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Money Monday with Brian James · Brian Thomas

0:01
Speaker 1: You know six, so I think about their cdtalk station.
0:03
Speaker 1: Very happy Monday for you, right, Thomas.
0:06
Speaker 2: Always pleased to hit this moment in time in the
0:09
Speaker 2: morning show because it's time for money Monday with Brian James.
0:12
Speaker 2: All were financial loans amount for some conversation topics this
0:15
Speaker 2: morning and are at this time every week and we
0:17
Speaker 2: get them every week. And welcome back, Brian. It's always
0:19
Speaker 2: a pleasure to have you on. I hope you had
0:20
Speaker 2: a wonderful weekend.
0:22
Speaker 1: I did, miss Thomas. Hope you did as well.
0:25
Speaker 2: I did, Thank you very much. Pleased about that.
0:27
Speaker 1: All right.
0:28
Speaker 2: Guess we got earnings reports last week, winners and losers.
0:31
Speaker 2: Where are we on this? Because I checked the futures
0:34
Speaker 2: market this morning, we are.
0:35
Speaker 1: Looking right now, look looking pretty good, to be quite honest,
0:38
Speaker 1: because we are seeing some things that are that are
0:41
Speaker 1: quite positively, quite honest. So big takeaway from that from
0:44
Speaker 1: last week's earnings report is Wall Street has become a
0:47
Speaker 1: lot more selective about AI. A year ago, company could
0:51
Speaker 1: come out with a huge AI spending plan, the stock
0:54
Speaker 1: might go up just because investors assumed it was keeping up.
0:57
Speaker 1: But now we're gett a little more challenging. We're asking
0:59
Speaker 1: tougher questions, show me where that revenue is, where's it
1:01
Speaker 1: coming from, where's the demand, and show me when spending
1:04
Speaker 1: becomes profitable. And this is most impactful directly with Amazon
1:09
Speaker 1: and Microsoft. So Amazon came out with a real strong quarter,
1:12
Speaker 1: sales up about twenty percent to two hundred billion dollars.
1:15
Speaker 1: And Amazon Web Services that's their cloud computing business that
1:20
Speaker 1: every now and then it goes down and we have
1:22
Speaker 1: all those weird headlines all day long because a lot
1:24
Speaker 1: of stuff breaks for your average person and we all
1:27
Speaker 1: get reminded of exactly how big Amazon is. But revenue
1:31
Speaker 1: from the cloud business grew about thirty seven percent. That's
1:34
Speaker 1: the fastest Amazon has seen there in about four years,
1:37
Speaker 1: and that's important because of so much that's a huge
1:40
Speaker 1: part of Amazon's profit. They're a long way from being
1:42
Speaker 1: a bookstore, you know, back in the day. Microsoft another
1:45
Speaker 1: clear winner. June quarter revenue rose about eighteen percent to
1:48
Speaker 1: ninety billion dollars. Their cloud business grew about thirty nine percent.
1:52
Speaker 1: So again, all these cloud headlines, of course, are just
1:56
Speaker 1: more and more evidence of how much how important that
1:58
Speaker 1: part of the technology world is to us, and it
2:01
Speaker 1: definitely plays a role with all these data centers. We
2:04
Speaker 1: keep talking about good, bad and ugly. With the growth
2:07
Speaker 1: of AI, we would completely anticipate that to continue. So
2:10
Speaker 1: some good headlines, so far, so far, so good.
2:13
Speaker 2: It does sound good, Brian. I agree with you completely
2:15
Speaker 2: on that, because it sounds like people are making logical
2:18
Speaker 2: and reasonable and business related decisions when it comes to
2:21
Speaker 2: where they're going to invest. I mean, you don't get
2:24
Speaker 2: I guess massive bubbles when well, you don't get massive
2:28
Speaker 2: bubbles bursting and people make prudent decisions and don't pump
2:30
Speaker 2: up stocks and aren't going to ever perform, right, I mean,
2:33
Speaker 2: isn't this like a return to normal training or something? Yeah,
2:37
Speaker 2: I mean I think that's a great insight there, because
2:41
Speaker 2: of you know, we do tend to get too excited
2:43
Speaker 2: about things. Is when there are good headlines, right, we.
