October 10, 2025 • 38 mins
Chuck Zodda and Mike Armstrong discuss how AI concerns from the media and public have yet to show up in markets. What other areas of the economy are concerning? Government recalls workers to produce key inflation report. Shutdown pain ripples through the US economy with no deal in sight. China's rare-earth escalation threatens trade talks. Is China using a workaround to buy Nvidia chips? Bessent's big gamble on Argentina has a narrow path to pay off.
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Episode Transcript
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Speaker 1 (00:01):
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(01:06):
Zada and Mike Armstrong.
Speaker 2 (01:11):
Chuck, Mike and Tucker with you, and as we continue through,
probably it's not the least important week in markets this year,
but it's the you hold your tongue PEPSI reported. I
changed my mind it's the least important week in markets
this year because literally, like the most exciting thing that
(01:32):
we had happened was Delta earnings yesterday. Yeah, aside from that,
any of the government data is not coming out to
a certain extent. I do have a little bit of
an update on a couple items there. We have consumer
sentiment data from the University of Michigan that came out today,
which has been useless for four years. I'm not sure
(01:52):
if there's any signal there at this point. There has
been no other major data release on the private side
of things this week, and so we're all left kind
of being like, okay, Like gotta be honest in a
in an industry where you're paid to evaluate what's going
(02:13):
on and make decisions based on it. When nothing is
going on, you kind of look at it and you're like,
why what am I doing here?
Speaker 1 (02:22):
Like?
Speaker 2 (02:22):
What is my purpose? These are the deep questions that
come to me when I look at a week like this.
Speaker 3 (02:29):
Yeah, there's been a large absence of obviously data to
consume and information. We will be getting into earning season
next week, so we'll have a little bit more of
that and some important companies actually reporting on what they
are doing.
Speaker 2 (02:42):
Do you.
Speaker 3 (02:44):
I feel as though this week I have seen more
of a sentiment shift when it comes to AI and
AI related transactions, not that that is manifested in any
way into markets. But if I go and to into
this show, or if I, you know, go watch Bloomberg
for an hour and listen to interviews there or pull
(03:08):
open any paper, I sense that the sentiment on AI
and the concern about the bubblisious activity there has shifted
in the most significant way that I've seen so far,
and I feel like that has been more severe this
week than any point. Do you do you sense the
same thing or am I misreading the situation.
Speaker 2 (03:28):
I don't sense the same thing, Okay, And the reason
that I don't sense the same thing is that it
hasn't affected price in any way, shape or form. It
is not like in video today is in a new
all time hot yep, it's at one hundred and ninety
four dollars a share. It's never been there before ever
in its storied history.
Speaker 3 (03:46):
Yeah, all right, then I'm just getting more concerned about
it this week.
Speaker 2 (03:50):
I think there's a Michael thing. There are a bunch
of people out there that are talking about it, and
and the chorus is growing. It's not affecting the markets
in any way, shape or form. No, And I'm not
saying that it should or shouldn't, but it's not. And
that's what we can speak to on this. You know,
like you go through like your AI basket of you know,
(04:11):
names and everything. Okay, so you got Nvidia close to
a new you know, at anue all time high. Microsoft
broke out this week and you know is up, you know,
six seven percent since early September. Who else do we
put in that group of like publicly traded companies that
are AI interested. Broadcom, let's see what they have going on.
(04:34):
Broadcom is up another five percent this week. You look
at AMD. Oh gee, did they have a little bit
of an announcement on Monday where the stock pop twenty
five percent? Yes, and then it went up further and
now it's come down a little bit from there, but
it's still up twenty five percent for the week. Despite
the fact that there are more people talking and writing
(04:56):
with concern about AI right now, it's not being reflected markets,
right It is not showing up there. Whether that's good
or bad is yet to be determined. The next couple
of years will write that story ultimately, but I'm not
sure there's there's much there. I personally, in the short term,
am much more concerned about what we're starting to see
(05:17):
bubbling up in the auto sector and other consumer related areas. Specifically,
low end consumer consumption is bad in getting worse, and
there's nothing out there suggesting an improvement on that side
of things, and so I think that's something that is
concerning to me. But again, that is being reflected in markets.
(05:42):
When you look at what's going on with you know,
a lot of these big asset managers of you know,
private equity, private credit and things like that, they're continuing
to touch some pretty you know, dangerous areas. And I'm
personally out there kind of being like, Okay, what's the
next show that's going to drop on this stuff? Because
you know, one, okay as a fluke, two's a coincidence.
(06:03):
Three it's like gollag Gee Walker's what's going on here?
Speaker 3 (06:08):
And and that's the part that we're in. Now, let's
play that thought. Well, we can go elsewhere if you want,
but let's play that thought through. At some point auto
lenders to the subprime space where the first to be affected. Yes,
there are certain credit card companies that issue in that
space that are probably going to tell us how things
are going. Yeah, and you can see other stuff is
(06:28):
going to be I mean, dollar stores, I would think
would be another area that we would see to new weakness,
you know, McDonald's, Wendy's, those types of areas. Do you
see it on that front? Like, those are the things
that that I'm I'm kind of looking for. But the
other piece that you come back to is look for
better for worse. And quite honestly, it's probably for worse.
Speaker 2 (06:50):
Like when a whole when like half the US population
feels and quite honestly, because of the data is economically unimportant,
that's bad man. Yeah, Like that's not.
Speaker 3 (07:05):
Not necessarily for the stock market in the short term,
but just for like, but for society it's not great.
Speaker 2 (07:10):
And and and look, when it's bad for society, eventually
it becomes bad for the stock market. You know, Like
it's it's not good to have half the population rightfully knowing, well,
whether I spend this money or not, it's not gonna
matter like that. That's bad on a lot of levels here,
Like we're we're kind of doing it wrong. If if
(07:32):
we're in this situation of half Americans, you know, that's
that's not good. So I think that you know, again,
when you have a week like this, this is the
stuff that you have to like start getting into because
we have no economic data, but we will soon a
couple of lights on the end at the end of
the tunnel that may or may not be an oncoming
(07:52):
train the first one. Uh. I still, honestly, I need to,
like this, do a podcast with this guy because I haven't.
His name's either Guy Berger, GhIE Burget, or some combination
of the you.
Speaker 3 (08:03):
You've talked about Gee or Guy in the past. Yeah,
so Gee, Guy Burget, Burger yep.
Speaker 2 (08:09):
Uh is. He works at the Burning Glass Institute and
focuses on labor economics. And one of the things that
he so nicely did this week is even though we
don't get the DOL weekly unemployment claims data, the states
do still publish it themselves. Oh so he put it
off because he put it all together. Now, he didn't
have data from Massachusetts, Hawaii and the Virgin Islands just
(08:31):
because they weren't include like they didn't update theirs for
whatever reason. So he just included the most recent values
and said, all else being equal, he stayed the same.
And his estimate is that initial claims moved up a
little bit to two hundred and thirty five thousand, and
continuing claims moved up a very modest amount to one
point nine twenty seven million. And this is again I
(08:52):
say estimate. This is the actual data that the states
provided that the federal government usually compiles into one piece, correct,
So he just compiled it. So we do kind of
have like a backt into Hey, here's what we saw
from initial and continuing claims. There's nothing overly concerning in those,
so I don't think that there's too much of note
on that front. But the other piece that is very
(09:16):
exciting to me is that the Bureau of Labor Statistics,
or the BLS as you may know them. Did you
see what they announced yesterday? I did. They're recalling the
CPI staff to put together the September CPI. All those
furloughed workers are going to put this together. It's not
because they want us to have something to talk about
(09:37):
next Wednesday, but we we will have something to talk about.
