December 8, 2025 • 39 mins
Chuck Zodda and Mike Armstrong discuss reasons why investors are feeling good about stocks again. Is AI making us dumb? America gets retirement wrong. Can Vanguard fix that? Could paper checks be on the way out? States are raking in billions from slot machines on your phone.
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Episode Transcript
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Speaker 1 (00:00):
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(00:20):
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Exchange with Chuck Zada and Mike Armstrong, Your exclusive look
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(00:43):
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donation today. This is the Financial Exchange with Chuck Zada,
(01:06):
and Mike Armstraw, Chuck.
Speaker 2 (01:12):
Mike Tucker with you here as we kick things off,
and well, got markets selling off modestly today, nothing crazy,
nothing huge, but uh, sm P five hundred is down
twenty four points, DOWS off two hundred points, NASDAK is
off about fifty five points, so about a quarter to
(01:33):
a half percent slide across major markets. Bond selling off
as well. Tenure Treasury up point I'm sorry, zero point
four to three percent zero point nope, gotta do this again.
Tenure Treasury up four point three basis points to four
point one eight two. Uh. We've got the dollar index
strengthening on the back of that up zo point one
(01:57):
nine ninety nine sixteen go down thirty dollars ten cents
now it's to forty two to twelve and ninety cents.
Crude oil down sixty nine cents of barrel on West
Text Intermediate to fifty nine thirty nine triple a national
average for gas prices, though continuing to slide as those
refineries get back up to full speed, down another three
(02:17):
tenths of ascent overnight to two ninety five and two
tents on the national average. And so that is what
we've gotten moving in markets today. Big things we're watching
for this week. Tomorrow we get the jolt support. That's
the job openings report. Wednesday, we've got a FED meeting. Thursday,
we have jobless claims. And then on the earning side
(02:40):
of things, we've got Oracle and broadcomm on Wednesday and Thursday, respectively,
And so those are going to be exciting for us.
Campbell Soup also reporting tomorrow, And yeah, Campbell Soup reporting tomorrow.
Speaker 3 (02:57):
Didn't they have some controversy recently.
Speaker 2 (02:59):
Yes, there it was someone in there because one of
their top executives. Yeah, one of their top executives said
something along the lines of we only make food for
poor people. Yeah, probably shouldn't say that, which probably shouldn't
say And by the way, especially in the winter, I
go through a whole lot of Campbell's tomato soup with
some grilled cheeses on the regular.
Speaker 3 (03:20):
So yeah, there's not really a circumstance you want to
say that.
Speaker 2 (03:24):
No, you generally don't want to say that.
Speaker 4 (03:28):
And in fact, even if you want to express that
sentiment as a concern about your overall business model, there
are probably better ways to say it, Like, well, there's
seventy five percent of our sales come from this income demographic.
You're in business for a large, publicly traded corporation. I
think there's just better, better terms to use.
Speaker 2 (03:46):
Yes, yeah, it's like you don't often have a CEO
being like, no, we're just not gonna do it. We're
just not gonna do it. Let's talk about stocks. Does
that sound good?
Speaker 3 (03:57):
Yes?
Speaker 2 (03:58):
Chicken or beef. There's Campbell soup. It was ay, it's
stocks piece here in the Bloomberg what bubble asset managers
in risk on mode stick with stocks?
Speaker 3 (04:13):
Yeah.
Speaker 4 (04:14):
So every month or so, I feel like we come
across an article or two where someone somewhere is trying
to justify stock levels at these prices. At least that's
been the case like this year and the year before.
And I guess the concern that I would bring out
is every time we read one of these articles, somebody
(04:36):
comes up with some new ratio or benchmark you can
use to try and prove that stocks aren't that pricey.
This time around, you have what's referred to as the
excess cape yield. The excess cape yield, which you know,
where is cape yield by the way, Yeah, it's is
that near Cape Cod. No, it's off South Africa. So
(05:00):
it uses the S and P five hundred. We've talked
about Cape in terms of price to earnings ratio, So
it tries to adjust over a longer period of time
for inflation and earnings.
Speaker 3 (05:10):
And so it uses the S and P.
Speaker 4 (05:12):
Five hundred companies average earnings from the past decade and
then adjust both those earnings and the ten year treasury
yield for inflation. So you're basically trying to figure out
how expensive are stocks compared to the current interest rate environment.
And they point out that it was really really the
lower this ratio is the arguably more expensive stocks are.
(05:35):
And they point out that in February is one point
two percent and now it's closer to one point seven.
Speaker 3 (05:40):
I just want to point.
Speaker 2 (05:41):
Out, though, does anyone making their investment decisions based on that?
Speaker 1 (05:45):
No?
Speaker 4 (05:45):
And I'll also point out that there's like very few
instances where this has been worse than it is right now,
and it's pretty much just one, which is the lead
up to the dot com bubble. We've talked about this
over and over and so like, oh yeah, it's gotten
a little better because interest rates have come down since
Nuary but we're still in historically expensive levels, and I
don't know if you're making your investment decision based on
(06:07):
a change to the excess KPE yield over the short term,
you might be missing some of the bigger picture.
Speaker 2 (06:16):
If you want reasons why you can look for stocks
and say, hey, maybe they're not actually that expensive. The
only one that I think holds weight. And I'm not
saying like this is like go buy stocks or like don't.
I'm just saying this is one that holds weight with me,
at least in terms of like trying to justify it.
(06:39):
When we look at multiples, they tell you how expensive
a stock is based on either profits that have already
occurred or profits that are expected to occur. Yes, if
you believe that we are in a continued secular trend
where profit margins should move up, then that is something
where in theory you can command a higher multiple because
(07:03):
you are projecting that corporations are going to grow their
share of GDP over time as a result.
