September 30, 2024 • 38 mins
Chuck Zodda and Mike Armstrong discuss the potential dockworkers strike that could slam the US economy. Boeing and the union stall on strike talks. Pensions are the latest problem for the company. Michigan nuclear plant finalizes federal loan to support the first reactor restart in US history. AT&T exits pay-TV and frees DirecTV to combine with Dish. What are some of the worst mergers in US history?
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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):
It's Chuck, Mike and Ben with you here as we
head to the second hour, the Financial Exchange stock's not
doing a whole whole bunch of anything at the moment.
They are down slightly. The Dow's off seventy five points,
the S and P is down two, the Nasdaq down twelve.
So again, all moves within about a tenth of a percent,
may be two tenths on the Dow, so not too
much movement there. Tenure US Treasury is moving up slightly
(01:36):
anneal to three points seven to seven five percent, up
two point six basis points. Oil West Texts Intermediate up
fifty five cents to sixty eight seventy three a barrel.
When we take a look at the triple A national
average of gas prices, down two tenths of ascent over
night to three twenty one and six tenths of ascent.
(01:56):
Been hovering around that three to twenty mark for the
last couple of weeks. Now we'll see if we get
any further movement, but that is where we are at
the moment. There and we've got gold today down twelve
dollars and twenty cents an ounce, and Mike anything else
catching your eye against a pretty quiet day overall here
(02:19):
at the moment.
Speaker 3 (02:20):
Not much that is moving markets at the moment, but
just in terms of what will be having potential to
move markets this week, one Drune Palell is speaking this
afternoon at about two pm. I don't know what the
occasion is, but he will be addressing someone at one
fifty five and lots of people will be listening. Tomorrow
morning we get ISM manufacturing data. We also get job
(02:42):
openings and construction spending all at ten am. To me,
that job openings one will be a big data points
to keep an eye. On Wednesday, ADP employment comes out
along with every other Federal Reserve member speaking. Jobless claims
as we get every week come out on Thursday, along
with ISM services and factory orders, and then finally on Friday,
(03:04):
the big one, which would be the Job's Report, comes
out Friday at eight thirty am. You'll get the unemployment rate,
you'll get the number of jobs created, wage information. So
that's probably the one that has the ability to move
things the most in terms of this narrative. Around the
soft landing, but a fairly big week in terms of
labor market data that we'll be getting. And then, as
(03:26):
we mentioned during the first hour of the program, Chuck,
a lot of this will kind of be in this
opaque area beginning in October because of the you know,
the impact from the hurricane as well as strikes that
we are likely to be seeing over the next month.
Speaker 2 (03:44):
And let's talk a little bit about one of the strikes, Mike.
Have you ever flown on an airplane?
Speaker 3 (03:49):
Yes?
Speaker 2 (03:50):
Have you ever flown on an airplane with one hundred
and fifty pounds of asparagus?
Speaker 1 (03:54):
Not?
Speaker 2 (03:54):
To my knowledge, I haven't either, and I wouldn't want.
Speaker 3 (03:58):
I'm not sure I would know. I mean, how many
pounds of asparagus can you fit in the luggage area?
Speaker 2 (04:04):
Not one hundred and fifty thousand. I think this is
like the cargo plane is filled with asparagus, not just
you know underneath the uh guy that the passenger cabin. Okay,
the reason I bring this up is Tim Ryan, who
is the owner of Square one Farms, who is an
importer of agricultural products, has one hundred and fifty thousand
pounds of asparagus that he needs to get to Miami
(04:26):
from Peru. Doesn't this just sound like a great setup
for a movie like this in a world there's a
lot of it just sounds like this is Ocean's fourteen
or something like that, you know, like they're they're stealing
the asparagus. The reason they're flying this in is because
the port of Miami is expected to be closed starting
(04:47):
at midnight tonight because of the International long Shoreman's Association,
which is going to strike beginning at midnight tonight. As
far as we know, the International Longshoreman's Association, it represents
forty five thousand DOC workers along the East Coast and
Gulf Coast. And again, it is a huge union that
(05:09):
is critically important to the products that America imports. Just
as an example in this Wall Street Journal piece, the
ports represented by this union handled seventy four percent of
the country's seaborn wine imports, seventy five percent of our
banana imports, and eighty nine percent of imports of salt
used in chemical manufacturing. So so again, these are just
(05:30):
you know, some examples here, and it's not necessarily that
these are all going to stop being imported. It's that, hey,
some of these things they're going to start flying in
on cargo planes at additional cost. And what does that
mean in terms of how these products, you know, how
companies pass on those additional costs? Can they or can
they not? But you've seen estimates. I've seen estimates that
(05:54):
this strike, if it goes into effect, is going to
reduce US economic activity anywhere between about three and a
half and five billion dollars a day. Those are the
estimates that I've seen. It's a good chunk of change.
Like you do the math out at five billion a day,
it's one hundred and fifty billion dollars a month, it's
one point eight trillion dollars a year. You're talking like
(06:15):
five six percent of GDP. You're taking off the table
right there. And in terms of what the International Longshoreman's
Association is asking for, seventy seven percent wage increase over
a six year period, so they're asking for a large chunk.
The counter that they received from the port ports and
(06:37):
ocean carriers was a forty percent wage increase over the
same time. So it's it's not like the other side
is saying no, we're offering like two percent a year.
The other side is still talking like five and a
half six percent a year over this time period.
Speaker 3 (06:52):
Who employs all these people? So this is just you know,
with Boeing, it's fairly easy to understand, like, yeah, we
are sometimes sitting with pots and sometimes it is the
carriers like Maersk hmm, So it depends.
Speaker 2 (07:07):
It can be both depending on how the port is
set up.
Speaker 3 (07:09):
They're all represented apparently by the United States Maritime Alliance,
so that's who's actually you know, doing this negotiating. But
it is that adds a layer of complexity, right with Boeing,
it's hey, we want these wage increases, we want these
pension contributions. These are employees that likely all have slightly
different benefits. They all belong to the same union, but
they're negotiating with likely a lot of different employers. So
(07:34):
this is something that has the potential to be hugely
disruptive in terms of actual goods traveling around the United
States and into the United States. Because remember, it's not
just the disruption that you're going to see at the ports.
You're going to see the teamsters acting in solidarity with
the union saying hey, look we're you know great, you're
(07:55):
flying this produce into Miami. Instead of you know, taking
it to the port. We're not picking that up. That's
scab produce, you know, like like that's the stuff that
you will see. And so as you you know, try
to play out how this, you know, ends up impacting
the overall economy. It could be significant, and it's happening
(08:16):
at a time that the Southeast is already disrupted because
of the impacts of Hurricane Helene that just went through.
There the obvious, you know, the one clear place where
you're going to see an impact. If this strike goes
into effect and stays more than you know, five or
six days, it's gonna be the job numbers for October,
which are going to be terrible. Like we're not gonna
(08:38):
be able to tell anything from October, right, Like, there's
a good chance that you just have to take October
throw it out because it doesn't mean anything. So a
few things. There's no great time for a strike of dockworkers. Uh,
it seems to always be not a great time. You're
talking about food supply and all sorts of other items.
Week after July fourth, Yeah, probably the best choose one. Yeah,
(09:03):
maybe the you know week after Christmas, Uh, you know,
fewer imports coming in at that stage. You know, this
is the time if you're unfamiliar, right, if if you
are well, any retailer in the country.
Speaker 2 (09:17):
This is when your shipments are coming in for the
Christmas season.
Speaker 3 (09:20):
All your stuff is coming in for the Christmas season. Now,
how much of that is coming on the West coast
from China?
Speaker 2 (09:25):
Good point.