But it's not because of that. Rather, it's because the
September CPI is critical to determining the cost of living
adjustment for Social Security next year, and so without it
you wouldn't be able to calculate that. And so most
of the work had already been done because the data
collection process takes place in September, as you would expect,
(10:00):
and so now they just need to actually do the
compilation and computations and things along those lines and feed
it into their computers. So we are going to be
getting CPI data next week, which is really exciting to me.
We're not gonna get PPI, but let's be honest, no
one really cares about PPI anyways, aside from hey, how
does this pass through into PCE?
Speaker 3 (10:18):
And the FED will have it ahead of their October
thirtieth meeting too, Yes, Halloween meeting twenty ninth ninth.
Speaker 2 (10:24):
Okay, ooh, spooky FED meeting. I need to look at
the calendar for future years and find out when we're
going to have a Halloween FED meeting because I just
love the idea of Jay Powell walking up to the
podium with J Powell would not be a vampire, no,
J Powe wouldn't be no, Like, I don't think Jay
Powell would go vampire. If if, why don't we take
(10:48):
a quick break. When we come back, we'll discuss what
Jay Powell's FED Halloween costume will be next and more.
Speaker 1 (10:56):
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Speaker 2 (11:31):
All right, Mike, So the FED has a meeting coming
up in two and a half weeks, not on Halloween.
It's two days before Halloween, which, by the way, how
great is it that Halloween is a Friday this year? Yeah?
Top not stuff? And you know what's messed up?
Speaker 4 (11:44):
Do you know?
Speaker 2 (11:45):
There are some towns that still are not having Halloween
on Halloween, which I think it's dumb that like a
town has to be like Hey, this is the night
that you celebrate Halloween. Just go out on October thirty
first and knock on people's doors for candy. I didn't
know that tons did that.
Speaker 1 (11:58):
I didn't either.
Speaker 2 (11:59):
You've never heard of like towns being like, oh, Halloween's
on this day. No, No, it's like every town does this,
now what you're talking about? Oh, maybe it's just your
towne No, Like I don't do Halloween.
Speaker 4 (12:10):
Yeah, he does Christmas in September. Yeah, Christmas is a
three month event grocery stores. Yeah, so quite honestly, so
funny segue, funny that you mentioned this, So funny for you.
Speaker 2 (12:22):
It's freaking hilarious. So every year, my wife and her
college friends we do a friends Giving with all of
our families and it's sometime in Thanksgiving and normally sometime
in November. And this year the only time people could
do it was the Sunday right before Thanksgiving, and so
(12:42):
everyone was like, do we really want to have turkey
like twice in the week, Like, you know, once is enough?
Like I love it, but I just after one turkey,
I'm kind of like I'm good for a while. So
this year the Friendsgiving is going to be a nineteen
eighties Italian themed Christmas friends Giving. Oh, because it's on
(13:03):
a Sunday, It's on a Sunday Sunday supper. Yeah, exactly,
So we're it's it's gonna be fantastic. Yeah, we're doing
and stir the sauce nineteen eighties. Yeah, I'm basically going
to recreate Good Fellows pretty much is what I'm gonna do.
It'll be a razor out to slice the guards. It's
a great system for it. So anyways, Jay Powell dresses
up for Halloween. We suppose, and I asked the question
(13:26):
at the end of the last segment, what would j
Powell dress up as if if there were a FED
meeting they concluded on Halloween and he had to give
his press conference, what would his Halloween costume be? Dov,
It's like a giant bird. He's dead pan, straight day.
(13:47):
What do you what do you think about? You know
where rates are gonna go? That's a pigeons. I imagine
they're pretty similar, right, Yeah, that's that's just a white pitch.
That's pretty good. I would have the one I came
up with. He could have gone as a hiker, kind
of the opposite approach that he could have taken there.
Speaker 3 (14:09):
Uh.
Speaker 2 (14:09):
The other one that I thought would have been interesting
and this is Yeah, I think this would have been
been good. He could have gone as any bond villain
because J. Powell is a villain to the bond market,
you know, right, so you know he could he could
have gone as a bond villain. So I thought that
would have been kind of good as well. And and
(14:30):
finally I think he could have just worn like a
tan suit. Again it could have been the ball.
Speaker 3 (14:36):
I would suggest that Jerome Powell, if you're listening, do
not wear a costume to the next thing, but just
have some Dracula teeth in and don't acknowledge it at all.
Just to just give your entire speech a couple of
drips of blood, some prosthetic like get good quality ones
like not the ones that you can't talk. Get some
good get you know, some costume designer. To just put
(14:58):
in some traditional drag and do not acknowledge it, do
not answer any questions about it.
Speaker 2 (15:05):
I like J. Powell as a dove instead of the
dot plot. They should bring the whole board out there,
just dressed up as either doves or hawks. Yeah, okay,
I'm getting goosebumps just thinking about it. Speaking of the FED,
a hawkish FED official is rethinking his stance on rate cuts.
Doesn't matter. You can't vote oh redone, yep, toss it
(15:28):
next one. Shut down. Pain ripples through US economy with
no deal in sight. Here's the thing. I believe two
things at the same time right now. The first is
for anyone who is right next to the federal government
metaphorically in an economic sense or you know, actually in
the federal government, there's a lot of economic uncertainty right now,
(15:51):
in potential pain. Sure for the vast majority of Americans,
there is no rippling right now.
Speaker 3 (15:58):
Yeah, So where might you be able to see the
rippling if you are anywhere in America? Certainly if you
run any sort of services related business in DC, if
you're a government contractor if you're a government contractor if
you have a sub have a sub shop in DC,
that's going to be problematic for you. If you fly
out of a regional, smaller airport on a regular basis,
(16:20):
probably problematic. They're going to experience issues before Logan or
JFK do. As we've talked about, I view the lost
economic We've talked about what did you estimate the hit
to GDP was on a weekly.
Speaker 2 (16:33):
I didn't the estimates that I've seen from economists or
anywhere from point one to point two percent a week.
Speaker 3 (16:38):
I would imagine that that escalates the longer it goes on,
because we're not really seeing people don't know cancel flights.
We don't, but just think about it logically, like, yeah,
if it's going on for four weeks, you're going to
be more likely to change your travel plans than you
would be at this stage of the game. So I suspect,
with very little evidence, that the longer a down goes on,
(17:01):
the more significant hit two over the overall economy. But look,
I mean, if we were gonna hear about it, you know,
certainly Delta CEO ed Bastian would have been, you know,
bring it up if you really thought it was a
big problem, and he did acknowledge it that hey, you know,
in seven to ten days, I expect it to be
more problematic, but for the time being, he said, not
(17:23):
at all an issue.
Speaker 2 (17:24):
And so I think the big thing that I say
on this and the reason why, like, again, if this
goes on for an extended period of time, we don't
know the impact Remember, there have been twenty some odd shutdowns,
maybe it's like twenty five since nineteen seventy two. There
have been three that have been three weeks or longer.
So like all of these estimates like, hey, here's how
much a shutdown shaves off GDP each week. Most shutdowns
(17:47):
are one to five days. Yeah, you know, sort of
past that all. So the fact that we're into day
ten is already like, huh, we'll see where this goes.
And quite honestly, next week again on the fourteenth and fifteenth,
that's where you got, you know, the next paycheck processing cycle.
That's gonna be the first paycheck processing cycle that'll be
missed for federal workers. And that's the one where you
(18:08):
look at it and say, do we start seeing more
people calling out of work in the public facing positions TSA,
age and air traffic controllers and you know, how do
you you know, how do you resolve that? Because once
it becomes something that most of us do start noticing. Yeah,
you know, when you've got two and a half million
(18:28):
people flying a day and they're like, hey, my plane's delayed.
You know, three hours are canceled. That's the kind of
stuff where it starts making waves right now. Yes, like
if you are a government employee or a government contractor
anywhere close to those types of things, you're saying, yeah,
this is scary for us, But the vast majority of
(18:48):
Americans are not in those positions right now. I think
a quarter million of federal workers have already missed a paycheck.
