December 2, 2024 • 38 mins
Chuck Zodda and Mike Armstrong discuss stocks ending November with a bang. Upcoming economic data to indicate the strength of the US economy. Carlos Tavares steps down as CEO of Stellantis. Intel CEO Pat Gelsinger is out. With discounts on offer, shoppers began to bite. Cyber Monday shoppers expected to set a record. As cash fades, small retailers embrace efforts to rein in swipe fees.
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Episode Transcript
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Speaker 1 (00:00):
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(01:04):
Veterans Development Corporation. This is the Financial Exchange with Chuck
Zada and Mike Armstrong.
Speaker 2 (01:12):
Kick it off the month of December.
Speaker 3 (01:13):
It's Chuck, Mike and Tucker with you, and we got
a busy week to get the month started.
Speaker 2 (01:19):
Here.
Speaker 3 (01:19):
A whole bunch of economic data ism manufacturing was out
at ten am this morning. We'll discuss that today. We
also have job openings tomorrow with the Joltz Report. On Wednesday,
we get ism services data, Thursday, some jobs claims. Friday
we get the Jobs report and consumer sentiments. So it
is a busy week that we've got here. But Mike, first,
let's recap kind of what we saw in November, where
(01:43):
the S and P five hundred had itself a nice
little month here at open, yeah, six percent up yeah,
open the month of November fifty seven to twenty three.
It closed the month of November at six thirty two.
So yeah, you saw basically about a five percent upward
move for the month of November here. This after a
(02:03):
choppy October, and obviously the question is, okay, like where
does this market go from here? Because you're sitting pretty
much at all time highs right now. You've got a
market that is expensive. It's trading twenty two times forward
earnings based on data from fact sets earnings insight from
November twenty second, So it's a steeply valued market. And
(02:26):
the questions are all about, hey, where can this market
go next year with a new administration in the White
House and one that views the stock market as a.
Speaker 2 (02:37):
Report card for how they're doing economically.
Speaker 4 (02:39):
Yeah, it's something we've discussed really since the beg since
the beginning of November and the results of the election
were known, which is it is going to be an
extremely I don't know how you describe it, narrow, needle
to thread or just delicate market to look forward here,
and as we've talked about it, there's going to be
some unique challenges. Pared to Donald Trump's first administration, there
(03:03):
were unique challenges then too, they're just a different set
of them as we head into twenty twenty five.
Speaker 3 (03:08):
So that's where we stand right now, and if you're
looking at this market, I think one thing that I
do like to point out, even though tech is leading
the way today, that has not been the case in
this market in recent months. If you take a look
at the different sectors of the S and P five hundred,
and if you say, okay, let's look at this year
(03:30):
to date first.
Speaker 2 (03:31):
And see what's been doing the best.
Speaker 3 (03:34):
Like, how many people had financials being the best performing
sector in the S and P five hundred this year
when it started?
Speaker 4 (03:39):
Yeah, not not likely a whole lot of them. Not
many Communication services number two. Okay, at least that one.
You say, Yeah, when I look at you know, communication
services and what falls under that umbrella, Okay, you know
you got Google and Meta in there, so there's some
tech exposure. Sure, I could see that being you know,
something that we're seeing, but you know, again, financials being
(04:00):
the leader kind of something that that gives you a
little bit of pause there, and then you continue down
the list as far as hey, what if you know
the best performing sector's been Utilities is number three. And
this one again, financials and utilities are not two things
that you typically see, as you know, things that move
in lockstep. Typically, financials a little bit more of a
(04:21):
cyclical exposure when the economy gets going, so today utilities
much more. Hey, let's let's you know, flock to them
when things pull back. But they've had this tailwind because
of artificial intelligence and the power demands for it in
the idea that hey, maybe this could be good for
you know, overall power capacity and overall size of the
market in the US, I mean to be, to put
(04:43):
it bluntly, you're talking about a potential forecast here where
we vastly expand demand of electricity, and notoriously utilities are
pretty slow to respond to that demand. And so I
mean economic if you've ever taken any economics course, that's
the first thing to teach, right, supply and demand. What
happens when demand goes up without supply increasing, you have
(05:04):
an increase in prices, and so pretty compelling story when
it comes to utilities.
Speaker 3 (05:09):
Next two sectors you got, you got industrials and consumer discretionary. Discretionary,
though I will caution was basically one of the worst
performing sectors in the market through late October. It's really
been Tesla's recent performance in the last month that has
kind of vaulted into that spot.
Speaker 2 (05:24):
And then you've got technology, which is again kind of
middle of the pack overall this year.
Speaker 3 (05:28):
But the interesting thing sp technology sector was the best
performing sector for the first half of the year. And
now if you look for you know, again, let's look
since July first, Just as an example, here the S
and P five hundred. I'm sorry, the SP five hundred
technology sector second worst performing sector since July first of
(05:51):
this year. The worst performing one is healthcare, and so
it's been everything else that's actually been carrying this market
for the last five months. I know that tech and
AI have gotten all this hype, but if you hopped
on the AI train halfway through this year, hasn't actually
been the right move for you.
Speaker 5 (06:09):
Like, outside of a few individuals.
Speaker 4 (06:11):
Yeah, inside of a few individual companies who you know,
we can talk about and have done quite well. If
you bought the sector right, it hasn't been the thing
that's carried now. I think the positive side of this,
to put some positive spin on it, is you don't
necessarily want to see one area or one company leading
and dragging up the entire market. What we are seeing
as an expansion into other areas, and that can be
(06:33):
that can be signs of a healthy, positive market. It
could also be signs of irrational exuberance and everybody just
buying everything. But you know, if I want to take
the optimistic view, I'll take it as Hey, many companies
are now profiting many companies have worked through what was
a tricky four years and are growing their margins and
investors are appropriately rewarding them.
Speaker 3 (06:56):
So let's touch on some of the economic data that
we're getting this week. I know this more. At ten am,
we got ISM manufacturing data. ISM manufacturing PMI came in
at forty eight point four compared to the previous reading
of forty six five.
Speaker 2 (07:10):
The expectation was for forty seven to five.
Speaker 3 (07:12):
And the question that I think I'm trying to sort
through on ISM manufacturing here is ultimately you ended up
with new orders, you know, surging from forty seven to
one to fifty point four. What I'm trying to figure
out is how much of this is companies trying to
front run tariff implementation and just trying to you know,
get stuff done before the end of the year and
(07:35):
really before January twentieth, and how much of this is
an actual real uptick in you know, longer term capacity
and capability.
Speaker 2 (07:44):
And I don't think that there's any way to tell
that right.
Speaker 5 (07:47):
Away here, Now, correct me if I'm wrong.
Speaker 4 (07:49):
At at forty eight something, we are still in a
pretty ugly survey for manufacturing in general. Right like this,
this is not exactly a strong story of expansion. It's
just a story of improvement compared to last month, it is, and.
Speaker 3 (08:05):
The bulk of that came through new orders. The interesting
thing that you did see in this data was even
though new orders move from forty seven to one to
fifty point four, prices paid went from fifty four eight
to fifty point three. So it wasn't something where you
saw a huge jump in prices as a result of,
you know, whatever expansion in activity was happening here relative
(08:25):
to before. But the other thing that you come back
to on this is, look, this is a survey. It's
it's soft data. It's not something where you can, you know,
conclusively say anything about this, especially because as we've been
talking look for the last two three years, two years
really in particular, this data series has been in the
dumps and in a spot where typically it's been indicative of,
(08:49):
you know, meaningful recession, and there's been no supporting economic
data around it that's really said, yeah, you're you're definitely
in recession. So this is one that I think I've
been trying to take it with a grain of salt
for the last couple of years because.
Speaker 4 (09:04):
It's indicated recession for the last several and we haven't
gotten one.
Speaker 3 (09:07):
Yeah, it just has not had the right signal to
noise ratio for quite some time here.
Speaker 2 (09:13):
But you did have some improvement here.
Speaker 3 (09:15):
Whether it means anything, I don't know that you can
make that judgment today. I think we are still much
more looking at Hey, show me what's happening with the
labor market, show me what's happening with housing. Those are
areas where I think you're getting better signal than a
place like this.
Speaker 4 (09:31):
I've heard from a lot of we've heard from a
lot of retail executives over the last month or so
about maybe criticizing tariffs and saying, look at a land
in higher prices for consumers. I don't know that we've
seen a lot definitive about whether or not those same
retailers are stocking up like we've talked about, Right, it
made logical sense for Walmart to go and buy a
whole bunch of TVs. You know that they assume that
(09:54):
they'll be able to sell in twenty twenty five. But
I don't know that we've seen a lot of evidence
that it's actually happening, And we might not for another
few months. But again to your point, it would make
a fair bit of logical sense for these companies to
stock up on inventory take a temporary hit to earnings
because of it, in order to avoid presumed sanctions and
rather tariffs.
