June 21, 2024 • 38 mins
Paul Lane and Marc Fandetti explain why Nvidia's success is the stock markets problem. SoftBank founder laments selling Nvidia back in 2019. Home prices hit record high in May as sales stall. At Target, store workers become AI conduits. China has spent at least $230B to build its EV industry. Europe has a new economic engine: American Tourists. Hackers auction off stolen Lending Tree consumers' data.
Mark as Played
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Episode Transcript
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DAV five K Boston is presented byVeterans Development Corporation Faces The Financial Exchange with
Paul Lane and Mark Fandetti. Welcometo this Friday edition of The Financial Exchange.
Paul Lane, Mark Ndetti and BenKitchen here with you as we await
the kickoff of the Celtic's victory paradeto start at eleven am through the streets
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of Boston and on the duck boats. And we head into a summer weekend
that looks like it's going to bea hot one. Taking a look at
markets at the moment, relatively mixed, pretty slow trading to at this point
with the SMP off about a quarterof a percent and the Dow Jones up
over fifty points. We're going tostart our show today by talking about this
little known company called n Video thathas been dominating the market headlines and Mark,
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I thought a nice piece here laidout on the Wall Street Journal.
Nice is probably not the right wouldput it, but informative as to just
the impact that Nvidia has had onthe stock market as a whole this year
and even dating back to last yearas well. It's grown to a size
that is just a behemoth in thespace of the likes of Microsoft and Apple.
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Certainly, its impact on the technologysector of the S and P five
hundred, which has close to abouta thirty percent waiting has been large,
and I want you to to kindof cover that a little bit. But
if we look at just the headlineshere in this piece regarding Nvidia, the
stat that blew me away the mostwas that I believe since twenty twenty two,
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forty four percent of the gains thatwe've seen have been attributed to in
Nvidia's meteoric rise, and that tome was staggering. Though I'm not overly
surprised just with how much it's goneup, but it's just been a tremendous
increase that we've seen over the lastyear and a half or so. Yeah,
I see that, and it's impressive. It's only human to be wowed
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by the size of the company,which I don't know the pace of doubling.
I should have done a back ofthe envelope on that, but it's
doubling at a rapid pace and itcontinues to plow ahead, which given its
size, is pretty remarkable because growthrates typically slow down. Whether or not
that's reasonable, whether or not that'spredicated on reasonable expectations for sales and other
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metrics that investors actually care about isa slightly different question. But its run
up has been impressive, and it'sthe percentage of gains in the broad market
which you're attributable to that run upare also remarkable. So it's hard not
to be impressed by that. Butthen again, it's always something, something's
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driving the market. Sometimes it's verylopsided, like it is today. Sure
it seems unusually lopsided. And theauthor James McIntosh, who's widely respected columnist.
He writes now for the Journal,he used to write for the Financial
Times. I don't know where hewas before. That makes the point that
this could be a problem, Iguess for the market because if investors turn
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on Nvidio for whatever reason, orif the growth simply slows, which has
got to at some point, ohyeah, where are the gains in the
market going to come from? Youcan always add I'm not worried about that.
You can always ask that question.He may he may have a point,
but you can always ask that question. I wouldn't worry too much about
it. That's a good point tomake that because that is something that you
do think about. If you lookat just the S and P. Five
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hundred and what it's made up of. Microsoft and Nvidia and Apple each represent
about seven percent of the S andP five hundred, so twenty one percent
total. If you further that lista little bit more to tie in some
other Magnificent seven names, Amazon,Meta, and Google. There's two different
share classes for Google, but I'mgoing to combine them together for purposes of
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the percentage ownership or the percentage waiting. About thirty thirty percent of the S
and P five hundred is really tiedin those six companies, Microsoft, Nvidia,
Apple, Amazon, Meta, andGoogle. So to your point,
Mark, it's been the case beforethat these Magnificent seven got their nickname for
a reason. They were large contributorsto the market performance that we saw over
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the last year plus, and there'sbeen other times historically where a constituent of
a couple companies have led to alot of market gains. But from a
size perspective, it is reaching avery significant waiting and just as easily as
it can go up jeez, onehundred fifty percent year to date through today's
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trading, it can revert back downin the other direction, which could have
an outsize impact, although squel thatwould be bad but we don't know what
all else is going to be doing. Other sectors could rotate back into favor
or investor's sentiment, I should say, maybe could rotate back into pushing other
sectors into favor. Either way,that's very awkwardly put, but you know
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what I mean, what we oughtto be thinking about as people who manage
other people's money, and what Isubmit that investors listening should be thinking about
our prospects for the economy more broadly. Now those are intertwined with prospects for
AI. You sort of can't separatethe two these days. But undoubted I
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can predict one thing with near certainty, which is and video will not be
the talk of the town five orten years from now. It just won't
be. The growth will level off, it'll become mature. It may even
get displaced. We know that companiesthat depend on AI for chip design and
for servers and the other key componentsof data centers that Nvidia is now providing.
They companies like Microsoft and others arescrambling to develop altered They don't want
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to be dependent on Nvidia, sosomething will displace it at some point.
Something else will therefore displace in Vidiaas the Apple is the darling of the
day for equity investors and life goeson. If you own a market cap
weighted index, you benefit from this. You'll also benefit from whatever comes next,
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which is one of the virtues ofowning could cap weighted index. And
by that I mean an S andP five hundred or a Russell one thousand,
or anything that has broad market indexif fits in your four one K
plan, and it's called a broadUS market index or something like that,
or a large cap index. Youown all this stuff. You don't have
to worry about today's or even tomorrow'swinners. You'll you'll own them in proportion
to their share of total so calledmarket capitalization. It is interesting, as
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we almost get six months through theyear here, just in Vidia's gains relative
to some of the other companies inthe S and P five hundred and mark.
You mentioned that point that to me, you almost can't separate them as
what you said in terms of theAI frenzy and hype versus just what is
the broad economy doing. But insome ways the trading has been really powered
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by the gains of Nvidia and Appleand Microsoft and others. That's what we've
seen from a year date stock performance, while the other about one hundred and
ninety eight stocks in the S andP five hundred haven't managed any gains this
month. Half of the S andP five hundred for the course of the
year is averaging, you know,relatively thought, and is that unusual?
I don't have perspective. I'm sorry, I don't have the data. You'd
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need a Bloomberg or facset and thena lot of time to crunch the numbers.
I don't know. Forgive me foradmitting my ignorance in front of everybody.
I don't know whether today's concentration isextreme and unprecedented. My sense is
it is nearly unprecedented, with theexception of the dot com bubble and maybe
the nifty to fifty bubble of thevery late sixties early seventies. I think
I'm getting those time frame bookke ndsright, but it's not totally unprecedented.
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Nor do I think the lopsided natureof recent gains is totally unprecedented. Something's
always coming out on top, whichagain is the reason why people's who aren't
professional stock pickers like may buy anindex fund. Sure, I don't something's
going to do better in a relativesense. I just don't know what stock
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or sector will be in favor ata particular point in the market cycle.
Owning a broad based index fund,at the risk of repeating myself, provides
you with some insurance that you don'tmiss out. I'm sure it's not unpresident
in the sense that Microsoft and Applehave had these tremendous years where their performance
has significantly impacted the SMP five hundred. So this isn't a one It does
seem like usually it's the group togetherthat it's maybe four or five names that
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are driving it. Not to saythat Microsoft and Apple haven't been a little
bit added of particularly Apple more sorecently. But really this idea that on
the AI front there has continued tobe a significant amount of optimism and you're
now seeing what we'll talk about sortof a trickle down impact to some of
these other companies, but on theother sectors of the market just haven't seen
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as much of that same growth becauseof perhaps the worry of slowing a slowing
economy. Well, there are reallyI think a couple things to my layman's
eye going on here. This isnot I don't look at this sector carefully.
