November 3, 2025 • 38 mins
Chuck Zodda and Mike Armstrong discuss this week's biggest economic events. Has the S&P 500 become to heavily weighted to the Magnificent Seven? Is the recent wave of layoffs a warning sign for the job market? USVI Gov Albert Bryan Jr joins the show to chat about how the islands are avoiding the wrath of tariffs. How the US economy defied doomsday predictions on tariffs.
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Episode Transcript
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Speaker 1 (00:00):
The Financial Exchange is produced by Money Matters Radio and
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(00:20):
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(00:42):
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a donation today. This is the Financial Exchange with Chuck Zada,
(01:06):
and Mike Armstrong.
Speaker 2 (01:13):
Chuck, Mike and Tucker with you here kicking off a
new week, a new month. It is the first trading
day of November, and quite honestly, not that exciting of
a week in markets. We got a few things to
you know, maybe get excited about. But you can break
(01:33):
some leaves, have us on in the background. You don't
need to be glued to us leg last week. And
we tell you this because we love to have you listen.
But hey, full disclosure. When the biggest thing that's coming
out data wise this week is you know, the ADP
jobs report.
Speaker 3 (01:48):
You're kind of like, Okay, it would have been an
exciting week except for our lawmakers shutting the government down
for a thirty third straight thirty fourth straight day, thirty
third straight day.
Speaker 2 (01:59):
Yeah so, I mean, otherwise we could have talked about, Hey,
we get jolts coming out tomorrow. Can't what can't wait
to see what those tell us. Hey, Thursday, we're gonna
be getting more jobless claims, non farm productivity unit labor
costs a whole bunch of stuff there. Friday, we would
have gotten the jobs report for the month of October.
Instead we have to be like, hey, consumer Sentiment comes
(02:22):
out on Friday. Isn't that great? And it's it's it's
not like the Consumer Sentiment report kind of my least
favorite report that we cover that still is discussed as
if it's a major report. We do have some big
earnings this week. Today we get Palenteer reporting after the Bell,
So that is, you know, a four hundred billion dollar
company with four billion dollars in revenue reporting. So yeah,
(02:44):
I say that just because you know, talk about one
where you know, the fundamentals are completely detached from the
story that's being told, kind of the the you know
poster child there. AMD and Uber are going to be
reporting tomorrow. That'll be interesting to see what we get.
We also get marry At reporting as well, which gives
us a little bit more color on what is going
on from a travel perspective. Young brands reporting on Tuesday
(03:09):
as well, so we get a little bit of information
about the restaurant business Wednesday McDonald so more restaurants, Qualcom so,
a little bit of Semiconductors, door Dash, we get to
find out how many burritos need to be bought on layaway.
And then we also have a couple of insurers that
I'm interested to see if they give us a little
bit of color about what's going on the private credit space.
(03:32):
MetLife and All State both reporting on Wednesday, and quite honestly,
it's kind of the peak, like, yeah, you got Airbnb
on Thursday. Okay, I guess that's kind of exciting, but ultimately,
heading into the end of the week, there's you know,
we've we've kind of gotten through the heavy hitters at
that point.
Speaker 3 (03:50):
Yeah, I think what can be interesting about this week?
Like you said, the insurers, we've been talking a lot
about private credit and the concerns and cockroaches bubbling to
the surface there. So do they have convention of that
cockroaches bubble to the certain Oh, yes they do. We
also have that McDonald's Marriott story. So what's interesting about
that to me? Marriott can tell me a fair bit
(04:11):
about what the high end consumer is doing low end too.
Speaker 4 (04:14):
They have some you know, some.
Speaker 3 (04:15):
More discounted brands, but we've gotten some metrics from them
in terms of where their sales are over the most
you know, the last quarter. So I'm interested to hear
that again McDonald's. I mean, is there a better is
there a better barometer for you know, people going and
looking for a discount food item than McDonald's. I don't
(04:36):
really think of one, and so are they actually seeing
good sales or is there you know, common consumer really
pulling back like others have indicated that that's pretty interesting
to me.
Speaker 2 (04:47):
Can we talk about something that I realized when looking
at the just like what was on tap for this week,
that I was just kind of shocked about quite honestly.
Did you you know that for the last three years now,
Uber has more revenue on an annual basis than McDonald's.
Speaker 4 (05:09):
Revenue at McDonald's.
Speaker 2 (05:10):
Isn't that kind of wild? Uber did forty seven billion
dollars in revenue over the last twelve months. McDonald's did
twenty six. Now I know that you can point to
that and be like, Okay, it's because Uber a like
just on a per item charge.
Speaker 1 (05:23):
You know.
Speaker 2 (05:23):
It's it's a lot easier to rack up a fifty
dollars bill at Uber than McDonald's.
Speaker 4 (05:28):
It is, yep.
Speaker 2 (05:29):
It also is in you know, different areas they do
food delivery, they take people from place to place. I
think they still might have like that Uber Freight division.
I can't remember if that still exists.
Speaker 3 (05:39):
But yeah, that is surprising to me, Yes, right, Like,
isn't it kind of wild that Uber does almost twice
the revenue annually that McDonald's does, And yet we don't
talk about Uber as being as impactful, right, but it is.
Speaker 2 (05:53):
I mean, like in terms of raw economic power, it is.
And the miraculous thing is is McDonald's revenue, by the way,
has been flat for the last decade. Isn't that kind
of wild? Like McDonald's doing twenty five billion dollars.
Speaker 3 (06:09):
Not shocked given where fast food has gone over the
last decade, but yeah, it is pretty crazy, you.
Speaker 2 (06:13):
Know, Like McDonald's done twenty five billion in revenue in
twenty fifteen, They're gonna do about twenty.
Speaker 4 (06:18):
Six billion this year. Yeah.
Speaker 2 (06:19):
Uber on the other hand, when the IPO, they were
doing about eight billion in revenue in twenty seventeen.
Speaker 4 (06:24):
Another up to forty seven.
Speaker 2 (06:26):
Yep, Derek Hashershaw, He's done a really nice, a sneaky
nice job there.
Speaker 3 (06:31):
There are some real questions about whether that company could
ever be profitable, right, There's some really serious questions about that,
and they have proven that they can.
Speaker 4 (06:40):
Their product is no longer cheap.
Speaker 3 (06:44):
In basically all scenarios that I see it's about the
same costs as a taxi, but that was always probably
going to be the case, and they have developed now
a user base that really prefers them over taxis.
Speaker 2 (06:56):
He's done a really nice job there. Yeah, and it
goes under the radar for some reason. I don't know why,
but they maybe it's just because we still think of
them as like just this app or something like that.
Speaker 4 (07:09):
I don't know what it is.
Speaker 2 (07:11):
But when you're a company doing fifty billion dollars in
revenue and twelve billion in profit, like, yeah, you've got
something there.
Speaker 4 (07:21):
Well.
Speaker 3 (07:21):
I mean, the real answer to me about why it
doesn't get talked about is A, it's not artificial intelligence,
and B it'll never be able to scale to be,
you know, a competitor with the top ten companies in
the S and P five hundred.
Speaker 4 (07:34):
Are we sure of that?
Speaker 2 (07:36):
I mean, would you ever have you know, ten years ago,
would you ever have said that Tesla was going to
be one of the top ten companies?
Speaker 4 (07:44):
Right? Yes, I guess you can never be sure about it.
Speaker 3 (07:46):
But in their current business model, they would need to
change that business model rather significantly. You know, they've talked
about being an app of everything, So if they want
to be that seriously, then yeah, they need to be
in everything app.
Speaker 2 (07:58):
But it's it's just kind of wild to me that
it's you know, this two hundred billion dollar company doing
fifty billion dollars in revenue. Now you kind of look
at you like, there's done a really really nice job
there with that company. Last week, we got a bunch
of the big tech earnings and there's a piece in
the Wall Street Journals titled what investors learned from tech
(08:18):
Earnings in charts, And quite honestly, I don't think we
learned anything from tech earnings. I think that we learned
that some of them are good, some of them are bad,
and some of them are okay, which is fine. Like
there's no consistent story that we got there. I want
to talk about something that's more interesting to me, which
I'm sorry, like you're all gonna have to listen the
(08:39):
subheadter on this. The so called Magnificent seven makeup a
record thirty eight percent of the S and P five
hundred and it got me just looking at S and P,
you know, components and allocations and things like that, and
here's the part to me that's that's kind of interesting.