Speaker 3 (09:26):
You know that might not be as big of a concern,
but you know, European imports and a lot of industrial
stuff coming in through these ports will not be affecting
military cargo that seems obvious or interesting to me. Cruise
ship services will not be affected by this strike should
it come into effect here. But nonetheless, this one, I mean,
(09:48):
this one, combined with what we're seeing it Boeing right now,
just does have the ability to not only you know,
be seen in the October numbers, but you think about
all of the related industries that may need to furlough
workers because of something like this. It's it could be
extensive if it lasts.
Speaker 2 (10:08):
Also, if you want a great trivia question, either of
you watch The Wire at any point, Yeah, then yeah,
So in The Wire second season is takes place at
the Port of Baltimore and the longshorm in there, they're
not referred to as longstorm They're referred to as steve adors.
If you ever wondered where that term comes from, I'm
(10:29):
asking you, I wonder almost every day. Chuck again. This
is like I saw it and I'm like, why are
they being Are they all named Steve? Like, what's the
what's the deal here? It actually came from the phonetic
spelling of esteve adore, which is the Portuguese word for
man who loads ships in stow's cargo, And it just
(10:51):
became common in terms of how longshoremen were referred to.
And so that's where you know, the term steve doors
comes from. Is Portuguese in Spanish.
Speaker 3 (11:00):
Was unaware that Baltimore had a heavy Portuguese population, isn't
it wild? Yeah?
Speaker 2 (11:06):
Yeah, that's good. The other thing, I believe longshoremen and
steve adores are typically separated in terms of their unions,
so like they can be referring to the same people,
but not always. Longshorremen can sometimes refer to just dock workers,
where stevedores are the ones who operate the cranes. I see,
(11:27):
So it can be different in some cases, but not
always It's kind of like all squares are rectangles, but
not all rectangles are squares.
Speaker 3 (11:34):
Yeah, got it that situation. I think good comparison.
Speaker 2 (11:36):
To take a quick break. When we come back, we
got another union story to cover Boeing in their union
still stalled. We'll give you an update there, and we've
got trivia right after this.
Speaker 1 (11:46):
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We're prohibited dine in only. Well, Mike requested a month's
worth of candy trivia, and well, we'll start it a
day early for you here. But it's gonna be all
candy trivia leading up to Halloween. And today we'll start
with a very simple trivia question, a question being how
many licks does it take to get to the center
(13:00):
of a Tutsi pop? Your question today, how many licks
does it take to get to the center of a
Tutsi pop?
Speaker 2 (13:08):
Think of that old.
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Speaker 2 (13:47):
Mike an update on Boeing and their union negotiations. UH.
Apparently no progress being made on talks. I'll quote here
from UH. Let's see this is just report from Dow Jones.
It looks like Friday at the International Association of Besunists
and Aerospace Workers Local seven fifty one, the main local
(14:07):
union representing some thirty three thousand Boeing employees, tweet the
talks between the sides had broken off with little progress,
and we have no further dates scheduled at this time.
Usually a great time. They've been talking about wage differences
as being a key sticking point. But another piece is
supposedly the defined benefit plan that Boeing does not want
to unfreeze. The interesting thing about this to find benefit
(14:32):
if you're not familiar with that term, is another plan
and have the name for pension.
Speaker 3 (14:36):
UH.
Speaker 2 (14:36):
And the piece here that is kind of interesting is
we covered. I think it might have been like six
months ago, maybe nine, that IBM was actually restarting their
pension plan, and the reason they were doing so is
because interest rates had gone up, and so the funding
looked better for the pension plan with higher interest rates,
and they said, yeah, we're gonna do this because it's
(14:59):
actually cheap now for us to contribute to the pension
than it is to continue making matching four when K contributions.
Speaker 3 (15:05):
Now that rate situation has changed pretty dramatically since IBM
made that announcement. That was back when you know, long
term rates were up near five percent, correct, but they're
still you know, close to four ye.
Speaker 2 (15:16):
And so you look at this and say, gee, as
you know, what kind of math is Boeing doing that's
different from IBMS on this, and why would they not
make a similar Why would they not come to a
similar conclusion. Obviously, different plans, different investment structure, things like
that that can play into it. But you look at it,
and when IBM did that, I said, gee, I wonder
if any companies with pensions are gonna, you know, do
(15:38):
this same thing. Because the reason the reason companies moved
away from pensions was because, hey, in a period where
interest rates are falling and getting lower, it becomes more
expensive to operate them. As rates move up, it actually
becomes cheaper relative to the alternative, and so I wonder
how closely Boeing has looked at this. And the reason
that I ask is, look, we can say a lot
(16:01):
of things about IBM and how badly run they've been
over the last ten to fifteen years. They're good accountants,
they are phenomenal at financial engineering. It is probably the
best thing that you can say about the company right
now is that they are great financial engineers. So sad,
and so if they're coming to the conclusion that they should,
you know, restart their pension, you kind of wonder, hey,
(16:23):
if other companies looked at this seriously, because maybe it's
not as bad as they think it is, and maybe
Boeing's reticence to do this is, hey, you know, we're
just you know, you know, this is something that we've
pushed back on for a while and we want to
continue that the counter. And the one thing that is
different IBM does not have a unionized workforce, that is,
(16:43):
you know, collectively bargained with. And so if the pension
has to be collectively bargained and you can't just get
rid of it when you choose to, that is a
fundamental difference between those two companies. That could be why
IBM doesn't want to reopen that as a bargaining chip,
not ib AM Boeing.
Speaker 3 (17:01):
I personally look at the demise of the American pension.
I mean, these days only fifteen percent of private workers
are actually covered by a defined benefit pension plan. It's
a small fraction. I look at that death of the
pension plan and then the slow uptake on four oh
one k's an education that was required and quite frankly,
you know, twenty thirty years ago four oh one K
(17:21):
plans that weren't all that great in terms of costs
that were borne by the employee, et cetera. As just
a terrible period of time for a group of baby
boomers who are kind of caught in the middle of
that transition.
Speaker 2 (17:34):
Gen X you could refer to them as actually was
a like right in the middle of it.
Speaker 3 (17:39):
Yeah, yeah, So you know, older gen xers, younger Baby Boomers, all,
you know, affected by this in their retirement at this stage,
I really do wonder, like, do you think it isn't
the best interest of Boeing's union to be arguing for
this pension. I mean, we've talked about, you know, a
result of all this could be a downgrade of Boeing's
debt to below credit you know, below investment grade credit quantity.
Speaker 2 (18:02):
Yeah.
Speaker 3 (18:03):
Do you know what happens to your four O one
K when your company goes out, goes bust? Still yours nothing,
It's still yours. What happens to your pension when your
company goes bust becomes just another creditor in the whole thing.
You You suddenly are insured by the PBGC and you
know they'll hopefully get you something so long as not
everybody's going bust at the same time. But I just
do I find that compelling and interesting. Now I've made
(18:28):
the argument that I don't think Boeing's ever going out
of business, and you know that's just my personal view,
but if you're the union, you have to be more
worried about that today than really anytime in Boeing's history.
Speaker 2 (18:40):
Yeah.
Speaker 3 (18:41):
Yeah, Again, there are a lot of benefits to having
pensions out there, and I'm not sure on the net
they outweigh h you know, the risks that you have
for a pension going bust. But I just found that
I found that piece to be compelling and interesting because
I bet that Boone's got a pretty darn good for
a one K plan right now? And where I that worker?
I'm not sure I would love the transition back to
(19:03):
a pension.
Speaker 2 (19:05):
Yeah, it's the other thing that I'm just thinking through this, Like,
if you are here, here's the other thing. As a
worker at Boeing, there is also no backup plan, Like
this is something that you have to consider that, Like
there's no other aerospace manufacturer that you can go to
in the United States, right Like, this is the only
(19:28):
place you can work. I mean, sure you can buy
your French it's you got suppliers, but it's still a
different environment. Quick break here trivia answers next.
Speaker 1 (19:39):
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Speaker 2 (20:18):
All right.
Speaker 4 (20:18):
Today's trivia question was how many licks to get to
the center of a Tootsie Pop.
