September 9, 2025 • 38 mins
Paul Lane and Marc Fandetti discuss the Fed likely cutting rates next week, but what if inflation data points to no cut? What would a half percent rate cut mean for markets? Hyundai-LG immigration raid sparks alarm at foreign companies in the US. A renewed bid to end quarterly earnings reports. Is Nvidia's 'WOW' factor fading?
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:20):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is the Financial
Exchange with Paul Lane and Mark Fandetti, Your exclusive look
at business and financial news affecting your day, your city,
(00:43):
your world. Stay informed and up to date about economic
and market trends plus breaking business news every day. The
Financial Exchange is a proud partner of the Disabled American
Veterans Department of Massachusetts. Help us support our great American
heroes by visiting dav IFK DOC Boston and making a
donation today. Face is the Financial Exchange with Paul Lane
(01:06):
and Mark Vandetti.
Speaker 2 (01:12):
Welcome back to the financial exchange. Stocks are in relatively
mixed territory. Not a whole lot of move in SMP
off about four points, dal Jones up about fifty two points,
and the Nasdaq, after hitting a record high yesterday, is
only off twenty six points.
Speaker 3 (01:27):
We did get.
Speaker 2 (01:28):
Some breaking news earlier this morning where it was announced
that there was revisions to the US labor market growth
over the period from March of twenty four through March
of twenty twenty five, where nine hundred thousand, nine hundred
and eleven thousand jobs were revised down from prior estimates
during that period of time, showing that the labor market
(01:52):
was perhaps weaker than realize. We have seen over the
course of the last couple months that certainly labor growth
has slowed, the unemployment rate has ticked up to about
four point three percent, and this revision sort of highlights
that during that period of time from March of twenty
four through March of twenty five, we did have less
job growth than initially anticipated. During those months, we would
(02:15):
have averaged previously somewhere around one hundred and fifty thousand
plus jobs a month. That we're being added now with
these revisions, the average job growth is going to be
about seventy six thousand less than initially reported for those
average monthly payroll growth, so certainly something of all. It
is worth noting that this is backward looking data. This
(02:36):
doesn't really give us a good pulse on where the
labor market is today, but it does further evidence that
the labor market has been relatively weak for this period
of time, and it sets us up for an interesting
place for this upcoming Thursday inflation report on CPI that's
going to come out, where we've talked about the labor
(02:58):
market has been quite and has showed signs of you know,
small cracks. Now we have an inflation report that is
anticipated to come in I believe in around three close
to three percent on the headline numbers by economist estimates.
Certainly on the core prices which strip out the impact
of food and energy, we could crest over three percent.
(03:21):
So you could have this potential scenario where inflation is
ticking up and remaining kind of sticky and we're seeing
some pricing pressure also at the same time having a
pretty weak labor force, and it puts the FED in
a difficult position though it seems like everything has kind
of been decided for where we sit next week, that
(03:42):
they will cut interest rates by a quarter of a percent,
But it could be the situation mark where we see
labor market weakening with a backdrop of inflation tick AMPT
the same time, which invokes the word stagflation that was
prevalent around the late nineteen seventies. Certainly, don't think we're
anywhere near there yet, but at least brings up the concept.
Speaker 3 (04:03):
Yeah, maybe I'll start there. Stagflation happens when some sort
of shock hits the factors that determine the economy's productive
capacity or potential. A stagflation, like you said, is a
combination that hybrid is a combination of stagnation, economic stagnation,
(04:26):
and inflation. They had to invent a new term for
that in the seventies because it was unusual prior to
that when the economy exceeded its speed limit, unemployment was
very low, GDP growth gross domestic product growth was very high.
That put upward pressure on prices through wages and through
inflation expectations. The FED had to pull the punch bowl away,
as a former FED chairman once said, and cool things down.
(04:48):
It helps to think of the FED as a thermostat,
cooling the economy down when it gets too hot, and
vice versa. And it does that through its control of
the money supply and its targeting of a short term
interest rate we say is shorthand. The FED controls interest rates,
but they don't they control the money supply. They have
virtual control over the Federal funds rate, which puts a
floor under bank lending rates, which in turn lowers interest
(05:11):
rates throughout the economy. Short term interest rates anyway, Long
term rates different story. A function of what people expect
the Fed to do in the future future interest rates.
That is an inflation expectation. So keep that distinction in mind.
Short versus long term interest rates. The Fed can control,
I mean a little fast and loose there, but it's
more or less accurate short term rates. It can influence,
certainly longer term rates in some environments. It's tried to
(05:34):
control long term interest rates by buying longer term bonds
during the financial crisis during and after World War Two
another example. But the Fed's main instrument is the short
term interest rate known as Federal funds.
Speaker 2 (05:45):
Rate, and what that means from a consumer product side,
is money markets. There's an impact there, usually directly and immediately.
Credit card debt, which is a variable line of debt
that will fluctuate based on interest rate changes, home equi
lines of credit. Those be examples of shorter term features
that would be impacted by the FED rate cut versus
(06:05):
what Mark is talking about. The longer and that's your
thirty year fixed mortgage. Oftentimes that's gonna move in relation
to what the longer end of the curve goes on.
Speaker 3 (06:13):
Yeah, so the Fed now is asking is the economy
going to slow further? If so, that should put some
downward pressure on inflation. They can therefore afford to look past,
so to speak, current elevated inflation. Cut today, cut their
federal funds rate target, increase the money supply. To be
(06:34):
technically correct about this description, lower the federal funds rate,
which they more or less have control over. That should
stimulate demand. Don't worry about the overheating part of it,
because the economy is slowing anyway. You may sense by
my description that I'm starting to pile assumption upon assumption here.
I'm assuming that economic slack is increasing. They can afford
(06:55):
to stimulate the economy if instead the disturbance is in
the economy's supply side, so to speak, productive capacity. Then
you run the risk like the FED encountered in the
nineteen seventies, of stagflation, pushing demand too much, not recognizing
that the economy's productive capacity was either shrinking or less
(07:16):
than you thought it was. This was the problem in
the seventies. One of the problems the FED overestimated the
economy's productive capacity, underestimated the natural I'm saying the same
thing here, I'm just going to say it differently. Underestimated
the natural rate of unemployment. Unemployment was seven. They thought
it could be six without pushing up inflation. They were wrong.
What if these tariff disturbances and the policy uncertainty and
(07:39):
just general movement and economic forces have pushed the natural
rate of unemployment up to five percent, then four point
three percent where we are today is too low. Problem
is you don't know until after the fact.
Speaker 2 (07:51):
That's what's so difficult about that job is you don't
know until after you know.
Speaker 3 (07:57):
Paul, they're going to cut their roll in the ice.
Oh that we all. They've they've forecasted it seven ways
to they've telegraphed it. Excuse me, seven ways to Sunday.
We know what play the FED is running coming out
of this huddle. They're going to cut in a week.
They're probably gonna cut again in December. The question is
are they cutting into an economy that the supply of
(08:22):
labor because of deportations or whatever is dwindling. Then you
do run the risk of stagflation. My personal view is
that they are going to run that risk, but they're
indifferent to them. Keeping employment as high as possible is preferable,
and honest people can disagree about that. Using the FED
to finance the federal deficit, which the White House has
talked about, is reckless and I hope we don't ultimately
(08:46):
go down that path. That's a whole new set of
considerations and possible risks. We're not even talking about that.
Speaker 2 (08:52):
Looking at the CME Group, which does probabilities and based
on futures data for where federal reserve interest rates may land.
There meeting is going to be next week on September seventeenth,
ninety two percent probability that we will see a quarter
of a percent cut, and there is still an eight
percent probably on the table that perhaps we could see
(09:13):
as much as a half percent cut next week. We'll
have that coverage for you here on the show next week.
Speaker 3 (09:19):
So market like, how will markets? How will they react?
They're expecting a quarter point cut. If we get a
half percentage point cut, what would that tell you? How
would you react personally to that? Would you be encouraged? Alarmed?
Speaker 2 (09:32):
Or I would be alarmed because ultimately that's the Fed
telegraphing that the labor market or the economic factors that
they're studying are weaker, much weaker than perhaps you or
I would anticipate. Or I would sit here and say
today that this is perhaps them saying that, jeez, the
labor market is in a real difficult position, whether it's
the supply shock on the immigration side of things, or
(09:54):
whatever the case may be. And I would wonder if
Wall Street would rally, because typically lower rates increases valuations,
And I wonder if that, how.