Speaker 5 (10:14):
In twenty twenty five.
Speaker 2 (10:15):
Let's take a quick break here.
Speaker 3 (10:16):
When we come back, we got a couple of leadership
shakeups that we're going to be discussing. One it's Stilantis
one at Intel will fill you in on the details
after this.
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Speaker 3 (11:27):
Mike, we've got a couple CEOs on the outs here.
Speaker 2 (11:32):
Do you want to start with Stillantis?
Speaker 4 (11:34):
Sure, we can get started with Stilantis. And what's been
a recent I mean longer term. I think this company
has had problems, but quite frankly, their performance was pretty
decent at the onset of COVID, and they were able
to really charge some high prices, and it seems that
their reactions since about mid twenty twenty three to the
state of demand has been pretty abysmal, and their earnings
(11:59):
have reflected that.
Speaker 2 (12:00):
Yeah.
Speaker 3 (12:01):
So Stillantis, who is the the parent company of Chrysler.
Just if you're not familiar with them, if you're like,
what the heck is the Stalantis?
Speaker 2 (12:08):
Yeah, it's it's that.
Speaker 3 (12:09):
That's the name that they picked because I don't know,
they thought it sounded great and who knows why.
Speaker 4 (12:16):
Similar ring to a General Motors or a Ford Stillantis.
Speaker 3 (12:21):
Again, I've said this before, but I've had a really
bad case of Stillantis for the last sounds like and
it's it's been challenging to get over. My feet are
just not the same. But look, so Carlos Taveras, the CEO,
is going to be stepping down effective immediately. And Stilanta's
shares are down over forty percent this year. So it's
been a real you know, a real dog in markets
(12:44):
this year. And I think in terms of trying to
figure out, look, what is you know, what what's actually.
Speaker 2 (12:51):
Going on here? A couple of things.
Speaker 3 (12:53):
Number One, US dealers are saying, look, the cars that
you're sending us are really expensive compared to the competition,
so that that's part of it. Back in September, a
dealer advisory group wrote a letter to Tavares blaming him
for quote disastrous choices in handling the market, so like
basically saying, guys, this is just the cars that you
(13:14):
are giving us are not price competitive and so they're
just sitting on our lots. You've also had repeated pauses
of production at Italian plants this year. This led to
the first national auto strike in twenty years in Italy.
So again Italy look as an Italian like, we're not
exactly known for you know, dramatic.
Speaker 2 (13:35):
Periods of labor and political peace.
Speaker 3 (13:37):
But when you go twenty years without, you know, a
strike at auto plants, that's kind of notable, and then
to have one come back, it's, hey, gee, you know
what changed here? So I think overall, this is a
company where you're trying figure out, hey, what is it
that they do well and how do they, you know,
(13:57):
get to market the way that they want to at
the prices they want to. And ultimately it comes back
to leadership and clearly the board saying yeah, this isn't
gonna work.
Speaker 4 (14:08):
And so you got the CEO stepping down here, right,
And I think the stepping down of immediately is interesting too, Right.
This is not something where they're looking for any sort
of transition period or anything along those lines, which not
a huge head scratcher, but it's interesting to me that, hey,
this guy is out and out immediately and it's gonna
(14:29):
be again, like I said, a challenging turnaround because they
are I mean, what options do you have other than
lowering the prices of your vehicles that clearly aren't in
high demand.
Speaker 5 (14:40):
I don't know what do you think overall?
Speaker 3 (14:42):
I mean, I'm just trying to think of this in
comparison to the other major US automakers, most notably Ford
and GM.
Speaker 5 (14:49):
Yeah, and you.
Speaker 3 (14:50):
Look at it, and you know, I can look back
to the nineteen nineties and in the nineties all three
of them were kind of on pars far as like
the overall business and the operations of those companies. And
as we headed into the financial crisis. Remember GM and
Chrysler needed significant bailouts to get through the financial crislist
(15:12):
Ford the financial crisis.
Speaker 2 (15:15):
Ford did not.
Speaker 3 (15:16):
But it's something where it felt like this all really
started to change then, where GM came out of basically
that whole financial crisis and was stronger than it was
in the last twenty years. Some of that might be
because of how it went through that in terms of
its specific deal with the government. Some of it might
(15:37):
have been, you know, leadership coming out with Mary Barratt
taking over after the ignition switch issues that they had.
In any case, GM you could point to and be like, yeah,
that they came out stronger. Ford you look at and
you said, hey, they might not have needed money in
two thousand and eight and two thousand and nine, but man,
from a strategic perspective, they've made some missteps for the
(15:59):
last couple of years that have been problematic in terms
of probably investing too much on the EV side, But
they still have the F one fifty and all their
trucks they can rely on. You look at Chrysler and
Dodge and Ram and Jeep and Jeep, and you look
at it and you go many they kind of had
(16:19):
it made, I mean back in the nineties. And again,
I know everything can change over like twenty thirty years,
but you had again one of the most popular pickup
trucks in the country with the Ram, which now by
all accounts has kind of fallen behind both its competitors
in the F one fifty and what GM has with
the uh the Silverados, the Silverado and I forget the
(16:41):
GMC version of it is, but you know, they've fallen
behind there. The Dodge Caravan was like the way that
basically everyone hauled kids around in the nineties.
Speaker 5 (16:52):
One cheeting by Honda and Toyota.
Speaker 3 (16:53):
Now everyone's driving Rav fours and crvs now exactly, and
so you kind of look at it and you go, o, case,
there's this cheap business that's there, But in terms of
the overall scale, it's still niche compared to the other ones. Man,
you guys were kind of in the cafpird seat in
a couple places, and you just you couldn't get there,
and it's unclear what they really do well.
Speaker 5 (17:13):
Now.
Speaker 4 (17:13):
Yeah, look, I think what it comes down to is GM, Ford,
even Stilantis all have vehicles that owners are love and
are passionate about. They have valuable brands attached to them.
But Ford and Stalantis in particular have had very serious
execution problems. And I'd say Stillantis have been longer running
than Ford's. But in either case, like you look it forward,
(17:35):
the the quality control issues and the investment in EV was,
you know, in hindsight a real serious problem for them. Stalantis,
I don't know what to say other than yeah, it's
been a multi decade long fall from fall from grace
here in terms of the most popular vehicles that are
out there, still very valuable brands, but yeah, I can't
(17:57):
put it. I can't point to any on vehicle in
that lineup that is more popular than anywhere else. And
I can do that with Ford, I can do that
with General Motors.
Speaker 3 (18:07):
Intel with the CEO change as well. Pat Gelsinger has
been there for almost four years, he's out. Instead, you're
gonna have CFO David Zinzer and Products CEO MJ.
Speaker 2 (18:17):
Holtthouse.
Speaker 3 (18:18):
They're gonna be the interim co CEOs while they search
for a new leader for the company long term. Gelsinger,
if you're not familiar with him, everyone went when he,
you know, went back to run the company, everyone kind
of heralded the move because they said, look, you finally
have an engineer running the company again. He's someone who's
the chief technical officer at Intel, you know earlier in
(18:40):
the uh around the turn of the millennium.
Speaker 2 (18:42):
Hey, this is great.
Speaker 3 (18:43):
You're gonna get someone who knows the product and knows
how to build it running the company. But ultimately, some
really tough decisions that he made. Look in a business
that may take a while for those decisions to pan
out the way you know, he hoped. He's just not
gonna have a chance to see it through because the
performance in that four year time period has been quite.
Speaker 2 (19:02):
Bad for the company. Yeah.
Speaker 4 (19:03):
Look, it's an industry where you have to make investments
a decade ahead of time and hope that they pay
off well. And Intel's bets we're not in the right
areas for what ended up paying off, so Gelsinger is
going to be out.
Speaker 3 (19:16):
We'll see what direction Intel goes in for their new
permanent CEO. But right now, couple of interim co CEOs
running the company.
Speaker 2 (19:25):
Take a quick break here.
Speaker 3 (19:27):
When we come back, we got Wall Street Watch, and
then we're talking Black Friday.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter. Act
TFE show breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch, a complete look at what's moving market so
far today, right here on the Financial Exchange Radio Network.