There are people who are deeply specializedin this area, but and videos
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sales are for real. Yes,we know that that's important to note,
but will that translate into something thatwhich we all care about Probably a little
bit more unless you have a personalstake and in Vidia specifically, which is
economic growth. How is this goingto play out for the economy and stocks
in the longer run? That isan open question. Certainly. We're going
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to take a quick break here onthe Financial Exchange, but when we come
back, we'll be doing a littlebit more talking about AI and Nvidia and
its impact on the tech sector,and we're also going to be discussing the
Chinese electrical vehicle market. That's rightafter this break here on the Financial Exchange.
The Financial Exchange is now available onyour Alexis smart speaker has to play
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by Veterans Development Corporation. Just towrap up our discussion on in video,
we were covering in the first segmentof the show just the impact that it's
had, particularly if you look atthe market this month, it has led
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to a lot of the gains thatwe've seen month to day, and then
if you go back to twenty twentytwo, to forty four percent of the
S and P five hundred gains havebeen tied to Nvidia and its performance over
the last close to two years orso. What's also happened is we've now
seen more recently companies that are inthe same ecosystem of the tech stack spread
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i'll call it, where they're eitherdoing chips, software components, just any
part of the IT infrastructure have startedto benefit from the optimism and continued further
for AI. Oracle is an exampleof that. Their stock was up seventeen
percent off news that they had closeda deal with open ai to have open
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ai its large language model trade trainedand be held on the cloud infrastructure.
For Oracle, you've also seen HughA. Packer Enterprises up about twenty four
percent as AI demand has really causedinvestors to reassess their outlook. There's another
story in here, Mark, whichis just a classic could have, should
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have, would have where Soft Bankchief CEO was mentioned by saying that they
had a five and a half percentsteak or five percent steak and in Vidia
back in twenty nineteen. They soldit at that point in time made three
point three billion dollars on their investment, but that investment gain today would have
been under fifty billion. A lotof people, a lot of us.
I just I wanted to point itout because that is that's the market,
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man, that is the market entirely. If I had what I mean,
it's all would it, could haveshould have? You know everyone has these
I mean, not this dollar number. That's why it gets listed in the
Wall Street Journal, because one hundredand fifty billion is a really big number.
But everyone has these stories over time. If I only bought Apple back
the difference. This guy's a fiduciary, he's It's as if you had a
pension funder a four one K plan. There's a manager on the roster,
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and they sold in video prematurely.They do deserve to be asked, what
was your thesis when you bought it, Why did you think it was undervalued
at the time, how much didyou think it was going to go up
to? And why this guy shouldbe able to answer those I'm not I'm
I'm literally pointing a finger at thestory, but I'm not. I don't
mean to point the finger at him. He was probably acting like a responsible
fiduciary, and it sounds like hewas. He says it hit his price
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target. He needed to de risk, as these guys like to say,
and he thought his capital could bedeployed more productively elsewhere. That's his He's
executing his duty as a fiduciary.He acted prudently. Fiduciary's duty is not
to is not to buy things wildlyhoping something will go up infinitely. It's
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to be a prudent steward of athird party's money. We do that every
day here, and a lot ofpeople do so. I don't I don't
take issue with the process as longas it was based on sound decision making,
and it sounds like it probably was. Oh, absolutely not. He's
I guess, I'm I'm quibbling withthe tone of the story. We like
his job is to guess in advance, what's going to, you know,
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go up two hundred percent a yearindefinitely, if of course not. And
to be clear, they do outlinein the piece this is SoftBank Group founder
Masayoshi's son, who has made tremendousinvestments in other companies like Ali Bob and
others and armholdings that have done tremendouslywell. So it's just something that catch
the eye. And you know,the quote is the fish that got away,
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but certainly has done a good jobhere. I think there's maybe a
little lesson here. If someone ifyou have an advisor and they bought in
video for you two years ago,it sounds ridiculous to question the decision.
Oh my god, this thing's upsix hundred percent since then they're a genius
maybe, or maybe they're lucky.Go back and look at the notes.
What was there, as they sayin finance circles, thesis at the time,
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What was their idea, what motivatedthe purchase, what did they say
they thought they thought the stock woulddo, and why most, in my
experience, just kind of got lucky. Now that's okay, there's room for
that. There's an strong element ofluck in every investment manager's performance. But
it's it's good, especially in exuberanttimes like these, exuberant for certain sectors
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and companies to question an investment managersto why they bought it in the first
place and whether or not the thesisthat underlied that decision is still valid.
I'm not talking about just in Nvidiahere, I'm talking generally. It helps
you separate luck from skill. Sure, sure, no question about it.
I know that it sounds counterintuitive likeit went up, you idiot. Just
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celebrate and the guys obviously a geniusmaybe, but maybe not. Theater needs
to be a little bit of timefor celebration here and there when you do
pick a strong investment. But switchinggears a little bit. We got some
fresh home price data come out thismorning where we saw home prices rising in
the month of May to a newhigh. We continue to have low inventory
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spurring bidding wars amongst home buyers insome markets. What we saw the national
median existing home price rose six percentin May from a year earlier to four
hundred and nineteen thousand. That isa record percentage wise. Going back to
data from nineteen ninety nine, wehave had mortgage rates peel back a little
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bit. That's not reflective in thisdata here, where we were sitting at
about seven point one five percent onthe thirty year fixed mortgage. That rate
is now in and around six pointeight percent or so. So perhaps that
will spur on more activity, butthe continued story will always be the amount
of homes available. And as perthis most recent data dump here from the
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National Assertion of Realtors, we arestill at a point where affordability is a
significant challenge. The decline at homesales was expected, but we still have
very minimal inventory out there. Mark, Yeah, I guess I'm not.
I don't find low sales increasing pricesto be inherently contradictory when you look at
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the but it's it's presented that way. Here, home prices are up fifty
percent on average according to case Shillor not Nar, which is the source
of the data we're talking about rightnow. But fifty percent since twenty twenty.
That is an unprecedented rise, andno era have prices risen that quickly,
that steeply. That's equity like infact, that would be awesome performance
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from equities that acuities are up,you know, like ninety percent over the
same time frame. So house pricesare behaving more like stock prices than like
residential housing prices, at least asthey've historically behaved. And you wonder,
in light of very slow population growthand solid but not fantastic economic growth in
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the rearview mirror look at going lookingahead, economic growth is expected to be
modest by historical standards. Will therebe sufficient economic propellant for this to continue?
I don't know. We're just we'redealing with still a massive a problem
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of massive undersupply relating to the GreatRecession and the lack of building that occurred
during that seven eight year period thatsurrounded the Great Recession. Yeah, it
really followed, I should see.You really can't size that point enough.
It just has had a tremendous impactfrom a long term perspective. We also
saw new housing starts yesterday that datacame out that was down about five and
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a half percent, I believe monthover month in terms of the amount of
new home construction that we've seen acrossthe United States. Taken a quick look
at markets, We've got markets relativelyin mixed territory here, with the S
and P five hundred off about eightor nine points, in the Dow Jones
up about a little more than onehundred points. We're going to take a
quick break, but when we comeback, we'll have more detail on the
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markets with Wall Street Watch. Likeus on Facebook and follow us on Twitter
at TFE show. Breaking business newsis always first right here on the Financial
Exchange Radio Network. Time now forWall Street Watch. A complete look at
(19:56):
what's moving markets so far today,right here on the Financial Exchange Radio Network.
All right, Well, markets arein mixed territory as we look to
close out a shortened trading week.The Dow Jones is up one hundred and
two points, the S and Pfive hundreds down eleven point twenty five points,
Nasacs down fifty seven points, andthe RUSS two thousands, down six
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point three points. In video,shares are down three point eight percent,
adding to losses from Thursday, whenin Vidia closed down three point five percent.