Speaker 2 (20:25):
Well, let's go to our reporter in the.
Speaker 4 (20:27):
Field, mister raw, how many licks dedicated to get to
the cuttual center of the Tursifa.
Speaker 5 (20:34):
Let's find out the one, two for free for three.
Speaker 4 (20:40):
Well, there you go, the answer is three and today's
winner is Lori in New Durham, New Hampshire. She's taking
home a Financial Exchange show t shirt. She's also entered
registered to win the one hundred dollars gift card to Applebee's.
We'll be giving away the gift card on Friday. Show
Trivia is brought to you by Applebee's. Enjoy half priced
late night appetize is after nine pm and join Club
(21:02):
Applebee's to enjoy exclusive deals and specials. You get a
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Speaker 2 (21:11):
We're now joined on the phones by Todd Lutsky from
the law firm of Cushing and Dolan. Mister Lutsky, how
are you today?
Speaker 5 (21:21):
I am never better and you.
Speaker 2 (21:23):
We're doing well here. Todd want to talk to you
a little bit about different types of trusts that are
out there. Can you give our listeners a brief breakdown
irrevocable versus revocable, and how they may differ.
Speaker 5 (21:36):
Certainly, and they're the first thing we need to know
is that there are more than one time of irrevocable.
Whereas revocables pretty big right, it's your incomplete control. You
don't have to file a separate gift tax return, move
money in and out, no problem at all. It avoids probate,
shelters assets for state taxes, and of course controls your
(21:59):
assets for your family in the way that you want
them to get It so very straightforward, Whereas irrevocable trusts
come in different flavors, so to medicaid. Irrevocable trust if
you're concerned about nursing homes, also keeps you probably ninety
five ninety eight percent in control. You can just avoid
the probate protected from the nursing home. You can also
(22:23):
shelter it for estate taxes and provide of course distributions
for these for your family the way you want them
to go. If you do, you got a file an
extra tax return, put no extra tax because it flows
onto your tax return. Whereas an irrevocable life insurance trust
might require a little less control, but the assets are
(22:44):
out of your estate for a state tax purpose, because
I know that's a lot, but I just wanted to
give you a little taste.
Speaker 2 (22:49):
Ton if someone's considering, you know, doing some kind of
a state plan creating one, what ages typically make sense
for someone to do this, or is there not any particular.
Speaker 5 (23:02):
So I would say, if you're young, married and have kids,
even if you don't have a ton of assets, because
we all know when we're young, we don't have a
ton of assets. So we might have that house, we
might have that four O one K or whatever is
in our bank. We know our children can't own the
assets because they're minors, so we would want to consider
(23:23):
doing the planning not only does take care of each other,
but really to make sure that the kids are taken
care of, even though there may not be a huge
tax reason to do it. Of course, once you get
older than that, then you're looking at doing it to
avoid probate and taxes and bloodline planning, of course, but
it comes into play. And then finally sixty enough, you're
probably thinking, wells nursing home is an issue, then you've
(23:46):
got to add that as a component and another reason
to do planning. On top of the fact that you
have a family, have assets, want to avoid probate and
reduce tax. Folks, at the end of the day, there
is a rate field of planning involved in your state.
There's many different kinds of trust. But what we try
to do in this guide, which is the end of
(24:08):
the month, so it's the last chance to get at folks,
is to give you the top what we believe to
be seven of most used estate planning trust. It will
explain to you how they work from a tax standpoint
and an operational standpoint. And if you've never done your planning,
it maybe will get you started as figuring out which
(24:29):
trust might be right for you. And if you've done
your planning, maybe it's time to switch. If you got
older and get out of the trust you're in and
get into a different trust. Call and get the guide
at the end of the month eight six eight, five
six nine nine or Legal Exchange Show dot Com again, folks,
last chance eight six six, eight five six nine to
(24:52):
nine the top seven estate planning trusts.
Speaker 2 (24:56):
Mister Lunsky, thank you for joining us today.
Speaker 5 (24:59):
Always a pleasure.
Speaker 3 (25:00):
Thank you.
Speaker 1 (25:01):
The proceeding was paid for and the views expressed are
solely those of cushingan Dolan, cushingan Dolan and or Armstrong
Advisory may contact you offering legal or investment services. Cushing
and Armstrong did not endorse each other and are not affiliated.
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Speaker 2 (26:12):
Mike, you've been to Covert Township, Michigan.
Speaker 3 (26:15):
No, Well maybe I don't know. I don't think so.
You probably haven't. Yeah, I think you'd know if you did.
Speaker 2 (26:19):
They have a big nuclear power plant there, the Palisades
Nuclear Power Plant, or at least they used to have it there.
Palisades just closed on a one and a half billion
dollar loan to restart operations by the end of next year.
This is the first nuclear power plant in the United
States to restart operations if they're successful in doing so.
Speaker 3 (26:41):
All the attention has been going to Three Mile Island.
Speaker 2 (26:44):
It has been, but look, part of you know, when
we talk about nuclear development, we also do need to
realize there are a handful of nuclear power plants throughout
the United States that have been shut down in you know,
the last twe twenty thirty forty years, and so you
do have the ability to potentially look at some of these,
(27:07):
uh and say, hey, rather than building entirely new construction,
what if we simply reauthorize and you know, retrofit these
to allow them to operate in the future because you
already have the facilities there that, like, they've already been
proven to work. Sure, you have to do some maintenance
in order to get them up to speed, and there's
a whole process. It's you don't just turn the key
(27:30):
and and you know vision, Yeah, but not like that,
it's not.
Speaker 3 (27:36):
But hence a one point five billion dollar loan to
restart these operations could just be an expensive key. Yeah. Yeah,
it could be a few pieces about this that I find,
you know, interesting compelling. One, they only closed in twenty
twenty two, and at the time that they closed they
referenced cheap net gas prices as being one of the
reasons they couldn't. I'm pretty sure that gas is cheaper
(27:56):
now than it was in twenty two. Yeah, So just
looking at this, and I forget, how do they express
it is dollars per British thermal unit whatever. I don't
know how they express that.
Speaker 2 (28:06):
Can I think it's per million BTUs?
Speaker 3 (28:07):
Yeah, at that point in time, when they closed, which
was around May of twenty twenty two, net gas prices
we're in the high sevens.
Speaker 2 (28:17):
Low eights.
Speaker 3 (28:19):
Yeah, in May of twenty twenty two. Today it's below
three bucks. So what this all spells to me is
higher demand for electricity and higher prices being paid for electricity,
because you don't do this with NOTT gas prices where
(28:39):
they are right now unless there is a compelling story
on the demand side that says, yeah, we can sell
this stuff for so much. That doesn't matter how cheap
net gas prices are. We're gonna be able to sell
this stuff on the market and make some money.
Speaker 2 (28:53):
So yeah, I do wonder if you start to see
additional consideration given to plants that have been recently shut down. Again,
it's Pilgrim. When did Pilgrim go off for twenty nineteen.
I they're further along in the decommissioning process, so I
don't know if they're gonna get there, but yeah, I mean,
even look, you think about something like that, but it's
(29:15):
it's something that clearly is being considered now. I mean, look,
I haven't heard of any you know, plans to restart
reactors before the last month, and now you've got two
that have said, yeah, we're going ahead with this. Yeah,
so there's something kind of notable there that's happening. And again,
is this gonna happen everywhere? No. I have been unable
(29:36):
to find a full list of like all the US
nuclear reactors that have been shut down, so it's it's
not like hundreds, but I wouldn't be surprised if there's
a dozen or something like that. And maybe you start
to seeing more and more noise on this front. Let's
take a quick break here. When we come back, let's
do a little bit of stack roulette.
Speaker 1 (29:54):
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Speaker 2 (31:00):
I want to talk a little bit about AT and T.