Speaker 6 (20:00):
Well after the Dow in SMP five hundred notch their
best month of the year, investors are turning the calendar
to December with an ie on the latest jobs data
do out later this week. Right now, the Dow is
off by three tenths of a percent, or one hundred
and twenty eight points, SMP five hundred is up by
(20:21):
two tenths of a percent or twelve points, and the
Nasdaq is up nearly one percent higher one hundred and
eighty six points. Russell two thousand is off by about
a third of a percent.
Speaker 5 (20:31):
Let's see here.
Speaker 6 (20:32):
Tenyure Treasure reeled up by three basis points at four
point two to two percent, and crude oil is up
two thirds of a percent, trading at sixty eight dollars
and forty seven cents a barrel. Big news in the
chip sector this morning, where Intel announced that CEO Pat
Gelsinger retired from the company effective yesterday. Intel CFO David
(20:54):
Zinzer and Intel Products CEO Michelle Johnston holt House were
named in room co CEOs. Intel shares are up three
percent on the news. Meanwhile, Still at the shares down
by seven percent after CEO Carlos Tavares stepped down from
his role at the jeep maker effective immediately, with a
(21:14):
company sided different views between Tavares and the board of directors.
Sticking with the auto sector, where Tesla up by three
percent after its VP of AI software tweeted that version
thirteen of the company's full self driving driver assistance software
had started rolling out to some of its customers. JP
(21:36):
Morgan upgraded Gap stock to overweight, citing a strong start
to the holiday season and a multi year growth outlook.
Shares in the retailer up six percent today, and super
microcomputer shares are up by eighteen percent after a special
committee rule that have found no evidence of misconduct at
(21:56):
the AI server maker and appointed a new chief accounting officer.
I'm Tucker Silvan.
Speaker 2 (22:02):
That's Wall Street Watch, Mike. Let's talk a little bit
about Black Friday.
Speaker 3 (22:07):
We're starting to get some data on how the shopping
has gone. I'll quote here from the New York Times.
Shoppers spent ten point eight billion dollars online on Friday,
according to data on Saturday from Adobe Analytics. That's on
top of the six point one billion spent online on Thursday,
around nine percent more than the previous year. Another metric
for Mastercard's Spending Pulse, which measures retail sales across all
(22:30):
forms of payment, found the online sales on Black Friday
increased by nearly fifteen percent, but that instore sales increased
by only point seven percent, for an overall increase of
three point four percent. To the jewelry, electronics, and apparel
were the top purchases. Your thoughts on what we're seeing
so far from the holiday shopping season.
Speaker 4 (22:47):
Well, if it holds true, then that online spend surge
is pretty robust. Like that, that's a big, big number.
It still might only convert into a low single digit
overall holiday shopping season increase. And that's entirely possible. But nonetheless,
if online sales come in between nine and fifteen percent
up compared to last year.
Speaker 5 (23:07):
Then that's huge.
Speaker 4 (23:09):
The few questions that I have on this are how
much of this is timing?
Speaker 5 (23:14):
Is a big one.
Speaker 4 (23:15):
Right, So we had a very late Thanksgiving this year
compared to last year, and so did people put off
shopping so substantially that they had a much bigger order
to fill when it came to Black Friday, and so
they were just out there for more stuff. Is there
some other trend playing out here where people were apprehensive
about the election and we're putting off purchases and then
(23:35):
that passed and now you have a big surgeon spending coming.
I'm not entirely sure yet, but look, this is there's
no way to phrase this. I think is bad news.
I think the worst piece that you can pull from
this is that the in store shopping only increased zero
point seven percent year over year, and that would be
less than inflation, and so that is a bad sign
(23:55):
for the brick and mortar retailers out there, But most
of them are test painting in Cyber Monday and seeing
those sales shift elsewhere, I think.
Speaker 3 (24:04):
Let's talk a little bit about Cyber Monday with that.
I've got a problem with Cyber Monday, Mike.
Speaker 2 (24:09):
Do you know it's gotten too commercialized? What I mean?
Speaker 5 (24:15):
What do you mean? Like it's it's.
Speaker 3 (24:18):
Gotten too commercialized Cyber Monday.
Speaker 4 (24:22):
This isn't Valentine's Day, Chuck. It is invented by commercial
companies to get you to shop on Yes, I know.
That's that's the best the joke. That's the commercialized.
Speaker 3 (24:30):
You know, everyone always talks about all like Thanksgiving has
gotten too commercialized.
Speaker 4 (24:33):
Yeah, no, no, Cyber Monday's gotten too commercialized.
Speaker 3 (24:36):
But it used to be this nice point time when
everyone just sat on their computers and didn't talk to anyone,
and now it's all about shopping.
Speaker 5 (24:41):
Yeah.
Speaker 2 (24:42):
Uh.
Speaker 3 (24:42):
In any case, according to data from Adobe Analytics, uh,
Cyber Monday's spending is expected to be thirteen point two
billion dollars today. That's up six point one percent from
last year.
Speaker 2 (24:55):
Uh. This is also though again.
Speaker 3 (24:56):
It's listen, I can't tell you how many different retailers
I got emails from two three weeks ago. Hey, it's
you know Black Friday, come early. Our Cyber Monday sales starts,
you know on October thirty thirty. First, Like, it's just
everything has kind of been extended as well. So it's
very much an apples to oranges comparison in a lot
(25:18):
of cases, just because you're seeing these these sales pop
up earlier and earlier, partly, as you mentioned, because of
when Thanksgiving fell this year. It's the latest that ever
can fall on the twenty eighth, and so companies wanted
to get a jump on those sales as opposed to
having to wait until, you know, early December for Cyber
Monday sales to come in.
Speaker 5 (25:38):
Right, Yeah, I'm taking a look around.
Speaker 4 (25:41):
I mean, Chuck, I know that you completed your shopping
like three months ago, so you're not a relevant point
for this argument. But I haven't seen anything on Cyber
Monday that I was not seeing. I did a lot
of shopping over the long over the long weekend here,
we had our office closed on Friday, so I did
a fair bit of holiday shopping over the last few.
Speaker 5 (25:59):
Days and browsing here.
Speaker 4 (26:01):
I don't feel as though I would have gotten any
better deals over the last couple of days, and I
was buying the type of thing that you do look
for deals on, right, Like my wife and I reached
buying each other smart watches for the holidays. I bought
the kids some stuff on Amazon, and you know again.
Speaker 2 (26:18):
Wait, you already know, like you've already discussed what you're getting.
Speaker 4 (26:21):
Each other, not entirely, but in this case with like
some of the details on a smart watch, I was
just we had already talked about that one because we
bought it for we had a momentary freak op because
we had a family member with a health scare and
were like, all right, nope, we're both getting some smart
watches for the holidays here yep, but no for everything else.
Speaker 5 (26:42):
Now, we're not discussing that, but yeah, a lot of it.
A lot of our holiday shopping is usually about activities.
Speaker 4 (26:47):
Like we're going on a ski trip in February, so
guess what the kids are all getting ski gear for
Christmas this year because they have never gone skiing before.
Speaker 2 (26:56):
Tucker, you been poking around on anything.
Speaker 6 (26:58):
I always keep my eye on it and check out
the you know, the review websites if you will, that
are out there, and nothing. It's just information overload really
in terms of like going through all the categories and
seeing what the best deal is. It's just a lot
of information throwing my way that I don't have the
patience to sift through.
Speaker 2 (27:17):
And yeah, I.
Speaker 4 (27:18):
Don't find that to be a useful activity either. I
think what I find to be spent.
Speaker 2 (27:22):
Eight hours to save thirty two dollars on six.
Speaker 4 (27:25):
Different gifts, right, Like what I find to be enjoyable
and useful is Okay, I have a list of things
that I'm going to be shopping for this season, and
do you know, do I find any special deals on
those items? Do I feel like I'm getting a real
deal when I actually log in on Friday or Monday
and see did they discount it any further? I get
some of that endorphin rush, I guess when I see
(27:47):
that price knocked down. But yeah, going through Wirecutters one
hundred and fifty best Cyber Monday deals like forget about it?
Speaker 6 (27:53):
Like you have time for this, Like I'll go through
and look at categories that might pop out to me,
like Apple deals or like kitchen or gaming deals.
Speaker 2 (28:01):
That's it.
Speaker 6 (28:02):
I'm not gonna go through one hundred and fifty different
deals like forget.
Speaker 5 (28:05):
It, but oh, trampoline for seven hundred dollars.
Speaker 6 (28:07):
I didn't see that one.
Speaker 2 (28:08):
Uh yeah?