Speaker 3 (07:13):
And to believe that.
Speaker 4 (07:14):
Don't you kind of have to fundamentally believe that CEOs
of major US companies are being conservative in terms of
their earning growth estimates.
Speaker 2 (07:24):
Not necessarily, I don't think so, but I think what
you do have to believe is that remember, if you
look at where like the money goes, if corporations are
taking a larger share, in theory, it is leaving less
for the other two pieces of the pie, one being labor,
the other being the government. And so you do wonder
(07:49):
based on like kind of the negative sentiment out there, Hey,
do we reach a point where like people just say, guys,
enough is enough. We're fed up with this and this
isn't gonna work anymore. And like, typically that's when you
see either you know, labor movements that occur or in
less developed parts of the world, that's where you see,
you know, the government thrown out and things like that.
(08:12):
Like that's kind of what happens when labor gets upset,
is like big changes happen. And so I think if
you want the case for yes, stocks are expensive, but
maybe that expensiveness is justified. It is that corporate margins
have continued to expand at a pretty consistent clip for
(08:33):
the last ten fifteen years. You can make a case
that it is aided and embedded by the level of
consolidation that we have gotten to throughout most of corporate America,
and the fact that we don't really seem to care
when it comes to anti trust and we're just kind
of cool with it because I don't really know why.
Speaker 3 (08:58):
Big company office towers look cool. It's not sure.
Speaker 2 (09:02):
Either like it, it's it's just kind of where we are.
So I can buy that as a case for hey, but.
Speaker 4 (09:08):
If you're going to buy it, you have to very
like thoroughly believe that right now they continue, it's going
to continue, and that probably artificial intelligence is going to
be the cause of it.
Speaker 2 (09:19):
The counterpoint to that is this probably isn't something that
is going to be able to increase forever, and may
in fact be mean reverting, meaning that, Hey, increase corporate
profits today may lead to lower profits tomorrow because not profits,
(09:40):
but profit margins tomorrow. Because when people get upset about,
you know, corporate profiteering, they tend to undertake actions to
stop that corporate profiteering. And can they mount a you know,
strong enough response to rein that in I'm not saying
this is good or bad. I'm I'm just saying, again,
(10:02):
let's talk about a few things like that are like
feeding my mind on this. Zora Muondami, Mayor of New
York City, talking about reigning in profits, President Donald Trump
setting levels for profits on different healthcare drugs, like these
(10:23):
are the things that are actually happening right now, and.
Speaker 3 (10:28):
Yeah, they're getting appeal from both sides.
Speaker 2 (10:29):
I think we need to be aware that this is
the world that we live in now. And I don't
know what it means for corporate power and corporate earnings
going forward, but there's a reason why this stuff is
being discussed and acted upon now.
Speaker 3 (10:49):
Well, yeah, I mean the reading is that it seems
to be what people want.
Speaker 2 (10:53):
I'm not saying that it's good that people want that,
but I'm not going to bury my head and say
it's not happening.
Speaker 3 (11:01):
It's happening.
Speaker 2 (11:02):
Yeah, let's take a quick break here. When we come back, Well,
answer the question, is AI making us dumb?
Speaker 1 (11:10):
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In twenty nineteen, Paul Vulker passed away at the age
(12:35):
of ninety two. Vulker was one of the most influential
economic policymakers in American history, renowned for his tenure as
chairman of the FED. So trivia question today, which US
President appointed Vulker as chairman of the FED?
Speaker 3 (12:53):
Once again?
Speaker 6 (12:53):
Which US President appointed Vulker as Chairman of the FED?
Be the fourth per sin today to text us at
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See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (13:26):
Wall Street Journal with a piece titled is AI making
us dumb? The subheader no, the moral panic over technology
is an excuse for a failing educational system. Can't both
things be true? Well, here's the thing. I I I
really struggle in a lot of cases to put the
(13:47):
blame purely on new technology, because like when I was
growing up as a kid, like I heard all this
stuff about like, oh, video games are gonna ruin your life,
and video games are gonna make you dumb, and they're
gonna make you do all kinds of things, and I've
turned out like alright ish at least, and so I
kind of poop pool a lot of that. There's other places, though,
(14:08):
where I think you can look at technology and be like, yep,
this is screwing us up, Like the smartphone and social media, chuck.
Speaker 3 (14:16):
We just got text from the text line at your
mother and she says she disagrees.
Speaker 4 (14:19):
With which part the part of you using video games
and then turning it out to be okay.
Speaker 2 (14:25):
I know it's an ongoing point of contention, but in
any case, even with social media and smartphones, the problem,
in my opinion, is that social media is not a technology.
It's a way of talking, and like, we've just done
a whole bunch of bad things because we converse that
way instead of with actual human beings going forward. Do
(14:47):
you want me to dig in further on that.
Speaker 4 (14:49):
No, I do agree, Like, I don't think AI is
a cause of making us dumb, and I think we're
kind of mixing together issues.
Speaker 3 (14:57):
I do very firmly believe that social.
Speaker 4 (14:59):
Media is an addict, is an addiction for a lot
of people, and I don't think that I would call,
you know, people addicted to heroin dumb.
Speaker 2 (15:10):
No, so I just making us dumber. It is removed
to save our ability to actually have meaningful conversations with
other human beings, right, and in turn is making us lonelier,
more prone to outrage, and generally unhappier.
Speaker 4 (15:30):
On the a On the AI side of things, I
do worry that we might eventually get there too, And
I think there is a tendency to want to reach
for the fast answer than rather than using critical thinking.
