Latest / The Financial Exchange Show / Nvidia Earnings Put the AI Boom Back in Focus

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Nvidia Earnings Put the AI Boom Back in Focus · The Financial Exchange Show

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1:02
Speaker 1: This is the Financial Exchange with Chuck Zada and Mike Armstrong.
1:10
Speaker 2: Chuck Mike talker with you here as we kick off
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Speaker 2: pretty interesting week in market's not too much of the
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Speaker 2: way of earnings we've got in video coming up on Wednesday,
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Speaker 2: which we're gonna discuss because look, there might not be
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Speaker 2: much in terms of volume, but in terms of importance.
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Speaker 2: Hard to find a more important company in the world
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Speaker 2: than in video today. Sure, you know, it's just it's
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Speaker 2: almost five trillion dollars in market cap, and so that's
1:34
Speaker 2: on Wednesday that we have their earnings. Also this week,
1:37
Speaker 2: in terms of economic data, we get some home price
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Speaker 2: data coming out on Tuesday, the Case Show our Home
1:43
Speaker 2: Price Index and the fhf A Home Price Index. Wednesday
1:47
Speaker 2: we get PCE price Index data. Thursday we're gonna be
1:50
Speaker 2: getting jobless claims, and Friday we got Kevin Warsh talking
1:54
Speaker 2: in Jackson Hole. So nice little week. It's uh again,
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Speaker 2: it's not really a ton of volume, but a couple
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Speaker 2: of really important pieces of data that I'm not expecting
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Speaker 2: any huge surprises. But that's why they call them surprises, Michael,
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Speaker 2: is because you're not expecting them.
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Speaker 3: Yeah, Like the data points I don't think are, like
2:13
Speaker 3: you said in video, hard to argue that any other
2:15
Speaker 3: companies earnings matter more than them, so big data point.
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Speaker 3: Other than that, I think we're going to see some
2:22
Speaker 3: you know, we know we're getting a press conference from
2:24
Speaker 3: Bessett this afternoon on quote Economic d Day. Are we
2:27
Speaker 3: really willing to bring ourselves to that brink again? We
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Speaker 3: have got the Jackson Hole piece. There's all this conflict
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Speaker 3: between what the Fed is trying to accomplish versus what
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Speaker 3: Treasury is trying to accomplish. So I think that's where
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Speaker 3: you're going to find the interesting news because, quite honestly,
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Speaker 3: as important as in Video's earnings are pretty tough for
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Speaker 3: them to surprise.
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Speaker 4: Anybody at this stage, given.
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Speaker 3: Who their customers are, what we know they're spending, and
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Speaker 3: what in Video has been doing recently. So let's let's
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Speaker 3: dive in there on Wednesday afternoon's earnings call for depending
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Speaker 3: on the day, the first or second largest company in
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Speaker 3: the world.
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Speaker 2: Yeah, just before we do that, SMP's down about twenty
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Speaker 2: six points right now, the Dow is up ninety one,
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Speaker 2: Nasdaq Composite down one to eighty seven, so mixed market
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Speaker 2: slight downside bias today. Tenure Treasury, though catching a bit
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Speaker 2: of a bid down three point eight basis points back
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Speaker 2: to four point seven percent. Dollars up despite that, up
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Speaker 2: point one seven percent. But even with the dollar up,
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Speaker 2: gold still finding a bid today up forty nine eighty
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Speaker 2: anounced to forty seven thirty and so you've got some
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Speaker 2: continued movement there.
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Speaker 5: Uh.
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Speaker 2: Crude oil West Text Intermediate down two dollars and eleven
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Speaker 2: cents of barrel to eighty four to ninety five triple
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Speaker 2: A National avatur gas prices looks like we are up
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Speaker 2: three hang on you got it? They go out an
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Speaker 2: extra decimal point now, which is just confusing. We are up.
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Speaker 4: Three one thousands, five one thousands of a percent. I
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Speaker 4: don't know.
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Speaker 2: Like das prices are flat today, got it? Diesel prices though,
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Speaker 2: up another cent overnight to five sixty one. We're now
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Speaker 2: just twenty cents away on diesel from an all time high.
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Speaker 3: Good part of the reason why Nasdaq's down three quarters percent,
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Speaker 3: by the way, and video stock today off five dollars
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Speaker 3: fifty five cents or two and a half percent.
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Speaker 2: Wouldn't be surprised if we just get some choppy trading
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Speaker 2: before Jackson Hole. It just kind of feels like that's
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Speaker 2: what we're just set up for not necessarily bad, but
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Speaker 2: just up and down, chop everyone up and spin them
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Speaker 2: back out. So we've got in Nvidia reporting on Wednesday,
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Speaker 2: analysts are projecting ninety two billion dollars of sales in
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Speaker 2: the second quarter, up from a forecast of seventy eight
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Speaker 2: billion just at the start of the year. So again,
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Speaker 2: like you're talking about just monster growth there, and look,
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Speaker 2: I think sometimes we lose sight of kind of the
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Speaker 2: larger picture in that. Look, everyone's guilty this, we are too.
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Speaker 2: We were talking off a lot just about like what's
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Speaker 2: going on in this quarter and know what happened last week.
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Speaker 2: Here's something that I just want to go back to,
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Speaker 2: just for context on in video. If you go back
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Speaker 2: to Q four of twenty two, remember before open Ai
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Speaker 2: got announced into twenty two, I think it was December
5:21
Speaker 2: is when chad GPT like hit the mainstream and video
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Speaker 2: had just completed a year in which it did twenty
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Speaker 2: six billion dollars in revenue for the year. The last
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Speaker 2: twelve months they've done two hundred and fifty three billion.
