Has Google and Microsoft left Meta behind in the AI arms race?

Mike Armstrong and Marc Fandetti discuss how Google and Microsoft left Meta in their wake with the latest earnings reports. China will pay consumers $1,400 to replace their old cars. How economists could make themselves more useful. With inflation this high, nobody knows what the dollar is worth anymore. Paul LaMonica joins the show to chat about why big banks are taking a risk on fintech.

Episode Transcript

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five K Boston is presented by VeteransDevelopment Corporation face is the Financial Exchange with
Mike Armstrong and Mark Fandetti. Welcomeback to the Financial Exchange. We're jumping
right into it here. With marketsoaring back from yesterday's losses, NASDAC up
now over two point two percent threehundred and forty four points, We'll be
diving into earnings from Google and MicrosoftSMP up fifty nine points, one point

(01:29):
one six percent in the Dow atthe moment at one hundred and thirty nine
points, about a third of apercent, So very tech heavy drive this
morning. Before we get into earnings, though, we did get a release
on inflation this morning. This fromthe Bureau of Economic Analysis for the month
of March. What we found yearover year inflation, which is the number
that you're going to hear quoted bymost media sources two point seven percent year

(01:53):
over year inflation two point eight percentif you strip out food and energy.
More importantly, in our opinion,the month over month numbers, which for
the last three months have been elevatedregular PCE inflation zero point three percent month
over month on both core and withfood and energy in there. That follows

(02:13):
readings on core for the last threemonths, so January came in at half
a percent, February point three percent, and March now point three percent.
What this indicates to me personally,and I won't put words in Mark's mouth,
is that we saw a brief periodof slower inflation. If you're taking

(02:34):
a look back in the fourth quarterof last year, that seems to have
been a blip on the radar,and we are now experiencing a three month
period now of higher than anticipated inflation. And there's a number of different ways
to cut this data. But youknow, if you annualize just the month
of March, obviously you get toa three point six percent rate. Just
multiply point three times twelve. Ifyou take a look at the average of

(02:55):
the last three months, you're gettingto a four percent rate of inflation in
the PCE index, neither of whichare anywhere near the federal reserves target of
two percent, meaning probably what investorsare already digesting that rates need to be
higher for longer and might not geta cut this year. And yeah,
I think you summed it up wellthe current state, and yet equity markets

(03:15):
are up and bond yields are down, so we're markets expecting I know that
the zero point three percent month overmonth in the so called PCE index or
personal consumption Expenditures deflator, which isjust a different way to calculate inflation.
It's the Fed's preferred measure for variousreasons, Mike, as you mentioned,
Uh, that was in line Iguess with expectations as published in various media

(03:38):
outlets. Is that why markets areshrugging it off because to your point,
inflation remains much higher than the respectTo your point, Mark, never try
and interpret what the market's doing ona single day. My question was a
little bit rhetorical. I thought.The other piece that I'll say is we
get PCE towards the end of themonth. We already got CPI for the
month of March, And while Iwouldn't know how to do it, there

(04:00):
are people out there that can probablytake a look at CPI data and predict
pretty easily what PCE is going tolook like. And so it's fairly normal
for us to get a reading onPCE that is well predicted, well well
understood, where it's already going tobe by the time it comes out.
I don't know about that. Arethe forecast errors. I'm not it's an
empirical, as researchers like to say, question, I can look at the

(04:21):
relationship between the two over time orthe forecast errors, as a researcher would
say lower when you plug CPI intoa PC forecasting model, as opposed to
just using the past value of PCE. I can answer that I just can't
do it right now. But toyour point, nobody surprised because CPI came
in at point four month over amonth a couple of weeks ago. PCE
is now at about the same overallcase. So this week we've heard earnings

(04:45):
from Meta, Tesla, Google,Microsoft, I actually think I put it
well. Earlier on a call withsomebody, we heard earnings from three major
tech companies and also Tesla. Ishow I would put it, because when
you're under half a billion dollars inmarket cap, I'm not going to consider
you a major tech company anymore.Nor are your tech company in the first
part, you're an auto manufacturer,but neither here nor there. So let's

