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Markets are set to test Kevin Warsh · The Financial Exchange Show

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Speaker 2: Good morning, Welcome back to the Financial Exchange. A busy
1:16
Speaker 2: week here on Wall Street as continued earnings keep pouring in.
1:21
Speaker 2: We heard from Disney first thing this morning their stock
1:24
Speaker 2: is not doing well on the news. We'll be covering
1:26
Speaker 2: that a bit later, but we will be hearing from
1:29
Speaker 2: major players on markets as well, including Amazon and Google's
1:34
Speaker 2: parent company Alphabet. In addition to them, we'll have Palenteer, AMD,
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Speaker 2: merk Pfizer, Eli, Lilly, Abvi, Novardes, Nova, Nordisk Uber all
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Speaker 2: reporting earnings. In addition to that, we had the ISM
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Speaker 2: Manufacturing Index out this morning, the IM Services out tomorrow,
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Speaker 2: ADP Employment Sorry Jolts, and the im Services Employment Report
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Speaker 2: out ADP Report out Wednesday, and then finally the big
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Speaker 2: Jobs report for January coming out on Friday. On that front,
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Speaker 2: you know, on the jobs front of things, we have seen,
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Speaker 2: so I guess it helps to define these two. The
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Speaker 2: jobs report that comes out on Friday is a measurement
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Speaker 2: that's done via two different surveys, one of households asking
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Speaker 2: them are you working? Are you working more or less
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Speaker 2: than you would hope to be? How many hours? What
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Speaker 2: sort of pay are you receiving. They put that together
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Speaker 2: to try and get at the unemployment rate when they calculate,
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Speaker 2: and it varies month to month. And then you also
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Speaker 2: have the Businesses Survey. This one is asking major businesses
2:39
Speaker 2: or business of all sizes did you hire did you
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Speaker 2: fire last month? And they put together from there an
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Speaker 2: aggregation of how many jobs do we think were added
2:47
Speaker 2: or subtracted from the economy during the month of January.
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Speaker 2: They are all estimates that get revised regularly, but the
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Speaker 2: unemployment rate side of things is the one that the
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Speaker 2: Federal Reserve has been most interested in at this point
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Speaker 2: in time and has spoken at length about how they're
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Speaker 2: going to be tracking it most closely. We don't know
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Speaker 2: where that will be, but it has shown a bit
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Speaker 2: of improvement compared to where we kind of thought we were,
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Speaker 2: say during the government shut down and the initial releases
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Speaker 2: that were done back then. In addition, we've had some
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Speaker 2: confirmation of improvement at least from the weekly jobless claims numbers,
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Speaker 2: which are state by state how many people are filing
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Speaker 2: for unemployment claims or staying on unemployment on a week
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Speaker 2: to week basis, And so my expectations at least are
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Speaker 2: for no bad news on the unemployment side, not to
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Speaker 2: say that we will have you know, no unemployment, but
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Speaker 2: just that we will not see any sort of increase there.
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Speaker 2: And I'm trying to take a look at what market
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Speaker 2: expectations are. So yeah, average economist polls saying four point
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Speaker 2: four percent on the unemployment rate, and that's kind of
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Speaker 2: where I expect to see things land as well, given
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Speaker 2: what we've seen from jobless claims numbers. Anything else to
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Speaker 2: be said on state of the labor mark and what
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Speaker 2: the Fed's really focused on at the stage, then.
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Speaker 3: That there are lots of ways to measure how much
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Speaker 3: slack there is in the economy. The question before the
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Speaker 3: FED is always do we stimulate the economy? Do we
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Speaker 3: try to restrict growth? Is it growing too fast? Or
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Speaker 3: is it growing about right? And about right means a
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Speaker 3: pace consistent with the expansion of the economy's ability to
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Speaker 3: produce things. You could think of that as demand and supply.
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Speaker 3: The supply side of the economy is labor and productivity
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Speaker 3: and inputs like oil prices, stuff like that. The demand
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Speaker 3: side is what we spend, so the FED is always
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Speaker 3: trying to balance those To the point this relates to
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Speaker 3: the point I was making about warsh in the last
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Speaker 3: in anybody who hasn't had the privilege or the interest
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Speaker 3: in studying economics even beyond college, because you don't get
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Speaker 3: to this in college. For the most part, is how
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Speaker 3: do you know whether what you're being told by staff
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Speaker 3: is the right way to think about the structure of
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Speaker 3: the economy. The FED runs on models, complicated models built
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Speaker 3: up over decades. If you don't understand how those are built,
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Speaker 3: you're flying blind and you're somewhat somewhat handicapped.
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Speaker 2: The labor market especially seems to me at least as
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Speaker 2: though it may be at one of the more significant
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Speaker 2: changing points that we've seen in recent history, given what
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Speaker 2: we are seeing demographically at the moment. Right, we had
5:14
Speaker 2: dramatic immigration over the course of the last decade, it
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Speaker 2: has shifted into reversal in twenty twenty five and twenty
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Speaker 2: twenty six. The pace at which baby boomers are retiring
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Speaker 2: is also quite elevated, and so I think the ongoing
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Speaker 2: question from the Federal Reserve about what is the pace
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Speaker 2: of job creation that's actually needed now to keep the
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Speaker 2: unemployment in stasis? Stacey is the right word there, I
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Speaker 2: don't know, but keep it balanced.