Speaker 3 (28:09):
And then shoulder surgery for two thousand on your deductible.
Speaker 5 (28:13):
I'm not great jumping on the trampoline.
Speaker 4 (28:15):
Come on, Mike, with your with your back, you shouldn't
be jumping on anything, correct.
Speaker 2 (28:19):
Yeah. Yeah, yeah. So the only Cyber Monday thing that
I do every year I.
Speaker 3 (28:23):
N towels like cool neat hey, listen, occasionally you need
new bath towels. I think new bath towels are a
great gift personally, but that's just me.
Speaker 2 (28:33):
Yeah.
Speaker 3 (28:33):
The only thing I do every Cyber Monday is the
liquor store that I shop at, they do a Cyber
Monday sale for unlimited gift cards every year, so I basically,
over the course of the year, I save up my
beer money and then they do it. It's a ten
percent off unlimited gift cards, so you save an instant
ten percent on all of your beer and wine for
(28:56):
the full year, and you just have to be dedicated
to save that money up, oh you know, the twelve months,
and then you're good to go, you know, for that one.
So that's my Cyber Monday purchase every year, including this one.
So it's I get something for myself on Cyber Monday.
It's because it's it's the best gift that you can get,
you know. Let's take a quick break here. When we
(29:18):
come back, let's talk a little bit about what we're
seeing in the world of credit card transaction fees right now.
This has been a topic that's been growing in terms
of the chatter about it recently with some potential legislation
coming through Congress. We'll talk about this when we return.
Speaker 1 (29:36):
Thankst us six one, seven, three, six, two thirteen eighty
five with your comments and questions about today's show, and
let us know what you think about the stories we
are covering. This is the Financial Exchange Radio Network, Business
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(29:56):
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Speaker 3 (30:06):
Mike, let's talk a little bit about this piece of
New York Times talking about how for small businesses, in particular,
the move away from cash and towards more buyers purchasing
products using credit cards is impacting their bottom line as hey,
with more credit card transactions comes more fees that they
(30:26):
have to pay to merchant networks your visas and master
cards of the world, and so in a business where
look margins are thinned, to begin with, if you got
to be paying two to three percent to a Visa,
MasterCard or Amex, it can really cause things to get
tight for you in your bottom line.
Speaker 2 (30:41):
Yeah.
Speaker 4 (30:42):
I mean for many retailers, this is the single biggest
line item that they end up paying on a year
to year basis is those credit card transaction fees. And
if you're a small you know, if you're Walmart, you
can negotiate the hell out of this thing. If you
are you know, the local toy shop in my town,
then you just take the prices. I don't have any
firm data on this, but I would be interested to see, Hey,
(31:04):
what is the cash in store spend as a percentage
of total sales in twenty nineteen compared to now.
Speaker 5 (31:13):
I don't even know who would.
Speaker 4 (31:15):
Track a data series like that, but you know, if
you took a look at those two, I'd be very
interested to see what portion of in store spending is
occurring on a electronic means versus versus cash. And I've
got to imagine it's I would bet that it's up
double digit percentages compared to pre COVID and that is
a that is a real trouble for these smaller stores
(31:37):
that you know, we don't really have the sway with
these credit card companies.
Speaker 3 (31:43):
And I'll tell you look at the financials from the
credit card companies or from it's really the payment networks.
Speaker 2 (31:48):
Like that's what we're talking about here.
Speaker 3 (31:51):
Visa had revenue for trailing twelve months of thirty five
point nine three billion dollars. Net income was nineteen billion.
Like Visa sitting there like, oh, gr margins are too slim,
Like their margins are like sixty percent plus MasterCard revenue
twenty seven billion dollars, net income twelve billion dollars. Again,
it's just a fat chunk of money, you know, coming
(32:14):
in there right now. American Express slightly different in terms
of you know, how they operate and everything, but still
a payment network sixty four billion dollars. Net income is
nine So again AMEX is a different model there, but
there's still something there. But Visa's the biggest one out there.
And again they're as close as you can be to
printing money because you you can't run a retailer today, Mike,
(32:36):
and no except Visa and not take Visa.
Speaker 4 (32:38):
Yeah, like that takes you out of the game entirely.
By Barber Is the only one that can still do it.
Speaker 3 (32:44):
And that's because listen, I say this as you know,
a proud bald man. But the day that I started
shaving my head was the day that I realized, hey,
barbers might have the best business going.
Speaker 2 (32:56):
Man. His hair always keeps growing. You always need to
go back.
Speaker 4 (33:00):
So, in terms of legislation out there, there's been something
proposed to require large banks that issue credit cards to
enable at least two networks to process payments.
Speaker 5 (33:08):
With those cards.
Speaker 4 (33:10):
Look, I'm generally in favor of something that would promote
more competition, but I keep going back to the same
thing we've talked about before is if you want prices
to come down, you gotta go INTI trust route, right Like,
I'm unconvinced that saying okay, now my Capital one credit
card is required to accept payment on Visa or MasterCard.
Would that truly drive down prices at all? Or do
(33:33):
we just have a duopoly here that is driving up
prices and faces no competition and needs to be broken
up in some way, shape or form.
Speaker 6 (33:42):
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Speaker 3 (34:42):
Mike, Let's talk a little bit about what's going on
at movie theaters. A Monster Monster holiday weekend for US
domestic box office numbers four hundred and twenty million dollars
estimated here in terms of the total gross, the vast
majority of that coming from three films, ma Wana two
which came out last week, Wicked, which came out the
(35:03):
week before, and Gladiator two which came out the week
before as well, but ultimately just some monster monster numbers
here mind.
Speaker 4 (35:11):
Yeah, So ma Wana two now taking that one seed
in terms of the best ever Thanksgiving holiday weekend sales
previously was held by Frozen two and now ma Wanatu
taking that title, and also on inflation adjusted dollars, it
blows it out of the water. I think ma Wana
two had sales of one hundred and twenty yeah, one
(35:32):
hundred and twenty five million back in twenty nineteen. If
you think about inflation over that period of time, what
twenty five percent on one hundred and twenty five million.
At two hundred and twenty one million for ma Wanato,
this just blows it out of the water. So I
used to have a good family tradition of going to
the movie theaters on Thanksgiving Day. Actually we don't do
that anymore, but kind of miss that. My kids don't
(35:54):
get to do that, and we almost got them to
ma Wanatoo this weekend, but we ended up on a
We ended up on a.
Speaker 5 (35:59):
Train to the North Pole, which was far superior.
Speaker 2 (36:02):
Or anyway, how is the North Pole? Good? Long ride?
Speaker 5 (36:04):
But it was good.
Speaker 2 (36:05):
Yeah.
Speaker 3 (36:06):
I want to talk just a little bit more detail
on this because Wicked is setting up in a position
where you may be looking at a movie that ends
up in the top ten overall all time in terms
of box office gross.
Speaker 2 (36:21):
It's a stretch for it to get there, but.
Speaker 3 (36:23):
It's possible, just because the declines that it's seeing are
pretty minimal. But this is one where the combination of
a the word of mouth on it is fantastic. Use
your solid Yeah, everything's kind of pointing in that direction.
But for Saturday, just as an example, the weekly decline
was about seventeen percent. A typical weekly decline for a
(36:44):
movie is usually around thirty five to forty percent.
Speaker 2 (36:48):
Week over week.
Speaker 3 (36:49):
So when you're only declining, you know, in the mid
to high teens, it sets you up for a potentially
long box office run. Here, we'll have to see what
Mawana two can do as well. Obviously it's got a
bit of a head start with how big that opening
week was, but you've got potentially just a monster run
ahead on wicket heading into the winter here, so we'll
(37:10):
see where it ends up going, but thus far really
kind of minimal slowdown in terms of what you're seeing
from it, and it has the potential to again. I
think it's kind of a stretch maybe to end up
as a top ten movie all time in terms of
gross but you certainly have top twenty getting somewhere near
that five hundred million mark being a possibility there. So
(37:31):
a monster win for Universal on that and from a
one to two look, Disney needed a little bit of help.
They had had a little bit of a tough time
with some of their releases, especially on the you know,
the animation side, over the last couple of years.
Speaker 5 (37:45):
But they have two they've had two big ones this year.
Speaker 3 (37:47):
They've had two big ones now this year, so it's
they they've started to hit again. So rumors of Disney's
demise may be a little bit exaggerated, And actually there's
gonna be three big ones for Disney. Remember dead Pooling
Wolverine is too Oh I forgot about that. Yeah, So
they think of the R rated movies, they're probably gonna
end up with the top three movies this year. Despite
all the talk and all those probably doing five hundred
(38:08):
to seven hundred millions, so Disney studios are they're not dead.