The decline comes after the AI chipmaker on Tuesday briefly top Microsoft at
the as the world's most valuable publiccompany. Athletic clothing maker Nike is up
point eight percent following an upgrade atOppenheimer to Outperform from market Perform. The
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firm also reinstated Nike as a topmegacat pick, saying that the stock is
poised to rebound gradually as the companyrefocuses on product innovation and brand building.
Gilliad Sciences stock rose four percent.On Thursday. Gilliad announced that an HIV
prevention shot succeeded in a late stagetrial. Shares of the online lending marketplace
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lending Tree were down one point eightpercent. Bloomberg reported that hackers are now
auctioning off stolen data from the site. Lending Tree was the victim of a
cyber attack against cloud computing firm Snowflake, and finally taking a look at Apple,
Applestock is up half a percent followinga price increase from Bernstein analyst Tony
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Sakanagi asserted that the more bullish outlookis tied to his view that Apple can
emerge as a leader of the artificialintelligence boom, not a lagger. I
am ben Kitchen and that was WallStreet Watch. Target is trying to figure
out AI and how it is goingto change the retailer's business model. In
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the first infancy form, it willbe a chatbot that they are rolling out
to help workers better answer questions fromshoppers and workers. And immediately Mark I
thought of home Depot as a primecandidate and lows for this type of technology.
Now I know that home Depot doeshave an app where you and I
can log on and just enter inan item to try and determine what aisle
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it may be in. But that'smy biggest problem stepping in there is trying
to find out where things are,and if you ask people there, they
often are not the most helpful inmy experience recently, So if they're able
to unveil this to employees there,then that would be a great help.
This is what they're trying to dowith Target, where it will help answer
questions on where items are. Itwill allow Target workers to more easily get
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information to how as to how toreboot the cash register and roll clients in
their loyalty programs, so they're unveiliantin about four hundred stores as a test
run, and maybe to most workersin their two thousand locations in August.
Thoughts a little underwhelmed. Okay,this is again. Do you agree with
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me on the home depot lovest oryou don't have trouble fund anything? No?
No, no, I do.I normally go on the app and
does that work pretty well? Locatethe Yeah? In my experience it does.
Yeah. Yeah. I'm not inevery week. I mean, I'm
sort of a do it yourself butI'm not there every week. So maybe
people who are more frequent patrons findit more useful than I do. But
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I'm wondering. Know. We talkedin the last segment about the valuation,
whether the price and as a consequenceof evaluation of companies like Nvidio, and
what needs to happen for those valuationsto be realized. AI has to permeate
the economy, change our way ofliving. This ain't it. This is
why I say I'm a little bitunderwhelmed. This is not what I had
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in mind when I thought life changingtechnology, so I get to where I
want to get or need to getand target a little bit quicker. Compare
this to the changes wrought by theInternet. Now having lived you guys may
not have lived through it, soI don't want to sound like the know
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it all old guy, but thoseof us who did live through it can
testify it was life changing. Therewas new technology coming online regularly that made
your job easier, that allowed youto do your job more easily, that
made you more productive, and itwas just neat. It was a really
cool time to be working in aconsumer of technology. And even then,
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the benefit to the economy was prettybrief. Productivity jumped for about eight years,
thus economic growth jumped, because productivityis a key contributor to potential economic
growth anyway. But then it subsided. So it came and went. This
is true of many technology, manyinnovations. I'll just speak generally over time.
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So is this going to change thetrend is? So far, nothing
I've seen suggests that AI is goingto change the trend line of economic growth
that has prevailed over the past saycentury and a half in this country,
and that needs to happen for thegains that are being uh for the optimism
that's being priced in, if youlike to some of these companies by shareholders
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right now is to be realized.And to your point, it takes a
long time for mass adoption to bereached. You know, when you're talking
about the unveiling of new technologies,maybe some firms have it initially, like
you're probably hertching back to whether it'sBloomberg or you know, the quote quote
system evolving, or you can pickany sort of technology and Excel spreadsheets,
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whatever it may be. It takesa while for that to rease a mass
audience of all businesses out there.The same thing applies for AI's. Was
the PC got on desktops? Youknow it was at the time Lotus,
But Lotus is the precursor to Excel. Lotus one, two three was the
original spreadsheet at least that I remember. Excel hasn't changed much in thirty years.
No, it hasn't, No man, fact was I was lamenting this
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point to Chugzadi yesterday. It takesme as long to move charts into a
document to make everything sort of coherentand come together today. Is it did
twenty five? Honest to God twentyfive years ago. No meaningful improvement in
productivity there on the part of Microsoft. It just leaves you scratching your head.
And that's what AI is supposed tobe able to us the burden of
you there. But you know,if you work with a document in Microsoft,
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you're formatting charts individually. For example, You're doing the same darn thing
to every chart. It's so repetitiveand tedious. Why does this software I'm
gonna get off on a little bitof a tangent ry. I'll keep it
really brief. Why do I haveto keep repeating the same thing? Why
doesn't this thing recognize that I wantto do every chart the same way,
or that I want to repeat thelast, say, formatting changes that I
(26:40):
made to something in to subsequent materials. I just don't get why I'm spending
as much time in Microsoft's software specificallytoday as I Some people probably think,
well, maybe you just suck atit, and that could be part of
it. Part of it too thoseif they haven't made it easier for people
to use TBD. I guess onthe impact on Target mark is not too
(27:03):
optimist. I'm just a little bitunderwhelmed. I love Target nothing against it,
and of course it makes sense,right I do think you do you
by No, I'm not blown awayby the only thing I was trying to
think in my head. Maybe thisreplaces employees at some point in time.
That was alluded to in the article. Where do you need to have as
many people walking around the store toanswer questions? If they could just have
some sort of Kiosk like thing orjust develop the app to where the end
(27:26):
consumer could just search where is thisitem? Maybe that cuts down on headcount.
McDonald's experience is probably a cautionary itis. We saw this week that
their software and I'm going to againbe crude and oversimplified, but it couldn't
distinguish between various accents. Yes,yes, so I can. This can
is is a I again, I'mjust talking very general here. Is it
(27:47):
capable of fielding questions from a diversegroup of consumers? Well, at least
with what I'm speaking of here,they would be typing in, you know,
their their questions rather than speak.Now people need to be you know
then the right one of what whydo you even go into the store?
Why not you just order it onlindI'm not saying this won't on the margin
be beneficial. I'm just saying it'snot. And nobody's making the claim that
(28:08):
it's life changing. But it's it'sit's it's a bit underwhelming. Remains to
be seen. Quick note here we'vegot China. They've spent about two hundred
and thirty billion dollars to build outits EV industry. A new study fines
that was done between two thousand andnine and twenty twenty three. Scott Kennedy,
(28:30):
the Trustee Chair of Chinese Business andEconomics at CISI, this is something
that isn't a surprise to me.Mark they've subsidized EV industry entirely, China
not entirely, but they've had atremendous amount of help. In fact,
it's close to twenty percent of aEV total EV sales over that period of
(28:51):
time, that fourteen year span wasrelated to government support from China. And
now as a result you have theEU and the US slaping significant import tariffs
on electric vehicles from China. Theprofit margin that blew me away the most
is BID, which is one ofthe biggest EV makers in China. The
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net profit per car has declined downto seven hundred and forty dollars per car,
and it's just minuscule margins that they'remaking on these these cars. Look,
if the goal is to get greenhousegas emissions down, the quickest way
to do it. You said thisis to just import subsidized Chinese electric cars
and let American consumers go nuts.If you're not embarrassed to drive one of
(29:33):
those things, and I probably wouldn'tbe. I don't know it all to
say it's probably good for the globalwarming problem, that part of it.
