August 19, 2025 • 38 mins
Chuck Zodda and Paul Lane dive into Home Depot's earnings that missed revenue but showed improvement in a key area. Home builders boost sales incentives to 5-year high as they struggle to sell newly built homes. We should the government invest in Intel over other chip manufacturers? Economic data has taken a dark turn. That doesn’t mean a crash is near. S&P affirms U.S. credit rating as tariff revenue expected to plug fiscal leaks.
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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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(00:42):
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(01:06):
and Paul.
Speaker 2 (01:06):
Lane, Chuck, Paul, and Tucker with you here and as
we kick things off, we got some housing related information
to share with you today. Starting with before before most
people woke up this morning, Home Depot reported earnings.
Speaker 3 (01:27):
They came in.
Speaker 2 (01:28):
Interestingly, they did miss on both revenue and earnings, the
first time since twenty fourteen that they have had a
miss on both top and bottom line in the same quarter.
Despite that, you get headlines like this one from Bloomberg
Home Depot sales gain with shoppers opting for smaller projects.
(01:49):
And when we look at home Depot stock today, they
are responding positively at this point, up four and a
quarter percent. What's going on with the depot of the homes, Paul.
Speaker 4 (02:01):
I'm a little surprised, Chuck to see the increase on
Home deep of stock today because you read through a
lot of this earnings feedback and none of it I
would really point to as being something that is really
accreative to the stock. And if you look at the
state of the housing market, which we'll get into, and
we've talked about it in prior shows, it's not in
(02:22):
a very good place. And Home Depot has been in
this cycle the last couple of years where many of
its consumers have sort of pushed back these larger projects
on their home The CFO was quoted as saying that
this home deferral has really lingered since twenty twenty three.
So I'm a bit puzzled as to why the stock's
(02:43):
going up. I mean, we can get into the nitty
gritty of the earnings report, but am I missing something
that you've peeled out here?
Speaker 2 (02:51):
The only thing that I saw is during the quarter
on a per month basis, like they even broke this
down further and basically they we saw steady increases in
spending over the course of the quarter. And so I
guess the good news could be, hey, look, you've had
a couple months of upwardly trending same store sales now
(03:11):
within the quarter. If you expect that to continue, it
gives you a path towards further improvement in the second
half of the year, and I think that could be
the read through when you look at this. It is
tough to just look at housing as a whole and say, hey, there's.
Speaker 3 (03:27):
Any meaning like that.
Speaker 2 (03:29):
There's no meaningful growth impulse in housing right now, and
so the question and kind of what you're betting on
with with Home Depot is combination of hey, there's gonna
be you know, more renovations that happen, and there are
going to be not even renovations, it's more of like
the smaller projects. Hey, I've got you know, a pantry
(03:50):
that I want to put new shelving in. Great, you know,
all in between the shelving and maybe some new drywall
and paint that I got to do in order to
make it all you know how I want. Okay, I'm
gonna be you know, in for seven hundred bucks and
I've got to you know, and hey, more homeowners are
going to do that kind of stuff. So I don't
think this is like a bad you know report. Again,
(04:11):
comp sales up one percent in this environment is pretty
darn good. I mean here, here's the other thing that's
always true about Home Depot. Even in a tough environment
like they've been in for kind of the last two
years now, I mean since you know, early twenty three,
it's been kind of it's been pretty tough in housing,
they're great operators. I mean, this is this is a
(04:32):
company where you can look at a quarter that's kind
of me and still say, hey, they They rang everything
they could out of that quarter because the economic fundamentals
are just not particularly good for Home Depot, But they
still figured out how to make it work for them,
and I think that that at least reaffirms that management
still knows how to make you know, chicken salad out
(04:53):
of chicken bleep.
Speaker 5 (04:54):
Yeah.
Speaker 4 (04:54):
No, it's it's interesting the strategic shift that they've had.
They've really made a huge focus on targeting the pro
contractors out there. If you look at them compared to
Low's Low's Services, about seventy percent of its customers are
kind of DIY, the do it yourselfers, whereas Home Depot
now is saying their CFO that fifty five percent of
(05:15):
Home Depot sales are to professionals out there. And they've
done this furthered this by acquiring SRS Distributions for eighteen
billion last year, which is a supplier of roofing and
landscaping and pool professional equipment. And then they also grabbed
another company out there that has specialty building products. So
to your point, the resiliency that they have in a
(05:36):
really tough environment for home sales is impressive. This comparable
sales growth that we note here only in two of
the alas eleven quarters have they been able to report
sales growth. So it's been a tough environment, and it
does seem like the position that they've had on the
pro side of things leads them to at least be
positioned well Chuck. If for some reason we are to
(05:58):
get a turnaround in the housing market, whether that comes
from lower interest rates or just perhaps people finally just
stopping punting on these larger products, they are well positioned.
The stock's been relatively flat this year heading into today's action,
but interesting to see sort of how they've continue to
mold their business on the pro side.
Speaker 2 (06:19):
Yeah, I mean, it's just something where they're just good
operators of the business. They're able to maintain margins pretty consistently.
Their margins if weakened a little in the last couple
of years, but again that's kind of expected. I mean,
housing has been when we talk about housing, like housing
(06:40):
construction has just been bad since early twenty three. It's
been on a steady decline. If you look at the
data out there in terms of number of units under construction,
which is what matters, right, Like it's permits and starts
ultimately feed into hey, how many units are under construction
and how much stuff do you need in order to
(07:01):
build all this? After Q two of twenty three, we
were seeing about one point seven million units under construction
on an annualized basis. In the US, it's at one
point three seven to two right now. So you do
the math, that's a twenty percent drop in construction activity
over the last two years. And Home Depot has been
(07:25):
able to respond by saying, Okay, like, yeah, we had
like some bad comps a couple of years ago, but
our margins are still you know, thirteen and a half
percent instead of fifteen, and we're figuring out, you know,
where to grow and like, they're just good operators, and
I give them a lot of credit for that because
it's not an easy time to be selling lumber and
(07:47):
selling sinks and selling lighting. I mean, it's it's just
kind of gross out there in terms of new construction activity.
And so given that, I think the one thing that
you can continue to say I said, again, I'm a
broken record on this, they're really good operator their business.
And if there's one thing we have seen, people are
willing to pay up now for good operators of otherwise
(08:10):
boring businesses. Look no further than Walmart as an example
of that.
Speaker 5 (08:13):
Sure.
Speaker 4 (08:14):
The other thing I would note here is in terms
of tariff impact, there really wasn't any in terms of
the data from this quarter. Just for folks out there
who may be asking, are they seeing price increases, and
the short answer is no. All of the items that
they sold over the course of this quarter that they
just reported were imported prior to tariff's being in place.
(08:34):
They source about fifty percent of their items in the
US Home Depot, and the CFO had mentioned that they
are going to do their best to hold line and
don't really anticipate major price increases. Again that can change,
but muted impact and really nothing to report on any
tear front there.
Speaker 2 (08:51):
Along these lines, we get a piece from market Watch
talking about the NHB data that came out yesterday. Homebuilders
boost sales and incentives to five year high as they
struggle to sell newly built homes. This is a real thing.
When we look at inventories that are sitting out there
of newly finished homes, you're at the highest level since
(09:14):
two thousand and nine, which is not the kind of
comparison that you want to be making when it comes
to anything related to housing.
Speaker 5 (09:20):
No question about it. We've talked about it before.
Speaker 4 (09:23):
The percentage of builders offering incentives has now increased to
sixty six percent in the month of August. That was
sixty two percent the prior month. So, like you mentioned,
a five year high, that percentage figure that I just
quoted here, the confidence index has dropped too from where
it was last year. On the building front, and you
think of the pockets of the country, Chuck, that would
(09:45):
have the most building activity, and we've talked about on
the program before, Florida, areas of the Sunbelt, there just
isn't a tremendous amount of demand to build there. The
housing markets are in really difficult shape. So you just
don't have a tremendous amount of eagerness for those homebuilders
to get out there and build in what is a
very tepid real estate market from the demand side of things.
