October 13, 2025 • 38 mins
Chuck Zodda and Mike Armstrong discuss AI juicing the economy but questions remain if workers are actually more productive because of it. Ted Rossman (Bankrate) joins the show to chat about the 2025 Holiday Spending Survey. Squeezing builders isn't the way to lower housing costs. This market is nothing like the dot-com bubble. This might be the dumbest market in history.
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Episode Transcript
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Speaker 1 (00:00):
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(00:20):
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(00:43):
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donation today. This is the Financial Exchange with Chuck Zada,
(01:06):
and Mike Armstrong.
Speaker 2 (01:10):
Chuck, Mike and Tucker with you here. And as we
kick things off today, we got stocks.
Speaker 3 (01:17):
Rebounding, making up about forty percent of Friday's losses thus far,
the Dow Jones Industrial average up four hundred points, the
S and P five hundred, up seventy, the Nasdaq composite
of three hundred and twenty five, so broad based rally
taking place today. In general, you know, you've seen pretty
(01:37):
good breadth across most of the indices, uh and again,
making up about forty percent or so of the the
losses that we saw on Friday when we had the
you know, the first real single day volatility that we've
seen in several months. As we take a look at
(01:58):
markets to see what else is moving today, the tenure
treasury not trading because the bond market is closed. You
might ask yourself, hey, why is the bond market closed
when equity markets are open. This is actually just a really,
like all the time, simple thing, but it's a good reason.
The banks are closed in observance of Columbus Day, and
banks cannot If banks are closed and they don't have
(02:20):
you know, certain funding needs in pricing, then you don't
have the bond market being open because you don't know
how much money is being borrowed and lent and how
much needs to take to change hands there, and so
as such, the bond market is closed. The let's see
prices for commodities. We got gold continuing just to scream
higher right now. It's up one hundred and twenty dollars
(02:42):
an ounce to forty one twenty cents, three percent move
up today for gold, breaking out to new all time highs.
You're seeing this across precious metal. Silver's up six percent,
palladiums up four percent. So it's it's just happening across
the board. Crude oil West Textas Intermediate up one dollar
(03:03):
and four cents a barrel of fifty nine to ninety
four at the moment when we take a look at
the TRIPA national average for gas prices breaking below three
ten a gallon for the first time in quite a while.
We're at three h eight and two tenthsive ascent nationally.
And if you go, if you happen to be listening
to us throughout you know, any of the southeastern into Texas,
(03:27):
you've got gas prices down the two sixties two seventies
throughout much of that region, so continuing to see those
sliding toward the mid twoes. Uh, if you're lucky enough
to be driving through the southern middle part of the
country right now.
Speaker 4 (03:42):
It's the first real kickoff of earning season. This week
we'll have in terms of the schedule here, JP, Morgan, Wells, Fargo,
Goldman Sachs, black Rock City Group all reporting tomorrow before
the bell in addition to Johnson and Johnson just wanted
to get the big financials out.
Speaker 2 (03:57):
Of the way.
Speaker 4 (03:58):
Wednesday, we will be hearing from AML, Bank America, Morgan Stanley,
Abbot Labs, and Progressive as well. On top of that,
and then Thursday of this week we'll have Oh Taiwan
Semiconductor reporting and Charles Schwab. So first real kickoff on
the financial side. Any Friday, we got a good one too, Express.
I didn't even look at Friday because they usually hold off.
Speaker 3 (04:20):
I anticipate that AM actually again good signals about kind
of that higher end consumer. I wouldn't expect to see
many problems there, given what we've been hearing from retailers
and you know, travel and hospitality. But interesting to see,
you know what they say, And so I think they're
one that I'm interested in as.
Speaker 4 (04:38):
Well, any unique insight you think any of these will
share with us. I mean, I'm most interested to hear what,
if anything, they have to say about that private credit space.
But frankly, they don't have a lot of exposure to it,
and so some of the customers do, I presume, But yeah,
I guess we don't know.
Speaker 3 (04:54):
You know, you don't know if Goldman Sachs has a
bunch of funds with private credit exposure. So it's we'll
see what we hear. I also don't know that there's
a great leading signal that you get from them. You know,
remember all the subprime stuff that blew up at the
end of eight The first rumblings were coming second quarter
(05:16):
two thousand and seven.
Speaker 4 (05:17):
I wouldn't expect it. But if if you had someone
announce a bunch of loan losses that nobody was really anticipating, that, sure,
that would be a pretty good tell. But usually you
don't get those until something really icky's happening.
Speaker 3 (05:31):
Yeah, so we'll see what we get there. Piece in
the Wall Street Journal AI is juicing the economy? Sounds fun?
Is it making American workers more productive? Ooh, that's an
interesting question. Two part question, Is it juicing the economy? Yeah,
very clearly.
Speaker 4 (05:45):
We are seeing building construction, We are seeing semiconductor investment
and all sorts of things that are leading to increased employment,
increase spending across this US and global economy on the
artificial intelligence infrastructure bets that are being made, and a
few years ago that was all just big dreams. Today
(06:07):
it's actual spending. You are actually seeing boots on the
ground constructing data centers. You are seeing maybe not you know,
actual utility and power generation construction, but permitting and announcements
on that front. And so I think you can easily
say that AI is juicing the economy. And frankly, without
(06:28):
the AI trade juicing the economy, I'd be quite concerned
about economic growth given what's fallen off on the housing
side of things.
Speaker 2 (06:34):
So yes to the first part.
Speaker 3 (06:35):
So is it making employees more productive? Here's what I'll
tell you. And again, I try to talk to a
lot of people just so that I can get a
sense of, you know, kind of a broader swath of
what's going on. I've read this article and it confirms
kind of what I've heard all my friends who work
in the tech space say that this is absolutely changing
(06:57):
how they work on a daily basis. Think there are
two reasons for that. The first is it generally seems
like large language models have some pretty useful things that
they can do on the coding front to speed up
a lot of those processes. Yes, and so if you're
directly involved in, you know, the production of tech products, yeah,
there's there's definitely something there. The second piece is, Hey,
if you work for a tech company, you're typically exposed
(07:20):
to a lot of these tools early and often relative
to someone you know who might work in a different industry,
and so you're able to pick these up, you know,
kind of you're you're at the tip of the spear
when it comes to adoption in a lot of these
areas as well.
Speaker 4 (07:33):
May I add a third piece, Yeah, if you work
in the tech space and don't say that you are
being made more productive by artificial intelligence, I'm unsure you
have a job tomorrow.
Speaker 2 (07:43):
Yeah, but they're telling me I get them, not their boss.
Speaker 4 (07:46):
No, I get that, And that's where a difference between
closed door conversations versus reality sets in. But I think
that third piece is playing a role across many other
places where oh, I better say that I'm more productive
because of artificial intelligence, because if I don't say it,
and if I don't prove it, then I might not
have a job tomorrow, and as a company, I might
not have an investor tomorrow.
Speaker 3 (08:05):
And I think that other than what we're seeing in tech,
I'm unclear if most other industries are seeing any major
shift at this point in the aggregation. I know that
JP Morgan came out last week and was like, y'are
we're gonna spend two billion dollars on artificial intelligence? And
sound like a pirate?
Speaker 4 (08:25):
Like just wondering if JP Morgan sounds like a pirate
to you the name of the company or if.
Speaker 2 (08:31):
I don't know anything.
Speaker 3 (08:32):
They just wanted to make like a big hullabaloo of
Like I can't stand with companies are like, well, we're
spending this much on this new technology, Okay? Is that
like good? Like I don't know if that's good or
useful or anything. But they said they're gonna be spending
two billion dollars a year on AI. That's that's fine,
It's all well and good. You're hearing it anecdotally in
(08:54):
other places. But I'm just not sure that across the board.
You're seeing a meaningful shift right now. Sure, you're also
obviously seeing all of the concerning things regarding AI technology,
such as, you know, the fact that it's not necessarily
right as often or more often than humans in a
lot of instances. It's also obviously something that comes with
(09:19):
a whole bunch of societal questions, whether you're talking about, hey,
how do we deal with potential you know, large scale
job displacement, to why is AI allowed to talk to
minors in sexually explicit terms? To you know, again, like
you even get some of the like stuff that's it's
hard to find too much that's worse than that, but
it's it's out there. When you talk about, you know,
(09:40):
some of the things along the lines of you know,
AI encouraging people towards self harm and things like that.
Speaker 2 (09:46):
I mean, it's there's some pretty bad stuff out there.