But I'm willing to buy that, Like, yeah, are our
are our teaching systems approaches to new and emerging technology
(15:53):
the best?
Speaker 3 (15:53):
No? Probably not.
Speaker 4 (15:55):
And could we be doing a better job of how
we implement new technology and you know, using it as
part of the education system rather than trying to block
it and then catch people using it and things on
those lines, Yeah, I'm also down with that. But you know,
on the other hand, when I hear parents of teenagers
who tell me that like kids wake up and ask
(16:16):
AI what they should do with their day, those are
things that concern me a little bit in the same
way that social media usage with a fourteen year old
concerns me.
Speaker 2 (16:24):
So I think Ultimately, no, AI is not making us dumber.
It might be revealing our own innate dumbness that's always
been present throughout humanity, because like we're all kind of stupid.
If like we're gonna be honest with ourselves.
Speaker 4 (16:42):
What I'll say about it is if you are a
parent that's out there that's like pretty good at policing
your parent your kid's social media usage, and you're just
ignoring the AI side of it, I don't know that
that's a great policy either, right, Like, oh yeah, I
don't let my kid use Facebook, but they spend three
hours a day talking to chat GPT also seems like
(17:03):
a problem to me.
Speaker 3 (17:04):
And we've got this twenty year history with social media.
Speaker 4 (17:07):
I hope we have a better approach to AI than
we do, and I see no evidence of that, by
the way, right, I've seen zero evidence whatsoever that we
are approaching artificial intelligence, this new emerging technology in a
thoughtful way with you know, guardrails in place to make
sure that people and specifically kids don't get hurt. This
(17:30):
is kind of an obsession of mine, but you know,
we've covered we like to cover this.
Speaker 3 (17:34):
Over and over again.
Speaker 4 (17:35):
That Meta, the owner of Facebook, had written policies on
what type of romantic interactions a thirteen year old could
have with an artificial intelligence. A thirteen year old, they
had written policy, so you thought about, like, Okay, this
is the level of romantic interactions there are AI can
have with a thirteen year old, rather than saying, hey,
that's probably inappropriate for thirteen year old.
Speaker 2 (17:56):
Yes.
Speaker 3 (17:56):
So there's a lot of evidence that we have given.
Speaker 4 (17:58):
Zero thought as a society to the long term implications
of this new emerging technology that everyone's using.
Speaker 2 (18:06):
We've given thoughts to it, just bad thoughts again, like
meta thought about it.
Speaker 4 (18:11):
Yeah, and the it was like and then they came
up with a disgusting policy.
Speaker 2 (18:16):
Yes, you're right, yes, and so yeah, like we've got
the problem isn't usually the technology, it's the humans and
how we decide to implement said technology.
Speaker 4 (18:29):
But good news, Jamie Diamond predicts that AI will not
dramatically reduce jobs in the next twelve months.
Speaker 3 (18:35):
So thank you, Jamie.
Speaker 2 (18:39):
He's got good track records on this stuff.
Speaker 3 (18:42):
Right.
Speaker 4 (18:43):
Just again, you know, sometimes he tosses something out there,
We're like, I don't know a lot of people that
were calling for AI to dramatically reshape the job mark
in the next twelve months, but Jamie doesn't think that's
going to happen, So I guess I'm happy with that.
Speaker 2 (18:58):
Why does Jamie Diamond get interviewed on like everything? I'm
not again, really smart guy, the absolute best risk manager
in the system.
Speaker 3 (19:08):
Here's all I think it is.
Speaker 4 (19:09):
I think he's just simply willing to answer these questions,
whereas other people, for you know, whatever reason, Like I'm
sure Taylor Swift gets asked the exact same questions and
she's like, I don't know, don't ask me that question,
whereas Jamie Diamond seems to be willing to answer any
question that gets tossed his way.
Speaker 2 (19:26):
Blake, How can I never hear what Brian moynihan has
to say about anything?
Speaker 4 (19:29):
Yeah, you know, I don't know? Well again, because I
think Jamie diamonds of answering these questions. Do you even
know who the CEO of City Bank is right now?
Speaker 3 (19:37):
I do not know?
Speaker 2 (19:38):
Jane Frasier.
Speaker 3 (19:39):
I knew it was a woman. I couldn't remember her name.
Speaker 2 (19:42):
Honest question. Who is the CEO of Wells Fargo right now?
Speaker 3 (19:46):
Don't know?
Speaker 2 (19:47):
Yeah, let's take a quick break here. When we come
back we will give the answer to the trivia question.
We do know that, and we've got Wall Street Watch after.
Speaker 1 (19:56):
This, bringing the latest financial news straight to your radio.
Every day. It's the Financial Exchange on the Financial Exchange
(20:17):
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 6 (20:31):
FED meeting week is finally here, yay, and markets are
dipping into negative territory at the moment. Traders are also
ready for job openings data du out tomorrow morning, in
addition to more tech earnings from the likes of Oracle
and Broadcom. Right now, the Dow is down three tenths
of one percent or one and forty four points. SMP
(20:52):
five hundred is down a third of a percent or
twenty two points, Nasdaq down by two tenths of one percent,
RUSSA two thousand is up nearly two cents of one percent,
Tenure treas reeled up four basis points at four point
one eighty two percent, and crude oiled down over one
and a half percent lower, trading at fifty nine dollars
and fifteen cents a barrel. In a hostile takeover bid.
(21:14):
Paramount is now offering an all cash, thirty dollars per
share deal for all of Warner Brothers days after Warner
agreed to a deal with Netflix. Paramount argues its offer
is better for shareholders and more likely to be approved
by regulators than the Netflix offer. Paramount stock is rallying
seven percent, while Netflix shares are dropping by four percent.