Speaker 2 (10:07):
And in terms of those those inventories that are out
there so recently completed, you know, constructions. Right now, you've
got one hundred and nineteen thousand units available nationwide. This
is according to data from the Census Bureau. If you
look back through the twenty tens, just as an example,
and you know, things were still normalizing as of you know,
(10:28):
twenty eleven to twelve from the housing bubble, but you
were down in twenty thirteen and fourteen. You're down at
like forty to fifty thousand units available. By the end
of the twenty tens, you moved up to around sixty
to seventy five eighty thousand units available nationwide. So you're
running right now at almost one hundred and twenty thousand,
anywhere from like a fifty percent to one hundred percent
(10:48):
increase from late twenty tens inventory. And the last time
that we saw housing inventory this high for completed homes
was August of two thousand and nine. It's just not
really a good comp again, like you, you do not
want to be.
Speaker 3 (11:04):
There the peak that we saw.
Speaker 2 (11:06):
Just so that you can understand the context of heyt
at peak housing bubble, what did things look like September
two thousand and seven, We had one hundred and ninety
four thousand units brand new ones finished but unsold, still
sitting out there, completed but unsold. And so the reason
why you are hearing about builders cutting back on their
(11:29):
plans right now for construction, they don't want to get
back to one hundred and ninety four thousand units of
unsold inventory.
Speaker 3 (11:36):
Again, right, it's kind.
Speaker 2 (11:38):
Of bad for business. It's not good for them. And look,
it's not even just that, like you haven't sold these
and made the money yet. You got to pay for
landscapers to come in and mow the lawns so that
people will visit. You've got to pay in the Northeast
for you know, plowing the driveway so people can visit
in the winter and stuff like that.
Speaker 3 (11:55):
You got to have all.
Speaker 2 (11:56):
The upkeep, but you don't get any money from it
until you actually sell it. That's a huge drag on
home builders as well. So we'll have to see where
this number goes. There some signs in the last few
months that maybe we're finding a little bit of a
plateau here in that one ten to one twenty thousand
unit range. Again, it more just speaks to the fact
(12:17):
that builders are pulling back as opposed to any surge
in buying activity. But we'll see where this goes, because
that's going to be the driver of how how home
builders move in the second half of this year and
into next year. Is Look, what's my own sold inventory
look like? Because I'm not sticking more shovels in the ground.
If I can't move these units, take a quick break here.
(12:38):
When we return, we're talking Intel.
Speaker 3 (12:42):
Right after this.
Speaker 1 (12:44):
Tara Fleebury's in high gear. We've got the latest on
what might be next and how long it might last.
Only here on the Financial Exchange Radio Network. Text does
six one seven three six two one three eight five
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Speaker 6 (13:06):
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Speaker 1 (13:35):
Today.
Speaker 6 (13:36):
That's DAV fivek dot Boston.
Speaker 2 (13:39):
Paul piece from Bloomberg late yesterday giving us some additional
information on the United States potentially becoming a shareholder in Intel.
Speaker 3 (13:50):
What do we learn?
Speaker 4 (13:51):
It seems that there is a potential. Again, this is
all just rumored. There's been nothing official yet that they
could utilize some of the chipsack money that was granted
to Intel and convert them into an equity stake within
the company. Intel had been allocated ten point nine billion
in grants for commercial and military production of chips. The
(14:13):
government is really focused on making sure that there is
a domestic alternative for chip manufacturing. It's dominated largely by
Taiwan Semiconductor and Samsung over in Asia, and they're looking
for a United States solution. So these grants are supposed
to be given out over different tranches based on different
(14:35):
benchmarks being held and hit in terms of Intel building
out its manufacturing capabilities, So this would be something that
would progress over time. In terms of my feeling a
little torn, Chuck just I don't really love government invention,
intervention in business in general, more of a laissez fair
(14:56):
approach personally, but obviously I recognize that need for domestic
manufacturing of chips Intel as backing them as potentially the
right bet.
Speaker 5 (15:08):
Historically they obviously we were.
Speaker 4 (15:10):
Dominant in the eighties and nineties and really were just
the pinnacle of manufacturing. But they've really just screw the
pooch big time. Over the course the last couple decades,
they completely missed Mobile and they also have missed this
AI wave as well. So mixed thoughts on this you
know proposal here, and this also piggybacks off of soft
(15:32):
Bank also announcing that they will be investing two billion
dollars in Intel as well.
Speaker 2 (15:38):
So rule number one never follows soft Bank into anything.
Speaker 5 (15:42):
I wanted to get into them a little bit, like like.
Speaker 3 (15:44):
Full stop, like Maciosi.
Speaker 2 (15:46):
Son has a track record over the last decade or
so of generally being kind of late to the party
and backing the wrong horse. Granted, like it's not to
say that he hasn't had you know, great investments. Historically,
soft Bank has had you know a few major winners,
largely from the early twenty tens. But recently we're talking
about companies like you know, we work and things like
that that you know we didn't work, and okay, like
(16:09):
you move on, you take the l and you call
it a day. When we talk about the federal government
taking a stake in a major American publicly traded company,
let's talk about the potential, you know, problems that that entails.
Number one you've got a company that is now part
(16:33):
owned by the federal government as such, are we going
to then be more or less likely to try to
funnel more money to that company because of you know,
already existing, because that relationship already exists, regardless of whether
or not the product coming out is actually good. Probably right,
(16:55):
like it's it's not really great. Number two? Okay, you
have to assume is it fair to say that if
the US government wants to be a shareholder in Intel,
they're probably not going to just be a passive shareholder
that lets Intel do whatever it wants.
Speaker 4 (17:11):
Absolutely not. You know, They're they're gonna make sure this
manufacturing gets They're gonna.
Speaker 2 (17:16):
Want board seats and stuff like that so they can
exercise some level of control. Like do US politicians rather,
do politicians have any political persuasion or any geographical and
any polity? Do do politicians in general like to preside
over job losses?
Speaker 5 (17:36):
No?
Speaker 2 (17:37):
What do companies often need to do in order to
get more competitive in the landscape? They often need to
lay people off. Are you gonna have you know, someone
on the board saying no, don't lay people off because
it's gonna look bad for US.
Speaker 3 (17:51):
M Okay, yep.
Speaker 2 (17:54):
Furthermore, regardless of what you think about this administration, good, bad,
everything in between, if the next administration comes in and
they are not someone who likes or believes in Intel,
are you now putting the future of this company in
the hands of someone who just because maybe there's a
bad relationship there this and that decides, Hey, guess what,
(18:15):
we're pulling the plug and you undo, maybe something good
that actually comes from this. Sure, these are things where
when you get into state owned enterprises, even on a
minority level, it becomes kind of problematic. I am much
more in favor of Hey, if you have something where
(18:35):
you see, you know, a critical need for products X, Y,
and Z, great, let's find a way, even if it
doesn't make economic sense. Let's find a way to produce
that stuff here through you know, ways that we can
incentivize production. Look at the MP Materials deal just as
an example. I'm gonna keep coming back to this one
because I actually think it makes a good deal of
(18:58):
sense if you look get the key tenants of that deal.
You know, from earlier this summer, the big things were Okay,
here's a bunch of money in order to produce.
Speaker 3 (19:12):
These rare earth materials.
Speaker 2 (19:15):
We are going to guarantee purchases at a certain level
at a certain price, and we are going.
Speaker 3 (19:24):
To basically pay for that.
Speaker 2 (19:26):
We're also going to provide some financing, but it's going
to be on the dead side, not the equity side.