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Speaker 2: They have ten x their revenue in four years. So
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Speaker 2: you can talk about saying all.
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Speaker 3: The blowney numbers when it comes to AI and how
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Speaker 3: much revenue those companies are going to need to generate
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Speaker 3: and whether or not it'll truly be that impactful. But
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Speaker 3: it's pretty easy to measure how impactful it's been to
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Speaker 3: in Vidia's business.
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Speaker 2: Absolutely. And by the way, like again you just kind
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Speaker 2: of look at it and you're like, Okay, so they've
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Speaker 2: done two hundred and fifty three billion in revenue the
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Speaker 2: last twelve you extrapolated out some projections, Yeah, they could
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Speaker 2: very easily get to like four hundred five hundred billion
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Speaker 2: in revenue next year, which is just nuts for a
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Speaker 2: chip maker.
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Speaker 4: Yep.
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Speaker 2: I mean, we've we've never seen anything like this, you know,
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Speaker 2: just as an example, like during the tech bubble, Intel
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Speaker 2: was the big chip maker then and Intel's revenue got
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Speaker 2: to like thirty billion for the year. I know you
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Speaker 2: can be like, well what about an inflation? Okay, great,
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Speaker 2: it was sixty billion.
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Speaker 4: Yep.
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Speaker 2: We've never seen anything like this.
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Speaker 3: Yeah, I wonder if there is any hardware maker at
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Speaker 3: that point in time that saw their revenue grow ten x.
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Speaker 4: So let's see.
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Speaker 2: So Intel Intel, the closest that I can find is
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Speaker 2: like over we're talking over a four year period. The
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Speaker 2: closest I can find is maybe like a two or
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Speaker 2: three x. We're gonna go take a look at Cisco,
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Speaker 2: and Cisco in ninety six was at three to one
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Speaker 2: four nine nine. Cisco went four x from three billion
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Speaker 2: to twelve. But again the scale's just dramatically different. Still, yes,
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Speaker 2: so like you've got some examples, and again that's that's
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Speaker 2: why if you were looking at Cisco's market cap. Okay, Cisco,
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Speaker 2: like I get it, it went from in ninety six
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Speaker 2: being a twenty billion dollar company to being a five
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Speaker 2: hundred billion dollar company because people said, well, if they
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Speaker 2: continue to quadruple their revenue like every four years, sure like,
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Speaker 2: and then they they didn't, and so they went back
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Speaker 2: to being a an eighty billion dollar company and basically
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Speaker 2: stayed there for about fifteen years. So I'm not saying
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Speaker 2: in videos Cisco, I'm not saying in videos Intel. What
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Speaker 2: I am saying is just what we've seen I think
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Speaker 2: we got to just sometimes like acknowledge and just show
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Speaker 2: a little bit of appreciation, like we never seen this before.
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Speaker 2: And it could and great for in Vidio could end badly,
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Speaker 2: like I don't know where we're going to be five
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Speaker 2: years from now. But quarter to quarter is what drives markets.
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Speaker 2: And so you've got this earnings report that is, you know,
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Speaker 2: coming up. And the reason I don't think you're going
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Speaker 2: to see any surprises to the downside for in video
8:19
Speaker 2: is because everyone's telling you they can't get enough of
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Speaker 2: these chips right now and can install them quickly enough.
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Speaker 2: And so you would hear it from the hyperscalers before
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Speaker 2: in Vidia reports, especially because they all reported earnings a
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Speaker 2: month ago.
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Speaker 3: Right now, when you say downside, what you're talking about
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Speaker 3: is anticipated revenue, not necessarily how investors react to that
8:39
Speaker 3: anticipated revenue, right That's an important Yes, that's an important
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Speaker 3: distinction here is Yeah, expectations from analysts are for ninety
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Speaker 3: two billion dollars worth of revenue the second quarter. It
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Speaker 3: was a lot lower than that at the start of
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Speaker 3: this year. Will it be enough for investors to be
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Speaker 3: optimistic now about in Nvidia? Amongst all of the other
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Speaker 3: projects that they are trying to endeavoring, you know, one
9:01
Speaker 3: is this new funding mechanism for their customers. That's I mean,
9:09
Speaker 3: that's certainly a way to keep the gravy train going.
9:12
Speaker 3: But effectively you're saying we are going to use our
9:14
Speaker 3: credit worthiness of as a massive the most massive company
9:19
Speaker 3: in the world to backstop the loans that you're going
9:23
Speaker 3: to make to buy our products. Increasingly, the phenomenon that
9:28
Speaker 3: we have focused on is the circularity. Circularity, the tentacles
9:35
Speaker 3: that you are seeing just tentcality. Yeah, the tentacality of
9:39
Speaker 3: this market. But these companies are like inextually tying their
9:44
Speaker 3: future success.
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Speaker 4: Or failure to each other in this market.
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Speaker 3: Right effectively in video is going out there and as
9:52
Speaker 3: an example saying we will backstop the loans that open
9:57
Speaker 3: ai is taking out in order to buy our product. Okay,
10:02
Speaker 3: you know, if they are hugely successful and you don't
10:05
Speaker 3: need to backstop those loans, then you're going to have
10:08
Speaker 3: a customer that's going to keep on ordering your stuff
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Speaker 3: at record high prices. If they fail in some meaningful way,
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Speaker 3: if they end up not being the global leader in
10:17
Speaker 3: AI and can to generate those sales to back the
10:20
Speaker 3: loans that they are taking, then not only do you
10:23
Speaker 3: potentially sink that company, you potentially have some damage done
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Speaker 3: to the giant supplier and you know, frankly household name
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Speaker 3: for AI for the last four years.