(05:08):
dive into Alphabet and Microsoft in particular. Before I get there, I will
just make a point that Meta wasdown. Did they finish down double digits
or just high single digits? Yesterday? Eight and a half or something like
that percent yesterday on their finish Zuckerbergon his earnings call, basically reiterated to
investors that they are going to bepouring a lot of money into artificial intelligence

(05:31):
research and that that could be amulti year process, and then went on
to say that, you know,historically when they have done endeavors like this,
their stock price has been volatile,and it was it took a big
hit Microsoft and Google. I don'tknow if they took lessons from what Mark
Zuckerberg had to say, but seemedto while also admitting that they are pouring

(05:51):
a lot of money into artificial intelligence, de emphasize that part of their earnings
call a fair bit compared to Zuckerberg'sa pro which was just put all the
cards on the table. Yeah,I don't know how to interpret someone's expectation
for the degree to which AI artificialintelligence spending will pay off. There's a

(06:15):
huge gap between the people that dothat, an unusually large gap between the
experts and the rest of us.No stock analysts, no matter what kind
of words salad they throw together aboutAI and how much they sound like they
know what they're talking about, they'rejust blustering their way through the subject.
The only people that really get itare the coders that create it and implement
it, and you have to taketheir word for it. So early market

(06:36):
trading so far, Microsoft stock uptwo point eight eight percent at the moment,
Alphabet stock up nine point four percentat the moment. Here's my summary
of what we heard from these twocompanies, so one, Meta, Microsoft,
Google all reporting very strong earnings bothfor the previous quarter as well as

(06:57):
their general forecast for where sales aregoing to go for the year. Those
did not disappoint. What was adisappointment, seemingly on Metacide was the amount
of investment going in and I wouldcall it a lack of clarity on how
that is going to be monetized forthe future. Doesn't mean it won't be,
just not terribly clear how it's goingto be. Microsoft was able to
point to a few data points thatI think made it somewhat clear that they

(07:24):
believe artificial intelligence is having an impacton their business already. The main one
that I can point to is thatMicrosoft's claiming so one, their Microsoft Azure,
which is their cloud services, thatrose by thirty one percent during the
quarter. Microsoft leaders said that sevenpercent of that thirty one came from AI
services, and so, unlike othercompanies, with Microsoft, it's fairly easy

(07:47):
for even a kind of AI dummylike myself to look at their products and
say, okay, I can understandhow it would be useful if I could
feed and AI bought a bunch ofdata that I'm trying to put into an
attractive PowerPoint presentation and say, hey, go build this for me with using

(08:11):
the theme from this website. Ican see how that would be very very
useful. Is that actually happening poorly? But yes, that's what they want
to do. That's what they wantto do, But so is that available
to say? So? There aresome people that are using a Copilot,
which was their system that was usedthat was released earlier this year. So

(08:33):
far, the co pilot seems reallygood at transcribing notes for Microsoft teams.
So if you're in a video conferenceor in a meeting and you want the
AI bought to basically take notes onwhat was discussed in the meeting, really
good at that. It's also capableof creating spreadsheets, writing emails, putting
together PowerPoint presentations, and according tosome customers, not so good at that

(08:58):
stuff yet, But I mean toI have no evidence that they're ever going
to be able to get there.But unlike with Google and Facebook, I
don't even really understand how AI willimprove their business substantially. So for Microsoft
at least I can say, yeah, if they can do this, and
I wouldn't be surprised if they getto a point where an AI bought can

(09:18):
create a PowerPoint presentation that looks reasonablyattractive and useful to me, then hey,
maybe I don't need as many investmentbankers in New York creating that stuff
for me in the future. Yeah, it is infuriating to have to spend
a lot of time sizing stuff anda PowerPoint presentation getting it to look right.
That's low value. Add any monkeycould do it forgive me, And
to to have to pay an employeeto do that a college educated person seems

(09:41):
like a total waste. And yetwe still struggle with that. The making
spreadsheet work easier, I guess itdepends on the task. This stuff doesn't
have the judgment to do good dataanalytics, and probably given the creativity element
involved in good data analysis, probablyI'll go it on a limit and say
it won't be comparable to what humanbeings can do for a very long time.

