September 24, 2025 • 38 mins
Chuck Zodda and Marc Fandetti discuss more trouble ahead on the US job front. The Fed's rate path is too cautious to fix housing. Is Nvidia's investment in OpenAI a bad sign for the tech market? Is the diversified portfolio dead? the NFL says is could renegotiate media deals as soon as 2026.
Mark as Played
Transcript
Episode Transcript
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Speaker 1 (00:01):
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(01:06):
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Speaker 2 (01:24):
Chuck, Mark and Tucker with you here, and stock stuck
in neutral. Today. The Dow Jones Industrial Average is up
twenty five points, the SMP is down to the Nasdaq
down nine, so not much of anything going on in equities,
Bonds not much different to the tenure Treasury is up
one point one basis point Yahoo. And when we look
at what's going on in commodity markets, we got West
(01:47):
Texas Intermediate up ninety five cents a barrel to sixty
four to thirty six, so a little bit of an
upward move there. And then with gold down thirty dollars
seventy cents anounced to thirty seven eighty five, I guess
it's got to take a break sometime, and today happens
to be at least, you know, one of the times
when it's it's taken a break. But overall, pretty quiet,
market's pretty quiet news day. Only things that we've gotten
(02:10):
today a little bit of mortgage application data which continued
to strengthen very modestly week over week after a big
jump last week. And we got new home sales data
that came out at ten am. They showed an unexpected
big jump from zero point six five million, six hundred
and fifty thousand units on an annual basis in the
(02:31):
prior month up to eight hundred thousand. I don't see
any other supporting data out there that shows any real
strength in the housing market. So for now, I'm kind
of just chalking this up to some kind of anomalous reading,
because really there's nothing else in housing that seems to
be showing any meaningful signs of life, and so I
(02:52):
kind of look at this and say, okay, fi a
little way, but most likely we're going to see some
kind of regression next month. If we happen to see
more strength, okay, maybe there's something there, but for now,
I can't really square this with anything else that I've
seen in housing, and so it's a good data point,
but it doesn't really mess with the whole rest of
(03:12):
the picture in housing. Top story this hour, and where
I want to kick things off, is this piece from
the Financial Times more trouble eze ahead on the US
job front, and it's talking more about this in the
context of you know, the FED obviously and the cutting
that they did last week on an interest rates, but
(03:34):
in terms of further concerns for the labor market in
the next few months. Mark a couple things that they
put out here in terms of, you know, things that
you need to watch for. Hey, number one, you've got
a bunch of job losses in the government sector that
(03:55):
are going to be showing up in the next month
or two, just because a lot of those people that
were part of of the the doze cuts back in
the spring, they were on a six month deferral, and
so a lot of those people are going to stop
being paid pretty shortly. Other things that are going on,
you have continued potential drag from AI slowing hiring. You've
(04:16):
also got surveys that are out today showing the thing
companies are most concerned about today is weakening demand, which
obviously tends to impact hiring because demand the leads hiring.
So that's obviously something that you need to watch on
that side of things. And this piece also gets at
the thing we've talked about on the labor supply side,
which is look for pretty much all of the economic
(04:38):
data that we have in American history, labor supply has
never been a limiting factor for job growth. It's always
been labor demand. I'm sure if we had you know,
data from the eighteen sixties, it would obviously show something different.
But given the you know, the limitations on data that
(04:58):
we have, labor supply has never been a limiting factor.
But today, when you have baby boomers continuing to retire
in larger numbers than they are being replaced by from
gen zers, and you have deportations and fear of deportations
taking a number of immigrants out of the labor pool,
(05:20):
you look at this and you say, hey, you've got
this weird situation where, yeah, there's really slow job growth
right now, but it might actually be matching what we're
seeing on labor supply, and so it kind of raises
questions about exactly how the Fed's going to act given
the uncertainty about where labor supply goes in the next
(05:40):
six to twelve months.
Speaker 3 (05:41):
Yeah, I guess, as others have noted, that may make
the unemployment rate a bad indicator of slack in the
economy because it could if you think of it as
a ratio, which it is, and the growth in the
top part of the ratio could equal the growth in
the bottom part of the ratio. That could be both
very low levels of growth of the ratio doesn't change,
so it's not really telling you what's going on. Vacancies
(06:03):
might be a better indicator, or payrolls might be a
better indicator. I really don't know, but it clearly distorts
what used to be a reliable signal on what the
FED used to depend on to determine whether or not
it needed to rein in versus goosing demand, which is
the way it acts on the real economy.
Speaker 2 (06:20):
When we look at the place that tends to tends
to get people nervous when it comes to hiring, construction
is always one of the ones that tends to roll
over in recessions for obvious reasons. When you talk about,
(06:41):
you know, major expenses, talk to either any family or
any business and ask them, Hey, how much does real
estate makeup of your monthly budget, and generally they'll say, yeah,
it's one of the two or three biggest line items,
depending on the exact you know people that you're talking to.
So what we have here right now is a case
(07:01):
where if you look at the year over year construction
the year over year growth in construction employment, uh, and
just kind of look at this as it's gone through
this cycle. So I'm excluding, you know, kind of the
whole twenty twenty window for obvious reasons. But if you
(07:22):
look at, you know, starting kind of mid twenty twenty one,
you had construction job growth running at about two point eight
percent year over year. In August of twenty one, that
actually went up as high as five point oh one
percent in July of twenty two. Hey, we got more
construction going on. We need more people in the construction industry.
Hiring is up since July of twenty twenty two. The
(07:45):
pace of hiring is slowed by July of twenty three,
I'm just gonna kind of go, you know, year over
year here, it went from five point oh one to
two point eight eight percent year over year growth. By
July of twenty four, it was down to two point
four to nine percent. So again and still fine, Like,
those numbers are not bad, they're they're perfectly acceptable to
normal economy. But it's really that in the last year
(08:07):
or so, we've now gone from two point four to
nine percent year over year growth down two point seven
percent year over year growth. And that's a pretty you know,
stark deceleration there. And I was looking at the data
this morning, and since the data set that we have
Fortunately it goes back to nineteen forty Since World War Two,
(08:28):
construction job growth aside from the World War Two period,
which I'm going to exclude for again obvious reasons, a
lot of people in the construction industry went overseas to fight,
so there was obvious contraction. Then, if you look at
the last eighty five years, year over year, construction job
growth has gone negative sixteen times during that time. In
(08:52):
twelve of those instances there were recessions. And it's because
construction is a huge driver of marginal economic activity. And
so when you start to see construction rolling over like this,
even though employment as a whole tends to be a
lagging indicator, the construction industry is a leading indicator, and
construction employment to a certain extent is a coincident indicator
(09:15):
with recessions. So the concern that you have if you're
watching this is, look, if construction jobs numbers go negative
year over year, that's usually not a good sign for
the US economy and for the labor market, you know,
as it relates to it, simply because labor, aside from construction,
tends to be a lagging indicator, and so the job
(09:36):
losses usually come you know as you go through the recession,
not an advance of it.
Speaker 3 (09:41):
In a lot of ways, this is feeling like a
traditional pre global financial crisis, pre eight nine business cycle.
We've forgotten what those are like, but typically coming out
of a recession, the FED has lowered rates by a
lot during the recession. That stimulates demand. Yeah, that boosts
all kinds of employment, including constructionuction and thus housing activity,
(10:02):
and all the incidental and knock on effects associated with that.
At some point rates have been too low for too long.