Mike if an mister came to you and said, hey,
(09:03):
I've got almost nine percent of my portfolio and one
holding and almost seven percent in three more, you'd probably
say to them, it's a little concentrated. We'd like to,
you know, reduce some of that because if things go
bad there, that could potentially be a problem for you.
Speaker 4 (09:22):
Yeah, And yet.
Speaker 2 (09:23):
When you go out and you buy it in an
S and P five hundred mutual fund or in an
ETF wrapper, you say, oh, I'm just buying the market.
It's diversified, and like it. I don't know why. It
just hit me that, like, we're at the point now
where if in video goes up another fifteen percent relative
to the index, it's going to be ten percent of
(09:43):
the S and P five hundred. And that's a level
where normally if someone comes in and says, hey, I've
got ten percent of my net worth tied up in
one company, we normally sit there and're like, this is
kind of the danger zone where it starts to represent potential.
Speaker 4 (09:57):
Problems for you. And I like, I don't know.
Speaker 2 (10:00):
Why, but this just triggered that thought in my head
that it's like, hey, this is not a well diversified
portfolio anymore to say you just own the S and P.
Speaker 4 (10:09):
Five, what are the top ten comprised?
Speaker 1 (10:10):
Now?
Speaker 4 (10:11):
The top ten? I can I can do something something.
I think it's it's.
Speaker 2 (10:15):
Yeah, probably in the mid forties. That's not a well
diversified portfolio.
Speaker 4 (10:20):
No, it's not.
Speaker 3 (10:21):
Now, you know, do most investors just have all their
money in the S and P five hundred? Probably not,
but a lot do many do. And yeah, that is
a very different type of concentration than we've ever talked
about for the S and P five hundred.
Speaker 2 (10:33):
You know, and like it's like, oh, well, I own
five hundred different companies, okay, Well, if for every thousand
dollars you put in, fifty cents is in, you know,
it wouldn't.
Speaker 4 (10:42):
Even be fifty cents quite honestly, like it.
Speaker 2 (10:45):
Yeah, I mean for every thousand dollars you put in,
you've got like a dollar in this, a dollar in that. Like,
I don't know that that's well diversified. Yeah, necessarily, you
know it's you. You will get the top twenty five components,
and they're the only ones basically where you're getting north
of like fifty sixty dollars of that thousand. Actually, no,
(11:06):
I'm sorry, north of like five dollars of that thousand
going in anywhere. The other four hundred and fifty components,
it's less than like five dollars of that thousand going
into them, And so like, how diversified are you actually?
If that's the case, real question that I think is
(11:26):
just worth asking. I'm not sure what it means other
than there's now a concentration risk present in the S
and P five hundred that you don't normally see.
Speaker 3 (11:37):
And I'll take it a step further to say, yeah,
you've got some individual company concentration risk, you also have
something that's more than just technology concentration. It's a specific
type type of technology. Like if there is a threat
to the artificial intelligence drive, forget about the tech sector
(11:58):
as a whole, because Apple is a tech company and
they don't have much to do with no. But if
you have some sort of threat to any of the
public or private companies in the AI story that disrupts
that narrative, there's.
Speaker 2 (12:09):
Like twenty five percent of the S and P that's
just tied to it right now.
Speaker 4 (12:12):
And it's not to say they will be bankrupt.
Speaker 3 (12:15):
Alphabet still has a business without AI, as is Microsoft,
but they're not seeming presumably they're not worth nearly as
much as.
Speaker 4 (12:22):
They are on paper today. Without that future promise.
Speaker 2 (12:25):
Of AI, anything else that you want to talk about
as regards to tech, I mean, I know there's you know,
it'll be making our.
Speaker 4 (12:30):
Way throughout the entire stack.
Speaker 3 (12:32):
AAI and the tech companies that dominated are going to
continue to be the main story that everyone talks about
over the course of this year, with some potential fun
chats about private credit as well.
Speaker 2 (12:45):
Can't wait take a quick break when we come back.
Let's talk labor after this. What's going on in the
job market. The government won't tell us because they're shut down,
but we'll tell you what we can glean from what
we're hearing from different companies.
Speaker 1 (12:58):
Right after This is your home for the most comprehensive
coverage of the economy and the trends on Wall Street.
This is the Financial Exchange Radio Network. Tax dies six
one seven, three, six, two one three eight five with
your comments and questions about today's show. This is the
Financial Exchange Radio Network.
Speaker 5 (13:23):
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Speaker 2 (13:52):
Couple pieces here on the labor market and one here
from Bloomberg a wave of us Lee Ploff's flash early
warning sign for the job market. Second one why companies
are no longer hanging on to employees. And a couple
thoughts that are some of them are mine, a lot
of them are not original in things that I've I've
(14:13):
read online that I do think we're reaching a tipping point.
On the first is, I do think that we are
very much at a point where companies are looking to
drive whatever they can margin wise right now, not through
increased sales, but through increased efficiency.
Speaker 4 (14:34):
We're seeing all kinds of reports about that, and there's
multiple reasons.
Speaker 3 (14:37):
One, they might be paying tariffs for the first or
substantially more terrorists than they were last year. They are
also facing pressure from investors to prove that some of
the spending on things like artificial intelligence are eventually going
to have their payoff. And so I think that there's
this moment right now where everyone is looking at executives
to ask them, show me signs that you can be
(14:59):
more efficient using the technology that you have.
Speaker 4 (15:02):
So there's that dual pressure there, and.
Speaker 3 (15:06):
Yeah, I think compared to this time last year, I
just sense more of a willingness from CEOs to depart
with their employees.
Speaker 2 (15:15):
And this gets to the part that I do think
is like, if you want a reason for this to
concern you over the next three to six months and
the potential economic impact, Mike, if there's one thing that
I've picked up, well, no, not one of the things
that I've picked up in you know, being in this
business for sixteen years now, sixteen years. Corporate leaders are lemmings.
(15:43):
They love to just follow other like each other off
the cliff of what they think is going to be
successful and look no further than back in twenty twenty
one and twenty two when in the auto sector, Hey, Tesla,
you know has this crazy valuation.
Speaker 4 (16:02):
What should we.
Speaker 2 (16:03):
Do make ev We're gonna make only EV's by twenty thirty. Yeah,
and now it's like, Okay, maybe that wasn't you know,
the smartest thing to you know, to do that. That
probably wasn't the best move for us. You take a
look this year and it's hey, like, what do we
have to do? We got to use AI like in
(16:23):
our company in order to you know, do something like
think about like who is the was it Wendy's or
Taco Bell who experimented with the AI ordering drive throughs?
And then they were like, Mark, Oh, this is actually
really bad. This is this is not working.
Speaker 4 (16:41):
And so when I see, by.
Speaker 3 (16:44):
The way, before we move on from that, I don't
remember if it was Taco Bell or no other company,
but people got into the habit of screwing with the
AI machines. Oh yeah, did you see them order like
a million cups of water? Yeah, you know, it's a
really funny thing that wouldn't fall for But nay, I,
you know, is going to process that order for free,
(17:05):
for a million cups of water.
Speaker 2 (17:07):
You know what's a sneaky good ad that I just
saw for the first time this weekend is the one
of Mitch Trubisky as the backup orderer for the drive
through ad. It's a progressive ad, but it's like someone
like fumbling around trying to like get their order in
the drive through, and they're like, no, we got to
get the backup orderer in here. And they get Mitch Trubisky,
who's you know, washed up NFL quarterback and didn't you know,
(17:27):
amount to being a starter, and he like executes like.
Speaker 4 (17:30):
A perfect order. It's pretty good.