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Speaker 2: Let's take a quick break. When we return, we'll talk
10:35
Speaker 2: about the potential and I say potential, but the likely
10:40
Speaker 2: looming expansion of trading hours and what it means for
10:44
Speaker 2: markets going forward.
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11:41
Speaker 2: So we got a piece here in Barons. The title
11:43
Speaker 2: of the market that Never gets Never sleeps is getting
11:45
Speaker 2: closer to reality. And this comes as the NASDAK in
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Speaker 2: New York Stock Exchange plan to expand to twenty three
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Speaker 2: hour a day, five day week trading starting on December sixth.
11:59
Speaker 2: That is when basically the back end processing facilities they
12:04
Speaker 2: expect will be ready to handle this. And the SEC
12:09
Speaker 2: hasn't commented on the current approval status because it's still
12:12
Speaker 2: is you know, work in progress, but by and large
12:15
Speaker 2: it seems like this is coming. I think it very
12:18
Speaker 2: much is an open question as to like who wants this.
12:24
Speaker 3: So there's been as few innovations, if you not even innovations,
12:28
Speaker 3: but improvements in capital markets over the last decade or
12:32
Speaker 3: two decades that I found really useful. It used to
12:36
Speaker 3: be when you bought or sold a stock, you had
12:39
Speaker 3: three days to settle the trade, meaning if you needed
12:43
Speaker 3: money on a Friday, you needed to get your butt
12:47
Speaker 3: in order by Tuesday in order to make sure you
12:50
Speaker 3: had the trades in place in order to have the
12:52
Speaker 3: cash in your account and deal with that delay.
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Speaker 4: Today it's one day, and.
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Speaker 2: There's by the way, there's a good reason why it's
12:59
Speaker 2: not zero days, is because then you run into all
13:03
Speaker 2: kinds of problems with potentially netting things out and if
13:05
Speaker 2: something goes wrong in a trade, being able to resolve
13:07
Speaker 2: it cleanly. And I know people are like, well, why
13:11
Speaker 2: can't I just like you know, have it instantly, And
13:13
Speaker 2: it's like Okay, like, understand how big the global financial
13:15
Speaker 2: system is and all the different moving pieces, and maybe
13:18
Speaker 2: having like one day to make sure nothing's gone wrong
13:21
Speaker 2: isn't a bad thing.
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Speaker 4: Prior to twenty eleven, when I made trades in my
13:26
Speaker 4: investment account, I was required to track on my own
13:29
Speaker 4: what I paid for those different securities and then report
13:32
Speaker 4: them to the IRS. Yeah.
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Speaker 3: Since twenty eleven, every custodian in the US has been
13:35
Speaker 3: required to track that on your behalf, and conveniently or
13:39
Speaker 3: inconveniently to you, depending on your outlook, report that directly
13:43
Speaker 3: to the IRS on your behalf.
13:44
Speaker 4: Yeah.
13:45
Speaker 3: Again, maybe you think that's overreach, but really convenient for
13:50
Speaker 3: the vast majority of investors comparative the way it was
13:52
Speaker 3: done prior to so all of those I look at
13:55
Speaker 3: real improvements. I have struggled in my mind to come
13:58
Speaker 3: up for any reason that this helps anybody.
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Speaker 4: I'll tell you why.
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Speaker 2: It's one paragraph right here. Actually it's one sentence that
14:05
Speaker 2: they made into a paragraph, because this is all just
14:07
Speaker 2: paragraphs of sentences. I don't know why the shift to
14:12
Speaker 2: twenty three hour trading five days a week could be
14:14
Speaker 2: good for business for the NASDAK in New York Stock Exchange.
14:18
Speaker 3: So that's who he's winning, got it. So it doesn't
14:20
Speaker 3: help you, me or anybody.
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Speaker 2: Yes, the exchanges will make more money being able to
14:27
Speaker 2: get that big ass spread twenty three hours a day
14:32
Speaker 2: quote from a business opportunity. Absolutely, we're geared towards the
14:36
Speaker 2: international investing crowd, said John Herrick, chief Product officer at
14:39
Speaker 2: New York Stock Exchange. Commercially, that's a very big driver here.
14:42
Speaker 2: So it's basically the exchanges want to make more money.
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Speaker 4: YEP.
14:47
Speaker 2: I don't expect like most individual investors are going to
14:50
Speaker 2: like stay up for the night session because you've got
14:53
Speaker 2: to sleep sometime. It's also not going to be as
14:57
Speaker 2: a result of that as heavily traded as the day session,
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Speaker 2: and so that can result in liquidity issues and wider spreads.
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Speaker 2: What I mean by that, Let's say that you have
15:08
Speaker 2: security X, that is, you know, trading it a dollar
15:11
Speaker 2: per share. It doesn't actually have a value of a dollar.
15:15
Speaker 2: If you go to any of the market makers that
15:18
Speaker 2: actually provide liquidity to the market, it might be in
15:21
Speaker 2: a highly liquid market. Okay, they're willing to buy it
15:24
Speaker 2: from you for ninety nine cents and they'll sell it
15:26
Speaker 2: back to someone else for a dollar and one cent,
15:29
Speaker 2: just as an example. In reality, oftentimes it's fractions of
15:32
Speaker 2: a penny. But like I'm just making an example here.