Speaker 1 (21:35):
Meanwhile, we have.
Speaker 6 (21:36):
Some acquisition news in the tech sector this morning, after
IBM announced it is buying data streaming platform Confluent and
a deal worth eleven billion dollars. IBM shares are now
up over one percent, while Confluent stock is surging twenty
nine percent. Elsewhere, according to the information, Microsoft was in
talks of moving its custom chips business to Broadcom from
(21:58):
Marvel Technology. Burbellstock is down nine percent on that news,
while Broadcom shares are up over two percent. Berkshire Hathaway
announced the departure of an investment officer in Geico CEO
Todd Combs, who will be joining JP Morgan Chase. Berkshire
stock is down over two percent. In manufacturer CEE our
HVAC company, Comfort Systems in online car retailer Carvana are
(22:21):
all seeing gains following news that all three companies will
join the S and P five hundred on December twenty second.
I'm Tucker Silvan. That is Waltree Watch. And in the
previous segment we asked the trivia question, which you, as
president appointed Paul Volker as Chairman of the FED. They'll
be Jimmy Carter. Greg from Fitchburg, Mass is our winner today,
(22:42):
taking home a Financial Exchange Show t shirt. Congrats to Greg,
and we play trivia every day here on the Financial Exchanes.
See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (22:53):
A couple questions who gave IBM eleven billion dollars? And
what's a confluent?
Speaker 6 (23:02):
Have you ever heard of data streaming platform?
Speaker 1 (23:04):
Chuck?
Speaker 6 (23:05):
Who are these people's data that streams.
Speaker 2 (23:08):
Eleven billion dollars? Like, that's a lot of money for
a company that, again, I've never heard of. I know
that I don't know every company out there, but I
never heard of this one. Yeah, IBM, their revenue has
dropped from one hundred and seven billion dollars a year
in early twenty twelve to sixty five billion today.
Speaker 3 (23:28):
Yeah, but Chuck, Ai, do you heard about this?
Speaker 2 (23:34):
When you put it that way?
Speaker 4 (23:36):
Sure, let's talk about this I'm sorry to tease that,
but like that seems to be the answer to everyone's
concerns and questions today.
Speaker 3 (23:45):
But yeah, Chuck, I mean, Ai.
Speaker 2 (23:47):
Here's the thing with IBM and aar Donald's quarter was
pretty bad.
Speaker 3 (23:51):
Yeah, Chuck, But Ai, I.
Speaker 2 (23:53):
Remember fifteen years ago hearing about Watson from IBM. Yeah,
and how it was going to revolutionize this, that and
everything so much for first to market.
Speaker 1 (24:01):
Huh.
Speaker 2 (24:02):
So, like, I forgive me if I just look at
IBM and AI and just kind of go eh, Yeah,
it's a maybe for you. America gets retirement wrong. Can
Vanguard fix that? Is a piece in Bloomberg Opinion? What
is the opinion of Bloomberg Opinion?
Speaker 3 (24:21):
Yes, with annuities.
Speaker 2 (24:24):
Discuss.
Speaker 4 (24:24):
Yeah, I'm not sure I agree with the columnists I
saw this last week. Yeah, So, the Vanguard and many
other four one K providers are toying with the idea
of putting pension like annuities into retirement plans. So again,
some form of income generation that will be a guaranteed
(24:47):
form of income generation for retirees at a certain age.
And I'm not sure that it's going to get off
the ground here, but I do fully understand the desire
for it. Right, We basically offloaded all Americans from the
pension system starting.
Speaker 3 (25:05):
Like fifty years ago and year migration.
Speaker 4 (25:09):
Yeah, without much of a great plan to replace it, right,
Like the four to one K came about, but it
wasn't really Hey, we're going to use this thing to
fully replace pensions. And so I see the desire. I
understand why, but there's a bunch of big questions that
I have about this. So one, I don't know how
(25:29):
putting a product like an annuity into a four oh
one K would work, given Americans propensity to change jobs
these days.
Speaker 2 (25:38):
And want to take early distributions from four to one
k's in a lot.
Speaker 3 (25:42):
Of cases, yeah, like these.
Speaker 4 (25:44):
You know, if you're not familiar with annuities, it's we
don't have enough time in a two hour program.
Speaker 3 (25:50):
To fully educate you.
Speaker 4 (25:51):
But there's a lot of different flavors, but the main
component to them is you are giving up in some way,
you access to your principle to ensure that you have
an income stream in the future.
Speaker 2 (26:03):
It's a contract with an insurance company.
Speaker 4 (26:05):
And so I just don't know how that fits within
today's world of constantly changing jobs. I also just don't
I don't think American consumers are generally good at assessing
how their four O one k's work now, and trying
to add something as complicated as an annuity into it
seems like it might be faced with some issues there.
(26:29):
And so what I don't like about it is putting
all of this on the individual person. There's gonna be
a if it's going to be successful in any meaningful way,
there's going to be a boatload of education that's going
to be need to be that's going to need to
be done that I don't see happening anywhere in our
education system or on the employer side of all of this.
So I'm not saying it's coming from a bad place
(26:50):
that they want to put a new like. I genuinely
don't believe that this is all about creating a new
revenue source for four one K plans, although that's clearly
contributing factor. But I think that it's not going to
go terribly well. Wan Americans have a terrible opinion of
annuities by and large. Two, it's really complicated.