The FED has to be an inflation begins to tick up,
it makes things uncomfortable for politicians and policymakers. The FED
wants to preserve its independence and do a good job,
so it raises rates. It slows the economy. Usually raises
(10:22):
rates too much because it's impossible to gauge these things precisely,
and the cycle repeats. This is feeling more like a
traditional business cycle. The FED may have left rates too
high too long, though I don't think there's evidence of that,
and other important pockets of data we'll see. But as
long as nothing hits us from out of left field,
(10:44):
and that's a very dangerous statement to make. Those are
famous last words, this will probably unfold like a typical
business cycle, the Fed will have to continue to lower
rates in order to avert recession. The challenge here, much
like in the nineteen seventies, is inflation is elevated, so
you might induce a recession, but that might not bring
(11:05):
down underlying inflation.
Speaker 2 (11:08):
Just take a quick break. When we return, we've got
some trivia, and then I want to talk a little
bit about in VideA and the stories that we've seen
the last week or two surrounding the AI space. Just
some interesting things that are giving me tech bubbly vibes.
(11:29):
But yeah, you'll have to wait until after the break
to hear what those are.
Speaker 1 (11:34):
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Speaker 4 (12:11):
All right time for trivia here in the Financial Exchange
and we're gonna continue our sitcom theme this week. One
of the most popular sitcoms of the sixties was Bewitched.
Bewitch starred Elizabeth Montgomery as Samantha and Dick York is Darren.
Dick York was replaced by Dick Sargent as Darren for
the show's final three seasons, and in two thousand and five,
(12:34):
be Witch was remade as a movie starring Nicole Kidman
as Samantha. So our trivia question today which actor portray
Darren in the two thousand and five movie Bewitched? Once again?
Which actor portray Darren in the two thousand and five
movie Bewitched. Be the fifth person today to text us
(12:57):
at six one seven three six two thirteen eighty five
with correct answer you know when a Financial Exchange Show
T shirt once again. The fifth correct response to text
us to the number six one seven three six two
thirteen eighty five will win that T shirt. See complete
contest rules at Financial Exchange Show dot com.
Speaker 2 (13:16):
So a couple of days ago, we got the headline
that uh in Vidio was going to invest up to
one hundred billion dollars into open ai the additional detail
that we've gotten, it's going to come in these ten
billion dollars tranches to allow open Aiye to try to
build out more compute capacities so that they can finally
(13:38):
build the computer that ends the world. You know, that's
that's that's the goal in this is give us, give
us the computer that's smarter than us, that decides we
don't need you anymore, and you know, okay, we'll see
what happens with all this. So immediately upon seeing this,
and granted I was not, you know, the mature, you know,
(14:02):
weathered veteran that I am today, but it immediately gave
me flashbacks to the tech bubble because what we saw
in the last you know, kind of the waning year
or so of the tech bubble was something called vendor financing,
and vendor financing was what companies like Cisco and do
(14:23):
you guys remember Nortel, No, you do remember Nortel. They
were I'm trying to think of how big they got
when they were finally are they even still around now? No,
they're not, of course not.
Speaker 4 (14:38):
No. They filed for bankruptcy in two thousand and nine
and they ceased operation.
Speaker 2 (14:45):
Okay, this was it was. The bankruptcy was settled in
twenty seventeen, but they were a telecom and networking equipment manufacturer.
Surprised they were around in you know, two thousand, just
like everyone else. That's what they did. And as we
got ward's the end of that cycle. Companies like Cisco
and Nortel, they went through this vendor financing cycle, which
(15:07):
was pretty much, hey, we're gonna give our customers credit
in order to buy our products. And generally you look
at that and you're like, okay. So it meant that
these companies had money, but it also meant that their
customers didn't have the money to buy their products, and
so demand was going to slow down if they didn't
basically give their money to the customers to give back
(15:30):
to them. It's pretty much what it was. And this peaked,
by the way, at around a twenty five thirty billion
dollar run rate in two thousand. This according to a
piece from Newsweek that I found. And so you've got
Nvidia today saying, hey, we're gonna give open ai up
(15:53):
to one hundred billion dollars so that open ai can
give one hundred billion dollars back to us in order
to buy chips. Okay, So do you actually make any
money in doing that? Well, no, But it's the thought
that counts, is kind of how it ends up being.
And I just kind of look at this and it
makes me feel very nervous about where we are in
(16:18):
the cycle. Not that Nvidio is going to go out
of business, because again, while Nortel did, there are plenty
of tech bubble legacy companies that are still here, whether
you look at you know, Dell or Cisco or Intel,
and these aren't you know, bad companies or anything. I mean,
you can even say, like until the last couple of years,
Intel was generally pretty good and then they just kind
of fell off a cliff starting in like twenty nineteen.
(16:41):
So I just kind of look at this and it
makes me nervous about where we are in the cycle
because anytime, like Mark, let's let's say that you you're
Italian like me, okay, and let's say that I make
the best pasta, it's just whoa, whoa, whoa, It's no, no, no,
(17:02):
I got all, I got it all going on, Like
my pasta is top notch okay.
Speaker 3 (17:08):
And I'll let you explain that to my mother.
Speaker 2 (17:10):
It's fine, better than her, better than hers. Okay, it's fine.
It might not be better than hers, but you know
she's not available to say that. I'm here right now
trying to get to get it for you. Right, And
so here's the deal. You've been buying five dollars a
day in pasta for me because you're just like, Chuck,
this is this is the best, this is hypothetical, it's
the best. I'm loading up, I'm backing up the bucks
(17:32):
on anything a day. And finally you get to the
point where you're like, you know what inflation's going on?
While it's getting a little thin, Chuck, I don't know
if I can do it now. I mean why I've
been raking it in because it only costs me a
dollar to make the stuff. It's like, I'm good at it,
but mostly I'm good at making money off you. And
I go, Mark, you know what, how about this, I'm
(17:54):
gonna give you twenty five dollars so that Monday through
Friday next week you can buy my pasta. I'm gonna
I'm vendor financing your purchases because I know that you
love it. You just need a little help getting over
the hump. I'm gonna do that. I give you twenty
five dollars. Next week, you give me twenty five bucks
(18:14):
and I give you a bunch of pasta, net net,
I'm out a bunch of wheat and eggs and flour
and everything. And you're sitting there saying I didn't have
to pay a thing. That doesn't fill me with confidence
when instead of pasta, we're talking about forty thousand dollars semiconductors.
Speaker 3 (18:31):
Yeah, I think the issue here for me with and
I don't know enough about this to say something over
all a little caveat, I'll just speculate. It does feel
a little bit like they don't have anything better to
do with their capital, like well, buy back shares or
make an investment in they have in the next generation
(18:52):
chip development technology or whatever that's incredibly vague.
Speaker 2 (18:56):
Because they need the number to grow up.
Speaker 3 (18:58):
Yeah, there behold into these very aggressive growth forecasts. We
all know they can't hit them indefinitely for reasons we
talked about in the last hour. A company can't grow
faster than the economy or the market on average for
that matter, forever.
Speaker 2 (19:11):
So it does seem a little bit desperate.
Speaker 3 (19:14):
But at the same time, in the comparison to vendor financing.
I just don't know, because that's viewed as a legitimate
sales tool. I mean it happens, for example, when you
buy a car and Carvana, I don't know, finances it
with their captive arm, their captive financing arm.
Speaker 2 (19:29):
Let's take a quick break. When we return, we got
Wall Street Watch in the trivia answer.
Speaker 1 (19:40):
Bringing the latest financial news straight to your radio. Every day.
It's the Financial Exchange on the Financial Exchange Radio Network.