15:35
Speaker 2: So in that case, there's a two cent bit ask spread.
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Speaker 2: But let's say that the overnight session is more thinly
15:41
Speaker 2: traded and there aren't as many participants, and so, because
15:46
Speaker 2: market makers don't want to get stuck holding the security
15:49
Speaker 2: at a loss. Remember the market can move unexpectedly at times,
15:53
Speaker 2: they might say, you know what, I got to have
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Speaker 2: a wider spread during the night session because I might
16:01
Speaker 2: lose money on this trade if I can't unload it
16:03
Speaker 2: quickly enough. And so the market maker might say, normally,
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Speaker 2: I'll do you know again. I'll buy it from you
16:09
Speaker 2: for ninety nine, sell it to someone else for one
16:10
Speaker 2: oh one. Hey, I'm only going to pay you ninety
16:13
Speaker 2: seven cents now for that, and I'll sell it to
16:15
Speaker 2: someone else.
16:16
Speaker 1: For one oh three.
16:18
Speaker 2: Wider spreads means more revenue for the exchange and less
16:25
Speaker 2: money in market participants pockets. That's how it works, yep.
16:30
Speaker 2: And if you've ever traded like thinly traded securities, you
16:34
Speaker 2: know this, by the way, like you've seen this, like
16:37
Speaker 2: you've seen stuff where it's like, oh, like the bid
16:39
Speaker 2: ask on that is not a cent, it's like ten
16:42
Speaker 2: cents because no one's trading this, or hey, the bid
16:46
Speaker 2: ask looks like it's there, but I'm trading this and
16:49
Speaker 2: I can't get it to fill because it's not real
16:53
Speaker 2: liquidity even like this stuff happens. So I don't know
16:59
Speaker 2: that the is really good for I'll tell you it's
17:03
Speaker 2: not good for investors. It might be good for traders
17:06
Speaker 2: who maybe are able to take advantage of this if
17:09
Speaker 2: they have, you know, sophisticated ways to approach it. For
17:13
Speaker 2: long term investors doesn't help you. It doesn't help you,
17:16
Speaker 2: doesn't hurt you. It's just like it doesn't matter to you.
17:20
Speaker 4: Yeah, I guess.
17:21
Speaker 3: I guess it can hurt you if you're tempted to
17:22
Speaker 3: trade in the middle of the night and don't know
17:23
Speaker 3: what you're doing.
17:26
Speaker 2: Every time I get the temptation to trade in the
17:28
Speaker 2: middle of the night, I realize it's just a bad dream,
17:33
Speaker 2: you know. Yeah, friends don't let friends trade in the
17:39
Speaker 2: middle of the night.
17:41
Speaker 3: Nothing good happens after midnight, no would I. So what
17:45
Speaker 3: I can tell you, Like my parents used to constantly
17:49
Speaker 3: shift that number. By the way, start at ten pm
17:51
Speaker 3: and then it was midnight. By by the time I
17:53
Speaker 3: was in my twenties, I think it was two am.
17:55
Speaker 3: But yeah, nothing good ever happens after midnight. I have
17:58
Speaker 3: a buddy of money used to play online poker, and
18:01
Speaker 3: his whole thing was he would play the the two
18:06
Speaker 3: am shift online because there's just a bunch of drunk people.
18:10
Speaker 2: It was everyone. It wasn't even drunk US people, it
18:12
Speaker 2: was everyone coming home from the casinos overseas because again,
18:16
Speaker 2: like you couldn't play online poker for money like legally,
18:19
Speaker 2: but it was all these people who were like coming
18:21
Speaker 2: home drunk from bars overseas, and he was just clean.
18:24
Speaker 2: He'd be like, I'd wake up at midnight and I'd
18:27
Speaker 2: you know, have breakfast and blah blah blah, and then
18:30
Speaker 2: I would make crazy money because it was all these
18:33
Speaker 2: drunk people coming home and trying to play poker and
18:35
Speaker 2: they were terrible at it. And I kind of look
18:38
Speaker 2: at it the same way with like the two am
18:41
Speaker 2: trading session is probably gonna be a bunch of drunk
18:44
Speaker 2: people thinking they're gonna make money, and then they're gonna
18:46
Speaker 2: wake up in the morning and.
18:47
Speaker 4: Be like, oh what happened? Like like I actually did that,
18:52
Speaker 4: So like.
18:53
Speaker 3: Breathalyzer on your you really honestly like there's a number
18:58
Speaker 3: of reasons people should have breathalyzers.
19:00
Speaker 2: Actually, it's not even like the drinking. We know that
19:03
Speaker 2: when you look at sleep deprivation, it has the same
19:06
Speaker 2: effect on cognition as drinking. You shouldn't trade in the
19:09
Speaker 2: middle of the night. Quick break, We got the uh
19:13
Speaker 2: other stuff next.
19:18
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19:37
Speaker 5: Markets mixed to begin the week with a modest pullback
19:41
Speaker 5: in tech as Wall Street prepares for Nvidia earnings another
19:45
Speaker 5: inflation reading in the Jackson Hoole Symposium later this week.
19:48
Speaker 5: Investor is also waiting details about US economic sanctions on
19:52
Speaker 5: Iran this afternoon at two. Right now, the Dow is
19:56
Speaker 5: up three tenths of one percent or one hundred and
19:59
Speaker 5: six x two points, IRSM P five hundred, down about
20:02
Speaker 5: a quarter percent or seventeen points lower. NASDAC down about
20:06
Speaker 5: a half or percent one hundred and twenty two points lower.