Speaker 2 (27:14):
The other piece on this that I'll be curious to
see is what the expense structure looks like. And I'm
going to approach this from the opposite perspective that most
people do. Vanguard, I think, in general, has been a
real positive for the industry in terms of leading the
(27:36):
charge to reduce expenses. Sure, I think some of the
stuff that they are doing now is to the point
where it's gratuitous, to the point where it doesn't make
a difference for the individual investor, but prevents competition in
that Hey, if you cut a fee on a product
from one percent to half a percent over a forty
(28:00):
appeared that's a meaningful shift, sure in savings for investors.
If you cut an expense ratio from point zero five
percent to point zero four that doesn't really improve the
overall picture for the person investing in it, like it's negligible,
but it makes it harder for new competitors to come
into the market who might have a better way of
(28:23):
doing things. So this is why I kind of wonder
where they may go on this, because I do think
that when you look at how a lot of annuities
tend to be priced, they tend to be pretty steeply priced,
and I do think it's one area where if someone
could come in and improve the pricing structure, there sure
like I think that's great, But in other parts of
(28:44):
the market, I think they may be starting to kind
of abuse the market position they hold and preventing more
competition rather than encouraging it.
Speaker 4 (28:52):
Here's my conclusion overall, regardless of the success or failure
of annuities and retirement plans, retirement plans are about to change,
not just because of this. They've been changing quite a
bit for the last couple of years. I think they're
going to change at a more rapid pace over the
next few years. And my assessment is that most Americans
aren't going to be prepared for that change. But if
(29:13):
you want to be, and if you want to better
understand how your current retirement plan actually might work for
you in retirement and all the complications that come along
with that, please give the folks at Armstrong Advisory Group
a call. You can book your free consultation by calling
eight hundred three nine three for zero zero one. You
can go to Armstrong Advisory dot Com to schedule time
(29:36):
for us to call you back. But this is one
of the least understood topics that I discuss with clients
of mine and other people that I meet with, and
so I understand why folks have questions eight hundred three
nine three for zero zero one.
Speaker 1 (29:50):
The proceeding was paid for by Armstrong Advisory Group, a
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Armstrong guide a specific financial, legal, or tax advice. Consult
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Speaker 2 (30:05):
Could paper checks be on the way out like the penny?
Your thoughts, Michael god I hope so discuss I I I.
Speaker 4 (30:16):
Have somebody who is buying a space in a retirement
community soon and they only accept checks, like dump only
accept no wires, dump, no electronic funds, transfers, check only.
Speaker 2 (30:32):
Wait you Dump only accepts checks. That's correct, So no cash, cash,
no credit cards, no credit card checks, that's right for
a dump, that's correct. That's crazy, which they then throw
in the dump.
Speaker 1 (30:47):
You know.
Speaker 2 (30:47):
My first job was as a cashier and at a
at a grocery store, and you'd get one maybe two
people shift that would come in with a check in
order to buy their grocery. And it was always the
toughest thing to deal with because like there's a whole
process for like validating it, and it slowed the whole.
Speaker 3 (31:07):
Thing down, no kidding.
Speaker 2 (31:09):
And you know, at that time in my life, I
was I don't know what, like fourteen fifteen years however
old you are when you can, you know, first start
legally working. And I was like, okay, like get rid
of these the older I've gotten. I kind of like
writing checks now, Oh my god, I don't. I don't
go into the grocery store and buy them there.
Speaker 4 (31:30):
But I don't know's they are constant sources of fraud. Yes,
they are challenging to deal with, but everything is a
constant source of fraud. Yeah, but I mean really low
hanging fruit there for somebody to open your mail, find
the check and just rewrite it really easy, especially with AI.
Speaker 2 (31:53):
Right like here. Here is the thing I guess is
the real problem with the check is that it has
to have your full bank cold count number on it
in order for it to be a real check. It's
just fraught with issues, you know, like that there's a
real from a security perspective, if blockchain can do one
thing for me, it should be able to allow me
to make a payment without having to physically write out
(32:14):
of check. The counterpoint is there's also I now believe
value in the slowness of the check in that if
I realize something's gone wrong, yeah, I can stop payment
on it pretty easily. Fair And like I kind of
value that overall. Like, where are we going with this?
Speaker 3 (32:36):
Tucker?
Speaker 2 (32:37):
Can we put this on the board? Will there still
be checks in our lifetime?
Speaker 3 (32:41):
No?
Speaker 2 (32:41):
We cannot put that in. We can't put that on
the board. I don't think they're going anywhere anytime soon, agreed.
I think you're going to have them for at least
the next twenty thirty years. But after that it's a
hard maybe for me. Just take a quick break when
we come back. Stack Roulette.
Speaker 1 (32:57):
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Speaker 2 (34:15):
Mike, what do you got for me?
Speaker 4 (34:15):
For stock Rich A text from a listener. AI is
not making us dumb yet, but it will. The example
is what is referred to as Google brain, the phenomenon
where people no longer seem to have the ability or
desire to remember common things because they'll just look them up.
When I was a kid, I remembered everybody's phone number.
Now I barely remember my wife's phone number. So I'm
going to debate this one. I again. I will acknowledge
(34:39):
that I think social media and AI might make us different,
but I'm not sure that this one adds up to
me right. Like I don't remember phone numbers now either.
Very rarely can I recall a phone number, but I
do remember passwords to some ten or fifteen different websites.
I do remember specific apps that I need to use
(35:01):
if I want to turn up or down the temperature
in my home.
Speaker 3 (35:04):
Like I feel like I've just replaced my phone number.
Speaker 4 (35:07):
Recall with other types of recall that I didn't use
to use, and so I don't like as society. Like
you know, if I'm sitting with a group of friends
and we're asking a question about, you know, something that
happened in nineteen eighty five, and somebody just googles it
and we no longer get to have the fun conversation.