Speaker 3 (10:07):
Would Wall Street react?
Speaker 2 (10:08):
Would they react as, oh, this is concerning from an
economic perspective that they're doing this half percent cut, or
would they react the borrowing costs have lowered significantly, We're
on this path where we're gonna have cheap money again
from a financing perspective, And I honestly could see it
going either way. This market is so confounding that maybe
that would cause arise in markets, which would be a
(10:31):
surprise to me, who would read it a little bit
more pessimistically. But maybe that's because we always air more
on the side of caution. But the markets have continued enthusiasm,
come hell or high water, they just keep shugging along.
Speaker 3 (10:43):
Yeah, to me, that wouldn't be the right reaction. The
FED would be conveying that they know something that we don't.
The economies in worse shape, or they think it is,
that should be bad news and reflected as such in markets.
But to your point, markets are so equity markets in
particular are so used to reflexively responding to anything the
FED does on the easing side by going higher that
(11:05):
then markets might shoot higher than they otherwise.
Speaker 2 (11:08):
It's been a favorable FED for the mart The markets
have been really benefited by the FED that has oftentimes
seemed to really sort of lend themselves to Wall Street
and the stock market in general. Not like they would
be doing that here, but maybe it gets interpreted that way.
We'll have to see. We're gonna take a quick break
here on the financial exchange When we come back, we're
gonna be doing a little bit of trivia and a
(11:29):
little bit more about the labor force in the United States.
Right after this break, The.
Speaker 1 (11:34):
Financial Exchange streams live on YouTube. Subscribe to our page
and stay up to date on breaking business news all morning.
Long Face is the Financial Exchange Radio Network. Here the
Financial Exchange every day from eleven to noon non Serious
XM's Business Radio Channel one thirty two. Keep it here
for the latest business and financial news and the trends
(11:56):
on Wall Street. The Financial Exchange is now life on
Serious XMS Business Radio Channel one thirty two. Thanks, He's
the Financial Exchange Radio Network.
Speaker 4 (12:15):
Let's do a little bit of trivia here in the
Financial Exchange. And today is Adam Sandler's fifty ninth birthday.
Sandler is the third highest grossing comedy actor. Excuse me,
He's the third highest grossing comedy actor of all time,
behind only Will Ferrell and Eddie Murphy. The three highest
(12:37):
grossing Sandler movies are all Hotel Transylvania movies, with each
grossing over three hundred million dollars. So our trivia question today,
what is the highest grossing live action Adam Sandler movie?
Once again, what is the highest grossing live action Adam
Sandler movie? Be the third per since today to text
(13:01):
us at six one seven three six two thirteen eighty
five with the correct answer, and he went a Financial
Exchange Show t shirt once again. The third correct response
to text us to the number six one seven three
six two thirteen eighty five will win that T shirt.
See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (13:21):
Did you guys watch Happy Gilmore two? I did? Yeah,
what'd you think?
Speaker 3 (13:24):
Eh?
Speaker 4 (13:25):
It's fine, a good nostalgia.
Speaker 2 (13:28):
Good nostalgia, but that's about it.
Speaker 4 (13:30):
First half was pretty good, like the track was going on,
and then the second half, Yeah, I'd watch it.
Speaker 2 (13:37):
They had more cameos than they knew it to do it.
I mean, golfers person part of the movie. Yeah, they
got like the whole PGA tours.
Speaker 4 (13:43):
It felt like to jump in on Scottie Scheffler, will
Sell Xalatorus were hilarious. A couple of the ones are great.
John Daily, Yeah, but you know, the plot was okay.
Speaker 2 (13:53):
It was a little crazy. Yeah, I mean it was
good nostalgia stuff. But Sandler's success is just uh incredible.
He kid just continues to pump out movie after movie,
and I don't know his first three. I think we're
the best. But anyway, I digress. I want to talk
a little bit here about immigration. We recently had Hyundai
(14:14):
had a there was a detention of four hundred and
seventy five people of South Korean nationals at the Hyundai
LG Energy Solution factory and that was was that Virginia
that that was out of the factory where they had
the the workers that they were George and Georgia. You've
(14:36):
got that Pence an energy.
Speaker 3 (14:38):
Plant kidding to our national audience, I'm just.
Speaker 2 (14:41):
Kidding, Yes, it was a plant in Georgia. Also, just
you have this piece in Blueberg in general regarding the
potential labor supply shock, and this is something that we've
talked about on the show as well, where the American
workforce is now short one point two million workers, but
partially as a result of what's been a very strict
campaign to you know, deport a lot of immigrants. And
(15:04):
immigration is a very difficult subject. There's there's many differing
views on it, but ultimately from an economic standpoint, and
that's where we sit is our focus is how can
we grow the economy because that typically will lead to
a stronger stock market and that benefits shareholders. And what
we do and what you do need is you need
(15:25):
a labor supply out there. You need labor supply growth.
And from a population standpoint, this country is not getting
it from just outright population growth. Those numbers are slowing
in declining. So to make up that differential to fund
things like Social Security and other programs out there, you
are going to need an increase in the labor supply.
Certainly not a proponent here of a legal immigration but
(15:47):
if there could be some sort of program that was
created that would allow for a legal process of undocumented
workers to transition to legal employment sets, ultimately that would
be the goal here. You know, I know I'm way
oversimplifying the problem, but immigration. It's a country that's built
on immigration. But we just need to be able to
(16:07):
do it in a way that is, you know, a
solid process.
Speaker 3 (16:12):
Yeah, whatever you think of the way our immigration laws
are being enforced, this is a stagflationary move. It decreases
as you said the I'll just I'll broaden it and
say it decreases the productive potential of the economy, which
is what happens when you take workers out of it.
Now you could say, I don't care they weren't here legally,
(16:32):
get them out. Well, you could empty all the prisons
and that would increase the labor supply too. Is that
what you want to do? No, No, I'm not taking
a position on it, although you could argue that, as
I debate myself here, you could argue that, well, this
is different. These are skilled workers, some of their visas expired,
et cetera, et cetera. The fact is they broke the law,
the law was enforced, and the result was, I guess,
(16:56):
a good one from an immigration law point of view.
From an economic point of view, this is only several
hundred people. Yeah, probably not going to dramatically affect overall
labor supply, overall aggregate supply, and thus make the Fed's
job harder. But if we did this persistently and on
a larger scale, and I guess there are arguments that
(17:16):
we are doing it persistently and on a larger scale. Yeah,
this type of stuff is stagflationary, but maybe it's necessary
in the minds of some to get better conformity with
our labor laws. You could argue, as you did, though,
that we ought to be at the same time making
it easier for people with skills to come here and
(17:37):
make a living here and contribute to the economy. It
would be nice to hear that from policymakers too.
Speaker 2 (17:42):
Yeah, the combination of both home bar shortage forces sellers
to lower prices and walk away as the sumpter drags on. Really,
what we've seen over the course of the last six
month plus has been a very tepid real estate market,
particularly in the South and the West, where many of
those people who are listing their homes have had to
(18:02):
decrease their prices that they're listening to that. As of
data through May, more than half of the country of
active listings had to decrease their prices. We've seen that
the sales of previously occupied US homes are running about
one percent less than they were through the first seven
months of last year, and last year they sank to
(18:25):
the lowest level of nearly thirty years. So there's just
been not a lot of inventory moving. The housing market
has remained incredibly stagnant. It's an issue of affordability as
part of it, but you also have other areas of
the country where there's just a pocket of excess inventory
that you just don't have a lot of buyers chomping
(18:45):
at the bit to be participants in whether it be
Florida or the Sun Belt. There just isn't a lot
of demand out there. So we'll continue to see how
that situation plays out, but there doesn't really look to
be any sort of near term catallus that has kind
of jolt the housing market. Taking a look at the
regular the stock markets, we've got little change on some
(19:05):
of the major industries. S ANDP is up a measley
two points, the Dow Jones is up a little bit
more one hundred and thirty points, and the Nasdaq is
off about twelve points. The US ten year Treasury remains
relatively flat, sitting at four point zero eight percent, and
gold is down just slightly a quarter of a percent.
(19:26):
We're going to take a quick break here on the
Finished Exchange. When we come back, the trivia answer and
much more right after this break.
