighty
14:53
Speaker 2: percent drops are not uncommon. Like just to put this
14:57
Speaker 2: in perspective, in the last six years since the pandemic,
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Speaker 2: the Philadelphia Semiconductor Index saw one fifty percent dip into
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Speaker 2: twenty twenty two. That was when the broader market fell
15:10
Speaker 2: what like twenty to twenty five percent. Yep, we saw
15:13
Speaker 2: another one from mid twenty four through early twenty five
15:19
Speaker 2: of around thirty five Oh no, sorry, hang on, did
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Speaker 2: the math there wrong? This one was this was a
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Speaker 2: forty three percent drop that we saw in from again
15:34
Speaker 2: mid twenty fourth through early twenty five. And even if
15:39
Speaker 2: you just want to take a look at like more
15:42
Speaker 2: recent than that, like, hey, what have we seen like
15:44
Speaker 2: with some of the volatility in the last you know
15:47
Speaker 2: little bit here you saw like a twenty percent pullback
15:52
Speaker 2: from the beginning of March to the end of March
15:55
Speaker 2: when stocks as a hole went down ten percent.
15:57
Speaker 4: And a fifty percent jump in April.
15:59
Speaker 2: Yes, so like this is the high volatility area of
16:05
Speaker 2: the market. It always has been yep, because the difference
16:09
Speaker 2: between winning and losing in that market is so thin
16:14
Speaker 2: that it's hey. When when things are going great, it
16:18
Speaker 2: is as good as it gets for any company out there.
16:22
Speaker 2: The second that that cycle turns, watch out below. Like
16:27
Speaker 2: it is high risk, high reward, and that's just the
16:31
Speaker 2: nature of that industry.
16:34
Speaker 3: The one last thing a lot is there's earnings growth
16:36
Speaker 3: that justifies these price jumps. That they are making a
16:39
Speaker 3: lot more money hand over fist. So just it's not
16:41
Speaker 3: a speculative trading thing. This is backed by there's tremendous
16:45
Speaker 3: demand for products. They're making more money. But the question is,
16:47
Speaker 3: like I said before, how long does that last?
16:49
Speaker 2: Right? Like, if if you want to take a look,
16:51
Speaker 2: I mean, look the biggest semiconductor name out there's in video.
16:54
Speaker 2: So if if we pull up you know, good Old
16:56
Speaker 2: in video, and let's look at forward pe ray ratio
17:00
Speaker 2: and forward price to sales ratio just as an example
17:04
Speaker 2: in videos. Forward Pe right now is twenty four. This
17:08
Speaker 2: is a company that's been trading anywhere from like aside
17:10
Speaker 2: from a brief period, and twenty twenty five generally been
17:14
Speaker 2: trading like forty times forward earnings. The stock's actually gotten
17:18
Speaker 2: cheaper relative to next year's earnings over you know, the
17:22
Speaker 2: last you know year or two. Same thing. If we
17:25
Speaker 2: take a look at you know, price to sales, it's
17:27
Speaker 2: in the same boat there because the sales numbers are
17:30
Speaker 2: just going absolutely nutty. It's trading thirteen x price to
17:34
Speaker 2: sales right now. It's normally been like twenty to twenty five.
17:37
Speaker 2: I'm not saying that this is like cheap, like absolute terms,
17:41
Speaker 2: you could absolutely have this go from you know thirteen
17:44
Speaker 2: x you know forward sales down to you know three.
17:47
Speaker 2: It's not to say that that can't happen. But what
17:49
Speaker 2: I am saying is this is a company that's been
17:52
Speaker 2: growing into that. If you want to just look, you know,
17:54
Speaker 2: trailing price to sales, it's twenty three x sales right now,
18:00
Speaker 2: been as high as forty five three years ago. Okay,
18:03
Speaker 2: now again, in Vidia also spent much of the twenty
18:06
Speaker 2: and twenty tens at about two x price to sales.
18:10
Speaker 2: So yeah, if again, if this market collapses, then you've
18:18
Speaker 2: got something where you look at Nvidia and say, oh,
18:20
Speaker 2: even if they're doing the revenue they are, historically they
18:23
Speaker 2: were valued, you know, ninety percent lower than today I'm
18:26
Speaker 2: not saying that that's going to happen because they keep
18:29
Speaker 2: on just chugging along right now. But at some point
18:33
Speaker 2: the music ends for every company in the semiconductor space
18:37
Speaker 2: as far as the growth, and when that happens, it's
18:39
Speaker 2: usually really painful for the sector as a whole. It's
18:43
Speaker 2: there's no evidence showing up that we are there right now,
18:46
Speaker 2: there is nothing there. Eventually it happens to all of them.