It certainly we have this. Wehave these two objectives that are in perfect
tension. We want to create asmany jobs as possible, keeping them create
or keep them here, while atthe same time increase EV purchases. I
(29:57):
say those two things are intention becausewe could achieve the former more quickly if
we were just willing to allow moreimports. But there's this protectionist policy goal
wrapped up with the goal of theEV adoption, and it makes it harder
to achieve the latter. I guessit is. And then at some point
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in time, though, you know, you just you want to make sure
that you have the infrastructure in place, and you don't just let a country,
you know, subsidize it, andyou don't want to be relying on
just China for all your EV's outthere, you know, just to have
all of your eggs in that basket, because all the gplical issues that could
come at that point in time fromjust being relying on China. Yeah,
(30:40):
I don't know. It starts tobe my head starts to spend between relying
on this country or this segment ofthis portion of the supply chain for this
good or that good. What shouldwe protect? What should we not protect?
I'm getting increasingly uncomfortable with these conversations, as you can. As you
(31:03):
could tell, there are no answersto these questions. Sounds like a good
time for a break. We're goingto take a quick break here on the
Finished Exchange, and when we comeback, we're going to be talking about
tourism in Europe. If you're planninga trip to Europe this year, you're
not alone. They've really seen asignificant uptick of American tours. We're going
to talk about that right after thisbreak. Miss any of the show.
The Financial Exchange Show podcast is availableon Apple, Spotify, and iHeartRadio.
(31:29):
Hit the subscribe button and leave usa five star review. This is the
Financial Exchange Radio Network. The FinancialExchange Show podcast drops every day on Apple,
Spotify, and iHeartRadio. Hit thatsubscribe button and leave us a five
star review. You're listening to theFinancial Exchange Radio Network. Europe has a
(31:56):
new economic engine. It's US Americansout there. Lisbon is reporting that they've
seen economic growth of eight point twopercent from last year in a twenty percent
rise in tax revenue. The mayorhas claimed that it's just been a fantastic
time for the city of Lisbon,the best in the last forty five years,
(32:16):
and we're really seeing it across allof the EU. Back in the
twenty tens, Mark Germany was ableto get the EU out of its economic
slowdown and debt crisis through its manufacturingprowess and the exportation of vehicles and other
capital goods to China. But reallythe story more recently in some of the
(32:37):
EU economic resurgence in companies like Greeceand Spain in Portugal has been all tied
to American tourists, and Mike onthe show quotes some statistic out there that
there's an I believe it's forty percentof Americans are planning European travel, and
that was his sort of new signe. It was thirty oh, way like
(32:57):
half the country's going to Europe,thirty or forty. I want to make
it was those with passports thirty totypercent. We're playing travel within the national
year or so. I was blownaway by he was using that as basically
the proxy for the Taylor Swift inflationindex, where he previously remarked that the
amount that people were willing to spendon Taylor Swift tickets was evidence that inflation
(33:19):
had gone out of control because peoplewere willing to pay thousands of dollars to
go see here, similar here withthis story regarding European travel. That is
an expense things up. But yeah, you could blame Taylor Swift if you'd
like a little bit of both.But sure, however you slice it.
If you look at Spain, theyhave seen themselves become Europe's fastest growing economy.
(33:42):
Three quarters of that growth is tiedto tourism. One out of four
jobs is linked to tourism, andGreece is another one which you would not
really think of as a likely economicstar. Forty four percent of their jobs
have been tethered to tourism too.So the long and short is that a
lot of people from the United Statesare going over to Europe. Ben and
I were just talking off air.It's probably the worst time to go over
(34:05):
the summer. I mean not inthe sense of the weather, but just
it's a really popular area, specificallyif you're talking about Lisbon or Greece,
particularly in the you know, mikinosin some of those other areas. But
there has been a tremendous amount ofdemand and it probably picks up from the
post pandemic era where a lot ofpeople are looking to get out there and
travel. That has been the oneconstant that we've seen from a spending pattern
(34:30):
is less focus on spending on durablegoods furniture, you know, patio furniture,
watch, a dryer, things likethat. A lot more money allocated
from US households to traveling abroad andto getting out there and seeing the world.
Vacationing in Europe is cool and all, but there's no better place to
vacation than the United States. VirginIslands, Saint Croix, Saint Thomas,
(34:51):
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to visit USVII dot com. Learnabout all three islands and plan the ideal
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so head to visit USVII dot comfor more information and to reserve your trip
(35:34):
today. That's visit USVII dot com. Another concern that is prevalent every day.
It seems like I'm constantly talking toclients out there that are a victim
of some sort of cybersecurity hack outthere, whether it be on their bank
account, credit cards, it's everywhere. And there's a story that Ben covered
a little bit in Wall Street Watchwhere hackers are auctioning off stolen lending tree
(36:00):
consumer data and this is just goingto continue to be a problem. What
had happened was a subsidiary of lendingTree detected some unauthorized access on a cloud
database that was hosted by Snowflake,and as a result, there has been
cyber criminal forms where there has beendata posted there for sale and it just
(36:22):
is going out there to whoever thehighest bidder is going to be, and
just really emphasizes the point that Itell all clients that you have to be
extremely careful with your data. Butat some point, though, Mark,
we've all been subject to a databreach that's impacted us. However careful you
want to be with your data.We've had hospitals get hit. There's lending
Tree, there's story after story ofinstances. Equifax was another data breach out
(36:45):
there where more or less most ofour data has likely been breached out there.
It just takes the end client tobe hypervigilant in terms of whether that's
freezing their credit or taking measures tomake sure that they are monitoring their financial
situation on a daily basis. Beyondfreezing your credit, which is pretty easy
to do in free what do youtell people? How can you protect yourself
(37:09):
you always want to make sure thatif you are fielding a call that from
some area that claims to be whetheryour bank or your finance institution, and
they're claiming that there is an unauthorizedcharge or something that doesn't look right,
say okay, I'll hang up,let me call you back, and then
(37:29):
make sure you're doing the due diligenceto actually look up what is the proper
phone number for my Bank of America, for my chase wherever it may be,
from a reputable site that you cangarner the information from. That's really
important because we see a lot ofattempts there. Do not just let some
technician on the phone take over controlof your computer, because we see a
(37:50):
lot of instances where they get controland then it's a done deal from that
point. Obviously, passwords, makingsure that those are being changed or they're
complex enough. No password one two. I was really hoping for just one
answer on this. Okay, wetalked about it a lot. This sounds
like a lot of work. Wetalked about it a lot. It's important.
I didn't realize you were so wellinformed. I'm sorry, Ben,
(38:13):
We're gonna take a break. That'sall the time that we have for the
first hour of the show. Makesure you're keeping your information well protected.
We're gonna have a whole lot moreinformation here on the second hour of the
show. Stick us here on thefinancial exchange. We'll be right back after this
The Financial Exchanges produced by Money MattersRadio and is hosted by employees of the
Armstrong Advisory Group, a registered investmentadvisor that provides investment advisory services. All
opinions expressed are solely those of thehosts, do not reflect the opinions of
Armstrong Advisory or anyone else, anddo not guarantee profit. Investments can lose
money. This program does not offerany specific financial or investment advice. Please
(00:21):
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are not affiliated. This is theFinancial Exchange, with Paul Lane and Mark
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(01:02):
DAV five K Boston is presented byVeterans Development Corporation Faces The Financial Exchange with
Paul Lane and Mark Fandetti. Welcometo this Friday edition of The Financial Exchange.
Paul Lane, Mark Ndetti and BenKitchen here with you as we await
the kickoff of the Celtic's victory paradeto start at eleven am through the streets
(01:26):
of Boston and on the duck boats. And we head into a summer weekend
that looks like it's going to bea hot one. Taking a look at
markets at the moment, relatively mixed, pretty slow trading to at this point
with the SMP off about a quarterof a percent and the Dow Jones up
over fifty points. We're going tostart our show today by talking about this
little known company called n Video thathas been dominating the market headlines and Mark,
(01:53):
I thought a nice piece here laidout on the Wall Street Journal.