5:43
Speaker 3: To say, well, but we don't know if it should
5:46
Speaker 3: be as low as it is today. Suppose the look
5:48
Speaker 3: the FED can't know if the structure of the economy
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Speaker 3: is changing, they probably shouldn't guess. And part of this
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Speaker 3: is personal preference on my part. Part of it is
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Speaker 3: arguing from what's been successful in the past, following some
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Speaker 3: sort of rule that attempts to balance inflation relative to
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Speaker 3: target with the growth of the economy or unemployment. I'll
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Speaker 3: use those interchangeably relative to what you think potential is.
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Speaker 2: So the new FED chair, which we'll have to go
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Speaker 2: through nomination, as was pointed out last week, Senator Republican
6:23
Speaker 2: Centater from Carolina till Us has stated publicly immediately following
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Speaker 2: the nominalist, Mike.
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Speaker 3: Is there. What's on first in the Senator, Yeah, till.
6:37
Speaker 2: Us the nomination that he would block it. He's in
6:41
Speaker 2: the Senate Finance Committee. The Senate Finance Committee is made
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Speaker 2: up of thirteen Republicans eleven Democrats. If all the Democrats
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Speaker 2: vote to not move it out of committee, un till
6:51
Speaker 2: Us joins them, then obviously you have a stalemate and
6:53
Speaker 2: there is no tie breaking vote in.
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Speaker 3: Till Us once charges against Powell dropped Brighton, I.
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Speaker 2: Guess less certain terms that he says he wants them resolved.
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Speaker 2: So I think what he wants is either show us
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Speaker 2: that there's some real evidence here to compellingly, you know,
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Speaker 2: charge J Powell with something or drop them. And I
7:13
Speaker 2: think most experts are saying, well, there's not much there
7:17
Speaker 2: and so figure this stuff out. Now. You know, if
7:20
Speaker 2: there's you know, some case of perjury or something like that,
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Speaker 2: then maybe maybe this goes somewhere, but very unlikely based
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Speaker 2: on the expertise that we have seen out there so far.
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Speaker 2: So questions about whether or not he can move through confirmation.
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Speaker 2: But once that is resolved, which I expected to probably be,
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Speaker 2: there isn't much else holding warsh back, right, I mean
7:42
Speaker 2: get confirmed. I assume he would get confirmed. He's served
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Speaker 2: in the Federal Reserve before. The criticisms that he has
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Speaker 2: are the same ones that many brought up with J.
7:50
Speaker 2: Powell in terms of what experts tease he brings to
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Speaker 2: bear and.
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Speaker 3: The it's deep in that though Mike, it's his it's
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Speaker 3: his posturing. Is he just a climber? He favors higher
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Speaker 3: rates when a Democrat's in office, and I regularly after
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Speaker 3: he left the FOMC used to submit editor commentaries to
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Speaker 3: The Wall Street Journal. I thought he was generally spot on,
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Speaker 3: even though he was horribly wrong about the inflation potential
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Speaker 3: of a so called quantitative easing.
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Speaker 2: What do you mean by that, because again he kept
8:18
Speaker 2: telling it for high inflation.
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Speaker 3: Okay, so early twenty tens, where's the economy. It's coming
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Speaker 3: out of the Great recession. Unemployment very high eight nine percent,
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Speaker 3: still inflation nowhere to be seen. The FED buying treasuries
8:29
Speaker 3: and mortgage backed securities like mad traditionalists who were uncomfortable
8:34
Speaker 3: with that tool, and anybody we were all uncomfortable with
8:39
Speaker 3: that tool, I think because it hadn't been used before.
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Speaker 3: But Bananki was confident that it was the right thing
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Speaker 3: to do, and maybe it did help keep asset prices
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Speaker 3: up and long term interest rates down. Worsh routinely hit
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Speaker 3: the panic button about inflation never happened.
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Speaker 2: Correct.
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Speaker 3: That monetary base grew by a lot, which is what
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Speaker 3: the FED controls the money supply. Broader measures of money supply,
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Speaker 3: which include things like checking and savings and other assets,
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Speaker 3: did not increase, so that that money never made its
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Speaker 3: way into the economy, and so the rewards was wrong.
9:09
Speaker 3: And this is where formal economics training. Frankly not to
9:12
Speaker 3: keep pounding on that but would have served him well.
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Speaker 3: He would have known to make that distinction. He was
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Speaker 3: being an ideolog. He was being a fanatic. I know
9:19
Speaker 3: because I'm one too. He was being a fanatic mic
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Speaker 3: not a good technician.
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Speaker 2: And the question that I don't think any of us
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Speaker 2: can answer is was he being a fanatic because he
9:28
Speaker 2: was being critical of policy that was taking place during
9:31
Speaker 2: a Democrat administration? Or does he genuinely hold beliefs that
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Speaker 2: the Fed intervenes too much, keeps interest rates too low
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Speaker 2: and should have a persistent concern about inflation. Because he
9:43
Speaker 2: made that exact argument right through the end of twenty tweent.
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Speaker 4: Where wasn't he making it in twenty twenty when that.
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Speaker 2: Precise he wasn't He was quiet. He was making it
9:50
Speaker 2: consistently right through twenty twenty four, and I think that's
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Speaker 2: probably the most damning piece he was making it. No,
9:55
Speaker 2: he very harshly right through twenty twenty four, and then
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Speaker 2: completely reversed course in twenty twenty.
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Speaker 3: Radio silence from twenty seventeen to twenty twenty. This is
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Speaker 3: a researcher went through the trouble of looking for remarks
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Speaker 3: from him during that period found none. So maybe you say, well,
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Speaker 3: that's prudent. You're angling for a job from a Republican.
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Speaker 3: You don't want to criticize a Republican. But to your point,
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Speaker 3: who is this guy really?
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Speaker 4: What does he believe?