18:50
Speaker 2: But this is where we are right now, taking a
18:54
Speaker 2: look at markets as we head towards the bottom of
18:56
Speaker 2: the hour, now is up six hundred and nine points,
19:00
Speaker 2: the SMP is up eighty six, Nasdaq Composite up three
19:04
Speaker 2: hundred and seventy six, So the broad based rally continuing
19:08
Speaker 2: as we go through the day.
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Speaker 1: Here.
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Speaker 2: We're going to take a quick break. When we return,
19:14
Speaker 2: I'm gonna talk about what we're seeing in mortgages for
19:18
Speaker 2: rates and also far to real estate, how is it
19:21
Speaker 2: evolving as we go through the twenty twenties. We'll discuss next.
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19:59
Speaker 5: Ne markets building on their rally after Axios reported this
20:03
Speaker 5: morning that the US and around are closing in on
20:05
Speaker 5: a one page memo to end the wars, sending oil
20:08
Speaker 5: prices plunging. Traders are also encouraged by even more strong
20:13
Speaker 5: tech earnings. Right now, the Dow is up over one
20:18
Speaker 5: percent or five hundred and eighty seven points, S and
20:20
Speaker 5: P five hundred up over one percent or eighty four points,
20:24
Speaker 5: NASDAC up nearly one and a half percent, or three
20:27
Speaker 5: hundred and seventy points. Russ In two thousand also up
20:31
Speaker 5: over one percent. Ten year treasure Reel down six basis
20:34
Speaker 5: points at four point three five percent, and oil down
20:37
Speaker 5: seven percent, trading at ninety.
20:41
Speaker 4: Five dollars a barrel.
20:42
Speaker 5: AMD shares rallying seventeen percent after the chip maker posted
20:47
Speaker 5: strong first quarter of sales and profit while also issuing
20:51
Speaker 5: strong guidance. Another chip maker, and super micro Computer, also
20:55
Speaker 5: posted a stronger than expected quarterly guidance despite a revenue miss,
20:59
Speaker 5: sending shares up by fifteen percent. Meanwhile, Disney saw it's
21:02
Speaker 5: revenue climb seven percent.
21:04
Speaker 4: From a year ago.
21:05
Speaker 5: While turnings beat expectations due to growing streaming margins. New
21:09
Speaker 5: CEO Josh Deamero revealed his long term vision of the company,
21:13
Speaker 5: focusing on technology to reach customers. Disney stock is up
21:17
Speaker 5: by six percent. Elsewhere, in Vidia and Corning announced a
21:20
Speaker 5: partnership to expand manufacturing of fiber optics for AI infrastructure.
21:25
Speaker 5: In Vidia up by five percent, Corning up by fourteen percent.
21:29
Speaker 5: Uber shares climbing eight percent after the right handling company
21:32
Speaker 5: posted a rise in revenue and bookings for the previous quarter.
21:36
Speaker 5: And media mogul Ted Turner has died at the age
21:40
Speaker 5: of eighty seven. I'm Tucker Silvan. That is Wall Street
21:43
Speaker 5: Watch and in the previous segment we asked you the
21:45
Speaker 5: trivia question, what is the name of Henry David Thoro's
21:48
Speaker 5: most famous book? That will be Walden and Tom from
21:52
Speaker 5: Walfam Mass is our winner today, taking home the Financial
21:54
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21:57
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22:01
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22:05
Speaker 2: Before we go further and talk a little bit about housing,
22:09
Speaker 2: did you guys know that this is today is the
22:12
Speaker 2: sixteenth anniversary of the flash crash from twenty ten. No,
22:18
Speaker 2: so the flash crash if for those of you listening
22:21
Speaker 2: who don't remember it, it was a regular day in
22:24
Speaker 2: the middle of May in twenty ten where the S
22:28
Speaker 2: and P five hundred for no discernible reason, whether it
22:32
Speaker 2: was not you know, a Middle East headline or anything
22:34
Speaker 2: like that, but the S and P five hundred fell
22:39
Speaker 2: about I'm sorry, the dow fell about nine percent in
22:43
Speaker 2: a span of thirteen minutes, and the S and P
22:46
Speaker 2: five hundred fell about ten percent as well during the
22:49
Speaker 2: same time. And if you have a chance, like go
22:54
Speaker 2: onto YouTube and if you just type in flash crash,
22:57
Speaker 2: it's usually like the second or third one that comes up.