2:46
Speaker 1: Always have to take a breath and realize that, you know,
2:49
Speaker 1: things aren't going to ever be perfect, and it is
2:51
Speaker 1: very easy to we go both ways. We overreact in
2:54
Speaker 1: both directions, Brian. We assume the world is going to
2:57
Speaker 1: end when the bad times happen, and we also tend
3:00
Speaker 1: to assume that nothing bad is ever going to happen again.
3:02
Speaker 1: I usually know that when we've gotten a little too
3:05
Speaker 1: far over our skis when I start getting questions from
3:09
Speaker 1: people about, Hey, how can I find more money in
3:11
Speaker 1: my situation to throw at the market. Maybe I should
3:13
Speaker 1: take out a home equity line of credit, or maybe
3:14
Speaker 1: we should sell this car or something like that. Haven't
3:16
Speaker 1: heard that lately. There's still a little more trepidation. And
3:19
Speaker 1: I think that's a lot more driven by politics than
3:21
Speaker 1: anything else. But yeah, you're right. I mean we do
3:24
Speaker 1: tend to get a little two wound up about things,
3:26
Speaker 1: all right.
3:27
Speaker 2: Well, you know, I just was thinking about the Internet
3:29
Speaker 2: bubble that burst, and everybody that came out with an
3:31
Speaker 2: Internet site, it was all brand new, and oh my god,
3:33
Speaker 2: every one of them is going to make gazillions of dollars.
3:35
Speaker 2: I think pets dot com was one of the great
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Speaker 2: illustrations of colossal failure. But just because it was new,
3:41
Speaker 2: and just because they launched a site and it had
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Speaker 2: a cool name or something, people would pump gazillions of
3:46
Speaker 2: dollars and do it. Only it'll lose it all. So
3:48
Speaker 2: those were not prudent decisions. It was just a knee
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Speaker 2: jerk reaction because oh Internet, I'm gonna make money, right,
3:53
Speaker 2: that sounds to me like more prudence has been factored
3:56
Speaker 2: in the situation now with AI.
3:58
Speaker 1: Yes, we will eventually find a way to get irresponsible
4:03
Speaker 1: with it, because that's what we do. So I also
4:06
Speaker 1: remember back in those days you're talking thirty years ago,
4:08
Speaker 1: that's when I first entered this industry in the late nineties,
4:11
Speaker 1: and I remember all of the you know, all the
4:14
Speaker 1: different products that came out touting the Internet, and it
4:17
Speaker 1: was basically they were all prepackaged portfolios of all the
4:20
Speaker 1: hot sexy names of the Internet, you know, the yahoos
4:23
Speaker 1: of theworld, pets dot Com, all those things. They would
4:25
Speaker 1: come out in unit investment trusts, which are kind of
4:28
Speaker 1: an antiquated sort of kind of like a limited mutual
4:31
Speaker 1: fund structure, that kind of thing. But those wholesalers made
4:34
Speaker 1: the rounds of all the banks and all the financial institutions,
4:36
Speaker 1: and they had golf balls for us, and they had
4:38
Speaker 1: bagels and anything you wanted, so that we would go
4:40
Speaker 1: sell the Internet bloah by blah whatever fund because that's
4:44
Speaker 1: just what people would buy. What people would buy and
4:48
Speaker 1: what is a prudent decision is are two very very
4:50
Speaker 1: different things.
4:51
Speaker 2: Well, I guess I'm just going to wonder how long
4:53
Speaker 2: it's going to take for this AI thing to sort
4:55
Speaker 2: of sort out. Obviously you mentioned some of the bigger
4:59
Speaker 2: players and how well they're doing. It seems to me
5:01
Speaker 2: they're going to ultimately become the predominant force in artificial
5:04
Speaker 2: intelligence and they're going to ultimately.