Speaker 1 (19:33):
Okay, bringing the latest financial news straight to your radio
every day, it's the Financial Exchange 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
(19:56):
on the Financial Exchange Radio Network.
Speaker 4 (20:00):
Well, one day after the NASDAK notched a fresh record high.
Markets today are mostly quiet mixed as investors sift through
the annual jobs revision from the Bureau of Labor Statistics.
According to those revisions, the US added nine hundred and
eleven thousand fewer jobs over the twelve months that ended
in March. Wall Street's also riding for two inflation readings
(20:24):
this week. Tomorrow we have the Producer Price Index, followed
by the Consumer Price Index on Thursday. Right now, the
Dow is up by third of a percent, or one
hundred and sixty four points higher, SMP five hundred is
completely flat, and the Nasdaq is down only a tenth
of percent. Russell two thousand is now down seven tenths
(20:44):
of one percent. Tenure Treasure realed is up three basis
points at four point zero eight percent, and crude oil
up over one and a half percent. Hire trading right
at sixty three dollars a barrel. Big news in the
commodities based this morning after Anglo American agreed to merge
with Tech Resources and a deal that will create one
(21:06):
of the largest copper producers. Anglo shares are up by
about nine percent, while Tech stock is up nearly fourteen percent. Meanwhile,
Apple shares are down modestly ahead of its anticipated annual
product event at one o'clock this afternoon Eastern Time, where
the tech Giant will unveil its new line of iPhone seventeens,
(21:27):
among other device updates. Elsewhere, Fox shares down about six
percent after the Media Giant announced the Murdoch family resolved
its succession battle where Lachlan Murdoch won control of the company.
Casey's General Stores beat quarterly earnings and revenue estimates, boosted
by strong same store sales growth. However, shares are down
(21:50):
about one percent. Dick's Sporting Goods was upgraded by City
Group to buy from neutral, saying the sports retailer will
be a powerful force in athletic retail following its acquisition
of foot Locker. That stock also down modestly. And after
today's close, we'll see quarterly earnings from Game Stop In Oracle,
(22:12):
I'm Tucker Silva and that is Wall Street Watch. And
in the previous segment, we asked you the trivia question,
what was Adam Sandler's or what is the highest grossing
live action Adam Sandler movie? That would be Grown Ups
That would be grown up. Steve from Westbrook, Maine is
our winner today today taking home a Financial Exchange Show
(22:33):
t shirt. Congrats to Steve and we play trivia every
day here in the Financial Exchange See complete contest rules
at Financial Exchange Show dot com.
Speaker 2 (22:42):
There is a renewed bid to end quarterly earnings reports.
The Long Term Stock Exchange is trying to petition regulators
to allow public companies to share results less frequently. This
has been something that for the last fifty years has
been pretty much the additional trajectory of US public companies.
Every three months, they'll come out and do an earning
(23:05):
support to show how the company fared over the course
of the last three months. It has been criticized by
the likes of Buffett and others, saying that the need
for quarterly earnings reports creates, you know, too much noise
and that there should be more focus on kind of
the long term trajectory of a company rather than just
scrutinizing do they beat expectations or come in under expectations
(23:27):
for the recent quarter. But it is something that has
not changed, like I said, over the last fifty years
or so. However, now again some renewed momentum. Perhaps this
idea of the shift from the quarterly earnings reports sessions.
Speaker 3 (23:40):
I don't know how I feel about eliminating actual earnings
reports as opposed to getting away from earnings guidance, which
is voluntary guidance is different. Amazon doesn't provide guidance. There
are other examples. Coca Cola is one that I in
a very a quick but very thorough Google search on Earth.
So there are plenty of companies that don't give guidance,
(24:02):
which is different than actually reporting. The problem with guidance,
of course, is that you're then incented to game earnings
to reach the guidance or to gain the number that
you provide as a forecast, knowing that it's easily achievable,
leading to unproductive This called volatility and stock price I mean,
(24:24):
the reason for earnings guidance is to set investor expectations
obviously and reduce share price volatility. That makes it easier
to finance your investments over time. You don't want to
jump a share price. You want a relatively stable, ideally
growing share price. Guidance should help with that, but it doesn't,
so some companies don't do it. I personally see no
(24:45):
harm in eliminating guidance earnings themselves less frequently. I don't
know they generally can if they don't contain valuable information.
Maybe we need to revise earnings preparation procedures and guidelines
as opposed to releasing them less frequently. I'm not sure.
I haven't studied the issue. Maybe there are good statistical
(25:06):
arguments for less frequent but more accurate earnings releases.
Speaker 2 (25:09):
The argument made by CEO Jamie Diamond of JP Morgan,
Chase and Buffett. They co offered a journal opinion column
on this, stating that companies hold back on spending and
hiring to try and meet the quarterly earnings for a forecast.
They very much become a hurdle that people the companies
try to beat for, you know, appeasing Wall Street and
(25:29):
their stock price. So that that's their argument.
Speaker 3 (25:32):
The other that's their argument against guidance, though not against
releasing earnings quarterly, which right right, though those are two different. No,
it does, it does get confused, and the article doesn't
do a good job. And this is a complicated area.
You can't just dive into this for three minutes like
we do every subject on the show virtually and then
cover it in five and expect to be thorough and correct. Frankly,
(25:52):
so it is important to make that distinction. Again, do
we want less information?
Speaker 2 (25:56):
But the other issue that you have is that there's
less And I'm not saying this this should be done
because of this, but there is a lot less publicly
traded companies in the US. There's only about thirty seven
hundred as of late June, which is down thirteen percent
from three years ago, and way less than we had
back in ninety seven. Not saying good or bad, but
this is why these things are being kicked around that
(26:17):
often there are issues that come with being a public
company that a lot of private companies are now being
more and more reticent to jump into those waters. Perhaps
not having the quarterly earnings reports or the earnings guidance
reports would make it so that they'd be more willing
to I don't know if that would.
Speaker 3 (26:36):
Move so burdensome day. They don't have to do the guidance. Now,
that's voluntary, as I said, according to Google, which I'm
using as my authority here. Companies like Amazon, which I
think I knew, Coca Cola, which I don't think I knew,
do not provide forecasts so called guidance. If it's the
quarterly it's If it's the formal reporting process that's onerous.
Is there a better solution than no information, I guess
(26:57):
is my pointy.
Speaker 4 (27:00):
Lall, Why just watch the leaves change when you could
watch the sunset over turquoise waters? Well, the US Virgin
Islands are your perfect fall escape. Set sail in the
sparkling blue seas, snorkel colorful reefs, kayak through calm lagoons,
or try to reel in the Big One with world
class sport fishing. Then explore Charlotte, Amali, the capital of
(27:21):
Saint Thomas, with its historic streets and duty free shopping,
farr to Saint John's Virgin Islands National Park for hiking
and secluded beaches, and finally experience the culture, festivals and
rum of Saint Croix. Three incredible islands, countless experiences and
something for everyone to enjoy. With easy travel from New England,
(27:43):
no passport required for US citizens and no money to exchange,
paradise is closer than you think, So why wait? This
can be the season you fall naturally in rhythm with
the heartbeat of the islands in America's Caribbean, the US
Virgin Islands. Plan your getaway now at visit USVII dot com.
That's visit USVII dot com.
Speaker 2 (28:06):
N Video's wow factor is fading back. Two years ago,
in Vidia came out with a earnings beat where they
forecast or sorry, enterings forecasts, where they forecast eleven billion
of quarterly revenue that was fifty three percent higher than
what analysts had anticipated, and it set off a string
of quarters where in Vidia's revenue just went up like
(28:27):
a hockey stick curve. They now do close to forty
billion plus revenue a quarter. Back two years ago, like
I was mentioning, they forecast eleven billion. They now over
the trailing twelve months, have done one hundred and sixty
five billion of revenue. This company has been by far
the biggest benefactor of all of the AI enthusiasm. They
(28:49):
make a tremendous amount of the chips and infrastructure that's
used to build out AI computing capabilities. The piece here,
to me is really just a commentary in the law
of large numbers. You're not always going to be able
to beat antist expectations by fifty three percent or grow
your revenue by one hundred and sixty five percent, you know,
(29:10):
year over year, and they've plateaued in a sense, but
it's hard to continue to grow your revenue at that pace.