But I don't know that that's because we're dumber. I
(35:30):
guess is where I'll leave it. And I'm not sure
that our ability to recall has also gone away because
of these technologies. But interesting thought exercise. I would be
interested to see if it's there's any evidence that our
ability to recall information has gone away.
Speaker 2 (35:44):
There is evidence out there that our ability to focus
has diminished because of smartphones and the reward system associated
with you know, notifications of positive reinforcement, and they're always
checking your phone to see if like something came in.
But I think that's that's different from recall.
Speaker 3 (35:59):
Inherently.
Speaker 2 (36:00):
I want to talk about online gambling, and not sports gambling,
but specifically digital casinos and digital slot machines. And here's
the thing. Pennsylvania collected over a billion dollars from digital
casinos last year, compared to one hundred and eighty eight
million from digital sports book apps.
Speaker 4 (36:18):
Sorry, hold on, this is the tax revenue or this
is tax revenue?
Speaker 2 (36:22):
Oh wow, tax revenue. Pennsylvania's entire state budget is fifty
billion dollars, so two percent of their budget for the
year came from digital casinos. So I have two feelings
on this. The first is, if I'm a resident of
Pennsylvania who does not use these online casinos, I'm like, fine,
you want to take money from all these people, fine,
(36:44):
like have at it, keep my taxes low. Like I
get that perspective. Unfortunately, the place that I come back
to that's more important, is man. The state is literally
like encouraging gambling addiction to the tune of a billion
dollar a year and its own residents in order to
figure out how to balance its budget without raising taxes
(37:07):
on people because they're too cowardly to do so or
cutting services because they're too cowardly to do so. And
that really sits badly with me. Yeah, that's a uh,
because I'm willing to bet that that billion dollars in
taxes from digital casinos, it's probably like five percent of
Pennsylvania residents that are ending up, you know, putting that in,
(37:30):
and it's not the wealthiest five percent.
Speaker 4 (37:32):
Going to say, think about the round trip that happens
here is you gamble all your money away on a
Maybe it's not state sponsored, but it's in some cases
it might be because.
Speaker 3 (37:42):
The lottery is, for example, are state sponsored.
Speaker 4 (37:44):
You gamble all your money away and the state collects
a bunch of revenue, at which point you are forced
to go on federal benefits because you're impoverished and have
no money.
Speaker 3 (37:56):
Like, this is a pretty bad system.
Speaker 2 (37:58):
Are you though, Because here's the thing, most of those
systems are based on income. If you have income that's
coming in, but you're just spending it gambling. I don't
know what you qualify for.
Speaker 4 (38:08):
Necessarily eventually medicaid, I mean like it might take a
little while, but yeah, you're not gonna earn income forever
either way.
Speaker 2 (38:16):
I look at this and like, the societal implications are
like the place I get to, the states want the revenue,
but they are too chicken to raise taxes or cut services,
and so they just end up basically hosing a small
portion of their population that can't stop gambling on their phones.
And that feels really bad to me. It feels really
(38:38):
bad to me. Let's take a quick break for the
rest of the day. We'll see it tomorrow with more
financial exchange.
Speaker 3 (39:00):
Ye
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(01:06):
and Mike Armstraw, Chuck.
Speaker 2 (01:12):
Mike Tucker with you here as we kick things off,
and well, got markets selling off modestly today, nothing crazy,
nothing huge, but uh, sm P five hundred is down
twenty four points, DOWS off two hundred points, NASDAK is
off about fifty five points, so about a quarter to
(01:33):
a half percent slide across major markets. Bond selling off
as well. Tenure Treasury up point I'm sorry, zero point
four to three percent zero point nope, gotta do this again.
Tenure Treasury up four point three basis points to four
point one eight two. Uh. We've got the dollar index
strengthening on the back of that up zo point one
(01:57):
nine ninety nine sixteen go down thirty dollars ten cents
now it's to forty two to twelve and ninety cents.
Crude oil down sixty nine cents of barrel on West
Text Intermediate to fifty nine thirty nine triple a national
average for gas prices, though continuing to slide as those
refineries get back up to full speed, down another three
(02:17):
tenths of ascent overnight to two ninety five and two
tents on the national average. And so that is what
we've gotten moving in markets today. Big things we're watching
for this week. Tomorrow we get the jolt support. That's
the job openings report. Wednesday, we've got a FED meeting. Thursday,
we have jobless claims. And then on the earning side
(02:40):
of things, we've got Oracle and broadcomm on Wednesday and Thursday, respectively,
And so those are going to be exciting for us.
Campbell Soup also reporting tomorrow, And yeah, Campbell Soup reporting tomorrow.
Speaker 3 (02:57):
Didn't they have some controversy recently.
Speaker 2 (02:59):
Yes, there it was someone in there because one of
their top executives. Yeah, one of their top executives said
something along the lines of we only make food for
poor people. Yeah, probably shouldn't say that, which probably shouldn't
say And by the way, especially in the winter, I
go through a whole lot of Campbell's tomato soup with
some grilled cheeses on the regular.
Speaker 3 (03:20):
So yeah, there's not really a circumstance you want to
say that.
Speaker 2 (03:24):
No, you generally don't want to say that.
Speaker 4 (03:28):
And in fact, even if you want to express that
sentiment as a concern about your overall business model, there
are probably better ways to say it, Like, well, there's
seventy five percent of our sales come from this income demographic.
You're in business for a large, publicly traded corporation. I
think there's just better, better terms to use.
Speaker 2 (03:46):
Yes, yeah, it's like you don't often have a CEO
being like, no, we're just not gonna do it. We're
just not gonna do it. Let's talk about stocks. Does
that sound good?