And we'll talk a little bit more about this when
we come back. Along with Wall Street Watch, Like us.
Speaker 1 (19:42):
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 financi You'll Exchange Radio Network.
Speaker 6 (20:02):
Markets are in mixed territory as investors react to the
first wave of major retailer earnings from Home Depot unveiled
this morning with mixed results. Right now, the Dow is
up by six tenths of one percent, or two hundred
and seventy three points. SMP five hundred is now completely flat,
Nasdaq is off by six tenths of one percent, or
(20:24):
down one hundred and forty one points. Russell two thousand
is up by one tenth of a percent. Ten year
treasure yield is down two basis points at four point
three one percent, and crude oil off nearly one percent,
lower training and sixty two dollars in eighty four cents
a barrel. Home Deepot reported disappointing second quarter results, where
(20:44):
the home improvement retailers said that consumers were still delaying
big ticket projects and that it would make modest price increases. However,
home Depot backed its annual outlook, sending shares up by
four percent at the moment. Meanwhile, Intel shares are rising
over eight percent after Japan's SoftBank agreed to invest two
(21:05):
billion dollars in the struggling chip maker. This comes after
news that the US government has been considering taking a
stake in Intel. Elsewhere, Palo Alto Networks reported quarterly results
at Beach Street forecast and offered full year guidance that
was stronger than expected. Shares in this cybersecurity company are
up nearly five percent. Medtronic down by four percent, falling
(21:29):
news that the medical device makers adding directors after Elliott
Investment Management became a major shareholder. Medtronic also reported strong
quarterly results and hiked its angle outlook, citing lower than
expected tariff costs. Shares a Viking Therapeutics tumbling forty percent
after the company released mid stage trial data on its
(21:50):
obesity pill that disappointed, and TV station operator Nextstar Media
agreed to buy its rival Tegna for six point two
billion dollars. The Wall Your Journal previously reported that Sinclair
was also seeking a merger with Tegna. Shares Integna in
next Star up over four percent. Well, Sinclair stock is flat.
(22:10):
I'm Tucker Silva, and that is Wall Street Watch.
Speaker 3 (22:14):
Paul.
Speaker 2 (22:14):
A couple other things that I want to touch on,
just with Intel and the possibility of the US government
taking a stake there with the NP Materials deal. One
of the things is, look, we've seen in the last year,
not even the last year, last six months, the importance
of being able to produce rare earth materials domestically correct correct.
(22:41):
With Intel, is there any information specifically that we need
to have Intel chips produced here domestically.
Speaker 4 (22:52):
Just the looming thread of you know, potential Chinese invasion
into of Taiwan, but not today.
Speaker 2 (22:57):
I agree, Maybe I didn't make the question clear. Is
there any reason why we need Intel chips specific Intel? No,
if you like, you look at it, just as an example,
Taiwan Semiconductor I got a big old factory they're building
down in Arizona. Samsung's doing one in Texas. They might
be doing one in Arizona two, I can't remember. LG
(23:19):
it's doing the same thing. Why why Intel, I guess,
is my question? And and what I mean by this
is I too believe that we need to have semiconductors
produced here domestically. Why are we taking a steak in
Intel when they're not really proven as a good operator
(23:41):
in this space right now? Like if you wanted to
produce semiconductors domestically, Hey, Taiwan Semi, come to us. We're
gonna invest X dollars in this. I'm not even saying
I like the deal structure, but just like bear with me,
we're gonna I want you to set up, you know,
a joint venture in the U. They might even already
have one for just how they're structuring their US operations.
(24:05):
Said up a joint venture in the US. We're going
to own ten percent of it, and we want you to,
you know, do the build out and do your stuff there.
What's if Intel doesn't make the chips that are cost competitive,
you know, competitive in terms of performance, and they're struggling
to get their quality to where they need it to be.
(24:28):
Why do we just want to throw more money at
them at this point in this format too? Because remember,
as an equity holder, if the company does badly, you
do badly.
Speaker 1 (24:38):
Right, right?
Speaker 3 (24:39):
What's like? What?
Speaker 2 (24:40):
And I saw, you know, Commerce Secretary Lutnik today say well, look,
you know this is a chance for the US to
participate in the upside. Well, if the US wants to
theoretically participate in the upside. Again, this is before I
even get to you know, being cool with just you know,
state owned semiconductor companies and things like that. Why are
you picking Intel and not anyone else who's doing this
right now?
Speaker 5 (25:01):
They're the only US option?
Speaker 4 (25:03):
Really, is probably the short answer to that, not to
say I agree with that, and I mean they're not
though who on the manufacturing side, who would be the
next pick?
Speaker 3 (25:11):
Well, you're talking like for fabs and stuff.
Speaker 5 (25:13):
Yes, that's what they care about.
Speaker 2 (25:17):
Okay, I guess like, let's say, let's take this a
step further then, if you really want to have a
state owned chip maker, why not make a state owned
chip maker.
Speaker 4 (25:29):
Well, that's gonna take even longer than into Intel is
probably going to take a decade to figure it out.
But it's gonna take even longer longer to see, which is.
Speaker 3 (25:36):
Why this is kind of a bad idea, right, No,
I'm not.
Speaker 4 (25:39):
I'm not here to say the idea is a great idea,
but that I'm just telling you the logic behind the decision.
I would agree with you that we have to research
probably Taiwan semi conducted they're that agreement. There's no way
there isn't some deal in place or some partnership there
for Taiwan Semiconductor to build that fab in Arizona. I
feel like there has to be some sort of US
(25:59):
government commits meant to that. But I'll take a look
at that. But ultimately that's that's why the impetus for
this decision, and based on their checkered history, I don't know,
it's not necessarily the right horse of back. I don't
agree with that at all, because they really have struggled,
like I said, over the last fifteen years or so,
whether it's mobile anything on the AI front, and the
sophistication that's required to do this manufacturing. It's just it's
(26:24):
a very high bar to clear and it's really capital
intensive and to your point, as an equity stakeholder that
would potentially require more capital commitment down the road, or
or Intel is going to have to raise more debt
to do this. It's it's a long road for sure.
Speaker 2 (26:39):
This also gets the problem of you mentioned, Hey, it
tells like the only the only game in town, right
you said something along those lines. Yeah, The benefab like
that kind of.
Speaker 4 (26:50):
Because so many of the US companies are more design driven.
On the chip side of things, they're probably the best,
but on the manufacturing side.
Speaker 2 (26:58):
So I guess we're going with this is like I
was also looking just at Intel's history of acquisitions over
you know, the last twenty thirty years, and you know,
a lot of the stuff is you know, kind of
random things here and there. There's a few things, but
they've also bought you know, some semiconductor manufacturers over the
(27:19):
last fifteen twenty years as well. You know, it's not
just you know, they've bought companies that you know, do
you know machine learning and cloud computing and this and that,
and that's what it is. But in terms of you know,
actual you know, semiconductor capacity and things like that. Back
in twenty fifteen, just as an example, All Terror was
(27:39):
a semiconductor manufacturer. They were founded back in I want
to say, like early mid eighties, like like most of
them out in California, and Intel was allowed to buy
them back in twenty fifteen for around fifteen sixteen point
seven billion dollars. And you say, okay, Like, isn't part
of the problem that we don't really have many companies
that do this because there's been so much consolidation all
(28:01):
out in this space that you have to back the
bad horse instead of having other ones that are out
there that you can potentially rely on.
Speaker 4 (28:08):
Yes, that's that's definitely part of it. And it's just
it's such a capital intensive business too, that it's it's
hard to build up. Not impossible, but it's challenging.
Speaker 2 (28:18):
So I don't know, I just I look at this
and I just get a little bit nervous about it
because I've seen this before where when you start getting
into companies that you know historically are owned by, you know,
the government with which they reside in, it can create
(28:38):
some perverse incentives where things don't necessarily go great in
the future.
