December 11, 2025 • 38 mins
Chuck Zodda and Mike Armstrong discuss the Fed's fractured rate cut vote signals trouble ahead for future cuts. Oracle shares tumble as AI spending ramps up. Chuck is stunned by Disney's decision to sell its soul to OpenAI.
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Episode Transcript
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Speaker 1 (00:00):
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(01:07):
and Mike Armstraw.
Speaker 2 (01:11):
Chuck Mike Tucker with you the day after the Federal
Reserve Open Market Committee meeting, and I mean, gosh, we
kind of have to start by talking about that meeting,
in which the Federal Reserve cut interest rates by a
quarter percent. This move was largely expected and so no
(01:32):
real surprises on that front, and the FED funds right
now stands in a range of three and a half
to three point seventy five percent. Beyond that, we did
receive a dot plot the summary of economic projections, and
so we're going to cover that and whether there were
any surprises in there. But I think overall the message
(01:56):
from the Fed is not entirely unexpected, and that it is, Hey,
we're cutting interest rates this time, just as we have
for the previous two meetings, and beyond that, we're not
really committing to doing anything else in the future.
Speaker 3 (02:09):
Yeah, in terms of what's being asked about, the FED
asked about their meeting, you know, listening to the press conference,
it's obviously the highlight is that they cut the rates
this time, but the focus from reporters was on the
dot plot and on the Again, when I say disagreement
at the FED. It is not a hostile type of environment.
(02:30):
But there was a lot of disagreement at the FED
about where rates should be going at this meeting, which
they already decided, and where they're going to go in
twenty twenty six. And so that's where the questions were
directed at this meeting. Especially was Hey, it seems like
there was a fair bit of disagreement. How did that
go and how's that going to evolve in twenty twenty
six when J Powell is no longer leading the Federal Reserve.
Speaker 2 (02:52):
Yeah, and I think look the summary of economic projections
that they put out, it includes projections for the end
of twenty five. Gotta be honest, don't care about them
at this point. They're not relevant. Twenty twenty five's over
five there are there are twenty days left in the year.
Nothing matters for twenty twenty five at this point. What
matters now is what are we going to get in
twenty six? And this is interesting in terms of what
(03:15):
the FED is showing us here. So for change in
real GDP next year, they're projecting two point three percent.
During their September projection, they came in at one point
eight percent. Mike last time I checked, two point three
is higher than one point eight. Is that's still correct?
Speaker 3 (03:30):
Yes? That FED Chair of J. Powell did explain some
of this away, basically saying that, hey, the lost economic
productivity from the government shutdown was going to shift now
into twenty twenty six. Don't know if I buy it,
but that was his argument, is that, yeah, in fact,
we were planning on more like one point nine versus
two point one, and now you know, government shutdown took
some of the oomph out of twenty twenty five and
(03:51):
put it into twenty twenty six instead.
Speaker 2 (03:54):
Sure, unemployment rate they thought in September it was going
to be four point four percent for next year. They
still think it's going to be four point four percent.
Speaker 3 (04:01):
Which is where we are right now.
Speaker 2 (04:03):
Correct. And I think the interesting thing here is that
we've been on a little bit of an uptrend for
unemployment in the last couple of months. The FED is
effectively saying, hey, at some point in twenty twenty six,
that uptrend is going to stop, and if it goes
higher than where it already is, not only is it
going to stop, but it's going to reverse.
Speaker 3 (04:25):
Can we we're going to talk about this more later too.
So I don't know if I'm preempting it, but can
we talk about that point in the context of J.
Powell saying that he doesn't believe the jobs numbers that
have been coming out.
Speaker 2 (04:37):
Yes, because I thought that was one of the more
interesting things that Powell said, Uh, but also fully explainable.
Speaker 3 (04:45):
Okay, So what he said is that they Federal Reserve
members are a little bit concerned that the BLS might
be over counting job creation. We're not talking about like
five hundred jobs here and there, but to the tune
of what was sixty thousand jobs a month for the
last however long. So explain to me what that means,
(05:07):
and I guess my concern would be justifying. Okay, I
think that the unemployment rate's going to stick around four
point four percent, but I also think the job creation
is a lot weaker than what the BLS is telling me.
Speaker 2 (05:19):
So I think when we talk about, you know, the
job creation being weaker than what the BLS is saying, basically,
what he's referencing is these you know, large annual revisions
to the downside that have come through the last couple
of years. Yes, and the fact that you've had these
large annual revisions. By the way, the BLS had has
as of September. I didn't see this, but I saw
(05:40):
it talked about this morning. Actually, the BLS did indicate
in September that they are going to be making some
improvements to how they manage the birth death model throughout
the year in order to hopefully minimize those those those
(06:01):
revisions that happen on an annual basis. So I found
that kind of interesting as well. But basically what Powell
is getting at here is that, look, job growth probably
is weaker than being reported just because it's been weaker
for the last couple of years, and there hasn't been
a turning point in the economy, and generally, you know,
you see those those revisions shift around turning points, so
(06:25):
we haven't seen one there. So I think that that's
kind of what he's getting at on that side. When
it comes to the unemployment rate, I think that the
big piece is, look, what is the size of the
labor force because of the combination of baby boomers retiring
and stricter immigration controls and immigration measures, and so as
(06:48):
a result, do you have a labor force that is
still growing is very much an open question. Right now. Fair,
So continuing through the step, so unemployment they think is
going to be the same as it is now. We'll
get to, you know, whether or not that's a valid
point down the road. Piece of inflation, they're projecting to
(07:09):
be two point four percent next year compared to two
point six percent in September, so the saying is going
to be less inflation next year than anticipated. This The
explanation that I think was largely presented was, you know,
the exceptions to tariffs have been steeper than have been anticipated.
(07:30):
There also have been further negotiations in a couple of
cases to bring them down, and so the thought processes
as long as there is no further upward adjustment in tariffs,
that you can potentially shrug it off as a one
time impact and not something that seeps into the system
and perpetuity to the same degree, I can buy that.
Speaker 3 (07:51):
Specifically, the exceptions piece, yeah, we continue to see that
every day. The grocery items, for example, are the most
recent ones where a whole bunch of items that we
buy every day of the grocery how exempts from tariffs core.
Speaker 2 (08:02):
Two five next year relative to two six. So again
very modest shift there I don't think there's anything huge.
And the FED funds rate they're still projecting to be
at three point four percent next year, meeting one rate
cut being priced in for twenty twenty six. So now
we get to the question, like this is what the
FED thinks. Fed's not always right. They are smarter than us, admittedly,
(08:24):
like they're they're in they they study this stuff all
day every day. They all have PhDs, they all have PhDs.
They have you know, models that they build out to
do this in ways that we do not. But they're
not always right still, and so this is our chance
to you know, we're David with his slingshot being like, hey, Goliath,
(08:45):
you're wrong. And do we think they're wrong? Like, let's
let's ask that question because I think that's a good
starting point out of what they're projecting for next year.
Where are the places where we believe they're most likely
to be wrong?
Speaker 3 (08:57):
My I guess my biggest area of concern would be
the unemployment rates staying exactly where it is right now.
We have seen a trend line here where it's increased
now year over year, by where are we a full
percentage point compared to a year and a half ago,
and so I personally would find it surprising if we
were able to level off at four point four percent
(09:19):
and see no increase from here or no sizeable increase
from here.
Speaker 2 (09:22):
Now, the counter to that, there's two potential counters. Number One,
growth reaccelerates and as a result of that, there is
more demand for labor that pulls the unemployment rate down.