Speaker 2 (17:34):
But like when I say, like corporate lemmings, you see
these companies that are now like Amazon announces layoffs last week,
stock goes up. How many CEOs do you think are
sitting there over the weekend saying, hey Andy, Andy got
rid of thirty thousand employees and look what it did
to his stock. When I get in, I gotta I
gotta talk to, you know, the the chief operating officer
(17:55):
on Monday, and we got to see if we have
to do our own, you know, headcount reductions.
Speaker 3 (18:00):
So what I keep coming back to is the FED
is having this debate around the supply and demand of labor.
Right on one hand, they clearly see the slowdown and hiring,
but on the other they're just not sure how many
people are out there looking for work in the absence
of all the data. What's your sense of the job
market right now? Because my sense and by the way,
you can text the show at six one, seven, three,
(18:21):
six two and thirteen eighty five, uh, to.
Speaker 4 (18:23):
Give your opinion too.
Speaker 3 (18:24):
But my feeling right now when I hear from folks,
when I when I you know, just generally ask people
about how they're doing. They're worried about the state of
their job and they're having a very tough time finding
a new one.
Speaker 2 (18:40):
And I think the other thing is, you know, with
the with the additional layoff announcements, I think that you
can make a case that the job market is continuing
to slow further, you know, like it's it's worsening still. Yep,
it still is one where on a net basis, the
(19:00):
rate of layoffs is not particularly high relative to historical standards.
But it's again we're kind of in that danger zone
where if you don't see a change in trajectory soon,
it starts to get kind of problematic. Now the last
two years, we've seen that change in trajectory heading into
(19:21):
year end. Can we go three for three? Maybe we'll
see quick break here when we return. It's Wall Street watch,
and we're also going to be joined by the Virgin
Islands Governor Albert Bryan right after this.
Speaker 1 (19:40):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall Street.
Watch a complete look at what's moving market so far
today right here on the Financial Exchange Radio Network.
Speaker 5 (19:59):
Market's beginning the week in mixed territories. Investors ready for
a new batch of third quarter earnings Right now. The
Dow is down by about four hundred points, SMP five hundreds,
down two tents of one percent, and the Nasdaq is
up about a quarter of a percent. Major news in
the tech space this morning after OpenAI signed a thirty
eight billion dollar deal with Amazon, where Amazon Web Services
(20:21):
will provide the Chat GPT maker with access to hundreds
of thousands of in videographics processor units as part of
a seven year deal. Amazon up over four percent, and
Kimberly Clark announced this morning it's reached an agreement with
talentel maker Kenbew in a deal value to forty eight
point seven billion dollars, which would create a consumer stables giant.
(20:42):
Kimberly Clark shares are down twelve percent, while Kenbustock is
jumping fifteen percent. On the news, I'm Tucker Silvan. That
is Wall Street Watch.
Speaker 3 (20:50):
Joining us now is the Governor of the United States
Virgin Islands, Albert Bryan, Governor.
Speaker 4 (20:55):
Thank you so much for joining us today. Appreciate it.
Speaker 6 (20:58):
Thank you, tok for having me. It's great to be
on the show all the time to talk about what's
going on in the Virgin Islands and what we expect
to see for the upcoming season.
Speaker 3 (21:06):
So, Governor, we reached freezing temperatures here this morning, and
we will be for the next several months. I'll allow
you to I'll allow you to boast about your weather
down there eventually, But I actually want to start on
a different subject, which is the state of the government
down in the Virgin Islands. You know up here much
more in the twenty tens was discussed about Puerto Rico's
(21:28):
fiscal situation and the struggles that they had and kind
of overshadowed what was happening in the Virgin Islands in
the late twenty tens. Can you talk to us about
where the territory was at the end of the twenty
ten decade, and just where you see it's come over
the course of the last several years.
Speaker 6 (21:46):
Yeah, I think we were in a really bad place.
So I'm much like Puerto Rico. Often when I go
to the Senate, I have been trying to get a
bill poss that would allow the treasury to back all
our bonds. I mean, it's one simple thing that they
could do in order to shore up. But in twenty ten,
we were facing an energy crisis. We couldn't go to
the markets, mainly because we hadn't completed our audits. We
(22:08):
kind of topped out during the Great Recession trying to
just keep the government alive. Is you know, thirty percent
of our population and our workforce works for the government,
and probably another fifteen to twenty percent the total population
is affected by that in terms of whether it's a
spouse or a husband, kids on the support, insurance programs
and whatnot. Also facing us in twenty twelve, we had
(22:31):
the shutdown of the hess Oil or the Venza as
people come and know it. It's the third largest refinery
in the Western Hemisphere, so it really impacted us. We
lost like twenty percent of our employment overnight. So when
Puerto Rico was going through Petivase, so we had to
really fight I'm saying Pettibase and Petivasa on the takeover,
(22:54):
we really had to fight not to be included in
a lot of those bills that Puerto Rico still hasn't
really gotten out of as yet. It doesn't seem to
benefit Puerto Rico all that much. So since then, we've
been me Coming to office in twenty nineteen, for sure,
was about solidifying our finances, making sure that the Virgin
(23:15):
Islands was able to meet its bills, meet its payrolls,
and also to expand. And since that time we've been
doing incredibly well. I have to say. We had two
major hurricanes, two cap fires, back to back within a
month in twenty seventeen, and that caused us a lot
of distress, grief, but it also brought a lot of
opportunity in terms of money. When we started doing the
(23:40):
recovery from this hurricane was under Governor mop it was
about eight billion that we thought we would recover in damages.
We're up to twenty four billion at this point and
under major recovery here in the Islands.
Speaker 4 (23:55):
So talk to me about the most recent fiscal year.
Speaker 3 (23:58):
What was the success is still being worked down at
the government level, and what is the state of the
territories today.
Speaker 6 (24:04):
Well, one of the things that really hampered us in
the last year was, well the last four years, is
we get a tax extender called the Rum cover over
and it takes our ten fifty So every proof gallon
of rum we shipped to the United States, we get
back ten fifty of the excise tax. There was a
tax extender that had been extended multiple times that allowed
(24:27):
us to get three thirteen twenty five. It carried the
amount of the tax we got per proof gallon from
ten twenty five, from ten fifty, sorry to thirteen twenty five.
We had been trying to get this solidified for a
long time. This year, under the Bipartisan Budget Act, the
Big Beautiful Bill, I'm sorry, we were successful in getting
(24:49):
it solidified. So now forever that thirteen fifty is going
to come back to the Virgin Hos. The big part
about that is is it solidified our pension system, which
is arguably was arguably the worst in the country. We've
now funded that pension system using that So every single
year we've been moving along, we've been making tremendous strides
(25:13):
that was a big one for this year. I think
we also during the last administration we got our match
for this twenty four billion reduced from ten percent to
two percent under the Biden administration, so that was big
for US as well. Coming into President Trump, the good
news is the Virgin Islands is not affected by any
(25:36):
of the Trump tariffs.
Speaker 4 (25:37):
So see that surprised.
Speaker 3 (25:39):
I mean, I would think by necessity the territories have
to import a lot of stuff, but I guess the
answer is that it's coming from either within the United
States rather than importing a whole lot from overseas.
Speaker 6 (25:54):
Yeah, so, I mean ninety percent of everything we get
comes from the US mainland. We would never be able
to sustained the amount of people on such a small
island just from beginning for beginners, but then we get
a large tourism economy that's on fire, and that all
the liquors imported and everything else or to service those
(26:14):
needs as well. So not being affected by these tarifts
have been kind of like going all over the place saying, hey,
you can import your stuff into the Virgin Islands, we
have a free trade zone and not pay the Trump tariffs.
And if you have thirty percent in value dan it
becomes a US made product and it can go into
the United States tariff free. So we've been getting a
(26:36):
lot of calls about our free trade zone in sync Court,
specifically where we have a deep water port and the
ability to extend tax benefits on top of that. So
you get one hundred percent reduction of your state taxes
and ninety percent reduction of your federal income taxes. So
it's kind of like no tariff, no tax. It's a
(27:00):
condition for charging our industrial sector, a light industry sector
here in the island. So I'm doing a lot of
worker I'm not.