20:09
Speaker 5: Russage thousand is down six tenths of one percent, Tenure
20:14
Speaker 5: Treasure Reel down four basis points at four point six
20:17
Speaker 5: nine percent, and oil down two percent, trading at eighty
20:22
Speaker 5: five dollars a barrel. Several memory storage companies seeing losses
20:26
Speaker 5: to begin the week sand Disk, Western Digital, Seagate Technology,
20:31
Speaker 5: and Micron Technology. You're down anywhere between six and eight percent. Meanwhile,
20:36
Speaker 5: Ali Baba now dipping slightly after the Chinese technology company
20:40
Speaker 5: announced it was issuing ten point two billion dollars of
20:43
Speaker 5: new shares to non US investors, where all of the
20:46
Speaker 5: money it raises will be used to fund its AI projects,
20:51
Speaker 5: and after trade talks between the USA and Canada fell
20:54
Speaker 5: apart on Friday. Steel manufacturers, including new Core and Steel Dynamics,
20:59
Speaker 5: are up about two percent on the day. Canada is
21:02
Speaker 5: set to target the US steel industry in its retaliatory
21:06
Speaker 5: terriffs that will begin on September eighth. I'm Tucker Silva.
21:11
Speaker 2: That is Wall Street watch piece in New York Times
21:15
Speaker 2: for gen Z Building. Wealth is in the stock market,
21:17
Speaker 2: not the housing market. That's the title. What's the uh,
21:21
Speaker 2: what's the deal?
21:22
Speaker 5: Like?
21:23
Speaker 4: I think it's beloney enlighten me.
21:27
Speaker 3: So they're laying out this piece here that there's this
21:30
Speaker 3: generational shift ongoing.
21:32
Speaker 4: For logical reasons.
21:33
Speaker 3: It's tougher for gen z ers to get into the
21:35
Speaker 3: housing market than it has been for other generations, based
21:38
Speaker 3: on price of homes and interest rates. Right, heck of
21:43
Speaker 3: a lot tougher if you're in that group than if
21:45
Speaker 3: you are a millennial with the same amount saved to
21:47
Speaker 3: buy a home. You could argue that wages are up
21:51
Speaker 3: in accordance with that, but you know, realistically it's tougher.
21:55
Speaker 3: There are a lot fewer homes for sale today than
21:57
Speaker 3: there were a few years ago, and there's more people
22:00
Speaker 3: on this earth. So got the premise makes plenty of sense. Sure,
22:04
Speaker 3: the argument would be that this is going to turn
22:06
Speaker 3: into some long term phenomenon, which I doubt.
22:09
Speaker 4: Gen Z is pretty young.
22:11
Speaker 3: What's the oldest gen Z or do either of you
22:12
Speaker 3: know off the top of your head, late twenties.
22:17
Speaker 2: Gen Z twenty nine? Okay the oldest, yeah, ninety seven,
22:21
Speaker 2: carry the twenty nine what he said?
22:25
Speaker 3: So I have a really tough time buying into the
22:30
Speaker 3: idea that a generation whose oldest demo is twenty nine
22:35
Speaker 3: years old is substantially different from the previous one. If
22:38
Speaker 3: they do go about this differently than every previous generation,
22:42
Speaker 3: I'm also not sure it will equate to anything terribly
22:45
Speaker 3: bad for them. So I think there are a ton
22:49
Speaker 3: of benefits to home ownership, and frankly, our capital system
22:52
Speaker 3: and our tax system is set up in a way
22:55
Speaker 3: that benefits home ownership. So you think through a few
22:58
Speaker 3: things here. One, the amount of leverage you can put
23:01
Speaker 3: onto a primary residence, your single family home, is quite
23:05
Speaker 3: a bit more than just about any product out there.
23:09
Speaker 4: The existence of.
23:10
Speaker 3: A thirty year mortgage really wouldn't exist unless the government
23:14
Speaker 3: forced the banks.
23:15
Speaker 4: To make thirty year mortgages.
23:17
Speaker 3: And then finally, there's this nice capital gains tax exclusion
23:21
Speaker 3: you get when you sell a home that doesn't exist
23:23
Speaker 3: on any other asset that I'm familiar with. So if
23:26
Speaker 3: you can afford to buy home, it's a pretty great
23:29
Speaker 3: thing to do. But plenty of studies have shown that, hey,
23:33
Speaker 3: so long as you're actually a disciplined renter who does
23:37
Speaker 3: not fall for the lifestyle creep that typically comes with
23:40
Speaker 3: folks as they earn more income over time, which is
23:43
Speaker 3: a very difficult one to combat. But if you, for instance,
23:48
Speaker 3: at twenty seven years old, have found yourself in an
23:51
Speaker 3: apartment that you're renting for twenty five hundred dollars a month,
23:54
Speaker 3: and you just see that increase with inflation and then
23:57
Speaker 3: save the rest of your growth and earnings investments. You're
24:01
Speaker 3: probably going to end up in a pretty similar place,
24:04
Speaker 3: if not better off than by buying a home. The
24:07
Speaker 3: problem comes in the difficulty in actually doing that and
24:11
Speaker 3: maintaining that discipline to actually save the money rather than
24:16
Speaker 3: taking those excess dollars that you earn and putting them
24:18
Speaker 3: towards lifestyle greed.
24:21
Speaker 2: I'll go further. Do you know so the oldest gen
24:26
Speaker 2: z R is now twenty nine?