Speaker 3 (09:34):
Yep.
Speaker 2 (09:35):
So if you think that's gonna happen, the question that
you have to ask is where is the growth acceleration
going to come from? The place that I think you
can pausibly get there is The Big Beautiful Bill had
a whole bunch of provisions in it that kicked in
basically next year. You know, some of them were in
effect this year, but they don't pay out until next year,
in things like no tax on tips, no tax on overtime,
(09:58):
increased tax credit, tax deductions for seniors. So potentially you
get more consumer spending coming through starting late in Q
one early in Q two, and then you've also got
some additional depreciation things that are kicking in for next year.
So if there's more capex coming from businesses, then you
can get that additional spend that drives more activity as well.
(10:20):
I think that that is very much possible. The counter
to this is that housing is in the toilet, and
construction for housing is going to get worse next year
most likely.
Speaker 3 (10:32):
Yeah, it doesn't. It doesn't restart immediately either.
Speaker 2 (10:36):
It's not even restart. The reason why housing's going to
get worse next year in all likelihood is prices are
falling in large parts of the country, and next year,
prices are going to be falling in a majority of
the country by the middle of the year. And if
you are a builder, you're not just competing against new homes,
you're competing against existing home stock. If that stuff is cheaper,
(10:57):
it either puts pressure on margins or forces you to
sell fewer units at the same price because you won't
sell the same number of units at the same price,
so you potentially have less construction activity next year. That's
not really a great growth sign. So that's your counter.
The other one, the labor market is teetering, and generally
(11:17):
once we get to this point in the labor market again,
it's been really surprising, quite honestly, that you haven't seen
the acceleration in a worsening that you normally see when
you get to some of these points in the labor market,
does that teetering finally, you know, kind of go over
the edge and the labor market shows a faster weakening. Maybe.
(11:39):
So I think there are viable cases for the economy
improves next year based on more consumer spending and more capex.
There are viable cases for the economy worsening based on
housing worsening in the labor market finally going off the cliff.
And this is the battle that we're going to see,
all against the backdrop of Hey, what's gonna happen with AI?
(12:00):
And so let's take a quick break, and when we
come back, I want to talk about Oracle earnings from
yesterday as it relates to that idea.
Speaker 1 (12:08):
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Speaker 2 (13:07):
Mike. So, yesterday after the Bell Oracle reported their earnings
and the stock is down fourteen percent today. So the
assumption that someone would have is these earnings were a
dumpster fire?
Speaker 3 (13:24):
Is that an accurate description in your opinion? Compared to estimates? No,
not really well. Their cloud sales increase thirty four percent, uh,
their infrastructure business gained sixty eight percent. These were not
far off from the estimates. They were, however, slightly worse
than the estimates. And I think this speaks less to
(13:47):
the actual results and more to investor concern about who
are the actual winners and losers in this AI game.
You have a different you have different take. You think
it's dumb.
Speaker 2 (14:00):
I think the results are borderline terrible.
Speaker 3 (14:04):
Compared to I guess, but compared to analyst estimates, I
don't think they really were.
Speaker 2 (14:09):
The earnings are not the problem, it's everything underlying them.
Do you know what percentage of their revenue for the
quarter they are spending on capex?
Speaker 3 (14:20):
All of it?
Speaker 2 (14:21):
Seventy five?
Speaker 3 (14:23):
Okay?
Speaker 2 (14:24):
Do you know what percentage of revenue for the quarter
they are spending on depreciation for capex they have already
made thirteen point one Michael. This is before you even
account for the dramatic increase in capex that they say
they are going to do going forward, with their revenue
increasing at a much slower rate, they are going to
(14:48):
This is very simple. Their free cash flow is negative
ten billion dollars for the quarter. If they do not
continue to borrow money or increase revenue dramatically, they will
run out of money. Like it's it's that simple. That's
why they're being treated this way. They're like, oh, no,
we've got another one hundred and eighty billion dollars in
future revenue commitments. Great, doesn't matter if you keep spending
(15:11):
ten billion dollars more than you're bringing in every quarter.
Speaker 3 (15:15):
Yeah, and all the uh, like, all the deals they're
negotiating are for twenty twenty seven and beyond and they're.
Speaker 2 (15:20):
With open Ai. Yeah, like two thirds of that future
revenue projection is for a company that we don't even
know is going to be here in two years, you know,
open Ai. The whole promise of them is, hey, they're
the ones with like the best models and the best
erotica for adults and you know, all the stuff that
(15:41):
they're talking about. What if like they're not Like we
just saw Gemini come in and eat open AI's lunch
last week. Granted, open Ai is supposed to be, you know,
in theory releasing a new model in the next week
or two that that counters that. But this is all
expensive and requires more money for a company that already
isn't profit and Oracle has basically committed to saying, yeah,
(16:03):
we want to be, you know, the main provider of
cloud solutions to open Ai. Well, you're doing that right now,
and you're you're you're not really making money on the deal.
And what happens if open Ai isn't what you think
it's going to be in the next couple of years.
Speaker 3 (16:18):
So that's the problem is like there isn't much of
a backup plan. Yeah, they have other customers, but ultimately
open Ai is the one supporting the stock price, and
that's a lot of concentration risk.
Speaker 2 (16:33):
It's it is a hugely risky move. And this is
why despite in the previous quarter everyone looked at all
you've got like three hundred billion in future revenue commitments.
Now like, wow, your stock's gonna pop forty percent. Hey,
you're going for me know, three hundred and forty billion
in future revenue projections to five hundred. Well, you didn't
have the same effect here.
Speaker 3 (16:53):
What could have Oracle said or done in the most
recent quarter that wouldn't have resulted in investors dumping their
stock like they are today. Like, I'm just trying to
think of what shift you could have made here, because
you weren't going to get the revenue any faster. You
have to keep spending the money in order to get
the future contracts. They're in a position here that I
don't really understand how they dig themselves out of, other
(17:15):
than some form of government backstop, like the CFO of
open Ai was talking about.
Speaker 2 (17:21):
There's only one way through, and that is for them
to just plow ahead, cross their fingers and hope that
the revenue's there. It's the only thing they can do
at this point because field the dreams theory again, like
the debts already there, like they already have now you know,
over one hundred billion dollars in debt. You can't just
(17:41):
press the undo button on that. They have one way
out of this, and it is you just gotta go
full speed and I'm gonna take it's gonna go out.
Speaker 3 (17:52):
Takes something here as good news Jack. For months now,
we have been bemoaning the concerns that we have about
the AI industry that everyone is being treated as a winner.
We at least now have one seemingly pretty big loser
at the moment. Again, their stock price is still up
nearly twenty percent for the year, so I don't want
(18:13):
to consider them to, you know, be in death throws.
But you know, what's the stock down since their peak
a few months ago?
Speaker 2 (18:19):
Like half Let me take a look and see where
they were.
Speaker 3 (18:23):
They were at three twenty eight so not.
Speaker 2 (18:25):
No, they were they got up to three forty five,
did they Okay? Yep? So one three forty five. They're
off forty three and a half percent.
Speaker 3 (18:33):
Yeah, So I mean that that's one positive that we'll
take from this. Is not. Everyone that announces a deal
with open AI is being treated like they are going
to rule the world.
Speaker 2 (18:46):
So I think that this is the problem. Like, yeah,
if you look at the current quarter, sir, like nothing
was like that dramatically different. But all of this stuff
underlying it is pointing towards a company that is not
healthy and that at some point is going to have
to address these things. Because you cannot run your free
(19:08):
cash flow at negative ten billion dollars a quarter in
perpetuity and just expect everything to be fine.