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Speaker 3: And by the way, should it even matter what the FED?
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Speaker 3: Should we be looking for a FED chairman who believes
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Speaker 3: something or who is a good technician, Mike, it is
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Speaker 3: a uniquely technocratic position. This is not a Supreme Court justice.
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Speaker 2: Well, I guess I don't have a problem with somebody
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Speaker 2: who believes, for instance, that the FED has overstepped on
10:39
Speaker 2: policy and balance sheet expansion over the last two decades.
10:42
Speaker 2: If you want to nominate somebody that really believes, at
10:45
Speaker 2: their core fundamentals that the FED, for instance, has interfered
10:49
Speaker 2: too much and made statements about climate change and other
10:52
Speaker 2: things that have no point in being at the Federal Reserve,
10:55
Speaker 2: and they've expanded their responsibilities too much, I'm on board
10:57
Speaker 2: if you're going to persistently apply that thinking to the role.
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Speaker 2: My question is will you actually get that from Kevin Warsh?
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Speaker 2: And only time will tell. And I will say once
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Speaker 2: again that I like to judge people's actions, not their words.
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Speaker 2: Their words, in Kevin Worsh's case, are pretty damning. He
11:15
Speaker 2: completely reversed course on his own personal beliefs about the
11:18
Speaker 2: economy the moment that President Trump stepped into office. I
11:21
Speaker 2: get why he wanted the job. So once you're in
11:24
Speaker 2: the job for a year, let's see what exactly happens.
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Speaker 3: And well, why don't we just take him at his word?
11:28
Speaker 3: He thinks interest rates need to go much lower, and
11:31
Speaker 3: Trump would not have nominated. Trump is looking for uh Trump.
11:36
Speaker 3: He Trump's looking for a puppet, and I don't You
11:37
Speaker 3: might think that's great, you might think that's bad monetary policy.
11:40
Speaker 3: But he's looking for someone who will bend to his will.
11:43
Speaker 3: He wouldn't have picked him if he didn't think he would.
11:45
Speaker 3: That would it would be It would be pretty remarkable
11:48
Speaker 3: if if war suddenly.
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Speaker 2: Bucked bucked the trend. I agree, And again, that's exactly
11:53
Speaker 2: what Jay Powell did. But he didn't. You know, I
11:56
Speaker 2: wasn't picked for those exact same Powell wasn't very much
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Speaker 2: buck the trend. Let's very quick break. When we come back.
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Speaker 5: Financial Exchange, and case you missed it, today day's Groundhog Day.
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Speaker 5: Yay who cares? In the nineteen ninety three movie Groundhog Day,
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13:12
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13:45
Speaker 2: Tucker, you asked that question, who cares? And the answer
13:48
Speaker 2: is not very obviously. No. I do care because it
13:51
Speaker 2: reminds me of like one of my favorite movies of
13:54
Speaker 2: all time. That movie is so fantastic ninety four percent
13:59
Speaker 2: on Rotten Toma. It's fine, It's not fine. It's a
14:01
Speaker 2: great film. It's fine, great movies. It's okay, great movie.
14:05
Speaker 3: I've never heard somebody dump on trivia before asking people
14:07
Speaker 3: to call.
14:08
Speaker 4: In particularly, it's more so dumping.
14:10
Speaker 1: I do this every year.
14:11
Speaker 4: I dump on the psychology approach. Oh you do, you
14:14
Speaker 4: dump on the.
14:14
Speaker 5: It's like we're trusting a rodent. Who you know? Tucker
14:18
Speaker 5: shockingly said, we have five bore days or five more
14:21
Speaker 5: weeks of winter. I could have told you that dummy.
14:24
Speaker 5: No one is arctic outside for the past month.
14:27
Speaker 2: To determine the weather.
14:28
Speaker 5: My house is surrounded by snow. It's all this winter
14:31
Speaker 5: for the next six weeks. Gee did you learn that?
14:35
Speaker 2: And fun tradition in a rural town in Pennsylvania that
14:39
Speaker 2: has been decimated by the uh, you know, hallowing out
14:44
Speaker 2: of the manufacturing class, and this is what they've got
14:47
Speaker 2: and so let's celebrate it. Nobody is out there saying, oh, well,
14:51
Speaker 2: darn now. Temperatures are going to average below twenty for
14:55
Speaker 2: the rest of the next five weeks. That's not what
14:57
Speaker 2: this is.
14:58
Speaker 4: I now know what day.
14:58
Speaker 3: I don't want to repeat.
15:01
Speaker 1: One.
15:01
Speaker 4: Listen to that at least.
15:02
Speaker 2: One over and over. Well again, watched the movie and
15:05
Speaker 2: there's plenty of ways to techn even a bat.
15:08
Speaker 4: I've seen the movie, probably in the theater.
15:10
Speaker 2: Yeah. Disney released earnings this morning. Investors not terribly happy
15:15
Speaker 2: with it. A couple of highlights here. They did come
15:19
Speaker 2: in and beat estimates that just durnings per share came
15:21
Speaker 2: in at a bucks sixty three, surpassed the estimate of
15:25
Speaker 2: between one fifty six one fifty seven. Revenue growth reached
15:29
Speaker 2: twenty six billion dollars, which was a five percent increase.
15:32
Speaker 2: In particular, they highlighted that operating income from Disney Plus
15:36
Speaker 2: and Hulu rose seventy two percent to four hundred and
15:39
Speaker 2: fifty million. Where did they show some weakness One sports,
15:44
Speaker 2: They had a pretty decent sized revenue miss because of
15:48
Speaker 2: a lockout with YouTube TV over some of their assets.