Speaker 3 (28:42):
And so I just I have questions about it. I
wonder about it.
Speaker 2 (28:47):
I guess sure, let's see let's take a quick break now,
and when we return, Uh, let's take a look at
what we're seeing in the economic data as a whole.
There's a good piece of New York Times talking about this,
and so let's touch on that when we return.
Speaker 1 (29:07):
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Speaker 2 (29:36):
Piece of New York Times that I, you know, a
lot of times I'll call out, you know, a headline
or a piece for being just you know, sensationalists are
not really meaning anything or you can't do anything with this.
In this case, I actually feel the opposite, and so
I like to point out, you know, good things that
I see that are out there as well. Piece here
(29:56):
in the New York Times. Economic data has taken a
dark turn. That doesn't necessarily mean a crash is near,
and the subheader is inflation is up, in job creations down,
but the US economy could still pull through without too
much pain. And this is something we've been saying on
our show for you know, quite a while now, which is, look,
just because you have things slowing down here for a
quarter or two doesn't mean that you inherently go into recession.
(30:20):
We've seen this in the last two years, where heading
into the fall, each time we had questions about job
growth and inflation, and each time they were answered positively. Yes,
we can get through this. The US economy is strong
enough and it's going to be able to deal with this.
And it's not saying that will or won't be the
case this time, but much more. Hey, the US economy
(30:41):
is a pretty robust and dynamic thing. And even though
there are some questions that are out there on the
US economy right now, it could still be answered successfully
over the next couple months. And then as you get
into next year, you've got a ton of potential business
incentives from the big beautiful bill that could spur you know,
additional investment, and now you're off to the races again
(31:02):
in twenty twenty six. This is absolutely something that is
possible that we have to you know, keep on our
board as a real potential possibility for twenty twenty six.
Speaker 4 (31:13):
So many pundits out there are always in the business
of trying to make a dramatic call one way or another,
chuck that the economy is going to boom, or the
economy is going to bust.
Speaker 3 (31:23):
Bear, we're so back, gets so over, We're so back
gets so over.
Speaker 5 (31:26):
Bare bull case.
Speaker 4 (31:27):
You know, all these different terminologies that get thrown around.
But sometimes and it's not appealing, it doesn't get clicks,
and it also doesn't get views on the video front.
Sometimes you might just go through a little bit of malaise.
And that's possible here. And it's something that when you
covered so much of this stuff earlier, when the tariffs
were announced, it just was always one way or another.
(31:49):
People viewed it in two different directions. Either this is
going to fall apart and be disaster or this is
going to be lucrative. And the answer could be somewhere
in the middle, which isn't sexy to say, but we
could get through this, muddle through it just fine. And
like you said in twenty twenty six, turn the corner.
Speaker 2 (32:04):
So I just think it's important to keep, you know,
the potential for upside on your dark board as something
that we could see here. I mean, I'm not necessarily
talking like upside in markets, Like you can also have
something where, hey, the US economy catches up and markets
stall for a little bit in order to get things
more aligned there, Like, that's very possible too. So I
think it's always just useful to remember. Now I think
(32:27):
back at the last four or five years and just
probably like how many things were like certain to throw
us into recession during that time, and how many things
then were, oh, well, the US Economy's gonna boom because
of this, and oftentimes the truth is somewhere in the middle,
And I think it's just important for people to remember.
Speaker 4 (32:47):
That, no question, inflation that we saw in twenty twenty two,
it's still damaging, but we got through that remarkably without
a substantial recession.
Speaker 2 (32:56):
Folks, if you are sitting there right now and you're saying, hey, hey,
you know what, this is all well and good, but
I'm getting up there in age and I want to
make sure that I'm leaving things better for that next generation.
Speaker 3 (33:08):
The Armstrong Advisory.
Speaker 2 (33:09):
Group does have a guide on this exact topic this
exact month. It's titled Leaving a Lasting Legacy. What types
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Speaker 3 (33:30):
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Speaker 2 (33:31):
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Speaker 1 (34:09):
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Speaker 3 (34:24):
Peace from the Wall Street Journal.
Speaker 2 (34:26):
SMP Global Ratings has affirmed the credit ratings of the
United States, this with them saying they expect quote robust
revenues from the Trump administration's newly Institute of Terror regime
to help offset the fiscal deterioration resulting from recent legislative changes.
So basically saying, hey, the big beautiful build provides for
(34:47):
a bunch more spending and so it's not really doing
anything to reign in deficits. But you got this tear
for revenue coming in, and so long as that continues,
things aren't really worsening.
Speaker 3 (34:57):
You're just kind of treading water.
Speaker 4 (34:59):
Yeah, there wasn't huge meaningful takeaways that I had from
from this ratings reffe reformation here. I don't know if
they get paid by the word, but they really throw
around a lot of different words in their their statement here, Chuck.
They really are trying to get that word count up
and use as sophisticated verbiage as possible.
Speaker 2 (35:18):
It seemed like, here, what businesses do you think would
be worse to be paid by the word in uh
for the employer or for the employee?
Speaker 4 (35:30):
Those investment perspectuses that yes often can get in the
hundreds of pages. Anything in the legal realm has got
to be in there too.
Speaker 3 (35:40):
Can we talk about investment perspectuses for a bit?
Speaker 5 (35:43):
Sure?
Speaker 3 (35:43):
Just while like you brought it up, and I think
it's a great topic.
Speaker 2 (35:48):
It's one that I've actually seen written about, which is
basically like disclosure fatigue.
Speaker 3 (35:53):
And it's not just on.
Speaker 2 (35:53):
Investment perspectuses, it's on you know, oh, you signed up
for door dash. Here are terms and conditions. Click here
to agree, right, and has anyone actually read them? Aside
from the guy I forget what the company was, but
someone some company buried something in theres where it was like,
if you're the first person to read this and reach
out to us, you collect like ten thousand dollars from
(36:14):
us or something like. That's fantastic, And it took like
five or six years for someone to actually do it,
just because no one reads the terms and conditions, you know,
like it's just you get disclosed so much by the
lawyers that you're just like, I don't know what this means.
I'm just gonna click it and next thing, you know,
McDonald's owns your front lawn.
Speaker 4 (36:35):
I mean, think about when you do your p and
s to buy buy a house. That's a good example
of one that just pages go on forever and ever,
and it's just sign sign sign. They really should have
some reason and that's it's in our industry. There is
a case of that where right, there's summaries that are
provided that just hit on the key points. And I
feel like this statement here by the S and P
(36:57):
on the reinformation rating could have been much shorter or
much more concise than it was.
Speaker 5 (37:04):
But hey, it is much the same thing.
Speaker 2 (37:07):
Yeah, let's see private equity firm stocks are struggling despite
getting into four oh one k's misleading headline, Yes, and no,
I wonder is the reason that they're trying to get
into four oh one k's because they're struggling a bunch.
Speaker 4 (37:28):
There's they're always gonna be looking for new capital. That's
definitely part of it. The reason I would say misleading
headline is yes, President Trump put that into that notice
or whatever exactly was termed as but it's gonna take years,
several years for them to get on platforms and to
get approval. There's a lot that goes into the regulatory
(37:49):
background for four one k's and what they put on
their platform. They have to act as produci aya. So
this isn't an immediate revenue stream that kicks on tomorrow.
Speaker 2 (37:57):
No, it's a it's a great point, like this stuff
is not happen overnight. Even if even if the platform
may approve it, the fiduciary overseeing the plan may still say,
I need a little bit more time to look at
these before I allow these investments actually into my particular plan.
Speaker 3 (38:14):
Let's take a quick break here.
Speaker 2 (38:15):
When we come back, oh nother hour stuff on the
financial exchange.
Speaker 3 (38:21):
Back in a bit.