Speaker 3 (09:48):
And quite honestly, this is like before you even get
to the fact that, hey, I don't really think that,
you know, Mark Zuckerberg has proven himself to be, you know,
a great steward of.
Speaker 2 (10:00):
Ethical technological use historically.
Speaker 4 (10:02):
Yeah, when I'm really interested to see so coming from
the perspective of you know, a company that is not
JP Morgan doesn't have two billion to spend on developing
their own artificial intelligence tools. Right like that, That's where
I think most Americans land. My our company demoed a
(10:23):
tool that you know, I found compelling. It was a
artificial intelligence tool designed to help you fill out paperwork faster.
Right because you know what's the prappiest part of almost
any white collar job out there, it's probably and some
blue collar jobs filling out paperwork. And so we took
a look at that and interesting product. Interesting company. The
(10:46):
cost of said product was probably more expensive than just
hiring a person to do it, And so we're very
much still at this early stage too, where I'm even
if it does make someone more productive, I'm wondering how
much money some of these companies are really spending to
produce a product that, yes, make somebody more productive at
a not terribly affordable cost.
Speaker 2 (11:07):
Let's take a quick break.
Speaker 3 (11:08):
When we come back, Ted Rossman from Bank Raad is
going to join us talking about their twenty twenty five
holiday spending survey.
Speaker 1 (11:15):
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Speaker 5 (11:53):
This year's DAV five k is sold out, but you
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Speaker 2 (12:06):
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Speaker 3 (12:24):
As promised, We're now joined by Ted Rossman from Bank
Right here to talk about their twenty twenty five holidays,
spending survey ted how are you today?
Speaker 6 (12:33):
Doing well? Good to be here.
Speaker 2 (12:35):
What are some of the big takeaways from this survey?
Speaker 7 (12:39):
People are a bit reluctant to spend this year, whether
we're talking travel or gifts. On the gift side of things,
about a third say they're planning to spend last this year.
About forty percent are concerned about higher prices now. To
be fair, there's also about another third that says they're
going to spend more and everybody else is about the same,
So kind of a bag there. On the travel front,
(13:02):
twenty one percent say they're going to travel this year
for the holidays.
Speaker 6 (13:05):
Last year it was twenty seven.
Speaker 7 (13:07):
I take all this with a bit of a grain
of salt, because, as we know, the consumer mood has
been very depressed this year. A lot of actual spending
has come in better, but people are a little skittish
as the holiday shopping season gets underway.
Speaker 3 (13:20):
When you talk about that skittishness, is that concentrated in
any one particular area, any one particular demographic, or anything
like that.
Speaker 6 (13:29):
Upper income households are faring the best.
Speaker 7 (13:31):
Moody says that the top ten percent of earners are
accounting for fifty percent of all spending, which is an
all time high and a data set that goes back
to the late eighties. So upper income people are more
insulated from this, but they're actually the ones who are
propping up a lot of the overall statistics. We do
see a lot of cutbacks among lower and middle income households.
(13:52):
That's one of the reasons why the overall numbers look
better than what a lot of people are reporting. In
our holiday travel survey, we found that people in their
twenties and thirties are the most likely to be cutting back.
That often correlates with parents of young kids. Many people
are feeling that cumulative weight of inflation. It's not the
prices have changed a lot over the past few months,
(14:14):
or even over the past year, but it's when you
go back to let's say the start of twenty twenty one,
prices are up twenty five percent. As a result, people
have dipped into savings, they've taken on debt, We're seeing
some weakening in the job market. All this is adding
up to a cumulative weight that people are just not
feeling as spendy this year.
Speaker 3 (14:35):
So this is the point where I asked the tough question,
which is even though everyone's saying they're not going to
spend as much, we haven't seen any real shift in
spending trends over the course of this year. In the
aggregate that this spending data, whether you're looking at retail sales,
credit cards, like, however you slice it has continued to
be pretty good.
Speaker 2 (14:54):
Why should I listen to what.
Speaker 3 (14:55):
People are telling me when their behavior for the last
nine months says some different.
Speaker 6 (15:01):
Well, it's a great point.
Speaker 7 (15:02):
The TSA screened a record number of passengers per day
in the first nine months of the year. Last year
was a record, the year before that was a record.
Looks like this year could be another record. So yeah,
it's kind of like what gives people are saying one thing,
they're doing another. Consumer sentiment has not been as predictive
the past few years. Really ever since the nineteen seventies,
(15:22):
everybody always thought consumer sentiment was this great predictor, It
was this leading indicator.
Speaker 6 (15:27):
It was for a long time.
Speaker 7 (15:29):
It really hasn't been ever since the pandemic set In
the past five years, consumer sentiment has been really depressed
and a lot of the actual numbers have been better. Now,
first it was COVID stuff, Now lately it's been inflation,
it's been tariffs. People are climbing the wall of worry.
Though they say that with stocks, sometimes it's happening with
consumer spending right now, is that people are complaining about
(15:51):
the cost of living and they're spending anyway, sometimes because
they have to, because these are necessities, but sometimes because
they want to traveled, concerts, sporting events. All these have
been hot areas. Inflation is weighing on sentiment, but the
bark has been worse than the bite when it comes
to actual data.
Speaker 3 (16:10):
When we talk about consumers taking on debt for their
holidays spending, how is that debt typically showing up? Is
it credit cards? Is it buy now, pay later? Where
is it happening?
Speaker 6 (16:22):
Primarily credit cards? But by now, pay later is.
Speaker 7 (16:24):
A growing segment of this By now, pay later tends
to grow ten twelve something like that percent every year.
In recent years, especially around the holidays. Credit card balances
are much higher. I mean, the buy now, pay later
market only accounts for something like three percent of the
credit card market, So we really do look primarily at
the credit card when we're talking about debt.
Speaker 6 (16:46):
The average interest rate is about twenty percent.
Speaker 7 (16:48):
Many store cards are north of thirty percent, So that's
a buyer beware if you're at the checkout counter this
holiday season and they offer you the stores branded credit card.
Half of credit card holders carry debt from month to month.
In our surveys, about a quarter of holiday shoppers say
they're taking on debt for retail. About a third say
(17:09):
they're taking on debt for travel. Frankly, I fear the
toll will be hired just because half of credit card
holders already have debt from month to month, so directly
or indirectly, they may be adding to that. Not to
say you can't have any fun, but try to set
a good budget ahead of time. You still have five
paychecks between now and the end of the year. Set
(17:29):
money aside from each of them. Consider a zero percent
balance transfer card to pause that interest clock for up
to twenty four months, and.
Speaker 6 (17:37):
Maybe even consider cutting back.
Speaker 7 (17:39):
Maybe you talk to your family about, hey, could we
buy fewer gifts this year?
Speaker 6 (17:43):
Others' heads may get nodding.
Speaker 3 (17:45):
Ted, appreciate you joining us today. Thanks so much for
the information anytime.
Speaker 6 (17:49):
Thank you.
Speaker 3 (17:50):
Ted Rossman from Bankery talking about their twenty twenty five
holiday spending survey.
Speaker 5 (17:54):
All right, time for trivia here on the Financial Exchange
and today is Paul Simon's fourth birthday. In nineteen eighty six,
Simon released his most successful and acclaimed album, Graceland. The
hit single from that album was you Can Call Me Al.
So our trivia question today which famous comedians start alongside
(18:16):
Simon in the music video four you Can Call Me Al?
Speaker 2 (18:19):
Once again?
Speaker 5 (18:19):
Which famous comedian starred alongside Paul Simon in the music
video for you Can Call Me ALU be the fifth
person today to text us at six one seven thirty
six two thirteen eighty five with the correct answer, and
you win a Financial Exchange Show T shirt. Once again.
The fifth correct response to text us to the number
(18:41):
six one seven three six two thirteen eighty five will
win that Financial Exchange Show T shirt. See complete contest
rules at Financial Exchange Show dot com.
Speaker 3 (18:52):
Take a look at markets as we move towards the
bottom of the hour, with the Dow is now five
hundred and eighty two points, the S and P's up
ninety six, and the NASDA can pose it up four
hundred and thirty five, So market's continuing to stretch their
legs further as we continue today again now having recouped
about half of what they lost on Friday. We'll see
(19:12):
if we continue to see a little bit of momentum
in that direction. As we continue here, let's take a
quick break. When we return, We've got the trivia answer,
we got Wall Street Watch, and then let's talk home
building after this.
Speaker 1 (19:40):
Bringing the latest financial news straight.
Speaker 6 (19:42):
To your radio.