Speaker 3 (27:11):
Governor on that on that subject, if you don't mind,
So I'm sure the first very question is about those
potential tax benefits and how it all works into the tariffs.
I would imagine the second question has to be about
infrastructure and what companies are used to versus what the
Virgin Island has been focusing on developing. What is you know,
(27:32):
what do you see as the biggest infrastructure accomplishments, say
in future projects that need to be accomplished to continue
to drive growth there.
Speaker 6 (27:39):
So so just to get just to kind of picture
what we're talking about here, our entire economy is about
four billion dollars. This year. We have already issued six
billion in contracts. We already had a billion out and
by the end of the year we would have issued
eight billion in contracts. That means new schools, new hospital,
(27:59):
all new under ground water sewer electric. We're putting in
two new power plants Saint Croix in this last year.
The second solar farm we opened up Saint Croix peaks
at forty four megawatts. We have thirty five megawats of
solar pound for pound, we have the most solar per
capita in the world. We're about to open two more plants,
(28:23):
one in Saint Thomas on the west end and one
on the East end, which will also bolster the solar
generating power of that island as well too. So my
race is to get a power down to put in.
Contracts have now been let for most of Saint Croix
underground water sewer. Saint Thomas's on the way as well,
(28:47):
and we're getting two new essentially two new power plants
and Saint Thomas. The sides of solar that we've installed,
we're putting in much more efficient generators, trying to drive
down the cost of energy, so governa Obviously tourism is
always a big focus for the Virgin Islands.
Speaker 3 (29:06):
What else is at the top of your list for
twenty twenty six in terms of priorities.
Speaker 6 (29:10):
So we got this year. We opened up the first
hotel in thirty five years, Hampton is right on the
beautiful Whyco doc in downtown Saint Thomas Saladamali, and we're
working on a deal where ownership of the Premier Frenchman's Reef,
another hotel, will revert back to the Virgin Islands government
(29:30):
courtesy of our Hotel Development OX. So we've been finally
started building and renovating our hotels because we have a
lot that says you can take the hotel room tax,
which is at about fourteen percent, increase it by seven
points so that you can actually take the twenty one
percent room tax and rehab or build a new hotels.
(29:54):
So we've been getting a lot of track film hoteliers
using that in order to find out it's building all
these new developments. So that is really there. And then
for twenty twenty I leave office in January twenty seventh,
so my race now is getting a power plant and
getting energy in the right place that if we get
(30:17):
our power, our energy down to about twenty something since
in the industrial power, I'm trying to be able to
give it at twelve cents. Couple with a tariff break
on the tax initiatives that we have, I really think
we could put more fire in our economy. So that's
what I'm really focused on.
Speaker 3 (30:34):
Governor Albert Bryan of the United States version ILDs join
us today talk about the state of the Virgin Island,
state of the economy there and economic development. Governor, really
appreciate you coming on as always and looking forward to
chatting with you again and as we had in the
last couple of months of the year.
Speaker 6 (30:48):
Here fantastic and have a sunny Virgin Islands that I
hate that code for you, but it's good for me
coming down.
Speaker 4 (30:55):
Thank you, Governor thanke care.
Speaker 3 (30:57):
Let's take a quick break when we come we're talking
not employment. We're talking about tariffs and the doomsday predictions
that have yet to take place. Quick break, We'll be
back with tariffs next.
Speaker 1 (31:11):
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Speaker 2 (31:53):
How do yours economy is defined? Doomsday predictions on tariffs?
This is the piece from the Wall Street Journal. The
first sentence should be, Hey, after the tariffs were imposed
in April, the rates were brought back down and so
it wasn't as bad as you know, people thought it
would be. But I don't like the rest is I
can't keep talking about this just because it's like, look,
(32:16):
if you actually look at goods prices, they are rising
this year. If you look at the stuff that is tariffed,
those prices are rising faster. See audio equipment up like
fifteen percent since the start of the summer. The big
thing is there are a bunch of exemptions that were
put in place. The stuff that doesn't have exemptions is
going up about as much as you would expect based
(32:38):
on the tariffs. And to this point, that is leading
to prices moving up, but not in a fashion that's
been high enough to derail the economy otherwise.
Speaker 3 (32:48):
Yeah, the estimates that i've seen total tariffs collected through
September thirtieth through around one hundred and ninety five billion.
It's a lot of money, but it was seventy seven
billion the previous year. We're not talking about ten x
the collection of tariffs. We're not talking about any of
these other numbers. Yes, the average teriff rates are substantially
higher than where they were prior to but this is
(33:09):
this complex web of different rates of things.
Speaker 4 (33:13):
And what you're seeing here is that there are all
sorts of exemptions.
Speaker 3 (33:19):
The rates are far lower than was estimated back in April,
and so there is an effect, but it is a
far cry from what everyone was talking about it. And
again it is not because companies somehow managed through ultra
high tariffs. Again, it is certainly some pressure from big
companies who are able to pressure suppliers, but a lot.
Speaker 4 (33:40):
Of it is all sorts of.
Speaker 3 (33:43):
Lower rates that were actually implemented, all sorts of loopholes
that have been granted. And you know, a policy that
looks a lot different than it did in early April.
Speaker 2 (33:53):
They also this piece mentions you know, auto manufacturers, and look,
if you want to see what's happening on this Yes,
you can look at auto manufacturers. Just as an example,
before tariffs went into effect, the you know, previous several quarters,
GM was averaging about you know, seven to eight percent
profit margins. They're now down to two because GM is
(34:16):
paying more for its inputs and hasn't raised prices enough
to offset that. If we take a look at Ford
Motor Company, this is one where they don't have quite
the same exposure. Remember, GM is more heavily tied into
Canadian manufacturing, and so Ford's profit margin still running about
three percent, pretty much where it was before. Why because
(34:37):
most of what they sell is the F one fifty,
which is already made in the US and assembled there
and has you know, tighter supply lines. If you look
at let's take a look at the European ones, just
because I haven't you know, looked at them. Should we
will get Volkswagen. Sure, let's see Volkswagen.
Speaker 4 (34:55):
Where are you?
Speaker 2 (34:56):
Oh, they haven't reported earnings yet this quarter, but their
margins in the previous couple orders have gone from around
six percent down to Hang, I'm sorry, from around nine
percent down to six percent, so you're seeing some compression
there as well. So I think overall, you know, in
terms of why haven't tariffs you know, caused the problems
people thought in April, the answers, well, the April tariff
(35:17):
rates never went into effect. The other ones that have
subsequently gone in have only been in place since was
it late September or early September? I can't remember when
the higher rates that were then put into effect.
Speaker 4 (35:30):
Yeah, I don't know.
Speaker 2 (35:31):
Somewhere in that range. They're probably starting to hit now
ish into Q one, so we'll see if there's you know,
further impact there. But the biggest thing is, look, the
high rates that were feared in April did not go
into effect, right, That's the biggest thing is.
Speaker 5 (35:46):
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Speaker 2 (36:54):
Tucker's kind enough to forward on a text from a
listener regarding the job market. I'll quote here. I know
of several people who are applying for low end jobs
at places they claim to be hiring and not getting
a job. Someone I know was hiring minimum wage help
for his movie theater and had no issue scheduling twenty
interviews for two part time positions.
Speaker 3 (37:15):
That's the feel I get too, although I will also
say that within the last couple of months we were
hiring here and had a lot of applications, but a
lot of no shows and no callbacks.
Speaker 4 (37:30):
So I do sometimes get mixed messages.
Speaker 3 (37:32):
But my overall assessment of the labor market is much
more like the text we got than our own personal experience.
Speaker 2 (37:37):
So you're saying it's the no hire, no fire, no
interview labor market.
Speaker 3 (37:42):
Again, we got plenty of people to come in for interviews,
but a lot, you know, a surprising number of got
your resume, sow that you applied and you never return
our call.
Speaker 2 (37:52):
There's a real problem with communication just in the world, man.
Speaker 3 (37:55):
Like I think there's just this attitude of ghosting is
okay these days that I guess you just see everywhere.