Time now for Wall Street Watch. A complete look at
what's moving market so far today right here on the
Financial Exchange Radio Network.
Speaker 4 (20:00):
Well after the S and P five hundred snapped a
three day winning streak yesterday, markets today are a little changed.
This morning, we saw more housing data posted where sales
of newly built homes rosa much larger than expected twenty
point five percent in August compared with July, to the
highest level since January of twenty twenty two. That according
(20:21):
to the US Census. Right now, the Dow is down
by a tenth of one percent, or fifty five points lower.
SMP five hundred also down by about a tenth of
a percent or eight points. Nasdaq also down by tenth
of percent or thirty points lower. Russ two thousand down,
you guessed it a tenth of a percent. Tenure Treasure
Reeled is up two basis points at four point one
(20:43):
three nine percent. In crude oil up nearly two percent higher,
trading at sixty four dollars and fifty six cents a barrel.
Ali Baba jumping over nine percent after the Chinese tech
company said it will boost spending on AI models and
development to more than fifty three billion million dollars. Sticking
with tech in AI, where Micron Technology has reported a
(21:04):
it's a revenue sword forty six percent in the previous quarter,
driven by demand for AI developers. Micron's outlook for the
current quarter also beat expectations, However, that stock is retreating
about two percent. Meanwhile, shares in Lithium America is surging
ninety seven percent now after Reuter's reported that the US
is negotiating a stake as large as ten percent in
(21:27):
the Canadian mining company. Lithium America's is also developing a
mine with General Motors, sending shares in GM up by
about two percent, and according to Bloomberg, Oracle is seeking
to borrow fifteen billion dollars from the US investment grade
bond market. Today, as the software maker ramps up it's
spending to meet the needs of the AI boom, Oracle
(21:49):
shares are down about two and a half percent. I'm
Tucker Silva and that is Wall Street Watch. And in
the previous segment, we asked you the trivia question which
actor portrayed Darren in the two thousand and five movie Bewitched.
That would be Will Ferrell. Charlie from Scarborough, Maine is
our winner today, taking home a Financial Exchange Show teacher.
(22:09):
Congrats to Charlie. We play trivia every day here in
the Financial Exchange See complete contest rules at Financial Exchange
Show dot com.
Speaker 2 (22:17):
Can we talk a little bit about that GM Lithium
America's item. Let's do it the one that Tucker just
brought up. It's not in your stack. Oh good, Yeah,
So basically, Tucker correct me, look at that later. What
you just said was that GM is going in on
that mining venture with them.
Speaker 4 (22:37):
They are currently developing a mind Yes, that's what I've read.
Speaker 2 (22:41):
What a horrible idea with vertical integration. There's a reason
why automakers don't do it for their raw materials. Is
because they have no expertise and specialization in doing so.
Speaker 3 (22:54):
I think of Henry Ford when I think of that.
Didn't he buy rubber plantations?
Speaker 2 (22:57):
So he went further than that. He bought lane and
in Brazil and tried to set up a commune called
ford Landia that was going to basically produce the rubber
and other raw materials needed and send it up to
the US for production and everything. It wasn't quite like
(23:17):
it wasn't you know, it didn't go as badly as
it could have been, Like not everybody died, but they
shut it down within a year or two because they
were like, this is horrible, it's not working. Why because
you have no expertise in doing any of this stuff.
So I have no doubt that GM is looking at
this saying, well, we're gonna need the lithium. Why don't we,
you know, help develop you know, the venture and everything.
(23:38):
Like I'm sure it comes from a place of good intentions.
But if that's the case, hey, why don't you also
own a bunch of iron mines and a bunch of
steel smelters and you know all the stuff that you know,
why don't you go and you know, buy a bunch
of rubbertories.
Speaker 3 (23:53):
Sounds very nineteenth century, doesn't it.
Speaker 2 (23:55):
What makes lithium different that you feel like, hey, we've
got some way that we can do it that's better
when you clearly don't. So the nicest thing I can
say about it is, at least, this is kind of
an ancillary business. Is not like you remember when AMC
got all that money from an equity raise and they
went out and they bought like a gold mine. It's
(24:15):
not that at least, so you like, you could at
least say it's it's it's at least an ancillary business
like AMC does not need any They don't need to
buying gold in order to show movies. To me, this
you could say, okay, like I understand they're thinking. But historically,
there's a reason why automakers are not involved in the
production of the raw materials needed to make their cars,
(24:36):
and that is they're not any good at it. So
who knows if GMS identified that this is actually you know,
viable and useful. Who knows that this is gonna actually
end up working out well for them? But whenever a
car company in particular gets outside their comfort zone, immediately
I'm just like Nope, you're gonna need that capital for
(24:56):
something else. Running your car company is expensive. Don't don't
go doing dumb stuff. It's kind of where I get
to there. I don't know, Yeah, I could see that.
Let's talk about this piece here, actually, yeah, let's talk
about this is the diversified portfolio dead. The AI boom
has turned an age old investing rule on its head.
A couple things. This piece largely talks about, you know,
(25:18):
some studies that have been done on more concentrated portfolios
and whether or not that's good or bad. And the
answer basically always boils down to, hey, if you have
any actual investing skill, it's good, but most of us
don't have investing skill, and so it's bad. That's kind
of where it gets to the other piece. You know,
like they quote you know, Warren freaking Buffet, which like
(25:40):
quoting Warren Buffett on investing and saying, hey, you should
do this is like quoting Ted Williams on baseball and
being like, oh, like just do that. Like just because
it works for Ted Williams doesn't mean it's gonna work
for you. Like, these are generational talents at their respective trades,
and you should not take advice from like the best
person ever any specific thing, because it usually doesn't apply
(26:03):
to you.
Speaker 3 (26:04):
Yeah, hard to operationalize it when you don't have their
level of skill. If you substitute for sixty forty just
the generic term diversified, the answer is yeah, probably. If
you're older, for example, well, you probably need some growth
and inflation protection. Stocks have historically been good at those things.
You might also need some money to meet short term
(26:24):
needs educational or other expenses that will arrive in the
next several years. Well, you might not want to put
that money in equities in stocks, because stocks can experience
serious draw downs price to clients, and they can sometimes
last for a while. So, of course, most investors should
(26:45):
be somewhat diversified. Arguably every investor should, except for people
with an extremely long time arizon. Some investment folks, not all,
but some would argue that they can afford to be
entirely inequities and even borrow to buy more.
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Speaker 2 (28:07):
One other piece here. Whenever I see something, a piece
that's written talking about, Hey, you know, because of x
y Z doing so well, does that mean you shouldn't diversify?
Usually means that that XYZ whatever it is, has about
run its course.
Speaker 3 (28:23):
Yeah, you could write a piece like that every year,
just substitute of fill in just you know, fill in
the blank for.
Speaker 1 (28:28):
X y Z.
Speaker 2 (28:28):
That's why whatever the best performance yeah, whatever the best
performance sector is because generally, if you look at the
history of the S and P five hundred, hey, you
might have a trend that lasts like two or three
years that that's you know, kind of a longer term one.
But generally the best performing sectors in the S and
P change every year and you have no idea what
(28:48):
they're going to be based on how the prior year went.
So when you see something being like, oh, should you
like not diversify and just invest in AI, it's probably
not like, why weren't you writing this piece three years ago?
Is the question that I would ask. Yeah, no, it's
not clear.