24:28
Speaker 4: Yep.
24:29
Speaker 2: Let's assume and again let's assume that they were able
24:32
Speaker 2: to either they you know, went to college or didn't,
24:34
Speaker 2: but let's assume they were able to start saving money
24:38
Speaker 2: into the stock market at twenty two.
24:40
Speaker 4: Okay, so for the last seven years, yep.
24:42
Speaker 2: Do you know what the return is over the last
24:46
Speaker 2: seven years? According to the SP five hundred total return
24:51
Speaker 2: is over that seven year period on an annual basis
24:53
Speaker 2: thirteen percent sixteen to seven. This according to data from
24:57
Speaker 2: Don't Quit Your Day Job, I Keep forgetting how long
25:00
Speaker 2: go seven years?
25:00
Speaker 1: Was?
25:01
Speaker 4: That was like twenty nineteen. Yeah, so it's been like
25:03
Speaker 4: a really good period.
25:05
Speaker 2: So my first point is that the earnings if you've
25:10
Speaker 2: just put money into the stock market, not even like
25:12
Speaker 2: crazy weird stocks, but just the stock market as a whole,
25:14
Speaker 2: you've made almost seventeen percent a year on average for
25:17
Speaker 2: the last seven years.
25:18
Speaker 1: Yep.
25:19
Speaker 2: Do you know what the best return is that we've
25:21
Speaker 2: ever seen for a seven year period? Two twenty five okay?
25:27
Speaker 2: And we got to that on two different times. The
25:31
Speaker 2: first was during the Roaring twenties before the Great Depression, okay.
25:34
Speaker 2: The second was the post World War Two period, like
25:37
Speaker 2: forty five through fifty two.
25:38
Speaker 4: Wow, we didn't even get there in the nineties.
25:40
Speaker 2: No, the nineties we got to around twenty percent. Okay, okay,
25:44
Speaker 2: but good segue. The only times historically that we have
25:49
Speaker 2: seen a better seven year return than right now just
25:54
Speaker 2: before the Great Depression, post World War Two and the
25:58
Speaker 2: nineteen nineties had it stocks to it after this horribly okay,
26:03
Speaker 2: And again by horribly, I don't mean that like you
26:05
Speaker 2: lost all of your money necessarily, because you didn't, but
26:08
Speaker 2: like you look at seven year returns through the nineteen thirties,
26:12
Speaker 2: and they were basically negative for the whole time. If
26:14
Speaker 2: you take a look at the post tech bubble period,
26:17
Speaker 2: seven year returns basically fluctuated between like down four percent
26:21
Speaker 2: and up like one or two percent a year. So
26:24
Speaker 2: the point that I'll make the post World War two periods.
26:26
Speaker 4: The only outlier.
26:27
Speaker 2: And even then, by the nineteen sixties you did have
26:30
Speaker 2: like some returns that were like load to mid single digits,
26:33
Speaker 2: but that's the only one where you didn't just see
26:35
Speaker 2: things fall apart. And even there the story was, Okay,
26:40
Speaker 2: you've got half the workforce that is now coming, half
26:44
Speaker 2: the population that's now coming into the workforce that previously
26:47
Speaker 2: wasn't working. You've got a huge expansion of the economy
26:50
Speaker 2: as a result of that.
26:52
Speaker 3: So what you're saying is that the gen Z average
26:55
Speaker 3: experience and investing in the stock market and building wealth
26:57
Speaker 3: might not be their long term experience.
26:59
Speaker 2: Yeah, yes, I'm saying this is equivalent to basically, I
27:05
Speaker 2: don't want to say it's not like going into casino,
27:07
Speaker 2: because I don't think long term investing is gambling, but
27:10
Speaker 2: this is basically like having everything work out perfectly with
27:14
Speaker 2: one decision, being like I'm gonna do that for the
27:16
Speaker 2: rest of my life. Yeah, without understanding that It's just
27:18
Speaker 2: not always like this, folks.
27:20
Speaker 3: The decision on where to park money for short, intermediate,
27:28
Speaker 3: and long term financial decisions that you need to make
27:31
Speaker 3: is incredibly complex, and we get it all the time, right.
27:33
Speaker 3: I was having a conversation just the other day with
27:35
Speaker 3: somebody who's talking about money that they are investing for
27:40
Speaker 3: their parents, and hey, we might need to start accessing
27:42
Speaker 3: it in eighteen months. That becomes really really complicated once
27:45
Speaker 3: you start to understand that over twelve month time periods,
27:49
Speaker 3: stocks move down about one in four times. It is
27:53
Speaker 3: really complicated to assess, and the horizon for your investments
27:59
Speaker 3: is crucial when making investment decisions. If you are on
28:02
Speaker 3: the cusp of buying a home, if you're thinking about moving,
28:05
Speaker 3: relocating your family, and upgrading your home, or doing projects
28:08
Speaker 3: inside your home, you're likely saving with those goals in minds,
28:12
Speaker 3: and how to save those funds in the most efficient
28:14
Speaker 3: way possible is crucial for your financial scenario. If you
28:17
Speaker 3: have questions along those lines, want a little bit of
28:20
Speaker 3: that financial guidance, give the folks at Armstrong a call.
28:23
Speaker 3: We work with our clients every day on these questions
28:26
Speaker 3: of saving for the future. The numbers eight hundred three
28:29
Speaker 3: nine three for zero zero one. We offer free consultations
28:32
Speaker 3: across New England. You can go to Armstrong Advisory dot
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Speaker 3: Com or call us at eight hundred three nine three
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Speaker 3: for zero zero one.