Speaker 3 (19:16):
Yeah, at least not if you're Oracle.
Speaker 2 (19:18):
I don't think anyone can. Yeah, I mean, like even
look even Apple, like if it started doing that, it
would run out of money after you know, like nineteen
years or something like that.
Speaker 3 (19:28):
Be a while.
Speaker 2 (19:30):
Let's take a quick break, and when we return, we
got Wall Street.
Speaker 1 (19:33):
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(19:53):
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Speaker 4 (20:01):
One day after the FED delivered it's expected interest rate cut,
markets today are mixed after Oracles disappointing quarterly revenue at
increase spending forecast, fueling deck concerns. Oracle shares are currently
plunging thirteen percent right now. For markets, the Dow is
up nearly one percent higher or four hundred and fifty
(20:23):
one points, SMP five hundreds down nearly two tenths of
one percent, NASDAC down just over seven tenths of a
percent lower one hundred and seventy points, RUSS two thousand
is up about a half a percent, Tenure Treasure Reel
down four basis points at four point one one six percent,
and crude oil down nearly two percent lower, trading a
(20:43):
fifty seven dollars and thirty seven cents of barrel. Other
AI names are all seeing sympathy losses in reaction to
oracles earnings report. Nvidia, Broadcom, and AMD are all falling
three percent at the moment. Speaking of AI, breaking news
involving Disney this morning after the Media and Entertainment Jina
(21:04):
now still we'll make a one billion dollar equity investment
in open Ai. The investment will allow users to make
videos of more than two hundred of Disney's copyright characters
on open AI's video platform. Sora, including Marvel, Marvel, Pixar,
and Star Wars. Disney stock is up over one percent. Meanwhile,
(21:24):
Adobe shares arising nearly two percent after the software provider
said it expects double digit revenue growth next year as
it looks to expand its AI business elsewhere. Eli Lilly
set a late stage trial of its next generation obesity
drug delivered what appears to be the highest weight loss
yet while reducing knee arthritis pain. ELI stock is climbing
(21:47):
three percent, and Coca Cola announced CEO James Quincy will
step down in March and will be replaced by COO
Henrique Braun. Coke stock is down about one percent. I'm
Tucker Silva in that Walltree Watch and remember you can
watch the show live every day on our YouTube page.
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Speaker 2 (22:23):
Just nice to know that Disney just doesn't care about
anything anymore. I was stunned to say, like, why don't
you just like spit on all of your content creators,
Like literally just go and spit on them, because like
this is basically what you just did. Like why would
anyone go work for Disney at this point? I always
thought they would protective of their characters, So I was
(22:46):
really surprised to see this. I I although I'm not
I'm sure Open a Eye is gonna be like, oh,
like we're building protection so that like you can't have
Mickey be heading an elephant or something like that. But
like what you think that people are not going to
figure out how to make all kinds of bad crap
with this using Disney characters? Of course?
Speaker 3 (23:08):
Why yeah, why what does who need this? Who needed this?
And why?
Speaker 4 (23:13):
Because it's AI slop and we're all getting dumber.
Speaker 2 (23:17):
Like I I don't know why we cover companies anymore.
Like if this is all it's gonna be, is just
like giving away all your crap, then what's the point
of even like having a business.
Speaker 3 (23:30):
So this deal that they inked basically they're allowed to
invest in Open Ai for shares of their company along
with uh their.
Speaker 2 (23:40):
Agreement to so like Open Eye is gonna pay Disney
for this fine, But like you just devalued your entire brand. Yeah,
if I don't need to go watch Disney movies in
order to watch Disney characters, what's the point, Like the
whole thing's gone, that's it. You'd like, you're done, it's over. Well,
(24:08):
if if I can make my own Disney movie, why
do I need to go see a Disney movie?
Speaker 3 (24:14):
I guess I would argue that nobody's seeing Disney movies now,
so what someone is, Mike, let's not say that no
one's Yeah, but like maybe that's the point that they
are making. I'm not willing to say that Disney's as
a company as an entity is dead and their creative
departments are over based on this deal.
Speaker 2 (24:31):
But why would I go work for this company? They
just licensed all of the stuff I do to the
general public and I don't get anything from that. Why
would I go make any movies.
Speaker 3 (24:42):
For Disney because all the other companies are going to
do it too, That's my only guess, Like, why would
I go work for Disney because my employer's doing the
exact same thing or they're already doing.
Speaker 2 (24:53):
This is why no one's going to work in this industry,
Like they are killing their business. This is the what
the point I just made. Yeah, like anyone who dreams
of working in film is going to say, no, this
is stupid and they're just not going to do it.
Speaker 3 (25:08):
And here's the logical piece to me too. It maybe
maybe I am missing this, but did you saw the
stuff about the Norwegian McDonald's commercial?
Speaker 2 (25:21):
Oh? Was this the one that McDonald's had to poll
because I generated? Yes? Yeah, people don't like this stuff.
Speaker 3 (25:26):
People hate it. And so what exactly are you trying
to accomplish here? Because every time somebody, any company has
tried to release an AI generated advertisement or pretty much
anything else, it's gotten very poor reception from customers. The
McDonald's commercial I watched it. It was stupid. Yeah, it
(25:48):
was dumb, Like it was dumb. It was very cheap
to create, no doubt, but it was poorly received. And
so what makes you think that licensing your characters to
open a eye is going to result in anything different?
The only stuff that's going to be popular is stuff
that you don't want to see your characters doing.
Speaker 2 (26:08):
Correct, it's going to be oh like I don't even know,
it's not going to be good. Yeah, And and again
it's it's two different, two things where like, yes, no
one wants to see this, but everyone's just gonna make
the dumb stuff and that's what you're going to get
and there's no revenue in that, so you're you're simultaneously
(26:29):
killing your own ip and no one's going to watch
the new stuff. Like the entire thing just doesn't mean anything.
You used to have to go if again, like just
from my own life and everything. When I was a kid,
Looney Tunes. Looney Tunes was Disney.
Speaker 3 (26:48):
Right, No, Warner Brothers, Yeah.
Speaker 2 (26:51):
Okay, whatever, Looney Tunes. Let's say that Warner Brothers did this,
which they got enough of their own stuff going on
right now, so let's uh let them get through there.
But let's say that they do a deal like this.
It used to be I'd have to sit down on
my couch and watch Looney Tunes on TV and I'd
get whatever it is. Now it's different. I could go
on YouTube, and I'm sure I could go to the
Looney Tunes YouTube channel and I could watch Bugs, Bunny
(27:14):
and Elmer Fudd and all of them do all their
things great, but I still have to go through them.
And the ad revenue that they generate from that goes
to Warner Brothers and so on and so on. If
my friend Jim goes and makes you know, Elmer Fudd
chasing I don't know, like a crocodile around with a
(27:36):
saw and sends it to me personally, there's nothing like
there's no commerce there, and I don't need to go
anywhere for my fix anymore.
Speaker 3 (27:45):
I'm I'm less concerned about the commerce side of things
because I think eventually look open Aye is not licensing
this content so that they can permanently provide it to
everyone for free. That would be my take is that
they're going to plan to monetize it at some point.
My point, as you are worsening your product, cheapening your
product and private sharing though, Like so let's say no,
(28:09):
but they can monetize the creation.