Speaker 3 (29:02):
To me who they're writing for. For an individual investor,
that is incredibly bad advice. If you're a family office,
which is an investment advisor that runs money for one
or more very wealthy families, or if you're running a
hedge fund, which is an unconstrained type investment strategy usually
catering to wealthy people who can afford exotic forms of risk, well,
(29:23):
they tend to not be diversified and they use a
very unusual skill in unusual ways, but all for most
of us, for nearly all of us. The rules of
them you learn about when you go to your first
four h one K education session, when you sign up
for your plan or you're signed up for it, those
(29:44):
will apply for the rest of your lives.
Speaker 2 (29:47):
Piece and CNBC and exclusive from them. Ford courts riskier
borrowers with lower rates for F one to fifty pickups.
I'll quote here from the piece. Ford is racing to
sell more F one fifty pickups this quarter by offering
lower interest rates to buyers with the weakest acceptable credit histories.
So this, I guess, is Ford's version of like a
buy now, pay later, and that they're gonna let you
(30:08):
buy now and Ford's gonna pay later. Because af Ford
wanted to offer these rates all the time, they would do,
so they're doing so now because they want the money
from the F one fifty sales today, probably because inventories
are building, would be my guess. And in return they're
willing to accept lower interest payments and probably higher defaults
as a result of this.
Speaker 3 (30:28):
Yeah, I guess depends on what happens in the broader economy.
If things go south, those defaults will pick up and
this will seem like an incredibly ill, ill advised and
in retrospect, ill faded move.
Speaker 2 (30:41):
Whenever we see something like this, it's just like, Okay,
I know, I feel I always come back to.
Speaker 1 (30:47):
Look.
Speaker 2 (30:48):
Basically, every bubble in history has been caused by two things,
securitization and leverage. And this is the leverage piece. It's
are you, you know, levering up people that can't afford
to make the payments? And are you going to end
up in a problem?
Speaker 3 (31:03):
Yeah, they're by definition they can't afford it. That's what
credit rating scores exist for. It's not to make life
hard for us. It's to make sure you don't overextend yourself.
Speaker 2 (31:12):
Yep. Yeah, it doesn't fill me with the warm and fuzzies.
Speaker 3 (31:16):
No, sounds like a terrible idea. Honest, I hate to
be a party pooper. Maybe it works out, but odds
are doesn't right for the people who are induced into
borrowing huge amounts of money to pay for these beautiful
vehicles who wouldn't want one, But you know it's probably
not the right thing to do.
Speaker 2 (31:32):
Just take a quick break. When we return.
Speaker 1 (31:35):
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(31:57):
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He's the Financial Exchange Radio Network.
Speaker 4 (32:16):
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American Veterans Department of Massachusetts and this year's DAV five
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Speaker 2 (32:50):
Mike, what do you got? Mark?
Speaker 3 (32:54):
Whoever you are, well, Chuck, I want to tell you
how handsome I am today?
Speaker 2 (32:57):
Is that in Mike Armstrong impression. Yeah, it's cause he's
I can't do him. Well, he's he's way too.
Speaker 1 (33:02):
Low for me. I don't know.
Speaker 3 (33:04):
That's that's that's closest I'm ever going to again. Okay, And
if we could not let him hear that, that would
be wonderful too. Touch we could dump the last twenty
seconds to the show from the Financial Times. This speaks
to the challenges that all developed countries are facing with
a larger number of retirees being supported by with the
(33:25):
with the growth rate of retirees growing faster than the
growth rate of people still in the workforce. The story
is about Italy. Italy weighs freezing its retirement age at
sixty seven. The Maloney's government. Prime Minister Georgia Maloney's government
is considering making this change. The reason I bring it
up is that I was surprised to find out that
Italy's pension law links the statutory retirement age to life
(33:48):
expectancy improvement, so it goes up automatically, whereas now their
pension law governs relationships between labor and it's more broad
than what we're talking about with social security, very much
so the closest analog we have a social securities normal
retirement age, which by coincidence is sixty seven. But what
sort of impressed me about Italy's system, if you will,
(34:11):
is that it escalates automatically. Ours has to be increases
in and ra under social security have to be legislated,
and the Prime Minister is under pressure to put a
ceiling on that because obviously older folks are squawking. I
was also a little bit surprised to learn that the
number of people over fifty still working in Italy, or
the percentage, is nearly fifty percent, whereas here our fifty
(34:35):
five and over labor force participation rate is about forty percent.
So for what it is worth, firstly, we're all facing
the same challenges in the developed world, more people retiring,
fewer people working, or a higher growth rate in the
retirement age part of the workforce than in the overall workforce.
And the fact that Italy's laws are a little bit
(34:56):
or practices are a little more stringent than ours. As
I read this, I'm.
Speaker 2 (35:02):
Going to talk a little bit about this piece on
the NFL rights and potential renegotiation. So back in twenty
twenty one, the NFL signed an eleven year, one hundred
eleven billion dollar media rights deal for distribution, and the
(35:22):
league has an opt out cause after the twenty nine
to thirty season, which is five years from now, four
years from now, and Roger Goodell, the NFL Commissioner, said
this yesterday. I think our partners would want to sit
down and talk to us at any time when we
continue dialogue with them. I like that opportunity. Obviously it's
not gonna happen this year, but it could happen as
early as next year. That could happen. So obviously you
(35:47):
start say, okay, why do the owners want to renegotiate
the rights deal today? You know what what gives? Like,
what's what's the reason? And the obvious answer that you
come up with as well, they think they can get
more money for the rights today as opposed to where
it was four or five years ago. A couple things
(36:09):
that go through my head. The first is, look, you
obviously went through a substantial bout of inflation since this
deal was signed. Prices in general are higher, and so
the owners look at this and say, great, like we
locked in prior to that, we want, you know, more
than we were getting and we think instead of getting
you know, ten billion dollars a year in this media
rights deal, maybe we can get you know, twelve or thirteen,
(36:31):
so it's you know, twenty thirty percent higher. Okay, Like
I understand that, But again, why now? Like what why
not last year? Why not next year?
Speaker 1 (36:42):
Like?
Speaker 2 (36:42):
Why now? What's the the reason for this? And the
only piece that I keep coming back to is there
have been a couple of things written about this to
a certain extent where when you look at the price
of pro sports teams today, it's basically at the point
where individuals can afford them. You have to have these
(37:05):
consortums or a bunch of private equity money or sovereign
wealth wealth funds from the Middle East that come in
and are able to do this. And in order to
entice some of those groups, most notably the private equity
firms and the sovereign wealth funds, you have to actually
show that you can make a return on the investment.
You know, the Norwegian Sovereign wealth funder, the Saudi Sovereign
(37:28):
Wealth fund doesn't want to invest in an NFL team
just so that they can go to the games and
the owner's box on Sunday they don't need that in
order to have like their place in society. It's not
you know, Daniel Snyder buying, you know, the commanders being like, oh, like, yeah,
I'm the biggest fan ever. It's no, they don't care.
They just want them right right. So when you look
(37:49):
at this, I think part of it that I get
come back to is, hey, because these teams need to
have their value continue to go up in order to
make the whole thing work. You've got to have a
faster negotiating cycle and more money coming in on a
more rapid basis. And that's where I think the impetus
(38:10):
is for the owners on this. Let's take a quick
break for the rest of the day. We're gonna be
back at it tomorrow. We get some jobless claims and
existing home sales data. We'll filly in on all that
and more tomorrow
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a donation today. This is the Financial Exchange with Chuck
(01:06):
Zada and Mark Vandetti.