Another two million will have by end of next week. Yeah,
that's the big one. So we'll see kind of where
things go on that front. But day ten and no
end to shut down in sight, we'll see what happens there.
(19:10):
Let's take a quick break here. When we return, we're
gonna do Wall Street Watch, talk about some of the
big moves in markets today, and then we're gonna be
talking China. A couple moves being made by China to
you know, kind of jab the US a little bit
over the last twenty four hours. We'll talk about what
they are and why. After this.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch, a complete look at what's moving market so
far today, right here on the Financial Exchange Radio Network.
Speaker 4 (20:02):
Well after yesterday's pullback from record highs Marcus today I
modestly hire as traders sift through the latest consumer sentiment
data as the government shutdown continues. It's day ten right now.
The Dow is up by a third of a percent,
or one hundred and sixty two points, SMP five hundreds
up two tenths of one percent or thirteen points, Nasdaq
(20:23):
up two tenths of one percent as well. Russell two
thousand is edging higher mostly flat, Tenure treasury yield down
four basis points at four point one zero one percent,
and crude oil down nearly two and a half percent
today trading right at sixty dollars a barrel. Shares in
Qualcom pulling back about one percent after China said it
(20:45):
is conducting an anti monopoly probe into the chip maker
over the purchase of Israeli startup Auto Talk, sticking with
the chip sector when video shares are up nearly two
percent after the Senate passed legislation yesterday aimed at ensuring
the US companies get priority access to AI chips ahead
of China. Meanwhile, Applied Digital stock soaring twenty six percent
(21:09):
after the data center builder reported revenue in its fiscal
first quarter was up eighty four percent from the same
period a year ago. The company also said it finalized
a new lease agreement with AI cloud computing company core Weave. Elsewhere,
denim apparel maker Levi Strauss sinking ten percent after it
(21:29):
posted weaker than expected earnings guidance for the current quarter,
and jeep maker Stiliantas saw its shipment's climb about thirteen
percent in the third quarter, driven by a strong rebound
in North America. However, that stock is down over one
percent at the moment. I'm Tucker Silva and that is
Wall Street watch couple.
Speaker 2 (21:50):
Pieces discussing recent actions from China in the last day
or two. Number one trying to put new restrictions on
rare earth materi cials. This was on I think early
Thursday is when we saw this. And the big thing
is that effectively further export controls on products made with
(22:13):
rare earth materials sourced from China, and also restrictions on
export of intellectual property. And even workers who know about
processes for refining, extracting, or anything related to rare earth
will not be allowed to do work overseas except in
certain circumstances.
Speaker 3 (22:32):
So Basically, if China determines that your company, wherever you
are in the world, imports their rare earths in order
to manufacture something where that rare earth accounts for zero
point one percent or more of the product's value, then
you need permission from the Chinese government.
Speaker 2 (22:51):
Which would seem to be problematic for lots of companies.
The other piece China also raising fees on US ships
that would be docking in China and putting an anti
trust probe in place for on qualcomm. Here here's the deal.
I don't know how much of this like China actually
(23:11):
cares about. The answer is probably not much of it.
But expectations are that President Trump president g are going
to be meeting at a what is it the Asia
Pacific Economic Cooperation Conference at the end of October. I
think it's the twenty six through twenty eighth in Korea
that it's taking place, and the two leaders are expected
to chat on the sidelines there. And so you better
(23:34):
believe that China is saying, all right, we want to
have a little bit of leverage, and even though we
might not really care about this, we're going to load
these things on so that we can trade them away
for something that we do want at that meeting ideal,
which I think is telling right.
Speaker 3 (23:48):
If they're putting in these rare earth restrictions, which of
everything here is the most important. In my opinion, at least,
investigation to Qualcomm or anything else is a lot less
important than that I'm completely shutting down rare earth from
leaving the country.
Speaker 2 (24:02):
I mean, Qualcom's probably like the one US semiconductor company
that I don't think has had a whole lot of
interaction with the Trump administration at this point.
Speaker 3 (24:11):
So if they are targeting the rarest to me, it
means they're willing to negotiate it. If you're announcing it
fifteen days ahead of the meeting, it means that you
are not serious about fully shutting down the access to it.
And so the question then becomes, what does the United
States need to give up to make sure that they
maintain access to it? Most importantly, for this market moment,
(24:35):
nobody's making semiconductors without access to Chinese rare earths.
Speaker 2 (24:40):
So here's the place that I think I land on this,
And it's apparent to me over the last six months
now that China not only is willing to use that
rare earth card, you know, once, but use it repeatedly
in order to try to get what they want from
the US or from other countries. We know the Trump
(25:00):
administration has already started to try to ramp up efforts
to produce more of this stuff domestically. I don't know
how you do it, but you got a turbocharge what
you're already doing, because like China realizes, hey, this is
like the one thing that we have that can really
put pressure on other countries right now because of their
dependence on us, and so I think, quite honestly, you
(25:22):
need to break that near total supply control that they have,
and when that goes away, you have all kinds of
options as to how to deal with China on a
range of economic issues. Yeah.
Speaker 3 (25:34):
I know that there's a lot of balls in the
air right now, But doesn't this seem like it should
be getting the attention that for instance, the Trump administration
put towards vaccines back in twenty twenty.
Speaker 2 (25:44):
Well, they've made a couple deals here and there, but
it's it really is. Yes, Like in a perfect world,
you need an operation warp speed for rare earth production
in the United States. Yeah, Like, how do we figure
out how to produce as much of this stuff as
possible domestically by the end of twenty twenty six, right,
you know, not by the end of the decade. But
(26:05):
this has to be like in the next twelve to
eighteen months. And maybe they're you know, starting to you know,
work on some plans. They're like, again, they've already done
some things. I'm certainly cognizant of the fact that they've
you know, made a few deals in order to try
to facilitate this. But I think this is as critical
an item as you can see, because it is something
(26:26):
that quite honestly can bring the US economy to its
knees at you know, the whims of whatever China wants
to do on this, right, So I think it's it's
a real problem the other stuff. You want to open
an antitrust probe into Qualcomm, Sure, okay, like fine, I'm
(26:47):
sure Qualcom doesn't like it, but you know, it doesn't
move the needle. The rare move the needle. It's not
mission critical to the United States that Qualcomm you know,
operates how they need to. Within China, this is different.
So that's again, this is all part of you know,
the negotiation. As you head into that meeting at the
end of the month about two weeks from now. But
(27:10):
I guess it's a big deal.
Speaker 3 (27:11):
But the point that you make and that we should
focus on is Okay, yes, I do think the Chinese
are willing to negotiate on this, the rare earth export piece,
but regardless, it's just not something that I think is
sustainable to hang over our head and perpetuity.
Speaker 2 (27:28):
Right, and you're going to bring it back every three
months like, hey, now we want this and we're going
to do these rare earth export restrictions.
Speaker 3 (27:35):
Well, so it does need to be pushed, and it
also needs to be acknowledged that it is very possibly
an industry that will never be profitable because of the
way that the Chinese will flood the market.
Speaker 2 (27:45):
Not only not profitable, but there's also quite honestly, one
of the main reasons why you don't want this stuff
produced in the United States is it's hugely toxic to
do so.
Speaker 3 (27:53):
I mean, it's we've all starts of problems. We've talked
a lot about how I would.
Speaker 2 (27:58):
Love to like put a nuclear power or plant in
my basement, because look, if the worst case situation happens,
like you, you don't know, like that that's it, like
it's it is what it is. Under no circumstances would
I want a rare earth mind in my basement because
it's just it's just messy, like toxic. It just makes
you like very sick for like long periods of time
(28:21):
and stuff. So the question is, hey, how do we
bring this back if it's not going to be profitable
because of what China does, and where the heck do
you actually do this at scale? Given the environmental concerns
that are very real on this stuff, But you still
have to do it domestically unless you just don't want
to have a lot of the things that we currently have,
(28:44):
you know, like windshield wipers. We're gonna have a real
shortage of mining engineers in the next decade. Yeah, Colorado
School Minds is going to be like the Avice to Go.