(10:03):
Yeah, I wouldn't say that it'dbe capable of doing that, but
like, for instance, if itcould write a macro for me on a
spreadsheet that would allow me to analyzedata sets over time. And again I'm
not looking for do the analysis,but just hey, write me the macro
to do this repeatable process over Butthat's a coder, Kim and I could.
We could write one line of codein Python or our my preferred platform

(10:24):
and have that set up for lifetoo. So that's not hard. We
could, but you need the persontoday with that intelligence and knowledge you do
it you do, and that youalso have to know how to frame the
question right now, I don't knowthat AI, well not without the domain
expertise, can get us there anytimesoon. I don't know. I'm just
I'm skeptical. I hear AI,and I think somebody's trying to sell me
something I hear touches my nature onthe alphabet side of things, I likewise

(10:48):
remain pretty skeptical about how AI isgoing to transform their business. In fact,
I kind of view it as abig threat. Right if I want
the answer to a question right now. I don't know what you do,
Mark, but I go to Googleand I search it, and the first
five results are sponsored ads from Google. The next five are kind of selected
based on this algorithm that I'm notsure how it works. The dream of

(11:11):
AI is I can just ask achat bought the answer to a question and
it will give me the answer withsome sorted some cited sources. And I
don't know how you advertise on topof that. So I do get a
little bit concerned about Google's core business. But what the company basically came out
and said is, hey, wehave been incredibly profitable. We are going
to be paying our first ever dividendrevenue group fifteen percent in the latest quarter.

(11:35):
And while they too admitted that theyare going to be investing a lot
of our artificial intelligence, Like Isaid, I think the main difference between
them and Meta was they really deemphasizeit in this most recent quarter in terms
of how much they're going to spend, how long it's going to take,
and where it's going to go.Might be the exact same result as Meta,
but for the time being, deemphasizing a little bit, at least
in the earnings call, the latestnews on inflation, the FED, be

(11:58):
economy, and how the market's reacting. Every morning right here on the Financial
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This is the Financial Exchange Radio Network. China, in a further evidence

(12:20):
of an economy that is not doingso well, has come up with their
own version of cash for clunkers.They're going to be paying consumers up to
nearly one four hundred dollars, which, again, compared to US cars,
that might not be a whole lotof money, but fourteen hundred bucks to
the Chinese consumer in order to replacetheir old cars with newer versions of them.

(12:43):
Why probably not, because China isimmensely concerned about their global impact on
emissions, and much more to dowith the fact that, oh crap,
we have all these cars, therest of the world doesn't want to buy
them. We'd better find a wayto spur some growth in our economy by
getting our own demand up off thefloor. Here. So that's how I

(13:03):
interpret all of this is, youknow, again, like we did in
two thousand and nine. I'm surethat there are plenty that we're talking about
the environmental benefits of it as well. But the cash for clunkers program was
basically a way to bail out theUS automakers, and this seems to be
the same thing over in China.Boy, a lot of bad ideas coming
out today fed independence being questioned,cash for clock I don't care what the

(13:26):
Chinese do with how in debt theybecome pursue all the stupid economic ideas that
we've tried and arguably fruitlessly, youlike, if you're China from my point
of view, But yeah, Mike, I think you nailed it. It
stimulates, it kills a few birds. I don't know if that's a confusion
proverb or not, but it killsa few birds with one stone. I
don't think it is. I thinkwhat I find particularly interesting about this is

(13:50):
we've talked, really since the realestate crisis in China really took hold there
and the economy was clearly in recession, about how the Chinese government seemed very
resistant to any sort of direct consumerstimulus like we did during COVID, which,
again I would argue a lot ofthat was a mistake, but they

(14:11):
were very, very hesitant to saysend people checks in the mail like was
done in the United States for youknow, either the paycheck Protection program or
all sorts of stimulus programs that werepassed over the last few years. This
is the first one I've seen inChina that is as close as it gets
to a direct stimulus program to theChinese consumer. Yes, it's very it's
very hair brain western in there comingaround, I agree. At the same

(14:39):
time, Anthony Blincoln's meeting with Presidentshe in China allegedly pressuring China to end
their support for Russia, I can'treally imagine how or why he's going to
have any more success than any otherleader has had recently. Germany just had
leadership in China as well, doingthe exact same thing. And one would
think that the year Opeans have alittle bit more vested interest in this one