Speaker 2 (01:24):
Chuck, Mark and Tucker with you here, and stock stuck
in neutral. Today. The Dow Jones Industrial Average is up
twenty five points, the SMP is down to the Nasdaq
down nine, so not much of anything going on in equities,
Bonds not much different to the tenure Treasury is up
one point one basis point Yahoo. And when we look
at what's going on in commodity markets, we got West
(01:47):
Texas Intermediate up ninety five cents a barrel to sixty
four to thirty six, so a little bit of an
upward move there. And then with gold down thirty dollars
seventy cents anounced to thirty seven eighty five, I guess
it's got to take a break sometime, and today happens
to be at least, you know, one of the times
when it's it's taken a break. But overall, pretty quiet,
market's pretty quiet news day. Only things that we've gotten
(02:10):
today a little bit of mortgage application data which continued
to strengthen very modestly week over week after a big
jump last week. And we got new home sales data
that came out at ten am. They showed an unexpected
big jump from zero point six five million, six hundred
and fifty thousand units on an annual basis in the
(02:31):
prior month up to eight hundred thousand. I don't see
any other supporting data out there that shows any real
strength in the housing market. So for now, I'm kind
of just chalking this up to some kind of anomalous reading,
because really there's nothing else in housing that seems to
be showing any meaningful signs of life, and so I
(02:52):
kind of look at this and say, okay, fi a
little way, but most likely we're going to see some
kind of regression next month. If we happen to see
more strength, okay, maybe there's something there, but for now,
I can't really square this with anything else that I've
seen in housing, and so it's a good data point,
but it doesn't really mess with the whole rest of
(03:12):
the picture in housing. Top story this hour, and where
I want to kick things off, is this piece from
the Financial Times more trouble eze ahead on the US
job front, and it's talking more about this in the
context of you know, the FED obviously and the cutting
that they did last week on an interest rates, but
(03:34):
in terms of further concerns for the labor market in
the next few months. Mark a couple things that they
put out here in terms of, you know, things that
you need to watch for. Hey, number one, you've got
a bunch of job losses in the government sector that
(03:55):
are going to be showing up in the next month
or two, just because a lot of those people that
were part of of the the doze cuts back in
the spring, they were on a six month deferral, and
so a lot of those people are going to stop
being paid pretty shortly. Other things that are going on,
you have continued potential drag from AI slowing hiring. You've
(04:16):
also got surveys that are out today showing the thing
companies are most concerned about today is weakening demand, which
obviously tends to impact hiring because demand the leads hiring.
So that's obviously something that you need to watch on
that side of things. And this piece also gets at
the thing we've talked about on the labor supply side,
which is look for pretty much all of the economic
(04:38):
data that we have in American history, labor supply has
never been a limiting factor for job growth. It's always
been labor demand. I'm sure if we had you know,
data from the eighteen sixties, it would obviously show something different.
But given the you know, the limitations on data that
(04:58):
we have, labor supply has never been a limiting factor.
But today, when you have baby boomers continuing to retire
in larger numbers than they are being replaced by from
gen zers, and you have deportations and fear of deportations
taking a number of immigrants out of the labor pool,
(05:20):
you look at this and you say, hey, you've got
this weird situation where, yeah, there's really slow job growth
right now, but it might actually be matching what we're
seeing on labor supply, and so it kind of raises
questions about exactly how the Fed's going to act given
the uncertainty about where labor supply goes in the next
(05:40):
six to twelve months.
Speaker 3 (05:41):
Yeah, I guess, as others have noted, that may make
the unemployment rate a bad indicator of slack in the
economy because it could if you think of it as
a ratio, which it is, and the growth in the
top part of the ratio could equal the growth in
the bottom part of the ratio. That could be both
very low levels of growth of the ratio doesn't change,
so it's not really telling you what's going on. Vacancies
(06:03):
might be a better indicator, or payrolls might be a
better indicator. I really don't know, but it clearly distorts
what used to be a reliable signal on what the
FED used to depend on to determine whether or not
it needed to rein in versus goosing demand, which is
the way it acts on the real economy.
Speaker 2 (06:20):
When we look at the place that tends to tends
to get people nervous when it comes to hiring, construction
is always one of the ones that tends to roll
over in recessions for obvious reasons. When you talk about,
(06:41):
you know, major expenses, talk to either any family or
any business and ask them, Hey, how much does real
estate makeup of your monthly budget, and generally they'll say, yeah,
it's one of the two or three biggest line items,
depending on the exact you know people that you're talking to.
So what we have here right now is a case
(07:01):
where if you look at the year over year construction
the year over year growth in construction employment, uh, and
just kind of look at this as it's gone through
this cycle. So I'm excluding, you know, kind of the
whole twenty twenty window for obvious reasons. But if you
(07:22):
look at, you know, starting kind of mid twenty twenty one,
you had construction job growth running at about two point eight
percent year over year. In August of twenty one, that
actually went up as high as five point oh one
percent in July of twenty two. Hey, we got more
construction going on. We need more people in the construction industry.
Hiring is up since July of twenty twenty two. The
(07:45):
pace of hiring is slowed by July of twenty three,
I'm just gonna kind of go, you know, year over
year here, it went from five point oh one to
two point eight eight percent year over year growth. By
July of twenty four, it was down to two point
four to nine percent. So again and still fine, Like,
those numbers are not bad, they're they're perfectly acceptable to
normal economy. But it's really that in the last year
(08:07):
or so, we've now gone from two point four to
nine percent year over year growth down two point seven
percent year over year growth. And that's a pretty you know,
stark deceleration there. And I was looking at the data
this morning, and since the data set that we have
Fortunately it goes back to nineteen forty Since World War Two,
(08:28):
construction job growth aside from the World War Two period,
which I'm going to exclude for again obvious reasons, a
lot of people in the construction industry went overseas to fight,
so there was obvious contraction. Then, if you look at
the last eighty five years, year over year, construction job
growth has gone negative sixteen times during that time. In
(08:52):
twelve of those instances there were recessions. And it's because
construction is a huge driver of marginal economic activity. And
so when you start to see construction rolling over like this,
even though employment as a whole tends to be a
lagging indicator, the construction industry is a leading indicator, and
construction employment to a certain extent is a coincident indicator
(09:15):
with recessions. So the concern that you have if you're
watching this is, look, if construction jobs numbers go negative
year over year, that's usually not a good sign for
the US economy and for the labor market, you know,
as it relates to it, simply because labor, aside from construction,
tends to be a lagging indicator, and so the job
(09:36):
losses usually come you know as you go through the recession,
not an advance of it.
Speaker 3 (09:41):
In a lot of ways, this is feeling like a
traditional pre global financial crisis, pre eight nine business cycle.
We've forgotten what those are like, but typically coming out
of a recession, the FED has lowered rates by a
lot during the recession. That stimulates demand. Yeah, that boosts
all kinds of employment, including constructionuction and thus housing activity,
(10:02):
and all the incidental and knock on effects associated with that.
At some point rates have been too low for too long.
The FED has to be an inflation begins to tick up,
it makes things uncomfortable for politicians and policymakers. The FED
wants to preserve its independence and do a good job,
so it raises rates. It slows the economy. Usually raises
(10:22):
rates too much because it's impossible to gauge these things precisely,
and the cycle repeats. This is feeling more like a
traditional business cycle. The FED may have left rates too
high too long, though I don't think there's evidence of that,
and other important pockets of data we'll see. But as
long as nothing hits us from out of left field,
(10:44):
and that's a very dangerous statement to make. Those are
famous last words, this will probably unfold like a typical
business cycle, the Fed will have to continue to lower
rates in order to avert recession. The challenge here, much
like in the nineteen seventies, is inflation is elevated, so
you might induce a recession, but that might not bring
(11:05):
down underlying inflation.