Speaker 4 (38:01):
I just don't get it.
Speaker 2 (38:03):
I just don't get it, Like showing up and being
a human being is kind of I don't know a
big thing, But what do I know. Let's take a
quick break. When we come back, we had hour two
coming up,
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(01:06):
and Mike Armstrong.
Speaker 2 (01:13):
Chuck, Mike and Tucker with you here kicking off a
new week, a new month. It is the first trading
day of November, and quite honestly, not that exciting of
a week in markets. We got a few things to
you know, maybe get excited about. But you can break
(01:33):
some leaves, have us on in the background. You don't
need to be glued to us leg last week. And
we tell you this because we love to have you listen.
But hey, full disclosure. When the biggest thing that's coming
out data wise this week is you know, the ADP
jobs report.
Speaker 3 (01:48):
You're kind of like, Okay, it would have been an
exciting week except for our lawmakers shutting the government down
for a thirty third straight thirty fourth straight day, thirty
third straight day.
Speaker 2 (01:59):
Yeah so, I mean, otherwise we could have talked about, Hey,
we get jolts coming out tomorrow. Can't what can't wait
to see what those tell us. Hey, Thursday, we're gonna
be getting more jobless claims, non farm productivity unit labor
costs a whole bunch of stuff there. Friday, we would
have gotten the jobs report for the month of October.
Instead we have to be like, hey, consumer Sentiment comes
(02:22):
out on Friday. Isn't that great? And it's it's it's
not like the Consumer Sentiment report kind of my least
favorite report that we cover that still is discussed as
if it's a major report. We do have some big
earnings this week. Today we get Palenteer reporting after the Bell,
So that is, you know, a four hundred billion dollar
company with four billion dollars in revenue reporting. So yeah,
(02:44):
I say that just because you know, talk about one
where you know, the fundamentals are completely detached from the
story that's being told, kind of the the you know
poster child there. AMD and Uber are going to be
reporting tomorrow. That'll be interesting to see what we get.
We also get marry At reporting as well, which gives
us a little bit more color on what is going
on from a travel perspective. Young brands reporting on Tuesday
(03:09):
as well, so we get a little bit of information
about the restaurant business Wednesday McDonald so more restaurants, Qualcom so,
a little bit of Semiconductors, door Dash, we get to
find out how many burritos need to be bought on layaway.
And then we also have a couple of insurers that
I'm interested to see if they give us a little
bit of color about what's going on the private credit space.
(03:32):
MetLife and All State both reporting on Wednesday, and quite honestly,
it's kind of the peak, like, yeah, you got Airbnb
on Thursday. Okay, I guess that's kind of exciting, but ultimately,
heading into the end of the week, there's you know,
we've we've kind of gotten through the heavy hitters at
that point.
Speaker 3 (03:50):
Yeah, I think what can be interesting about this week?
Like you said, the insurers, we've been talking a lot
about private credit and the concerns and cockroaches bubbling to
the surface there. So do they have convention of that
cockroaches bubble to the certain Oh, yes they do. We
also have that McDonald's Marriott story. So what's interesting about
that to me? Marriott can tell me a fair bit
(04:11):
about what the high end consumer is doing low end too.
Speaker 4 (04:14):
They have some you know, some.
Speaker 3 (04:15):
More discounted brands, but we've gotten some metrics from them
in terms of where their sales are over the most
you know, the last quarter. So I'm interested to hear
that again McDonald's. I mean, is there a better is
there a better barometer for you know, people going and
looking for a discount food item than McDonald's. I don't
(04:36):
really think of one, and so are they actually seeing
good sales or is there you know, common consumer really
pulling back like others have indicated that that's pretty interesting
to me.
Speaker 2 (04:47):
Can we talk about something that I realized when looking
at the just like what was on tap for this week,
that I was just kind of shocked about quite honestly.
Did you you know that for the last three years now,
Uber has more revenue on an annual basis than McDonald's.
Speaker 4 (05:09):
Revenue at McDonald's.
Speaker 2 (05:10):
Isn't that kind of wild? Uber did forty seven billion
dollars in revenue over the last twelve months. McDonald's did
twenty six. Now I know that you can point to
that and be like, Okay, it's because Uber a like
just on a per item charge.
Speaker 1 (05:23):
You know.
Speaker 2 (05:23):
It's it's a lot easier to rack up a fifty
dollars bill at Uber than McDonald's.
Speaker 4 (05:28):
It is, yep.
Speaker 2 (05:29):
It also is in you know, different areas they do
food delivery, they take people from place to place. I
think they still might have like that Uber Freight division.
I can't remember if that still exists.
Speaker 3 (05:39):
But yeah, that is surprising to me, Yes, right, Like,
isn't it kind of wild that Uber does almost twice
the revenue annually that McDonald's does, And yet we don't
talk about Uber as being as impactful, right, but it is.
Speaker 2 (05:53):
I mean, like in terms of raw economic power, it is.
And the miraculous thing is is McDonald's revenue, by the way,
has been flat for the last decade. Isn't that kind
of wild? Like McDonald's doing twenty five billion dollars.
Speaker 3 (06:09):
Not shocked given where fast food has gone over the
last decade, but yeah, it is pretty crazy, you.
Speaker 2 (06:13):
Know, Like McDonald's done twenty five billion in revenue in
twenty fifteen, They're gonna do about twenty.
Speaker 4 (06:18):
Six billion this year. Yeah.
Speaker 2 (06:19):
Uber on the other hand, when the IPO, they were
doing about eight billion in revenue in twenty seventeen.
Speaker 4 (06:24):
Another up to forty seven.
Speaker 2 (06:26):
Yep, Derek Hashershaw, He's done a really nice, a sneaky
nice job there.
Speaker 3 (06:31):
There are some real questions about whether that company could
ever be profitable, right, There's some really serious questions about that,
and they have proven that they can.
Speaker 4 (06:40):
Their product is no longer cheap.
Speaker 3 (06:44):
In basically all scenarios that I see it's about the
same costs as a taxi, but that was always probably
going to be the case, and they have developed now
a user base that really prefers them over taxis.
Speaker 2 (06:56):
He's done a really nice job there. Yeah, and it
goes under the radar for some reason. I don't know why,
but they maybe it's just because we still think of
them as like just this app or something like that.
Speaker 4 (07:09):
I don't know what it is.
Speaker 2 (07:11):
But when you're a company doing fifty billion dollars in
revenue and twelve billion in profit, like, yeah, you've got
something there.
Speaker 4 (07:21):
Well.
Speaker 3 (07:21):
I mean, the real answer to me about why it
doesn't get talked about is A, it's not artificial intelligence,
and B it'll never be able to scale to be,
you know, a competitor with the top ten companies in
the S and P five hundred.
Speaker 4 (07:34):
Are we sure of that?
Speaker 2 (07:36):
I mean, would you ever have you know, ten years ago,
would you ever have said that Tesla was going to
be one of the top ten companies?
Speaker 4 (07:44):
Right? Yes, I guess you can never be sure about it.
Speaker 3 (07:46):
But in their current business model, they would need to
change that business model rather significantly. You know, they've talked
about being an app of everything, So if they want
to be that seriously, then yeah, they need to be
in everything app.
Speaker 2 (07:58):
But it's it's just kind of wild to me that
it's you know, this two hundred billion dollar company doing
fifty billion dollars in revenue. Now you kind of look
at you like, there's done a really really nice job
there with that company. Last week, we got a bunch
of the big tech earnings and there's a piece in
the Wall Street Journals titled what investors learned from tech
(08:18):
Earnings in charts, And quite honestly, I don't think we
learned anything from tech earnings. I think that we learned
that some of them are good, some of them are bad,
and some of them are okay, which is fine. Like
there's no consistent story that we got there. I want
to talk about something that's more interesting to me, which
I'm sorry, like you're all gonna have to listen the
(08:39):
subheadter on this. The so called Magnificent seven makeup a
record thirty eight percent of the S and P five
hundred and it got me just looking at S and P,
you know, components and allocations and things like that, and
here's the part to me that's that's kind of interesting.