And now the Wall Street expectations have more or less
caught up to where Nvidia has reported on a quarterly
basis from an earning's perspective. So the argument being is
that they can't surprise the upside as much as they could.
But to me, that's just you can't always do that
(29:32):
with large numbers. It's hard to keep that pace.
Speaker 3 (29:36):
Unless they're going to get into another market. At some point,
we're going to have enough data centers yep. And are
they going to monopolize the chip market for those centers indefinitely?
Probably not. No replacement chips will be made by somebody else.
Probably at some point.
Speaker 2 (29:50):
Oh there's a lot of capital being thrown at that
to get after The gross margins that in Nvidia have
are upwards of seventy percent, So you can believe that
somebody is going to come in try yea.
Speaker 3 (30:00):
It would be a good sign if they continue to
effectively monopolize. And I use that not in a legal sense,
just in sort of as a factual description wouldn't be
a good sign of a healthy economy if Nvidia maintain
their current position indefinitely, and they're not going to grow
at their current clip in definitely, Otherwise they've become the
whole economy is obviously absurd.
Speaker 2 (30:18):
They're a big part of the S and p F,
that's for sure. With a market cap over four trillion dollars,
in Vidia stock has been on a turnaspun over the
last several years, a little bit more muted on a
year to date basis, will continue to follow how they fare.
We're going to take a quick break here on the
finished Exchange. When we come back, a little bit of
stack Roulette right after this break.
Speaker 1 (30:40):
Miss any of the show. The Financial Exchange Show podcast
is available on Apple, Spotify, and iHeartRadio. Hit the subscribe
button and leave us a five star review. This is
the Financial Exchange Radio Network. The Financial Exchange is now
available every day from eleven to noon. Non Serious XM's
Business radio Channel one. Stay informed about the latest from
(31:02):
Wall Street, fiscal policy, and breaking business news. Every day.
The Financial Exchange is live I Serious XM's Business Radio
Channel one thirty two. This is the Financial Exchange Radio Network.
Speaker 4 (31:19):
This year's DAV five k is less than three months
away and slart slots are continuing to fill up, so
if you'd like to participate, now's the time to register.
The race is Saturday, November eighth, a Castle Island and
you can visit DAV five k dot Boston to sign up.
Speaker 3 (31:36):
We join our.
Speaker 4 (31:37):
Team Team TFE. Your support helps fund free rides to
medical appointments for veterans and the nation's first LED or
excuse me first dav Lead Housing Initiative providing homes for
single veterans and veteran families. Go to DAV five k
dot Boston and register today.
Speaker 2 (31:59):
All right, Tom, for a little bit of stack roulette.
Mark Fandetti, with his uplifting stories and humorous contents, always
headline this segment. So a funny bone, so he will
that lead off mister funny man himself. Fandetti.
Speaker 3 (32:14):
I do scour the news for something uplifting in light,
but for some reason I'm drawn too. Well. Okay, so
you probably you may have heard this story. If not,
you will probably hear it later on today. This comes
from the Wall Street Journal, but it's being widely reported.
Twelfth grade math and reading scores in US hit New low.
This continues a decline that started well before the pandemic,
(32:38):
and the new low for context is since this assessment
started in nineteen ninety two, scores have again gradually been
declining in both reading and math categories. But there's some
COMPREHENDI you so reading includes comprehension, discerning the purpose of
discerning the main point of a paragraph, you know, the
(32:59):
usual I guess sat type stuff. So one interpretation is that, wow,
this is bad, perhaps due to COVID lockdowns, perhaps just
due to continue a continuation of ongoing trends in erosion
of comprehension and math skills. Another interpretation is that well,
more people are making it to twelfth grade, so lower
(33:20):
performers are actually graduating. That'd be a good thing. They're
graduating with some skills anyway, and they're bringing down the averages.
It's hard to say to what degree that effect is
responsible for this ongoing trend. So not necessarily the end
of the world, but hard not to come away from
a story like this optimistic about, for example, something we
(33:44):
care about future productivity and economic growth and how that
relates to asset class returns and stuff like that.
Speaker 2 (33:51):
So I'm gonna put you on the spot here, So
are these high schoolers don't?
Speaker 3 (33:55):
Because I don't know anything about this other than the well.
Speaker 2 (33:57):
Because it says the asterisk is that it's obscured by
rising high school graduations rate, which could mean that more
lower performing students are taking the exam. So it's for
those people who are not finishing high school that they're
taking this, or everybody's taking this.
Speaker 3 (34:14):
I interpreted that to mean more people are getting to
the point where the exam is administered.
Speaker 2 (34:18):
Got it, got it, they're not. So these are people
the worst of the vote or dragging. Yeah, so there's
there's always some self selection. Like you don't just look
at SAT scores and say, oh, they're going up, so
kids are getting smarter. Well, no, they're self selection there.
A statistician would say, well, that's you're selecting on the
dependent variable.
Speaker 3 (34:36):
You got to look out for that. It's not it's
a It's like saying wages are going up, therefore Americans
are getting more skilled. Well, no, people who have skills
want to get a job, they take the job. They
are on the wages. You're not looking at a representative.
A simple way to put this is you may not
be looking at a representative sample.
Speaker 2 (34:52):
You're not looking at the people who are not taking
the SATs or are not working.
Speaker 3 (34:56):
You know, you gotta look at Yeah, you gotta look
at the You're not looking at a big part of
the population. So in this case, we're looking at a
bigger part of the population. And it may have always
been the case that these scores are more representative of
what an eighteen year old American of where an eighteen
year old American is at in terms of math skills.
So it depends on why you're using it. I guess
so using it to evaluate how our teachers. I wouldn't
(35:17):
dare blame teachers, but they may be using it to
evaluate themselves orre you using it to evaluate the skills
of the typical eighteen year old American. If used for
the latter purpose, this is probably not appropriate. Although it
may be becoming more representative. Is more people take it.
Speaker 2 (35:33):
Yes, it is definitely something that is out of our scope,
but concerning nonetheless, Now for some more positive news here,
The Wizard of Oz is going to be played out
on the Sphere in Las Vegas. This is by James Dolan.
The Sphere has gotten overwhelmingly positive reviews James Dolan, who
(35:55):
is the owner of the New York Knicks, is the
Sphere chairman CEO. And what they did specifically with The
Wizard of Oz is they spent about one hundred million
dollars to reimagine the film with Warner Brothers and another
producer to use AI to upscale the film to fit
on the Sphere's massive screen. And they also incorporated some
(36:16):
technology in here and techniques that they're going to have
falling apples and flying monkeys above the audience's head. And
the demand for this has been incredible. Thousands of people
are paying two hundred bucks to watch the film that
was released more than eighty five years ago. The venue
has a one hundred and sixty thousand square foot screen
(36:37):
and from everything that I've read about it, it is
supposed to be just an incredible place to watch a
concert or Now they're adapting movies to the Sphere as well,
and they're already in talks with trying to build out
Harry Potter films or Star Wars films to invest to
kind of build out these films to be launched on
the Fear movie experience.
Speaker 3 (36:58):
How do you watch a movie on us spherical.
Speaker 4 (37:01):
Look up clips of this.
Speaker 3 (37:03):
It is out there. It works.
Speaker 4 (37:04):
Yeah, oh yeah, it works. It looks real, Mark like, yeah, real,
and there's like wind blowing. It's really amazing.
Speaker 2 (37:12):
It's They've had YouTube Backstreet Boys and others perform at
the Sphere on the concert side of things, and overwhelmingly
the reviews have been really positive. It's weird to hear
James Dolan attributed to something positive because he's gotten so
much heat as the New York Nick's owner over the
last twenty years or so. But there has been tremendous
(37:33):
demand for this, and it'll be interesting to see if
they build this out for others. I got to look
up just what the viewing experience is like, but it's
supposed to be just absolutely it's like you are out.
Speaker 3 (37:44):
Yeah.
Speaker 2 (37:45):
Even just watching the clip, you can feel like you
are there. Another quick hitter here. They're bringing back the
Gott Milk campaign. They're trying to get a comeback for
Darry This was initially launched in nineteen ninety three. They're
busting back the milk mustaches that were such a huge
part of the nineties. I remember all the baseball legends
participating in those campaigns. That's all the time that we
(38:06):
have for today's episode of the Financial Exchange. Thanks so
much for joining us. We'll be back at it tomorrow
at ten am.