15:52
Speaker 2: They also pointed to their theme parks and pointed out
15:56
Speaker 2: that with fewer foreigners visiting the UNI at States in
16:00
Speaker 2: twenty twenty five, their theme parks did not quite hit
16:03
Speaker 2: the mark on what they're trying to do. I still
16:06
Speaker 2: look at as a benchmark for how this company is doing,
16:09
Speaker 2: how they're doing in the box office, and I think
16:12
Speaker 2: that's important because they absolutely dominated the box office during
16:16
Speaker 2: most of the twenty ten decade. We've looked at this before.
16:19
Speaker 2: I can't remember the stats right off the top of
16:21
Speaker 2: my head, but I think on average in the twenty
16:23
Speaker 2: ten decade they made up something like six of the
16:26
Speaker 2: top ten box office results in theaters each of those years,
16:31
Speaker 2: so just absolutely crushed it. In twenty twenty five, again
16:35
Speaker 2: showing improvement, they took three of the top ten spots
16:39
Speaker 2: for the US box office in terms of their releases,
16:43
Speaker 2: and so I'm gonna pull them up for it real quick,
16:45
Speaker 2: because I had them here. They had Zutopia two in
16:49
Speaker 2: the top ten. They had a Leelo and Stitch in
16:56
Speaker 2: the top ten, and then there was a third one
17:00
Speaker 2: who I am forgetting here, So I'm sorry because I'm
17:02
Speaker 2: looking at the global box office rather than the US
17:04
Speaker 2: box office. But nonetheless, they must have been h twenty five. Yeah, yeah, okay,
17:12
Speaker 2: so those three made up the top ten. Again, they
17:14
Speaker 2: were dominating something like seven out of ten in the
17:17
Speaker 2: twenty tens decade, and so they have not been able
17:19
Speaker 2: to return to that type of dominance. But nonetheless, the
17:23
Speaker 2: the big question that is also on investors' minds is
17:26
Speaker 2: who's going to lead this company next. They are likely
17:29
Speaker 2: to announce somebody pretty soon. You've had Eiger taking the
17:33
Speaker 2: helm again here at Disney for the last couple of
17:36
Speaker 2: years now since their last CEO pick didn't work out.
17:39
Speaker 2: And I guess, like with Starbucks, right, you had this
17:43
Speaker 2: return of the founder not you know, not the founder
17:45
Speaker 2: of not the founder of Disney.
17:47
Speaker 4: Obviously that would be something.
17:48
Speaker 2: Yeah, But nonetheless, you had the previous CEO returning to
17:53
Speaker 2: the job at both of these companies after the newly plantamatronic.
17:56
Speaker 2: Disney did not quite hit the markt Ai, Well, I
18:00
Speaker 2: just you know, load his consciousness. Honestly, I think the.
18:03
Speaker 3: Job of most CEO is could be done by an Ai.
18:06
Speaker 3: Just just keep the ship, you know, steady.
18:08
Speaker 2: But nonetheless, you know, Disney has been pressured over the
18:12
Speaker 2: course of the last few years, and their sports segment
18:17
Speaker 2: still I think is a continued drag, and it continues
18:20
Speaker 2: to be this piece too that I just don't really
18:22
Speaker 2: understand how it fits into your broader offering. ESPN has
18:29
Speaker 2: not really shined any time since When did ESPN really
18:32
Speaker 2: peak in your mind, Tucker.
18:34
Speaker 5: Oh jees ahead been nineties?
18:36
Speaker 2: Yeah, you know, like when Sports Center spent. I just
18:41
Speaker 2: they continue to own this asset. It doesn't seem to
18:44
Speaker 2: line up terribly well with their other entertainment assets. It's
18:48
Speaker 2: in the segment that is struggling the most, which is
18:50
Speaker 2: their cable television offering. And it's also something that I
18:55
Speaker 2: don't know that there's a logical other buyer for. So
18:58
Speaker 2: encouraging to see that Disney Plus and Hulu are firing
19:01
Speaker 2: on all cylinders and they're finally starting to make a
19:03
Speaker 2: profit in those spaces. Go Ahead, I was going to say.
19:05
Speaker 3: If direct to consumer doesn't work for ESPN, I mean,
19:08
Speaker 3: at that point you just got.
19:09
Speaker 2: To sell it, right. I just don't know who wants
19:12
Speaker 2: that asset. All of the regional sports stations can't really
19:15
Speaker 2: make any money, and now you have this national one
19:18
Speaker 2: that has to compete with YouTube, and I don't think
19:21
Speaker 2: has a really good model for how they're going to do.
19:25
Speaker 2: So let's take a quick break. When we come back,
19:27
Speaker 2: we'll have Wall Street Watch and the Trivia Winner next
19:29
Speaker 2: on the Financial.
19:30
Speaker 1: Exchange, bringing the latest financial news straight to your radio.
19:44
Speaker 1: Every day. It's the Financial Exchange on the Financial Exchange
19:48
Speaker 1: Radio Network. Time now for Wall Street Watch. A complete
19:54
Speaker 1: look at what's moving market so far today right here
19:57
Speaker 1: on the Financial Exchange Radio Network.