They're not Let's take a quick break here. We got
more financial exchange coming up.
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(01:04):
Veterans Development Corporation. This is the Financial Exchange with Chuck
Zada and Mike Armstrong.
Speaker 2 (01:12):
Kick it off the month of December.
Speaker 3 (01:13):
It's Chuck, Mike and Tucker with you, and we got
a busy week to get the month started.
Speaker 2 (01:19):
Here.
Speaker 3 (01:19):
A whole bunch of economic data ism manufacturing was out
at ten am this morning. We'll discuss that today. We
also have job openings tomorrow with the Joltz Report. On Wednesday,
we get ism services data, Thursday, some jobs claims. Friday
we get the Jobs report and consumer sentiments. So it
is a busy week that we've got here. But Mike, first,
let's recap kind of what we saw in November, where
(01:43):
the S and P five hundred had itself a nice
little month here at open, yeah, six percent up yeah,
open the month of November fifty seven to twenty three.
It closed the month of November at six thirty two.
So yeah, you saw basically about a five percent upward
move for the month of November here. This after a
(02:03):
choppy October, and obviously the question is, okay, like where
does this market go from here? Because you're sitting pretty
much at all time highs right now. You've got a
market that is expensive. It's trading twenty two times forward
earnings based on data from fact sets earnings insight from
November twenty second, So it's a steeply valued market. And
(02:26):
the questions are all about, hey, where can this market
go next year with a new administration in the White
House and one that views the stock market as a.
Speaker 2 (02:37):
Report card for how they're doing economically.
Speaker 4 (02:39):
Yeah, it's something we've discussed really since the beg since
the beginning of November and the results of the election
were known, which is it is going to be an
extremely I don't know how you describe it, narrow, needle
to thread or just delicate market to look forward here,
and as we've talked about it, there's going to be
some unique challenges. Pared to Donald Trump's first administration, there
(03:03):
were unique challenges then too, they're just a different set
of them as we head into twenty twenty five.
Speaker 3 (03:08):
So that's where we stand right now, and if you're
looking at this market, I think one thing that I
do like to point out, even though tech is leading
the way today, that has not been the case in
this market in recent months. If you take a look
at the different sectors of the S and P five hundred,
and if you say, okay, let's look at this year
(03:30):
to date first.
Speaker 2 (03:31):
And see what's been doing the best.
Speaker 3 (03:34):
Like, how many people had financials being the best performing
sector in the S and P five hundred this year
when it started?
Speaker 4 (03:39):
Yeah, not not likely a whole lot of them. Not
many Communication services number two. Okay, at least that one.
You say, Yeah, when I look at you know, communication
services and what falls under that umbrella, Okay, you know
you got Google and Meta in there, so there's some
tech exposure. Sure, I could see that being you know,
something that we're seeing, but you know, again, financials being
(04:00):
the leader kind of something that that gives you a
little bit of pause there, and then you continue down
the list as far as hey, what if you know
the best performing sector's been Utilities is number three. And
this one again, financials and utilities are not two things
that you typically see, as you know, things that move
in lockstep. Typically, financials a little bit more of a
(04:21):
cyclical exposure when the economy gets going, so today utilities
much more. Hey, let's let's you know, flock to them
when things pull back. But they've had this tailwind because
of artificial intelligence and the power demands for it in
the idea that hey, maybe this could be good for
you know, overall power capacity and overall size of the
market in the US, I mean to be, to put
(04:43):
it bluntly, you're talking about a potential forecast here where
we vastly expand demand of electricity, and notoriously utilities are
pretty slow to respond to that demand. And so I
mean economic if you've ever taken any economics course, that's
the first thing to teach, right, supply and demand. What
happens when demand goes up without supply increasing, you have
(05:04):
an increase in prices, and so pretty compelling story when
it comes to utilities.
Speaker 3 (05:09):
Next two sectors you got, you got industrials and consumer discretionary. Discretionary,
though I will caution was basically one of the worst
performing sectors in the market through late October. It's really
been Tesla's recent performance in the last month that has
kind of vaulted into that spot.
Speaker 2 (05:24):
And then you've got technology, which is again kind of
middle of the pack overall this year.
Speaker 3 (05:28):
But the interesting thing sp technology sector was the best
performing sector for the first half of the year. And
now if you look for you know, again, let's look
since July first, Just as an example, here the S
and P five hundred. I'm sorry, the SP five hundred
technology sector second worst performing sector since July first of
(05:51):
this year. The worst performing one is healthcare, and so
it's been everything else that's actually been carrying this market
for the last five months. I know that tech and
AI have gotten all this hype, but if you hopped
on the AI train halfway through this year, hasn't actually
been the right move for you.
Speaker 5 (06:09):
Like, outside of a few individuals.
Speaker 4 (06:11):
Yeah, inside of a few individual companies who you know,
we can talk about and have done quite well. If
you bought the sector right, it hasn't been the thing
that's carried now. I think the positive side of this,
to put some positive spin on it, is you don't
necessarily want to see one area or one company leading
and dragging up the entire market. What we are seeing
as an expansion into other areas, and that can be
(06:33):
that can be signs of a healthy, positive market. It
could also be signs of irrational exuberance and everybody just
buying everything. But you know, if I want to take
the optimistic view, I'll take it as Hey, many companies
are now profiting many companies have worked through what was
a tricky four years and are growing their margins and
investors are appropriately rewarding them.
Speaker 3 (06:56):
So let's touch on some of the economic data that
we're getting this week. I know this more. At ten am,
we got ISM manufacturing data. ISM manufacturing PMI came in
at forty eight point four compared to the previous reading
of forty six five.
Speaker 2 (07:10):
The expectation was for forty seven to five.
Speaker 3 (07:12):
And the question that I think I'm trying to sort
through on ISM manufacturing here is ultimately you ended up
with new orders, you know, surging from forty seven to
one to fifty point four. What I'm trying to figure
out is how much of this is companies trying to
front run tariff implementation and just trying to you know,
get stuff done before the end of the year and
(07:35):
really before January twentieth, and how much of this is
an actual real uptick in you know, longer term capacity
and capability.
Speaker 2 (07:44):
And I don't think that there's any way to tell
that right.
Speaker 5 (07:47):
Away here, Now, correct me if I'm wrong.
Speaker 4 (07:49):
At at forty eight something, we are still in a
pretty ugly survey for manufacturing in general. Right like this,
this is not exactly a strong story of expansion. It's
just a story of improvement compared to last month, it is, and.
Speaker 3 (08:05):
The bulk of that came through new orders. The interesting
thing that you did see in this data was even
though new orders move from forty seven to one to
fifty point four, prices paid went from fifty four eight
to fifty point three. So it wasn't something where you
saw a huge jump in prices as a result of,
you know, whatever expansion in activity was happening here relative
(08:25):
to before. But the other thing that you come back
to on this is, look, this is a survey. It's
it's soft data. It's not something where you can, you know,
conclusively say anything about this, especially because as we've been
talking look for the last two three years, two years
really in particular, this data series has been in the
dumps and in a spot where typically it's been indicative of,
(08:49):
you know, meaningful recession, and there's been no supporting economic
data around it that's really said, yeah, you're you're definitely
in recession. So this is one that I think I've
been trying to take it with a grain of salt
for the last couple of years because.
Speaker 4 (09:04):
It's indicated recession for the last several and we haven't
gotten one.
Speaker 3 (09:07):
Yeah, it just has not had the right signal to
noise ratio for quite some time here.
Speaker 2 (09:13):
But you did have some improvement here.
Speaker 3 (09:15):
Whether it means anything, I don't know that you can
make that judgment today. I think we are still much
more looking at Hey, show me what's happening with the
labor market, show me what's happening with housing. Those are
areas where I think you're getting better signal than a
place like this.
Speaker 4 (09:31):
I've heard from a lot of we've heard from a
lot of retail executives over the last month or so
about maybe criticizing tariffs and saying, look at a land
in higher prices for consumers. I don't know that we've
seen a lot definitive about whether or not those same
retailers are stocking up like we've talked about, Right, it
made logical sense for Walmart to go and buy a
whole bunch of TVs. You know that they assume that
(09:54):
they'll be able to sell in twenty twenty five. But
I don't know that we've seen a lot of evidence
that it's actually happening, And we might not for another
few months. But again to your point, it would make
a fair bit of logical sense for these companies to
stock up on inventory take a temporary hit to earnings
because of it, in order to avoid presumed sanctions and
rather tariffs.