28:39
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
28:42
Speaker 1: registered investment advisor. Nothing in the ad or in any
28:44
Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
28:48
Speaker 1: your own financial tax into state planning advisors before making
28:50
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
28:53
Speaker 1: advisory services.
28:55
Speaker 4: My do you like mold? Uh? Some good blue cheese? Right? Yeah?
29:03
Speaker 2: I always do. Wonder how do you know when blue
29:04
Speaker 2: cheese goes bad? I always look when when it gets
29:07
Speaker 2: hair is the point where I'm like, got it too blue?
29:11
Speaker 2: You know. But what we're talking about here big nationwide
29:14
Speaker 2: home builders, the d R. Horton's, the Lenars of the world.
29:18
Speaker 2: They are starting to build up financial reserves for legal
29:23
Speaker 2: claims because we're seeing an uptick in mold related lawsuits.
29:29
Speaker 2: And the lawsuits are exactly what you expect, okay, Like
29:32
Speaker 2: so and so built my house and they did it poorly,
29:35
Speaker 2: and so we've got mold that we're linking to the
29:37
Speaker 2: construction effort, and it's affecting our health, and so we want,
29:41
Speaker 2: you know, money for it. I don't know whether this
29:46
Speaker 2: is something that is legitimate not legitimate. I don't know
29:52
Speaker 2: whether like rates of mold are higher on new construction
29:56
Speaker 2: than construction from ten years ago or forty years ago
29:58
Speaker 2: or one hundred years ago. But clearly we are seeing
30:01
Speaker 2: an uptick in lawsuits on this and builders are socking
30:08
Speaker 2: more money away to deal with it.
30:10
Speaker 4: Yeah.
30:11
Speaker 3: The argument is that one of the arguments from the
30:13
Speaker 3: journal here is that modern energy efficiency codes have really
30:16
Speaker 3: just lowered the margin of error for builders when it
30:20
Speaker 3: comes to dealing with mold and moisture management. It has
30:23
Speaker 3: become more difficult. And so you know, one improperly installed
30:26
Speaker 3: window or this, that or the other can really screw
30:29
Speaker 3: you up. And I could see how changing building codes
30:34
Speaker 3: over time could leave some builders unprepared to deal with
30:37
Speaker 3: those and unaware of the potential risks. And for families
30:41
Speaker 3: like mold can be just absolutely devastating in terms of
30:46
Speaker 3: because the remediation process in a lot of cases effectively
30:50
Speaker 3: tear out everything and throw it out.
30:52
Speaker 4: Yeah.
30:52
Speaker 3: So, yeah, if this is a real issue, which is again,
30:57
Speaker 3: we know that there's an increase in these lawsuits. We
30:59
Speaker 3: know that the buildings are sending a side more money
31:01
Speaker 3: for them. Is there an actual trend towards higher mold
31:04
Speaker 3: in homes or are we better at detecting it or
31:06
Speaker 3: is there something else going on?
31:08
Speaker 4: I think is an open question.
31:09
Speaker 2: Yo, But people don't realize about uh, just fung guy
31:13
Speaker 2: in general. Well, it's the type of it. Yeah, mushroom's
31:17
Speaker 2: being another one. You know what the third major type
31:20
Speaker 2: of fungus is no will you tell me?
31:23
Speaker 4: Yeast?
31:25
Speaker 2: So if you say, hey, why don't we just get
31:27
Speaker 2: rid of all fung guy? Maybe you're not a mushroom person.
31:29
Speaker 4: Yeah, big problem.
31:30
Speaker 2: How do you feel about bread? Yeah, you know, I
31:33
Speaker 2: happen to love it myself, but uh, there are too
31:36
Speaker 2: many foods that I don't really enjoy, so it's not
31:40
Speaker 2: a high bar. Let's take a quick break. When we
31:43
Speaker 2: come back, let's do some stack.
31:44
Speaker 1: Roulette gay in real time Financial link Sight as news breaks,
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Speaker 1: The Financial Exchange is life on x Watch the show
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31:53
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32:01
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32:20
Speaker 2: Mike, what do you got for stuck?
32:23
Speaker 3: I've got the robot games in China, and the story
32:29
Speaker 3: itself doesn't really do justice to it, so if you're
32:34
Speaker 3: interested in following along, just go to YouTube and take
32:38
Speaker 3: a look. But Chinese humanoid robots have set records, including
32:42
Speaker 3: beating Usain Bolts hundred meter sprint at the World Humanoid
32:47
Speaker 3: Robot Games. They also beat the record for the standing
32:51
Speaker 3: high jump, crushing the previous and I gotta tell you, like,
32:57
Speaker 3: for me personally, these videos are just pretty disturbing, like
33:01
Speaker 3: just terrifying in a science fiction type way. You know,
33:06
Speaker 3: it's silly they are. They also have a video of
33:07
Speaker 3: them playing soccer.
33:09
Speaker 4: They're terrible.
33:10
Speaker 3: After the one hundred meter sprint, they're all crashing into
33:13
Speaker 3: this giant barrier that they set up to basically catch
33:15
Speaker 3: the humanoid robots who can't slow down in time. But man,
33:20
Speaker 3: you just you look at these and then also the
33:23
Speaker 3: funny part after they crash there's two people hauling them
33:26
Speaker 3: away on a stretcher, which is just a funny.
33:28
Speaker 4: Part of it.
33:33
Speaker 3: The next war between a superpower and anybody else is
33:37
Speaker 3: going to be pretty disturbing. Yeah, I mean everyone more
33:42
Speaker 3: than like any any other I don't know, I suppose not.