Mike if an mister came to you and said, hey,
(09:03):
I've got almost nine percent of my portfolio and one
holding and almost seven percent in three more, you'd probably
say to them, it's a little concentrated. We'd like to,
you know, reduce some of that because if things go
bad there, that could potentially be a problem for you.
Speaker 4 (09:22):
Yeah, And yet.
Speaker 2 (09:23):
When you go out and you buy it in an
S and P five hundred mutual fund or in an
ETF wrapper, you say, oh, I'm just buying the market.
It's diversified, and like it. I don't know why. It
just hit me that, like, we're at the point now
where if in video goes up another fifteen percent relative
to the index, it's going to be ten percent of
(09:43):
the S and P five hundred. And that's a level
where normally if someone comes in and says, hey, I've
got ten percent of my net worth tied up in
one company, we normally sit there and're like, this is
kind of the danger zone where it starts to represent potential.
Speaker 4 (09:57):
Problems for you. And I like, I don't know.
Speaker 2 (10:00):
Why, but this just triggered that thought in my head
that it's like, hey, this is not a well diversified
portfolio anymore to say you just own the S and P.
Speaker 4 (10:09):
Five, what are the top ten comprised?
Speaker 1 (10:10):
Now?
Speaker 4 (10:11):
The top ten? I can I can do something something.
I think it's it's.
Speaker 2 (10:15):
Yeah, probably in the mid forties. That's not a well
diversified portfolio.
Speaker 4 (10:20):
No, it's not.
Speaker 3 (10:21):
Now, you know, do most investors just have all their
money in the S and P five hundred? Probably not,
but a lot do many do. And yeah, that is
a very different type of concentration than we've ever talked
about for the S and P five hundred.
Speaker 2 (10:33):
You know, and like it's like, oh, well, I own
five hundred different companies, okay, Well, if for every thousand
dollars you put in, fifty cents is in, you know,
it wouldn't.
Speaker 4 (10:42):
Even be fifty cents quite honestly, like it.
Speaker 2 (10:45):
Yeah, I mean for every thousand dollars you put in,
you've got like a dollar in this, a dollar in that. Like,
I don't know that that's well diversified. Yeah, necessarily, you
know it's you. You will get the top twenty five components,
and they're the only ones basically where you're getting north
of like fifty sixty dollars of that thousand. Actually, no,
(11:06):
I'm sorry, north of like five dollars of that thousand
going in anywhere. The other four hundred and fifty components,
it's less than like five dollars of that thousand going
into them, And so like, how diversified are you actually?
If that's the case, real question that I think is
(11:26):
just worth asking. I'm not sure what it means other
than there's now a concentration risk present in the S
and P five hundred that you don't normally see.
Speaker 3 (11:37):
And I'll take it a step further to say, yeah,
you've got some individual company concentration risk, you also have
something that's more than just technology concentration. It's a specific
type type of technology. Like if there is a threat
to the artificial intelligence drive, forget about the tech sector
(11:58):
as a whole, because Apple is a tech company and
they don't have much to do with no. But if
you have some sort of threat to any of the
public or private companies in the AI story that disrupts
that narrative, there's.
Speaker 2 (12:09):
Like twenty five percent of the S and P that's
just tied to it right now.
Speaker 4 (12:12):
And it's not to say they will be bankrupt.
Speaker 3 (12:15):
Alphabet still has a business without AI, as is Microsoft,
but they're not seeming presumably they're not worth nearly as
much as.
Speaker 4 (12:22):
They are on paper today. Without that future promise.
Speaker 2 (12:25):
Of AI, anything else that you want to talk about
as regards to tech, I mean, I know there's you know,
it'll be making our.
Speaker 4 (12:30):
Way throughout the entire stack.
Speaker 3 (12:32):
AAI and the tech companies that dominated are going to
continue to be the main story that everyone talks about
over the course of this year, with some potential fun
chats about private credit as well.
Speaker 2 (12:45):
Can't wait take a quick break when we come back.
Let's talk labor after this. What's going on in the
job market. The government won't tell us because they're shut down,
but we'll tell you what we can glean from what
we're hearing from different companies.
Speaker 1 (12:58):
Right after This is your home for the most comprehensive
coverage of the economy and the trends on Wall Street.
This is the Financial Exchange Radio Network. Tax dies six
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Financial Exchange Radio Network.
Speaker 5 (13:23):
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Speaker 2 (13:52):
Couple pieces here on the labor market and one here
from Bloomberg a wave of us Lee Ploff's flash early
warning sign for the job market. Second one why companies
are no longer hanging on to employees. And a couple
thoughts that are some of them are mine, a lot
of them are not original in things that I've I've
(14:13):
read online that I do think we're reaching a tipping point.
On the first is, I do think that we are
very much at a point where companies are looking to
drive whatever they can margin wise right now, not through
increased sales, but through increased efficiency.
Speaker 4 (14:34):
We're seeing all kinds of reports about that, and there's
multiple reasons.
Speaker 3 (14:37):
One, they might be paying tariffs for the first or
substantially more terrorists than they were last year. They are
also facing pressure from investors to prove that some of
the spending on things like artificial intelligence are eventually going
to have their payoff. And so I think that there's
this moment right now where everyone is looking at executives
to ask them, show me signs that you can be
(14:59):
more efficient using the technology that you have.
Speaker 4 (15:02):
So there's that dual pressure there, and.
Speaker 3 (15:06):
Yeah, I think compared to this time last year, I
just sense more of a willingness from CEOs to depart
with their employees.
Speaker 2 (15:15):
And this gets to the part that I do think
is like, if you want a reason for this to
concern you over the next three to six months and
the potential economic impact, Mike, if there's one thing that
I've picked up, well, no, not one of the things
that I've picked up in you know, being in this
business for sixteen years now, sixteen years. Corporate leaders are lemmings.
(15:43):
They love to just follow other like each other off
the cliff of what they think is going to be
successful and look no further than back in twenty twenty
one and twenty two when in the auto sector, Hey, Tesla,
you know has this crazy valuation.
Speaker 4 (16:02):
What should we.
Speaker 2 (16:03):
Do make ev We're gonna make only EV's by twenty thirty. Yeah,
and now it's like, Okay, maybe that wasn't you know,
the smartest thing to you know, to do that. That
probably wasn't the best move for us. You take a
look this year and it's hey, like, what do we
have to do? We got to use AI like in
(16:23):
our company in order to you know, do something like
think about like who is the was it Wendy's or
Taco Bell who experimented with the AI ordering drive throughs?
And then they were like, Mark, Oh, this is actually
really bad. This is this is not working.
Speaker 4 (16:41):
And so when I see, by.
Speaker 3 (16:44):
The way, before we move on from that, I don't
remember if it was Taco Bell or no other company,
but people got into the habit of screwing with the
AI machines. Oh yeah, did you see them order like
a million cups of water? Yeah, you know, it's a
really funny thing that wouldn't fall for But nay, I,
you know, is going to process that order for free,
(17:05):
for a million cups of water.
Speaker 2 (17:07):
You know what's a sneaky good ad that I just
saw for the first time this weekend is the one
of Mitch Trubisky as the backup orderer for the drive
through ad. It's a progressive ad, but it's like someone
like fumbling around trying to like get their order in
the drive through, and they're like, no, we got to
get the backup orderer in here. And they get Mitch Trubisky,
who's you know, washed up NFL quarterback and didn't you know,
(17:27):
amount to being a starter, and he like executes like.
Speaker 4 (17:30):
A perfect order. It's pretty good.
Speaker 2 (17:34):
But like when I say, like corporate lemmings, you see
these companies that are now like Amazon announces layoffs last week,
stock goes up. How many CEOs do you think are
sitting there over the weekend saying, hey Andy, Andy got
rid of thirty thousand employees and look what it did
to his stock. When I get in, I gotta I
gotta talk to, you know, the the chief operating officer
(17:55):
on Monday, and we got to see if we have
to do our own, you know, headcount reductions.
Speaker 3 (18:00):
So what I keep coming back to is the FED
is having this debate around the supply and demand of labor.