They have announced that they are selling their seventy percent
stake in Direct TV to a private equity firm by
the name of TPG. And look, this is great. You know,
they're finally getting out of this. They're gonna get about
seven point six billion dollars for this. And the only
(31:23):
problem is that they bought one hundred percent of Direct
TV for forty eight and a half billion dollars back
in twenty fifteen, which means that seventy percent of it
was like thirty five billion. So they're only taking a
twenty eight billion dollar loss on this piece here, which
is pretty It's not like a car, No.
Speaker 3 (31:44):
You doesn't doesn't depreciate by that much when you drive
it off the lot.
Speaker 2 (31:48):
You wouldn't expect a company to depreciate, but that's exactly
what happened here. Yeah, and again, this is exactly why
AT and T is where they are today, is because
they have been horrible allocators of capital over the last
couple of decades. And it's good that this is finally
done and we'll see what their next bad purchase is.
Speaker 3 (32:10):
Does in your mind, does AT and T kind of
take the ranking on two of the worst mergers in
modern history? I mean between this and Time Warner.
Speaker 2 (32:20):
Yeah. I mean, look like these two mergers have effectively
they haven't killed the company because it's still alive, but
they've rendered it a zombie that has no direction and
have stripped it of a ton of capital at a
time where they could really use that capital to make
an actual good acquisition or expand the business in a
good fashion.
Speaker 3 (32:38):
What are some of the other ones that are tossed
out there as worst acquisitions of all?
Speaker 2 (32:41):
I mean the AOL Time Always There, a well, Time Warner.
I put the HP autonomy one there. It's not the
same scale because I think it was like eight and
a half billion dollars, but they wrote it down by
like ninety five percent within a year and a half
or two years.
Speaker 3 (32:56):
Oh, Quaker Oats and Snapple is oftentimes looked at as
one of the really bad ones that it was only
one point seven billion, but that was back in ninety
four and they basically spun it back off a few
years later. Yeah, there's a lot of them, But AT
and T has been at the center of a couple
in a few years.
Speaker 2 (33:11):
I mean Sprint and Next Tel. That was a thirty
five billion dollars.
Speaker 3 (33:14):
Whoops, Sprinted, Next Tel, Google and Motorola. They didn't do
anything with that, although maybe they did in the cell
phone space.
Speaker 2 (33:21):
We just don't know. I AT and T, Like, I
don't think there's much competition. They are the worst shepherd
of capital in the past two decades.
Speaker 3 (33:30):
Yeah, Like there might have been worse mergers, but few
have eroded the company as much as I don't know
if there have.
Speaker 2 (33:37):
Been many, like those two mergers that the problem was
they were the same mistake and they made it twice. Yeah, Like,
it was just it was the same thing over and over.
Speaker 3 (33:50):
We're at the utility company with all this cash, what
should we do with it? Award shareholders, or go make
acquisitions that of businesses that we don't know how to run.
Speaker 2 (33:58):
Hey, let's buy a content district combustion service that is
maybe not where the puck is going.
Speaker 3 (34:05):
What the hell is the future of DirecTV? By the way,
they don't have a Sunday ticket anymore.
Speaker 2 (34:12):
You don't just.
Speaker 4 (34:13):
Drive around and look to see how many dishes you
see on the side of people's houses or anything.
Speaker 2 (34:17):
I mean, if the.
Speaker 3 (34:18):
Key goal, if one of the key goals of I
don't remember which department of the US government, but whoever
is in charge of delivering high speed internet to the
remaining Americans that don't have access to it. It's like
a big push that has been going on for five
years and is going to continue for another decade once
that's through. Give me one good reason why anybody needs
to settleite.
Speaker 2 (34:38):
There still are like places and people who.
Speaker 3 (34:41):
Agreed they will still exist, but it is a rapidly
shrinking group that needs satellite based television.
Speaker 2 (34:49):
Someone still thinks there's seven point six billion dollars in
value there.
Speaker 3 (34:54):
Well, AT and T thought there was fifty billion dollars
worth of value there like eight years ago, and they
were sure wrong. About it, so I'm not sure.
Speaker 2 (35:00):
Maybe they just want to repurpose it for something else. Yeah,
so they will be as part of this, By the way,
what else could you use all those satellites for something? Fun?
Speaker 3 (35:09):
Ramen, They will be merging this. It looks like with
Dish Network. But again, the wrongs don't make it right. Yeah,
like you know, you still have the same shrinking population
here that.
Speaker 2 (35:25):
Was like when who was it?
Speaker 1 (35:26):
Was it?
Speaker 2 (35:26):
Uh? When Verizon? But Yahoo and AOL? Remember they Verizon?
But like the remp was, no is Yahoo and someone else?
They bought who was it? Hang on, give me just
a second on this, so Verizon Media. Yeah, Verizon bought
AOL and twenty fifteen like the remnants of it and
(35:47):
then Yahoo two years later. Remember they merged them into
a company called oath Oh right, that they said was
gonna like reshape Digital didn't. It didn't and they had
to sell them off in twenty twenty one to Apollo,
who I'm not sure has done anything with it either, right.
Speaker 3 (36:01):
Yeah, yeah, those ones are entertaining. The mist acquisitions are
also pretty fun to reminisce on, like when Blockbuster turned
down the Netflix acquisition, Apple turned down Tesla.
Speaker 2 (36:14):
There are others where I'm trying to think of who.
Speaker 4 (36:16):
Else Yahoo tuned turned down Google?
Speaker 3 (36:20):
Yeahoo turned down? Or do they make a bid or
do they can't remember.
Speaker 4 (36:24):
I can't remember Google went to them and said for
a million dollars you can, and they.
Speaker 3 (36:28):
Said, yeah, yeah. Those are ones are almost as entertaining.
Speaker 2 (36:32):
The other ones that are fun to think about are
the ones like, hey, what if they had turned this down?
What would it look like? Think about if YouTube would
turned down Google as an example and was just a
separate company. Imagine imagine Instagram turns down Facebook back when
it was Facebook.
Speaker 3 (36:48):
Ways turns down Google.
Speaker 2 (36:49):
The ways one is like a personal convenience thing. But
imagine what the Internet would be like if Google didn't
have YouTube under it Pretty different to really different. That's
that's a globally different Internet at that point, Like the
way this thing is like, Okay, I would have liked
to see some competition, but whenever it's it's maps. You know,
(37:10):
the whole YouTube thing is so central to what Google
is now.
Speaker 3 (37:14):
It'd be a a pretty different looking internet. Agreed, Yeah,
I love fast food companies throwing shade at each other.
And Wendy's did this over the weekend, they partnered with
the developer of micbroken dot com, which I had not
heard of until today, but it tracks all of the
ice cream machines that are out and they have started
donald McDonald sorry, yeah, all the McDonald's ice cream machines
(37:36):
that are quote broken and in many cases actually are broken.
And they have started pulling up a truck that sells
Frosty's in front of the McDonald's, which I can't imagine
they can easily get permits for. But nonetheless they are
doing this, and you know, they'll yeah, they're just having
a pretty fun time with saying, oh, yeah, this is
a funny thing that McDonald's is incredibly guilty of and everybody,
(38:00):
and here's how we're going to advertise for ourselves. At
the same time, I.
Speaker 2 (38:04):
Enjoy that quite a bit.
Speaker 3 (38:05):
I like it. I like it.
Speaker 2 (38:06):
I do techno good markets. The daves off one twenty one,
that S ANDP is down one, the Nasdaq is up six,
so exciting. Not much movement today, pretty quiet. Start to
get some data coming in tomorrow. We get ism manufacturing
and we also get the Jolts report, So we will
see you tomorrow and we'll have all that and more
on the show
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(01:04):
Veterans Development Corporation. This is the Financial Exchange with Chuck
Zada and Mike Armstrong.
Speaker 2 (01:12):
It's Chuck, Mike and Ben with you here as we
head to the second hour, the Financial Exchange stock's not
doing a whole whole bunch of anything at the moment.