23:00
Speaker 2: It's a video that shows the price action during the event,
23:05
Speaker 2: but also has a call from one of the pit
23:09
Speaker 2: traders who was watching it. They have these again, you
23:13
Speaker 2: could you can listen to, you know, basically commentary about
23:17
Speaker 2: what's going on, just from a trading perspective. It's not
23:20
Speaker 2: it's not oh, here's why this is doing this. It's
23:22
Speaker 2: more just, hey, here's like what's happening in markets, And
23:25
Speaker 2: there's this guy who runs the commentary and was just
23:30
Speaker 2: freaking out because again it was like everyone's sitting there
23:33
Speaker 2: like why is this happening? And he's calling out like, oh,
23:36
Speaker 2: we've got like this, now we've got this. Like it
23:38
Speaker 2: just kept like worstening and worstening. So if you got
23:41
Speaker 2: a couple of minutes, it's just kind of a cool
23:42
Speaker 2: piece of financial markets history that you can check, check
23:47
Speaker 2: out and look at, just because it was sixteen days
23:51
Speaker 2: ago today. I thought about asking Tucker to play the audio,
23:55
Speaker 2: but then I was like, if someone was just tuning
23:56
Speaker 2: in with that, knowing what it is, it might just
23:59
Speaker 2: scare the crap out of home. So I decided that
24:01
Speaker 2: that was good call. Yeah, a good thing to ask
24:04
Speaker 2: Tucker to do. Otherwise, but I was like, oh, like
24:07
Speaker 2: we should do this day. And then I was driving
24:09
Speaker 2: in and I was like, no, No, you're going to
24:12
Speaker 2: cause like some real problems if you play something from
24:15
Speaker 2: sixteen years ago and someone comes in like midstream and
24:17
Speaker 2: is like, what's happening, Paul, Let's talk about mortgage rates.
24:21
Speaker 2: What do we see over the last week?
24:23
Speaker 3: We've seen them jump up to six point four five
24:26
Speaker 3: percent from six point three seven percent. Applications to buy
24:31
Speaker 3: a home were just five percent higher than they were
24:34
Speaker 3: a week ago, and as a result of the uptick
24:37
Speaker 3: and mortgage rates to getting close to that six and
24:39
Speaker 3: a half percent. Obviously, refinances were down a little bit
24:43
Speaker 3: as well. It does look like, you know, I'm sure
24:45
Speaker 3: you've covered it, that won't be a you know, hugely
24:49
Speaker 3: robust year for the housing market this year. Perhaps we
24:52
Speaker 3: see some increases the following year in twenty seven, but
24:56
Speaker 3: with some of the stuff that we've seen recently with rates,
24:58
Speaker 3: I believe we he got on the low end at
25:01
Speaker 3: high five nines, but since haven't been able to get
25:05
Speaker 3: back down to that.
25:06
Speaker 2: Level, folks. The Armstrong Advisory Group has a guide available
25:10
Speaker 2: this month titled Consolidating Investment Accounts. If you're like most people,
25:15
Speaker 2: you got an old four to one K over here,
25:17
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25:20
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25:22
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25:25
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25:28
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25:31
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25:35
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25:39
Speaker 2: because different accounts have certain benefits that you want to keep.
25:43
Speaker 2: There are other times when it makes sense to consolidate
25:46
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25:48
Speaker 2: really receive anything special from having all these things scattered
25:53
Speaker 2: out into different financial institutions. So this guy is all
25:56
Speaker 2: about understanding, Hey, what are the considerations for knowing when
26:00
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26:03
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26:07
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26:10
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26:20
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26:23
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26:28
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26:31
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26:36
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26:46
Speaker 2: Paul We got a piece in Bloomberg Opinion from Connor
26:48
Speaker 2: Send Florida's Future more Wealth higher costs and less growth.
26:52
Speaker 2: Talk to me about this. That sounds different from how
26:54
Speaker 2: it's historically been viewed.