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
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the hosts, do not reflect the opinions of Armstrong Advisory
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(00:20):
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(01:06):
and Paul.
Speaker 2 (01:06):
Lane, Chuck, Paul, and Tucker with you here and as
we kick things off, we got some housing related information
to share with you today. Starting with before before most
people woke up this morning, Home Depot reported earnings.
Speaker 3 (01:27):
They came in.
Speaker 2 (01:28):
Interestingly, they did miss on both revenue and earnings, the
first time since twenty fourteen that they have had a
miss on both top and bottom line in the same quarter.
Despite that, you get headlines like this one from Bloomberg
Home Depot sales gain with shoppers opting for smaller projects.
(01:49):
And when we look at home Depot stock today, they
are responding positively at this point, up four and a
quarter percent. What's going on with the depot of the homes, Paul.
Speaker 4 (02:01):
I'm a little surprised, Chuck to see the increase on
Home deep of stock today because you read through a
lot of this earnings feedback and none of it I
would really point to as being something that is really
accreative to the stock. And if you look at the
state of the housing market, which we'll get into, and
we've talked about it in prior shows, it's not in
(02:22):
a very good place. And Home Depot has been in
this cycle the last couple of years where many of
its consumers have sort of pushed back these larger projects
on their home The CFO was quoted as saying that
this home deferral has really lingered since twenty twenty three.
So I'm a bit puzzled as to why the stock's
(02:43):
going up. I mean, we can get into the nitty
gritty of the earnings report, but am I missing something
that you've peeled out here?
Speaker 2 (02:51):
The only thing that I saw is during the quarter
on a per month basis, like they even broke this
down further and basically they we saw steady increases in
spending over the course of the quarter. And so I
guess the good news could be, hey, look, you've had
a couple months of upwardly trending same store sales now
(03:11):
within the quarter. If you expect that to continue, it
gives you a path towards further improvement in the second
half of the year, and I think that could be
the read through when you look at this. It is
tough to just look at housing as a whole and say, hey, there's.
Speaker 3 (03:27):
Any meaning like that.
Speaker 2 (03:29):
There's no meaningful growth impulse in housing right now, and
so the question and kind of what you're betting on
with with Home Depot is combination of hey, there's gonna
be you know, more renovations that happen, and there are
going to be not even renovations, it's more of like
the smaller projects. Hey, I've got you know, a pantry
(03:50):
that I want to put new shelving in. Great, you know,
all in between the shelving and maybe some new drywall
and paint that I got to do in order to
make it all you know how I want. Okay, I'm
gonna be you know, in for seven hundred bucks and
I've got to you know, and hey, more homeowners are
going to do that kind of stuff. So I don't
think this is like a bad you know report. Again,
(04:11):
comp sales up one percent in this environment is pretty
darn good. I mean here, here's the other thing that's
always true about Home Depot. Even in a tough environment
like they've been in for kind of the last two
years now, I mean since you know, early twenty three,
it's been kind of it's been pretty tough in housing,
they're great operators. I mean, this is this is a
(04:32):
company where you can look at a quarter that's kind
of me and still say, hey, they They rang everything
they could out of that quarter because the economic fundamentals
are just not particularly good for Home Depot, But they
still figured out how to make it work for them,
and I think that that at least reaffirms that management
still knows how to make you know, chicken salad out
(04:53):
of chicken bleep.
Speaker 5 (04:54):
Yeah.
Speaker 4 (04:54):
No, it's it's interesting the strategic shift that they've had.
They've really made a huge focus on targeting the pro
contractors out there. If you look at them compared to
Low's Low's Services, about seventy percent of its customers are
kind of DIY, the do it yourselfers, whereas Home Depot
now is saying their CFO that fifty five percent of
(05:15):
Home Depot sales are to professionals out there. And they've
done this furthered this by acquiring SRS Distributions for eighteen
billion last year, which is a supplier of roofing and
landscaping and pool professional equipment. And then they also grabbed
another company out there that has specialty building products. So
to your point, the resiliency that they have in a
(05:36):
really tough environment for home sales is impressive. This comparable
sales growth that we note here only in two of
the alas eleven quarters have they been able to report
sales growth. So it's been a tough environment, and it
does seem like the position that they've had on the
pro side of things leads them to at least be
positioned well Chuck. If for some reason we are to
(05:58):
get a turnaround in the housing market, whether that comes
from lower interest rates or just perhaps people finally just
stopping punting on these larger products, they are well positioned.
The stock's been relatively flat this year heading into today's action,
but interesting to see sort of how they've continue to
mold their business on the pro side.
Speaker 2 (06:19):
Yeah, I mean, it's just something where they're just good
operators of the business. They're able to maintain margins pretty consistently.
Their margins if weakened a little in the last couple
of years, but again that's kind of expected. I mean,
housing has been when we talk about housing, like housing
(06:40):
construction has just been bad since early twenty three. It's
been on a steady decline. If you look at the
data out there in terms of number of units under construction,
which is what matters, right, Like it's permits and starts
ultimately feed into hey, how many units are under construction
and how much stuff do you need in order to
(07:01):
build all this? After Q two of twenty three, we
were seeing about one point seven million units under construction
on an annualized basis. In the US, it's at one
point three seven to two right now. So you do
the math, that's a twenty percent drop in construction activity
over the last two years. And Home Depot has been
(07:25):
able to respond by saying, Okay, like, yeah, we had
like some bad comps a couple of years ago, but
our margins are still you know, thirteen and a half
percent instead of fifteen, and we're figuring out, you know,
where to grow and like, they're just good operators, and
I give them a lot of credit for that because
it's not an easy time to be selling lumber and
(07:47):
selling sinks and selling lighting. I mean, it's it's just
kind of gross out there in terms of new construction activity.
And so given that, I think the one thing that
you can continue to say I said, again, I'm a
broken record on this, they're really good operator their business.
And if there's one thing we have seen, people are
willing to pay up now for good operators of otherwise
(08:10):
boring businesses. Look no further than Walmart as an example
of that.
Speaker 5 (08:13):
Sure.
Speaker 4 (08:14):
The other thing I would note here is in terms
of tariff impact, there really wasn't any in terms of
the data from this quarter. Just for folks out there
who may be asking, are they seeing price increases, and
the short answer is no. All of the items that
they sold over the course of this quarter that they
just reported were imported prior to tariff's being in place.
(08:34):
They source about fifty percent of their items in the
US Home Depot, and the CFO had mentioned that they
are going to do their best to hold line and
don't really anticipate major price increases. Again that can change,
but muted impact and really nothing to report on any
tear front there.
Speaker 2 (08:51):
Along these lines, we get a piece from market Watch
talking about the NHB data that came out yesterday. Homebuilders
boost sales and incentives to five year high as they
struggle to sell newly built homes. This is a real thing.
When we look at inventories that are sitting out there
of newly finished homes, you're at the highest level since
(09:14):
two thousand and nine, which is not the kind of
comparison that you want to be making when it comes
to anything related to housing.
Speaker 5 (09:20):
No question about it. We've talked about it before.
Speaker 4 (09:23):
The percentage of builders offering incentives has now increased to
sixty six percent in the month of August. That was
sixty two percent the prior month. So, like you mentioned,
a five year high, that percentage figure that I just
quoted here, the confidence index has dropped too from where
it was last year. On the building front, and you
think of the pockets of the country, Chuck, that would
(09:45):
have the most building activity, and we've talked about on
the program before, Florida, areas of the Sunbelt, there just
isn't a tremendous amount of demand to build there. The
housing markets are in really difficult shape. So you just
don't have a tremendous amount of eagerness for those homebuilders
to get out there and build in what is a
very tepid real estate market from the demand side of things.