Speaker 2 (28:10):
Of it, okay, But then, like, what what are you
gonna do after that? Like, it's not a DVD. You
can't be like, well, you have to have the express
written consent of Bob no oh.
Speaker 4 (28:22):
The big FBI warning at the beginning of the video,
you know, like don't.
Speaker 2 (28:26):
Top this video, Like okay, Like what are you gonna do?
Have that at the beginning of every video that you
send via text message? I mean I was literally Just
as an example, I'm on a group text chain that
yesterday one of my friends was sending videos of us
based on pictures that we have taken over the last
few years. There's no disclaimer, there's no disclosure. It's just like, hey, like,
(28:51):
here's what's going on, Like, this is one of your
houses on fire, this is one of your dogs biting
another person, Like, and what are you going to do
with this? And Disney things that can control this? You
want to try to ride that tiger? I like, I
(29:11):
can't say how dumb I think this is.
Speaker 3 (29:13):
Yeah, I'm trying to figure out in my mind why
you go and do this? And I think the answer
is we can't control.
Speaker 2 (29:21):
We're short sighted, and we think it'll make us money.
Speaker 3 (29:24):
So if I'm going to be the most optimistic about it,
it is this. We can't control it anyway, Yeah, chat GPT,
if we want to sue them for creating this stuff,
then we might be successful there, but fifteen other video
generation companies that aren't controlled by US authorities and we
have no ability to take down the content are going
to crop up next to it, and so we might
(29:45):
as well make some money while we can because otherwise everyone,
you know, every video generator you're out there, is going
to create you know, fake Bluey videos, fake Mickey Mouse videos. Anyway,
at least we're going to license some money out of this,
and you know, for some legitimate company out there. That's
my most optimistic view of this is, hey, we're screwed anyway,
(30:06):
so let's get some money in the meantime.
Speaker 2 (30:09):
And it continues to push me towards the point where
it's like this might kill the Internet. Like it really,
I don't think we're ready for what's coming the next
five years. I don't think we are. And I just
I can't see this ending. Well, what else did you
talk about there, Tucker? There was something else that caught
(30:29):
my ear?
Speaker 4 (30:30):
Oh geez, hold on, Eli, Lily, No, that's good, a Doobe.
Speaker 2 (30:37):
No, that's fine. It was just this.
Speaker 3 (30:40):
Let's take a break.
Speaker 2 (30:41):
Yeah, let's take a break and see if we can.
Speaker 3 (30:44):
Chuck's gotta cool off, take a cold bath. Chuck Disney's
the one who needs to take a cold bath. They
just sold their company for like pennies on the dollar. Basically, Yeah, Like,
I just I don't.
Speaker 2 (30:57):
Know why people think they can control this. They can't.
And the only way to deal with it is to
have zero tolerance for losing your IP and Disney just
did the exact opposite, and I don't know what they're
gonna do. Let's take a quick break. When we come back,
we'll talk about uh, let's see, oh, oil takers and
(31:21):
the reflation trade.
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Speaker 4 (31:54):
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Speaker 2 (32:09):
Mike, before we move on to talk about oil tankers,
I have one more AI thing I need to say.
Hit me. Did you happen to see the what is now?
Irrelevant Time magazine cover for their Person of the Year
for this year that was announced this morning. No, it's
(32:30):
the architects of AI. And are you you remember the
picture from I don't know the year, but like nineteen tens,
nineteen twenties of all of the construction workers sitting having
lunch on the ibeam above New York City. Sure they
took that iconic picture of young men risking their lives
for very little pay to go and build great things
(32:52):
and replaced it with eight tech CEOs like on their
phones and laptops sitting up there, probably using AI to
make it.
Speaker 3 (33:01):
Almost undoubtedly based on this picture that I'm looking at, And.
Speaker 2 (33:04):
I just can't think of anything like more on the
nose than a completely irrelevant magazine that I don't think
even publishes a print version anymore. Is that correct? As
far as I know, I believe they stopped publishing their
print version several years ago, using tools that could help
to destroy that magazine's you know, reach even further to
(33:27):
promote a group of billionaires who are basically racing a
ticking debt clock, to try to create technology to allow
companies to replace workers.
Speaker 3 (33:41):
And they probably trained themselves on a bunch of times
content over the years.
Speaker 2 (33:44):
Probably probably already ripped off their ip. I mean, man, like,
doesn't it just feel like like there's just a vampire
like grabbing it our neck the entire time? Now?
Speaker 3 (33:59):
No, but we do seemingly have an infatuation with glorifying
billionaire tech CEOs that I cannot wrap my head around.
Speaker 2 (34:06):
Like I I just don't get it. I just don't
get it. But that's just me.
Speaker 4 (34:14):
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Speaker 3 (35:25):
I stand corrected by the way, Chuck, Time magazine apparently
does still publish a print version of itself, which.
Speaker 2 (35:32):
Was this It was a newsweek that stopped publishing.
Speaker 3 (35:35):
Recently, right, I can't recall.
Speaker 2 (35:37):
I think it might have been Newsweek. But in any case,
I would imagine that the circulation for Time is a
little smaller than it used to be.
Speaker 3 (35:46):
During the second half of two thousand and nine, they
saw giant declines twenty twelve at circulated three point three million.
By twenty twenty four, you were talking about one million
for combined print and digital back in twenty twenty four.
Speaker 2 (36:04):
So yeah, but exactly is a digital magazine.
Speaker 3 (36:09):
Not something you would want to read, Yeah, uh, US
seas US season is oil tanker off the Venezuela coast.
Speaker 2 (36:18):
It is. It was unclear at the time exactly which
vessel this was, and now appears that it is known
as the Skipper, which again has been involved in a number.
Speaker 3 (36:30):
Really cute name for a boat that ships oil between
Venezuela and Iran.
Speaker 2 (36:35):
Yeah, it's been. It's been involved reportedly in a number
of different transactions involving oil that has been sanctioned in
the last several years. Oil market's not really paying much
attention to this.
Speaker 3 (36:51):
I want to bring this up right, Jack. We have
a massive you know, oil sanctioned, the seizure of an
oil vest the President toted as the largest one ever seized,
and oil prices are down nearly two percent today. I
know there's other stuff going on, specifically the Russia Ukraine
deal that's being debated, but just kind of fascinating that
(37:15):
you have this happening. An oil price is moving down
sharply today.
Speaker 2 (37:18):
So I don't know what to make of this. As
far as you know exactly where things go from.
Speaker 3 (37:24):
Here, I think we can view it as an escalation
in the US Venezuela tension.
Speaker 2 (37:30):
Yeah, it sure seems like something's going to happen there,
like something further. I don't know exactly what form it
takes or the timing in this and that, but it
sure seems like things are heading in that direction.
Speaker 3 (37:40):
Especially now that what's I'm sorry, who's the Nobel Prize winner.
I have no idea the Venezuelan opposition leaders now out
of the country. It seems like that's maybe opened a
door for the Trump administration to escalate further.
Speaker 2 (37:52):
So, look, this potentially has you know, big global geopolitical ramifications,
just because when you look at where Venezuela tends to
ex sport oil too, tends to be places that we're
not huge fans of necessarily, you know, places like China
and so on and so forth, and so you do wonder, hey,
is there another you know, shoot a drop that potentially
(38:14):
could influence geopolitics further? But at this point, nothing you know,
moving beyond what we know today. Quick break here and
when we come back, we got out of two coming
up
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(01:07):
and Mike Armstraw.