Speaker 5 (10:14):
In twenty twenty five.
Speaker 2 (10:15):
Let's take a quick break here.
Speaker 3 (10:16):
When we come back, we got a couple of leadership
shakeups that we're going to be discussing. One it's Stilantis
one at Intel will fill you in on the details
after this.
Speaker 1 (10:27):
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(11:10):
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Speaker 3 (11:27):
Mike, we've got a couple CEOs on the outs here.
Speaker 2 (11:32):
Do you want to start with Stillantis?
Speaker 4 (11:34):
Sure, we can get started with Stilantis. And what's been
a recent I mean longer term. I think this company
has had problems, but quite frankly, their performance was pretty
decent at the onset of COVID, and they were able
to really charge some high prices, and it seems that
their reactions since about mid twenty twenty three to the
state of demand has been pretty abysmal, and their earnings
(11:59):
have reflected that.
Speaker 2 (12:00):
Yeah.
Speaker 3 (12:01):
So Stillantis, who is the the parent company of Chrysler.
Just if you're not familiar with them, if you're like,
what the heck is the Stalantis?
Speaker 2 (12:08):
Yeah, it's it's that.
Speaker 3 (12:09):
That's the name that they picked because I don't know,
they thought it sounded great and who knows why.
Speaker 4 (12:16):
Similar ring to a General Motors or a Ford Stillantis.
Speaker 3 (12:21):
Again, I've said this before, but I've had a really
bad case of Stillantis for the last sounds like and
it's it's been challenging to get over. My feet are
just not the same. But look, so Carlos Taveras, the CEO,
is going to be stepping down effective immediately. And Stilanta's
shares are down over forty percent this year. So it's
been a real you know, a real dog in markets
(12:44):
this year. And I think in terms of trying to
figure out, look, what is you know, what what's actually.
Speaker 2 (12:51):
Going on here? A couple of things.
Speaker 3 (12:53):
Number One, US dealers are saying, look, the cars that
you're sending us are really expensive compared to the competition,
so that that's part of it. Back in September, a
dealer advisory group wrote a letter to Tavares blaming him
for quote disastrous choices in handling the market, so like
basically saying, guys, this is just the cars that you
(13:14):
are giving us are not price competitive and so they're
just sitting on our lots. You've also had repeated pauses
of production at Italian plants this year. This led to
the first national auto strike in twenty years in Italy.
So again Italy look as an Italian like, we're not
exactly known for you know, dramatic.
Speaker 2 (13:35):
Periods of labor and political peace.
Speaker 3 (13:37):
But when you go twenty years without, you know, a
strike at auto plants, that's kind of notable, and then
to have one come back, it's, hey, gee, you know
what changed here? So I think overall, this is a
company where you're trying figure out, hey, what is it
that they do well and how do they, you know,
(13:57):
get to market the way that they want to at
the prices they want to. And ultimately it comes back
to leadership and clearly the board saying yeah, this isn't
gonna work.
Speaker 4 (14:08):
And so you got the CEO stepping down here, right,
And I think the stepping down of immediately is interesting too, Right.
This is not something where they're looking for any sort
of transition period or anything along those lines, which not
a huge head scratcher, but it's interesting to me that, hey,
this guy is out and out immediately and it's gonna
(14:29):
be again, like I said, a challenging turnaround because they
are I mean, what options do you have other than
lowering the prices of your vehicles that clearly aren't in
high demand.
Speaker 5 (14:40):
I don't know what do you think overall?
Speaker 3 (14:42):
I mean, I'm just trying to think of this in
comparison to the other major US automakers, most notably Ford
and GM.
Speaker 5 (14:49):
Yeah, and you.
Speaker 3 (14:50):
Look at it, and you know, I can look back
to the nineteen nineties and in the nineties all three
of them were kind of on pars far as like
the overall business and the operations of those companies. And
as we headed into the financial crisis. Remember GM and
Chrysler needed significant bailouts to get through the financial crislist
(15:12):
Ford the financial crisis.
Speaker 2 (15:15):
Ford did not.
Speaker 3 (15:16):
But it's something where it felt like this all really
started to change then, where GM came out of basically
that whole financial crisis and was stronger than it was
in the last twenty years. Some of that might be
because of how it went through that in terms of
its specific deal with the government. Some of it might
(15:37):
have been, you know, leadership coming out with Mary Barratt
taking over after the ignition switch issues that they had.
In any case, GM you could point to and be like, yeah,
that they came out stronger. Ford you look at and
you said, hey, they might not have needed money in
two thousand and eight and two thousand and nine, but man,
from a strategic perspective, they've made some missteps for the
(15:59):
last couple of years that have been problematic in terms
of probably investing too much on the EV side, But
they still have the F one fifty and all their
trucks they can rely on. You look at Chrysler and
Dodge and Ram and Jeep and Jeep, and you look
at it and you go many they kind of had
(16:19):
it made, I mean back in the nineties. And again,
I know everything can change over like twenty thirty years,
but you had again one of the most popular pickup
trucks in the country with the Ram, which now by
all accounts has kind of fallen behind both its competitors
in the F one fifty and what GM has with
the uh the Silverados, the Silverado and I forget the
(16:41):
GMC version of it is, but you know, they've fallen
behind there. The Dodge Caravan was like the way that
basically everyone hauled kids around in the nineties.
Speaker 5 (16:52):
One cheeting by Honda and Toyota.
Speaker 3 (16:53):
Now everyone's driving Rav fours and crvs now exactly, and
so you kind of look at it and you go, o, case,
there's this cheap business that's there, But in terms of
the overall scale, it's still niche compared to the other ones. Man,
you guys were kind of in the cafpird seat in
a couple places, and you just you couldn't get there,
and it's unclear what they really do well.
Speaker 5 (17:13):
Now.
Speaker 4 (17:13):
Yeah, look, I think what it comes down to is GM, Ford,
even Stilantis all have vehicles that owners are love and
are passionate about. They have valuable brands attached to them.
But Ford and Stalantis in particular have had very serious
execution problems. And I'd say Stillantis have been longer running
than Ford's. But in either case, like you look it forward,
(17:35):
the the quality control issues and the investment in EV was,
you know, in hindsight a real serious problem for them. Stalantis,
I don't know what to say other than yeah, it's
been a multi decade long fall from fall from grace
here in terms of the most popular vehicles that are
out there, still very valuable brands, but yeah, I can't
(17:57):
put it. I can't point to any on vehicle in
that lineup that is more popular than anywhere else. And
I can do that with Ford, I can do that
with General Motors.
Speaker 3 (18:07):
Intel with the CEO change as well. Pat Gelsinger has
been there for almost four years, he's out. Instead, you're
gonna have CFO David Zinzer and Products CEO MJ.
Speaker 2 (18:17):
Holtthouse.
Speaker 3 (18:18):
They're gonna be the interim co CEOs while they search
for a new leader for the company long term. Gelsinger,
if you're not familiar with him, everyone went when he,
you know, went back to run the company, everyone kind
of heralded the move because they said, look, you finally
have an engineer running the company again. He's someone who's
the chief technical officer at Intel, you know earlier in
(18:40):
the uh around the turn of the millennium.
Speaker 2 (18:42):
Hey, this is great.
Speaker 3 (18:43):
You're gonna get someone who knows the product and knows
how to build it running the company. But ultimately, some
really tough decisions that he made. Look in a business
that may take a while for those decisions to pan
out the way you know, he hoped. He's just not
gonna have a chance to see it through because the
performance in that four year time period has been quite.
Speaker 2 (19:02):
Bad for the company. Yeah.
Speaker 4 (19:03):
Look, it's an industry where you have to make investments
a decade ahead of time and hope that they pay
off well. And Intel's bets we're not in the right
areas for what ended up paying off, so Gelsinger is
going to be out.
Speaker 3 (19:16):
We'll see what direction Intel goes in for their new
permanent CEO. But right now, couple of interim co CEOs
running the company.
Speaker 2 (19:25):
Take a quick break here.
Speaker 3 (19:27):
When we come back, we got Wall Street Watch, and
then we're talking Black Friday.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter. Act
TFE show breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch, a complete look at what's moving market so
far today, right here on the Financial Exchange Radio Network.
Speaker 6 (20:00):
Well after the Dow in SMP five hundred notch their
best month of the year, investors are turning the calendar
to December with an ie on the latest jobs data
do out later this week. Right now, the Dow is
off by three tenths of a percent, or one hundred
and twenty eight points, SMP five hundred is up by
(20:21):
two tenths of a percent or twelve points, and the
Nasdaq is up nearly one percent higher one hundred and
eighty six points. Russell two thousand is off by about
a third of a percent.