Right on one hand, they clearly see the slowdown and hiring,
but on the other they're just not sure how many
people are out there looking for work in the absence
of all the data. What's your sense of the job
market right now? Because my sense and by the way,
you can text the show at six one, seven, three,
(18:21):
six two and thirteen eighty five, uh, to.
Speaker 4 (18:23):
Give your opinion too.
Speaker 3 (18:24):
But my feeling right now when I hear from folks,
when I when I you know, just generally ask people
about how they're doing. They're worried about the state of
their job and they're having a very tough time finding
a new one.
Speaker 2 (18:40):
And I think the other thing is, you know, with
the with the additional layoff announcements, I think that you
can make a case that the job market is continuing
to slow further, you know, like it's it's worsening still. Yep,
it still is one where on a net basis, the
(19:00):
rate of layoffs is not particularly high relative to historical standards.
But it's again we're kind of in that danger zone
where if you don't see a change in trajectory soon,
it starts to get kind of problematic. Now the last
two years, we've seen that change in trajectory heading into
(19:21):
year end. Can we go three for three? Maybe we'll
see quick break here when we return. It's Wall Street watch,
and we're also going to be joined by the Virgin
Islands Governor Albert Bryan right after this.
Speaker 1 (19:40):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall Street.
Watch a complete look at what's moving market so far
today right here on the Financial Exchange Radio Network.
Speaker 5 (19:59):
Market's beginning the week in mixed territories. Investors ready for
a new batch of third quarter earnings Right now. The
Dow is down by about four hundred points, SMP five hundreds,
down two tents of one percent, and the Nasdaq is
up about a quarter of a percent. Major news in
the tech space this morning after OpenAI signed a thirty
eight billion dollar deal with Amazon, where Amazon Web Services
(20:21):
will provide the Chat GPT maker with access to hundreds
of thousands of in videographics processor units as part of
a seven year deal. Amazon up over four percent, and
Kimberly Clark announced this morning it's reached an agreement with
talentel maker Kenbew in a deal value to forty eight
point seven billion dollars, which would create a consumer stables giant.
(20:42):
Kimberly Clark shares are down twelve percent, while Kenbustock is
jumping fifteen percent. On the news, I'm Tucker Silvan. That
is Wall Street Watch.
Speaker 3 (20:50):
Joining us now is the Governor of the United States
Virgin Islands, Albert Bryan, Governor.
Speaker 4 (20:55):
Thank you so much for joining us today. Appreciate it.
Speaker 6 (20:58):
Thank you, tok for having me. It's great to be
on the show all the time to talk about what's
going on in the Virgin Islands and what we expect
to see for the upcoming season.
Speaker 3 (21:06):
So, Governor, we reached freezing temperatures here this morning, and
we will be for the next several months. I'll allow
you to I'll allow you to boast about your weather
down there eventually, But I actually want to start on
a different subject, which is the state of the government
down in the Virgin Islands. You know up here much
more in the twenty tens was discussed about Puerto Rico's
(21:28):
fiscal situation and the struggles that they had and kind
of overshadowed what was happening in the Virgin Islands in
the late twenty tens. Can you talk to us about
where the territory was at the end of the twenty
ten decade, and just where you see it's come over
the course of the last several years.
Speaker 6 (21:46):
Yeah, I think we were in a really bad place.
So I'm much like Puerto Rico. Often when I go
to the Senate, I have been trying to get a
bill poss that would allow the treasury to back all
our bonds. I mean, it's one simple thing that they
could do in order to shore up. But in twenty ten,
we were facing an energy crisis. We couldn't go to
the markets, mainly because we hadn't completed our audits. We
(22:08):
kind of topped out during the Great Recession trying to
just keep the government alive. Is you know, thirty percent
of our population and our workforce works for the government,
and probably another fifteen to twenty percent the total population
is affected by that in terms of whether it's a
spouse or a husband, kids on the support, insurance programs
and whatnot. Also facing us in twenty twelve, we had
(22:31):
the shutdown of the hess Oil or the Venza as
people come and know it. It's the third largest refinery
in the Western Hemisphere, so it really impacted us. We
lost like twenty percent of our employment overnight. So when
Puerto Rico was going through Petivase, so we had to
really fight I'm saying Pettibase and Petivasa on the takeover,
(22:54):
we really had to fight not to be included in
a lot of those bills that Puerto Rico still hasn't
really gotten out of as yet. It doesn't seem to
benefit Puerto Rico all that much. So since then, we've
been me Coming to office in twenty nineteen, for sure,
was about solidifying our finances, making sure that the Virgin
(23:15):
Islands was able to meet its bills, meet its payrolls,
and also to expand. And since that time we've been
doing incredibly well. I have to say. We had two
major hurricanes, two cap fires, back to back within a
month in twenty seventeen, and that caused us a lot
of distress, grief, but it also brought a lot of
opportunity in terms of money. When we started doing the
(23:40):
recovery from this hurricane was under Governor mop it was
about eight billion that we thought we would recover in damages.
We're up to twenty four billion at this point and
under major recovery here in the Islands.
Speaker 4 (23:55):
So talk to me about the most recent fiscal year.
Speaker 3 (23:58):
What was the success is still being worked down at
the government level, and what is the state of the
territories today.
Speaker 6 (24:04):
Well, one of the things that really hampered us in
the last year was, well the last four years, is
we get a tax extender called the Rum cover over
and it takes our ten fifty So every proof gallon
of rum we shipped to the United States, we get
back ten fifty of the excise tax. There was a
tax extender that had been extended multiple times that allowed
(24:27):
us to get three thirteen twenty five. It carried the
amount of the tax we got per proof gallon from
ten twenty five, from ten fifty, sorry to thirteen twenty five.
We had been trying to get this solidified for a
long time. This year, under the Bipartisan Budget Act, the
Big Beautiful Bill, I'm sorry, we were successful in getting
(24:49):
it solidified. So now forever that thirteen fifty is going
to come back to the Virgin Hos. The big part
about that is is it solidified our pension system, which
is arguably was arguably the worst in the country. We've
now funded that pension system using that So every single
year we've been moving along, we've been making tremendous strides
(25:13):
that was a big one for this year. I think
we also during the last administration we got our match
for this twenty four billion reduced from ten percent to
two percent under the Biden administration, so that was big
for US as well. Coming into President Trump, the good
news is the Virgin Islands is not affected by any
(25:36):
of the Trump tariffs.
Speaker 4 (25:37):
So see that surprised.
Speaker 3 (25:39):
I mean, I would think by necessity the territories have
to import a lot of stuff, but I guess the
answer is that it's coming from either within the United
States rather than importing a whole lot from overseas.
Speaker 6 (25:54):
Yeah, so, I mean ninety percent of everything we get
comes from the US mainland. We would never be able
to sustained the amount of people on such a small
island just from beginning for beginners, but then we get
a large tourism economy that's on fire, and that all
the liquors imported and everything else or to service those
(26:14):
needs as well. So not being affected by these tarifts
have been kind of like going all over the place saying, hey,
you can import your stuff into the Virgin Islands, we
have a free trade zone and not pay the Trump tariffs.
And if you have thirty percent in value dan it
becomes a US made product and it can go into
the United States tariff free. So we've been getting a
(26:36):
lot of calls about our free trade zone in sync Court,
specifically where we have a deep water port and the
ability to extend tax benefits on top of that. So
you get one hundred percent reduction of your state taxes
and ninety percent reduction of your federal income taxes. So
it's kind of like no tariff, no tax. It's a
(27:00):
condition for charging our industrial sector, a light industry sector
here in the island. So I'm doing a lot of
worker I'm not.
Speaker 3 (27:11):
Governor on that on that subject, if you don't mind,
So I'm sure the first very question is about those
potential tax benefits and how it all works into the tariffs.
I would imagine the second question has to be about
infrastructure and what companies are used to versus what the
Virgin Island has been focusing on developing. What is you know,
(27:32):
what do you see as the biggest infrastructure accomplishments, say
in future projects that need to be accomplished to continue
to drive growth there.