Nice is probably not the right wouldput it, but informative as to just
the impact that Nvidia has had onthe stock market as a whole this year
and even dating back to last yearas well. It's grown to a size
that is just a behemoth in thespace of the likes of Microsoft and Apple.
(02:15):
Certainly, its impact on the technologysector of the S and P five
hundred, which has close to abouta thirty percent waiting has been large,
and I want you to to kindof cover that a little bit. But
if we look at just the headlineshere in this piece regarding Nvidia, the
stat that blew me away the mostwas that I believe since twenty twenty two,
(02:36):
forty four percent of the gains thatwe've seen have been attributed to in
Nvidia's meteoric rise, and that tome was staggering. Though I'm not overly
surprised just with how much it's goneup, but it's just been a tremendous
increase that we've seen over the lastyear and a half or so. Yeah,
I see that, and it's impressive. It's only human to be wowed
(02:59):
by the size of the company,which I don't know the pace of doubling.
I should have done a back ofthe envelope on that, but it's
doubling at a rapid pace and itcontinues to plow ahead, which given its
size, is pretty remarkable because growthrates typically slow down. Whether or not
that's reasonable, whether or not that'spredicated on reasonable expectations for sales and other
(03:23):
metrics that investors actually care about isa slightly different question. But its run
up has been impressive, and it'sthe percentage of gains in the broad market
which you're attributable to that run upare also remarkable. So it's hard not
to be impressed by that. Butthen again, it's always something, something's
(03:43):
driving the market. Sometimes it's verylopsided, like it is today. Sure
it seems unusually lopsided. And theauthor James McIntosh, who's widely respected columnist.
He writes now for the Journal,he used to write for the Financial
Times. I don't know where hewas before. That makes the point that
this could be a problem, Iguess for the market because if investors turn
(04:04):
on Nvidio for whatever reason, orif the growth simply slows, which has
got to at some point, ohyeah, where are the gains in the
market going to come from? Youcan always add I'm not worried about that.
You can always ask that question.He may he may have a point,
but you can always ask that question. I wouldn't worry too much about
it. That's a good point tomake that because that is something that you
do think about. If you lookat just the S and P. Five
(04:26):
hundred and what it's made up of. Microsoft and Nvidia and Apple each represent
about seven percent of the S andP five hundred, so twenty one percent
total. If you further that lista little bit more to tie in some
other Magnificent seven names, Amazon,Meta, and Google. There's two different
share classes for Google, but I'mgoing to combine them together for purposes of
(04:46):
the percentage ownership or the percentage waiting. About thirty thirty percent of the S
and P five hundred is really tiedin those six companies, Microsoft, Nvidia,
Apple, Amazon, Meta, andGoogle. So to your point,
Mark, it's been the case beforethat these Magnificent seven got their nickname for
a reason. They were large contributorsto the market performance that we saw over
(05:06):
the last year plus, and there'sbeen other times historically where a constituent of
a couple companies have led to alot of market gains. But from a
size perspective, it is reaching avery significant waiting and just as easily as
it can go up jeez, onehundred fifty percent year to date through today's
(05:29):
trading, it can revert back downin the other direction, which could have
an outsize impact, although squel thatwould be bad but we don't know what
all else is going to be doing. Other sectors could rotate back into favor
or investor's sentiment, I should say, maybe could rotate back into pushing other
sectors into favor. Either way,that's very awkwardly put, but you know
(05:50):
what I mean, what we oughtto be thinking about as people who manage
other people's money, and what Isubmit that investors listening should be thinking about
our prospects for the economy more broadly. Now those are intertwined with prospects for
AI. You sort of can't separatethe two these days. But undoubted I
(06:11):
can predict one thing with near certainty, which is and video will not be
the talk of the town five orten years from now. It just won't
be. The growth will level off, it'll become mature. It may even
get displaced. We know that companiesthat depend on AI for chip design and
for servers and the other key componentsof data centers that Nvidia is now providing.
They companies like Microsoft and others arescrambling to develop altered They don't want
(06:34):
to be dependent on Nvidia, sosomething will displace it at some point.
Something else will therefore displace in Vidiaas the Apple is the darling of the
day for equity investors and life goeson. If you own a market cap
weighted index, you benefit from this. You'll also benefit from whatever comes next,
(06:57):
which is one of the virtues ofowning could cap weighted index. And
by that I mean an S andP five hundred or a Russell one thousand,
or anything that has broad market indexif fits in your four one K
plan, and it's called a broadUS market index or something like that,
or a large cap index. Youown all this stuff. You don't have
to worry about today's or even tomorrow'swinners. You'll you'll own them in proportion
to their share of total so calledmarket capitalization. It is interesting, as
(07:21):
we almost get six months through theyear here, just in Vidia's gains relative
to some of the other companies inthe S and P five hundred and mark.
You mentioned that point that to me, you almost can't separate them as
what you said in terms of theAI frenzy and hype versus just what is
the broad economy doing. But insome ways the trading has been really powered
(07:46):
by the gains of Nvidia and Appleand Microsoft and others. That's what we've
seen from a year date stock performance, while the other about one hundred and
ninety eight stocks in the S andP five hundred haven't managed any gains this
month. Half of the S andP five hundred for the course of the
year is averaging, you know,relatively thought, and is that unusual?
I don't have perspective. I'm sorry, I don't have the data. You'd
(08:07):
need a Bloomberg or facset and thena lot of time to crunch the numbers.
I don't know. Forgive me foradmitting my ignorance in front of everybody.
I don't know whether today's concentration isextreme and unprecedented. My sense is
it is nearly unprecedented, with theexception of the dot com bubble and maybe
the nifty to fifty bubble of thevery late sixties early seventies. I think
I'm getting those time frame bookke ndsright, but it's not totally unprecedented.
(08:31):
Nor do I think the lopsided natureof recent gains is totally unprecedented. Something's
always coming out on top, whichagain is the reason why people's who aren't
professional stock pickers like may buy anindex fund. Sure, I don't something's
going to do better in a relativesense. I just don't know what stock
(08:52):
or sector will be in favor ata particular point in the market cycle.
Owning a broad based index fund,at the risk of repeating myself, provides
you with some insurance that you don'tmiss out. I'm sure it's not unpresident
in the sense that Microsoft and Applehave had these tremendous years where their performance
has significantly impacted the SMP five hundred. So this isn't a one It does
seem like usually it's the group togetherthat it's maybe four or five names that
(09:16):
are driving it. Not to saythat Microsoft and Apple haven't been a little
bit added of particularly Apple more sorecently. But really this idea that on
the AI front there has continued tobe a significant amount of optimism and you're
now seeing what we'll talk about sortof a trickle down impact to some of
these other companies, but on theother sectors of the market just haven't seen
(09:39):
as much of that same growth becauseof perhaps the worry of slowing a slowing
economy. Well, there are reallyI think a couple things to my layman's
eye going on here. This isnot I don't look at this sector carefully.
There are people who are deeply specializedin this area, but and videos
(10:00):
sales are for real. Yes,we know that that's important to note,
but will that translate into something thatwhich we all care about Probably a little
bit more unless you have a personalstake and in Vidia specifically, which is
economic growth. How is this goingto play out for the economy and stocks
in the longer run? That isan open question. Certainly. We're going
(10:20):
to take a quick break here onthe Financial Exchange, but when we come
back, we'll be doing a littlebit more talking about AI and Nvidia and
its impact on the tech sector,and we're also going to be discussing the
Chinese electrical vehicle market. That's rightafter this break here on the Financial Exchange.