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:20):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is the Financial
Exchange with Paul Lane and Mark Fandetti, Your exclusive look
at business and financial news affecting your day, your city,
(00:43):
your world. Stay informed and up to date about economic
and market trends plus breaking business news every day. The
Financial Exchange is a proud partner of the Disabled American
Veterans Department of Massachusetts. Help us support our great American
heroes by visiting dav IFK DOC Boston and making a
donation today. Face is the Financial Exchange with Paul Lane
(01:06):
and Mark Vandetti.
Speaker 2 (01:12):
Welcome back to the financial exchange. Stocks are in relatively
mixed territory. Not a whole lot of move in SMP
off about four points, dal Jones up about fifty two points,
and the Nasdaq, after hitting a record high yesterday, is
only off twenty six points.
Speaker 3 (01:27):
We did get.
Speaker 2 (01:28):
Some breaking news earlier this morning where it was announced
that there was revisions to the US labor market growth
over the period from March of twenty four through March
of twenty twenty five, where nine hundred thousand, nine hundred
and eleven thousand jobs were revised down from prior estimates
during that period of time, showing that the labor market
(01:52):
was perhaps weaker than realize. We have seen over the
course of the last couple months that certainly labor growth
has slowed, the unemployment rate has ticked up to about
four point three percent, and this revision sort of highlights
that during that period of time from March of twenty
four through March of twenty five, we did have less
job growth than initially anticipated. During those months, we would
(02:15):
have averaged previously somewhere around one hundred and fifty thousand
plus jobs a month. That we're being added now with
these revisions, the average job growth is going to be
about seventy six thousand less than initially reported for those
average monthly payroll growth, so certainly something of all. It
is worth noting that this is backward looking data. This
(02:36):
doesn't really give us a good pulse on where the
labor market is today, but it does further evidence that
the labor market has been relatively weak for this period
of time, and it sets us up for an interesting
place for this upcoming Thursday inflation report on CPI that's
going to come out, where we've talked about the labor
(02:58):
market has been quite and has showed signs of you know,
small cracks. Now we have an inflation report that is
anticipated to come in I believe in around three close
to three percent on the headline numbers by economist estimates.
Certainly on the core prices which strip out the impact
of food and energy, we could crest over three percent.
(03:21):
So you could have this potential scenario where inflation is
ticking up and remaining kind of sticky and we're seeing
some pricing pressure also at the same time having a
pretty weak labor force, and it puts the FED in
a difficult position though it seems like everything has kind
of been decided for where we sit next week, that
(03:42):
they will cut interest rates by a quarter of a percent,
But it could be the situation mark where we see
labor market weakening with a backdrop of inflation tick AMPT
the same time, which invokes the word stagflation that was
prevalent around the late nineteen seventies. Certainly, don't think we're
anywhere near there yet, but at least brings up the concept.
Speaker 3 (04:03):
Yeah, maybe I'll start there. Stagflation happens when some sort
of shock hits the factors that determine the economy's productive
capacity or potential. A stagflation, like you said, is a
combination that hybrid is a combination of stagnation, economic stagnation,
(04:26):
and inflation. They had to invent a new term for
that in the seventies because it was unusual prior to
that when the economy exceeded its speed limit, unemployment was
very low, GDP growth gross domestic product growth was very high.
That put upward pressure on prices through wages and through
inflation expectations. The FED had to pull the punch bowl away,
as a former FED chairman once said, and cool things down.
(04:48):
It helps to think of the FED as a thermostat,
cooling the economy down when it gets too hot, and
vice versa. And it does that through its control of
the money supply and its targeting of a short term
interest rate we say is shorthand. The FED controls interest rates,
but they don't they control the money supply. They have
virtual control over the Federal funds rate, which puts a
floor under bank lending rates, which in turn lowers interest
(05:11):
rates throughout the economy. Short term interest rates anyway, Long
term rates different story. A function of what people expect
the Fed to do in the future future interest rates.
That is an inflation expectation. So keep that distinction in mind.
Short versus long term interest rates. The Fed can control,
I mean a little fast and loose there, but it's
more or less accurate short term rates. It can influence,
certainly longer term rates in some environments. It's tried to
(05:34):
control long term interest rates by buying longer term bonds
during the financial crisis during and after World War Two
another example. But the Fed's main instrument is the short
term interest rate known as Federal funds.
Speaker 2 (05:45):
Rate, and what that means from a consumer product side,
is money markets. There's an impact there, usually directly and immediately.
Credit card debt, which is a variable line of debt
that will fluctuate based on interest rate changes, home equi
lines of credit. Those be examples of shorter term features
that would be impacted by the FED rate cut versus
(06:05):
what Mark is talking about. The longer and that's your
thirty year fixed mortgage. Oftentimes that's gonna move in relation
to what the longer end of the curve goes on.
Speaker 3 (06:13):
Yeah, so the Fed now is asking is the economy
going to slow further? If so, that should put some
downward pressure on inflation. They can therefore afford to look past,
so to speak, current elevated inflation. Cut today, cut their
federal funds rate target, increase the money supply. To be
(06:34):
technically correct about this description, lower the federal funds rate,
which they more or less have control over. That should
stimulate demand. Don't worry about the overheating part of it,
because the economy is slowing anyway. You may sense by
my description that I'm starting to pile assumption upon assumption here.
I'm assuming that economic slack is increasing. They can afford
(06:55):
to stimulate the economy if instead the disturbance is in
the economy's supply side, so to speak, productive capacity. Then
you run the risk like the FED encountered in the
nineteen seventies, of stagflation, pushing demand too much, not recognizing
that the economy's productive capacity was either shrinking or less
(07:16):
than you thought it was. This was the problem in
the seventies. One of the problems the FED overestimated the
economy's productive capacity, underestimated the natural I'm saying the same
thing here, I'm just going to say it differently. Underestimated
the natural rate of unemployment. Unemployment was seven. They thought
it could be six without pushing up inflation. They were wrong.
What if these tariff disturbances and the policy uncertainty and
(07:39):
just general movement and economic forces have pushed the natural
rate of unemployment up to five percent, then four point
three percent where we are today is too low. Problem
is you don't know until after the fact.
Speaker 2 (07:51):
That's what's so difficult about that job is you don't
know until after you know.
Speaker 3 (07:57):
Paul, they're going to cut their roll in the ice.
Oh that we all. They've they've forecasted it seven ways
to they've telegraphed it. Excuse me, seven ways to Sunday.
We know what play the FED is running coming out
of this huddle. They're going to cut in a week.
They're probably gonna cut again in December. The question is
are they cutting into an economy that the supply of
(08:22):
labor because of deportations or whatever is dwindling. Then you
do run the risk of stagflation. My personal view is
that they are going to run that risk, but they're
indifferent to them. Keeping employment as high as possible is preferable,
and honest people can disagree about that. Using the FED
to finance the federal deficit, which the White House has
talked about, is reckless and I hope we don't ultimately
(08:46):
go down that path. That's a whole new set of
considerations and possible risks. We're not even talking about that.
Speaker 2 (08:52):
Looking at the CME Group, which does probabilities and based
on futures data for where federal reserve interest rates may land.
There meeting is going to be next week on September seventeenth,
ninety two percent probability that we will see a quarter
of a percent cut, and there is still an eight
percent probably on the table that perhaps we could see
(09:13):
as much as a half percent cut next week. We'll
have that coverage for you here on the show next week.
Speaker 3 (09:19):
So market like, how will markets? How will they react?
They're expecting a quarter point cut. If we get a
half percentage point cut, what would that tell you? How
would you react personally to that? Would you be encouraged? Alarmed?
Speaker 2 (09:32):
Or I would be alarmed because ultimately that's the Fed
telegraphing that the labor market or the economic factors that
they're studying are weaker, much weaker than perhaps you or
I would anticipate. Or I would sit here and say
today that this is perhaps them saying that, jeez, the
labor market is in a real difficult position, whether it's
the supply shock on the immigration side of things, or
(09:54):
whatever the case may be. And I would wonder if
Wall Street would rally, because typically lower rates increases valuations,
And I wonder if that, how.
Speaker 3 (10:07):
Would Wall Street react?