They are down slightly. The Dow's off seventy five points,
the S and P is down two, the Nasdaq down twelve.
So again, all moves within about a tenth of a percent,
may be two tenths on the Dow, so not too
much movement there. Tenure US Treasury is moving up slightly
(01:36):
anneal to three points seven to seven five percent, up
two point six basis points. Oil West Texts Intermediate up
fifty five cents to sixty eight seventy three a barrel.
When we take a look at the triple A national
average of gas prices, down two tenths of ascent over
night to three twenty one and six tenths of ascent.
(01:56):
Been hovering around that three to twenty mark for the
last couple of weeks. Now we'll see if we get
any further movement, but that is where we are at
the moment. There and we've got gold today down twelve
dollars and twenty cents an ounce, and Mike anything else
catching your eye against a pretty quiet day overall here
(02:19):
at the moment.
Speaker 3 (02:20):
Not much that is moving markets at the moment, but
just in terms of what will be having potential to
move markets this week, one Drune Palell is speaking this
afternoon at about two pm. I don't know what the
occasion is, but he will be addressing someone at one
fifty five and lots of people will be listening. Tomorrow
morning we get ISM manufacturing data. We also get job
(02:42):
openings and construction spending all at ten am. To me,
that job openings one will be a big data points
to keep an eye. On Wednesday, ADP employment comes out
along with every other Federal Reserve member speaking. Jobless claims
as we get every week come out on Thursday, along
with ISM services and factory orders, and then finally on Friday,
(03:04):
the big one, which would be the Job's Report, comes
out Friday at eight thirty am. You'll get the unemployment rate,
you'll get the number of jobs created, wage information. So
that's probably the one that has the ability to move
things the most in terms of this narrative. Around the
soft landing, but a fairly big week in terms of
labor market data that we'll be getting. And then, as
(03:26):
we mentioned during the first hour of the program, Chuck,
a lot of this will kind of be in this
opaque area beginning in October because of the you know,
the impact from the hurricane as well as strikes that
we are likely to be seeing over the next month.
Speaker 2 (03:44):
And let's talk a little bit about one of the strikes, Mike.
Have you ever flown on an airplane?
Speaker 3 (03:49):
Yes?
Speaker 2 (03:50):
Have you ever flown on an airplane with one hundred
and fifty pounds of asparagus?
Speaker 1 (03:54):
Not?
Speaker 2 (03:54):
To my knowledge, I haven't either, and I wouldn't want.
Speaker 3 (03:58):
I'm not sure I would know. I mean, how many
pounds of asparagus can you fit in the luggage area?
Speaker 2 (04:04):
Not one hundred and fifty thousand. I think this is
like the cargo plane is filled with asparagus, not just
you know underneath the uh guy that the passenger cabin. Okay,
the reason I bring this up is Tim Ryan, who
is the owner of Square one Farms, who is an
importer of agricultural products, has one hundred and fifty thousand
pounds of asparagus that he needs to get to Miami
(04:26):
from Peru. Doesn't this just sound like a great setup
for a movie like this in a world there's a
lot of it just sounds like this is Ocean's fourteen
or something like that, you know, like they're they're stealing
the asparagus. The reason they're flying this in is because
the port of Miami is expected to be closed starting
(04:47):
at midnight tonight because of the International long Shoreman's Association,
which is going to strike beginning at midnight tonight. As
far as we know, the International Longshoreman's Association, it represents
forty five thousand DOC workers along the East Coast and
Gulf Coast. And again, it is a huge union that
(05:09):
is critically important to the products that America imports. Just
as an example in this Wall Street Journal piece, the
ports represented by this union handled seventy four percent of
the country's seaborn wine imports, seventy five percent of our
banana imports, and eighty nine percent of imports of salt
used in chemical manufacturing. So so again, these are just
(05:30):
you know, some examples here, and it's not necessarily that
these are all going to stop being imported. It's that, hey,
some of these things they're going to start flying in
on cargo planes at additional cost. And what does that
mean in terms of how these products, you know, how
companies pass on those additional costs? Can they or can
they not? But you've seen estimates. I've seen estimates that
(05:54):
this strike, if it goes into effect, is going to
reduce US economic activity anywhere between about three and a
half and five billion dollars a day. Those are the
estimates that I've seen. It's a good chunk of change.
Like you do the math out at five billion a day,
it's one hundred and fifty billion dollars a month, it's
one point eight trillion dollars a year. You're talking like
(06:15):
five six percent of GDP. You're taking off the table
right there. And in terms of what the International Longshoreman's
Association is asking for, seventy seven percent wage increase over
a six year period, so they're asking for a large chunk.
The counter that they received from the port ports and
(06:37):
ocean carriers was a forty percent wage increase over the
same time. So it's it's not like the other side
is saying no, we're offering like two percent a year.
The other side is still talking like five and a
half six percent a year over this time period.
Speaker 3 (06:52):
Who employs all these people? So this is just you know,
with Boeing, it's fairly easy to understand, like, yeah, we
are sometimes sitting with pots and sometimes it is the
carriers like Maersk hmm, So it depends.
Speaker 2 (07:07):
It can be both depending on how the port is
set up.
Speaker 3 (07:09):
They're all represented apparently by the United States Maritime Alliance,
so that's who's actually you know, doing this negotiating. But
it is that adds a layer of complexity, right with Boeing,
it's hey, we want these wage increases, we want these
pension contributions. These are employees that likely all have slightly
different benefits. They all belong to the same union, but
they're negotiating with likely a lot of different employers. So
(07:34):
this is something that has the potential to be hugely
disruptive in terms of actual goods traveling around the United
States and into the United States. Because remember, it's not
just the disruption that you're going to see at the ports.
You're going to see the teamsters acting in solidarity with
the union saying hey, look we're you know great, you're
(07:55):
flying this produce into Miami. Instead of you know, taking
it to the port. We're not picking that up. That's
scab produce, you know, like like that's the stuff that
you will see. And so as you you know, try
to play out how this, you know, ends up impacting
the overall economy. It could be significant, and it's happening
(08:16):
at a time that the Southeast is already disrupted because
of the impacts of Hurricane Helene that just went through.
There the obvious, you know, the one clear place where
you're going to see an impact. If this strike goes
into effect and stays more than you know, five or
six days, it's gonna be the job numbers for October,
which are going to be terrible. Like we're not gonna
(08:38):
be able to tell anything from October, right, Like, there's
a good chance that you just have to take October
throw it out because it doesn't mean anything. So a
few things. There's no great time for a strike of dockworkers. Uh,
it seems to always be not a great time. You're
talking about food supply and all sorts of other items.
Week after July fourth, Yeah, probably the best choose one. Yeah,
(09:03):
maybe the you know week after Christmas, Uh, you know,
fewer imports coming in at that stage. You know, this
is the time if you're unfamiliar, right, if if you
are well, any retailer in the country.
Speaker 2 (09:17):
This is when your shipments are coming in for the
Christmas season.
Speaker 3 (09:20):
All your stuff is coming in for the Christmas season. Now,
how much of that is coming on the West coast
from China?
Speaker 2 (09:25):
Good point.
Speaker 3 (09:26):
You know that might not be as big of a concern,
but you know, European imports and a lot of industrial
stuff coming in through these ports will not be affecting
military cargo that seems obvious or interesting to me. Cruise
ship services will not be affected by this strike should
it come into effect here. But nonetheless, this one, I mean,
(09:48):
this one, combined with what we're seeing it Boeing right now,
just does have the ability to not only you know,
be seen in the October numbers, but you think about
all of the related industries that may need to furlough
workers because of something like this. It's it could be
extensive if it lasts.
Speaker 2 (10:08):
Also, if you want a great trivia question, either of
you watch The Wire at any point, Yeah, then yeah,
So in The Wire second season is takes place at
the Port of Baltimore and the longshorm in there, they're
not referred to as longstorm They're referred to as steve adors.