Speaker 3 (28:54):
Did I ever tell you that I have a my
wife has a family member who went there and is
one of like, was one of like three women in
her graduating classes.
Speaker 2 (29:04):
Doesn't it feel like the whole I've never been there myself,
but doesn't it feel like the whole school should be
underground run by the dwarfs from the hobbit. Yeah, sure,
does you know, like Gimli's there with his acts like,
oh you want to make you know you want to
find gems? No, like I want rare earths, oh, rare
earth jet No.
Speaker 3 (29:23):
But perfect example this this young woman who you know
has a career in uh in mining engineering, moved to
Australia four years ago and has been living there since.
Speaker 2 (29:35):
It's just not jobs here in the United States.
Speaker 4 (29:37):
No.
Speaker 3 (29:37):
I mean there are some, but you know, there are
not a ton of jobs to do this in the
United and there's quite a few in Australia.
Speaker 1 (29:42):
Yeah.
Speaker 2 (29:42):
Yeah, Let's take a quick break here and when we
come back, uh, do we want to talk about whether
China is actually buying banned in video chips secretly? Let's
do it. Okay, let's do that when we come back.
Speaker 1 (29:55):
The latest news on inflation, the FED, the economy, and
how the markets are react every morning right here on
the Financial Exchange Radio Network. Text us six one, seven, three, six,
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(30:16):
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Speaker 4 (30:25):
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Speaker 2 (30:30):
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Speaker 4 (30:31):
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Speaker 2 (30:39):
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Speaker 2 (30:57):
Mike, have you ever heard of Megaspeed?
Speaker 4 (31:01):
No?
Speaker 2 (31:02):
Tell me about you this morning? I did, yes. So.
Megaspeed is a Singapore based data center company and they
were going to buy two billion dollars of in Vidia
chips over the next twelve months. Jensen Huang was in.
Speaker 1 (31:22):
Was this.
Speaker 2 (31:22):
It was in Taipei and he was talking to the
CEO of Megaspeed about these chips that they wanted to buy.
And it turns out that the e Commerce Department's actually
been investigating whether Megaspeed is helping companies in China, has
been helping companies in China export sidestep export restrictions on
(31:47):
in Vidia chips. We don't know for sure, but I
have no idea if Megaspeed's doing it.
Speaker 3 (31:52):
I'm pretty sure that some companies out there that are
funneling in Vidia's latest and greatest chips to China.
Speaker 2 (31:58):
Yes, is that fair to say? Yes? Or at least
have been, because now the question is, hey, China has
now recently gone on the record saying we don't want
in Vidio chips coming into China, which part of me
also looks at and says, okay, like do I really
believe that or are they still secretly funneling them in
but just you know, want to have the appearance of no,
we're not going to buy them directly, even though the
(32:20):
US now allows them to at least in the tone
down versions. Yeah. So this is a pretty big report here.
I mean again, it's a four person byline that you
have on this thing. So like, there's a lot of
reporting that went into this, and you know, an awful
lot of background and a lot of specifics on this
(32:42):
that they dug up here, and ultimately it leaves more
questions than answers other than it's pretty apparent that in
Vidio chips have been making their way into China for
the last couple of years, which is something that I
think a lot of people suspected along the way. Anyways.
Speaker 3 (32:59):
Yeah, and if you want to talk about a key
risk to the largest company in the US stock market,
it's China's ability to reverse engineer things. Yeah, and then
their willingness after they have successfully reversed, reverse engineered something,
to flood the market with that product. This is a
story that has been repeated over and over of the
(33:22):
course the last thirty years. You are seeing with cars,
You've seen it with solar panels. None of these are
technologies that were developed in China. They are technologies that
were sold to the Chinese market, and through a number
of different methods, companies there learned how to engineer them
on their own. And I really view that as one
(33:43):
of the key risks to Invidia's future and any latest
and greatest semiconductors future, is not their ability to innovate,
but rather Chinese the Chinese company's ability to replicate and
then flood markets with the product thereafter at a pretty
quick folks. We did our live broadcast at the Financial
(34:03):
Exchange down on the Cape yesterday. It was an awesome event.
Thanks for everyone who attended. We have one more to
go here next Thursday the sixteenth, that's right nearby and
Chestnut Hill, right nearby Boston and Chestnut Hill, Massachusetts, at
the Showcase super Lucks. For anyone that missed it, we
do a live broadcast at the show Following that, we
(34:24):
have lunch and we'll be talking to the crowd there
about our own outlook on this economy, what is really
happening underneath the hood, views on the stock market, and
what one is to do as an investor in today's environment.
Speaker 2 (34:38):
We'd love for you to join us. The event is free.
Speaker 3 (34:40):
It's at the Chestnut Hill Showcase Superlucks and you can
join us by calling eight hundred three nine three four
zero zero one to reserve your spot. We've got plenty
of information online at Armstrong Advisory dot com, but to
register again space limited. It's this coming Thursday, the sixteenth,
Showcase super Lucks, Chestnut Hill, hundred three nine three four
(35:01):
zero zero one.
Speaker 1 (35:03):
The proceeding was paid for by Armstrong Advisory Group, a
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Armstrong guide a specific financial, legal or tax advice. Consult
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Speaker 2 (35:18):
Yesterday, Treasury Secretary Scott Bessett announced an agreement on a
twenty billion dollar Yes thank you swap arrangement with Argentina,
and in addition to that, also announced that the US
has already intervened to at least once by the Argentinian
PESO in order to keep Argentinian markets functioning normally. A
(35:44):
few thoughts on this. The first is, Argentina's markets don't
function normally. They function your badly, and quite honestly, it's
not to say that there's no chance this works out well,
but it's a really slim chance this does just because
the Argentinian economy is a mess, has been a mess,
and is not guaranteed to stay a mess, but has
(36:05):
you know, real uphill clime in order to get to
something approaching respectability and stability. So what's on the line here,
twenty billion dollars? Yeah, yeah, I mean, but it's twenty
billion dollars to support an economy that doesn't matter to
the United States, right, you know, Like it's like, quite honestly,
(36:26):
Argentina is not in the top thirty most important trading
partners of the US. It's probably somewhere in that thirty
to fifty range, and that's you know, significantly less important
than the ones above its.
Speaker 3 (36:42):
I'm just trying to think of what happens if this
does Like, what is the big success if this does
work out?
Speaker 2 (36:47):
What do you get if this works out? Beef love it,
but not twenty billion dollars of it, you know, the
Trump administration. If it doesn't work out, you lose.
Speaker 3 (36:59):
Twenty billion dollars that the US government will not in
any meaningful way recapture.
Speaker 2 (37:03):
No. I mean, look, in the past week and a half,
Argentina's treasury burned through one point eight billion dollars just
to keep their currency afloat. That's no week and a half,
I mean, quite honestly, at that pace, you're talking about
like two months of liquidity that you're providing Argentina.
Speaker 3 (37:19):
The best argument that I can make for doing this,
which hasn't really been made by the current administration, I
don't know why, is you have some ability to counter
Chinese influence in the region, because I do think that
the Chinese would step in and do this instead, and
so I think there's some legitimacy to that argument. But
nobody's really talking about in that context.
Speaker 2 (37:40):
But why Argentina. Yeah, you know, like if you want
to counter Chinese influence in South America, there are other
places that you can look and probably get more bang
for your boss, ell in Mexicano than Argentina. Yeah, like
that's that's the case there. So I hope this works out.
It's it's a gamble, you know, like you're going to
(38:00):
have to see what happens here. But it's dodgy, it's
not without risk, and we'll see what ends up happening.