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Speaker 1: Win the game.
5:06
Speaker 2: Will there be just a handful of major AI players
5:10
Speaker 2: because the complexity of AI is often lost on me,
5:13
Speaker 2: no computer expert of my but I know there can
5:16
Speaker 2: be different countries of the CCP versus the United States.
5:19
Speaker 2: We've got a better system over there, they say, we
5:22
Speaker 2: have a better system, whatever, power usage, all these different
5:25
Speaker 2: things go into these into determining who's going to ultimately
5:28
Speaker 2: come out on top. But down the road, do you
5:30
Speaker 2: see multiple, many full players or do you see this
5:33
Speaker 2: thing being a shakeout or only the couple of strongest survive?
5:41
Speaker 2: Do we lose them? Apparently we did. I guess we'll
5:46
Speaker 2: have to take an early break. See if you can
5:48
Speaker 2: find Brian up. What is he there?
5:51
Speaker 1: Brian microphone disappeared for a minute there and I was
5:54
Speaker 1: talking and you are listening. I guess talking speaking of technology,
5:59
Speaker 1: Maybe we need some audio hardware companies to step to
6:02
Speaker 1: the four and be profitable.
6:03
Speaker 2: I heard the rescue. I'm sorry, go ahead, Brian. Here
6:06
Speaker 2: the answer to that to my how many players in
6:08
Speaker 2: the final analysis will emerge on this will be a
6:11
Speaker 2: huge industry filled with many or are we going to
6:13
Speaker 2: look at a couple down the road?
6:15
Speaker 1: Yeah, So so my thought there is eventually we're going
6:17
Speaker 1: to settle down to. Right now, we're in the sexy
6:20
Speaker 1: build the infrastructure part. Right. So, I was talking about
6:22
Speaker 1: the Internet earlier and then there was a mutual fund
6:24
Speaker 1: called the Internet Tollkeeper Fund, and it was all those
6:27
Speaker 1: companies that were supposedly going to be the backbone of
6:29
Speaker 1: the Internet. And this time around, that's what we're seeing.
6:32
Speaker 1: You're hearing about the data centers being built. We're hearing
6:35
Speaker 1: mostly about infrastructure. We are not yet hearing we all,
6:38
Speaker 1: we are a little bit. But where the focus is
6:40
Speaker 1: not yet on what is being done with AI, we
6:42
Speaker 1: are simply building it right now. So we need all
6:45
Speaker 1: these data centers we need And again that's a whole
6:46
Speaker 1: other topic. Right Whether you want it in your backyard
6:49
Speaker 1: is different from whether it's going to happen somewhere. So
6:51
Speaker 1: right now, the sexy companies are the ones building the infrastructure. Again,
6:55
Speaker 1: back in the day we talked about fiber optic. Who
6:56
Speaker 1: the last time you cared about fiber optic cables, Well,
6:59
Speaker 1: that was a big sex to twenty some years ago
7:01
Speaker 1: when we were building the backbone of the Internet. So
7:03
Speaker 1: right now we're building the backbone of AI. That's going
7:05
Speaker 1: to be all the major players in hardware and all
7:09
Speaker 1: that technology because there are massive barriers to entry. What
7:12
Speaker 1: we have not yet heard about is the huge wave.
7:16
Speaker 1: I'm talking bigger than what we've gotten so far, the
7:18
Speaker 1: huge wave of companies that do something entirely different than technology,
7:22
Speaker 1: but are using technology in their day to day operation.
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Speaker 1: That's what's coming, That's what the market is anticipating and
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Speaker 1: what is driven it for the last couple of years.
7:30
Speaker 2: Fair Enough, let's pause a little bit are in this
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Speaker 2: segment because we'll talk about the economy doing pretty well
7:34
Speaker 2: in spite of yes war, even though we've seem to
7:36
Speaker 2: be on yet another pause. High gas prices obviously. Then
7:40
Speaker 2: also we'll talk about with Brian James, the second quarter
7:43
Speaker 2: economic growth came in a little below what experts were predicting.