Speaker 2 (10:08):
Would they react as, oh, this is concerning from an
economic perspective that they're doing this half percent cut, or
would they react the borrowing costs have lowered significantly, We're
on this path where we're gonna have cheap money again
from a financing perspective, And I honestly could see it
going either way. This market is so confounding that maybe
that would cause arise in markets, which would be a
(10:31):
surprise to me, who would read it a little bit
more pessimistically. But maybe that's because we always air more
on the side of caution. But the markets have continued enthusiasm,
come hell or high water, they just keep shugging along.
Speaker 3 (10:43):
Yeah, to me, that wouldn't be the right reaction. The
FED would be conveying that they know something that we don't.
The economies in worse shape, or they think it is,
that should be bad news and reflected as such in markets.
But to your point, markets are so equity markets in
particular are so used to reflexively responding to anything the
FED does on the easing side by going higher that
(11:05):
then markets might shoot higher than they otherwise.
Speaker 2 (11:08):
It's been a favorable FED for the mart The markets
have been really benefited by the FED that has oftentimes
seemed to really sort of lend themselves to Wall Street
and the stock market in general. Not like they would
be doing that here, but maybe it gets interpreted that way.
We'll have to see. We're gonna take a quick break
here on the financial exchange When we come back, we're
gonna be doing a little bit of trivia and a
(11:29):
little bit more about the labor force in the United States.
Right after this break, The.
Speaker 1 (11:34):
Financial Exchange streams live on YouTube. Subscribe to our page
and stay up to date on breaking business news all morning.
Long Face is the Financial Exchange Radio Network. Here the
Financial Exchange every day from eleven to noon non Serious
XM's Business Radio Channel one thirty two. Keep it here
for the latest business and financial news and the trends
(11:56):
on Wall Street. The Financial Exchange is now life on
Serious XMS Business Radio Channel one thirty two. Thanks, He's
the Financial Exchange Radio Network.
Speaker 4 (12:15):
Let's do a little bit of trivia here in the
Financial Exchange. And today is Adam Sandler's fifty ninth birthday.
Sandler is the third highest grossing comedy actor. Excuse me,
He's the third highest grossing comedy actor of all time,
behind only Will Ferrell and Eddie Murphy. The three highest
(12:37):
grossing Sandler movies are all Hotel Transylvania movies, with each
grossing over three hundred million dollars. So our trivia question today,
what is the highest grossing live action Adam Sandler movie?
Once again, what is the highest grossing live action Adam
Sandler movie? Be the third per since today to text
(13:01):
us at six one seven three six two thirteen eighty
five with the correct answer, and he went a Financial
Exchange Show t shirt once again. The third correct response
to text us to the number six one seven three
six two thirteen eighty five will win that T shirt.
See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (13:21):
Did you guys watch Happy Gilmore two? I did? Yeah,
what'd you think?
Speaker 3 (13:24):
Eh?
Speaker 4 (13:25):
It's fine, a good nostalgia.
Speaker 2 (13:28):
Good nostalgia, but that's about it.
Speaker 4 (13:30):
First half was pretty good, like the track was going on,
and then the second half, Yeah, I'd watch it.
Speaker 2 (13:37):
They had more cameos than they knew it to do it.
I mean, golfers person part of the movie. Yeah, they
got like the whole PGA tours.
Speaker 4 (13:43):
It felt like to jump in on Scottie Scheffler, will
Sell Xalatorus were hilarious. A couple of the ones are great.
John Daily, Yeah, but you know, the plot was okay.
Speaker 2 (13:53):
It was a little crazy. Yeah, I mean it was
good nostalgia stuff. But Sandler's success is just uh incredible.
He kid just continues to pump out movie after movie,
and I don't know his first three. I think we're
the best. But anyway, I digress. I want to talk
a little bit here about immigration. We recently had Hyundai
(14:14):
had a there was a detention of four hundred and
seventy five people of South Korean nationals at the Hyundai
LG Energy Solution factory and that was was that Virginia
that that was out of the factory where they had
the the workers that they were George and Georgia. You've
(14:36):
got that Pence an energy.
Speaker 3 (14:38):
Plant kidding to our national audience, I'm just.
Speaker 2 (14:41):
Kidding, Yes, it was a plant in Georgia. Also, just
you have this piece in Blueberg in general regarding the
potential labor supply shock, and this is something that we've
talked about on the show as well, where the American
workforce is now short one point two million workers, but
partially as a result of what's been a very strict
campaign to you know, deport a lot of immigrants. And
(15:04):
immigration is a very difficult subject. There's there's many differing
views on it, but ultimately from an economic standpoint, and
that's where we sit is our focus is how can
we grow the economy because that typically will lead to
a stronger stock market and that benefits shareholders. And what
we do and what you do need is you need
(15:25):
a labor supply out there. You need labor supply growth.
And from a population standpoint, this country is not getting
it from just outright population growth. Those numbers are slowing
in declining. So to make up that differential to fund
things like Social Security and other programs out there, you
are going to need an increase in the labor supply.
Certainly not a proponent here of a legal immigration but
(15:47):
if there could be some sort of program that was
created that would allow for a legal process of undocumented
workers to transition to legal employment sets, ultimately that would
be the goal here. You know, I know I'm way
oversimplifying the problem, but immigration. It's a country that's built
on immigration. But we just need to be able to
(16:07):
do it in a way that is, you know, a
solid process.
Speaker 3 (16:12):
Yeah, whatever you think of the way our immigration laws
are being enforced, this is a stagflationary move. It decreases
as you said the I'll just I'll broaden it and
say it decreases the productive potential of the economy, which
is what happens when you take workers out of it.
Now you could say, I don't care they weren't here legally,
(16:32):
get them out. Well, you could empty all the prisons
and that would increase the labor supply too. Is that
what you want to do? No, No, I'm not taking
a position on it, although you could argue that, as
I debate myself here, you could argue that, well, this
is different. These are skilled workers, some of their visas expired,
et cetera, et cetera. The fact is they broke the law,
the law was enforced, and the result was, I guess,
(16:56):
a good one from an immigration law point of view.
From an economic point of view, this is only several
hundred people. Yeah, probably not going to dramatically affect overall
labor supply, overall aggregate supply, and thus make the Fed's
job harder. But if we did this persistently and on
a larger scale, and I guess there are arguments that
(17:16):
we are doing it persistently and on a larger scale. Yeah,
this type of stuff is stagflationary, but maybe it's necessary
in the minds of some to get better conformity with
our labor laws. You could argue, as you did, though,
that we ought to be at the same time making
it easier for people with skills to come here and
(17:37):
make a living here and contribute to the economy. It
would be nice to hear that from policymakers too.
Speaker 2 (17:42):
Yeah, the combination of both home bar shortage forces sellers
to lower prices and walk away as the sumpter drags on. Really,
what we've seen over the course of the last six
month plus has been a very tepid real estate market,
particularly in the South and the West, where many of
those people who are listing their homes have had to
(18:02):
decrease their prices that they're listening to that. As of
data through May, more than half of the country of
active listings had to decrease their prices. We've seen that
the sales of previously occupied US homes are running about
one percent less than they were through the first seven
months of last year, and last year they sank to
(18:25):
the lowest level of nearly thirty years. So there's just
been not a lot of inventory moving. The housing market
has remained incredibly stagnant. It's an issue of affordability as
part of it, but you also have other areas of
the country where there's just a pocket of excess inventory
that you just don't have a lot of buyers chomping
(18:45):
at the bit to be participants in whether it be
Florida or the Sun Belt. There just isn't a lot
of demand out there. So we'll continue to see how
that situation plays out, but there doesn't really look to
be any sort of near term catallus that has kind
of jolt the housing market. Taking a look at the
regular the stock markets, we've got little change on some
(19:05):
of the major industries. S ANDP is up a measley
two points, the Dow Jones is up a little bit
more one hundred and thirty points, and the Nasdaq is
off about twelve points. The US ten year Treasury remains
relatively flat, sitting at four point zero eight percent, and
gold is down just slightly a quarter of a percent.
(19:26):
We're going to take a quick break here on the
Finished Exchange. When we come back, the trivia answer and
much more right after this break.
Speaker 1 (19:33):
Okay, bringing the latest financial news straight to your radio
every day, it's the Financial Exchange 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
(19:56):
on the Financial Exchange Radio Network.
Speaker 4 (20:00):
Well, one day after the NASDAK notched a fresh record high.
Markets today are mostly quiet mixed as investors sift through
the annual jobs revision from the Bureau of Labor Statistics.