Speaker 2 (10:07):
And in terms of those those inventories that are out
there so recently completed, you know, constructions. Right now, you've
got one hundred and nineteen thousand units available nationwide. This
is according to data from the Census Bureau. If you
look back through the twenty tens, just as an example,
and you know, things were still normalizing as of you know,
(10:28):
twenty eleven to twelve from the housing bubble, but you
were down in twenty thirteen and fourteen. You're down at
like forty to fifty thousand units available. By the end
of the twenty tens, you moved up to around sixty
to seventy five eighty thousand units available nationwide. So you're
running right now at almost one hundred and twenty thousand,
anywhere from like a fifty percent to one hundred percent
(10:48):
increase from late twenty tens inventory. And the last time
that we saw housing inventory this high for completed homes
was August of two thousand and nine. It's just not
really a good comp again, like you, you do not
want to be.
Speaker 3 (11:04):
There the peak that we saw.
Speaker 2 (11:06):
Just so that you can understand the context of heyt
at peak housing bubble, what did things look like September
two thousand and seven, We had one hundred and ninety
four thousand units brand new ones finished but unsold, still
sitting out there, completed but unsold. And so the reason
why you are hearing about builders cutting back on their
(11:29):
plans right now for construction, they don't want to get
back to one hundred and ninety four thousand units of
unsold inventory.
Speaker 3 (11:36):
Again, right, it's kind.
Speaker 2 (11:38):
Of bad for business. It's not good for them. And look,
it's not even just that, like you haven't sold these
and made the money yet. You got to pay for
landscapers to come in and mow the lawns so that
people will visit. You've got to pay in the Northeast
for you know, plowing the driveway so people can visit
in the winter and stuff like that.
Speaker 3 (11:55):
You got to have all.
Speaker 2 (11:56):
The upkeep, but you don't get any money from it
until you actually sell it. That's a huge drag on
home builders as well. So we'll have to see where
this number goes. There some signs in the last few
months that maybe we're finding a little bit of a
plateau here in that one ten to one twenty thousand
unit range. Again, it more just speaks to the fact
(12:17):
that builders are pulling back as opposed to any surge
in buying activity. But we'll see where this goes, because
that's going to be the driver of how how home
builders move in the second half of this year and
into next year. Is Look, what's my own sold inventory
look like? Because I'm not sticking more shovels in the ground.
If I can't move these units, take a quick break here.
(12:38):
When we return, we're talking Intel.
Speaker 3 (12:42):
Right after this.
Speaker 1 (12:44):
Tara Fleebury's in high gear. We've got the latest on
what might be next and how long it might last.
Only here on the Financial Exchange Radio Network. Text does
six one seven three six two one three eight five
with your comments and questions about today's This is the
Financial Exchange Radio Network.
Speaker 6 (13:06):
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Speaker 2 (13:39):
Paul piece from Bloomberg late yesterday giving us some additional
information on the United States potentially becoming a shareholder in Intel.
Speaker 3 (13:50):
What do we learn?
Speaker 4 (13:51):
It seems that there is a potential. Again, this is
all just rumored. There's been nothing official yet that they
could utilize some of the chipsack money that was granted
to Intel and convert them into an equity stake within
the company. Intel had been allocated ten point nine billion
in grants for commercial and military production of chips. The
(14:13):
government is really focused on making sure that there is
a domestic alternative for chip manufacturing. It's dominated largely by
Taiwan Semiconductor and Samsung over in Asia, and they're looking
for a United States solution. So these grants are supposed
to be given out over different tranches based on different
(14:35):
benchmarks being held and hit in terms of Intel building
out its manufacturing capabilities, So this would be something that
would progress over time. In terms of my feeling a
little torn, Chuck just I don't really love government invention,
intervention in business in general, more of a laissez fair
(14:56):
approach personally, but obviously I recognize that need for domestic
manufacturing of chips Intel as backing them as potentially the
right bet.
Speaker 5 (15:08):
Historically they obviously we were.
Speaker 4 (15:10):
Dominant in the eighties and nineties and really were just
the pinnacle of manufacturing. But they've really just screw the
pooch big time. Over the course the last couple decades,
they completely missed Mobile and they also have missed this
AI wave as well. So mixed thoughts on this you
know proposal here, and this also piggybacks off of soft
(15:32):
Bank also announcing that they will be investing two billion
dollars in Intel as well.
Speaker 2 (15:38):
So rule number one never follows soft Bank into anything.
Speaker 5 (15:42):
I wanted to get into them a little bit, like like.
Speaker 3 (15:44):
Full stop, like Maciosi.
Speaker 2 (15:46):
Son has a track record over the last decade or
so of generally being kind of late to the party
and backing the wrong horse. Granted, like it's not to
say that he hasn't had you know, great investments. Historically,
soft Bank has had you know a few major winners,
largely from the early twenty tens. But recently we're talking
about companies like you know, we work and things like
that that you know we didn't work, and okay, like
(16:09):
you move on, you take the l and you call
it a day. When we talk about the federal government
taking a stake in a major American publicly traded company,
let's talk about the potential, you know, problems that that entails.
Number one you've got a company that is now part
(16:33):
owned by the federal government as such, are we going
to then be more or less likely to try to
funnel more money to that company because of you know,
already existing, because that relationship already exists, regardless of whether
or not the product coming out is actually good. Probably right,
(16:55):
like it's it's not really great. Number two? Okay, you
have to assume is it fair to say that if
the US government wants to be a shareholder in Intel,
they're probably not going to just be a passive shareholder
that lets Intel do whatever it wants.
Speaker 4 (17:11):
Absolutely not. You know, They're they're gonna make sure this
manufacturing gets They're gonna.
Speaker 2 (17:16):
Want board seats and stuff like that so they can
exercise some level of control. Like do US politicians rather,
do politicians have any political persuasion or any geographical and
any polity? Do do politicians in general like to preside
over job losses?
Speaker 5 (17:36):
No?
Speaker 2 (17:37):
What do companies often need to do in order to
get more competitive in the landscape? They often need to
lay people off. Are you gonna have you know, someone
on the board saying no, don't lay people off because
it's gonna look bad for US.
Speaker 3 (17:51):
M Okay, yep.
Speaker 2 (17:54):
Furthermore, regardless of what you think about this administration, good, bad,
everything in between, if the next administration comes in and
they are not someone who likes or believes in Intel,
are you now putting the future of this company in
the hands of someone who just because maybe there's a
bad relationship there this and that decides, Hey, guess what,
(18:15):
we're pulling the plug and you undo, maybe something good
that actually comes from this. Sure, these are things where
when you get into state owned enterprises, even on a
minority level, it becomes kind of problematic. I am much
more in favor of Hey, if you have something where
(18:35):
you see, you know, a critical need for products X, Y,
and Z, great, let's find a way, even if it
doesn't make economic sense. Let's find a way to produce
that stuff here through you know, ways that we can
incentivize production. Look at the MP Materials deal just as
an example. I'm gonna keep coming back to this one
because I actually think it makes a good deal of
(18:58):
sense if you look get the key tenants of that deal.
You know, from earlier this summer, the big things were Okay,
here's a bunch of money in order to produce.
Speaker 3 (19:12):
These rare earth materials.
Speaker 2 (19:15):
We are going to guarantee purchases at a certain level
at a certain price, and we are going.
Speaker 3 (19:24):
To basically pay for that.
Speaker 2 (19:26):
We're also going to provide some financing, but it's going
to be on the dead side, not the equity side.
And we'll talk a little bit more about this when
we come back. Along with Wall Street Watch, Like us.
Speaker 1 (19:42):
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 financi You'll Exchange Radio Network.