Speaker 1 (19:43):
Every day, it's the Financial Exchange on the Financial Exchange
Radio Network. Time now for Wall Street Watch. A complete
look at what's moving markets so far today right here
on the Financial Exchange Radio Network.
Speaker 5 (20:00):
Are rebounding from Friday's sell off after President Trump posted
to social media yesterday in a fall up to his
Friday post saying don't worry about China, It'll all be fine.
Trump's initial post on Friday was critical of China, threatening
massive tariffs.
Speaker 2 (20:16):
Right now, the dows up one.
Speaker 5 (20:18):
Point three percent, are six hundred and twenty eight points higher,
SMP five hundred up one and a half percent or
one hundred points higher, Nazdak up nearly two percent. Now
we're four hundred and thirty eight points. Russell two thousand
is up two point two percent. Bomb market close today
and observance of the holiday and crude Oil is up
one in a third percent, trading at fifty nine dollars
(20:41):
in seventy cents a barrel. MP Materials surging twenty three
percent now after the Pentagon recently took a stake in
the rare Earth's producer, adding to its recent rally last
week China Titan Rare Earth Export Controls. Other miners are
seeing gains on the day, including USA Rare Earth Critical
Medals and Energy Fuels. Meanwhile, shares in Broadcom rallying over
(21:03):
nine percent following news that open Ai signed a multi
year pact with Broadcom to collaborate on custom chips and
networking equipment, where the two companies will jointly build and
deploy ten gigawatts of custom AI accelerators Elsewhere. Shares and
Warner Brothers Discovery rising four percent following reports that the
company had rejected Paramount skydances proposed by out of roughly
(21:26):
twenty dollars a share. Furthermore, reports also say that Paramount
CEO David Ellison is making a play to buy Ali
Warner before it splits. It may take his offer directly.
Two shareholders, JP Morgan Chase up over two percent after
the bank said it would directly invest ten billion dollars
in companies it deems critical to national security, speaking of which, JP, Morgan, Chase,
(21:50):
and other major banks including Wells Fargo, Goldman, Sachs, black Rock,
and City Group will post their third quarter earnings tomorrow
ahead of the open. Outside of banks, we have Johnson
and Johnson, Erickson, Dominos, and Albertson's all reporting their earnings
ahead of tomorrow's opening.
Speaker 2 (22:06):
Bell.
Speaker 5 (22:07):
I'm Tucker Silva and that is Wall Street Watch. And
in the prior segment, we asked you the trivia question
which famous comedians starred alongside Paul Simon in the music
video You Can Call Me Al.
Speaker 2 (22:18):
That would be Chevy Chase.
Speaker 5 (22:21):
Scott from Chelmsford, Mass is our winner today, taking home
a Financial Exchange Show t shirt. Congrats to Scott and
we played trivia every day here in the Financial Exchange
See complete contest rules at Financial Exchange Show dot com.
Speaker 3 (22:34):
Mike, we got a PC here from Bloomberg opinion. Squeezing
builders isn't the way to lower housing costs?
Speaker 2 (22:39):
What are we talking about on this?
Speaker 4 (22:41):
Mainly we're talking about a tweet from Bill Paulty, who's
the Federal Housing Finance Agency director. Quote when I was
young and growing up in Paulty Holmes business, big home
builders had less than ten percent of the market. Today
that number is fifty percent in some say sixty. With
great market show comes great responsibility. I encourage all builders
(23:02):
to realize this, and sooner rather than later. So I
think it's mainly a backlash to that one tweet basically saying, look,
you know, adding threats to you know, monopolistic businesses in
the housing sector is not a great way to build
new homes, to which I have to say I agree,
because according to the National Association of home Builders, whose
(23:26):
data goes back to twenty twenty two and really anytime
over the last couple decades, the highest percentage of homes
that was represented by the top ten homebuilders was forty
three point two percent according to them back in twenty
twenty two. Maybe there's new data out that indicates fifty percent.
But if the top ten is making up fifty to
(23:47):
sixty percent of the new home building.
Speaker 2 (23:49):
It's pretty fragmented.
Speaker 4 (23:51):
That's not a monopolistic business, and no judge is going
to find it as such. So I don't think that
adding pressure to the home builders and threatening them.
Speaker 2 (24:00):
With because that's what this is.
Speaker 4 (24:01):
Right, when you have a government official saying, hey, figure
this out, because you represent a huge portion of the
new home building, what they're talking about is a threat
to their monopoly status. And that's not seemingly to me
at least, what is going on in this industry.
Speaker 5 (24:14):
No.
Speaker 3 (24:14):
I mean you take a look just as an example,
and like just some of the big u some of
the big home builders that are out there, and as
an example, Lenar Corporation, they right now they're trailing twelve
month margins are nine point seven percent. In May of
twenty two, they were twenty one percent. If you will
(24:36):
get the long term average, it's generally around you know,
five to seven percent is kind of you know, where
their margins have been.
Speaker 2 (24:43):
So they're a little high. But you sit there and say, okay, if.
Speaker 3 (24:45):
The margins can pressed by two percent, that makes the
average home eight thousand dollars cheaper.
Speaker 2 (24:52):
Is that really, you know, the thing that moves the needle.
I don't think so.
Speaker 4 (24:57):
And by the way, that company back in twenty twenty two,
apparently ten point seven percent market share according to the
National Association of home Builders.
Speaker 3 (25:05):
Okay, if you look at KB Home, their margins peaked
right around the same time about fifteen percent. They're also
down to about nine percent right now. So I think
that when we look at this, a couple of things
that I try to keep in mind on this. The
first is it's a fragmented markets market, especially once you
(25:25):
get out of like the southeast and Southwest. It's incredibly
like it's you don't have these giant developments that happen
in the northeast or the Pacific Northwest. A big development
in the Northeast is like eighty units, whereas a big
one in Florida is like twenty thousand units.
Speaker 4 (25:40):
So the question asks yourself, is our big Humboldt builders
preventing access to homes and intentionally raising prices, are raising
prices illegally? And the answer is very clearly not. Well,
if now with those margin.
Speaker 3 (25:55):
If homebuilders want to make more money, I mean, you like,
think about it, just very simply to make more money,
you want to sell more units at a higher price.
If home builders thought they could make more money, they
could do it one of two ways. They can raise
prices or make it up on volume. Yeah, there's one
thing we know about how the world works. You rarely
make it up on volume, and so I think ultimately
(26:17):
the problem with home building it comes back to, you know,
mostly a lot of local land use laws and things
like that, where hey, if people actually wanted more homes
and more affordable homes in their towns, they would vote
in that fashion.
Speaker 2 (26:30):
Yeah, but we don't vote that way.
Speaker 1 (26:32):
Yeah.
Speaker 4 (26:32):
The problem to housing affordability isn't monopolies too big of homebuilders.
It's not home builders sitting on vacant lots that they
don't want to develop. It's not tariffs. By and large,
the problem with high home prices is that nobody wants
more homes.
Speaker 2 (26:48):
Very simple.
Speaker 5 (26:49):
The US Virgin Islands aren't just stunning, they're thriving and
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Speaker 3 (27:56):
So every now and then Tucker hits like a stroke
of steaf act genius here and he did it again.
It is like you, I've never watched Tucker put together
the stack, but I kind of picture him. You just
kind of swaying in front of a couple of monitors
and just occasionally like that looks good.
Speaker 4 (28:16):
You know, like that Tom Cruise movie where he has
to direct all the stuff report that.
Speaker 3 (28:20):
One, except without you know, the whole idea of pre
crime and everything being a thing someone before criming, you know,
they have to crime first. In this case, Tucker knocked
this one out of the park. Here here are the
headlines from Bloomberg this market is nothing like the dot
com bubble. From market Watch, this is the dumbest stock
(28:42):
market in history.
Speaker 4 (28:45):
Those seem to contradict each other, don't they.
Speaker 3 (28:50):
We really should, so when it comes to, you know,
dot com bubble versus dumbest stock market in history, it's
true this is nothing like the dot com bubble.
Speaker 2 (29:03):
Sure very different.
Speaker 3 (29:06):
It might be the dumbest stock market in history, which
means both of these headlines can actually be true.
Speaker 4 (29:12):
So to summarize the first argument that this market is
nothing like the dot com bubble, the biggest compelling piece
of evidence that near KSAR presents, at least in my view,
would be that the earnings growth has been really strong,
it's predicted to be continue to be strong, and that
(29:33):
is really all that investors care about. Is Ultimately, if
earning's growth is strong, then stocks can continue to go up.