26:55
Speaker 3: Yeah, so Florida is going through a bit of a
26:57
Speaker 3: shift on the real estate market side of things. Where
27:01
Speaker 3: it was the state that I would bring up in
27:04
Speaker 3: terms of just the weakness in the overall real estate
27:08
Speaker 3: market over the course of the last few years, but
27:10
Speaker 3: that dynamic has shifted quite a bit over the course
27:13
Speaker 3: of the last six to twelve months or so. What
27:16
Speaker 3: we saw post pandemic is obviously a huge amount of
27:20
Speaker 3: migration to Florida. US home prices rose about forty one
27:24
Speaker 3: percent from March of twenty twenty through June of twenty
27:27
Speaker 3: twenty two. But US or Florida ones. I'm gonna get
27:29
Speaker 3: to Florida a second, but that was US forty one percent.
27:31
Speaker 3: Florida in that same time period, they spiked fifty one percent.
27:34
Speaker 4: And what we've just seen is the.
27:38
Speaker 3: Sort of correction that has occurred where like areas like
27:41
Speaker 3: Punta Gorda in this same time span were up seventy
27:44
Speaker 3: percent in terms of their price increases.
27:47
Speaker 2: Insane.
27:48
Speaker 3: It is just absolutely wild. And now we've seen that
27:51
Speaker 3: same Punta Gorda, Florida area drop about twenty four percent
27:55
Speaker 3: since June of twenty twenty two, so that now their
27:58
Speaker 3: home price increases over that span from twenty twenty to
28:01
Speaker 3: where we sit today are more closely tied to kind
28:04
Speaker 3: of what we've seen on the over real estate market
28:07
Speaker 3: in the United States. Now we're at a point where
28:10
Speaker 3: there's been a lot of migration that was probably moved
28:13
Speaker 3: forward by the pandemic, a lot of people fleeing California
28:16
Speaker 3: or New York for the state income tax benefits that
28:19
Speaker 3: Florida offers, but are starting to see finally that they
28:22
Speaker 3: are clearing through inventory and they You've had companies like
28:26
Speaker 3: Pulti Group mentioned that April saw a uptick in orders
28:31
Speaker 3: for every Florida market and you've got about eighteen percent
28:34
Speaker 3: increased statewide for new inventory across Florida, just you know,
28:39
Speaker 3: pulling one of the home builders here. So a lot
28:42
Speaker 3: more demand or perhaps working through some of that overpriced
28:45
Speaker 3: inventory is what we've seen in Florida.
28:47
Speaker 2: Yeah, it's gonna be interesting to see how the state evolves.
28:51
Speaker 2: As you know, these costs have risen because historically, i mean,
28:54
Speaker 2: look talk to anyone for the last eighty years or so,
28:59
Speaker 2: because quite honest, living in Florida before the advent of
29:02
Speaker 2: air conditioning not really pleasant for most of the year,
29:07
Speaker 2: generally unpleasant. Air conditioning is basically what's enabled this migration
29:10
Speaker 2: from north to south in the United States, because otherwise
29:14
Speaker 2: a lot of those parts like it. If you had
29:16
Speaker 2: to actually live there year round with no air conditioning,
29:19
Speaker 2: not just to like at home, but in public buildings,
29:21
Speaker 2: you'd be like, yeah, all else being equal, I prefer
29:25
Speaker 2: forty three feet of snow in Buffalo, you know, it
29:28
Speaker 2: can stay in warm and make a fire or something.
29:31
Speaker 2: So for the last eighty years, it's been Hey, these
29:36
Speaker 2: areas have been just growth magnets because there's all this land.