Speaker 6 (20:02):
Markets are in mixed territory as investors react to the
first wave of major retailer earnings from Home Depot unveiled
this morning with mixed results. Right now, the Dow is
up by six tenths of one percent, or two hundred
and seventy three points. SMP five hundred is now completely flat,
Nasdaq is off by six tenths of one percent, or
(20:24):
down one hundred and forty one points. Russell two thousand
is up by one tenth of a percent. Ten year
treasure yield is down two basis points at four point
three one percent, and crude oil off nearly one percent,
lower training and sixty two dollars in eighty four cents
a barrel. Home Deepot reported disappointing second quarter results, where
(20:44):
the home improvement retailers said that consumers were still delaying
big ticket projects and that it would make modest price increases. However,
home Depot backed its annual outlook, sending shares up by
four percent at the moment. Meanwhile, Intel shares are rising
over eight percent after Japan's SoftBank agreed to invest two
(21:05):
billion dollars in the struggling chip maker. This comes after
news that the US government has been considering taking a
stake in Intel. Elsewhere, Palo Alto Networks reported quarterly results
at Beach Street forecast and offered full year guidance that
was stronger than expected. Shares in this cybersecurity company are
up nearly five percent. Medtronic down by four percent, falling
(21:29):
news that the medical device makers adding directors after Elliott
Investment Management became a major shareholder. Medtronic also reported strong
quarterly results and hiked its angle outlook, citing lower than
expected tariff costs. Shares a Viking Therapeutics tumbling forty percent
after the company released mid stage trial data on its
(21:50):
obesity pill that disappointed, and TV station operator Nextstar Media
agreed to buy its rival Tegna for six point two
billion dollars. The Wall Your Journal previously reported that Sinclair
was also seeking a merger with Tegna. Shares Integna in
next Star up over four percent. Well, Sinclair stock is flat.
(22:10):
I'm Tucker Silva, and that is Wall Street Watch.
Speaker 3 (22:14):
Paul.
Speaker 2 (22:14):
A couple other things that I want to touch on,
just with Intel and the possibility of the US government
taking a stake there with the NP Materials deal. One
of the things is, look, we've seen in the last year,
not even the last year, last six months, the importance
of being able to produce rare earth materials domestically correct correct.
(22:41):
With Intel, is there any information specifically that we need
to have Intel chips produced here domestically.
Speaker 4 (22:52):
Just the looming thread of you know, potential Chinese invasion
into of Taiwan, but not today.
Speaker 2 (22:57):
I agree, Maybe I didn't make the question clear. Is
there any reason why we need Intel chips specific Intel? No,
if you like, you look at it, just as an example,
Taiwan Semiconductor I got a big old factory they're building
down in Arizona. Samsung's doing one in Texas. They might
be doing one in Arizona two, I can't remember. LG
(23:19):
it's doing the same thing. Why why Intel, I guess,
is my question? And and what I mean by this
is I too believe that we need to have semiconductors
produced here domestically. Why are we taking a steak in
Intel when they're not really proven as a good operator
(23:41):
in this space right now? Like if you wanted to
produce semiconductors domestically, Hey, Taiwan Semi, come to us. We're
gonna invest X dollars in this. I'm not even saying
I like the deal structure, but just like bear with me,
we're gonna I want you to set up, you know,
a joint venture in the U. They might even already
have one for just how they're structuring their US operations.
(24:05):
Said up a joint venture in the US. We're going
to own ten percent of it, and we want you to,
you know, do the build out and do your stuff there.
What's if Intel doesn't make the chips that are cost competitive,
you know, competitive in terms of performance, and they're struggling
to get their quality to where they need it to be.
(24:28):
Why do we just want to throw more money at
them at this point in this format too? Because remember,
as an equity holder, if the company does badly, you
do badly.
Speaker 1 (24:38):
Right, right?
Speaker 3 (24:39):
What's like? What?
Speaker 2 (24:40):
And I saw, you know, Commerce Secretary Lutnik today say well, look,
you know this is a chance for the US to
participate in the upside. Well, if the US wants to
theoretically participate in the upside. Again, this is before I
even get to you know, being cool with just you know,
state owned semiconductor companies and things like that. Why are
you picking Intel and not anyone else who's doing this
right now?
Speaker 5 (25:01):
They're the only US option?
Speaker 4 (25:03):
Really, is probably the short answer to that, not to
say I agree with that, and I mean they're not
though who on the manufacturing side, who would be the
next pick?
Speaker 3 (25:11):
Well, you're talking like for fabs and stuff.
Speaker 5 (25:13):
Yes, that's what they care about.
Speaker 2 (25:17):
Okay, I guess like, let's say, let's take this a
step further then, if you really want to have a
state owned chip maker, why not make a state owned
chip maker.
Speaker 4 (25:29):
Well, that's gonna take even longer than into Intel is
probably going to take a decade to figure it out.
But it's gonna take even longer longer to see, which is.
Speaker 3 (25:36):
Why this is kind of a bad idea, right, No,
I'm not.
Speaker 4 (25:39):
I'm not here to say the idea is a great idea,
but that I'm just telling you the logic behind the decision.
I would agree with you that we have to research
probably Taiwan semi conducted they're that agreement. There's no way
there isn't some deal in place or some partnership there
for Taiwan Semiconductor to build that fab in Arizona. I
feel like there has to be some sort of US
(25:59):
government commits meant to that. But I'll take a look
at that. But ultimately that's that's why the impetus for
this decision, and based on their checkered history, I don't know,
it's not necessarily the right horse of back. I don't
agree with that at all, because they really have struggled,
like I said, over the last fifteen years or so,
whether it's mobile anything on the AI front, and the
sophistication that's required to do this manufacturing. It's just it's
(26:24):
a very high bar to clear and it's really capital
intensive and to your point, as an equity stakeholder that
would potentially require more capital commitment down the road, or
or Intel is going to have to raise more debt
to do this. It's it's a long road for sure.
Speaker 2 (26:39):
This also gets the problem of you mentioned, Hey, it
tells like the only the only game in town, right
you said something along those lines. Yeah, The benefab like
that kind of.
Speaker 4 (26:50):
Because so many of the US companies are more design driven.
On the chip side of things, they're probably the best,
but on the manufacturing side.
Speaker 2 (26:58):
So I guess we're going with this is like I
was also looking just at Intel's history of acquisitions over
you know, the last twenty thirty years, and you know,
a lot of the stuff is you know, kind of
random things here and there. There's a few things, but
they've also bought you know, some semiconductor manufacturers over the
(27:19):
last fifteen twenty years as well. You know, it's not
just you know, they've bought companies that you know, do
you know machine learning and cloud computing and this and that,
and that's what it is. But in terms of you know,
actual you know, semiconductor capacity and things like that. Back
in twenty fifteen, just as an example, All Terror was
(27:39):
a semiconductor manufacturer. They were founded back in I want
to say, like early mid eighties, like like most of
them out in California, and Intel was allowed to buy
them back in twenty fifteen for around fifteen sixteen point
seven billion dollars. And you say, okay, Like, isn't part
of the problem that we don't really have many companies
that do this because there's been so much consolidation all
(28:01):
out in this space that you have to back the
bad horse instead of having other ones that are out
there that you can potentially rely on.
Speaker 4 (28:08):
Yes, that's that's definitely part of it. And it's just
it's such a capital intensive business too, that it's it's
hard to build up. Not impossible, but it's challenging.
Speaker 2 (28:18):
So I don't know, I just I look at this
and I just get a little bit nervous about it
because I've seen this before where when you start getting
into companies that you know historically are owned by, you know,
the government with which they reside in, it can create
(28:38):
some perverse incentives where things don't necessarily go great in
the future.
Speaker 3 (28:42):
And so I just I have questions about it. I
wonder about it.
Speaker 2 (28:47):
I guess sure, let's see let's take a quick break now,
and when we return, Uh, let's take a look at
what we're seeing in the economic data as a whole.
There's a good piece of New York Times talking about this,
and so let's touch on that when we return.
Speaker 1 (29:07):
Miss any of the show. The Financial Exchange Show podcast
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the Financial Exchange Radio Network. This is your home for
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on Wall Street. This is the Financial Exchange Radio Network.