Quick Break Hour two coming up in a bit
The Financial Exchange is produced by Money Matters Radio and
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(00:21):
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(01:06):
Zada and Mike Armstrong.
Speaker 2 (01:11):
Chuck, Mike and Tucker with you, and as we continue through,
probably it's not the least important week in markets this year,
but it's the you hold your tongue PEPSI reported. I
changed my mind it's the least important week in markets
this year because literally, like the most exciting thing that
(01:32):
we had happened was Delta earnings yesterday. Yeah, aside from that,
any of the government data is not coming out to
a certain extent. I do have a little bit of
an update on a couple items there. We have consumer
sentiment data from the University of Michigan that came out today,
which has been useless for four years. I'm not sure
(01:52):
if there's any signal there at this point. There has
been no other major data release on the private side
of things this week, and so we're all left kind
of being like, okay, Like gotta be honest in a
in an industry where you're paid to evaluate what's going
(02:13):
on and make decisions based on it. When nothing is
going on, you kind of look at it and you're like,
why what am I doing here?
Speaker 1 (02:22):
Like?
Speaker 2 (02:22):
What is my purpose? These are the deep questions that
come to me when I look at a week like this.
Speaker 3 (02:29):
Yeah, there's been a large absence of obviously data to
consume and information. We will be getting into earning season
next week, so we'll have a little bit more of
that and some important companies actually reporting on what they
are doing.
Speaker 2 (02:42):
Do you.
Speaker 3 (02:44):
I feel as though this week I have seen more
of a sentiment shift when it comes to AI and
AI related transactions, not that that is manifested in any
way into markets. But if I go and to into
this show, or if I, you know, go watch Bloomberg
for an hour and listen to interviews there or pull
(03:08):
open any paper, I sense that the sentiment on AI
and the concern about the bubblisious activity there has shifted
in the most significant way that I've seen so far,
and I feel like that has been more severe this
week than any point. Do you do you sense the
same thing or am I misreading the situation.
Speaker 2 (03:28):
I don't sense the same thing, Okay, And the reason
that I don't sense the same thing is that it
hasn't affected price in any way, shape or form. It
is not like in video today is in a new
all time hot yep, it's at one hundred and ninety
four dollars a share. It's never been there before ever
in its storied history.
Speaker 3 (03:46):
Yeah, all right, then I'm just getting more concerned about
it this week.
Speaker 2 (03:50):
I think there's a Michael thing. There are a bunch
of people out there that are talking about it, and
and the chorus is growing. It's not affecting the markets
in any way, shape or form. No, And I'm not
saying that it should or shouldn't, but it's not. And
that's what we can speak to on this. You know,
like you go through like your AI basket of you know,
(04:11):
names and everything. Okay, so you got Nvidia close to
a new you know, at anue all time high. Microsoft
broke out this week and you know is up, you know,
six seven percent since early September. Who else do we
put in that group of like publicly traded companies that
are AI interested. Broadcom, let's see what they have going on.
(04:34):
Broadcom is up another five percent this week. You look
at AMD. Oh gee, did they have a little bit
of an announcement on Monday where the stock pop twenty
five percent? Yes, and then it went up further and
now it's come down a little bit from there, but
it's still up twenty five percent for the week. Despite
the fact that there are more people talking and writing
(04:56):
with concern about AI right now, it's not being reflected markets,
right It is not showing up there. Whether that's good
or bad is yet to be determined. The next couple
of years will write that story ultimately, but I'm not
sure there's there's much there. I personally, in the short term,
am much more concerned about what we're starting to see
(05:17):
bubbling up in the auto sector and other consumer related areas. Specifically,
low end consumer consumption is bad in getting worse, and
there's nothing out there suggesting an improvement on that side
of things, and so I think that's something that is
concerning to me. But again, that is being reflected in markets.
(05:42):
When you look at what's going on with you know,
a lot of these big asset managers of you know,
private equity, private credit and things like that, they're continuing
to touch some pretty you know, dangerous areas. And I'm
personally out there kind of being like, Okay, what's the
next show that's going to drop on this stuff? Because
you know, one, okay as a fluke, two's a coincidence.
(06:03):
Three it's like gollag Gee Walker's what's going on here?
Speaker 3 (06:08):
And and that's the part that we're in. Now, let's
play that thought. Well, we can go elsewhere if you want,
but let's play that thought through. At some point auto
lenders to the subprime space where the first to be affected. Yes,
there are certain credit card companies that issue in that
space that are probably going to tell us how things
are going. Yeah, and you can see other stuff is
(06:28):
going to be I mean, dollar stores, I would think
would be another area that we would see to new weakness,
you know, McDonald's, Wendy's, those types of areas. Do you
see it on that front? Like, those are the things
that that I'm I'm kind of looking for. But the
other piece that you come back to is look for
better for worse. And quite honestly, it's probably for worse.
Speaker 2 (06:50):
Like when a whole when like half the US population
feels and quite honestly, because of the data is economically unimportant,
that's bad man. Yeah, Like that's not.
Speaker 3 (07:05):
Not necessarily for the stock market in the short term,
but just for like, but for society it's not great.
Speaker 2 (07:10):
And and and look, when it's bad for society, eventually
it becomes bad for the stock market. You know, Like
it's it's not good to have half the population rightfully knowing, well,
whether I spend this money or not, it's not gonna
matter like that. That's bad on a lot of levels here,
Like we're we're kind of doing it wrong. If if
(07:32):
we're in this situation of half Americans, you know, that's
that's not good. So I think that you know, again,
when you have a week like this, this is the
stuff that you have to like start getting into because
we have no economic data, but we will soon a
couple of lights on the end at the end of
the tunnel that may or may not be an oncoming
(07:52):
train the first one. Uh. I still, honestly, I need to,
like this, do a podcast with this guy because I haven't.
His name's either Guy Berger, GhIE Burget, or some combination
of the you.
Speaker 3 (08:03):
You've talked about Gee or Guy in the past. Yeah,
so Gee, Guy Burget, Burger yep.
Speaker 2 (08:09):
Uh is. He works at the Burning Glass Institute and
focuses on labor economics. And one of the things that
he so nicely did this week is even though we
don't get the DOL weekly unemployment claims data, the states
do still publish it themselves. Oh so he put it
off because he put it all together. Now, he didn't
have data from Massachusetts, Hawaii and the Virgin Islands just
(08:31):
because they weren't include like they didn't update theirs for
whatever reason. So he just included the most recent values
and said, all else being equal, he stayed the same.
And his estimate is that initial claims moved up a
little bit to two hundred and thirty five thousand, and
continuing claims moved up a very modest amount to one
point nine twenty seven million. And this is again I
(08:52):
say estimate. This is the actual data that the states
provided that the federal government usually compiles into one piece, correct,
So he just compiled it. So we do kind of
have like a backt into Hey, here's what we saw
from initial and continuing claims. There's nothing overly concerning in those,
so I don't think that there's too much of note
on that front. But the other piece that is very
(09:16):
exciting to me is that the Bureau of Labor Statistics,
or the BLS as you may know them. Did you
see what they announced yesterday? I did. They're recalling the
CPI staff to put together the September CPI. All those
furloughed workers are going to put this together. It's not
because they want us to have something to talk about
(09:37):
next Wednesday, but we we will have something to talk about.
But it's not because of that. Rather, it's because the
September CPI is critical to determining the cost of living
adjustment for Social Security next year, and so without it
you wouldn't be able to calculate that. And so most
of the work had already been done because the data
collection process takes place in September, as you would expect,
(10:00):
and so now they just need to actually do the
compilation and computations and things along those lines and feed
it into their computers. So we are going to be
getting CPI data next week, which is really exciting to me.
We're not gonna get PPI, but let's be honest, no
one really cares about PPI anyways, aside from hey, how
does this pass through into PCE?