According to those revisions, the US added nine hundred and
eleven thousand fewer jobs over the twelve months that ended
in March. Wall Street's also riding for two inflation readings
(20:24):
this week. Tomorrow we have the Producer Price Index, followed
by the Consumer Price Index on Thursday. Right now, the
Dow is up by third of a percent, or one
hundred and sixty four points higher, SMP five hundred is
completely flat, and the Nasdaq is down only a tenth
of percent. Russell two thousand is now down seven tenths
(20:44):
of one percent. Tenure Treasure realed is up three basis
points at four point zero eight percent, and crude oil
up over one and a half percent. Hire trading right
at sixty three dollars a barrel. Big news in the
commodities based this morning after Anglo American agreed to merge
with Tech Resources and a deal that will create one
(21:06):
of the largest copper producers. Anglo shares are up by
about nine percent, while Tech stock is up nearly fourteen percent. Meanwhile,
Apple shares are down modestly ahead of its anticipated annual
product event at one o'clock this afternoon Eastern Time, where
the tech Giant will unveil its new line of iPhone seventeens,
(21:27):
among other device updates. Elsewhere, Fox shares down about six
percent after the Media Giant announced the Murdoch family resolved
its succession battle where Lachlan Murdoch won control of the company.
Casey's General Stores beat quarterly earnings and revenue estimates, boosted
by strong same store sales growth. However, shares are down
(21:50):
about one percent. Dick's Sporting Goods was upgraded by City
Group to buy from neutral, saying the sports retailer will
be a powerful force in athletic retail following its acquisition
of foot Locker. That stock also down modestly. And after
today's close, we'll see quarterly earnings from Game Stop In Oracle,
(22:12):
I'm Tucker Silva and that is Wall Street Watch. And
in the previous segment, we asked you the trivia question,
what was Adam Sandler's or what is the highest grossing
live action Adam Sandler movie? That would be Grown Ups
That would be grown up. Steve from Westbrook, Maine is
our winner today today taking home a Financial Exchange Show
(22:33):
t shirt. Congrats to Steve and we play trivia every
day here in the Financial Exchange See complete contest rules
at Financial Exchange Show dot com.
Speaker 2 (22:42):
There is a renewed bid to end quarterly earnings reports.
The Long Term Stock Exchange is trying to petition regulators
to allow public companies to share results less frequently. This
has been something that for the last fifty years has
been pretty much the additional trajectory of US public companies.
Every three months, they'll come out and do an earning
(23:05):
support to show how the company fared over the course
of the last three months. It has been criticized by
the likes of Buffett and others, saying that the need
for quarterly earnings reports creates, you know, too much noise
and that there should be more focus on kind of
the long term trajectory of a company rather than just
scrutinizing do they beat expectations or come in under expectations
(23:27):
for the recent quarter. But it is something that has
not changed, like I said, over the last fifty years
or so. However, now again some renewed momentum. Perhaps this
idea of the shift from the quarterly earnings reports sessions.
Speaker 3 (23:40):
I don't know how I feel about eliminating actual earnings
reports as opposed to getting away from earnings guidance, which
is voluntary guidance is different. Amazon doesn't provide guidance. There
are other examples. Coca Cola is one that I in
a very a quick but very thorough Google search on Earth.
So there are plenty of companies that don't give guidance,
(24:02):
which is different than actually reporting. The problem with guidance,
of course, is that you're then incented to game earnings
to reach the guidance or to gain the number that
you provide as a forecast, knowing that it's easily achievable,
leading to unproductive This called volatility and stock price I mean,
(24:24):
the reason for earnings guidance is to set investor expectations
obviously and reduce share price volatility. That makes it easier
to finance your investments over time. You don't want to
jump a share price. You want a relatively stable, ideally
growing share price. Guidance should help with that, but it doesn't,
so some companies don't do it. I personally see no
(24:45):
harm in eliminating guidance earnings themselves less frequently. I don't
know they generally can if they don't contain valuable information.
Maybe we need to revise earnings preparation procedures and guidelines
as opposed to releasing them less frequently. I'm not sure.
I haven't studied the issue. Maybe there are good statistical
(25:06):
arguments for less frequent but more accurate earnings releases.
Speaker 2 (25:09):
The argument made by CEO Jamie Diamond of JP Morgan,
Chase and Buffett. They co offered a journal opinion column
on this, stating that companies hold back on spending and
hiring to try and meet the quarterly earnings for a forecast.
They very much become a hurdle that people the companies
try to beat for, you know, appeasing Wall Street and
(25:29):
their stock price. So that that's their argument.
Speaker 3 (25:32):
The other that's their argument against guidance, though not against
releasing earnings quarterly, which right right, though those are two different. No,
it does, it does get confused, and the article doesn't
do a good job. And this is a complicated area.
You can't just dive into this for three minutes like
we do every subject on the show virtually and then
cover it in five and expect to be thorough and correct. Frankly,
(25:52):
so it is important to make that distinction. Again, do
we want less information?
Speaker 2 (25:56):
But the other issue that you have is that there's
less And I'm not saying this this should be done
because of this, but there is a lot less publicly
traded companies in the US. There's only about thirty seven
hundred as of late June, which is down thirteen percent
from three years ago, and way less than we had
back in ninety seven. Not saying good or bad, but
this is why these things are being kicked around that
(26:17):
often there are issues that come with being a public
company that a lot of private companies are now being
more and more reticent to jump into those waters. Perhaps
not having the quarterly earnings reports or the earnings guidance
reports would make it so that they'd be more willing
to I don't know if that would.
Speaker 3 (26:36):
Move so burdensome day. They don't have to do the guidance. Now,
that's voluntary, as I said, according to Google, which I'm
using as my authority here. Companies like Amazon, which I
think I knew, Coca Cola, which I don't think I knew,
do not provide forecasts so called guidance. If it's the
quarterly it's If it's the formal reporting process that's onerous.
Is there a better solution than no information, I guess
(26:57):
is my pointy.
Speaker 4 (27:00):
Lall, Why just watch the leaves change when you could
watch the sunset over turquoise waters? Well, the US Virgin
Islands are your perfect fall escape. Set sail in the
sparkling blue seas, snorkel colorful reefs, kayak through calm lagoons,
or try to reel in the Big One with world
class sport fishing. Then explore Charlotte, Amali, the capital of
(27:21):
Saint Thomas, with its historic streets and duty free shopping,
farr to Saint John's Virgin Islands National Park for hiking
and secluded beaches, and finally experience the culture, festivals and
rum of Saint Croix. Three incredible islands, countless experiences and
something for everyone to enjoy. With easy travel from New England,
(27:43):
no passport required for US citizens and no money to exchange,
paradise is closer than you think, So why wait? This
can be the season you fall naturally in rhythm with
the heartbeat of the islands in America's Caribbean, the US
Virgin Islands. Plan your getaway now at visit USVII dot com.
That's visit USVII dot com.
Speaker 2 (28:06):
N Video's wow factor is fading back. Two years ago,
in Vidia came out with a earnings beat where they
forecast or sorry, enterings forecasts, where they forecast eleven billion
of quarterly revenue that was fifty three percent higher than
what analysts had anticipated, and it set off a string
of quarters where in Vidia's revenue just went up like
(28:27):
a hockey stick curve. They now do close to forty
billion plus revenue a quarter. Back two years ago, like
I was mentioning, they forecast eleven billion. They now over
the trailing twelve months, have done one hundred and sixty
five billion of revenue. This company has been by far
the biggest benefactor of all of the AI enthusiasm. They
(28:49):
make a tremendous amount of the chips and infrastructure that's
used to build out AI computing capabilities. The piece here,
to me is really just a commentary in the law
of large numbers. You're not always going to be able
to beat antist expectations by fifty three percent or grow
your revenue by one hundred and sixty five percent, you know,
(29:10):
year over year, and they've plateaued in a sense, but
it's hard to continue to grow your revenue at that pace.
And now the Wall Street expectations have more or less
caught up to where Nvidia has reported on a quarterly
basis from an earning's perspective. So the argument being is
that they can't surprise the upside as much as they could.
But to me, that's just you can't always do that
(29:32):
with large numbers. It's hard to keep that pace.
Speaker 3 (29:36):
Unless they're going to get into another market. At some point,
we're going to have enough data centers yep. And are
they going to monopolize the chip market for those centers indefinitely?