My counter would point would be, I don't think investors
in nineteen ninety nine expected earning his growth to start falling,
But once it did, stocks fell dramatically, and it eventually
did start falling, and so I don't know why this
(29:54):
would make this moment different than that one correct someday
earnings might fall again, which case I bet stocks would two.
Speaker 3 (30:02):
Right, Look, if if you actually believe that we're going
to become the United States of Nvidio, Okay, like that
that's reasonable. People can disagree. But if you actually believe, Hey,
in Vidia is a you know, four trillion dollar company
today and it should be forty trillion dollars in the
next five years, there's not much I can say to
dissuade you. And by the way, like you might be right,
(30:24):
Like I don't know, like you could be. On the
other hand, like history tends to suggest that that won't
be the case. The case for this being the dumbest
stock market in history is, I mean, look, in my
personal opinion, you're competing against two other markets maybe three
(30:47):
for dumbest twenty twenty one, Yeah, where we had Trevor
Milton pushing a truck down a hill saying it was
electrically powered and it wasn't.
Speaker 2 (30:58):
We had spac Mane.
Speaker 4 (31:00):
Yeah, we had memestock, mami Mania, we had all sorts
of non fundamental based driven We had.
Speaker 2 (31:06):
Long Island blockchain company. I mean, we had like that.
Speaker 4 (31:09):
One feels dumber. We had some real Well, here's the thing,
stack the evidence for me, you're good to keep going.
Speaker 3 (31:15):
You've got all these companies in the last like month
or two that have started saying they're gonna be cryptocurrency
treasuries that they don't really actually do anything. Yeah, you've
got this whole circular thing going on in AI right
now where everyone's just trading the same dollars back and
forth and no one might actually make any money off
those things. Other things that you have going on right now,
(31:37):
you got an awful lot of spackiness out there today
as well. So like I mean, Shamath launched a new
Spash's that's all you need to know.
Speaker 2 (31:44):
What was the other one other than twenty twenty one
in your mind?
Speaker 3 (31:48):
Ninety nine, nineteen, twenty nine, twenty nine, Okay, because I
don't actually think ninety nine was. Here's the thing about
ninety nine, it was it was headst dot com betting
on pets dot com as part of like a diversified portfolio.
Speaker 2 (32:04):
Was not a problem.
Speaker 3 (32:06):
Yeah, you could actually make a case the two thousand
and one And I'm not just saying like the popping
of the tech bubble, like once you started getting into
like the Enron and Worldcolm frauds. That's where the real
problem was, like startups being overvalued by people that got
you know, all hyped up on them tales old in time.
Speaker 4 (32:25):
Sure you know twenty nine, twenty twenty one and right now.
Speaker 3 (32:30):
Yes, Other than that, like it's kind of hard to
find like a time when things have been dumber because
the other thing that you have going on now.
Speaker 2 (32:38):
Can you give me some time teen twenty nine contexts?
Let me give you more now, just while we're talking
about it.
Speaker 3 (32:43):
You you have companies that are like going public now
with this whole like stable coin thing. Sure, you're you're
basically a bank. Why are you going to be.
Speaker 2 (32:52):
Like so much more transformative than a bank?
Speaker 3 (32:55):
I would say even less? And when the bank, you're
basically a gift card. And when the bank's start doing this,
why are you going to still exist? So there's some
dumb there. You had some of this stuff back in
twenty nine as well. This is your time is a
flat circle? Okay, yeah, there's that. Let's take a quick
(33:17):
break when we come back, let's do a little bit
of stack roulette.
Speaker 2 (33:20):
I can expand on twenty nine as well.
Speaker 1 (33:22):
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Keep it here for the latest business and financial news
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(33:45):
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Speaker 2 (34:05):
Mike, what do you got for me?
Speaker 4 (34:06):
For stack Roulett, I would like to present the Wall
Street Journals five ideas for helping solve America's student loan
program problem, which include what.
Speaker 2 (34:16):
Did I say program? Oh?
Speaker 4 (34:18):
Sorry, problem, Offering more aid colleges specifically automating loan repayment workplaces,
pitching in presumably for repayment, longer grace periods for those
student loans, and then states quote stepping up.
Speaker 2 (34:35):
Can anyone answer.
Speaker 4 (34:37):
Me why you write a five point plan on bringing
down the cost of education without talking about bringing down
the cost of education.
Speaker 2 (34:46):
Because it's not actually a plan to bring down the
cost of education. I mean, I know it's not. I know.
Speaker 4 (34:50):
It's slightly different between bringing down the cost of education
and fixing the student loan program, but they seem pretty interrelated.
You seriously didn't propose anything on reforming how universities work
and how they finance themselves and how they deliver education
to their students to make it maybe slightly more cost
(35:11):
efficient for some types of areas.
Speaker 2 (35:14):
Well, here's the other thing.
Speaker 3 (35:15):
And look, this is not to you know, slight, Notre Dame,
who is providing you know, this new grant package for families.
Most colleges aren't Notre Dame. Sure, Like I don't know
exactly where it stands, but I'm guessing Notre Dame is
somewhere in the top twenty five endowments nationwide. Seems likely,
you know, Like we're talking billions of dollars, not millions
(35:37):
of dollars. And so most schools can't do it. Can't
do that, you know, like if if, if you are
any other you know, and look, I'm a big believer,
you go to just about any school and commit yourself,
you're gonna get a darn good education. You go to
any school and just fool around, you're gonna get a
crappy education.
Speaker 2 (35:54):
Regardless of how good the school is.
Speaker 3 (35:55):
You may be able to cover it up at a
good school because of the networking connections that you can
get there.
Speaker 1 (35:59):
Ye.
Speaker 3 (36:00):
But ultimately, if you apply yourself anywhere, whether it is
North Notre Dame, North Dakota, Appalachian State, Duke, wherever it
might be, you can get a good education. So this
like Notre Dame being like, hey, we can do this, okay,
Appalachian State can't. So that's not really like a solution
(36:20):
for them. Automating loan repayment. So saying okay, your your
loans are gonna be automatically withheld, just like taxes, Well,
that doesn't really fix the student loan system might.
Speaker 2 (36:32):
Make it worse. Like what does that do?
Speaker 3 (36:36):
Yeah, Like it's there aren't many people out there that
are like, hey, you know what I'm gonna do.
Speaker 2 (36:42):
I'm gonna screw over the student loan system.
Speaker 3 (36:44):
No, most people are like, I took out these loans
and they're like, you know, it's really hard for me
to pay them back, and I'm gonna do what I can,
and they're following me forever, and now the interest just
keeps adding up and what do I do? Oh great,
Like my life is finally over now and after sixty years,
I still ow these.
Speaker 4 (36:58):
I was just floored by this, Like, no single proposal
had anything to do with looking at the efficiency of
delivering education to students.
Speaker 2 (37:07):
Right, you could put in workplaces, pitch in.
Speaker 3 (37:10):
Okay, you think they're not going to cut salary as
part of that then, because there's only so big of
a compensation bucket.
Speaker 2 (37:16):
State step up.
Speaker 3 (37:17):
Oh yeah, all these states with money just sloshing around
in their coffers. They have plenty of money to put
towards covering student loans. You know, like these I'm sorry,
they're not answers.
Speaker 2 (37:30):
Garbage proposals.
Speaker 3 (37:31):
They're not answers here in my opinion, So I I
don't know.
Speaker 2 (37:37):
They're just not saying you shouldn't do any of these things.
Speaker 4 (37:39):
I'm just saying it's not fixing the root cause of
the problem, which is that delivering education in the United
States is extraordinarily expensive.
Speaker 3 (37:46):
Baby boomers still love their department stores. Here's what they
know that gen z Ers don't. The department stores still exist.
So you're not optimistic, not really, Like the whole thing
is like, hey, like you know, if you order from
like the Bloomingdale's in New York City, they'll make a
house call to an apartment in New York City to
deliver your thing. Yeah, I'm sure that's really affordable for
(38:09):
Bloomingdale's do everywhere, and most people can totally afford to
shop at Bloomingdale's in New York City. Quick break here
for the rest of the day. We'll see you tomorrow
on the Financial Exchange
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:20):
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Armstrong and Money Matters Radio do not compensate each other
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Exchange with Chuck Zada and Mike Armstrong, Your exclusive look
at business and financial news affecting your day, your city,
(00:43):
your world. Stay informed and up to date about economic
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Veterans Department of Massachusetts. Help us support our great American
heroes by visiting DAV five dot Boston and making a
donation today. This is the Financial Exchange with Chuck Zada,
(01:06):
and Mike Armstrong.