The Financial Exchange is now available onyour Alexis smart speaker has to play
(10:43):
the Financial Exchange and catch up onanything you might have missed. This is
the Financial Exchange Radio Network, breakingbusiness and financial news first throughout the day
only here on the Financial Exchange RadioNetwork. The Financial Exchange is a proud
(11:03):
partner of the Disabled American Veterans Departmentof Massachusetts. This year's race is Saturday,
November ninth at Fort Independence on CastleIsland and registration is now open.
Help us support these great American heroesby visiting DAV FIVEK dot Boston and registering
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(11:28):
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by Veterans Development Corporation. Just towrap up our discussion on in video,
we were covering in the first segmentof the show just the impact that it's
had, particularly if you look atthe market this month, it has led
(11:50):
to a lot of the gains thatwe've seen month to day, and then
if you go back to twenty twentytwo, to forty four percent of the
S and P five hundred gains havebeen tied to Nvidia and its performance over
the last close to two years orso. What's also happened is we've now
seen more recently companies that are inthe same ecosystem of the tech stack spread
(12:13):
i'll call it, where they're eitherdoing chips, software components, just any
part of the IT infrastructure have startedto benefit from the optimism and continued further
for AI. Oracle is an exampleof that. Their stock was up seventeen
percent off news that they had closeda deal with open ai to have open
(12:35):
ai its large language model trade trainedand be held on the cloud infrastructure.
For Oracle, you've also seen HughA. Packer Enterprises up about twenty four
percent as AI demand has really causedinvestors to reassess their outlook. There's another
story in here, Mark, whichis just a classic could have, should
(12:56):
have, would have where Soft Bankchief CEO was mentioned by saying that they
had a five and a half percentsteak or five percent steak and in Vidia
back in twenty nineteen. They soldit at that point in time made three
point three billion dollars on their investment, but that investment gain today would have
been under fifty billion. A lotof people, a lot of us.
I just I wanted to point itout because that is that's the market,
(13:20):
man, that is the market entirely. If I had what I mean,
it's all would it, could haveshould have? You know everyone has these
I mean, not this dollar number. That's why it gets listed in the
Wall Street Journal, because one hundredand fifty billion is a really big number.
But everyone has these stories over time. If I only bought Apple back
the difference. This guy's a fiduciary, he's It's as if you had a
pension funder a four one K plan. There's a manager on the roster,
(13:41):
and they sold in video prematurely.They do deserve to be asked, what
was your thesis when you bought it, Why did you think it was undervalued
at the time, how much didyou think it was going to go up
to? And why this guy shouldbe able to answer those I'm not I'm
I'm literally pointing a finger at thestory, but I'm not. I don't
mean to point the finger at him. He was probably acting like a responsible
fiduciary, and it sounds like hewas. He says it hit his price
(14:05):
target. He needed to de risk, as these guys like to say,
and he thought his capital could bedeployed more productively elsewhere. That's his He's
executing his duty as a fiduciary.He acted prudently. Fiduciary's duty is not
to is not to buy things wildlyhoping something will go up infinitely. It's
(14:26):
to be a prudent steward of athird party's money. We do that every
day here, and a lot ofpeople do so. I don't I don't
take issue with the process as longas it was based on sound decision making,
and it sounds like it probably was. Oh, absolutely not. He's
I guess, I'm I'm quibbling withthe tone of the story. We like
his job is to guess in advance, what's going to, you know,
(14:48):
go up two hundred percent a yearindefinitely, if of course not. And
to be clear, they do outlinein the piece this is SoftBank Group founder
Masayoshi's son, who has made tremendousinvestments in other companies like Ali Bob and
others and armholdings that have done tremendouslywell. So it's just something that catch
the eye. And you know,the quote is the fish that got away,
(15:09):
but certainly has done a good jobhere. I think there's maybe a
little lesson here. If someone ifyou have an advisor and they bought in
video for you two years ago,it sounds ridiculous to question the decision.
Oh my god, this thing's upsix hundred percent since then they're a genius
maybe, or maybe they're lucky.Go back and look at the notes.
What was there, as they sayin finance circles, thesis at the time,
(15:30):
What was their idea, what motivatedthe purchase, what did they say
they thought they thought the stock woulddo, and why most, in my
experience, just kind of got lucky. Now that's okay, there's room for
that. There's an strong element ofluck in every investment manager's performance. But
it's it's good, especially in exuberanttimes like these, exuberant for certain sectors
(15:52):
and companies to question an investment managersto why they bought it in the first
place and whether or not the thesisthat underlied that decision is still valid.
I'm not talking about just in Nvidiahere, I'm talking generally. It helps
you separate luck from skill. Sure, sure, no question about it.
I know that it sounds counterintuitive likeit went up, you idiot. Just
(16:12):
celebrate and the guys obviously a geniusmaybe, but maybe not. Theater needs
to be a little bit of timefor celebration here and there when you do
pick a strong investment. But switchinggears a little bit. We got some
fresh home price data come out thismorning where we saw home prices rising in
the month of May to a newhigh. We continue to have low inventory
(16:37):
spurring bidding wars amongst home buyers insome markets. What we saw the national
median existing home price rose six percentin May from a year earlier to four
hundred and nineteen thousand. That isa record percentage wise. Going back to
data from nineteen ninety nine, wehave had mortgage rates peel back a little
(16:57):
bit. That's not reflective in thisdata here, where we were sitting at
about seven point one five percent onthe thirty year fixed mortgage. That rate
is now in and around six pointeight percent or so. So perhaps that
will spur on more activity, butthe continued story will always be the amount
of homes available. And as perthis most recent data dump here from the
(17:19):
National Assertion of Realtors, we arestill at a point where affordability is a
significant challenge. The decline at homesales was expected, but we still have
very minimal inventory out there. Mark, Yeah, I guess I'm not.
I don't find low sales increasing pricesto be inherently contradictory when you look at
(17:41):
the but it's it's presented that way. Here, home prices are up fifty
percent on average according to case Shillor not Nar, which is the source
of the data we're talking about rightnow. But fifty percent since twenty twenty.
That is an unprecedented rise, andno era have prices risen that quickly,
that steeply. That's equity like infact, that would be awesome performance
(18:03):
from equities that acuities are up,you know, like ninety percent over the
same time frame. So house pricesare behaving more like stock prices than like
residential housing prices, at least asthey've historically behaved. And you wonder,
in light of very slow population growthand solid but not fantastic economic growth in
(18:23):
the rearview mirror look at going lookingahead, economic growth is expected to be
modest by historical standards. Will therebe sufficient economic propellant for this to continue?
I don't know. We're just we'redealing with still a massive a problem
(18:45):
of massive undersupply relating to the GreatRecession and the lack of building that occurred
during that seven eight year period thatsurrounded the Great Recession. Yeah, it
really followed, I should see.You really can't size that point enough.
It just has had a tremendous impactfrom a long term perspective. We also
saw new housing starts yesterday that datacame out that was down about five and
(19:10):
a half percent, I believe monthover month in terms of the amount of
new home construction that we've seen acrossthe United States. Taken a quick look
at markets, We've got markets relativelyin mixed territory here, with the S
and P five hundred off about eightor nine points, in the Dow Jones
up about a little more than onehundred points. We're going to take a
quick break, but when we comeback, we'll have more detail on the
(19:33):
markets with Wall Street Watch. Likeus on Facebook and follow us on Twitter
at TFE show. Breaking business newsis always first right here on the Financial
Exchange Radio Network. Time now forWall Street Watch. A complete look at
(19:56):
what's moving markets so far today,right here on the Financial Exchange Radio Network.