Speaker 5 (20:31):
Let's see here.
Speaker 6 (20:32):
Tenyure Treasure reeled up by three basis points at four
point two to two percent, and crude oil is up
two thirds of a percent, trading at sixty eight dollars
and forty seven cents a barrel. Big news in the
chip sector this morning, where Intel announced that CEO Pat
Gelsinger retired from the company effective yesterday. Intel CFO David
(20:54):
Zinzer and Intel Products CEO Michelle Johnston holt House were
named in room co CEOs. Intel shares are up three
percent on the news. Meanwhile, Still at the shares down
by seven percent after CEO Carlos Tavares stepped down from
his role at the jeep maker effective immediately, with a
(21:14):
company sided different views between Tavares and the board of directors.
Sticking with the auto sector, where Tesla up by three
percent after its VP of AI software tweeted that version
thirteen of the company's full self driving driver assistance software
had started rolling out to some of its customers. JP
(21:36):
Morgan upgraded Gap stock to overweight, citing a strong start
to the holiday season and a multi year growth outlook.
Shares in the retailer up six percent today, and super
microcomputer shares are up by eighteen percent after a special
committee rule that have found no evidence of misconduct at
(21:56):
the AI server maker and appointed a new chief accounting officer.
I'm Tucker Silvan.
Speaker 2 (22:02):
That's Wall Street Watch, Mike. Let's talk a little bit
about Black Friday.
Speaker 3 (22:07):
We're starting to get some data on how the shopping
has gone. I'll quote here from the New York Times.
Shoppers spent ten point eight billion dollars online on Friday,
according to data on Saturday from Adobe Analytics. That's on
top of the six point one billion spent online on Thursday,
around nine percent more than the previous year. Another metric
for Mastercard's Spending Pulse, which measures retail sales across all
(22:30):
forms of payment, found the online sales on Black Friday
increased by nearly fifteen percent, but that instore sales increased
by only point seven percent, for an overall increase of
three point four percent. To the jewelry, electronics, and apparel
were the top purchases. Your thoughts on what we're seeing
so far from the holiday shopping season.
Speaker 4 (22:47):
Well, if it holds true, then that online spend surge
is pretty robust. Like that, that's a big, big number.
It still might only convert into a low single digit
overall holiday shopping season increase. And that's entirely possible. But nonetheless,
if online sales come in between nine and fifteen percent
up compared to last year.
Speaker 5 (23:07):
Then that's huge.
Speaker 4 (23:09):
The few questions that I have on this are how
much of this is timing?
Speaker 5 (23:14):
Is a big one.
Speaker 4 (23:15):
Right, So we had a very late Thanksgiving this year
compared to last year, and so did people put off
shopping so substantially that they had a much bigger order
to fill when it came to Black Friday, and so
they were just out there for more stuff. Is there
some other trend playing out here where people were apprehensive
about the election and we're putting off purchases and then
(23:35):
that passed and now you have a big surgeon spending coming.
I'm not entirely sure yet, but look, this is there's
no way to phrase this. I think is bad news.
I think the worst piece that you can pull from
this is that the in store shopping only increased zero
point seven percent year over year, and that would be
less than inflation, and so that is a bad sign
(23:55):
for the brick and mortar retailers out there, But most
of them are test painting in Cyber Monday and seeing
those sales shift elsewhere, I think.
Speaker 3 (24:04):
Let's talk a little bit about Cyber Monday with that.
I've got a problem with Cyber Monday, Mike.
Speaker 2 (24:09):
Do you know it's gotten too commercialized? What I mean?
Speaker 5 (24:15):
What do you mean? Like it's it's.
Speaker 3 (24:18):
Gotten too commercialized Cyber Monday.
Speaker 4 (24:22):
This isn't Valentine's Day, Chuck. It is invented by commercial
companies to get you to shop on Yes, I know.
That's that's the best the joke. That's the commercialized.
Speaker 3 (24:30):
You know, everyone always talks about all like Thanksgiving has
gotten too commercialized.
Speaker 4 (24:33):
Yeah, no, no, Cyber Monday's gotten too commercialized.
Speaker 3 (24:36):
But it used to be this nice point time when
everyone just sat on their computers and didn't talk to anyone,
and now it's all about shopping.
Speaker 5 (24:41):
Yeah.
Speaker 2 (24:42):
Uh.
Speaker 3 (24:42):
In any case, according to data from Adobe Analytics, uh,
Cyber Monday's spending is expected to be thirteen point two
billion dollars today. That's up six point one percent from
last year.
Speaker 2 (24:55):
Uh. This is also though again.
Speaker 3 (24:56):
It's listen, I can't tell you how many different retailers
I got emails from two three weeks ago. Hey, it's
you know Black Friday, come early. Our Cyber Monday sales starts,
you know on October thirty thirty. First, Like, it's just
everything has kind of been extended as well. So it's
very much an apples to oranges comparison in a lot
(25:18):
of cases, just because you're seeing these these sales pop
up earlier and earlier, partly, as you mentioned, because of
when Thanksgiving fell this year. It's the latest that ever
can fall on the twenty eighth, and so companies wanted
to get a jump on those sales as opposed to
having to wait until, you know, early December for Cyber
Monday sales to come in.
Speaker 5 (25:38):
Right, Yeah, I'm taking a look around.
Speaker 4 (25:41):
I mean, Chuck, I know that you completed your shopping
like three months ago, so you're not a relevant point
for this argument. But I haven't seen anything on Cyber
Monday that I was not seeing. I did a lot
of shopping over the long over the long weekend here,
we had our office closed on Friday, so I did
a fair bit of holiday shopping over the last few.
Speaker 5 (25:59):
Days and browsing here.
Speaker 4 (26:01):
I don't feel as though I would have gotten any
better deals over the last couple of days, and I
was buying the type of thing that you do look
for deals on, right, Like my wife and I reached
buying each other smart watches for the holidays. I bought
the kids some stuff on Amazon, and you know again.
Speaker 2 (26:18):
Wait, you already know, like you've already discussed what you're getting.
Speaker 4 (26:21):
Each other, not entirely, but in this case with like
some of the details on a smart watch, I was
just we had already talked about that one because we
bought it for we had a momentary freak op because
we had a family member with a health scare and
were like, all right, nope, we're both getting some smart
watches for the holidays here yep, but no for everything else.
Speaker 5 (26:42):
Now, we're not discussing that, but yeah, a lot of it.
A lot of our holiday shopping is usually about activities.
Speaker 4 (26:47):
Like we're going on a ski trip in February, so
guess what the kids are all getting ski gear for
Christmas this year because they have never gone skiing before.
Speaker 2 (26:56):
Tucker, you been poking around on anything.
Speaker 6 (26:58):
I always keep my eye on it and check out
the you know, the review websites if you will, that
are out there, and nothing. It's just information overload really
in terms of like going through all the categories and
seeing what the best deal is. It's just a lot
of information throwing my way that I don't have the
patience to sift through.
Speaker 2 (27:17):
And yeah, I.
Speaker 4 (27:18):
Don't find that to be a useful activity either. I
think what I find to be spent.
Speaker 2 (27:22):
Eight hours to save thirty two dollars on six.
Speaker 4 (27:25):
Different gifts, right, Like what I find to be enjoyable
and useful is Okay, I have a list of things
that I'm going to be shopping for this season, and
do you know, do I find any special deals on
those items? Do I feel like I'm getting a real
deal when I actually log in on Friday or Monday
and see did they discount it any further? I get
some of that endorphin rush, I guess when I see
(27:47):
that price knocked down. But yeah, going through Wirecutters one
hundred and fifty best Cyber Monday deals like forget about it?
Speaker 6 (27:53):
Like you have time for this, Like I'll go through
and look at categories that might pop out to me,
like Apple deals or like kitchen or gaming deals.
Speaker 2 (28:01):
That's it.
Speaker 6 (28:02):
I'm not gonna go through one hundred and fifty different
deals like forget.
Speaker 5 (28:05):
It, but oh, trampoline for seven hundred dollars.
Speaker 6 (28:07):
I didn't see that one.
Speaker 2 (28:08):
Uh yeah?
Speaker 3 (28:09):
And then shoulder surgery for two thousand on your deductible.
Speaker 5 (28:13):
I'm not great jumping on the trampoline.
Speaker 4 (28:15):
Come on, Mike, with your with your back, you shouldn't
be jumping on anything, correct.