Speaker 2 (11:08):
Just take a quick break. When we return, we've got
some trivia, and then I want to talk a little
bit about in VideA and the stories that we've seen
the last week or two surrounding the AI space. Just
some interesting things that are giving me tech bubbly vibes.
(11:29):
But yeah, you'll have to wait until after the break
to hear what those are.
Speaker 1 (11:34):
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(11:55):
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Radio Network.
Speaker 4 (12:11):
All right time for trivia here in the Financial Exchange
and we're gonna continue our sitcom theme this week. One
of the most popular sitcoms of the sixties was Bewitched.
Bewitch starred Elizabeth Montgomery as Samantha and Dick York is Darren.
Dick York was replaced by Dick Sargent as Darren for
the show's final three seasons, and in two thousand and five,
(12:34):
be Witch was remade as a movie starring Nicole Kidman
as Samantha. So our trivia question today which actor portray
Darren in the two thousand and five movie Bewitched? Once again?
Which actor portray Darren in the two thousand and five
movie Bewitched. Be the fifth person today to text us
(12:57):
at six one seven three six two thirteen eighty five
with correct answer you know when a Financial Exchange Show
T shirt once again. The fifth correct response to text
us to the number six one seven three six two
thirteen eighty five will win that T shirt. See complete
contest rules at Financial Exchange Show dot com.
Speaker 2 (13:16):
So a couple of days ago, we got the headline
that uh in Vidio was going to invest up to
one hundred billion dollars into open ai the additional detail
that we've gotten, it's going to come in these ten
billion dollars tranches to allow open Aiye to try to
build out more compute capacities so that they can finally
(13:38):
build the computer that ends the world. You know, that's
that's that's the goal in this is give us, give
us the computer that's smarter than us, that decides we
don't need you anymore, and you know, okay, we'll see
what happens with all this. So immediately upon seeing this,
and granted I was not, you know, the mature, you know,
(14:02):
weathered veteran that I am today, but it immediately gave
me flashbacks to the tech bubble because what we saw
in the last you know, kind of the waning year
or so of the tech bubble was something called vendor financing,
and vendor financing was what companies like Cisco and do
(14:23):
you guys remember Nortel, No, you do remember Nortel. They
were I'm trying to think of how big they got
when they were finally are they even still around now? No,
they're not, of course not.
Speaker 4 (14:38):
No. They filed for bankruptcy in two thousand and nine
and they ceased operation.
Speaker 2 (14:45):
Okay, this was it was. The bankruptcy was settled in
twenty seventeen, but they were a telecom and networking equipment manufacturer.
Surprised they were around in you know, two thousand, just
like everyone else. That's what they did. And as we
got ward's the end of that cycle. Companies like Cisco
and Nortel, they went through this vendor financing cycle, which
(15:07):
was pretty much, hey, we're gonna give our customers credit
in order to buy our products. And generally you look
at that and you're like, okay. So it meant that
these companies had money, but it also meant that their
customers didn't have the money to buy their products, and
so demand was going to slow down if they didn't
basically give their money to the customers to give back
(15:30):
to them. It's pretty much what it was. And this peaked,
by the way, at around a twenty five thirty billion
dollar run rate in two thousand. This according to a
piece from Newsweek that I found. And so you've got
Nvidia today saying, hey, we're gonna give open ai up
(15:53):
to one hundred billion dollars so that open ai can
give one hundred billion dollars back to us in order
to buy chips. Okay, So do you actually make any
money in doing that? Well, no, But it's the thought
that counts, is kind of how it ends up being.
And I just kind of look at this and it
makes me feel very nervous about where we are in
(16:18):
the cycle. Not that Nvidio is going to go out
of business, because again, while Nortel did, there are plenty
of tech bubble legacy companies that are still here, whether
you look at you know, Dell or Cisco or Intel,
and these aren't you know, bad companies or anything. I mean,
you can even say, like until the last couple of years,
Intel was generally pretty good and then they just kind
of fell off a cliff starting in like twenty nineteen.
(16:41):
So I just kind of look at this and it
makes me nervous about where we are in the cycle
because anytime, like Mark, let's let's say that you you're
Italian like me, okay, and let's say that I make
the best pasta, it's just whoa, whoa, whoa, It's no, no, no,
(17:02):
I got all, I got it all going on, Like
my pasta is top notch okay.
Speaker 3 (17:08):
And I'll let you explain that to my mother.
Speaker 2 (17:10):
It's fine, better than her, better than hers. Okay, it's fine.
It might not be better than hers, but you know
she's not available to say that. I'm here right now
trying to get to get it for you. Right, And
so here's the deal. You've been buying five dollars a
day in pasta for me because you're just like, Chuck,
this is this is the best, this is hypothetical, it's
the best. I'm loading up, I'm backing up the bucks
(17:32):
on anything a day. And finally you get to the
point where you're like, you know what inflation's going on?
While it's getting a little thin, Chuck, I don't know
if I can do it now. I mean why I've
been raking it in because it only costs me a
dollar to make the stuff. It's like, I'm good at it,
but mostly I'm good at making money off you. And
I go, Mark, you know what, how about this, I'm
(17:54):
gonna give you twenty five dollars so that Monday through
Friday next week you can buy my pasta. I'm gonna
I'm vendor financing your purchases because I know that you
love it. You just need a little help getting over
the hump. I'm gonna do that. I give you twenty
five dollars. Next week, you give me twenty five bucks
(18:14):
and I give you a bunch of pasta, net net,
I'm out a bunch of wheat and eggs and flour
and everything. And you're sitting there saying I didn't have
to pay a thing. That doesn't fill me with confidence
when instead of pasta, we're talking about forty thousand dollars semiconductors.
Speaker 3 (18:31):
Yeah, I think the issue here for me with and
I don't know enough about this to say something over
all a little caveat, I'll just speculate. It does feel
a little bit like they don't have anything better to
do with their capital, like well, buy back shares or
make an investment in they have in the next generation
(18:52):
chip development technology or whatever that's incredibly vague.
Speaker 2 (18:56):
Because they need the number to grow up.
Speaker 3 (18:58):
Yeah, there behold into these very aggressive growth forecasts. We
all know they can't hit them indefinitely for reasons we
talked about in the last hour. A company can't grow
faster than the economy or the market on average for
that matter, forever.
Speaker 2 (19:11):
So it does seem a little bit desperate.
Speaker 3 (19:14):
But at the same time, in the comparison to vendor financing.
I just don't know, because that's viewed as a legitimate
sales tool. I mean it happens, for example, when you
buy a car and Carvana, I don't know, finances it
with their captive arm, their captive financing arm.
Speaker 2 (19:29):
Let's take a quick break. When we return, we got
Wall Street Watch in the trivia answer.
Speaker 1 (19:40):
Bringing the latest financial news straight to your radio. Every day.
It's the Financial Exchange on the Financial Exchange Radio Network.
Time now for Wall Street Watch. A complete look at
what's moving market so far today right here on the
Financial Exchange Radio Network.
Speaker 4 (20:00):
Well after the S and P five hundred snapped a
three day winning streak yesterday, markets today are a little changed.
This morning, we saw more housing data posted where sales
of newly built homes rosa much larger than expected twenty
point five percent in August compared with July, to the
highest level since January of twenty twenty two. That according
(20:21):
to the US Census. Right now, the Dow is down
by a tenth of one percent, or fifty five points lower.