7:46
Speaker 2: Don't go away more with money, mondays, Brian James, and
7:49
Speaker 2: I get to mention fast and pro roofing and I
7:51
Speaker 2: Love being iceh eight eighteen IF fifty five KERCD talk
7:57
Speaker 2: station Happy Monday. Deve Gooden are legal expert on in
8:01
Speaker 2: the next segment, talking about the Cincinni Public school tax levy,
8:05
Speaker 2: which looks like it may be going away. A lot
8:07
Speaker 2: of alarm bells going on that one. In the meantime
8:09
Speaker 2: from all our financial Brian James talking about well investing
8:12
Speaker 2: and how to get returned on investment and trying to
8:14
Speaker 2: get you a plan for your retirement. That's what financial
8:17
Speaker 2: planners do. The economy still doing pretty well in spite
8:19
Speaker 2: of the war, Brian James. You mentioned gas prices in
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Speaker 2: the topic. I paid five dollars and thirty some odd
8:25
Speaker 2: cents the other day. It was premium, I know, but
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Speaker 2: I think that's the most I've perhaps ever paid for gasoline.
8:31
Speaker 2: I couldn't recall a time when I paid more. But
8:33
Speaker 2: I'm hoping at some point we get relief. I know
8:35
Speaker 2: the price of oil per barrel it went down because
8:38
Speaker 2: of the announcement from Trump about maybe entering into some
8:41
Speaker 2: sort of settlement talks and not bomb right away. Five
8:45
Speaker 2: dollars down after that announcement. Somewhere in there so, but
8:48
Speaker 2: we'll never see the relief at the pump for ages,
8:51
Speaker 2: it seems, Brian James. What's going on with the economic outlook?
8:55
Speaker 1: Well, what's going on there is capitalism, Brian Thomas. So
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Speaker 1: whenever we can squeeze out just a little more profit
9:01
Speaker 1: margin and blame it on inflation or blame it on
9:03
Speaker 1: headlines that are beyond our control, then most most companies
9:06
Speaker 1: are going to do it. At the end of the
9:07
Speaker 1: day as I as you know, I like to say
9:08
Speaker 1: where the United States of profit margin? And so I
9:11
Speaker 1: wouldn't anticipate, you know, these very brief swings. Right, we
9:14
Speaker 1: got a good headline that said that the war might
9:17
Speaker 1: wind down, might start winding down soon. That could be
9:20
Speaker 1: completely Remember we had a ceasefire not that long ago too,
9:22
Speaker 1: that did.
9:23
Speaker 2: How many so on again, off again, washed rents repeat.
9:27
Speaker 2: I was talking about that this morning, and you know,
9:28
Speaker 2: Donald Trump says it sounds like really good in developments,
9:31
Speaker 2: and then you read the quotes from the Irani and
9:33
Speaker 2: Aficient they're like, we don't know what the hell he's
9:35
Speaker 2: talking about.
9:36
Speaker 1: Yeah, that phone call never occurred, and yeah, so you
9:38
Speaker 1: got to take everything with very large grains of salt.
9:41
Speaker 1: But yeah, you're right, and I had that same you know,
9:43
Speaker 1: quote unquote personal best recently too. I have one car
9:47
Speaker 1: that I love that demands premium gas too, and I
9:49
Speaker 1: cringe every time, but I went over five myself with
9:51
Speaker 1: I think the first time in my life. Yeah. There,
9:54
Speaker 1: So that national average is about four dollars and ten
9:57
Speaker 1: cents a gallon. And obviously the longer you're commute, the
9:59
Speaker 1: law larger the vehicle, and the more drivers you have
10:01
Speaker 1: in the house. And I'm living that dream, by the way,
10:03
Speaker 1: I got five of us in the car, you know
10:06
Speaker 1: at this point. So the more expensive that gets triple
10:09
Speaker 1: a of course is citing higher cru prices and of
10:12
Speaker 1: course global instability and so forth. And that doesn't really
10:17
Speaker 1: hit the American economy the way it did in the
10:19
Speaker 1: seventies or the early two thousands, to your point earlier,
10:21
Speaker 1: we're getting we're getting these we're getting hammered at the
10:24
Speaker 1: gas pump. But the economy still came up about one
10:26
Speaker 1: and a half percent or so, you know, which is anemic,
10:30
Speaker 1: but it's still it's still positive. So it's not it
10:32
Speaker 1: doesn't have the drag that it used to say in
10:34
Speaker 1: the seventies, because we are now our own major energy producer.