Speaker 2 (01:11):
Chuck Mike Tucker with you the day after the Federal
Reserve Open Market Committee meeting, and I mean, gosh, we
kind of have to start by talking about that meeting,
in which the Federal Reserve cut interest rates by a
quarter percent. This move was largely expected and so no
(01:32):
real surprises on that front, and the FED funds right
now stands in a range of three and a half
to three point seventy five percent. Beyond that, we did
receive a dot plot the summary of economic projections, and
so we're going to cover that and whether there were
any surprises in there. But I think overall the message
(01:56):
from the Fed is not entirely unexpected, and that it is, Hey,
we're cutting interest rates this time, just as we have
for the previous two meetings, and beyond that, we're not
really committing to doing anything else in the future.
Speaker 3 (02:09):
Yeah, in terms of what's being asked about, the FED
asked about their meeting, you know, listening to the press conference,
it's obviously the highlight is that they cut the rates
this time, but the focus from reporters was on the
dot plot and on the Again, when I say disagreement
at the FED. It is not a hostile type of environment.
(02:30):
But there was a lot of disagreement at the FED
about where rates should be going at this meeting, which
they already decided, and where they're going to go in
twenty twenty six. And so that's where the questions were
directed at this meeting. Especially was Hey, it seems like
there was a fair bit of disagreement. How did that
go and how's that going to evolve in twenty twenty
six when J Powell is no longer leading the Federal Reserve.
Speaker 2 (02:52):
Yeah, and I think look the summary of economic projections
that they put out, it includes projections for the end
of twenty five. Gotta be honest, don't care about them
at this point. They're not relevant. Twenty twenty five's over
five there are there are twenty days left in the year.
Nothing matters for twenty twenty five at this point. What
matters now is what are we going to get in
twenty six? And this is interesting in terms of what
(03:15):
the FED is showing us here. So for change in
real GDP next year, they're projecting two point three percent.
During their September projection, they came in at one point
eight percent. Mike last time I checked, two point three
is higher than one point eight. Is that's still correct?
Speaker 3 (03:30):
Yes? That FED Chair of J. Powell did explain some
of this away, basically saying that, hey, the lost economic
productivity from the government shutdown was going to shift now
into twenty twenty six. Don't know if I buy it,
but that was his argument, is that, yeah, in fact,
we were planning on more like one point nine versus
two point one, and now you know, government shutdown took
some of the oomph out of twenty twenty five and
(03:51):
put it into twenty twenty six instead.
Speaker 2 (03:54):
Sure, unemployment rate they thought in September it was going
to be four point four percent for next year. They
still think it's going to be four point four percent.
Speaker 3 (04:01):
Which is where we are right now.
Speaker 2 (04:03):
Correct. And I think the interesting thing here is that
we've been on a little bit of an uptrend for
unemployment in the last couple of months. The FED is
effectively saying, hey, at some point in twenty twenty six,
that uptrend is going to stop, and if it goes
higher than where it already is, not only is it
going to stop, but it's going to reverse.
Speaker 3 (04:25):
Can we we're going to talk about this more later too.
So I don't know if I'm preempting it, but can
we talk about that point in the context of J.
Powell saying that he doesn't believe the jobs numbers that
have been coming out.
Speaker 2 (04:37):
Yes, because I thought that was one of the more
interesting things that Powell said, Uh, but also fully explainable.
Speaker 3 (04:45):
Okay, So what he said is that they Federal Reserve
members are a little bit concerned that the BLS might
be over counting job creation. We're not talking about like
five hundred jobs here and there, but to the tune
of what was sixty thousand jobs a month for the
last however long. So explain to me what that means,
(05:07):
and I guess my concern would be justifying. Okay, I
think that the unemployment rate's going to stick around four
point four percent, but I also think the job creation
is a lot weaker than what the BLS is telling me.
Speaker 2 (05:19):
So I think when we talk about, you know, the
job creation being weaker than what the BLS is saying, basically,
what he's referencing is these you know, large annual revisions
to the downside that have come through the last couple
of years. Yes, and the fact that you've had these
large annual revisions. By the way, the BLS had has
as of September. I didn't see this, but I saw
(05:40):
it talked about this morning. Actually, the BLS did indicate
in September that they are going to be making some
improvements to how they manage the birth death model throughout
the year in order to hopefully minimize those those those
(06:01):
revisions that happen on an annual basis. So I found
that kind of interesting as well. But basically what Powell
is getting at here is that, look, job growth probably
is weaker than being reported just because it's been weaker
for the last couple of years, and there hasn't been
a turning point in the economy, and generally, you know,
you see those those revisions shift around turning points, so
(06:25):
we haven't seen one there. So I think that that's
kind of what he's getting at on that side. When
it comes to the unemployment rate, I think that the
big piece is, look, what is the size of the
labor force because of the combination of baby boomers retiring
and stricter immigration controls and immigration measures, and so as
(06:48):
a result, do you have a labor force that is
still growing is very much an open question. Right now. Fair,
So continuing through the step, so unemployment they think is
going to be the same as it is now. We'll
get to, you know, whether or not that's a valid
point down the road. Piece of inflation, they're projecting to
(07:09):
be two point four percent next year compared to two
point six percent in September, so the saying is going
to be less inflation next year than anticipated. This The
explanation that I think was largely presented was, you know,
the exceptions to tariffs have been steeper than have been anticipated.
(07:30):
There also have been further negotiations in a couple of
cases to bring them down, and so the thought processes
as long as there is no further upward adjustment in tariffs,
that you can potentially shrug it off as a one
time impact and not something that seeps into the system
and perpetuity to the same degree, I can buy that.
Speaker 3 (07:51):
Specifically, the exceptions piece, yeah, we continue to see that
every day. The grocery items, for example, are the most
recent ones where a whole bunch of items that we
buy every day of the grocery how exempts from tariffs core.
Speaker 2 (08:02):
Two five next year relative to two six. So again
very modest shift there I don't think there's anything huge.
And the FED funds rate they're still projecting to be
at three point four percent next year, meeting one rate
cut being priced in for twenty twenty six. So now
we get to the question, like this is what the
FED thinks. Fed's not always right. They are smarter than us, admittedly,
(08:24):
like they're they're in they they study this stuff all
day every day. They all have PhDs, they all have PhDs.
They have you know, models that they build out to
do this in ways that we do not. But they're
not always right still, and so this is our chance
to you know, we're David with his slingshot being like, hey, Goliath,
(08:45):
you're wrong. And do we think they're wrong? Like, let's
let's ask that question because I think that's a good
starting point out of what they're projecting for next year.
Where are the places where we believe they're most likely
to be wrong?
Speaker 3 (08:57):
My I guess my biggest area of concern would be
the unemployment rates staying exactly where it is right now.
We have seen a trend line here where it's increased
now year over year, by where are we a full
percentage point compared to a year and a half ago,
and so I personally would find it surprising if we
were able to level off at four point four percent
(09:19):
and see no increase from here or no sizeable increase
from here.
Speaker 2 (09:22):
Now, the counter to that, there's two potential counters. Number One,
growth reaccelerates and as a result of that, there is
more demand for labor that pulls the unemployment rate down.
Speaker 3 (09:34):
Yep.
Speaker 2 (09:35):
So if you think that's gonna happen, the question that
you have to ask is where is the growth acceleration
going to come from? The place that I think you
can pausibly get there is The Big Beautiful Bill had
a whole bunch of provisions in it that kicked in
basically next year. You know, some of them were in
effect this year, but they don't pay out until next year,
in things like no tax on tips, no tax on overtime,
(09:58):
increased tax credit, tax deductions for seniors. So potentially you
get more consumer spending coming through starting late in Q
one early in Q two, and then you've also got
some additional depreciation things that are kicking in for next year.