33:46
Speaker 3: But these things are terrifying looking. Yeah, I don't think
33:51
Speaker 3: I'm gonna get used to them in my lifetime.
33:54
Speaker 2: It's not great. I don't like it. But this is
33:59
Speaker 2: where we're going.
34:00
Speaker 3: Yeah, we are, we are, and China kind of needs
34:03
Speaker 3: to specifically if they are going to. I mean, the
34:07
Speaker 3: population declined that China is going to face over the
34:09
Speaker 3: next five decades is like nothing the world has ever seen,
34:14
Speaker 3: and so this appears to be part of their long
34:17
Speaker 3: term plan around creating and maintaining productivity and wealth. Is
34:22
Speaker 3: have a army of humanoid robots that are able to
34:24
Speaker 3: do some of what the humans are in China. So
34:28
Speaker 3: I get the incentives, but man, is it just terrifying looking.
34:33
Speaker 4: It's it's not great.
34:37
Speaker 3: Running one hundred meters at nine point whatever seven seconds
34:41
Speaker 3: is not really really fast robot That is a really
34:45
Speaker 3: really disturbingly fast.
34:47
Speaker 2: If it were nine to seven. I could probably take it.
34:49
Speaker 4: Oh, got it?
34:50
Speaker 2: So nine three nine nine three is the cutoff from me.
34:53
Speaker 2: That's that's where I start to get nervous.
34:56
Speaker 3: Uh.
34:57
Speaker 2: Got a piece of the New York Times. The Hairy
34:59
Speaker 2: Styles super fans spending thousands to see him fifteen times
35:02
Speaker 2: in a row.
35:03
Speaker 4: Is this the story?
35:06
Speaker 2: It's because people like to think that their consumption is
35:09
Speaker 2: better than someone else's.
35:11
Speaker 3: So you ever know somebody that's been to over one
35:13
Speaker 3: hundred fish shows? Because I can.
35:15
Speaker 2: I saw it.
35:16
Speaker 5: I went to my first fish show at Fenway a
35:19
Speaker 5: few weeks back, and one of the people I met
35:22
Speaker 5: saw them sixty eight times.
35:24
Speaker 3: Yeah personally, not like, haven't been doing a show, not
35:27
Speaker 3: for me, but fine, Yeah, don't tell me that one
35:30
Speaker 3: superfan is bigger or better than another superfan.
35:33
Speaker 2: No, even like Look, so here's the lead. Starting this week,
35:38
Speaker 2: Harry Styles will play thirty shows at Madison Square Garden.
35:41
Speaker 2: If you just said, who's Harry Styles? Like, fine, got it?
35:43
Speaker 2: You don't know who he is? That's that's fine. Lindsey Burton,
35:46
Speaker 2: co host of the podcast What Makes You Fan Girl,
35:49
Speaker 2: will be in the crowd for fifteen of them, So
35:50
Speaker 2: you're going to half the shows in Madison Square Garden.
35:53
Speaker 2: All told, tickets cost her six ninety six dollars and
35:56
Speaker 2: eighty seven cents. Now, to the best of my knowledge,
35:59
Speaker 2: she hasn't stole the money in order to pay for this.
36:02
Speaker 2: She hasn't you know, lied and committed fraud in order
36:07
Speaker 2: to you know, pay for this. She has spent her
36:10
Speaker 2: own money in order to do this. And while Harry
36:12
Speaker 2: Styles might not be for me, it's clear that she
36:15
Speaker 2: really enjoys these concerts and wants to see as many
36:18
Speaker 2: of them as possible, which is totally fine. I get it.
36:22
Speaker 2: There are plenty of things in the world that, if
36:24
Speaker 2: you think about it, are really dumb that we do.
36:27
Speaker 2: Like one of the things that I do every winter
36:29
Speaker 2: is I go out to a mountain and I dress
36:33
Speaker 2: up in all the warm clothing I can. I put
36:35
Speaker 2: on really hard boots and two really long pieces of
36:38
Speaker 2: like probably carbon fiber or something along those lines at
36:41
Speaker 2: this point, and I spend twenty minutes getting up a
36:45
Speaker 2: mountain and then like two minutes coming down it really
36:49
Speaker 2: really fast idiots, and within like forty five minutes, I'm
36:52
Speaker 2: usually pretty.
36:52
Speaker 4: Cold, and I'm like, okay, like this'll do this.
36:56
Speaker 2: No, I have to pay like one hundred dollars a
36:57
Speaker 2: day to do this if I'm smart about it. And
37:00
Speaker 2: so most of the things that we do for fun,
37:03
Speaker 2: if we're gonna be honest with ourselves, are kind of stupid.
37:06
Speaker 2: Like even like and again I'm not saying this in
37:08
Speaker 2: a bad way. Like music. I love music, but it's
37:11
Speaker 2: like you either like hitting something really hard or strumming
37:14
Speaker 2: something like like it's all if you reduce it to
37:18
Speaker 2: like whatever it's it's just noise pun intended. So I
37:23
Speaker 2: think if someone really loves something and has the means
37:26
Speaker 2: to go and enjoy it as much as possible, whether
37:29
Speaker 2: it's music, golf, hunting, boating, fishing, tacos, I don't care
37:35
Speaker 2: what it is. Have at it. That's all I got.
37:40
Speaker 2: We're gonna take a quick break. We'll be back tomorrow
37:42
Speaker 2: on the Finance Exchange