Speaker 2 (01:10):
Chuck, Mike and Tucker with you here. And as we
kick things off today, we got stocks.
Speaker 3 (01:17):
Rebounding, making up about forty percent of Friday's losses thus far,
the Dow Jones Industrial average up four hundred points, the
S and P five hundred, up seventy, the Nasdaq composite
of three hundred and twenty five, so broad based rally
taking place today. In general, you know, you've seen pretty
(01:37):
good breadth across most of the indices, uh and again,
making up about forty percent or so of the the
losses that we saw on Friday when we had the
you know, the first real single day volatility that we've
seen in several months. As we take a look at
(01:58):
markets to see what else is moving today, the tenure
treasury not trading because the bond market is closed. You
might ask yourself, hey, why is the bond market closed
when equity markets are open. This is actually just a really,
like all the time, simple thing, but it's a good reason.
The banks are closed in observance of Columbus Day, and
banks cannot If banks are closed and they don't have
(02:20):
you know, certain funding needs in pricing, then you don't
have the bond market being open because you don't know
how much money is being borrowed and lent and how
much needs to take to change hands there, and so
as such, the bond market is closed. The let's see
prices for commodities. We got gold continuing just to scream
higher right now. It's up one hundred and twenty dollars
(02:42):
an ounce to forty one twenty cents, three percent move
up today for gold, breaking out to new all time highs.
You're seeing this across precious metal. Silver's up six percent,
palladiums up four percent. So it's it's just happening across
the board. Crude oil West Textas Intermediate up one dollar
(03:03):
and four cents a barrel of fifty nine to ninety
four at the moment when we take a look at
the TRIPA national average for gas prices breaking below three
ten a gallon for the first time in quite a while.
We're at three h eight and two tenthsive ascent nationally.
And if you go, if you happen to be listening
to us throughout you know, any of the southeastern into Texas,
(03:27):
you've got gas prices down the two sixties two seventies
throughout much of that region, so continuing to see those
sliding toward the mid twoes. Uh, if you're lucky enough
to be driving through the southern middle part of the
country right now.
Speaker 4 (03:42):
It's the first real kickoff of earning season. This week
we'll have in terms of the schedule here, JP, Morgan, Wells, Fargo,
Goldman Sachs, black Rock City Group all reporting tomorrow before
the bell in addition to Johnson and Johnson just wanted
to get the big financials out.
Speaker 2 (03:57):
Of the way.
Speaker 4 (03:58):
Wednesday, we will be hearing from AML, Bank America, Morgan Stanley,
Abbot Labs, and Progressive as well. On top of that,
and then Thursday of this week we'll have Oh Taiwan
Semiconductor reporting and Charles Schwab. So first real kickoff on
the financial side. Any Friday, we got a good one too, Express.
I didn't even look at Friday because they usually hold off.
Speaker 3 (04:20):
I anticipate that AM actually again good signals about kind
of that higher end consumer. I wouldn't expect to see
many problems there, given what we've been hearing from retailers
and you know, travel and hospitality. But interesting to see,
you know what they say, And so I think they're
one that I'm interested in as.
Speaker 4 (04:38):
Well, any unique insight you think any of these will
share with us. I mean, I'm most interested to hear what,
if anything, they have to say about that private credit space.
But frankly, they don't have a lot of exposure to it,
and so some of the customers do, I presume, But yeah,
I guess we don't know.
Speaker 3 (04:54):
You know, you don't know if Goldman Sachs has a
bunch of funds with private credit exposure. So it's we'll
see what we hear. I also don't know that there's
a great leading signal that you get from them. You know,
remember all the subprime stuff that blew up at the
end of eight The first rumblings were coming second quarter
(05:16):
two thousand and seven.
Speaker 4 (05:17):
I wouldn't expect it. But if if you had someone
announce a bunch of loan losses that nobody was really anticipating, that, sure,
that would be a pretty good tell. But usually you
don't get those until something really icky's happening.
Speaker 3 (05:31):
Yeah, so we'll see what we get there. Piece in
the Wall Street Journal AI is juicing the economy? Sounds fun?
Is it making American workers more productive? Ooh, that's an
interesting question. Two part question, Is it juicing the economy? Yeah,
very clearly.
Speaker 4 (05:45):
We are seeing building construction, We are seeing semiconductor investment
and all sorts of things that are leading to increased employment,
increase spending across this US and global economy on the
artificial intelligence infrastructure bets that are being made, and a
few years ago that was all just big dreams. Today
(06:07):
it's actual spending. You are actually seeing boots on the
ground constructing data centers. You are seeing maybe not you know,
actual utility and power generation construction, but permitting and announcements
on that front. And so I think you can easily
say that AI is juicing the economy. And frankly, without
(06:28):
the AI trade juicing the economy, I'd be quite concerned
about economic growth given what's fallen off on the housing
side of things.
Speaker 2 (06:34):
So yes to the first part.
Speaker 3 (06:35):
So is it making employees more productive? Here's what I'll
tell you. And again, I try to talk to a
lot of people just so that I can get a
sense of, you know, kind of a broader swath of
what's going on. I've read this article and it confirms
kind of what I've heard all my friends who work
in the tech space say that this is absolutely changing
(06:57):
how they work on a daily basis. Think there are
two reasons for that. The first is it generally seems
like large language models have some pretty useful things that
they can do on the coding front to speed up
a lot of those processes. Yes, and so if you're
directly involved in, you know, the production of tech products, yeah,
there's there's definitely something there. The second piece is, Hey,
if you work for a tech company, you're typically exposed
(07:20):
to a lot of these tools early and often relative
to someone you know who might work in a different industry,
and so you're able to pick these up, you know,
kind of you're you're at the tip of the spear
when it comes to adoption in a lot of these
areas as well.
Speaker 4 (07:33):
May I add a third piece, Yeah, if you work
in the tech space and don't say that you are
being made more productive by artificial intelligence, I'm unsure you
have a job tomorrow.
Speaker 2 (07:43):
Yeah, but they're telling me I get them, not their boss.
Speaker 4 (07:46):
No, I get that, And that's where a difference between
closed door conversations versus reality sets in. But I think
that third piece is playing a role across many other
places where oh, I better say that I'm more productive
because of artificial intelligence, because if I don't say it,
and if I don't prove it, then I might not
have a job tomorrow, and as a company, I might
not have an investor tomorrow.
Speaker 3 (08:05):
And I think that other than what we're seeing in tech,
I'm unclear if most other industries are seeing any major
shift at this point in the aggregation. I know that
JP Morgan came out last week and was like, y'are
we're gonna spend two billion dollars on artificial intelligence? And
sound like a pirate?
Speaker 4 (08:25):
Like just wondering if JP Morgan sounds like a pirate
to you the name of the company or if.
Speaker 2 (08:31):
I don't know anything.
Speaker 3 (08:32):
They just wanted to make like a big hullabaloo of
Like I can't stand with companies are like, well, we're
spending this much on this new technology, Okay? Is that
like good? Like I don't know if that's good or
useful or anything. But they said they're gonna be spending
two billion dollars a year on AI. That's that's fine,
It's all well and good. You're hearing it anecdotally in
(08:54):
other places. But I'm just not sure that across the board.
You're seeing a meaningful shift right now. Sure, you're also
obviously seeing all of the concerning things regarding AI technology,
such as, you know, the fact that it's not necessarily
right as often or more often than humans in a
lot of instances. It's also obviously something that comes with
(09:19):
a whole bunch of societal questions, whether you're talking about, hey,
how do we deal with potential you know, large scale
job displacement, to why is AI allowed to talk to
minors in sexually explicit terms? To you know, again, like
you even get some of the like stuff that's it's
hard to find too much that's worse than that, but
it's it's out there. When you talk about, you know,
(09:40):
some of the things along the lines of you know,
AI encouraging people towards self harm and things like that.
Speaker 2 (09:46):
I mean, it's there's some pretty bad stuff out there.
Speaker 3 (09:48):
And quite honestly, this is like before you even get
to the fact that, hey, I don't really think that,
you know, Mark Zuckerberg has proven himself to be, you know,
a great steward of.
Speaker 2 (10:00):
Ethical technological use historically.
Speaker 4 (10:02):
Yeah, when I'm really interested to see so coming from
the perspective of you know, a company that is not
JP Morgan doesn't have two billion to spend on developing
their own artificial intelligence tools. Right like that, That's where
I think most Americans land. My our company demoed a
(10:23):
tool that you know, I found compelling. It was a
artificial intelligence tool designed to help you fill out paperwork faster.