SMP five hundred also down by about a tenth of
a percent or eight points. Nasdaq also down by tenth
of percent or thirty points lower. Russ two thousand down,
you guessed it a tenth of a percent. Tenure Treasure
Reeled is up two basis points at four point one
(20:43):
three nine percent. In crude oil up nearly two percent higher,
trading at sixty four dollars and fifty six cents a barrel.
Ali Baba jumping over nine percent after the Chinese tech
company said it will boost spending on AI models and
development to more than fifty three billion million dollars. Sticking
with tech in AI, where Micron Technology has reported a
(21:04):
it's a revenue sword forty six percent in the previous quarter,
driven by demand for AI developers. Micron's outlook for the
current quarter also beat expectations, However, that stock is retreating
about two percent. Meanwhile, shares in Lithium America is surging
ninety seven percent now after Reuter's reported that the US
is negotiating a stake as large as ten percent in
(21:27):
the Canadian mining company. Lithium America's is also developing a
mine with General Motors, sending shares in GM up by
about two percent, and according to Bloomberg, Oracle is seeking
to borrow fifteen billion dollars from the US investment grade
bond market. Today, as the software maker ramps up it's
spending to meet the needs of the AI boom, Oracle
(21:49):
shares are down about two and a half percent. I'm
Tucker Silva and that is Wall Street Watch. And in
the previous segment, we asked you the trivia question which
actor portrayed Darren in the two thousand and five movie Bewitched.
That would be Will Ferrell. Charlie from Scarborough, Maine is
our winner today, taking home a Financial Exchange Show teacher.
(22:09):
Congrats to Charlie. We play trivia every day here in
the Financial Exchange See complete contest rules at Financial Exchange
Show dot com.
Speaker 2 (22:17):
Can we talk a little bit about that GM Lithium
America's item. Let's do it the one that Tucker just
brought up. It's not in your stack. Oh good, Yeah,
So basically, Tucker correct me, look at that later. What
you just said was that GM is going in on
that mining venture with them.
Speaker 4 (22:37):
They are currently developing a mind Yes, that's what I've read.
Speaker 2 (22:41):
What a horrible idea with vertical integration. There's a reason
why automakers don't do it for their raw materials. Is
because they have no expertise and specialization in doing so.
Speaker 3 (22:54):
I think of Henry Ford when I think of that.
Didn't he buy rubber plantations?
Speaker 2 (22:57):
So he went further than that. He bought lane and
in Brazil and tried to set up a commune called
ford Landia that was going to basically produce the rubber
and other raw materials needed and send it up to
the US for production and everything. It wasn't quite like
(23:17):
it wasn't you know, it didn't go as badly as
it could have been, Like not everybody died, but they
shut it down within a year or two because they
were like, this is horrible, it's not working. Why because
you have no expertise in doing any of this stuff.
So I have no doubt that GM is looking at
this saying, well, we're gonna need the lithium. Why don't we,
you know, help develop you know, the venture and everything.
(23:38):
Like I'm sure it comes from a place of good intentions.
But if that's the case, hey, why don't you also
own a bunch of iron mines and a bunch of
steel smelters and you know all the stuff that you know,
why don't you go and you know, buy a bunch
of rubbertories.
Speaker 3 (23:53):
Sounds very nineteenth century, doesn't it.
Speaker 2 (23:55):
What makes lithium different that you feel like, hey, we've
got some way that we can do it that's better
when you clearly don't. So the nicest thing I can
say about it is, at least, this is kind of
an ancillary business. Is not like you remember when AMC
got all that money from an equity raise and they
went out and they bought like a gold mine. It's
(24:15):
not that at least, so you like, you could at
least say it's it's it's at least an ancillary business
like AMC does not need any They don't need to
buying gold in order to show movies. To me, this
you could say, okay, like I understand they're thinking. But historically,
there's a reason why automakers are not involved in the
production of the raw materials needed to make their cars,
(24:36):
and that is they're not any good at it. So
who knows if GMS identified that this is actually you know,
viable and useful. Who knows that this is gonna actually
end up working out well for them? But whenever a
car company in particular gets outside their comfort zone, immediately
I'm just like Nope, you're gonna need that capital for
(24:56):
something else. Running your car company is expensive. Don't don't
go doing dumb stuff. It's kind of where I get
to there. I don't know, Yeah, I could see that.
Let's talk about this piece here, actually, yeah, let's talk
about this is the diversified portfolio dead. The AI boom
has turned an age old investing rule on its head.
A couple things. This piece largely talks about, you know,
(25:18):
some studies that have been done on more concentrated portfolios
and whether or not that's good or bad. And the
answer basically always boils down to, hey, if you have
any actual investing skill, it's good, but most of us
don't have investing skill, and so it's bad. That's kind
of where it gets to the other piece. You know,
like they quote you know, Warren freaking Buffet, which like
(25:40):
quoting Warren Buffett on investing and saying, hey, you should
do this is like quoting Ted Williams on baseball and
being like, oh, like just do that. Like just because
it works for Ted Williams doesn't mean it's gonna work
for you. Like, these are generational talents at their respective trades,
and you should not take advice from like the best
person ever any specific thing, because it usually doesn't apply
(26:03):
to you.
Speaker 3 (26:04):
Yeah, hard to operationalize it when you don't have their
level of skill. If you substitute for sixty forty just
the generic term diversified, the answer is yeah, probably. If
you're older, for example, well, you probably need some growth
and inflation protection. Stocks have historically been good at those things.
You might also need some money to meet short term
(26:24):
needs educational or other expenses that will arrive in the
next several years. Well, you might not want to put
that money in equities in stocks, because stocks can experience
serious draw downs price to clients, and they can sometimes
last for a while. So, of course, most investors should
(26:45):
be somewhat diversified. Arguably every investor should, except for people
with an extremely long time arizon. Some investment folks, not all,
but some would argue that they can afford to be
entirely inequities and even borrow to buy more.
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Speaker 2 (28:07):
One other piece here. Whenever I see something, a piece
that's written talking about, Hey, you know, because of x
y Z doing so well, does that mean you shouldn't diversify?
Usually means that that XYZ whatever it is, has about
run its course.
Speaker 3 (28:23):
Yeah, you could write a piece like that every year,
just substitute of fill in just you know, fill in
the blank for.
Speaker 1 (28:28):
X y Z.
Speaker 2 (28:28):
That's why whatever the best performance yeah, whatever the best
performance sector is because generally, if you look at the
history of the S and P five hundred, hey, you
might have a trend that lasts like two or three
years that that's you know, kind of a longer term one.
But generally the best performing sectors in the S and
P change every year and you have no idea what
(28:48):
they're going to be based on how the prior year went.
So when you see something being like, oh, should you
like not diversify and just invest in AI, it's probably
not like, why weren't you writing this piece three years ago?
Is the question that I would ask. Yeah, no, it's
not clear.
Speaker 3 (29:02):
To me who they're writing for. For an individual investor,
that is incredibly bad advice. If you're a family office,
which is an investment advisor that runs money for one
or more very wealthy families, or if you're running a
hedge fund, which is an unconstrained type investment strategy usually
catering to wealthy people who can afford exotic forms of risk, well,
(29:23):
they tend to not be diversified and they use a
very unusual skill in unusual ways, but all for most
of us, for nearly all of us. The rules of
them you learn about when you go to your first
four h one K education session, when you sign up
for your plan or you're signed up for it, those
(29:44):
will apply for the rest of your lives.