(15:01):
and pressuring China to stop this typeof behavior than the United States does.
And the commentary coming out of thatmeeting was basically more of the same.
And quite honestly, China's probably rightto call our bluff on this one.
If you're sitting there not morally rightor any of any of those things But

(15:22):
if you're sitting there in Chinese leadershipand you're taking a look at the overall
sentiment on support for Ukraine in thiswar right now, you're probably thinking,
hey, we can wait this oneout. At least that's what I would
be thinking, right Like, isAmerican sentiment towards support for Ukraine so abundantly

(15:43):
strong that we would be putting ourselvesin danger if we're China but by continue
to support Russia. I think theanswer is probably not. Relationship with Europe.
Different story, and you know,I'll be interested to see where that
goes. But in the United States, yeah, I don't know that we
need to. Look, we're atwar with Russia right now. It's a
proxy war, but it is awar, and we're spending a lot of

(16:04):
money, and the support is isheld up. You could say that it's
softened a bit, but for nearlythree years into this thing, are going
on, three years into this thing, or the third year of this conflict,
it's held up surprisingly well given ourshort attention span as Americans. So
I think you're probably right. Chinajust bides its time, doesn't do anything

(16:26):
to OVL give them direct weapons.I don't know, do I know.
Yeah. Again, if I'm China, I'm calling the bluff on this one
and waiting it out would be myguest. And I don't I don't know.
Wait, what leverage do we have? Other than yeah? But both
presidential candidates, I mean, Trumpwants to put a ten or fifty percent,

(16:47):
I don't even know. He juste quotes a different number every time
he speaks about it, but it'salways higher. So higher tariffs will come
from Trump, presumably, unless he'sjust using that as a negotiating technique,
because he's a masterful negotiator, aswe all know. Let's take Yeah,
Like, what leverage do we have? I hear you bringing the latest financial

(17:19):
news straight to your radio every day. It's the Financial Exchange on the Financial
Exchange Radio Network. The Financial Exchangestreams live on YouTube. Like our page
and stay up to date on breakingbusiness news all morning long. This is
the Financial Exchange Radio Network. There'sa piece in the Financial Times today from

(17:41):
Sumaya Keenes, so I had tolook up. Is actually the great great
niece of John Maynard Keynes, whichnot terribly relevant in terms of her own
work, but I just found interestingthat, you know, somebody writing about
economics I had no kids, soI didn't know he had any family,
great great and relatives. No,I just I never thought about his lineage.
Right, So whole theory of economicsname and the guys the fuck Haynes

(18:03):
is the father of all this demandmanagement for good or for bad stuff that
governments knew. He came out ofthe depression. We had twenty five percent
on employment. We had food sittingin fields and people starving. We had
factories with a beautiful new machinery.This was after the big explosion of the
industrial era and nobody working. Thiswas a real paradox, and he did
revolutionize the way we think about gettingpeople to work. But again that has

(18:26):
nothing to do with Sua. Well, well, you mentioned her name,
Knes's name, and people have heardJohn Maynard Kanes and they've heard Kynesian.
Yes, because Nixon famously said we'reall Knesians now, which was license for
him to just spend a lot ofmoney. But that came out. Well,
it was so a lot of mischief, but a lot of it was
the birth of the modern economics profession. It's why we have all these conversations
about policy and its influence on market'sprobably would have happened. Edie not lived,

(18:51):
but he revolutionized and continues to influenceeverybody, whether or not you know
it. So in either case,his great great but anyway has some critics,
some critiques for economists out there,and her general point to me seems
to be that you need to dumbit down economists. You put together all
this work which is really useful andreally insightful, and then you don't actually

(19:11):
propose what the policy should be todeal with all these things. And that
is her conclusion is that dumb itdown, don't make it into a sixty
page novel and come to a conclusionrather than just putting it out there.
There's not always a policy prescription,and evidence is constantly reinterpreted. The same
evidence can be reinterpreted using different methods, and different conclusions can be arrived at.