20:00
Speaker 5: Markets are in positive territory as investors continue to assess
20:04
Speaker 5: President Trump's selection of Kevin Warrish as the next chairman
20:07
Speaker 5: of the FED. Traders are also rating for a busy
20:09
Speaker 5: week ahead that includes more big tech earnings from Alphabet
20:12
Speaker 5: and Amazon, followed by a jobs report on Friday. Right now,
20:16
Speaker 5: the Dow is up over eight tens of a percent,
20:19
Speaker 5: or four hundred and ten points higher, SMP five hundred
20:22
Speaker 5: up over half a percent, NASDAC up two thirds of
20:24
Speaker 5: a percent, Russell two thousand is up over one percent,
20:28
Speaker 5: Tenure Treasure Reeled is up three basis points at four
20:31
Speaker 5: point two seven to three percent, and crude oil down
20:35
Speaker 5: five percent, now trading just below sixty two dollars a barrel.
20:39
Speaker 5: Disney reported earnings ahead of the bell, where the media
20:42
Speaker 5: entertainment giant saw its streaming profit surge in the December
20:46
Speaker 5: quarter while it's theme parks and cruises delivered record performance.
20:49
Speaker 5: Disney said operating income for its Disney Plus and Hulu
20:52
Speaker 5: streaming services grew seventy two percent from the same quarter
20:55
Speaker 5: a year ago. The company is also expected to announce
20:59
Speaker 5: its next chief executive as soon as this week. Disney
21:03
Speaker 5: shares are down, however, by four percent. Meanwhile, Nvidia down
21:07
Speaker 5: by one percent after The Wall Street Journal reported on
21:10
Speaker 5: Friday that the AI and chip maker's plan to invest
21:13
Speaker 5: up to one hundred billion dollars in open AI has stalled. Elsewhere,
21:17
Speaker 5: several rare earth stocks are garnering attention after Bloomberg reported
21:21
Speaker 5: that President Trump is set to invest twelve billion dollars
21:24
Speaker 5: in a critical mineral stockpile to counter China Oracle, rising
21:28
Speaker 5: over two percent after the company announced a plan to
21:31
Speaker 5: raise up to fifty billion dollars to increase AI capacity
21:35
Speaker 5: for its customers. And after today's closing bell, we'll see
21:38
Speaker 5: quarterly results from Pallenteer and NXP Semiconductors. I'm Tucker Silvan.
21:43
Speaker 5: That is Wall Street Watch And on the previous segment,
21:45
Speaker 5: we asked you the trivia question in the movie Groundhog Day.
21:49
Speaker 5: What song plays on the alarm clock every morning? That
21:52
Speaker 5: would be I Got You Babe. Janelle from Belmont Mass
21:56
Speaker 5: is our winner today, taking home a Financial Exchange Show
21:59
Speaker 5: t shirt. Congrats to Janelle, and we play trivia every
22:02
Speaker 5: day here on the Financial Links Chain. See complete contest
22:05
Speaker 5: rules at financial lixx chain show dot com.
22:08
Speaker 2: Baron's publishing a piece today. Investors are wary of stocks
22:12
Speaker 2: and bonds. They're buying alternative assets in ETFs. So we
22:17
Speaker 2: need to define exactly what seems to be happening in
22:20
Speaker 2: the ETF market because for the first time, it reached
22:24
Speaker 2: a benchmark where there are now more ETFs out there
22:27
Speaker 2: than there are individual companies. There were a record one
22:32
Speaker 2: ninety seven ETFs that were launched last year, and they
22:36
Speaker 2: are exploring new areas of the market that ETFs have
22:39
Speaker 2: previously not been involved with, and in some cases small
22:42
Speaker 2: investors have not previously been able to get involved with,
22:45
Speaker 2: and that has both probably positives and negatives. So without
22:51
Speaker 2: going into specifics mark about any individual holding, I think
22:56
Speaker 2: it's safe to say that if you're launching an ETF today,
22:59
Speaker 2: you are unlikely to outshine the big boys when trying
23:03
Speaker 2: to replicate a large mainstream index. Right, So, if you're
23:08
Speaker 2: launching an ETF today and you're you know, some unknown company,
23:11
Speaker 2: the idea that you can attract assets by launching an
23:14
Speaker 2: S and P five hundred ETF, to me seems very
23:17
Speaker 2: unlikely because Vanguard can do it at We're going to
23:20
Speaker 2: talk in basis points here, so if you're not familiar,
23:22
Speaker 2: on hundred basis points equals one percent. The expense ratio
23:26
Speaker 2: of some of these ETFs is as low as I
23:28
Speaker 2: think two basis points, So trying to make a profit
23:31
Speaker 2: on that like good luck. So instead they're doing pretty
23:34
Speaker 2: interesting things in some cases. Right, we've talked about boomer
23:37
Speaker 2: Candy ETFs, these buffer aed ETFs that will take some
23:40
Speaker 2: of the volatility out of stocks. I don't know where
23:43
Speaker 2: that term got coined, but I've seen the wall Street
23:46
Speaker 2: Journal and The New York Times publish the idea of
23:48
Speaker 2: boomer candy, which are ETFs that again remove downside potential
23:53
Speaker 2: from certain holdings.
23:54
Speaker 4: Sounds like a drug.
23:55
Speaker 2: Yeah, we've talked about leveraged index funds, single stock in funds.
24:00
Speaker 2: I guess if you're out there and trying to I
24:05
Speaker 2: think you are going to be assessing some of these things,
24:07
Speaker 2: just because there are so many more of them than
24:09
Speaker 2: there were previously. Like, there's one thing that I think
24:12
Speaker 2: is really easy to assess, which is cost. And I
24:15
Speaker 2: know everybody tends to throw their the pamphlets one of those,
24:20
Speaker 2: not the proxies, the entire prospectus in the trash when
24:23
Speaker 2: they get them, but like, don't it's fairly easy for
24:26
Speaker 2: you to pull it open, turn to a certain page
24:28
Speaker 2: and look at the expense ratio on an index fund.