Speaker 6 (27:39):
So so just to get just to kind of picture
what we're talking about here, our entire economy is about
four billion dollars. This year. We have already issued six
billion in contracts. We already had a billion out and
by the end of the year we would have issued
eight billion in contracts. That means new schools, new hospital,
(27:59):
all new under ground water sewer electric. We're putting in
two new power plants Saint Croix in this last year.
The second solar farm we opened up Saint Croix peaks
at forty four megawatts. We have thirty five megawats of
solar pound for pound, we have the most solar per
capita in the world. We're about to open two more plants,
(28:23):
one in Saint Thomas on the west end and one
on the East end, which will also bolster the solar
generating power of that island as well too. So my
race is to get a power down to put in.
Contracts have now been let for most of Saint Croix
underground water sewer. Saint Thomas's on the way as well,
(28:47):
and we're getting two new essentially two new power plants
and Saint Thomas. The sides of solar that we've installed,
we're putting in much more efficient generators, trying to drive
down the cost of energy, so governa Obviously tourism is
always a big focus for the Virgin Islands.
Speaker 3 (29:06):
What else is at the top of your list for
twenty twenty six in terms of priorities.
Speaker 6 (29:10):
So we got this year. We opened up the first
hotel in thirty five years, Hampton is right on the
beautiful Whyco doc in downtown Saint Thomas Saladamali, and we're
working on a deal where ownership of the Premier Frenchman's Reef,
another hotel, will revert back to the Virgin Islands government
(29:30):
courtesy of our Hotel Development OX. So we've been finally
started building and renovating our hotels because we have a
lot that says you can take the hotel room tax,
which is at about fourteen percent, increase it by seven
points so that you can actually take the twenty one
percent room tax and rehab or build a new hotels.
(29:54):
So we've been getting a lot of track film hoteliers
using that in order to find out it's building all
these new developments. So that is really there. And then
for twenty twenty I leave office in January twenty seventh,
so my race now is getting a power plant and
getting energy in the right place that if we get
(30:17):
our power, our energy down to about twenty something since
in the industrial power, I'm trying to be able to
give it at twelve cents. Couple with a tariff break
on the tax initiatives that we have, I really think
we could put more fire in our economy. So that's
what I'm really focused on.
Speaker 3 (30:34):
Governor Albert Bryan of the United States version ILDs join
us today talk about the state of the Virgin Island,
state of the economy there and economic development. Governor, really
appreciate you coming on as always and looking forward to
chatting with you again and as we had in the
last couple of months of the year.
Speaker 6 (30:48):
Here fantastic and have a sunny Virgin Islands that I
hate that code for you, but it's good for me
coming down.
Speaker 4 (30:55):
Thank you, Governor thanke care.
Speaker 3 (30:57):
Let's take a quick break when we come we're talking
not employment. We're talking about tariffs and the doomsday predictions
that have yet to take place. Quick break, We'll be
back with tariffs next.
Speaker 1 (31:11):
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(31:32):
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Speaker 5 (31:41):
The Financial Exchange streams every day live on YouTube. Subscribe
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only here in the Financial Exchange Radio Network.
Speaker 2 (31:53):
How do yours economy is defined? Doomsday predictions on tariffs?
This is the piece from the Wall Street Journal. The
first sentence should be, Hey, after the tariffs were imposed
in April, the rates were brought back down and so
it wasn't as bad as you know, people thought it
would be. But I don't like the rest is I
can't keep talking about this just because it's like, look,
(32:16):
if you actually look at goods prices, they are rising
this year. If you look at the stuff that is tariffed,
those prices are rising faster. See audio equipment up like
fifteen percent since the start of the summer. The big
thing is there are a bunch of exemptions that were
put in place. The stuff that doesn't have exemptions is
going up about as much as you would expect based
(32:38):
on the tariffs. And to this point, that is leading
to prices moving up, but not in a fashion that's
been high enough to derail the economy otherwise.
Speaker 3 (32:48):
Yeah, the estimates that i've seen total tariffs collected through
September thirtieth through around one hundred and ninety five billion.
It's a lot of money, but it was seventy seven
billion the previous year. We're not talking about ten x
the collection of tariffs. We're not talking about any of
these other numbers. Yes, the average teriff rates are substantially
higher than where they were prior to but this is
(33:09):
this complex web of different rates of things.
Speaker 4 (33:13):
And what you're seeing here is that there are all
sorts of exemptions.
Speaker 3 (33:19):
The rates are far lower than was estimated back in April,
and so there is an effect, but it is a
far cry from what everyone was talking about it. And
again it is not because companies somehow managed through ultra
high tariffs. Again, it is certainly some pressure from big
companies who are able to pressure suppliers, but a lot.
Speaker 4 (33:40):
Of it is all sorts of.
Speaker 3 (33:43):
Lower rates that were actually implemented, all sorts of loopholes
that have been granted. And you know, a policy that
looks a lot different than it did in early April.
Speaker 2 (33:53):
They also this piece mentions you know, auto manufacturers, and look,
if you want to see what's happening on this Yes,
you can look at auto manufacturers. Just as an example,
before tariffs went into effect, the you know, previous several quarters,
GM was averaging about you know, seven to eight percent
profit margins. They're now down to two because GM is
(34:16):
paying more for its inputs and hasn't raised prices enough
to offset that. If we take a look at Ford
Motor Company, this is one where they don't have quite
the same exposure. Remember, GM is more heavily tied into
Canadian manufacturing, and so Ford's profit margin still running about
three percent, pretty much where it was before. Why because
(34:37):
most of what they sell is the F one fifty,
which is already made in the US and assembled there
and has you know, tighter supply lines. If you look
at let's take a look at the European ones, just
because I haven't you know, looked at them. Should we
will get Volkswagen. Sure, let's see Volkswagen.
Speaker 4 (34:55):
Where are you?
Speaker 2 (34:56):
Oh, they haven't reported earnings yet this quarter, but their
margins in the previous couple orders have gone from around
six percent down to Hang, I'm sorry, from around nine
percent down to six percent, so you're seeing some compression
there as well. So I think overall, you know, in
terms of why haven't tariffs you know, caused the problems
people thought in April, the answers, well, the April tariff
(35:17):
rates never went into effect. The other ones that have
subsequently gone in have only been in place since was
it late September or early September? I can't remember when
the higher rates that were then put into effect.
Speaker 4 (35:30):
Yeah, I don't know.
Speaker 2 (35:31):
Somewhere in that range. They're probably starting to hit now
ish into Q one, so we'll see if there's you know,
further impact there. But the biggest thing is, look, the
high rates that were feared in April did not go
into effect, right, That's the biggest thing is.
Speaker 5 (35:46):
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Speaker 2 (36:54):
Tucker's kind enough to forward on a text from a
listener regarding the job market. I'll quote here. I know
of several people who are applying for low end jobs
at places they claim to be hiring and not getting
a job. Someone I know was hiring minimum wage help
for his movie theater and had no issue scheduling twenty
interviews for two part time positions.
Speaker 3 (37:15):
That's the feel I get too, although I will also
say that within the last couple of months we were
hiring here and had a lot of applications, but a
lot of no shows and no callbacks.
Speaker 4 (37:30):
So I do sometimes get mixed messages.
Speaker 3 (37:32):
But my overall assessment of the labor market is much
more like the text we got than our own personal experience.
Speaker 2 (37:37):
So you're saying it's the no hire, no fire, no
interview labor market.
Speaker 3 (37:42):
Again, we got plenty of people to come in for interviews,
but a lot, you know, a surprising number of got
your resume, sow that you applied and you never return
our call.
Speaker 2 (37:52):
There's a real problem with communication just in the world, man.
Speaker 3 (37:55):
Like I think there's just this attitude of ghosting is
okay these days that I guess you just see everywhere.
Speaker 4 (38:01):
I just don't get it.
Speaker 2 (38:03):
I just don't get it, Like showing up and being
a human being is kind of I don't know a
big thing, But what do I know. Let's take a
quick break. When we come back, we had hour two
coming up,
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