Right because you know what's the prappiest part of almost
any white collar job out there, it's probably and some
blue collar jobs filling out paperwork. And so we took
a look at that and interesting product. Interesting company. The
(10:46):
cost of said product was probably more expensive than just
hiring a person to do it, And so we're very
much still at this early stage too, where I'm even
if it does make someone more productive, I'm wondering how
much money some of these companies are really spending to
produce a product that, yes, make somebody more productive at
a not terribly affordable cost.
Speaker 2 (11:07):
Let's take a quick break.
Speaker 3 (11:08):
When we come back, Ted Rossman from Bank Raad is
going to join us talking about their twenty twenty five
holiday spending survey.
Speaker 1 (11:15):
Find daily interviews and full shows of the Financial Exchange
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This is the Financial Exchange Radio Network. The Financial Exchange
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(11:36):
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This is the Financial Exchange Radio Network.
Speaker 5 (11:53):
This year's DAV five k is sold out, but you
can still help our great American heroes. The race is Saturday,
November eighth at Castle Island and you can visit DAV
five k dot Boston to make a donation of any amount.
Speaker 2 (12:06):
To support our troops.
Speaker 5 (12:08):
Your gifts help fund free rides to medical appointments for
veterans and the nation's first DAV lead housing initiative providing
homes for single veterans and veteran families. Go to DAV
five k dot Boston and make your donation today.
Speaker 3 (12:24):
As promised, We're now joined by Ted Rossman from Bank
Right here to talk about their twenty twenty five holidays,
spending survey ted how are you today?
Speaker 6 (12:33):
Doing well? Good to be here.
Speaker 2 (12:35):
What are some of the big takeaways from this survey?
Speaker 7 (12:39):
People are a bit reluctant to spend this year, whether
we're talking travel or gifts. On the gift side of things,
about a third say they're planning to spend last this year.
About forty percent are concerned about higher prices now. To
be fair, there's also about another third that says they're
going to spend more and everybody else is about the same,
So kind of a bag there. On the travel front,
(13:02):
twenty one percent say they're going to travel this year
for the holidays.
Speaker 6 (13:05):
Last year it was twenty seven.
Speaker 7 (13:07):
I take all this with a bit of a grain
of salt, because, as we know, the consumer mood has
been very depressed this year. A lot of actual spending
has come in better, but people are a little skittish
as the holiday shopping season gets underway.
Speaker 3 (13:20):
When you talk about that skittishness, is that concentrated in
any one particular area, any one particular demographic, or anything
like that.
Speaker 6 (13:29):
Upper income households are faring the best.
Speaker 7 (13:31):
Moody says that the top ten percent of earners are
accounting for fifty percent of all spending, which is an
all time high and a data set that goes back
to the late eighties. So upper income people are more
insulated from this, but they're actually the ones who are
propping up a lot of the overall statistics. We do
see a lot of cutbacks among lower and middle income households.
(13:52):
That's one of the reasons why the overall numbers look
better than what a lot of people are reporting. In
our holiday travel survey, we found that people in their
twenties and thirties are the most likely to be cutting back.
That often correlates with parents of young kids. Many people
are feeling that cumulative weight of inflation. It's not the
prices have changed a lot over the past few months,
(14:14):
or even over the past year, but it's when you
go back to let's say the start of twenty twenty one,
prices are up twenty five percent. As a result, people
have dipped into savings, they've taken on debt, We're seeing
some weakening in the job market. All this is adding
up to a cumulative weight that people are just not
feeling as spendy this year.
Speaker 3 (14:35):
So this is the point where I asked the tough question,
which is even though everyone's saying they're not going to
spend as much, we haven't seen any real shift in
spending trends over the course of this year. In the
aggregate that this spending data, whether you're looking at retail sales,
credit cards, like, however you slice it has continued to
be pretty good.
Speaker 2 (14:54):
Why should I listen to what.
Speaker 3 (14:55):
People are telling me when their behavior for the last
nine months says some different.
Speaker 6 (15:01):
Well, it's a great point.
Speaker 7 (15:02):
The TSA screened a record number of passengers per day
in the first nine months of the year. Last year
was a record, the year before that was a record.
Looks like this year could be another record. So yeah,
it's kind of like what gives people are saying one thing,
they're doing another. Consumer sentiment has not been as predictive
the past few years. Really ever since the nineteen seventies,
(15:22):
everybody always thought consumer sentiment was this great predictor, It
was this leading indicator.
Speaker 6 (15:27):
It was for a long time.
Speaker 7 (15:29):
It really hasn't been ever since the pandemic set In
the past five years, consumer sentiment has been really depressed
and a lot of the actual numbers have been better. Now,
first it was COVID stuff, Now lately it's been inflation,
it's been tariffs. People are climbing the wall of worry.
Though they say that with stocks, sometimes it's happening with
consumer spending right now, is that people are complaining about
(15:51):
the cost of living and they're spending anyway, sometimes because
they have to, because these are necessities, but sometimes because
they want to traveled, concerts, sporting events. All these have
been hot areas. Inflation is weighing on sentiment, but the
bark has been worse than the bite when it comes
to actual data.
Speaker 3 (16:10):
When we talk about consumers taking on debt for their
holidays spending, how is that debt typically showing up? Is
it credit cards? Is it buy now, pay later? Where
is it happening?
Speaker 6 (16:22):
Primarily credit cards? But by now, pay later is.
Speaker 7 (16:24):
A growing segment of this By now, pay later tends
to grow ten twelve something like that percent every year.
In recent years, especially around the holidays. Credit card balances
are much higher. I mean, the buy now, pay later
market only accounts for something like three percent of the
credit card market, So we really do look primarily at
the credit card when we're talking about debt.
Speaker 6 (16:46):
The average interest rate is about twenty percent.
Speaker 7 (16:48):
Many store cards are north of thirty percent, So that's
a buyer beware if you're at the checkout counter this
holiday season and they offer you the stores branded credit card.
Half of credit card holders carry debt from month to month.
In our surveys, about a quarter of holiday shoppers say
they're taking on debt for retail. About a third say
(17:09):
they're taking on debt for travel. Frankly, I fear the
toll will be hired just because half of credit card
holders already have debt from month to month, so directly
or indirectly, they may be adding to that. Not to
say you can't have any fun, but try to set
a good budget ahead of time. You still have five
paychecks between now and the end of the year. Set
(17:29):
money aside from each of them. Consider a zero percent
balance transfer card to pause that interest clock for up
to twenty four months, and.
Speaker 6 (17:37):
Maybe even consider cutting back.
Speaker 7 (17:39):
Maybe you talk to your family about, hey, could we
buy fewer gifts this year?
Speaker 6 (17:43):
Others' heads may get nodding.
Speaker 3 (17:45):
Ted, appreciate you joining us today. Thanks so much for
the information anytime.
Speaker 6 (17:49):
Thank you.
Speaker 3 (17:50):
Ted Rossman from Bankery talking about their twenty twenty five
holiday spending survey.
Speaker 5 (17:54):
All right, time for trivia here on the Financial Exchange
and today is Paul Simon's fourth birthday. In nineteen eighty six,
Simon released his most successful and acclaimed album, Graceland. The
hit single from that album was you Can Call Me Al.
So our trivia question today which famous comedians start alongside
(18:16):
Simon in the music video four you Can Call Me Al?
Speaker 2 (18:19):
Once again?
Speaker 5 (18:19):
Which famous comedian starred alongside Paul Simon in the music
video for you Can Call Me ALU be the fifth
person today to text us at six one seven thirty
six two thirteen eighty five with the correct answer, and
you win a Financial Exchange Show T shirt. Once again.
The fifth correct response to text us to the number
(18:41):
six one seven three six two thirteen eighty five will
win that Financial Exchange Show T shirt. See complete contest
rules at Financial Exchange Show dot com.
Speaker 3 (18:52):
Take a look at markets as we move towards the
bottom of the hour, with the Dow is now five
hundred and eighty two points, the S and P's up
ninety six, and the NASDA can pose it up four
hundred and thirty five, So market's continuing to stretch their
legs further as we continue today again now having recouped
about half of what they lost on Friday. We'll see
(19:12):
if we continue to see a little bit of momentum
in that direction. As we continue here, let's take a
quick break. When we return, We've got the trivia answer,
we got Wall Street Watch, and then let's talk home
building after this.
Speaker 1 (19:40):
Bringing the latest financial news straight.
Speaker 6 (19:42):
To your radio.