Probably not. No replacement chips will be made by somebody else.
Probably at some point.
Speaker 2 (29:50):
Oh there's a lot of capital being thrown at that
to get after The gross margins that in Nvidia have
are upwards of seventy percent, So you can believe that
somebody is going to come in try yea.
Speaker 3 (30:00):
It would be a good sign if they continue to
effectively monopolize. And I use that not in a legal sense,
just in sort of as a factual description wouldn't be
a good sign of a healthy economy if Nvidia maintain
their current position indefinitely, and they're not going to grow
at their current clip in definitely, Otherwise they've become the
whole economy is obviously absurd.
Speaker 2 (30:18):
They're a big part of the S and p F,
that's for sure. With a market cap over four trillion dollars,
in Vidia stock has been on a turnaspun over the
last several years, a little bit more muted on a
year to date basis, will continue to follow how they fare.
We're going to take a quick break here on the
finished Exchange. When we come back, a little bit of
stack Roulette right after this break.
Speaker 1 (30:40):
Miss any of the show. The Financial Exchange Show podcast
is available on Apple, Spotify, and iHeartRadio. Hit the subscribe
button and leave us a five star review. This is
the Financial Exchange Radio Network. The Financial Exchange is now
available every day from eleven to noon. Non Serious XM's
Business radio Channel one. Stay informed about the latest from
(31:02):
Wall Street, fiscal policy, and breaking business news. Every day.
The Financial Exchange is live I Serious XM's Business Radio
Channel one thirty two. This is the Financial Exchange Radio Network.
Speaker 4 (31:19):
This year's DAV five k is less than three months
away and slart slots are continuing to fill up, so
if you'd like to participate, now's the time to register.
The race is Saturday, November eighth, a Castle Island and
you can visit DAV five k dot Boston to sign up.
Speaker 3 (31:36):
We join our.
Speaker 4 (31:37):
Team Team TFE. Your support helps fund free rides to
medical appointments for veterans and the nation's first LED or
excuse me first dav Lead Housing Initiative providing homes for
single veterans and veteran families. Go to DAV five k
dot Boston and register today.
Speaker 2 (31:59):
All right, Tom, for a little bit of stack roulette.
Mark Fandetti, with his uplifting stories and humorous contents, always
headline this segment. So a funny bone, so he will
that lead off mister funny man himself. Fandetti.
Speaker 3 (32:14):
I do scour the news for something uplifting in light,
but for some reason I'm drawn too. Well. Okay, so
you probably you may have heard this story. If not,
you will probably hear it later on today. This comes
from the Wall Street Journal, but it's being widely reported.
Twelfth grade math and reading scores in US hit New low.
This continues a decline that started well before the pandemic,
(32:38):
and the new low for context is since this assessment
started in nineteen ninety two, scores have again gradually been
declining in both reading and math categories. But there's some
COMPREHENDI you so reading includes comprehension, discerning the purpose of
discerning the main point of a paragraph, you know, the
(32:59):
usual I guess sat type stuff. So one interpretation is that, wow,
this is bad, perhaps due to COVID lockdowns, perhaps just
due to continue a continuation of ongoing trends in erosion
of comprehension and math skills. Another interpretation is that well,
more people are making it to twelfth grade, so lower
(33:20):
performers are actually graduating. That'd be a good thing. They're
graduating with some skills anyway, and they're bringing down the averages.
It's hard to say to what degree that effect is
responsible for this ongoing trend. So not necessarily the end
of the world, but hard not to come away from
a story like this optimistic about, for example, something we
(33:44):
care about future productivity and economic growth and how that
relates to asset class returns and stuff like that.
Speaker 2 (33:51):
So I'm gonna put you on the spot here, So
are these high schoolers don't?
Speaker 3 (33:55):
Because I don't know anything about this other than the well.
Speaker 2 (33:57):
Because it says the asterisk is that it's obscured by
rising high school graduations rate, which could mean that more
lower performing students are taking the exam. So it's for
those people who are not finishing high school that they're
taking this, or everybody's taking this.
Speaker 3 (34:14):
I interpreted that to mean more people are getting to
the point where the exam is administered.
Speaker 2 (34:18):
Got it, got it, they're not. So these are people
the worst of the vote or dragging. Yeah, so there's
there's always some self selection. Like you don't just look
at SAT scores and say, oh, they're going up, so
kids are getting smarter. Well, no, they're self selection there.
A statistician would say, well, that's you're selecting on the
dependent variable.
Speaker 3 (34:36):
You got to look out for that. It's not it's
a It's like saying wages are going up, therefore Americans
are getting more skilled. Well, no, people who have skills
want to get a job, they take the job. They
are on the wages. You're not looking at a representative.
A simple way to put this is you may not
be looking at a representative sample.
Speaker 2 (34:52):
You're not looking at the people who are not taking
the SATs or are not working.
Speaker 3 (34:56):
You know, you gotta look at Yeah, you gotta look
at the You're not looking at a big part of
the population. So in this case, we're looking at a
bigger part of the population. And it may have always
been the case that these scores are more representative of
what an eighteen year old American of where an eighteen
year old American is at in terms of math skills.
So it depends on why you're using it. I guess
so using it to evaluate how our teachers. I wouldn't
(35:17):
dare blame teachers, but they may be using it to
evaluate themselves orre you using it to evaluate the skills
of the typical eighteen year old American. If used for
the latter purpose, this is probably not appropriate. Although it
may be becoming more representative. Is more people take it.
Speaker 2 (35:33):
Yes, it is definitely something that is out of our scope,
but concerning nonetheless, Now for some more positive news here,
The Wizard of Oz is going to be played out
on the Sphere in Las Vegas. This is by James Dolan.
The Sphere has gotten overwhelmingly positive reviews James Dolan, who
(35:55):
is the owner of the New York Knicks, is the
Sphere chairman CEO. And what they did specifically with The
Wizard of Oz is they spent about one hundred million
dollars to reimagine the film with Warner Brothers and another
producer to use AI to upscale the film to fit
on the Sphere's massive screen. And they also incorporated some
(36:16):
technology in here and techniques that they're going to have
falling apples and flying monkeys above the audience's head. And
the demand for this has been incredible. Thousands of people
are paying two hundred bucks to watch the film that
was released more than eighty five years ago. The venue
has a one hundred and sixty thousand square foot screen
(36:37):
and from everything that I've read about it, it is
supposed to be just an incredible place to watch a
concert or Now they're adapting movies to the Sphere as well,
and they're already in talks with trying to build out
Harry Potter films or Star Wars films to invest to
kind of build out these films to be launched on
the Fear movie experience.
Speaker 3 (36:58):
How do you watch a movie on us spherical.
Speaker 4 (37:01):
Look up clips of this.
Speaker 3 (37:03):
It is out there. It works.
Speaker 4 (37:04):
Yeah, oh yeah, it works. It looks real, Mark like, yeah, real,
and there's like wind blowing. It's really amazing.
Speaker 2 (37:12):
It's They've had YouTube Backstreet Boys and others perform at
the Sphere on the concert side of things, and overwhelmingly
the reviews have been really positive. It's weird to hear
James Dolan attributed to something positive because he's gotten so
much heat as the New York Nick's owner over the
last twenty years or so. But there has been tremendous
(37:33):
demand for this, and it'll be interesting to see if
they build this out for others. I got to look
up just what the viewing experience is like, but it's
supposed to be just absolutely it's like you are out.
Speaker 3 (37:44):
Yeah.
Speaker 2 (37:45):
Even just watching the clip, you can feel like you
are there. Another quick hitter here. They're bringing back the
Gott Milk campaign. They're trying to get a comeback for
Darry This was initially launched in nineteen ninety three. They're
busting back the milk mustaches that were such a huge
part of the nineties. I remember all the baseball legends
participating in those campaigns. That's all the time that we
(38:06):
have for today's episode of the Financial Exchange. Thanks so
much for joining us. We'll be back at it tomorrow
at ten am.
Popular Podcasts
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Clay Travis and Buck Sexton Show
The Clay Travis and Buck Sexton Show. Clay Travis and Buck Sexton tackle the biggest stories in news, politics and current events with intelligence and humor. From the border crisis, to the madness of cancel culture and far-left missteps, Clay and Buck guide listeners through the latest headlines and hot topics with fun and entertaining conversations and opinions.