29:40
Speaker 2: The land was cheap, the labor was cheap, and so yeah,
29:45
Speaker 2: have at it. And obviously, like it's changed for a
29:49
Speaker 2: number of reasons that we've discussed, you know, for the
29:51
Speaker 2: last several years. But the cost disparity between you know,
29:56
Speaker 2: Florida and the Northeast, or Florida and the midwa West
30:00
Speaker 2: has compressed quite a bit. And it's not just Florida,
30:03
Speaker 2: by the way. You look at places like Nashville, Tennessee,
30:07
Speaker 2: like Denver, you know, you go through all of the
30:10
Speaker 2: these kind of boom towns of the twenty tens, they've
30:13
Speaker 2: gone through the same thing as well, because that cost
30:16
Speaker 2: disparity has just been arbitraged away by people who are like, oh, hey,
30:20
Speaker 2: I made all this money in New York and now
30:23
Speaker 2: I can go there. Well, yeah, when you bring your
30:25
Speaker 2: money there, it's gonna drive up cost there if enough
30:27
Speaker 2: people do that. And so that's what's happened. So it's
30:30
Speaker 2: you know, there's still places where you can go. And look,
30:32
Speaker 2: there's still differences between the cost of living in New
30:35
Speaker 2: York and the cost of living in Charlotte, but they're
30:38
Speaker 2: not as big as they used to be, right, And
30:40
Speaker 2: if you really want to go to the places that
30:44
Speaker 2: have that big cost of living disparity, the place that
30:47
Speaker 2: you have to go are the places that people have
30:49
Speaker 2: been leaving on a net basis for the last forty years,
30:51
Speaker 2: not going to you know, like that's where you've got
30:55
Speaker 2: to go. You've got to go to you know, bangor
30:59
Speaker 2: Maine and North You've got to go to West Virginia.
31:01
Speaker 2: You've got to go to the other you know, the
31:04
Speaker 2: Ross belt area that's seen all the manufacturing. Those are
31:08
Speaker 2: the places that you've got your arbitrage opportunities now for
31:14
Speaker 2: you know, hey, can my money go further than in
31:17
Speaker 2: the big city, because it's largely been eaten away when
31:20
Speaker 2: you look at a lot of these other areas now.
31:23
Speaker 2: And that's just kind of the where we sit today.
31:27
Speaker 2: Let's take a quick break. When we come back, it's
31:30
Speaker 2: time for a little bit of stack roulettes.
31:33
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32:55
Speaker 2: Paul, what you got for me for stack Roulette.
32:57
Speaker 3: Disney came out with Ernie today, their new CEO gave
33:00
Speaker 3: his vision for the company going forward. What they saw
33:03
Speaker 3: here from Disney's earnings is continued resiliency on their theme parks.
33:09
Speaker 3: In terms of its revenue. They saw a seven percent
33:11
Speaker 3: increase year over year on their theme parks. Global attendance
33:15
Speaker 3: at the theme parks and I believe this ties in
33:18
Speaker 3: the cruise ships as well. The attendance was up about
33:20
Speaker 3: two percent domestically here in the US a little bit
33:24
Speaker 3: of a decrease down about one percent in terms of
33:27
Speaker 3: the park visits. In terms of what Disney's looking at
33:30
Speaker 3: going forward, they had announced a partnership with open ai
33:34
Speaker 3: to license its IP and their characters to open ai
33:39
Speaker 3: to allow for the creation of AI generated video content.
33:44
Speaker 3: But open Ai shelved its Soorro video tool for a
33:49
Speaker 3: cost cutting measure, so that partnership has kind of been
33:53
Speaker 3: temporarily abandoned. But really it seems like what the new
33:56
Speaker 3: focuses on from a strategic.
33:58
Speaker 4: Standpoint is video games.
34:00
Speaker 3: They had done a one and a half billion dollar
34:02
Speaker 3: investment with Epic Games. They're the ones behind Fortnite for
34:06
Speaker 3: people who have grandkids, you know, out there, a very
34:08
Speaker 3: popular game developed by Epic that was two years ago
34:11
Speaker 3: that Disney made that one and a half billion investment
34:14
Speaker 3: in Epic Games, and the investment was to build an
34:17
Speaker 3: online world for Disney character So it seems like the
34:20
Speaker 3: new CEO, Justin Merrow, his big focus here is how
34:24
Speaker 3: they can make inroads within video games using you know,
34:28
Speaker 3: the huge library of IP content that they had in
34:32
Speaker 3: characters that they have perhaps within the video game space.
34:35
Speaker 2: Here, I want to talk a little bit about robots, alrighty. Specifically,
34:41
Speaker 2: there's a piece from the Wall Street Journal, the rumba
34:43
Speaker 2: Guy's second Act A robot you'll want to snuggle. So
34:47
Speaker 2: Colin Angele is one of the founders of I Robot, uh,
34:53
Speaker 2: and I don't know if he's a genius, but he's
34:57
Speaker 2: way way smarter than me and has done things that
34:59
Speaker 2: I will never do my life because he's really smart.