Speaker 1 (19:43):
Every day, it's the Financial Exchange on the Financial Exchange
Radio Network. Time now for Wall Street Watch. A complete
look at what's moving markets so far today right here
on the Financial Exchange Radio Network.
Speaker 5 (20:00):
Are rebounding from Friday's sell off after President Trump posted
to social media yesterday in a fall up to his
Friday post saying don't worry about China, It'll all be fine.
Trump's initial post on Friday was critical of China, threatening
massive tariffs.
Speaker 2 (20:16):
Right now, the dows up one.
Speaker 5 (20:18):
Point three percent, are six hundred and twenty eight points higher,
SMP five hundred up one and a half percent or
one hundred points higher, Nazdak up nearly two percent. Now
we're four hundred and thirty eight points. Russell two thousand
is up two point two percent. Bomb market close today
and observance of the holiday and crude Oil is up
one in a third percent, trading at fifty nine dollars
(20:41):
in seventy cents a barrel. MP Materials surging twenty three
percent now after the Pentagon recently took a stake in
the rare Earth's producer, adding to its recent rally last
week China Titan Rare Earth Export Controls. Other miners are
seeing gains on the day, including USA Rare Earth Critical
Medals and Energy Fuels. Meanwhile, shares in Broadcom rallying over
(21:03):
nine percent following news that open Ai signed a multi
year pact with Broadcom to collaborate on custom chips and
networking equipment, where the two companies will jointly build and
deploy ten gigawatts of custom AI accelerators Elsewhere. Shares and
Warner Brothers Discovery rising four percent following reports that the
company had rejected Paramount skydances proposed by out of roughly
(21:26):
twenty dollars a share. Furthermore, reports also say that Paramount
CEO David Ellison is making a play to buy Ali
Warner before it splits. It may take his offer directly.
Two shareholders, JP Morgan Chase up over two percent after
the bank said it would directly invest ten billion dollars
in companies it deems critical to national security, speaking of which, JP, Morgan, Chase,
(21:50):
and other major banks including Wells Fargo, Goldman, Sachs, black Rock,
and City Group will post their third quarter earnings tomorrow
ahead of the open. Outside of banks, we have Johnson
and Johnson, Erickson, Dominos, and Albertson's all reporting their earnings
ahead of tomorrow's opening.
Speaker 2 (22:06):
Bell.
Speaker 5 (22:07):
I'm Tucker Silva and that is Wall Street Watch. And
in the prior segment, we asked you the trivia question
which famous comedians starred alongside Paul Simon in the music
video You Can Call Me Al.
Speaker 2 (22:18):
That would be Chevy Chase.
Speaker 5 (22:21):
Scott from Chelmsford, Mass is our winner today, taking home
a Financial Exchange Show t shirt. Congrats to Scott and
we played trivia every day here in the Financial Exchange
See complete contest rules at Financial Exchange Show dot com.
Speaker 3 (22:34):
Mike, we got a PC here from Bloomberg opinion. Squeezing
builders isn't the way to lower housing costs?
Speaker 2 (22:39):
What are we talking about on this?
Speaker 4 (22:41):
Mainly we're talking about a tweet from Bill Paulty, who's
the Federal Housing Finance Agency director. Quote when I was
young and growing up in Paulty Holmes business, big home
builders had less than ten percent of the market. Today
that number is fifty percent in some say sixty. With
great market show comes great responsibility. I encourage all builders
(23:02):
to realize this, and sooner rather than later. So I
think it's mainly a backlash to that one tweet basically saying, look,
you know, adding threats to you know, monopolistic businesses in
the housing sector is not a great way to build
new homes, to which I have to say I agree,
because according to the National Association of home Builders, whose
(23:26):
data goes back to twenty twenty two and really anytime
over the last couple decades, the highest percentage of homes
that was represented by the top ten homebuilders was forty
three point two percent according to them back in twenty
twenty two. Maybe there's new data out that indicates fifty percent.
But if the top ten is making up fifty to
(23:47):
sixty percent of the new home building.
Speaker 2 (23:49):
It's pretty fragmented.
Speaker 4 (23:51):
That's not a monopolistic business, and no judge is going
to find it as such. So I don't think that
adding pressure to the home builders and threatening them.
Speaker 2 (24:00):
With because that's what this is.
Speaker 4 (24:01):
Right, when you have a government official saying, hey, figure
this out, because you represent a huge portion of the
new home building, what they're talking about is a threat
to their monopoly status. And that's not seemingly to me
at least, what is going on in this industry.
Speaker 5 (24:14):
No.
Speaker 3 (24:14):
I mean you take a look just as an example,
and like just some of the big u some of
the big home builders that are out there, and as
an example, Lenar Corporation, they right now they're trailing twelve
month margins are nine point seven percent. In May of
twenty two, they were twenty one percent. If you will
(24:36):
get the long term average, it's generally around you know,
five to seven percent is kind of you know, where
their margins have been.
Speaker 2 (24:43):
So they're a little high. But you sit there and say, okay, if.
Speaker 3 (24:45):
The margins can pressed by two percent, that makes the
average home eight thousand dollars cheaper.
Speaker 2 (24:52):
Is that really, you know, the thing that moves the needle.
I don't think so.
Speaker 4 (24:57):
And by the way, that company back in twenty twenty two,
apparently ten point seven percent market share according to the
National Association of home Builders.
Speaker 3 (25:05):
Okay, if you look at KB Home, their margins peaked
right around the same time about fifteen percent. They're also
down to about nine percent right now. So I think
that when we look at this, a couple of things
that I try to keep in mind on this. The
first is it's a fragmented markets market, especially once you
(25:25):
get out of like the southeast and Southwest. It's incredibly
like it's you don't have these giant developments that happen
in the northeast or the Pacific Northwest. A big development
in the Northeast is like eighty units, whereas a big
one in Florida is like twenty thousand units.
Speaker 4 (25:40):
So the question asks yourself, is our big Humboldt builders
preventing access to homes and intentionally raising prices, are raising
prices illegally? And the answer is very clearly not. Well,
if now with those margin.
Speaker 3 (25:55):
If homebuilders want to make more money, I mean, you like,
think about it, just very simply to make more money,
you want to sell more units at a higher price.
If home builders thought they could make more money, they
could do it one of two ways. They can raise
prices or make it up on volume. Yeah, there's one
thing we know about how the world works. You rarely
make it up on volume, and so I think ultimately
(26:17):
the problem with home building it comes back to, you know,
mostly a lot of local land use laws and things
like that, where hey, if people actually wanted more homes
and more affordable homes in their towns, they would vote
in that fashion.
Speaker 2 (26:30):
Yeah, but we don't vote that way.
Speaker 1 (26:32):
Yeah.
Speaker 4 (26:32):
The problem to housing affordability isn't monopolies too big of homebuilders.
It's not home builders sitting on vacant lots that they
don't want to develop. It's not tariffs. By and large,
the problem with high home prices is that nobody wants
more homes.
Speaker 2 (26:48):
Very simple.
Speaker 5 (26:49):
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Speaker 3 (27:56):
So every now and then Tucker hits like a stroke
of steaf act genius here and he did it again.
It is like you, I've never watched Tucker put together
the stack, but I kind of picture him. You just
kind of swaying in front of a couple of monitors
and just occasionally like that looks good.
Speaker 4 (28:16):
You know, like that Tom Cruise movie where he has
to direct all the stuff report that.
Speaker 3 (28:20):
One, except without you know, the whole idea of pre
crime and everything being a thing someone before criming, you know,
they have to crime first. In this case, Tucker knocked
this one out of the park. Here here are the
headlines from Bloomberg this market is nothing like the dot
com bubble. From market Watch, this is the dumbest stock
(28:42):
market in history.
Speaker 4 (28:45):
Those seem to contradict each other, don't they.
Speaker 3 (28:50):
We really should, so when it comes to, you know,
dot com bubble versus dumbest stock market in history, it's
true this is nothing like the dot com bubble.
Speaker 2 (29:03):
Sure very different.
Speaker 3 (29:06):
It might be the dumbest stock market in history, which
means both of these headlines can actually be true.
Speaker 4 (29:12):
So to summarize the first argument that this market is
nothing like the dot com bubble, the biggest compelling piece
of evidence that near KSAR presents, at least in my view,
would be that the earnings growth has been really strong,
it's predicted to be continue to be strong, and that
(29:33):
is really all that investors care about. Is Ultimately, if
earning's growth is strong, then stocks can continue to go up.