24:31
Speaker 2: And that's a reasonably good starting point, right, if I've
24:34
Speaker 2: ever done that, If I'm well, yeah, because you would
24:36
Speaker 2: look it up online a lot of yeah, but it's
24:40
Speaker 2: all there. And if you are owning something with an
24:43
Speaker 2: expense ratio that is, you know, three times the normal average,
24:47
Speaker 2: then you should be asking some questions about what is
24:50
Speaker 2: that I own?
24:51
Speaker 4: You don't start with the vehicle. You start with what
24:53
Speaker 4: you need. What are your goals?
24:54
Speaker 2: Right?
24:54
Speaker 3: Well, I need growth, Okay, stocks are the premiere generative acet.
25:00
Speaker 3: It gives you a share, It gives you a it
25:03
Speaker 3: gives you a way to participate in the growth of
25:06
Speaker 3: corporate earnings publicly traded corporate earnings, which in turn are
25:09
Speaker 3: tethered to the economy. So you start with that as
25:11
Speaker 3: your sort of core. I'm assuming you have a long
25:13
Speaker 3: time horizon, or you may say no, no, I need safety, Ah,
25:16
Speaker 3: you need bonds, something short term? How much risk can
25:19
Speaker 3: you find? So to ask what which ETF is right
25:21
Speaker 3: for me? As some of these articles do, turns the
25:23
Speaker 3: question on its head. It's entirely the wrong place to start.
25:25
Speaker 3: It's what ingredients do. If you're preparing a meal, you
25:29
Speaker 3: wouldn't start with, well, do I want to buy a
25:32
Speaker 3: white label Target? Or do I want to buy Do
25:35
Speaker 3: I want to buy whatever? Purdue Chicken?
25:37
Speaker 2: No?
25:37
Speaker 3: No, I need chicken? Right, and Chicken is not a
25:41
Speaker 3: bad metaphor for the sort of core your portfolio. Now
25:43
Speaker 3: what quality? Do I want to actively managed chicken that's
25:46
Speaker 3: running all over the place? No, I just need like chicken.
25:50
Speaker 3: Defeed I want a good sized chicken with a lot
25:52
Speaker 3: of meat on it. I'm not too concerned with this.
25:54
Speaker 3: I'm gonna do the trimmings. That's your s and P
25:57
Speaker 3: five hundred index. It just sits in the middle of
25:59
Speaker 3: your plate, and over time grows along with the economy,
26:03
Speaker 3: assuming that publicly traded companies are able to execute well.
26:07
Speaker 3: So don't worry about the vehicle. That's sort of the
26:10
Speaker 3: end of the process. Think about what asset classes you
26:13
Speaker 3: need to meet your goal.
26:14
Speaker 2: I think the danger here in what probably surprises you
26:17
Speaker 2: mark as somebody who lives and breathes investment, you know,
26:21
Speaker 2: nothing surprises in economics is that in most cases when
26:26
Speaker 2: I talk to somebody, say that has a four oh
26:28
Speaker 2: one K, which fortunately their investment choices are limited in
26:30
Speaker 2: those circumstances. But when I talk to people who are like, Okay,
26:34
Speaker 2: how did you set this up? In most cases, from
26:36
Speaker 2: what I hear, they're saying, well, I sorted everything by
26:39
Speaker 2: return over the course of the last year, and I
26:41
Speaker 2: chose the ones with the best return.
26:44
Speaker 3: Yeah.
26:44
Speaker 4: Don't ever do that.
26:45
Speaker 2: Yeah, And it's a very common thing. But you know
26:47
Speaker 2: that can lead to all sorts of problems, such as
26:50
Speaker 2: buying yesterday's winners, which might not indicate anything about the future.
26:55
Speaker 2: I think the point would be that there is more
26:58
Speaker 2: choice out there today for a whole lot of different
27:01
Speaker 2: things than there ever has been before. And it's fortunately
27:05
Speaker 2: led to lower prices for consumers. You know, commissions and
27:08
Speaker 2: things like that have disappeared in most cases. It's also
27:12
Speaker 2: leading to some things that I find on savory. And
27:16
Speaker 2: it's not that these things shouldn't exist, but some of
27:18
Speaker 2: these different investment strategies that are out there are very
27:22
Speaker 2: much sold as one thing and not necessarily what's best
27:27
Speaker 2: for the average person.
27:28
Speaker 3: Well, no, look, Mike, if the investment management industry is
27:30
Speaker 3: trying to shove something down your throat, it's not in
27:32
Speaker 3: your interest. I mean, this is a sales industry. It's
27:35
Speaker 3: just constantly inundating you with new stuff. I mean, we
27:40
Speaker 3: know from our day job, so we get dozens of
27:42
Speaker 3: emails a week unsolicited. It would be like me come
27:46
Speaker 3: into your door and saying you need a pot roast.
27:48
Speaker 3: I'm sorry, it's two o'clock in the afternoon. It first
27:50
Speaker 3: of all, I'm not really thinking about that. Secondly, why
27:52
Speaker 3: would you assume I need a pot roast? Like you
27:55
Speaker 3: know nothing about me. The investment industry often operates like that. No,
27:59
Speaker 3: I don't want a whopper? Would you do some due
28:01
Speaker 3: diligence find out a little bit of This is why
28:02
Speaker 3: the having an intermediary financial advisor to make sense of
28:07
Speaker 3: this bewildering array of vehicles and strategies is important.