So if there's more capex coming from businesses, then you
can get that additional spend that drives more activity as well.
(10:20):
I think that that is very much possible. The counter
to this is that housing is in the toilet, and
construction for housing is going to get worse next year
most likely.
Speaker 3 (10:32):
Yeah, it doesn't. It doesn't restart immediately either.
Speaker 2 (10:36):
It's not even restart. The reason why housing's going to
get worse next year in all likelihood is prices are
falling in large parts of the country, and next year,
prices are going to be falling in a majority of
the country by the middle of the year. And if
you are a builder, you're not just competing against new homes,
you're competing against existing home stock. If that stuff is cheaper,
(10:57):
it either puts pressure on margins or forces you to
sell fewer units at the same price because you won't
sell the same number of units at the same price,
so you potentially have less construction activity next year. That's
not really a great growth sign. So that's your counter.
The other one, the labor market is teetering, and generally
(11:17):
once we get to this point in the labor market again,
it's been really surprising, quite honestly, that you haven't seen
the acceleration in a worsening that you normally see when
you get to some of these points in the labor market,
does that teetering finally, you know, kind of go over
the edge and the labor market shows a faster weakening. Maybe.
(11:39):
So I think there are viable cases for the economy
improves next year based on more consumer spending and more capex.
There are viable cases for the economy worsening based on
housing worsening in the labor market finally going off the cliff.
And this is the battle that we're going to see,
all against the backdrop of Hey, what's gonna happen with AI?
(12:00):
And so let's take a quick break, and when we
come back, I want to talk about Oracle earnings from
yesterday as it relates to that idea.
Speaker 1 (12:08):
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Speaker 2 (13:07):
Mike. So, yesterday after the Bell Oracle reported their earnings
and the stock is down fourteen percent today. So the
assumption that someone would have is these earnings were a
dumpster fire?
Speaker 3 (13:24):
Is that an accurate description in your opinion? Compared to estimates? No,
not really well. Their cloud sales increase thirty four percent, uh,
their infrastructure business gained sixty eight percent. These were not
far off from the estimates. They were, however, slightly worse
than the estimates. And I think this speaks less to
(13:47):
the actual results and more to investor concern about who
are the actual winners and losers in this AI game.
You have a different you have different take. You think
it's dumb.
Speaker 2 (14:00):
I think the results are borderline terrible.
Speaker 3 (14:04):
Compared to I guess, but compared to analyst estimates, I
don't think they really were.
Speaker 2 (14:09):
The earnings are not the problem, it's everything underlying them.
Do you know what percentage of their revenue for the
quarter they are spending on capex?
Speaker 3 (14:20):
All of it?
Speaker 2 (14:21):
Seventy five?
Speaker 3 (14:23):
Okay?
Speaker 2 (14:24):
Do you know what percentage of revenue for the quarter
they are spending on depreciation for capex they have already
made thirteen point one Michael. This is before you even
account for the dramatic increase in capex that they say
they are going to do going forward, with their revenue
increasing at a much slower rate, they are going to
(14:48):
This is very simple. Their free cash flow is negative
ten billion dollars for the quarter. If they do not
continue to borrow money or increase revenue dramatically, they will
run out of money. Like it's it's that simple. That's
why they're being treated this way. They're like, oh, no,
we've got another one hundred and eighty billion dollars in
future revenue commitments. Great, doesn't matter if you keep spending
(15:11):
ten billion dollars more than you're bringing in every quarter.
Speaker 3 (15:15):
Yeah, and all the uh, like, all the deals they're
negotiating are for twenty twenty seven and beyond and they're.
Speaker 2 (15:20):
With open Ai. Yeah, like two thirds of that future
revenue projection is for a company that we don't even
know is going to be here in two years, you know,
open Ai. The whole promise of them is, hey, they're
the ones with like the best models and the best
erotica for adults and you know, all the stuff that
(15:41):
they're talking about. What if like they're not Like we
just saw Gemini come in and eat open AI's lunch
last week. Granted, open Ai is supposed to be, you know,
in theory releasing a new model in the next week
or two that that counters that. But this is all
expensive and requires more money for a company that already
isn't profit and Oracle has basically committed to saying, yeah,
(16:03):
we want to be, you know, the main provider of
cloud solutions to open Ai. Well, you're doing that right now,
and you're you're you're not really making money on the deal.
And what happens if open Ai isn't what you think
it's going to be in the next couple of years.
Speaker 3 (16:18):
So that's the problem is like there isn't much of
a backup plan. Yeah, they have other customers, but ultimately
open Ai is the one supporting the stock price, and
that's a lot of concentration risk.
Speaker 2 (16:33):
It's it is a hugely risky move. And this is
why despite in the previous quarter everyone looked at all
you've got like three hundred billion in future revenue commitments.
Now like, wow, your stock's gonna pop forty percent. Hey,
you're going for me know, three hundred and forty billion
in future revenue projections to five hundred. Well, you didn't
have the same effect here.
Speaker 3 (16:53):
What could have Oracle said or done in the most
recent quarter that wouldn't have resulted in investors dumping their
stock like they are today. Like, I'm just trying to
think of what shift you could have made here, because
you weren't going to get the revenue any faster. You
have to keep spending the money in order to get
the future contracts. They're in a position here that I
don't really understand how they dig themselves out of, other
(17:15):
than some form of government backstop, like the CFO of
open Ai was talking about.
Speaker 2 (17:21):
There's only one way through, and that is for them
to just plow ahead, cross their fingers and hope that
the revenue's there. It's the only thing they can do
at this point because field the dreams theory again, like
the debts already there, like they already have now you know,
over one hundred billion dollars in debt. You can't just
(17:41):
press the undo button on that. They have one way
out of this, and it is you just gotta go
full speed and I'm gonna take it's gonna go out.
Speaker 3 (17:52):
Takes something here as good news Jack. For months now,
we have been bemoaning the concerns that we have about
the AI industry that everyone is being treated as a winner.
We at least now have one seemingly pretty big loser
at the moment. Again, their stock price is still up
nearly twenty percent for the year, so I don't want
(18:13):
to consider them to, you know, be in death throws.
But you know, what's the stock down since their peak
a few months ago?
Speaker 2 (18:19):
Like half Let me take a look and see where
they were.
Speaker 3 (18:23):
They were at three twenty eight so not.
Speaker 2 (18:25):
No, they were they got up to three forty five,
did they Okay? Yep? So one three forty five. They're
off forty three and a half percent.
Speaker 3 (18:33):
Yeah, So I mean that that's one positive that we'll
take from this. Is not. Everyone that announces a deal
with open AI is being treated like they are going
to rule the world.
Speaker 2 (18:46):
So I think that this is the problem. Like, yeah,
if you look at the current quarter, sir, like nothing
was like that dramatically different. But all of this stuff
underlying it is pointing towards a company that is not
healthy and that at some point is going to have
to address these things. Because you cannot run your free
(19:08):
cash flow at negative ten billion dollars a quarter in
perpetuity and just expect everything to be fine.
Speaker 3 (19:16):
Yeah, at least not if you're Oracle.
Speaker 2 (19:18):
I don't think anyone can. Yeah, I mean, like even
look even Apple, like if it started doing that, it
would run out of money after you know, like nineteen
years or something like that.
Speaker 3 (19:28):
Be a while.