(19:33):
I could speak a little bit forpeople up. My little area is
applied financial economics. So you dosome research, god willing, get it
published, and someone takes your data, uses different methodology and comes to totally
I haven't had this happen to beembarrassing. It will at some point it
comes to totally different conclusions and yousay, damn, I wish I'd done
it that way. So there's acertain amount of humility that a good researcher
exercises. Economists don't really try toprescribe necessity. Some do. They're very

(19:57):
vocal, yeah, almost the pointof being obnoxious. Most are just trying
to do good research and get itanswers to things. So I'm not sure.
And she would know if nothing else, because of her lineage. She
knows what the job of a researcheris. It's not always to tell people
what to do. Yeah, I'mwith you, And she does acknowledge that
that, you know, some ofthe purpose of any sort of research,

(20:19):
whether it's economic or any other,should just be for the sake of moving
the profession forward and moving the theoryforward, rather than actually coming up with
policy. But economics in particular isparticularly policy. And we say economics,
but most of it is just veryboring workadays, especially like these these labor
economists. They asked a change inthis variable like the minimum wage or some

(20:44):
other aspect of labor employer relations,did it noticeably change labor market dynamics and
this specific exam, I mean,it's work a day, it's boring,
it's not anything anybody would be interestedin. Most of what economists do just
wouldn't be of much interest to thegeneral public. I don't think, Tucker
Mark, are you suffering from moneyillusion? I depend I don't know.

(21:07):
I don't know what that is.It's a new term for me. I
had not known that I ever heardof something was being money money illusion,
like money I don't have that Iwant, Yeah, that's only money,
yes, then yes? Or thinkingthat my credit card spending limit is real
money is money illusion? Now definefor me money illusion mark. If people
are fooled by inflation, basically theyconfuse nominal that is, non inflation adjusted

(21:32):
and real variable. So if theprice of every a negative example is if
the price of everything goes up,I'm automatically worse off. Well, if
real wages are flat to positive,that's not necessarily the case. Similarly,
if your wage goes up but doesn'tnecessarily mean you're you're better off. Yeah.
So there's all sorts of money illusionout there. A very simple example
is that a dollar in March twentytwenty one is worth less worth less than

(21:56):
eighty five cents today. So that'sthe first fundamental one that I think people
are starting to get a grasp onbased on inflation. But that's plain English.
If you had a dollar in twentytwenty one, what it can buy
you is about eighty five cents ofstuff today on average. Example. Use
Well, they're pointing out that peopledon't really understand that a dollar is worth

(22:17):
a lot less than it used tobe. Oh, I think people understand.
Yeah, you kidding, have youbeen? You've been talking to people
right like they seem to be gettingthat pretty evenly. Yeah, I think
we get it. But it's oneway to It's not an easy, not
a necessarily the easiest concept to explainit, like inflation can fool people.
That's how I've always thought about it. That's the I think Knes may have

(22:37):
used the phrase. Actually we talkedabout John maner Kine's cos Yeah. Yeah,
And this is point of areas.I don't know what to make of
it, because I genuinely other thanprobably few sorry contemporary sorry sorry, other
than a few real areas, doyou think that money illusion really exists?
Maybe the only way that it existsright now is that people think their dollar

(23:02):
is worth even less than it isbecause they are so dramatically impacted by inflation.
That they think it's basically worthless.I'm not sure you know where else
the money allus a reverse money illusion, Like normally money illusion means oh my
god, my stocks are up,Yeah, but price is double two.
Yeah, like you fell for moneyillusion. You can't actually buy more in
terms of goods of services with thoseassets because they are more inflated by inflation.

(23:26):
That is the classic way to presentit. But yeah, you're describing
sort of money illusion in reverse.Yeah. Yeah. Another version, or
just maybe my own different version ofmoney illusion that I always like to bring
up is people's illusion when it comesto the lottery recently, so we've talked
about this mark a little bit,and it's not directly related to inflation.
It's more related to interest rates.Yeah. But for everybody out there that

(23:49):
seems to be noticing that the megamillions in Powerball keep hitting a billion dollars
much more frequently and wondering, wow, do they change the payouts or something,
or or are way more people playingthe lottery to drive this up?
The answer is no. The statednumber that they put on that lottery winning
ticket, the little boards that hangin the gas station with the number that