All right, Well, markets arein mixed territory as we look to
close out a shortened trading week.The Dow Jones is up one hundred and
two points, the S and Pfive hundreds down eleven point twenty five points,
Nasacs down fifty seven points, andthe RUSS two thousands, down six
(20:18):
point three points. In video,shares are down three point eight percent,
adding to losses from Thursday, whenin Vidia closed down three point five percent.
The decline comes after the AI chipmaker on Tuesday briefly top Microsoft at
the as the world's most valuable publiccompany. Athletic clothing maker Nike is up
point eight percent following an upgrade atOppenheimer to Outperform from market Perform. The
(20:44):
firm also reinstated Nike as a topmegacat pick, saying that the stock is
poised to rebound gradually as the companyrefocuses on product innovation and brand building.
Gilliad Sciences stock rose four percent.On Thursday. Gilliad announced that an HIV
prevention shot succeeded in a late stagetrial. Shares of the online lending marketplace
(21:04):
lending Tree were down one point eightpercent. Bloomberg reported that hackers are now
auctioning off stolen data from the site. Lending Tree was the victim of a
cyber attack against cloud computing firm Snowflake, and finally taking a look at Apple,
Applestock is up half a percent followinga price increase from Bernstein analyst Tony
(21:26):
Sakanagi asserted that the more bullish outlookis tied to his view that Apple can
emerge as a leader of the artificialintelligence boom, not a lagger. I
am ben Kitchen and that was WallStreet Watch. Target is trying to figure
out AI and how it is goingto change the retailer's business model. In
(21:48):
the first infancy form, it willbe a chatbot that they are rolling out
to help workers better answer questions fromshoppers and workers. And immediately Mark I
thought of home Depot as a primecandidate and lows for this type of technology.
Now I know that home Depot doeshave an app where you and I
can log on and just enter inan item to try and determine what aisle
(22:11):
it may be in. But that'smy biggest problem stepping in there is trying
to find out where things are,and if you ask people there, they
often are not the most helpful inmy experience recently, So if they're able
to unveil this to employees there,then that would be a great help.
This is what they're trying to dowith Target, where it will help answer
questions on where items are. Itwill allow Target workers to more easily get
(22:33):
information to how as to how toreboot the cash register and roll clients in
their loyalty programs, so they're unveiliantin about four hundred stores as a test
run, and maybe to most workersin their two thousand locations in August.
Thoughts a little underwhelmed. Okay,this is again. Do you agree with
(22:55):
me on the home depot lovest oryou don't have trouble fund anything? No?
No, no, I do.I normally go on the app and
does that work pretty well? Locatethe Yeah? In my experience it does.
Yeah. Yeah. I'm not inevery week. I mean, I'm
sort of a do it yourself butI'm not there every week. So maybe
people who are more frequent patrons findit more useful than I do. But
(23:18):
I'm wondering. Know. We talkedin the last segment about the valuation,
whether the price and as a consequenceof evaluation of companies like Nvidio, and
what needs to happen for those valuationsto be realized. AI has to permeate
the economy, change our way ofliving. This ain't it. This is
why I say I'm a little bitunderwhelmed. This is not what I had
(23:41):
in mind when I thought life changingtechnology, so I get to where I
want to get or need to getand target a little bit quicker. Compare
this to the changes wrought by theInternet. Now having lived you guys may
not have lived through it, soI don't want to sound like the know
(24:03):
it all old guy, but thoseof us who did live through it can
testify it was life changing. Therewas new technology coming online regularly that made
your job easier, that allowed youto do your job more easily, that
made you more productive, and itwas just neat. It was a really
cool time to be working in aconsumer of technology. And even then,
(24:25):
the benefit to the economy was prettybrief. Productivity jumped for about eight years,
thus economic growth jumped, because productivityis a key contributor to potential economic
growth anyway. But then it subsided. So it came and went. This
is true of many technology, manyinnovations. I'll just speak generally over time.
(24:47):
So is this going to change thetrend is? So far, nothing
I've seen suggests that AI is goingto change the trend line of economic growth
that has prevailed over the past saycentury and a half in this country,
and that needs to happen for thegains that are being uh for the optimism
that's being priced in, if youlike to some of these companies by shareholders
(25:10):
right now is to be realized.And to your point, it takes a
long time for mass adoption to bereached. You know, when you're talking
about the unveiling of new technologies,maybe some firms have it initially, like
you're probably hertching back to whether it'sBloomberg or you know, the quote quote
system evolving, or you can pickany sort of technology and Excel spreadsheets,
(25:32):
whatever it may be. It takesa while for that to rease a mass
audience of all businesses out there.The same thing applies for AI's. Was
the PC got on desktops? Youknow it was at the time Lotus,
But Lotus is the precursor to Excel. Lotus one, two three was the
original spreadsheet at least that I remember. Excel hasn't changed much in thirty years.
No, it hasn't, No man, fact was I was lamenting this
(25:56):
point to Chugzadi yesterday. It takesme as long to move charts into a
document to make everything sort of coherentand come together today. Is it did
twenty five? Honest to God twentyfive years ago. No meaningful improvement in
productivity there on the part of Microsoft. It just leaves you scratching your head.
And that's what AI is supposed tobe able to us the burden of
you there. But you know,if you work with a document in Microsoft,
(26:19):
you're formatting charts individually. For example, You're doing the same darn thing
to every chart. It's so repetitiveand tedious. Why does this software I'm
gonna get off on a little bitof a tangent ry. I'll keep it
really brief. Why do I haveto keep repeating the same thing? Why
doesn't this thing recognize that I wantto do every chart the same way,
or that I want to repeat thelast, say, formatting changes that I
(26:40):
made to something in to subsequent materials. I just don't get why I'm spending
as much time in Microsoft's software specificallytoday as I Some people probably think,
well, maybe you just suck atit, and that could be part of
it. Part of it too thoseif they haven't made it easier for people
to use TBD. I guess onthe impact on Target mark is not too
(27:03):
optimist. I'm just a little bitunderwhelmed. I love Target nothing against it,
and of course it makes sense,right I do think you do you
by No, I'm not blown awayby the only thing I was trying to
think in my head. Maybe thisreplaces employees at some point in time.
That was alluded to in the article. Where do you need to have as
many people walking around the store toanswer questions? If they could just have
some sort of Kiosk like thing orjust develop the app to where the end
(27:26):
consumer could just search where is thisitem? Maybe that cuts down on headcount.
McDonald's experience is probably a cautionary itis. We saw this week that
their software and I'm going to againbe crude and oversimplified, but it couldn't
distinguish between various accents. Yes,yes, so I can. This can
is is a I again, I'mjust talking very general here. Is it
(27:47):
capable of fielding questions from a diversegroup of consumers? Well, at least
with what I'm speaking of here,they would be typing in, you know,
their their questions rather than speak.Now people need to be you know
then the right one of what whydo you even go into the store?
Why not you just order it onlindI'm not saying this won't on the margin
be beneficial. I'm just saying it'snot. And nobody's making the claim that
(28:08):
it's life changing. But it's it'sit's it's a bit underwhelming. Remains to
be seen. Quick note here we'vegot China. They've spent about two hundred
and thirty billion dollars to build outits EV industry. A new study fines
that was done between two thousand andnine and twenty twenty three. Scott Kennedy,
(28:30):
the Trustee Chair of Chinese Business andEconomics at CISI, this is something
that isn't a surprise to me.Mark they've subsidized EV industry entirely, China
not entirely, but they've had atremendous amount of help. In fact,
it's close to twenty percent of aEV total EV sales over that period of
(28:51):
time, that fourteen year span wasrelated to government support from China. And
now as a result you have theEU and the US slaping significant import tariffs
on electric vehicles from China. Theprofit margin that blew me away the most
is BID, which is one ofthe biggest EV makers in China. The
(29:11):
net profit per car has declined downto seven hundred and forty dollars per car,
and it's just minuscule margins that they'remaking on these these cars. Look,
if the goal is to get greenhousegas emissions down, the quickest way
to do it. You said thisis to just import subsidized Chinese electric cars
and let American consumers go nuts.If you're not embarrassed to drive one of
(29:33):
those things, and I probably wouldn'tbe. I don't know it all to
say it's probably good for the globalwarming problem, that part of it.