Speaker 2 (19:30):
Let's take a quick break, and when we return, we
got Wall Street.
Speaker 1 (19:33):
Watch 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
(19:53):
Wall Street Watch a complete book and what's moving market
so far today right here on the Financial Exchange Radio Network.
Speaker 4 (20:01):
One day after the FED delivered it's expected interest rate cut,
markets today are mixed after Oracles disappointing quarterly revenue at
increase spending forecast, fueling deck concerns. Oracle shares are currently
plunging thirteen percent right now. For markets, the Dow is
up nearly one percent higher or four hundred and fifty
(20:23):
one points, SMP five hundreds down nearly two tenths of
one percent, NASDAC down just over seven tenths of a
percent lower one hundred and seventy points, RUSS two thousand
is up about a half a percent, Tenure Treasure Reel
down four basis points at four point one one six percent,
and crude oil down nearly two percent lower, trading a
(20:43):
fifty seven dollars and thirty seven cents of barrel. Other
AI names are all seeing sympathy losses in reaction to
oracles earnings report. Nvidia, Broadcom, and AMD are all falling
three percent at the moment. Speaking of AI, breaking news
involving Disney this morning after the Media and Entertainment Jina
(21:04):
now still we'll make a one billion dollar equity investment
in open Ai. The investment will allow users to make
videos of more than two hundred of Disney's copyright characters
on open AI's video platform. Sora, including Marvel, Marvel, Pixar,
and Star Wars. Disney stock is up over one percent. Meanwhile,
(21:24):
Adobe shares arising nearly two percent after the software provider
said it expects double digit revenue growth next year as
it looks to expand its AI business elsewhere. Eli Lilly
set a late stage trial of its next generation obesity
drug delivered what appears to be the highest weight loss
yet while reducing knee arthritis pain. ELI stock is climbing
(21:47):
three percent, and Coca Cola announced CEO James Quincy will
step down in March and will be replaced by COO
Henrique Braun. Coke stock is down about one percent. I'm
Tucker Silva in that Walltree Watch and remember you can
watch the show live every day on our YouTube page.
Weill of breaking business news, and all of our content
(22:08):
is also archived, so if you want to go back
and see an interview or a discussion about a specific topic,
it's all there. With the click of a button. Just
searts the Financial Exchange on YouTube and hit that subscribe button.
Speaker 2 (22:23):
Just nice to know that Disney just doesn't care about
anything anymore. I was stunned to say, like, why don't
you just like spit on all of your content creators,
Like literally just go and spit on them, because like
this is basically what you just did. Like why would
anyone go work for Disney at this point? I always
thought they would protective of their characters, So I was
(22:46):
really surprised to see this. I I although I'm not
I'm sure Open a Eye is gonna be like, oh,
like we're building protection so that like you can't have
Mickey be heading an elephant or something like that. But
like what you think that people are not going to
figure out how to make all kinds of bad crap
with this using Disney characters? Of course?
Speaker 3 (23:08):
Why yeah, why what does who need this? Who needed this?
And why?
Speaker 4 (23:13):
Because it's AI slop and we're all getting dumber.
Speaker 2 (23:17):
Like I I don't know why we cover companies anymore.
Like if this is all it's gonna be, is just
like giving away all your crap, then what's the point
of even like having a business.
Speaker 3 (23:30):
So this deal that they inked basically they're allowed to
invest in Open Ai for shares of their company along
with uh their.
Speaker 2 (23:40):
Agreement to so like Open Eye is gonna pay Disney
for this fine, But like you just devalued your entire brand. Yeah,
if I don't need to go watch Disney movies in
order to watch Disney characters, what's the point, Like the
whole thing's gone, that's it. You'd like, you're done, it's over. Well,
(24:08):
if if I can make my own Disney movie, why
do I need to go see a Disney movie?
Speaker 3 (24:14):
I guess I would argue that nobody's seeing Disney movies now,
so what someone is, Mike, let's not say that no
one's Yeah, but like maybe that's the point that they
are making. I'm not willing to say that Disney's as
a company as an entity is dead and their creative
departments are over based on this deal.
Speaker 2 (24:31):
But why would I go work for this company? They
just licensed all of the stuff I do to the
general public and I don't get anything from that. Why
would I go make any movies.
Speaker 3 (24:42):
For Disney because all the other companies are going to
do it too, That's my only guess, Like, why would
I go work for Disney because my employer's doing the
exact same thing or they're already doing.
Speaker 2 (24:53):
This is why no one's going to work in this industry,
Like they are killing their business. This is the what
the point I just made. Yeah, like anyone who dreams
of working in film is going to say, no, this
is stupid and they're just not going to do it.
Speaker 3 (25:08):
And here's the logical piece to me too. It maybe
maybe I am missing this, but did you saw the
stuff about the Norwegian McDonald's commercial?
Speaker 2 (25:21):
Oh? Was this the one that McDonald's had to poll
because I generated? Yes? Yeah, people don't like this stuff.
Speaker 3 (25:26):
People hate it. And so what exactly are you trying
to accomplish here? Because every time somebody, any company has
tried to release an AI generated advertisement or pretty much
anything else, it's gotten very poor reception from customers. The
McDonald's commercial I watched it. It was stupid. Yeah, it
(25:48):
was dumb, Like it was dumb. It was very cheap
to create, no doubt, but it was poorly received. And
so what makes you think that licensing your characters to
open a eye is going to result in anything different?
The only stuff that's going to be popular is stuff
that you don't want to see your characters doing.
Speaker 2 (26:08):
Correct, it's going to be oh like I don't even know,
it's not going to be good. Yeah, And and again
it's it's two different, two things where like, yes, no
one wants to see this, but everyone's just gonna make
the dumb stuff and that's what you're going to get
and there's no revenue in that, so you're you're simultaneously
(26:29):
killing your own ip and no one's going to watch
the new stuff. Like the entire thing just doesn't mean anything.
You used to have to go if again, like just
from my own life and everything. When I was a kid,
Looney Tunes. Looney Tunes was Disney.
Speaker 3 (26:48):
Right, No, Warner Brothers, Yeah.
Speaker 2 (26:51):
Okay, whatever, Looney Tunes. Let's say that Warner Brothers did this,
which they got enough of their own stuff going on
right now, so let's uh let them get through there.
But let's say that they do a deal like this.
It used to be I'd have to sit down on
my couch and watch Looney Tunes on TV and I'd
get whatever it is. Now it's different. I could go
on YouTube, and I'm sure I could go to the
Looney Tunes YouTube channel and I could watch Bugs, Bunny
(27:14):
and Elmer Fudd and all of them do all their
things great, but I still have to go through them.
And the ad revenue that they generate from that goes
to Warner Brothers and so on and so on. If
my friend Jim goes and makes you know, Elmer Fudd
chasing I don't know, like a crocodile around with a
(27:36):
saw and sends it to me personally, there's nothing like
there's no commerce there, and I don't need to go
anywhere for my fix anymore.
Speaker 3 (27:45):
I'm I'm less concerned about the commerce side of things
because I think eventually look open Aye is not licensing
this content so that they can permanently provide it to
everyone for free. That would be my take is that
they're going to plan to monetize it at some point.
My point, as you are worsening your product, cheapening your
product and private sharing though, Like so let's say no,
(28:09):
but they can monetize the creation.
Speaker 2 (28:10):
Of it, okay, But then, like, what what are you
gonna do after that? Like, it's not a DVD. You
can't be like, well, you have to have the express
written consent of Bob no oh.