35:02
Speaker 2: Like he spent time working at NASA's Jet Propulsional Laboratory
35:05
Speaker 2: designing software for like actual Mars rovers that went up
35:10
Speaker 2: to Mars and landed on it and did stuff there.
35:15
Speaker 2: He's got a bachelor's in electrical engineering and a master's
35:19
Speaker 2: in computer science from MIT. He's a smart, smart dude.
35:24
Speaker 2: But then you also come across quotes like this when
35:26
Speaker 2: talking about Jurassic Park. To him, the white bearded CEO
35:30
Speaker 2: is the hero of the movie, not the villain, because
35:32
Speaker 2: he was trying to take something that was always smoking
35:34
Speaker 2: mirrors and turn it into something magical and real. That's
35:37
Speaker 2: some of the sentiment behind what we're doing. And basically
35:40
Speaker 2: what they're doing is trying to make robots that have
35:43
Speaker 2: an emotional relationship with their owners, so like if you're
35:48
Speaker 2: having a bad day, you can come and like pet
35:50
Speaker 2: them and snuggle with them, or if you're having a
35:52
Speaker 2: good day, it'll celebrate with you, and YadA YadA. And
35:56
Speaker 2: you know, there's a part of Jurassic Park and like
35:58
Speaker 2: a bunch of other movies where where you know they
36:00
Speaker 2: say Hey, like scientists were busy, you know, too busy
36:03
Speaker 2: figuring out if they could, they forgot to ask if
36:05
Speaker 2: they should. And it seems to me that this is
36:10
Speaker 2: one of those where, look, you probably can make a
36:12
Speaker 2: robot that can, you know, interpret your emotions and snuggle
36:18
Speaker 2: with you, and you know whatever, I'm just not sure
36:23
Speaker 2: that we should. And it seems like Angle just didn't
36:26
Speaker 2: pay attention to that part of the movie because even
36:29
Speaker 2: from like some of these other quotes, you know, they
36:33
Speaker 2: ask him as part of an interview here from the
36:35
Speaker 2: Wall Street Journal, how do you responsibly build a system
36:39
Speaker 2: that knows us intimately in one where we place greater
36:41
Speaker 2: trust And they talk about like, hey, like people will
36:47
Speaker 2: and should know that they're interacting with machine. I think
36:49
Speaker 2: most of us feel warmth and connection two objects in
36:52
Speaker 2: our lives, right, And it's like that's kind of different
36:54
Speaker 2: from you know, your car doesn't emotionally understand you, and
36:59
Speaker 2: you don't like it because because it snuggles you and
37:01
Speaker 2: your you know, your shoes aren't like high fiving you
37:05
Speaker 2: if you have like a good day at the office,
37:07
Speaker 2: er run a personal best in the marathons. So I
37:11
Speaker 2: don't know, I just I kind of struggle with this,
37:17
Speaker 2: and I'm just not sure that we should be building
37:20
Speaker 2: robots that can understand our emotions because I don't think
37:26
Speaker 2: we are emotionally ready for that as humans.
37:29
Speaker 4: Quite honestly, I'm definitely not there yet.
37:32
Speaker 3: And he feels like if we kind of rank the
37:34
Speaker 3: problems that someone's so gifted and smart should be tackling,
37:38
Speaker 3: I feel like pets do a reasonable job kind of
37:41
Speaker 3: meeting this objective, and perhaps it's better served elsewhere directing
37:47
Speaker 3: sort of all the talents and ambition here rather than
37:51
Speaker 3: putting together a roboat a robot emotional support dog. I
37:56
Speaker 3: think there's other places we could go with development of robots. Yea,
38:00
Speaker 3: And actually, I'm sorry.
38:01
Speaker 2: The quote that I just read it was the most
38:03
Speaker 2: recent one, was actually from the co CEO of the
38:06
Speaker 2: company that he's with now, by the name of Ira Renfrew.
38:09
Speaker 2: So again, sorry, I want to make sure that quote
38:12
Speaker 2: is properly attributed.
38:14
Speaker 1: There.
38:15
Speaker 2: Let's take a quick break for the whole rest of
38:17
Speaker 2: the day, But tomorrow's Thursday. We do a show on Thursdays,
38:20
Speaker 2: and you just join us. Then it'll be kind of
38:23
Speaker 2: fun at least