If you ever wondered where that term comes from, I'm
(10:29):
asking you, I wonder almost every day. Chuck again. This
is like I saw it and I'm like, why are
they being Are they all named Steve? Like, what's the
what's the deal here? It actually came from the phonetic
spelling of esteve adore, which is the Portuguese word for
man who loads ships in stow's cargo, And it just
(10:51):
became common in terms of how longshoremen were referred to.
And so that's where you know, the term steve doors
comes from. Is Portuguese in Spanish.
Speaker 3 (11:00):
Was unaware that Baltimore had a heavy Portuguese population, isn't
it wild? Yeah?
Speaker 2 (11:06):
Yeah, that's good. The other thing, I believe longshoremen and
steve adores are typically separated in terms of their unions,
so like they can be referring to the same people,
but not always. Longshorremen can sometimes refer to just dock workers,
where stevedores are the ones who operate the cranes. I see,
(11:27):
So it can be different in some cases, but not
always It's kind of like all squares are rectangles, but
not all rectangles are squares.
Speaker 3 (11:34):
Yeah, got it that situation. I think good comparison.
Speaker 2 (11:36):
To take a quick break. When we come back, we
got another union story to cover Boeing in their union
still stalled. We'll give you an update there, and we've
got trivia right after this.
Speaker 1 (11:46):
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Speaker 2 (13:47):
Mike an update on Boeing and their union negotiations. UH.
Apparently no progress being made on talks. I'll quote here
from UH. Let's see this is just report from Dow Jones.
It looks like Friday at the International Association of Besunists
and Aerospace Workers Local seven fifty one, the main local
(14:07):
union representing some thirty three thousand Boeing employees, tweet the
talks between the sides had broken off with little progress,
and we have no further dates scheduled at this time.
Usually a great time. They've been talking about wage differences
as being a key sticking point. But another piece is
supposedly the defined benefit plan that Boeing does not want
to unfreeze. The interesting thing about this to find benefit
(14:32):
if you're not familiar with that term, is another plan
and have the name for pension.
Speaker 3 (14:36):
UH.
Speaker 2 (14:36):
And the piece here that is kind of interesting is
we covered. I think it might have been like six
months ago, maybe nine, that IBM was actually restarting their
pension plan, and the reason they were doing so is
because interest rates had gone up, and so the funding
looked better for the pension plan with higher interest rates,
and they said, yeah, we're gonna do this because it's
(14:59):
actually cheap now for us to contribute to the pension
than it is to continue making matching four when K contributions.
Speaker 3 (15:05):
Now that rate situation has changed pretty dramatically since IBM
made that announcement. That was back when you know, long
term rates were up near five percent, correct, but they're
still you know, close to four ye.
Speaker 2 (15:16):
And so you look at this and say, gee, as
you know, what kind of math is Boeing doing that's
different from IBMS on this, and why would they not
make a similar Why would they not come to a
similar conclusion. Obviously, different plans, different investment structure, things like
that that can play into it. But you look at it,
and when IBM did that, I said, gee, I wonder
if any companies with pensions are gonna, you know, do
(15:38):
this same thing. Because the reason the reason companies moved
away from pensions was because, hey, in a period where
interest rates are falling and getting lower, it becomes more
expensive to operate them. As rates move up, it actually
becomes cheaper relative to the alternative, and so I wonder
how closely Boeing has looked at this. And the reason
that I ask is, look, we can say a lot
(16:01):
of things about IBM and how badly run they've been
over the last ten to fifteen years. They're good accountants,
they are phenomenal at financial engineering. It is probably the
best thing that you can say about the company right
now is that they are great financial engineers. So sad,
and so if they're coming to the conclusion that they should,
you know, restart their pension, you kind of wonder, hey,
(16:23):
if other companies looked at this seriously, because maybe it's
not as bad as they think it is, and maybe
Boeing's reticence to do this is, hey, you know, we're
just you know, you know, this is something that we've
pushed back on for a while and we want to
continue that the counter. And the one thing that is
different IBM does not have a unionized workforce, that is,
(16:43):
you know, collectively bargained with. And so if the pension
has to be collectively bargained and you can't just get
rid of it when you choose to, that is a
fundamental difference between those two companies. That could be why
IBM doesn't want to reopen that as a bargaining chip,
not ib AM Boeing.
Speaker 3 (17:01):
I personally look at the demise of the American pension.
I mean, these days only fifteen percent of private workers
are actually covered by a defined benefit pension plan. It's
a small fraction. I look at that death of the
pension plan and then the slow uptake on four oh
one k's an education that was required and quite frankly,
you know, twenty thirty years ago four oh one K
(17:21):
plans that weren't all that great in terms of costs
that were borne by the employee, et cetera. As just
a terrible period of time for a group of baby
boomers who are kind of caught in the middle of
that transition.
Speaker 2 (17:34):
Gen X you could refer to them as actually was
a like right in the middle of it.
Speaker 3 (17:39):
Yeah, yeah, So you know, older gen xers, younger Baby Boomers, all,
you know, affected by this in their retirement at this stage,
I really do wonder, like, do you think it isn't
the best interest of Boeing's union to be arguing for
this pension. I mean, we've talked about, you know, a
result of all this could be a downgrade of Boeing's
debt to below credit you know, below investment grade credit quantity.
Speaker 2 (18:02):
Yeah.
Speaker 3 (18:03):
Do you know what happens to your four O one
K when your company goes out, goes bust? Still yours nothing,
It's still yours. What happens to your pension when your
company goes bust becomes just another creditor in the whole thing.
You You suddenly are insured by the PBGC and you
know they'll hopefully get you something so long as not
everybody's going bust at the same time. But I just
do I find that compelling and interesting. Now I've made
(18:28):
the argument that I don't think Boeing's ever going out
of business, and you know that's just my personal view,
but if you're the union, you have to be more
worried about that today than really anytime in Boeing's history.
Speaker 2 (18:40):
Yeah.
Speaker 3 (18:41):
Yeah, Again, there are a lot of benefits to having
pensions out there, and I'm not sure on the net
they outweigh h you know, the risks that you have
for a pension going bust. But I just found that
I found that piece to be compelling and interesting because
I bet that Boone's got a pretty darn good for
a one K plan right now? And where I that worker?
I'm not sure I would love the transition back to
(19:03):
a pension.
Speaker 2 (19:05):
Yeah, it's the other thing that I'm just thinking through this, Like,
if you are here, here's the other thing. As a
worker at Boeing, there is also no backup plan, Like
this is something that you have to consider that, Like
there's no other aerospace manufacturer that you can go to
in the United States, right Like, this is the only
(19:28):
place you can work. I mean, sure you can buy
your French it's you got suppliers, but it's still a
different environment. Quick break here trivia answers next.
Speaker 1 (19:39):
Okay, bringing the latest financial news straight to your radio
every day. It's the Financial Exchange on the Financial Exchange
Radio Network. Miss any of the show, Catch up and
you're convenience by visiting Financial Exchange show dot com and
(20:01):
clicking the on demand icon, where you'll find all of
our interviews in full shows. This is your home for
the latest business and financial news in New England and
around the country. This is the Financial Exchange Radio Network.
Speaker 2 (20:18):
All right.
Speaker 4 (20:18):
Today's trivia question was how many licks to get to
the center of a Tootsie Pop.
Speaker 2 (20:25):
Well, let's go to our reporter in the.
Speaker 4 (20:27):
Field, mister raw, how many licks dedicated to get to
the cuttual center of the Tursifa.
Speaker 5 (20:34):
Let's find out the one, two for free for three.
Speaker 4 (20:40):
Well, there you go, the answer is three and today's
winner is Lori in New Durham, New Hampshire. She's taking
home a Financial Exchange show t shirt. She's also entered
registered to win the one hundred dollars gift card to Applebee's.