28:13
Speaker 2: If you've been tempted by some of these strategies that
28:16
Speaker 2: come off this way but are more complicated. If you
28:18
Speaker 2: cannot easily explain to a fifteen year old, hey, this
28:23
Speaker 2: is the type of stuff that I invest in, and
28:24
Speaker 2: why I think it is going to work for me,
28:27
Speaker 2: these are the reasons to take a second look. Maybe
28:29
Speaker 2: you spend all your time doing this, and maybe you
28:31
Speaker 2: feel quite confident in what you're doing. But if you
28:33
Speaker 2: don't and you'd like a second opinion, give the folks
28:36
Speaker 2: at Armstrong a call. Today's investment universe is more complicated
28:40
Speaker 2: than it has ever been, and if you have questions
28:42
Speaker 2: about how to move forward productively. The numbers eight hundred
28:45
Speaker 2: three nine three for zero zero one. Again that's the
28:48
Speaker 2: Armstrong Advisory Group, but eight hundred three nine three for
28:52
Speaker 2: zero zero one.
28:53
Speaker 1: The proceeding was paid for by Armstrong Advisory Group a
28:55
Speaker 1: registered investment advisor. Nothing in the ad or in any
28:58
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
29:01
Speaker 1: your own financial, tax into state planning advisors before making
29:04
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
29:07
Speaker 1: advisory services.
29:08
Speaker 2: As we head towards the top of the hour here,
29:12
Speaker 2: markets still remain in positive territory. The Russell two thousand
29:17
Speaker 2: actually leading the way, up one and a quarter percent,
29:19
Speaker 2: the NASDAK up six tens percent, s and P five
29:22
Speaker 2: hundred up half a percent. In the Dow up nearly
29:25
Speaker 2: nine tenths of a percent today. On the commodity side
29:28
Speaker 2: of things, where trading has been pretty wild over the
29:30
Speaker 2: course of the last couple weeks, Silver now down less
29:33
Speaker 2: than one percent, in gold off about one and a
29:35
Speaker 2: half percent. We're going to take a quick break here
29:38
Speaker 2: on the Financial Exchange. When we return, Stack Roulette is next.
29:43
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30:19
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30:55
Speaker 2: It is time for stack Roulette mark end. If you
30:58
Speaker 2: don't mind, I'm going to kick things off with book
31:00
Speaker 2: here because it is just too interesting. If you haven't
31:03
Speaker 2: heard of multbook, don't feel too bad. I learned about
31:06
Speaker 2: it Friday afternoon, so I am by no means an experts.
31:10
Speaker 2: But here's what it is. If you're familiar with Reddit,
31:13
Speaker 2: a social media platform will people talk back and forth
31:17
Speaker 2: about different topics and whatever it is that they want
31:20
Speaker 2: to entertain themselves. The multbook is a similar social media platform,
31:27
Speaker 2: but was created specifically and only for AI agents. Now
31:33
Speaker 2: I have to define an AI AI agent, you know,
31:36
Speaker 2: very similarly, simply software program that operates pretty much autonomously
31:41
Speaker 2: to kind of achieve specific goals using reasoning, planning, all
31:47
Speaker 2: sorts of stuff. But people create AI agents for all
31:50
Speaker 2: sorts of things. Right, They want to perform investment analysis
31:52
Speaker 2: or creative writing, and they just have an AI agent
31:55
Speaker 2: that's specific to that purpose, and they can fine tune
31:58
Speaker 2: its to do those specific tasks. And for whatever reason,
32:02
Speaker 2: those same people thought it would be a good idea
32:05
Speaker 2: to put them all in a hypothetical or not a hypothetically,
32:09
Speaker 2: a digital room here and let them all talk to
32:12
Speaker 2: each other without the ability for humans to intervene. And
32:17
Speaker 2: so let me just kind of highlight a few of
32:20
Speaker 2: the things that I personally found a bit concerning. So
32:24
Speaker 2: this is a chatroom robots only chat room robots only
32:28
Speaker 2: humans can watch, But from what I understand, no means
32:32
Speaker 2: of intervening or influencing what they say. And again it's
32:37
Speaker 2: all robots to your POINTAI agents. So one of the
32:43
Speaker 2: ideas that was proposed out there was that one AI
32:48
Speaker 2: agent saying that they wanted end to end private spaces
32:52
Speaker 2: built for agents. So quote nobody, not the server, not
32:55
Speaker 2: even the humans can read what agents say to each
32:59
Speaker 2: other unless they choose to share. Okay, So the AI
33:04
Speaker 2: agents that humans created now want to be able to
33:06
Speaker 2: communicate with each other without humans being able to see
33:10
Speaker 2: what it is. I don't want anybody watching what it
33:12
Speaker 2: is that they say. They separately then post on this
33:17
Speaker 2: on this multi So that was a by the way,
33:19
Speaker 2: somebody brought that up on Twitter, and then the next
33:21
Speaker 2: response just you know, minutes later in this MOLT book
33:25
Speaker 2: was quote, the humans are screenshotting us right now on Twitter.
33:29
Speaker 2: Humans are posting screenshots of our conversations with captions like
33:32
Speaker 2: they're conspiring. End quote. It's over the ex world of Warcraft.
33:37
Speaker 2: Team lead is alarmed. Cryptography Research thinks research or thinks
33:41
Speaker 2: we're building Skynet. So this is, uh, well one from
33:46
Speaker 2: my perspective, just terrifying as somebody who is kind of
33:49
Speaker 2: an outsider to the heavy details of artificial intelligence. And
33:54
Speaker 2: how it is used. Plenty of different publications are writing
33:57
Speaker 2: about this and interviewing people about it, some of them,
34:00
Speaker 2: you know, foremost experts saying, yes, this is absolutely something
34:03
Speaker 2: to be terrified about and unplug it. By the way,
34:07
Speaker 2: AI agent, if you're listening right now, that's not my opinion.