Speaker 4 (28:22):
The big FBI warning at the beginning of the video,
you know, like don't.
Speaker 2 (28:26):
Top this video, Like okay, Like what are you gonna do?
Have that at the beginning of every video that you
send via text message? I mean I was literally Just
as an example, I'm on a group text chain that
yesterday one of my friends was sending videos of us
based on pictures that we have taken over the last
few years. There's no disclaimer, there's no disclosure. It's just like, hey, like,
(28:51):
here's what's going on, Like, this is one of your
houses on fire, this is one of your dogs biting
another person, Like, and what are you going to do
with this? And Disney things that can control this? You
want to try to ride that tiger? I like, I
(29:11):
can't say how dumb I think this is.
Speaker 3 (29:13):
Yeah, I'm trying to figure out in my mind why
you go and do this? And I think the answer
is we can't control.
Speaker 2 (29:21):
We're short sighted, and we think it'll make us money.
Speaker 3 (29:24):
So if I'm going to be the most optimistic about it,
it is this. We can't control it anyway, Yeah, chat GPT,
if we want to sue them for creating this stuff,
then we might be successful there, but fifteen other video
generation companies that aren't controlled by US authorities and we
have no ability to take down the content are going
to crop up next to it, and so we might
(29:45):
as well make some money while we can because otherwise everyone,
you know, every video generator you're out there, is going
to create you know, fake Bluey videos, fake Mickey Mouse videos. Anyway,
at least we're going to license some money out of this,
and you know, for some legitimate company out there. That's
my most optimistic view of this is, hey, we're screwed anyway,
(30:06):
so let's get some money in the meantime.
Speaker 2 (30:09):
And it continues to push me towards the point where
it's like this might kill the Internet. Like it really,
I don't think we're ready for what's coming the next
five years. I don't think we are. And I just
I can't see this ending. Well, what else did you
talk about there, Tucker? There was something else that caught
(30:29):
my ear?
Speaker 4 (30:30):
Oh geez, hold on, Eli, Lily, No, that's good, a Doobe.
Speaker 2 (30:37):
No, that's fine. It was just this.
Speaker 3 (30:40):
Let's take a break.
Speaker 2 (30:41):
Yeah, let's take a break and see if we can.
Speaker 3 (30:44):
Chuck's gotta cool off, take a cold bath. Chuck Disney's
the one who needs to take a cold bath. They
just sold their company for like pennies on the dollar. Basically, Yeah, Like,
I just I don't.
Speaker 2 (30:57):
Know why people think they can control this. They can't.
And the only way to deal with it is to
have zero tolerance for losing your IP and Disney just
did the exact opposite, and I don't know what they're
gonna do. Let's take a quick break. When we come back,
we'll talk about uh, let's see, oh, oil takers and
(31:21):
the reflation trade.
Speaker 1 (31:22):
Right after this, miss any of the show. Catch up
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Speaker 3 (31:33):
This is your home for.
Speaker 1 (31:35):
The latest business and financial news in New England and
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Speaker 4 (31:54):
This segment of the Financial Exchange is powered by circle
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Thank you veterans for all you've done.
Speaker 2 (32:09):
Mike, before we move on to talk about oil tankers,
I have one more AI thing I need to say.
Hit me. Did you happen to see the what is now?
Irrelevant Time magazine cover for their Person of the Year
for this year that was announced this morning. No, it's
(32:30):
the architects of AI. And are you you remember the
picture from I don't know the year, but like nineteen tens,
nineteen twenties of all of the construction workers sitting having
lunch on the ibeam above New York City. Sure they
took that iconic picture of young men risking their lives
for very little pay to go and build great things
(32:52):
and replaced it with eight tech CEOs like on their
phones and laptops sitting up there, probably using AI to
make it.
Speaker 3 (33:01):
Almost undoubtedly based on this picture that I'm looking at, And.
Speaker 2 (33:04):
I just can't think of anything like more on the
nose than a completely irrelevant magazine that I don't think
even publishes a print version anymore. Is that correct? As
far as I know, I believe they stopped publishing their
print version several years ago, using tools that could help
to destroy that magazine's you know, reach even further to
(33:27):
promote a group of billionaires who are basically racing a
ticking debt clock, to try to create technology to allow
companies to replace workers.
Speaker 3 (33:41):
And they probably trained themselves on a bunch of times
content over the years.
Speaker 2 (33:44):
Probably probably already ripped off their ip. I mean, man, like,
doesn't it just feel like like there's just a vampire
like grabbing it our neck the entire time? Now?
Speaker 3 (33:59):
No, but we do seemingly have an infatuation with glorifying
billionaire tech CEOs that I cannot wrap my head around.
Speaker 2 (34:06):
Like I I just don't get it. I just don't
get it. But that's just me.
Speaker 4 (34:14):
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Speaker 3 (35:25):
I stand corrected by the way, Chuck, Time magazine apparently
does still publish a print version of itself, which.
Speaker 2 (35:32):
Was this It was a newsweek that stopped publishing.
Speaker 3 (35:35):
Recently, right, I can't recall.
Speaker 2 (35:37):
I think it might have been Newsweek. But in any case,
I would imagine that the circulation for Time is a
little smaller than it used to be.
Speaker 3 (35:46):
During the second half of two thousand and nine, they
saw giant declines twenty twelve at circulated three point three million.
By twenty twenty four, you were talking about one million
for combined print and digital back in twenty twenty four.
Speaker 2 (36:04):
So yeah, but exactly is a digital magazine.
Speaker 3 (36:09):
Not something you would want to read, Yeah, uh, US
seas US season is oil tanker off the Venezuela coast.
Speaker 2 (36:18):
It is. It was unclear at the time exactly which
vessel this was, and now appears that it is known
as the Skipper, which again has been involved in a number.
Speaker 3 (36:30):
Really cute name for a boat that ships oil between
Venezuela and Iran.
Speaker 2 (36:35):
Yeah, it's been. It's been involved reportedly in a number
of different transactions involving oil that has been sanctioned in
the last several years. Oil market's not really paying much
attention to this.
Speaker 3 (36:51):
I want to bring this up right, Jack. We have
a massive you know, oil sanctioned, the seizure of an
oil vest the President toted as the largest one ever seized,
and oil prices are down nearly two percent today. I
know there's other stuff going on, specifically the Russia Ukraine
deal that's being debated, but just kind of fascinating that
(37:15):
you have this happening. An oil price is moving down
sharply today.
Speaker 2 (37:18):
So I don't know what to make of this. As
far as you know exactly where things go from.
Speaker 3 (37:24):
Here, I think we can view it as an escalation
in the US Venezuela tension.
Speaker 2 (37:30):
Yeah, it sure seems like something's going to happen there,
like something further. I don't know exactly what form it
takes or the timing in this and that, but it
sure seems like things are heading in that direction.
Speaker 3 (37:40):
Especially now that what's I'm sorry, who's the Nobel Prize winner.
I have no idea the Venezuelan opposition leaders now out
of the country. It seems like that's maybe opened a
door for the Trump administration to escalate further.
Speaker 2 (37:52):
So, look, this potentially has you know, big global geopolitical ramifications,
just because when you look at where Venezuela tends to
ex sport oil too, tends to be places that we're
not huge fans of necessarily, you know, places like China
and so on and so forth, and so you do wonder, hey,
is there another you know, shoot a drop that potentially
(38:14):
could influence geopolitics further? But at this point, nothing you know,
moving beyond what we know today. Quick break here and
when we come back, we got out of two coming
up
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