We'll be giving away the gift card on Friday. Show
Trivia is brought to you by Applebee's. Enjoy half priced
late night appetize is after nine pm and join Club
(21:02):
Applebee's to enjoy exclusive deals and specials. You get a
free appetizer just for signing up. Now that's eating good
in the neighborhood void. We're prohibited dine in only.
Speaker 2 (21:11):
We're now joined on the phones by Todd Lutsky from
the law firm of Cushing and Dolan. Mister Lutsky, how
are you today?
Speaker 5 (21:21):
I am never better and you.
Speaker 2 (21:23):
We're doing well here. Todd want to talk to you
a little bit about different types of trusts that are
out there. Can you give our listeners a brief breakdown
irrevocable versus revocable, and how they may differ.
Speaker 5 (21:36):
Certainly, and they're the first thing we need to know
is that there are more than one time of irrevocable.
Whereas revocables pretty big right, it's your incomplete control. You
don't have to file a separate gift tax return, move
money in and out, no problem at all. It avoids probate,
shelters assets for state taxes, and of course controls your
(21:59):
assets for your family in the way that you want
them to get It so very straightforward, Whereas irrevocable trusts
come in different flavors, so to medicaid. Irrevocable trust if
you're concerned about nursing homes, also keeps you probably ninety
five ninety eight percent in control. You can just avoid
the probate protected from the nursing home. You can also
(22:23):
shelter it for estate taxes and provide of course distributions
for these for your family the way you want them
to go. If you do, you got a file an
extra tax return, put no extra tax because it flows
onto your tax return. Whereas an irrevocable life insurance trust
might require a little less control, but the assets are
(22:44):
out of your estate for a state tax purpose, because
I know that's a lot, but I just wanted to
give you a little taste.
Speaker 2 (22:49):
Ton if someone's considering, you know, doing some kind of
a state plan creating one, what ages typically make sense
for someone to do this, or is there not any particular.
Speaker 5 (23:02):
So I would say, if you're young, married and have kids,
even if you don't have a ton of assets, because
we all know when we're young, we don't have a
ton of assets. So we might have that house, we
might have that four O one K or whatever is
in our bank. We know our children can't own the
assets because they're minors, so we would want to consider
(23:23):
doing the planning not only does take care of each other,
but really to make sure that the kids are taken
care of, even though there may not be a huge
tax reason to do it. Of course, once you get
older than that, then you're looking at doing it to
avoid probate and taxes and bloodline planning, of course, but
it comes into play. And then finally sixty enough, you're
probably thinking, wells nursing home is an issue, then you've
(23:46):
got to add that as a component and another reason
to do planning. On top of the fact that you
have a family, have assets, want to avoid probate and
reduce tax. Folks, at the end of the day, there
is a rate field of planning involved in your state.
There's many different kinds of trust. But what we try
to do in this guide, which is the end of
(24:08):
the month, so it's the last chance to get at folks,
is to give you the top what we believe to
be seven of most used estate planning trust. It will
explain to you how they work from a tax standpoint
and an operational standpoint. And if you've never done your planning,
it maybe will get you started as figuring out which
(24:29):
trust might be right for you. And if you've done
your planning, maybe it's time to switch. If you got
older and get out of the trust you're in and
get into a different trust. Call and get the guide
at the end of the month eight six eight, five
six nine nine or Legal Exchange Show dot Com again, folks,
last chance eight six six, eight five six nine to
(24:52):
nine the top seven estate planning trusts.
Speaker 2 (24:56):
Mister Lunsky, thank you for joining us today.
Speaker 5 (24:59):
Always a pleasure.
Speaker 3 (25:00):
Thank you.
Speaker 1 (25:01):
The proceeding was paid for and the views expressed are
solely those of cushingan Dolan, cushingan Dolan and or Armstrong
Advisory may contact you offering legal or investment services. Cushing
and Armstrong did not endorse each other and are not affiliated.
Speaker 4 (25:12):
Summer is over, so it's time to take out your
planner and book a spectacular vacation in the US Virgin Islands,
America's Caribbean paradise. Saint Croix, Saint Thomas and Saint John
are three of the most incredible islands anywhere in the Caribbean,
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Speaker 2 (26:12):
Mike, you've been to Covert Township, Michigan.
Speaker 3 (26:15):
No, Well maybe I don't know. I don't think so.
You probably haven't. Yeah, I think you'd know if you did.
Speaker 2 (26:19):
They have a big nuclear power plant there, the Palisades
Nuclear Power Plant, or at least they used to have it there.
Palisades just closed on a one and a half billion
dollar loan to restart operations by the end of next year.
This is the first nuclear power plant in the United
States to restart operations if they're successful in doing so.
Speaker 3 (26:41):
All the attention has been going to Three Mile Island.
Speaker 2 (26:44):
It has been, but look, part of you know, when
we talk about nuclear development, we also do need to
realize there are a handful of nuclear power plants throughout
the United States that have been shut down in you know,
the last twe twenty thirty forty years, and so you
do have the ability to potentially look at some of these,
(27:07):
uh and say, hey, rather than building entirely new construction,
what if we simply reauthorize and you know, retrofit these
to allow them to operate in the future because you
already have the facilities there that, like, they've already been
proven to work. Sure, you have to do some maintenance
in order to get them up to speed, and there's
a whole process. It's you don't just turn the key
(27:30):
and and you know vision, Yeah, but not like that,
it's not.
Speaker 3 (27:36):
But hence a one point five billion dollar loan to
restart these operations could just be an expensive key. Yeah. Yeah,
it could be a few pieces about this that I find,
you know, interesting compelling. One, they only closed in twenty
twenty two, and at the time that they closed they
referenced cheap net gas prices as being one of the
reasons they couldn't. I'm pretty sure that gas is cheaper
(27:56):
now than it was in twenty two. Yeah, So just
looking at this, and I forget, how do they express
it is dollars per British thermal unit whatever. I don't
know how they express that.
Speaker 2 (28:06):
Can I think it's per million BTUs?
Speaker 3 (28:07):
Yeah, at that point in time, when they closed, which
was around May of twenty twenty two, net gas prices
we're in the high sevens.
Speaker 2 (28:17):
Low eights.
Speaker 3 (28:19):
Yeah, in May of twenty twenty two. Today it's below
three bucks. So what this all spells to me is
higher demand for electricity and higher prices being paid for electricity,
because you don't do this with NOTT gas prices where
(28:39):
they are right now unless there is a compelling story
on the demand side that says, yeah, we can sell
this stuff for so much. That doesn't matter how cheap
net gas prices are. We're gonna be able to sell
this stuff on the market and make some money.
Speaker 2 (28:53):
So yeah, I do wonder if you start to see
additional consideration given to plants that have been recently shut down. Again,
it's Pilgrim. When did Pilgrim go off for twenty nineteen.
I they're further along in the decommissioning process, so I
don't know if they're gonna get there, but yeah, I mean,
even look, you think about something like that, but it's
(29:15):
it's something that clearly is being considered now. I mean, look,
I haven't heard of any you know, plans to restart
reactors before the last month, and now you've got two
that have said, yeah, we're going ahead with this. Yeah,
so there's something kind of notable there that's happening. And again,
is this gonna happen everywhere? No. I have been unable
(29:36):
to find a full list of like all the US
nuclear reactors that have been shut down, so it's it's
not like hundreds, but I wouldn't be surprised if there's
a dozen or something like that. And maybe you start
to seeing more and more noise on this front. Let's
take a quick break here. When we come back, let's
do a little bit of stack roulette.
Speaker 1 (29:54):
Find daily interviews and full shows of the Financial Exchange
on how our YouTube page. Like us on YouTube tube
and get caught up on anything and everything you might
have missed. This is the Financial Exchange Radio Network. The
Financial Exchange streams live on YouTube. Like our page and
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(30:14):
This is the Financial Exchange Radio Network.