Speaker 3 (03:57):
Yes?
Speaker 2 (03:58):
Chicken or beef. There's Campbell soup. It was ay, it's
stocks piece here in the Bloomberg what bubble asset managers
in risk on mode stick with stocks?
Speaker 3 (04:13):
Yeah.
Speaker 4 (04:14):
So every month or so, I feel like we come
across an article or two where someone somewhere is trying
to justify stock levels at these prices. At least that's
been the case like this year and the year before.
And I guess the concern that I would bring out
is every time we read one of these articles, somebody
(04:36):
comes up with some new ratio or benchmark you can
use to try and prove that stocks aren't that pricey.
This time around, you have what's referred to as the
excess cape yield. The excess cape yield, which you know,
where is cape yield by the way, Yeah, it's is
that near Cape Cod. No, it's off South Africa. So
(05:00):
it uses the S and P five hundred. We've talked
about Cape in terms of price to earnings ratio, So
it tries to adjust over a longer period of time
for inflation and earnings.
Speaker 3 (05:10):
And so it uses the S and P.
Speaker 4 (05:12):
Five hundred companies average earnings from the past decade and
then adjust both those earnings and the ten year treasury
yield for inflation. So you're basically trying to figure out
how expensive are stocks compared to the current interest rate environment.
And they point out that it was really really the
lower this ratio is the arguably more expensive stocks are.
(05:35):
And they point out that in February is one point
two percent and now it's closer to one point seven.
Speaker 3 (05:40):
I just want to point.
Speaker 2 (05:41):
Out, though, does anyone making their investment decisions based on that?
Speaker 1 (05:45):
No?
Speaker 4 (05:45):
And I'll also point out that there's like very few
instances where this has been worse than it is right now,
and it's pretty much just one, which is the lead
up to the dot com bubble. We've talked about this
over and over and so like, oh yeah, it's gotten
a little better because interest rates have come down since
Nuary but we're still in historically expensive levels, and I
don't know if you're making your investment decision based on
(06:07):
a change to the excess KPE yield over the short term,
you might be missing some of the bigger picture.
Speaker 2 (06:16):
If you want reasons why you can look for stocks
and say, hey, maybe they're not actually that expensive. The
only one that I think holds weight. And I'm not
saying like this is like go buy stocks or like don't.
I'm just saying this is one that holds weight with me,
at least in terms of like trying to justify it.
(06:39):
When we look at multiples, they tell you how expensive
a stock is based on either profits that have already
occurred or profits that are expected to occur. Yes, if
you believe that we are in a continued secular trend
where profit margins should move up, then that is something
where in theory you can command a higher multiple because
(07:03):
you are projecting that corporations are going to grow their
share of GDP over time as a result.
Speaker 3 (07:13):
And to believe that.
Speaker 4 (07:14):
Don't you kind of have to fundamentally believe that CEOs
of major US companies are being conservative in terms of
their earning growth estimates.
Speaker 2 (07:24):
Not necessarily, I don't think so, but I think what
you do have to believe is that remember, if you
look at where like the money goes, if corporations are
taking a larger share, in theory, it is leaving less
for the other two pieces of the pie, one being labor,
the other being the government. And so you do wonder
(07:49):
based on like kind of the negative sentiment out there, Hey,
do we reach a point where like people just say, guys,
enough is enough. We're fed up with this and this
isn't gonna work anymore. And like, typically that's when you
see either you know, labor movements that occur or in
less developed parts of the world, that's where you see,
you know, the government thrown out and things like that.
(08:12):
Like that's kind of what happens when labor gets upset,
is like big changes happen. And so I think if
you want the case for yes, stocks are expensive, but
maybe that expensiveness is justified. It is that corporate margins
have continued to expand at a pretty consistent clip for
(08:33):
the last ten fifteen years. You can make a case
that it is aided and embedded by the level of
consolidation that we have gotten to throughout most of corporate America,
and the fact that we don't really seem to care
when it comes to anti trust and we're just kind
of cool with it because I don't really know why.
Speaker 3 (08:58):
Big company office towers look cool. It's not sure.
Speaker 2 (09:02):
Either like it, it's it's just kind of where we are.
So I can buy that as a case for hey, but.
Speaker 4 (09:08):
If you're going to buy it, you have to very
like thoroughly believe that right now they continue, it's going
to continue, and that probably artificial intelligence is going to
be the cause of it.
Speaker 2 (09:19):
The counterpoint to that is this probably isn't something that
is going to be able to increase forever, and may
in fact be mean reverting, meaning that, Hey, increase corporate
profits today may lead to lower profits tomorrow because not profits,
(09:40):
but profit margins tomorrow. Because when people get upset about,
you know, corporate profiteering, they tend to undertake actions to
stop that corporate profiteering. And can they mount a you know,
strong enough response to rein that in I'm not saying
this is good or bad. I'm I'm just saying, again,
(10:02):
let's talk about a few things like that are like
feeding my mind on this. Zora Muondami, Mayor of New
York City, talking about reigning in profits, President Donald Trump
setting levels for profits on different healthcare drugs, like these
(10:23):
are the things that are actually happening right now, and.
Speaker 3 (10:28):
Yeah, they're getting appeal from both sides.
Speaker 2 (10:29):
I think we need to be aware that this is
the world that we live in now. And I don't
know what it means for corporate power and corporate earnings
going forward, but there's a reason why this stuff is
being discussed and acted upon now.
Speaker 3 (10:49):
Well, yeah, I mean the reading is that it seems
to be what people want.
Speaker 2 (10:53):
I'm not saying that it's good that people want that,
but I'm not going to bury my head and say
it's not happening.