Speaker 3 (10:18):
And the FED will have it ahead of their October
thirtieth meeting too, Yes, Halloween meeting twenty ninth ninth.
Speaker 2 (10:24):
Okay, ooh, spooky FED meeting. I need to look at
the calendar for future years and find out when we're
going to have a Halloween FED meeting because I just
love the idea of Jay Powell walking up to the
podium with J Powell would not be a vampire, no,
J Powe wouldn't be no, Like, I don't think Jay
Powell would go vampire. If if, why don't we take
(10:48):
a quick break. When we come back, we'll discuss what
Jay Powell's FED Halloween costume will be next and more.
Speaker 1 (10:56):
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Speaker 2 (11:31):
All right, Mike, So the FED has a meeting coming
up in two and a half weeks, not on Halloween.
It's two days before Halloween, which, by the way, how
great is it that Halloween is a Friday this year? Yeah?
Top not stuff? And you know what's messed up?
Speaker 4 (11:44):
Do you know?
Speaker 2 (11:45):
There are some towns that still are not having Halloween
on Halloween, which I think it's dumb that like a
town has to be like Hey, this is the night
that you celebrate Halloween. Just go out on October thirty
first and knock on people's doors for candy. I didn't
know that tons did that.
Speaker 1 (11:58):
I didn't either.
Speaker 2 (11:59):
You've never heard of like towns being like, oh, Halloween's
on this day. No, No, it's like every town does this,
now what you're talking about? Oh, maybe it's just your
towne No, Like I don't do Halloween.
Speaker 4 (12:10):
Yeah, he does Christmas in September. Yeah, Christmas is a
three month event grocery stores. Yeah, so quite honestly, so
funny segue, funny that you mentioned this, So funny for you.
Speaker 2 (12:22):
It's freaking hilarious. So every year, my wife and her
college friends we do a friends Giving with all of
our families and it's sometime in Thanksgiving and normally sometime
in November. And this year the only time people could
do it was the Sunday right before Thanksgiving, and so
(12:42):
everyone was like, do we really want to have turkey
like twice in the week, Like, you know, once is enough?
Like I love it, but I just after one turkey,
I'm kind of like I'm good for a while. So
this year the Friendsgiving is going to be a nineteen
eighties Italian themed Christmas friends Giving. Oh, because it's on
(13:03):
a Sunday, It's on a Sunday Sunday supper. Yeah, exactly,
So we're it's it's gonna be fantastic. Yeah, we're doing
and stir the sauce nineteen eighties. Yeah, I'm basically going
to recreate Good Fellows pretty much is what I'm gonna do.
It'll be a razor out to slice the guards. It's
a great system for it. So anyways, Jay Powell dresses
up for Halloween. We suppose, and I asked the question
(13:26):
at the end of the last segment, what would j
Powell dress up as if if there were a FED
meeting they concluded on Halloween and he had to give
his press conference, what would his Halloween costume be? Dov,
It's like a giant bird. He's dead pan, straight day.
(13:47):
What do you what do you think about? You know
where rates are gonna go? That's a pigeons. I imagine
they're pretty similar, right, Yeah, that's that's just a white pitch.
That's pretty good. I would have the one I came
up with. He could have gone as a hiker, kind
of the opposite approach that he could have taken there.
Speaker 3 (14:09):
Uh.
Speaker 2 (14:09):
The other one that I thought would have been interesting
and this is Yeah, I think this would have been
been good. He could have gone as any bond villain
because J. Powell is a villain to the bond market,
you know, right, so you know he could he could
have gone as a bond villain. So I thought that
would have been kind of good as well. And and
(14:30):
finally I think he could have just worn like a
tan suit. Again it could have been the ball.
Speaker 3 (14:36):
I would suggest that Jerome Powell, if you're listening, do
not wear a costume to the next thing, but just
have some Dracula teeth in and don't acknowledge it at all.
Just to just give your entire speech a couple of
drips of blood, some prosthetic like get good quality ones
like not the ones that you can't talk. Get some
good get you know, some costume designer. To just put
(14:58):
in some traditional drag and do not acknowledge it, do
not answer any questions about it.
Speaker 2 (15:05):
I like J. Powell as a dove instead of the
dot plot. They should bring the whole board out there,
just dressed up as either doves or hawks. Yeah, okay,
I'm getting goosebumps just thinking about it. Speaking of the FED,
a hawkish FED official is rethinking his stance on rate cuts.
Doesn't matter. You can't vote oh redone, yep, toss it
(15:28):
next one. Shut down. Pain ripples through US economy with
no deal in sight. Here's the thing. I believe two
things at the same time right now. The first is
for anyone who is right next to the federal government
metaphorically in an economic sense or you know, actually in
the federal government, there's a lot of economic uncertainty right now,
(15:51):
in potential pain. Sure for the vast majority of Americans,
there is no rippling right now.
Speaker 3 (15:58):
Yeah, So where might you be able to see the
rippling if you are anywhere in America? Certainly if you
run any sort of services related business in DC, if
you're a government contractor if you're a government contractor if
you have a sub have a sub shop in DC,
that's going to be problematic for you. If you fly
out of a regional, smaller airport on a regular basis,
(16:20):
probably problematic. They're going to experience issues before Logan or
JFK do. As we've talked about, I view the lost
economic We've talked about what did you estimate the hit
to GDP was on a weekly.
Speaker 2 (16:33):
I didn't the estimates that I've seen from economists or
anywhere from point one to point two percent a week.
Speaker 3 (16:38):
I would imagine that that escalates the longer it goes on,
because we're not really seeing people don't know cancel flights.
We don't, but just think about it logically, like, yeah,
if it's going on for four weeks, you're going to
be more likely to change your travel plans than you
would be at this stage of the game. So I suspect,
with very little evidence, that the longer a down goes on,
(17:01):
the more significant hit two over the overall economy. But look,
I mean, if we were gonna hear about it, you know,
certainly Delta CEO ed Bastian would have been, you know,
bring it up if you really thought it was a
big problem, and he did acknowledge it that hey, you know,
in seven to ten days, I expect it to be
more problematic, but for the time being, he said, not
(17:23):
at all an issue.
Speaker 2 (17:24):
And so I think the big thing that I say
on this and the reason why, like, again, if this
goes on for an extended period of time, we don't
know the impact Remember, there have been twenty some odd shutdowns,
maybe it's like twenty five since nineteen seventy two. There
have been three that have been three weeks or longer.
So like all of these estimates like, hey, here's how
much a shutdown shaves off GDP each week. Most shutdowns
(17:47):
are one to five days. Yeah, you know, sort of
past that all. So the fact that we're into day
ten is already like, huh, we'll see where this goes.
And quite honestly, next week again on the fourteenth and fifteenth,
that's where you got, you know, the next paycheck processing cycle.
That's gonna be the first paycheck processing cycle that'll be
missed for federal workers. And that's the one where you
(18:08):
look at it and say, do we start seeing more
people calling out of work in the public facing positions TSA,
age and air traffic controllers and you know, how do
you you know, how do you resolve that? Because once
it becomes something that most of us do start noticing. Yeah,
you know, when you've got two and a half million
(18:28):
people flying a day and they're like, hey, my plane's delayed.
You know, three hours are canceled. That's the kind of
stuff where it starts making waves right now. Yes, like
if you are a government employee or a government contractor
anywhere close to those types of things, you're saying, yeah,
this is scary for us, But the vast majority of
(18:48):
Americans are not in those positions right now. I think
a quarter million of federal workers have already missed a paycheck.
Another two million will have by end of next week. Yeah,
that's the big one. So we'll see kind of where
things go on that front. But day ten and no
end to shut down in sight, we'll see what happens there.
(19:10):
Let's take a quick break here. When we return, we're
gonna do Wall Street Watch, talk about some of the
big moves in markets today, and then we're gonna be
talking China. A couple moves being made by China to
you know, kind of jab the US a little bit
over the last twenty four hours. We'll talk about what
they are and why. After this.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch, a complete look at what's moving market so
far today, right here on the Financial Exchange Radio Network.