(24:11):
changes every day, has nothing todo with the lump sum payout. It
has everything to do with the annuityoption that you can take on your winnings
from a lottery, which are alltied to interest rates, and so strates
go up, the lump sum goesdown because of the inverse relationship. Or
to help help me, actually,with the lottery, the lump sum is
always constant. Okay, sales okay, and the annuity goes up based on

(24:34):
interest rates. Yeah, okay,same thing, right, it's one versus
the other. But in the caseof the lottery, that's how it works,
which is slightly different or the inverseI guess of how a pension works
from an employer versus a lump sum. But I always find that one fascinating
because so here's the different one.My gosh, one point three billion dollars
again, well if yeah, onlybecause interest rates triple. Because if you

(24:56):
don't want the lump sum to godown, if to keep that constant,
if interest rates go up, theface value, so to speak, Mike's
glossing over Tucker just left the studio. If the face value or whatever you
want to call it, of thejackpot has to go up to keep the
lump side constant in the present valueon some comes. Thank you, Mike.
We've got to go. We've gotto stop because, uh, Paul,

(25:17):
I know people like the explanation ofthe lottery. That's why. Because
not everybody invest in the stock market. Not everybody knows what's going on with
Google's earnings, but everybody goes tothe gas station and sees those boards printed
everywhere, and here's the news aboutthe power ball. So I have to
bring that up every once in awhile. Let's take a quick break when
we come back. Paul La Monicafrom Baron's joining us for Friday on the

(25:37):
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is Paul Lamonica from Barons and hisPiece and Barons. This bank stock fund
owns Coinbase and PayPal. The managerexplains why. Paul, thanks so much
for coming on as always, Yeah, thank you very much. So I'll

(26:49):
tell you when I think most investorsthink of that ETF or mutual funding their
portfolio that owns the banking sector orthe financial services sector. You know,
there are probably some names that cometo mind, JP Morgan, Bank of
America, maybe Berkshire Hathaway. Idoubt most people are thinking about venmo's owner,

(27:10):
PayPal or crypto exchange Coinbase, butas you point out, for some
managers, these are growing parts ofthe puzzle. Yeah, exactly, It's
very interesting. Dave Ellison Hennessey LargeCap financial fund he has in addition to
those names that you mentioned, JP, Morgan, Chase City, all the

(27:30):
big banks as well as Berkshire Hathaway. He owns both Coinbase and PayPal as
top ten holdings. To put thatin context, based on the last filings
that we have, they are biggerpositions in the fund than Goldman, Saxon,
Morgan, Stanley. And his justificationis that fintech is increasingly gaining credence

(27:57):
with particularly younger cannsumers that are engagedwith cryptocurrencies and are paying each other via
vemo. So that's bullish for PayPal. But in regards to Coinbase, Coinbase
is obviously benefiting from the rise ofbigcoin prices this year, and because of

(28:18):
their institutional business not just for consumers, they are sort of the de facto
Nastac and YSC in crypto right now. It's an exchange business, so there
are a lot of fees that Coinbasegenerates from that business. Shame on me
for not researching this ahead of time, Paul, But I don't even know.
I mean is are these companies PayPal, Coinbase? Are they in like

(28:44):
SMP, for instance, builds theFinancial Services sector Index? Are these companies
in there are these are these bigholdings when you look across the board,
regardless of active versus passive management style. Yeah, that is a great question.
I'd have to look, to behonest as well, to see if
they are part of the SMP financialservices sector or if they are in other

(29:07):
sectors, be it communications services orinformation technology. I mean, I think
the argument is that they are morefinancial oriented than tech, but they may
not be characterized that way for anyonelooking at a passive sector. Fund well,
since arguably the Great Recession, someof these big banks have been really

(29:30):
regulated in different ways that have killedoff portions of their business. And you
know, arguably, I for youa good reason they have stepped out of
these businesses, but a number ofdifferent institutions have taken that place, whether
it's private equity in the lending spaceor to your point, digital platforms for
money movement such as Venmo. WhereI guess, is all of this stuff