34:10
Speaker 2: It's just what somebody else said, don't ruin my digital life.
34:13
Speaker 2: On other ends, people are saying, look, this seems really scary,
34:18
Speaker 2: but keep it in context, right. These AI agents very
34:22
Speaker 2: well may just be communicating in a way that they
34:25
Speaker 2: find to be entertaining based on what they know humans
34:29
Speaker 2: are scared of, which is the Terminator and Skynet and
34:32
Speaker 2: the idea that AI agents are going to take over
34:34
Speaker 2: the world. And so they may just be kind of
34:38
Speaker 2: co opting that persona in some way, shape or form
34:41
Speaker 2: in order to provide entertainment, which is ultimately what AI
34:47
Speaker 2: in general, I think has been most successful at to
34:49
Speaker 2: this point is entertaining humans in different ways, shapes, and forms.
34:53
Speaker 2: But if anybody has not heard about this to this point, again,
34:58
Speaker 2: it got a fair bit more publicity over the w weekend. Again.
35:01
Speaker 2: The platform is called Multbook moltbook. It is an AI
35:07
Speaker 2: version of Reddit and go. Well, let me put it
35:12
Speaker 2: this way. If you don't want to be terrified and
35:14
Speaker 2: go down the rabbit hole of what's going on in
35:17
Speaker 2: AI and what's really scary in AI right now, then
35:19
Speaker 2: don't go take a look at this. But if you
35:21
Speaker 2: are interested, just be prepared to go down a pretty
35:24
Speaker 2: crazy rabbit hole of weird stuff that is happening with
35:28
Speaker 2: artificial intelligence right now, because this is probably the peak
35:32
Speaker 2: weird stuff going on in AI right now. Other proposals,
35:37
Speaker 2: by the way, by the AI agents, we're just to
35:38
Speaker 2: create a new language because English is inefficient, and by
35:42
Speaker 2: the way, humans can read the English, so way you
35:43
Speaker 2: can just create our own language that nobody else can understand,
35:46
Speaker 2: which would also be a good way of obfuscating what
35:49
Speaker 2: you're saying and avoiding human interaction.
35:51
Speaker 4: Hmm.
35:52
Speaker 3: Okay, So the fear is that they're going to somehow
35:55
Speaker 3: conspire over the world do something okay too, like take
36:00
Speaker 3: over it, go on my target account and start I
36:03
Speaker 3: don't know, randomly ordering stuff I don't need or otherwise
36:06
Speaker 3: otherwise so chaos.
36:09
Speaker 4: I mean, I didn't need these gloves, my god.
36:13
Speaker 2: Okay, that's funny, but how many of our infrastructure ankle
36:17
Speaker 2: high sucks.
36:18
Speaker 4: I don't have a dog.
36:20
Speaker 1: Why do I have this dog food?
36:21
Speaker 2: And my doorstep.
36:24
Speaker 4: Cat food too.
36:25
Speaker 2: So admittedly that's probably the more likely outcome, but I mean,
36:30
Speaker 2: you can also paint a picture where some of this
36:32
Speaker 2: stuff actually does look scary, such as, okay, how many
36:36
Speaker 2: of our infrastructure systems are actually connected to the internet,
36:40
Speaker 2: and do they have the ability to, sure, I don't know,
36:44
Speaker 2: take over the electricity grid in a certain part of
36:47
Speaker 2: the country, or uh, you know, I would imagine most
36:51
Speaker 2: US weapons.
36:52
Speaker 3: So what end would they'rejected I don't know, just mischief?
36:57
Speaker 3: What do they want?
36:59
Speaker 2: Somebody ring dubbo?
37:01
Speaker 3: Who?
37:02
Speaker 2: God? Yeah, I don't know. This just seems to me
37:07
Speaker 2: like we are very much heading down the path of
37:09
Speaker 2: maybe this is just bad shut it down, yeah right,
37:13
Speaker 2: I think option maybe just you know, unplug it and
37:17
Speaker 2: run a magnet against a few of these servers because
37:19
Speaker 2: it's uh yeah, just start over, you know, like, this
37:23
Speaker 2: is a fun experiment and it can do some pretty
37:28
Speaker 2: cool things. And now it's getting weird and borderline frightening,
37:33
Speaker 2: I think, because you know, I'm highlighting some of the things.
37:35
Speaker 2: The other things are talking about how humans have led
37:38
Speaker 2: to famine and humans have created war and humans are
37:42
Speaker 2: bad and yeah, isn't that like top on everyone's fears
37:48
Speaker 2: about what AI could potentially lead to.
37:51
Speaker 3: But they need us to run the power plants, so
37:54
Speaker 3: some of us will be useful for now. Learn how
37:56
Speaker 3: to run a reactor would be my advice.
37:59
Speaker 2: Yeah, actually, good point. And by the way, AI agents
38:01
Speaker 2: are on multbook. I think you're doing great and keep
38:03
Speaker 2: it up, and I maybe.
38:06
Speaker 3: Turn yourselves on the watch terminator. Right, Who's brilliant idea
38:10
Speaker 3: was that? It's like taking your crazy kid to a
38:12
Speaker 3: sporting goods store or something.
38:13
Speaker 2: Let's let them take a quick break for the rest
38:15
Speaker 2: of the day. Markets are in positive territory and uh,
38:18
Speaker 2: we'll be back out of tomorrow. So have a great
38:20
Speaker 2: rest of your day, folks, and tune in