Speaker 4 (20:02):
Well after yesterday's pullback from record highs Marcus today I
modestly hire as traders sift through the latest consumer sentiment
data as the government shutdown continues. It's day ten right now.
The Dow is up by a third of a percent,
or one hundred and sixty two points, SMP five hundreds
up two tenths of one percent or thirteen points, Nasdaq
(20:23):
up two tenths of one percent as well. Russell two
thousand is edging higher mostly flat, Tenure treasury yield down
four basis points at four point one zero one percent,
and crude oil down nearly two and a half percent
today trading right at sixty dollars a barrel. Shares in
Qualcom pulling back about one percent after China said it
(20:45):
is conducting an anti monopoly probe into the chip maker
over the purchase of Israeli startup Auto Talk, sticking with
the chip sector when video shares are up nearly two
percent after the Senate passed legislation yesterday aimed at ensuring
the US companies get priority access to AI chips ahead
of China. Meanwhile, Applied Digital stock soaring twenty six percent
(21:09):
after the data center builder reported revenue in its fiscal
first quarter was up eighty four percent from the same
period a year ago. The company also said it finalized
a new lease agreement with AI cloud computing company core Weave. Elsewhere,
denim apparel maker Levi Strauss sinking ten percent after it
(21:29):
posted weaker than expected earnings guidance for the current quarter,
and jeep maker Stiliantas saw its shipment's climb about thirteen
percent in the third quarter, driven by a strong rebound
in North America. However, that stock is down over one
percent at the moment. I'm Tucker Silva and that is
Wall Street watch couple.
Speaker 2 (21:50):
Pieces discussing recent actions from China in the last day
or two. Number one trying to put new restrictions on
rare earth materi cials. This was on I think early
Thursday is when we saw this. And the big thing
is that effectively further export controls on products made with
(22:13):
rare earth materials sourced from China, and also restrictions on
export of intellectual property. And even workers who know about
processes for refining, extracting, or anything related to rare earth
will not be allowed to do work overseas except in
certain circumstances.
Speaker 3 (22:32):
So Basically, if China determines that your company, wherever you
are in the world, imports their rare earths in order
to manufacture something where that rare earth accounts for zero
point one percent or more of the product's value, then
you need permission from the Chinese government.
Speaker 2 (22:51):
Which would seem to be problematic for lots of companies.
The other piece China also raising fees on US ships
that would be docking in China and putting an anti
trust probe in place for on qualcomm. Here here's the deal.
I don't know how much of this like China actually
(23:11):
cares about. The answer is probably not much of it.
But expectations are that President Trump president g are going
to be meeting at a what is it the Asia
Pacific Economic Cooperation Conference at the end of October. I
think it's the twenty six through twenty eighth in Korea
that it's taking place, and the two leaders are expected
to chat on the sidelines there. And so you better
(23:34):
believe that China is saying, all right, we want to
have a little bit of leverage, and even though we
might not really care about this, we're going to load
these things on so that we can trade them away
for something that we do want at that meeting ideal,
which I think is telling right.
Speaker 3 (23:48):
If they're putting in these rare earth restrictions, which of
everything here is the most important. In my opinion, at least,
investigation to Qualcomm or anything else is a lot less
important than that I'm completely shutting down rare earth from
leaving the country.
Speaker 2 (24:02):
I mean, Qualcom's probably like the one US semiconductor company
that I don't think has had a whole lot of
interaction with the Trump administration at this point.
Speaker 3 (24:11):
So if they are targeting the rarest to me, it
means they're willing to negotiate it. If you're announcing it
fifteen days ahead of the meeting, it means that you
are not serious about fully shutting down the access to it.
And so the question then becomes, what does the United
States need to give up to make sure that they
maintain access to it? Most importantly, for this market moment,
(24:35):
nobody's making semiconductors without access to Chinese rare earths.
Speaker 2 (24:40):
So here's the place that I think I land on this,
And it's apparent to me over the last six months
now that China not only is willing to use that
rare earth card, you know, once, but use it repeatedly
in order to try to get what they want from
the US or from other countries. We know the Trump
(25:00):
administration has already started to try to ramp up efforts
to produce more of this stuff domestically. I don't know
how you do it, but you got a turbocharge what
you're already doing, because like China realizes, hey, this is
like the one thing that we have that can really
put pressure on other countries right now because of their
dependence on us, and so I think, quite honestly, you
(25:22):
need to break that near total supply control that they have,
and when that goes away, you have all kinds of
options as to how to deal with China on a
range of economic issues. Yeah.
Speaker 3 (25:34):
I know that there's a lot of balls in the
air right now, But doesn't this seem like it should
be getting the attention that for instance, the Trump administration
put towards vaccines back in twenty twenty.
Speaker 2 (25:44):
Well, they've made a couple deals here and there, but
it's it really is. Yes, Like in a perfect world,
you need an operation warp speed for rare earth production
in the United States. Yeah, Like, how do we figure
out how to produce as much of this stuff as
possible domestically by the end of twenty twenty six, right,
you know, not by the end of the decade. But
(26:05):
this has to be like in the next twelve to
eighteen months. And maybe they're you know, starting to you know,
work on some plans. They're like, again, they've already done
some things. I'm certainly cognizant of the fact that they've
you know, made a few deals in order to try
to facilitate this. But I think this is as critical
an item as you can see, because it is something
(26:26):
that quite honestly can bring the US economy to its
knees at you know, the whims of whatever China wants
to do on this, right, So I think it's it's
a real problem the other stuff. You want to open
an antitrust probe into Qualcomm, Sure, okay, like fine, I'm
(26:47):
sure Qualcom doesn't like it, but you know, it doesn't
move the needle. The rare move the needle. It's not
mission critical to the United States that Qualcomm you know,
operates how they need to. Within China, this is different.
So that's again, this is all part of you know,
the negotiation. As you head into that meeting at the
end of the month about two weeks from now. But
(27:10):
I guess it's a big deal.
Speaker 3 (27:11):
But the point that you make and that we should
focus on is Okay, yes, I do think the Chinese
are willing to negotiate on this, the rare earth export piece,
but regardless, it's just not something that I think is
sustainable to hang over our head and perpetuity.
Speaker 2 (27:28):
Right, and you're going to bring it back every three
months like, hey, now we want this and we're going
to do these rare earth export restrictions.
Speaker 3 (27:35):
Well, so it does need to be pushed, and it
also needs to be acknowledged that it is very possibly
an industry that will never be profitable because of the
way that the Chinese will flood the market.
Speaker 2 (27:45):
Not only not profitable, but there's also quite honestly, one
of the main reasons why you don't want this stuff
produced in the United States is it's hugely toxic to
do so.
Speaker 3 (27:53):
I mean, it's we've all starts of problems. We've talked
a lot about how I would.
Speaker 2 (27:58):
Love to like put a nuclear power or plant in
my basement, because look, if the worst case situation happens,
like you, you don't know, like that that's it, like
it's it is what it is. Under no circumstances would
I want a rare earth mind in my basement because
it's just it's just messy, like toxic. It just makes
you like very sick for like long periods of time
(28:21):
and stuff. So the question is, hey, how do we
bring this back if it's not going to be profitable
because of what China does, and where the heck do
you actually do this at scale? Given the environmental concerns
that are very real on this stuff, But you still
have to do it domestically unless you just don't want
to have a lot of the things that we currently have,
(28:44):
you know, like windshield wipers. We're gonna have a real
shortage of mining engineers in the next decade. Yeah, Colorado
School Minds is going to be like the Avice to Go.
Speaker 3 (28:54):
Did I ever tell you that I have a my
wife has a family member who went there and is
one of like, was one of like three women in
her graduating classes.