My counter would point would be, I don't think investors
in nineteen ninety nine expected earning his growth to start falling,
But once it did, stocks fell dramatically, and it eventually
did start falling, and so I don't know why this
(29:54):
would make this moment different than that one correct someday
earnings might fall again, which case I bet stocks would two.
Speaker 3 (30:02):
Right, Look, if if you actually believe that we're going
to become the United States of Nvidio, Okay, like that
that's reasonable. People can disagree. But if you actually believe, Hey,
in Vidia is a you know, four trillion dollar company
today and it should be forty trillion dollars in the
next five years, there's not much I can say to
dissuade you. And by the way, like you might be right,
(30:24):
Like I don't know, like you could be. On the
other hand, like history tends to suggest that that won't
be the case. The case for this being the dumbest
stock market in history is, I mean, look, in my
personal opinion, you're competing against two other markets maybe three
(30:47):
for dumbest twenty twenty one, Yeah, where we had Trevor
Milton pushing a truck down a hill saying it was
electrically powered and it wasn't.
Speaker 2 (30:58):
We had spac Mane.
Speaker 4 (31:00):
Yeah, we had memestock, mami Mania, we had all sorts
of non fundamental based driven We had.
Speaker 2 (31:06):
Long Island blockchain company. I mean, we had like that.
Speaker 4 (31:09):
One feels dumber. We had some real Well, here's the thing,
stack the evidence for me, you're good to keep going.
Speaker 3 (31:15):
You've got all these companies in the last like month
or two that have started saying they're gonna be cryptocurrency
treasuries that they don't really actually do anything. Yeah, you've
got this whole circular thing going on in AI right
now where everyone's just trading the same dollars back and
forth and no one might actually make any money off
those things. Other things that you have going on right now,
(31:37):
you got an awful lot of spackiness out there today
as well. So like I mean, Shamath launched a new
Spash's that's all you need to know.
Speaker 2 (31:44):
What was the other one other than twenty twenty one
in your mind?
Speaker 3 (31:48):
Ninety nine, nineteen, twenty nine, twenty nine, Okay, because I
don't actually think ninety nine was. Here's the thing about
ninety nine, it was it was headst dot com betting
on pets dot com as part of like a diversified portfolio.
Speaker 2 (32:04):
Was not a problem.
Speaker 3 (32:06):
Yeah, you could actually make a case the two thousand
and one And I'm not just saying like the popping
of the tech bubble, like once you started getting into
like the Enron and Worldcolm frauds. That's where the real
problem was, like startups being overvalued by people that got
you know, all hyped up on them tales old in time.
Speaker 4 (32:25):
Sure you know twenty nine, twenty twenty one and right now.
Speaker 3 (32:30):
Yes, Other than that, like it's kind of hard to
find like a time when things have been dumber because
the other thing that you have going on now.
Speaker 2 (32:38):
Can you give me some time teen twenty nine contexts?
Let me give you more now, just while we're talking
about it.
Speaker 3 (32:43):
You you have companies that are like going public now
with this whole like stable coin thing. Sure, you're you're
basically a bank. Why are you going to be.
Speaker 2 (32:52):
Like so much more transformative than a bank?
Speaker 3 (32:55):
I would say even less? And when the bank, you're
basically a gift card. And when the bank's start doing this,
why are you going to still exist? So there's some
dumb there. You had some of this stuff back in
twenty nine as well. This is your time is a
flat circle? Okay, yeah, there's that. Let's take a quick
(33:17):
break when we come back, let's do a little bit
of stack roulette.
Speaker 2 (33:20):
I can expand on twenty nine as well.
Speaker 1 (33:22):
Sure, here the Financial Exchange every day from eleven to
noon on Serious XM's Business radio channel one thirty two.
Keep it here for the latest business and financial news
and the trends on Wall Street. The Financial Exchange is
now live on Serious XM's business radio channel one thirty two.
Face He's the Financial Exchange Radio Network. The Financial Exchange
(33:45):
streams live on YouTube. Like our page and stay up
to date on breaking business news all morning long. This
is the Financial Exchange Radio Network.
Speaker 2 (34:05):
Mike, what do you got for me?
Speaker 4 (34:06):
For stack Roulett, I would like to present the Wall
Street Journals five ideas for helping solve America's student loan
program problem, which include what.
Speaker 2 (34:16):
Did I say program? Oh?
Speaker 4 (34:18):
Sorry, problem, Offering more aid colleges specifically automating loan repayment workplaces,
pitching in presumably for repayment, longer grace periods for those
student loans, and then states quote stepping up.
Speaker 2 (34:35):
Can anyone answer.
Speaker 4 (34:37):
Me why you write a five point plan on bringing
down the cost of education without talking about bringing down
the cost of education.
Speaker 2 (34:46):
Because it's not actually a plan to bring down the
cost of education. I mean, I know it's not. I know.
Speaker 4 (34:50):
It's slightly different between bringing down the cost of education
and fixing the student loan program, but they seem pretty interrelated.
You seriously didn't propose anything on reforming how universities work
and how they finance themselves and how they deliver education
to their students to make it maybe slightly more cost
(35:11):
efficient for some types of areas.
Speaker 2 (35:14):
Well, here's the other thing.
Speaker 3 (35:15):
And look, this is not to you know, slight, Notre Dame,
who is providing you know, this new grant package for families.
Most colleges aren't Notre Dame. Sure, Like I don't know
exactly where it stands, but I'm guessing Notre Dame is
somewhere in the top twenty five endowments nationwide. Seems likely,
you know, Like we're talking billions of dollars, not millions
(35:37):
of dollars. And so most schools can't do it. Can't
do that, you know, like if if, if you are
any other you know, and look, I'm a big believer,
you go to just about any school and commit yourself,
you're gonna get a darn good education. You go to
any school and just fool around, you're gonna get a
crappy education.
Speaker 2 (35:54):
Regardless of how good the school is.
Speaker 3 (35:55):
You may be able to cover it up at a
good school because of the networking connections that you can
get there.
Speaker 1 (35:59):
Ye.
Speaker 3 (36:00):
But ultimately, if you apply yourself anywhere, whether it is
North Notre Dame, North Dakota, Appalachian State, Duke, wherever it
might be, you can get a good education. So this
like Notre Dame being like, hey, we can do this, okay,
Appalachian State can't. So that's not really like a solution
(36:20):
for them. Automating loan repayment. So saying okay, your your
loans are gonna be automatically withheld, just like taxes, Well,
that doesn't really fix the student loan system might.
Speaker 2 (36:32):
Make it worse. Like what does that do?
Speaker 3 (36:36):
Yeah, Like it's there aren't many people out there that
are like, hey, you know what I'm gonna do.
Speaker 2 (36:42):
I'm gonna screw over the student loan system.
Speaker 3 (36:44):
No, most people are like, I took out these loans
and they're like, you know, it's really hard for me
to pay them back, and I'm gonna do what I can,
and they're following me forever, and now the interest just
keeps adding up and what do I do? Oh great,
Like my life is finally over now and after sixty years,
I still ow these.
Speaker 4 (36:58):
I was just floored by this, Like, no single proposal
had anything to do with looking at the efficiency of
delivering education to students.
Speaker 2 (37:07):
Right, you could put in workplaces, pitch in.
Speaker 3 (37:10):
Okay, you think they're not going to cut salary as
part of that then, because there's only so big of
a compensation bucket.
Speaker 2 (37:16):
State step up.
Speaker 3 (37:17):
Oh yeah, all these states with money just sloshing around
in their coffers. They have plenty of money to put
towards covering student loans. You know, like these I'm sorry,
they're not answers.
Speaker 2 (37:30):
Garbage proposals.
Speaker 3 (37:31):
They're not answers here in my opinion, So I I
don't know.
Speaker 2 (37:37):
They're just not saying you shouldn't do any of these things.
Speaker 4 (37:39):
I'm just saying it's not fixing the root cause of
the problem, which is that delivering education in the United
States is extraordinarily expensive.
Speaker 3 (37:46):
Baby boomers still love their department stores. Here's what they
know that gen z Ers don't. The department stores still exist.
So you're not optimistic, not really, Like the whole thing
is like, hey, like you know, if you order from
like the Bloomingdale's in New York City, they'll make a
house call to an apartment in New York City to
deliver your thing. Yeah, I'm sure that's really affordable for
(38:09):
Bloomingdale's do everywhere, and most people can totally afford to
shop at Bloomingdale's in New York City. Quick break here
for the rest of the day. We'll see you tomorrow
on the Financial Exchange
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