Speaker 4 (30:20):
The Financial Exchange is a proud partner of the Disabled
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November ninth, that Ford Independence on Castle Island and registration
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(30:41):
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DAV five K Boston is presented by Veterans Development Corporation.
Speaker 2 (31:00):
I want to talk a little bit about AT and T.
They have announced that they are selling their seventy percent
stake in Direct TV to a private equity firm by
the name of TPG. And look, this is great. You know,
they're finally getting out of this. They're gonna get about
seven point six billion dollars for this. And the only
(31:23):
problem is that they bought one hundred percent of Direct
TV for forty eight and a half billion dollars back
in twenty fifteen, which means that seventy percent of it
was like thirty five billion. So they're only taking a
twenty eight billion dollar loss on this piece here, which
is pretty It's not like a car, No.
Speaker 3 (31:44):
You doesn't doesn't depreciate by that much when you drive
it off the lot.
Speaker 2 (31:48):
You wouldn't expect a company to depreciate, but that's exactly
what happened here. Yeah, and again, this is exactly why
AT and T is where they are today, is because
they have been horrible allocators of capital over the last
couple of decades. And it's good that this is finally
done and we'll see what their next bad purchase is.
Speaker 3 (32:10):
Does in your mind, does AT and T kind of
take the ranking on two of the worst mergers in
modern history? I mean between this and Time Warner.
Speaker 2 (32:20):
Yeah. I mean, look like these two mergers have effectively
they haven't killed the company because it's still alive, but
they've rendered it a zombie that has no direction and
have stripped it of a ton of capital at a
time where they could really use that capital to make
an actual good acquisition or expand the business in a
good fashion.
Speaker 3 (32:38):
What are some of the other ones that are tossed
out there as worst acquisitions of all?
Speaker 2 (32:41):
I mean the AOL Time Always There, a well, Time Warner.
I put the HP autonomy one there. It's not the
same scale because I think it was like eight and
a half billion dollars, but they wrote it down by
like ninety five percent within a year and a half
or two years.
Speaker 3 (32:56):
Oh, Quaker Oats and Snapple is oftentimes looked at as
one of the really bad ones that it was only
one point seven billion, but that was back in ninety
four and they basically spun it back off a few
years later. Yeah, there's a lot of them, But AT
and T has been at the center of a couple
in a few years.
Speaker 2 (33:11):
I mean Sprint and Next Tel. That was a thirty
five billion dollars.
Speaker 3 (33:14):
Whoops, Sprinted, Next Tel, Google and Motorola. They didn't do
anything with that, although maybe they did in the cell
phone space.
Speaker 2 (33:21):
We just don't know. I AT and T, Like, I
don't think there's much competition. They are the worst shepherd
of capital in the past two decades.
Speaker 3 (33:30):
Yeah, Like there might have been worse mergers, but few
have eroded the company as much as I don't know
if there have.
Speaker 2 (33:37):
Been many, like those two mergers that the problem was
they were the same mistake and they made it twice. Yeah, Like,
it was just it was the same thing over and over.
Speaker 3 (33:50):
We're at the utility company with all this cash, what
should we do with it? Award shareholders, or go make
acquisitions that of businesses that we don't know how to run.
Speaker 2 (33:58):
Hey, let's buy a content district combustion service that is
maybe not where the puck is going.
Speaker 3 (34:05):
What the hell is the future of DirecTV? By the way,
they don't have a Sunday ticket anymore.
Speaker 2 (34:12):
You don't just.
Speaker 4 (34:13):
Drive around and look to see how many dishes you
see on the side of people's houses or anything.
Speaker 2 (34:17):
I mean, if the.
Speaker 3 (34:18):
Key goal, if one of the key goals of I
don't remember which department of the US government, but whoever
is in charge of delivering high speed internet to the
remaining Americans that don't have access to it. It's like
a big push that has been going on for five
years and is going to continue for another decade once
that's through. Give me one good reason why anybody needs
to settleite.
Speaker 2 (34:38):
There still are like places and people who.
Speaker 3 (34:41):
Agreed they will still exist, but it is a rapidly
shrinking group that needs satellite based television.
Speaker 2 (34:49):
Someone still thinks there's seven point six billion dollars in
value there.
Speaker 3 (34:54):
Well, AT and T thought there was fifty billion dollars
worth of value there like eight years ago, and they
were sure wrong. About it, so I'm not sure.
Speaker 2 (35:00):
Maybe they just want to repurpose it for something else. Yeah,
so they will be as part of this, By the way,
what else could you use all those satellites for something? Fun?
Speaker 3 (35:09):
Ramen, They will be merging this. It looks like with
Dish Network. But again, the wrongs don't make it right. Yeah,
like you know, you still have the same shrinking population
here that.
Speaker 2 (35:25):
Was like when who was it?
Speaker 1 (35:26):
Was it?
Speaker 2 (35:26):
Uh? When Verizon? But Yahoo and AOL? Remember they Verizon?
But like the remp was, no is Yahoo and someone else?
They bought who was it? Hang on, give me just
a second on this, so Verizon Media. Yeah, Verizon bought
AOL and twenty fifteen like the remnants of it and
(35:47):
then Yahoo two years later. Remember they merged them into
a company called oath Oh right, that they said was
gonna like reshape Digital didn't. It didn't and they had
to sell them off in twenty twenty one to Apollo,
who I'm not sure has done anything with it either, right.
Speaker 3 (36:01):
Yeah, yeah, those ones are entertaining. The mist acquisitions are
also pretty fun to reminisce on, like when Blockbuster turned
down the Netflix acquisition, Apple turned down Tesla.
Speaker 2 (36:14):
There are others where I'm trying to think of who.
Speaker 4 (36:16):
Else Yahoo tuned turned down Google?
Speaker 3 (36:20):
Yeahoo turned down? Or do they make a bid or
do they can't remember.
Speaker 4 (36:24):
I can't remember Google went to them and said for
a million dollars you can, and they.
Speaker 3 (36:28):
Said, yeah, yeah. Those are ones are almost as entertaining.
Speaker 2 (36:32):
The other ones that are fun to think about are
the ones like, hey, what if they had turned this down?
What would it look like? Think about if YouTube would
turned down Google as an example and was just a
separate company. Imagine imagine Instagram turns down Facebook back when
it was Facebook.
Speaker 3 (36:48):
Ways turns down Google.
Speaker 2 (36:49):
The ways one is like a personal convenience thing. But
imagine what the Internet would be like if Google didn't
have YouTube under it Pretty different to really different. That's
that's a globally different Internet at that point, Like the
way this thing is like, Okay, I would have liked
to see some competition, but whenever it's it's maps. You know,
(37:10):
the whole YouTube thing is so central to what Google
is now.
Speaker 3 (37:14):
It'd be a a pretty different looking internet. Agreed, Yeah,
I love fast food companies throwing shade at each other.
And Wendy's did this over the weekend, they partnered with
the developer of micbroken dot com, which I had not
heard of until today, but it tracks all of the
ice cream machines that are out and they have started
donald McDonald sorry, yeah, all the McDonald's ice cream machines
(37:36):
that are quote broken and in many cases actually are broken.
And they have started pulling up a truck that sells
Frosty's in front of the McDonald's, which I can't imagine
they can easily get permits for. But nonetheless they are
doing this, and you know, they'll yeah, they're just having
a pretty fun time with saying, oh, yeah, this is
a funny thing that McDonald's is incredibly guilty of and everybody,
(38:00):
and here's how we're going to advertise for ourselves. At
the same time, I.
Speaker 2 (38:04):
Enjoy that quite a bit.
Speaker 3 (38:05):
I like it. I like it.
Speaker 2 (38:06):
I do techno good markets. The daves off one twenty one,
that S ANDP is down one, the Nasdaq is up six,
so exciting. Not much movement today, pretty quiet. Start to
get some data coming in tomorrow. We get ism manufacturing
and we also get the Jolts report, So we will
see you tomorrow and we'll have all that and more
on the show
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