Speaker 2 (29:04):
Doesn't it feel like the whole I've never been there myself,
but doesn't it feel like the whole school should be
underground run by the dwarfs from the hobbit. Yeah, sure,
does you know, like Gimli's there with his acts like,
oh you want to make you know you want to
find gems? No, like I want rare earths, oh, rare
earth jet No.
Speaker 3 (29:23):
But perfect example this this young woman who you know
has a career in uh in mining engineering, moved to
Australia four years ago and has been living there since.
Speaker 2 (29:35):
It's just not jobs here in the United States.
Speaker 4 (29:37):
No.
Speaker 3 (29:37):
I mean there are some, but you know, there are
not a ton of jobs to do this in the
United and there's quite a few in Australia.
Speaker 1 (29:42):
Yeah.
Speaker 2 (29:42):
Yeah, Let's take a quick break here and when we
come back, uh, do we want to talk about whether
China is actually buying banned in video chips secretly? Let's
do it. Okay, let's do that when we come back.
Speaker 1 (29:55):
The latest news on inflation, the FED, the economy, and
how the markets are react every morning right here on
the Financial Exchange Radio Network. Text us six one, seven, three, six,
two thirteen eighty five with your comments and questions about
today's show, and let us know what you think about
the stories we are covering. This is the Financial Exchange
(30:16):
Radio Network.
Speaker 4 (30:25):
This year's DAV five K is sold out, but you
can still help.
Speaker 2 (30:30):
Our great American heroes.
Speaker 4 (30:31):
The race is Saturday, November eighth at Castle Island and
you can visit DAV five k dot Boston to make
a donation of any amount.
Speaker 2 (30:39):
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Your gifts help fund free rides to medical appointments for veterans,
and the nation's first dav lead housing initiative providing homes
for single veterans and veteran families. Go to DAV five
k dot Boston and make your donation today.
Speaker 2 (30:57):
Mike, have you ever heard of Megaspeed?
Speaker 4 (31:01):
No?
Speaker 2 (31:02):
Tell me about you this morning? I did, yes. So.
Megaspeed is a Singapore based data center company and they
were going to buy two billion dollars of in Vidia
chips over the next twelve months. Jensen Huang was in.
Speaker 1 (31:22):
Was this.
Speaker 2 (31:22):
It was in Taipei and he was talking to the
CEO of Megaspeed about these chips that they wanted to buy.
And it turns out that the e Commerce Department's actually
been investigating whether Megaspeed is helping companies in China, has
been helping companies in China export sidestep export restrictions on
(31:47):
in Vidia chips. We don't know for sure, but I
have no idea if Megaspeed's doing it.
Speaker 3 (31:52):
I'm pretty sure that some companies out there that are
funneling in Vidia's latest and greatest chips to China.
Speaker 2 (31:58):
Yes, is that fair to say? Yes? Or at least
have been, because now the question is, hey, China has
now recently gone on the record saying we don't want
in Vidio chips coming into China, which part of me
also looks at and says, okay, like do I really
believe that or are they still secretly funneling them in
but just you know, want to have the appearance of no,
we're not going to buy them directly, even though the
(32:20):
US now allows them to at least in the tone
down versions. Yeah. So this is a pretty big report here.
I mean again, it's a four person byline that you
have on this thing. So like, there's a lot of
reporting that went into this, and you know, an awful
lot of background and a lot of specifics on this
(32:42):
that they dug up here, and ultimately it leaves more
questions than answers other than it's pretty apparent that in
Vidio chips have been making their way into China for
the last couple of years, which is something that I
think a lot of people suspected along the way. Anyways.
Speaker 3 (32:59):
Yeah, and if you want to talk about a key
risk to the largest company in the US stock market,
it's China's ability to reverse engineer things. Yeah, and then
their willingness after they have successfully reversed, reverse engineered something,
to flood the market with that product. This is a
story that has been repeated over and over of the
(33:22):
course the last thirty years. You are seeing with cars,
You've seen it with solar panels. None of these are
technologies that were developed in China. They are technologies that
were sold to the Chinese market, and through a number
of different methods, companies there learned how to engineer them
on their own. And I really view that as one
(33:43):
of the key risks to Invidia's future and any latest
and greatest semiconductors future, is not their ability to innovate,
but rather Chinese the Chinese company's ability to replicate and
then flood markets with the product thereafter at a pretty
quick folks. We did our live broadcast at the Financial
(34:03):
Exchange down on the Cape yesterday. It was an awesome event.
Thanks for everyone who attended. We have one more to
go here next Thursday the sixteenth, that's right nearby and
Chestnut Hill, right nearby Boston and Chestnut Hill, Massachusetts, at
the Showcase super Lucks. For anyone that missed it, we
do a live broadcast at the show Following that, we
(34:24):
have lunch and we'll be talking to the crowd there
about our own outlook on this economy, what is really
happening underneath the hood, views on the stock market, and
what one is to do as an investor in today's environment.
Speaker 2 (34:38):
We'd love for you to join us. The event is free.
Speaker 3 (34:40):
It's at the Chestnut Hill Showcase Superlucks and you can
join us by calling eight hundred three nine three four
zero zero one to reserve your spot. We've got plenty
of information online at Armstrong Advisory dot com, but to
register again space limited. It's this coming Thursday, the sixteenth,
Showcase super Lucks, Chestnut Hill, hundred three nine three four
(35:01):
zero zero one.
Speaker 1 (35:03):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial, tax, and estate planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 2 (35:18):
Yesterday, Treasury Secretary Scott Bessett announced an agreement on a
twenty billion dollar Yes thank you swap arrangement with Argentina,
and in addition to that, also announced that the US
has already intervened to at least once by the Argentinian
PESO in order to keep Argentinian markets functioning normally. A
(35:44):
few thoughts on this. The first is, Argentina's markets don't
function normally. They function your badly, and quite honestly, it's
not to say that there's no chance this works out well,
but it's a really slim chance this does just because
the Argentinian economy is a mess, has been a mess,
and is not guaranteed to stay a mess, but has
(36:05):
you know, real uphill clime in order to get to
something approaching respectability and stability. So what's on the line here,
twenty billion dollars? Yeah, yeah, I mean, but it's twenty
billion dollars to support an economy that doesn't matter to
the United States, right, you know, Like it's like, quite honestly,
(36:26):
Argentina is not in the top thirty most important trading
partners of the US. It's probably somewhere in that thirty
to fifty range, and that's you know, significantly less important
than the ones above its.
Speaker 3 (36:42):
I'm just trying to think of what happens if this
does Like, what is the big success if this does
work out?
Speaker 2 (36:47):
What do you get if this works out? Beef love it,
but not twenty billion dollars of it, you know, the
Trump administration. If it doesn't work out, you lose.
Speaker 3 (36:59):
Twenty billion dollars that the US government will not in
any meaningful way recapture.
Speaker 2 (37:03):
No. I mean, look, in the past week and a half,
Argentina's treasury burned through one point eight billion dollars just
to keep their currency afloat. That's no week and a half,
I mean, quite honestly, at that pace, you're talking about
like two months of liquidity that you're providing Argentina.
Speaker 3 (37:19):
The best argument that I can make for doing this,
which hasn't really been made by the current administration, I
don't know why, is you have some ability to counter
Chinese influence in the region, because I do think that
the Chinese would step in and do this instead, and
so I think there's some legitimacy to that argument. But
nobody's really talking about in that context.
Speaker 2 (37:40):
But why Argentina. Yeah, you know, like if you want
to counter Chinese influence in South America, there are other
places that you can look and probably get more bang
for your boss, ell in Mexicano than Argentina. Yeah, like
that's that's the case there. So I hope this works out.
It's it's a gamble, you know, like you're going to
(38:00):
have to see what happens here. But it's dodgy, it's
not without risk, and we'll see what ends up happening.
Quick Break Hour two coming up in a bit
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