Speaker 2 (29:36):
Piece of New York Times that I, you know, a
lot of times I'll call out, you know, a headline
or a piece for being just you know, sensationalists are
not really meaning anything or you can't do anything with this.
In this case, I actually feel the opposite, and so
I like to point out, you know, good things that
I see that are out there as well. Piece here
(29:56):
in the New York Times. Economic data has taken a
dark turn. That doesn't necessarily mean a crash is near,
and the subheader is inflation is up, in job creations down,
but the US economy could still pull through without too
much pain. And this is something we've been saying on
our show for you know, quite a while now, which is, look,
just because you have things slowing down here for a
quarter or two doesn't mean that you inherently go into recession.
(30:20):
We've seen this in the last two years, where heading
into the fall, each time we had questions about job
growth and inflation, and each time they were answered positively. Yes,
we can get through this. The US economy is strong
enough and it's going to be able to deal with this.
And it's not saying that will or won't be the
case this time, but much more. Hey, the US economy
(30:41):
is a pretty robust and dynamic thing. And even though
there are some questions that are out there on the
US economy right now, it could still be answered successfully
over the next couple months. And then as you get
into next year, you've got a ton of potential business
incentives from the big beautiful bill that could spur you know,
additional investment, and now you're off to the races again
(31:02):
in twenty twenty six. This is absolutely something that is
possible that we have to you know, keep on our
board as a real potential possibility for twenty twenty six.
Speaker 4 (31:13):
So many pundits out there are always in the business
of trying to make a dramatic call one way or another,
chuck that the economy is going to boom, or the
economy is going to bust.
Speaker 3 (31:23):
Bear, we're so back, gets so over, We're so back
gets so over.
Speaker 5 (31:26):
Bare bull case.
Speaker 4 (31:27):
You know, all these different terminologies that get thrown around.
But sometimes and it's not appealing, it doesn't get clicks,
and it also doesn't get views on the video front.
Sometimes you might just go through a little bit of malaise.
And that's possible here. And it's something that when you
covered so much of this stuff earlier, when the tariffs
were announced, it just was always one way or another.
(31:49):
People viewed it in two different directions. Either this is
going to fall apart and be disaster or this is
going to be lucrative. And the answer could be somewhere
in the middle, which isn't sexy to say, but we
could get through this, muddle through it just fine. And
like you said in twenty twenty six, turn the corner.
Speaker 2 (32:04):
So I just think it's important to keep, you know,
the potential for upside on your dark board as something
that we could see here. I mean, I'm not necessarily
talking like upside in markets, Like you can also have
something where, hey, the US economy catches up and markets
stall for a little bit in order to get things
more aligned there, Like, that's very possible too. So I
think it's always just useful to remember. Now I think
(32:27):
back at the last four or five years and just
probably like how many things were like certain to throw
us into recession during that time, and how many things
then were, oh, well, the US Economy's gonna boom because
of this, and oftentimes the truth is somewhere in the middle,
And I think it's just important for people to remember.
Speaker 4 (32:47):
That, no question, inflation that we saw in twenty twenty two,
it's still damaging, but we got through that remarkably without
a substantial recession.
Speaker 2 (32:56):
Folks, if you are sitting there right now and you're saying, hey, hey,
you know what, this is all well and good, but
I'm getting up there in age and I want to
make sure that I'm leaving things better for that next generation.
Speaker 3 (33:08):
The Armstrong Advisory.
Speaker 2 (33:09):
Group does have a guide on this exact topic this
exact month. It's titled Leaving a Lasting Legacy. What types
of items are can you discussed in here. Making sure
that your estate plan is aligned with your financial plan.
How do you make sure that you're minimizing taxes to
maximize what you're passing through to that next generation.
Speaker 3 (33:30):
How do you make sure that.
Speaker 2 (33:31):
You're minimizing taxes on a multi generational basis, not just you,
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These are some of the topics discussed in this guide.
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(33:55):
Click the button to request your guide, and then you
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Speaker 1 (34:09):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.
Speaker 3 (34:24):
Peace from the Wall Street Journal.
Speaker 2 (34:26):
SMP Global Ratings has affirmed the credit ratings of the
United States, this with them saying they expect quote robust
revenues from the Trump administration's newly Institute of Terror regime
to help offset the fiscal deterioration resulting from recent legislative changes.
So basically saying, hey, the big beautiful build provides for
(34:47):
a bunch more spending and so it's not really doing
anything to reign in deficits. But you got this tear
for revenue coming in, and so long as that continues,
things aren't really worsening.
Speaker 3 (34:57):
You're just kind of treading water.
Speaker 4 (34:59):
Yeah, there wasn't huge meaningful takeaways that I had from
from this ratings reffe reformation here. I don't know if
they get paid by the word, but they really throw
around a lot of different words in their their statement here, Chuck.
They really are trying to get that word count up
and use as sophisticated verbiage as possible.
Speaker 2 (35:18):
It seemed like, here, what businesses do you think would
be worse to be paid by the word in uh
for the employer or for the employee?
Speaker 4 (35:30):
Those investment perspectuses that yes often can get in the
hundreds of pages. Anything in the legal realm has got
to be in there too.
Speaker 3 (35:40):
Can we talk about investment perspectuses for a bit?
Speaker 5 (35:43):
Sure?
Speaker 3 (35:43):
Just while like you brought it up, and I think
it's a great topic.
Speaker 2 (35:48):
It's one that I've actually seen written about, which is
basically like disclosure fatigue.
Speaker 3 (35:53):
And it's not just on.
Speaker 2 (35:53):
Investment perspectuses, it's on you know, oh, you signed up
for door dash. Here are terms and conditions. Click here
to agree, right, and has anyone actually read them? Aside
from the guy I forget what the company was, but
someone some company buried something in theres where it was like,
if you're the first person to read this and reach
out to us, you collect like ten thousand dollars from
(36:14):
us or something like. That's fantastic, And it took like
five or six years for someone to actually do it,
just because no one reads the terms and conditions, you know,
like it's just you get disclosed so much by the
lawyers that you're just like, I don't know what this means.
I'm just gonna click it and next thing, you know,
McDonald's owns your front lawn.
Speaker 4 (36:35):
I mean, think about when you do your p and
s to buy buy a house. That's a good example
of one that just pages go on forever and ever,
and it's just sign sign sign. They really should have
some reason and that's it's in our industry. There is
a case of that where right, there's summaries that are
provided that just hit on the key points. And I
feel like this statement here by the S and P
(36:57):
on the reinformation rating could have been much shorter or
much more concise than it was.
Speaker 5 (37:04):
But hey, it is much the same thing.
Speaker 2 (37:07):
Yeah, let's see private equity firm stocks are struggling despite
getting into four oh one k's misleading headline, Yes, and no,
I wonder is the reason that they're trying to get
into four oh one k's because they're struggling a bunch.
Speaker 4 (37:28):
There's they're always gonna be looking for new capital. That's
definitely part of it. The reason I would say misleading
headline is yes, President Trump put that into that notice
or whatever exactly was termed as but it's gonna take years,
several years for them to get on platforms and to
get approval. There's a lot that goes into the regulatory
(37:49):
background for four one k's and what they put on
their platform. They have to act as produci aya. So
this isn't an immediate revenue stream that kicks on tomorrow.
Speaker 2 (37:57):
No, it's a it's a great point, like this stuff
is not happen overnight. Even if even if the platform
may approve it, the fiduciary overseeing the plan may still say,
I need a little bit more time to look at
these before I allow these investments actually into my particular plan.
Speaker 3 (38:14):
Let's take a quick break here.
Speaker 2 (38:15):
When we come back, oh nother hour stuff on the
financial exchange.
Speaker 3 (38:21):
Back in a bit.
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