(29:52):
seemingly going and are the banks moreand more just looking like, you know,
the infrastructure companies underneath the banking sectorrather than the real drivers of what's
next. Yeah, I think there'sa certain validity to the argument that banks
are so regulated now that they couldbe considered slower growth businesses, sort of

(30:15):
like utilities. But let's not gothat far. Yes, you mentioned you
know that there are now more optionsin the lending world. I think Blackstone
has become a big player private forcompanies, particularly looking to take out loans.
And we have crypto companies like Coinbaseand digital services firms like PayPal that

(30:41):
are taking share from the big banks. But JP Morgan Chase and Bank of
America, and then you look atGoldman Sachs and Morgan Stanley. They are
still gigantic when it comes to investmentbanking. And you are not going to
see Coinbase obviously become a company thatis a competitor to Goldman Sachs for taking

(31:03):
another company public, for advising onmergers and acquisitions. So shed no tears
for the big banks. I justtook a look before this hit. Goldman
Sachs is hitting a new all timehigh today, So this is not exactly
an area where investors are fleeing forthe exits because of concerns about upstart competition.

(31:26):
I think they have learned to adaptand recognized that they just stick to
what they do well even if thereis competition for deposits and things of that
nature. They still have a prettystrong foothold in businesses that they're not likely
to lose ground anytime soon. Theworry is more about competition amongst each other

(31:47):
as opposed to competition from new rivals. Paul A Monica is from Barons,
joining us today to talk about theevolving nature of the financial services sector as
a whold as a whole in thoseinvestments there in. Paul, thanks so
much for joining us. Appreciate We'lltalk to you again next week. Thanks
Lon. I have a gooe,guys, I have an item for stack
Roulette that I just I have toI have to get to. Whirlpool is

(32:12):
seemingly, at least in my view, completely misunderstanding Americans coffee habits. So
Americans spent three billion dollars on coffeemakers last year, and there is a
trend out there that I myself amguilty of of going to a Starbucks or
a Dunkin and loading up on anafternoon coffee on many a day. And
they seem to be interpreting that somehowinto Americans wanting a two thousand dollars countertop

(32:37):
coffee maker. And I just don'tknow who's going to do. So my
explanation of why people go to DunkinDonuts at Starbucks in the middle of the
day to go get up that coffeehas nothing to do with the quality of
the coffee, although that's certainly youknow, expected. It has everything to
do with wanting to get away frommy job for twenty minutes and go and

(33:00):
you know, do something that's consideredacceptable, and buying a coffee, uh,
halfway through the afternoon is a littlebit more acceptable than sitting in the
parking lot and smoking a cigarette thesedays. So that's that's the path that
people go towards. So maybe thisthing's gonna sell like hotcakes. It is
a pretty good economy right now.But kitchen aid, I think you might
be missing the point on this.And I don't know who needs or wants

(33:24):
or is willing to shell out twothousand dollars rich people, rich people.
There's just not enough. This isthis is not the passion statement that I'm
looking to make. They have onehigh end item in their lineup, even
if they only sell a thousand ayear, Yeah, helps the brand.
I don't know. I'm just beingcontract I'm just not to mention, it's
not like it's really the smallest lookingthing there stuff to market haphazardly. They

(33:50):
did some research. Yeah, theyasked probably McKinsey, and they gave them
a nice bound report. Again,there's a market. My disagreement is not
about whether or not people will buyit. I'm sure they will. You're
probably right, Mark, if youput enough of these things. What's that?
Yeah, you can put it onyou know, one of those pay
buy now, pay later systems.It you'll barely notice it. What's that

(34:10):
really fancy? H Shoot, it'sgot like the French name the store where
you go and buy really expensive hardwarefor your kitchen. It's expensive. I
don't know that. That's not expensivemiddle of the road. You're not going
to sell this here, okay,I don't. I don't buy very high

(34:32):
end items, as you can tell. I mean, they have high end
items, but it's everyday kitchen plays. You didn't like that was actually it
was actually? Yeah, that isall the time we will have for the
financial exchange this week. Have afantastic weekend. Go Bruins Nasdaq still leading

(34:52):
the way, up three hundred andseventeen points two percent. Have a great
weekend, everybody, we will catchyou on Monday for the Fiinancial Exchange sh