Speaker 2 (28:19):
Yeah. Yeah, yeah. So the only Cyber Monday thing that
I do every year I.
Speaker 3 (28:23):
N towels like cool neat hey, listen, occasionally you need
new bath towels. I think new bath towels are a
great gift personally, but that's just me.
Speaker 2 (28:33):
Yeah.
Speaker 3 (28:33):
The only thing I do every Cyber Monday is the
liquor store that I shop at, they do a Cyber
Monday sale for unlimited gift cards every year, so I basically,
over the course of the year, I save up my
beer money and then they do it. It's a ten
percent off unlimited gift cards, so you save an instant
ten percent on all of your beer and wine for
(28:56):
the full year, and you just have to be dedicated
to save that money up, oh you know, the twelve months,
and then you're good to go, you know, for that one.
So that's my Cyber Monday purchase every year, including this one.
So it's I get something for myself on Cyber Monday.
It's because it's it's the best gift that you can get,
you know. Let's take a quick break here. When we
(29:18):
come back, let's talk a little bit about what we're
seeing in the world of credit card transaction fees right now.
This has been a topic that's been growing in terms
of the chatter about it recently with some potential legislation
coming through Congress. We'll talk about this when we return.
Speaker 1 (29:36):
Thankst us six one, seven, three, six, two thirteen eighty
five with your comments and questions about today's show, and
let us know what you think about the stories we
are covering. This is the Financial Exchange Radio Network, Business
and financial news affecting the markets and your wallet. We've
got it all straight from Wall Street right here on
(29:56):
the Financial Exchange Radio Network.
Speaker 3 (30:06):
Mike, let's talk a little bit about this piece of
New York Times talking about how for small businesses, in particular,
the move away from cash and towards more buyers purchasing
products using credit cards is impacting their bottom line as hey,
with more credit card transactions comes more fees that they
(30:26):
have to pay to merchant networks your visas and master
cards of the world, and so in a business where
look margins are thinned, to begin with, if you got
to be paying two to three percent to a Visa,
MasterCard or Amex, it can really cause things to get
tight for you in your bottom line.
Speaker 2 (30:41):
Yeah.
Speaker 4 (30:42):
I mean for many retailers, this is the single biggest
line item that they end up paying on a year
to year basis is those credit card transaction fees. And
if you're a small you know, if you're Walmart, you
can negotiate the hell out of this thing. If you
are you know, the local toy shop in my town,
then you just take the prices. I don't have any
firm data on this, but I would be interested to see, Hey,
(31:04):
what is the cash in store spend as a percentage
of total sales in twenty nineteen compared to now.
Speaker 5 (31:13):
I don't even know who would.
Speaker 4 (31:15):
Track a data series like that, but you know, if
you took a look at those two, I'd be very
interested to see what portion of in store spending is
occurring on a electronic means versus versus cash. And I've
got to imagine it's I would bet that it's up
double digit percentages compared to pre COVID and that is
a that is a real trouble for these smaller stores
(31:37):
that you know, we don't really have the sway with
these credit card companies.
Speaker 3 (31:43):
And I'll tell you look at the financials from the
credit card companies or from it's really the payment networks.
Speaker 2 (31:48):
Like that's what we're talking about here.
Speaker 3 (31:51):
Visa had revenue for trailing twelve months of thirty five
point nine three billion dollars. Net income was nineteen billion.
Like Visa sitting there like, oh, gr margins are too slim,
Like their margins are like sixty percent plus MasterCard revenue
twenty seven billion dollars, net income twelve billion dollars. Again,
it's just a fat chunk of money, you know, coming
(32:14):
in there right now. American Express slightly different in terms
of you know, how they operate and everything, but still
a payment network sixty four billion dollars. Net income is
nine So again AMEX is a different model there, but
there's still something there. But Visa's the biggest one out there.
And again they're as close as you can be to
printing money because you you can't run a retailer today, Mike,
(32:36):
and no except Visa and not take Visa.
Speaker 4 (32:38):
Yeah, like that takes you out of the game entirely.
By Barber Is the only one that can still do it.
Speaker 3 (32:44):
And that's because listen, I say this as you know,
a proud bald man. But the day that I started
shaving my head was the day that I realized, hey,
barbers might have the best business going.
Speaker 2 (32:56):
Man. His hair always keeps growing. You always need to
go back.
Speaker 4 (33:00):
So, in terms of legislation out there, there's been something
proposed to require large banks that issue credit cards to
enable at least two networks to process payments.
Speaker 5 (33:08):
With those cards.
Speaker 4 (33:10):
Look, I'm generally in favor of something that would promote
more competition, but I keep going back to the same
thing we've talked about before is if you want prices
to come down, you gotta go INTI trust route, right Like,
I'm unconvinced that saying okay, now my Capital one credit
card is required to accept payment on Visa or MasterCard.
Would that truly drive down prices at all? Or do
(33:33):
we just have a duopoly here that is driving up
prices and faces no competition and needs to be broken
up in some way, shape or form.
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Speaker 3 (34:42):
Mike, Let's talk a little bit about what's going on
at movie theaters. A Monster Monster holiday weekend for US
domestic box office numbers four hundred and twenty million dollars
estimated here in terms of the total gross, the vast
majority of that coming from three films, ma Wana two
which came out last week, Wicked, which came out the
(35:03):
week before, and Gladiator two which came out the week
before as well, but ultimately just some monster monster numbers
here mind.
Speaker 4 (35:11):
Yeah, So ma Wana two now taking that one seed
in terms of the best ever Thanksgiving holiday weekend sales
previously was held by Frozen two and now ma Wanatu
taking that title, and also on inflation adjusted dollars, it
blows it out of the water. I think ma Wana
two had sales of one hundred and twenty yeah, one
(35:32):
hundred and twenty five million back in twenty nineteen. If
you think about inflation over that period of time, what
twenty five percent on one hundred and twenty five million.
At two hundred and twenty one million for ma Wanato,
this just blows it out of the water. So I
used to have a good family tradition of going to
the movie theaters on Thanksgiving Day. Actually we don't do
that anymore, but kind of miss that. My kids don't
(35:54):
get to do that, and we almost got them to
ma Wanatoo this weekend, but we ended up on a
We ended up on a.
Speaker 5 (35:59):
Train to the North Pole, which was far superior.
Speaker 2 (36:02):
Or anyway, how is the North Pole? Good? Long ride?
Speaker 5 (36:04):
But it was good.
Speaker 2 (36:05):
Yeah.
Speaker 3 (36:06):
I want to talk just a little bit more detail
on this because Wicked is setting up in a position
where you may be looking at a movie that ends
up in the top ten overall all time in terms
of box office gross.
Speaker 2 (36:21):
It's a stretch for it to get there, but.
Speaker 3 (36:23):
It's possible, just because the declines that it's seeing are
pretty minimal. But this is one where the combination of
a the word of mouth on it is fantastic. Use
your solid Yeah, everything's kind of pointing in that direction.
But for Saturday, just as an example, the weekly decline
was about seventeen percent. A typical weekly decline for a
(36:44):
movie is usually around thirty five to forty percent.
Speaker 2 (36:48):
Week over week.
Speaker 3 (36:49):
So when you're only declining, you know, in the mid
to high teens, it sets you up for a potentially
long box office run. Here, we'll have to see what
Mawana two can do as well. Obviously it's got a
bit of a head start with how big that opening
week was, but you've got potentially just a monster run
ahead on wicket heading into the winter here, so we'll
(37:10):
see where it ends up going, but thus far really
kind of minimal slowdown in terms of what you're seeing
from it, and it has the potential to again. I
think it's kind of a stretch maybe to end up
as a top ten movie all time in terms of
gross but you certainly have top twenty getting somewhere near
that five hundred million mark being a possibility there. So
(37:31):
a monster win for Universal on that and from a
one to two look, Disney needed a little bit of help.
They had had a little bit of a tough time
with some of their releases, especially on the you know,
the animation side, over the last couple of years.
Speaker 5 (37:45):
But they have two they've had two big ones this year.
Speaker 3 (37:47):
They've had two big ones now this year, so it's
they they've started to hit again. So rumors of Disney's
demise may be a little bit exaggerated, And actually there's
gonna be three big ones for Disney. Remember dead Pooling
Wolverine is too Oh I forgot about that. Yeah, So
they think of the R rated movies, they're probably gonna
end up with the top three movies this year. Despite
all the talk and all those probably doing five hundred
(38:08):
to seven hundred millions, so Disney studios are they're not dead.
They're not Let's take a quick break here. We got
more financial exchange coming up.
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