Speaker 2 (29:47):
Piece and CNBC and exclusive from them. Ford courts riskier
borrowers with lower rates for F one to fifty pickups.
I'll quote here from the piece. Ford is racing to
sell more F one fifty pickups this quarter by offering
lower interest rates to buyers with the weakest acceptable credit histories.
So this, I guess, is Ford's version of like a
buy now, pay later, and that they're gonna let you
(30:08):
buy now and Ford's gonna pay later. Because af Ford
wanted to offer these rates all the time, they would do,
so they're doing so now because they want the money
from the F one fifty sales today, probably because inventories
are building, would be my guess. And in return they're
willing to accept lower interest payments and probably higher defaults
as a result of this.
Speaker 3 (30:28):
Yeah, I guess depends on what happens in the broader economy.
If things go south, those defaults will pick up and
this will seem like an incredibly ill, ill advised and
in retrospect, ill faded move.
Speaker 2 (30:41):
Whenever we see something like this, it's just like, Okay,
I know, I feel I always come back to.
Speaker 1 (30:47):
Look.
Speaker 2 (30:48):
Basically, every bubble in history has been caused by two things,
securitization and leverage. And this is the leverage piece. It's
are you, you know, levering up people that can't afford
to make the payments? And are you going to end
up in a problem?
Speaker 3 (31:03):
Yeah, they're by definition they can't afford it. That's what
credit rating scores exist for. It's not to make life
hard for us. It's to make sure you don't overextend yourself.
Speaker 2 (31:12):
Yep. Yeah, it doesn't fill me with the warm and fuzzies.
Speaker 3 (31:16):
No, sounds like a terrible idea. Honest, I hate to
be a party pooper. Maybe it works out, but odds
are doesn't right for the people who are induced into
borrowing huge amounts of money to pay for these beautiful
vehicles who wouldn't want one, But you know it's probably
not the right thing to do.
Speaker 2 (31:32):
Just take a quick break. When we return.
Speaker 1 (31:35):
Stack Roulette Bane Show podcast drops every day on Apple, Spotify,
and iHeartRadio. Hit that subscribe button then leave us a
five star review. You're listening to the Financial Exchange Radio Network.
Here the Financial Exchange every day from eleven to noon,
non serious XM's Business Radio Channel one thirty two. Keep
it here for the latest business and financial news and
(31:57):
the trends on Wall Street. The Financial Exchange is now
life on series XM's Business Radio Channel one thirty two. Thanks.
He's the Financial Exchange Radio Network.
Speaker 4 (32:16):
The Financial Exchange is a proud partner of the Disabled
American Veterans Department of Massachusetts and this year's DAV five
K on Saturday, November eighth at Castle Island is sold out,
but you can still take part by making a donation
to support our great American heroes. Please visit DAV five
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(32:38):
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Speaker 2 (32:50):
Mike, what do you got? Mark?
Speaker 3 (32:54):
Whoever you are, well, Chuck, I want to tell you
how handsome I am today?
Speaker 2 (32:57):
Is that in Mike Armstrong impression. Yeah, it's cause he's
I can't do him. Well, he's he's way too.
Speaker 1 (33:02):
Low for me. I don't know.
Speaker 3 (33:04):
That's that's that's closest I'm ever going to again. Okay, And
if we could not let him hear that, that would
be wonderful too. Touch we could dump the last twenty
seconds to the show from the Financial Times. This speaks
to the challenges that all developed countries are facing with
a larger number of retirees being supported by with the
(33:25):
with the growth rate of retirees growing faster than the
growth rate of people still in the workforce. The story
is about Italy. Italy weighs freezing its retirement age at
sixty seven. The Maloney's government. Prime Minister Georgia Maloney's government
is considering making this change. The reason I bring it
up is that I was surprised to find out that
Italy's pension law links the statutory retirement age to life
(33:48):
expectancy improvement, so it goes up automatically, whereas now their
pension law governs relationships between labor and it's more broad
than what we're talking about with social security, very much
so the closest analog we have a social securities normal
retirement age, which by coincidence is sixty seven. But what
sort of impressed me about Italy's system, if you will,
(34:11):
is that it escalates automatically. Ours has to be increases
in and ra under social security have to be legislated,
and the Prime Minister is under pressure to put a
ceiling on that because obviously older folks are squawking. I
was also a little bit surprised to learn that the
number of people over fifty still working in Italy, or
the percentage, is nearly fifty percent, whereas here our fifty
(34:35):
five and over labor force participation rate is about forty percent.
So for what it is worth, firstly, we're all facing
the same challenges in the developed world, more people retiring,
fewer people working, or a higher growth rate in the
retirement age part of the workforce than in the overall workforce.
And the fact that Italy's laws are a little bit
(34:56):
or practices are a little more stringent than ours. As
I read this, I'm.
Speaker 2 (35:02):
Going to talk a little bit about this piece on
the NFL rights and potential renegotiation. So back in twenty
twenty one, the NFL signed an eleven year, one hundred
eleven billion dollar media rights deal for distribution, and the
(35:22):
league has an opt out cause after the twenty nine
to thirty season, which is five years from now, four
years from now, and Roger Goodell, the NFL Commissioner, said
this yesterday. I think our partners would want to sit
down and talk to us at any time when we
continue dialogue with them. I like that opportunity. Obviously it's
not gonna happen this year, but it could happen as
early as next year. That could happen. So obviously you
(35:47):
start say, okay, why do the owners want to renegotiate
the rights deal today? You know what what gives? Like,
what's what's the reason? And the obvious answer that you
come up with as well, they think they can get
more money for the rights today as opposed to where
it was four or five years ago. A couple things
(36:09):
that go through my head. The first is, look, you
obviously went through a substantial bout of inflation since this
deal was signed. Prices in general are higher, and so
the owners look at this and say, great, like we
locked in prior to that, we want, you know, more
than we were getting and we think instead of getting
you know, ten billion dollars a year in this media
rights deal, maybe we can get you know, twelve or thirteen,
(36:31):
so it's you know, twenty thirty percent higher. Okay, Like
I understand that, But again, why now? Like what why
not last year? Why not next year?
Speaker 1 (36:42):
Like?
Speaker 2 (36:42):
Why now? What's the the reason for this? And the
only piece that I keep coming back to is there
have been a couple of things written about this to
a certain extent where when you look at the price
of pro sports teams today, it's basically at the point
where individuals can afford them. You have to have these
(37:05):
consortums or a bunch of private equity money or sovereign
wealth wealth funds from the Middle East that come in
and are able to do this. And in order to
entice some of those groups, most notably the private equity
firms and the sovereign wealth funds, you have to actually
show that you can make a return on the investment.
You know, the Norwegian Sovereign wealth funder, the Saudi Sovereign
(37:28):
Wealth fund doesn't want to invest in an NFL team
just so that they can go to the games and
the owner's box on Sunday they don't need that in
order to have like their place in society. It's not
you know, Daniel Snyder buying, you know, the commanders being like, oh, like, yeah,
I'm the biggest fan ever. It's no, they don't care.
They just want them right right. So when you look
(37:49):
at this, I think part of it that I get
come back to is, hey, because these teams need to
have their value continue to go up in order to
make the whole thing work. You've got to have a
faster negotiating cycle and more money coming in on a
more rapid basis. And that's where I think the impetus
(38:10):
is for the owners on this. Let's take a quick
break for the rest of the day. We're gonna be
back at it tomorrow. We get some jobless claims and
existing home sales data. We'll filly in on all that
and more tomorrow
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