10:38
Speaker 1: We are. We're an oil and energy exporter at this point,
10:41
Speaker 1: which I know it sounds weird to say from people
10:43
Speaker 1: who grew up being worried about the Middle East and
10:45
Speaker 1: OPEK and all that, But with the technology advances in
10:48
Speaker 1: fracking and then when where we found oil and shale,
10:51
Speaker 1: we are our own source of energy. Not to say that,
10:55
Speaker 1: you know. So the impact of the economy comes from
10:57
Speaker 1: the fact that our customers, the companies countries we want
11:00
Speaker 1: to sell to themselves are suffering because they are still
11:03
Speaker 1: dependent on OPEK in the Middle East. So everything's connected
11:07
Speaker 1: to everything, no matter how we want to phrase.
11:09
Speaker 2: That, it really is. And I imagine much in the
11:12
Speaker 2: same way we found additional and vast resources of additional
11:16
Speaker 2: oil for our own benefit now and then became the
11:18
Speaker 2: global producer of oil, the largest I imagine, there's a
11:22
Speaker 2: lot of different areas in the world. They have untapped
11:25
Speaker 2: vast reserves similar to what we found. They just won't
11:27
Speaker 2: look for it.
11:29
Speaker 1: Well. I am no geologist by any stretch of the matter,
11:32
Speaker 1: but I am. My understanding is everything we found in
11:35
Speaker 1: shale is very, very very much localized to the North
11:38
Speaker 1: American market. We just don't have shale in other parts
11:40
Speaker 1: of the country, other parts of the world, So yeah,
11:43
Speaker 1: they may find it elsewhere, but they're not going to
11:44
Speaker 1: be able to rely on the technology that we've built
11:46
Speaker 1: because they simply don't have that set up underneath them.
11:49
Speaker 2: Fair enough, and no geologists am I either, And I
11:51
Speaker 2: don't even suggest I've plan one on radio. It's just that,
11:54
Speaker 2: you know, technological advances over the years. Oh and parenthetically,
11:57
Speaker 2: for those folks who want a refresher on why capital
12:00
Speaker 2: is so great, reed John Steele Gordon's a brief history
12:03
Speaker 2: of wealth creation and all the different major milestones we've
12:08
Speaker 2: gone through over the course of history which resulted in
12:10
Speaker 2: vast creation of vast quantities of wealth, which then were
12:14
Speaker 2: invested to create even greater vast quantities of wealth. It's
12:18
Speaker 2: sort of a rejection of what socialists want and how
12:20
Speaker 2: they are blind to the realities.
12:21
Speaker 1: Of all that.
12:22
Speaker 2: But pivoting back over, since the Fed just decided to
12:24
Speaker 2: keep maintain the status quo on rates, with the economic
12:28
Speaker 2: growth in the second quarter only one point five percent.
12:31
Speaker 1: Did that figure?
12:32
Speaker 2: Did they have that figure when reaching their conclusions on
12:34
Speaker 2: interest rates? Because it sounds me with the growth rate
12:38
Speaker 2: coming in below expectations. That's kind of a suggestion. Maybe
12:41
Speaker 2: they could have lowered the rate a little bit.