It certainly we have this. Wehave these two objectives that are in perfect
tension. We want to create asmany jobs as possible, keeping them create
or keep them here, while atthe same time increase EV purchases. I
(29:57):
say those two things are intention becausewe could achieve the former more quickly if
we were just willing to allow moreimports. But there's this protectionist policy goal
wrapped up with the goal of theEV adoption, and it makes it harder
to achieve the latter. I guessit is. And then at some point
(30:18):
in time, though, you know, you just you want to make sure
that you have the infrastructure in place, and you don't just let a country,
you know, subsidize it, andyou don't want to be relying on
just China for all your EV's outthere, you know, just to have
all of your eggs in that basket, because all the gplical issues that could
come at that point in time fromjust being relying on China. Yeah,
(30:40):
I don't know. It starts tobe my head starts to spend between relying
on this country or this segment ofthis portion of the supply chain for this
good or that good. What shouldwe protect? What should we not protect?
I'm getting increasingly uncomfortable with these conversations, as you can. As you
(31:03):
could tell, there are no answersto these questions. Sounds like a good
time for a break. We're goingto take a quick break here on the
Finished Exchange, and when we comeback, we're going to be talking about
tourism in Europe. If you're planninga trip to Europe this year, you're
not alone. They've really seen asignificant uptick of American tours. We're going
to talk about that right after thisbreak. Miss any of the show.
The Financial Exchange Show podcast is availableon Apple, Spotify, and iHeartRadio.
(31:29):
Hit the subscribe button and leave usa five star review. This is the
Financial Exchange Radio Network. The FinancialExchange Show podcast drops every day on Apple,
Spotify, and iHeartRadio. Hit thatsubscribe button and leave us a five
star review. You're listening to theFinancial Exchange Radio Network. Europe has a
(31:56):
new economic engine. It's US Americansout there. Lisbon is reporting that they've
seen economic growth of eight point twopercent from last year in a twenty percent
rise in tax revenue. The mayorhas claimed that it's just been a fantastic
time for the city of Lisbon,the best in the last forty five years,
(32:16):
and we're really seeing it across allof the EU. Back in the
twenty tens, Mark Germany was ableto get the EU out of its economic
slowdown and debt crisis through its manufacturingprowess and the exportation of vehicles and other
capital goods to China. But reallythe story more recently in some of the
(32:37):
EU economic resurgence in companies like Greeceand Spain in Portugal has been all tied
to American tourists, and Mike onthe show quotes some statistic out there that
there's an I believe it's forty percentof Americans are planning European travel, and
that was his sort of new signe. It was thirty oh, way like
(32:57):
half the country's going to Europe,thirty or forty. I want to make
it was those with passports thirty totypercent. We're playing travel within the national
year or so. I was blownaway by he was using that as basically
the proxy for the Taylor Swift inflationindex, where he previously remarked that the
amount that people were willing to spendon Taylor Swift tickets was evidence that inflation
(33:19):
had gone out of control because peoplewere willing to pay thousands of dollars to
go see here, similar here withthis story regarding European travel. That is
an expense things up. But yeah, you could blame Taylor Swift if you'd
like a little bit of both.But sure, however you slice it.
If you look at Spain, theyhave seen themselves become Europe's fastest growing economy.
(33:42):
Three quarters of that growth is tiedto tourism. One out of four
jobs is linked to tourism, andGreece is another one which you would not
really think of as a likely economicstar. Forty four percent of their jobs
have been tethered to tourism too.So the long and short is that a
lot of people from the United Statesare going over to Europe. Ben and
I were just talking off air.It's probably the worst time to go over
(34:05):
the summer. I mean not inthe sense of the weather, but just
it's a really popular area, specificallyif you're talking about Lisbon or Greece,
particularly in the you know, mikinosin some of those other areas. But
there has been a tremendous amount ofdemand and it probably picks up from the
post pandemic era where a lot ofpeople are looking to get out there and
travel. That has been the oneconstant that we've seen from a spending pattern
(34:30):
is less focus on spending on durablegoods furniture, you know, patio furniture,
watch, a dryer, things likethat. A lot more money allocated
from US households to traveling abroad andto getting out there and seeing the world.
Vacationing in Europe is cool and all, but there's no better place to
vacation than the United States. VirginIslands, Saint Croix, Saint Thomas,
(34:51):
and Saint John have everything you needto enjoy a spectacular, romantic getaway or
a week long family vacation. Fromthe moment you arrive, you'll fall natch
in rhythm with the heartbeat of theislands. The weather is perfect all year
round, so book now and experiencethe most beautiful beaches anywhere in the Caribbean,
world class cuisine, iconic history,a wide variety of watersports, and
(35:12):
an energetic nightlife. There's no moneyto exchange, no passport required, and
travel from New England could not beeasier. Make your plans now by going
to visit USVII dot com. Learnabout all three islands and plan the ideal
vacation for you and your family.America's Caribbean paradise is waiting for you,
so head to visit USVII dot comfor more information and to reserve your trip
(35:34):
today. That's visit USVII dot com. Another concern that is prevalent every day.
It seems like I'm constantly talking toclients out there that are a victim
of some sort of cybersecurity hack outthere, whether it be on their bank
account, credit cards, it's everywhere. And there's a story that Ben covered
a little bit in Wall Street Watchwhere hackers are auctioning off stolen lending tree
(36:00):
consumer data and this is just goingto continue to be a problem. What
had happened was a subsidiary of lendingTree detected some unauthorized access on a cloud
database that was hosted by Snowflake,and as a result, there has been
cyber criminal forms where there has beendata posted there for sale and it just
(36:22):
is going out there to whoever thehighest bidder is going to be, and
just really emphasizes the point that Itell all clients that you have to be
extremely careful with your data. Butat some point, though, Mark,
we've all been subject to a databreach that's impacted us. However careful you
want to be with your data.We've had hospitals get hit. There's lending
Tree, there's story after story ofinstances. Equifax was another data breach out
(36:45):
there where more or less most ofour data has likely been breached out there.
It just takes the end client tobe hypervigilant in terms of whether that's
freezing their credit or taking measures tomake sure that they are monitoring their financial
situation on a daily basis. Beyondfreezing your credit, which is pretty easy
to do in free what do youtell people? How can you protect yourself
(37:09):
you always want to make sure thatif you are fielding a call that from
some area that claims to be whetheryour bank or your finance institution, and
they're claiming that there is an unauthorizedcharge or something that doesn't look right,
say okay, I'll hang up,let me call you back, and then
(37:29):
make sure you're doing the due diligenceto actually look up what is the proper
phone number for my Bank of America, for my chase wherever it may be,
from a reputable site that you cangarner the information from. That's really
important because we see a lot ofattempts there. Do not just let some
technician on the phone take over controlof your computer, because we see a
(37:50):
lot of instances where they get controland then it's a done deal from that
point. Obviously, passwords, makingsure that those are being changed or they're
complex enough. No password one two. I was really hoping for just one
answer on this. Okay, wetalked about it a lot. This sounds
like a lot of work. Wetalked about it a lot. It's important.
I didn't realize you were so wellinformed. I'm sorry, Ben,
(38:13):
We're gonna take a break. That'sall the time that we have for the
first hour of the show. Makesure you're keeping your information well protected.
We're gonna have a whole lot moreinformation here on the second hour of the
show. Stick us here on thefinancial exchange. We'll be right back after this
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