12:43
Speaker 1: Brian, Well, you would sink. But at the same time,
12:46
Speaker 1: we've got inflation. Inflation is still a problem, and it's
12:49
Speaker 1: actually ticked up somewhat recently. So that flies right in
12:53
Speaker 1: the face of the goal of lowering interest rates because
12:55
Speaker 1: we could simply make inflation worse. So this is going
12:57
Speaker 1: to be a kind of Chicken or the egg scenario
13:00
Speaker 1: where which problem do we target first? Do we want
13:02
Speaker 1: to focus on the slowing growth that we have, which
13:05
Speaker 1: again is still growth. We're not in a recession, it
13:07
Speaker 1: doesn't look like that's you know, on the horizon at
13:10
Speaker 1: this point. Or do we want to focus on the
13:13
Speaker 1: the pesky problem of inflation, which has been stuck in
13:16
Speaker 1: the mud around three percent really for the past three
13:19
Speaker 1: or four years, and even a little bit higher than that. So,
13:22
Speaker 1: you know, I think Chairman Warsh would very very much
13:26
Speaker 1: like to do what his boss wants him to do,
13:28
Speaker 1: what his boss campaigned on, which is lower interestates, But
13:31
Speaker 1: at the same time he knows his boss is not
13:33
Speaker 1: focused on inflation to the extent that Kevin worsh himself
13:37
Speaker 1: has to be as the leader of the Federal Reserve,
13:39
Speaker 1: so it'll be interesting to watch him Tapdan through that.
13:42
Speaker 1: It will.
13:42
Speaker 2: And if you have to identify the primary driver of inflation,
13:45
Speaker 2: because it seems to me that a lot of the
13:46
Speaker 2: issues that we dealt with in COVID, you know, supply
13:49
Speaker 2: chain issues, disruptions and all that created scarcity, which of
13:53
Speaker 2: course created increase in prices. We've of course had the
13:55
Speaker 2: bird flu and the eggs went through the roof, and
13:58
Speaker 2: we still have ex defensive beef because the cattle hasn't
14:01
Speaker 2: rebounded and we're still in an all time low of
14:04
Speaker 2: herds of cattle. But you know, each one sort of
14:06
Speaker 2: has its own explanation. But if you had to look
14:08
Speaker 2: at the inflationary realities we're facing collectively, is it the
14:12
Speaker 2: price of gasoline or fuel that is the primary driver.
14:15
Speaker 2: Where are we in terms of what's causing this inflation?
14:18
Speaker 1: Oh? Yeah, so one hundred percent energy. So in the
14:21
Speaker 1: latest June CPI data, over and overall inflation came out
14:24
Speaker 1: at three and a half percent. Energy up almost sixteen
14:28
Speaker 1: percent year over year. Gas itself was up twenty six percent.
14:32
Speaker 1: Core inflation, which excludes food and energy, and again people
14:36
Speaker 1: hate that core inflation number because why are we excluding
14:38
Speaker 1: food and energy? Well, this is why, right, so we
14:40
Speaker 1: can identify core inflation was only up two point six percent.
14:44
Speaker 1: If you take out the crazy things, then it's normal.
14:47
Speaker 1: But if we put in those things, because like you
14:49
Speaker 1: just said, food and energy are very volatile, because as
14:51
Speaker 1: soon as we have a war, energy goes through the roof,
14:54
Speaker 1: and we have eggs that spike because of bird flu
14:56
Speaker 1: which we can't predict, so that makes those things extremely volatile.
15:00
Speaker 1: That's what's driving those food and energy prices are driving
15:02
Speaker 1: inflation overall.
15:03
Speaker 2: Well, and you just provided the best explanation I've ever
15:05
Speaker 2: got for why we don't include those when we're talking
15:08
Speaker 2: about what the realities are with inflation, extremely volatile energy
15:12
Speaker 2: and food. Brian James, thank you' all Worth Financial, your
15:14
Speaker 2: employer for loaning you out. Appreciate it. I always enjoy
15:16
Speaker 2: these discussions. We'll do this again next Mondy, and I
15:18
Speaker 2: hope you have a great week.
15:20
Speaker 1: Yes, sir, we talk to you one a week.
15:21
Speaker 2: Thanks, Brothers, stick around. Steve Gooden, our legal expert, will
15:24
Speaker 2: join us talk about this since a