Speaker 3 (11:01):
It's happening.
Speaker 2 (11:02):
Yeah, let's take a quick break here. When we come back, Well,
answer the question, is AI making us dumb?
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(12:35):
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Speaker 3 (12:53):
Once again?
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Speaker 2 (13:26):
Wall Street Journal with a piece titled is AI making
us dumb? The subheader no, the moral panic over technology
is an excuse for a failing educational system. Can't both
things be true? Well, here's the thing. I I I
really struggle in a lot of cases to put the
(13:47):
blame purely on new technology, because like when I was
growing up as a kid, like I heard all this
stuff about like, oh, video games are gonna ruin your life,
and video games are gonna make you dumb, and they're
gonna make you do all kinds of things, and I've
turned out like alright ish at least, and so I
kind of poop pool a lot of that. There's other places, though,
(14:08):
where I think you can look at technology and be like, yep,
this is screwing us up, Like the smartphone and social media, chuck.
Speaker 3 (14:16):
We just got text from the text line at your
mother and she says she disagrees.
Speaker 4 (14:19):
With which part the part of you using video games
and then turning it out to be okay.
Speaker 2 (14:25):
I know it's an ongoing point of contention, but in
any case, even with social media and smartphones, the problem,
in my opinion, is that social media is not a technology.
It's a way of talking, and like, we've just done
a whole bunch of bad things because we converse that
way instead of with actual human beings going forward. Do
(14:47):
you want me to dig in further on that.
Speaker 4 (14:49):
No, I do agree, Like, I don't think AI is
a cause of making us dumb, and I think we're
kind of mixing together issues.
Speaker 3 (14:57):
I do very firmly believe that social.
Speaker 4 (14:59):
Media is an addict, is an addiction for a lot
of people, and I don't think that I would call,
you know, people addicted to heroin dumb.
Speaker 2 (15:10):
No, so I just making us dumber. It is removed
to save our ability to actually have meaningful conversations with
other human beings, right, and in turn is making us lonelier,
more prone to outrage, and generally unhappier.
Speaker 4 (15:30):
On the a On the AI side of things, I
do worry that we might eventually get there too, And
I think there is a tendency to want to reach
for the fast answer than rather than using critical thinking.
But I'm willing to buy that, Like, yeah, are our
are our teaching systems approaches to new and emerging technology
(15:53):
the best?
Speaker 3 (15:53):
No? Probably not.
Speaker 4 (15:55):
And could we be doing a better job of how
we implement new technology and you know, using it as
part of the education system rather than trying to block
it and then catch people using it and things on
those lines, Yeah, I'm also down with that. But you know,
on the other hand, when I hear parents of teenagers
who tell me that like kids wake up and ask
(16:16):
AI what they should do with their day, those are
things that concern me a little bit in the same
way that social media usage with a fourteen year old
concerns me.
Speaker 2 (16:24):
So I think Ultimately, no, AI is not making us dumber.
It might be revealing our own innate dumbness that's always
been present throughout humanity, because like we're all kind of stupid.
If like we're gonna be honest with ourselves.
Speaker 4 (16:42):
What I'll say about it is if you are a
parent that's out there that's like pretty good at policing
your parent your kid's social media usage, and you're just
ignoring the AI side of it, I don't know that
that's a great policy either, right, Like, oh yeah, I
don't let my kid use Facebook, but they spend three
hours a day talking to chat GPT also seems like
(17:03):
a problem to me.
Speaker 3 (17:04):
And we've got this twenty year history with social media.
Speaker 4 (17:07):
I hope we have a better approach to AI than
we do, and I see no evidence of that, by
the way, right, I've seen zero evidence whatsoever that we
are approaching artificial intelligence, this new emerging technology in a
thoughtful way with you know, guardrails in place to make
sure that people and specifically kids don't get hurt. This
(17:30):
is kind of an obsession of mine, but you know,
we've covered we like to cover this.
Speaker 3 (17:34):
Over and over again.
Speaker 4 (17:35):
That Meta, the owner of Facebook, had written policies on
what type of romantic interactions a thirteen year old could
have with an artificial intelligence. A thirteen year old, they
had written policy, so you thought about, like, Okay, this
is the level of romantic interactions there are AI can
have with a thirteen year old, rather than saying, hey,
that's probably inappropriate for thirteen year old.
Speaker 2 (17:56):
Yes.
Speaker 3 (17:56):
So there's a lot of evidence that we have given.
Speaker 4 (17:58):
Zero thought as a society to the long term implications
of this new emerging technology that everyone's using.
Speaker 2 (18:06):
We've given thoughts to it, just bad thoughts again, like
meta thought about it.
Speaker 4 (18:11):
Yeah, and the it was like and then they came
up with a disgusting policy.
Speaker 2 (18:16):
Yes, you're right, yes, and so yeah, like we've got
the problem isn't usually the technology, it's the humans and
how we decide to implement said technology.
Speaker 4 (18:29):
But good news, Jamie Diamond predicts that AI will not
dramatically reduce jobs in the next twelve months.
Speaker 3 (18:35):
So thank you, Jamie.
Speaker 2 (18:39):
He's got good track records on this stuff.
Speaker 3 (18:42):
Right.
Speaker 4 (18:43):
Just again, you know, sometimes he tosses something out there,
We're like, I don't know a lot of people that
were calling for AI to dramatically reshape the job mark
in the next twelve months, but Jamie doesn't think that's
going to happen, So I guess I'm happy with that.
Speaker 2 (18:58):
Why does Jamie Diamond get interviewed on like everything? I'm
not again, really smart guy, the absolute best risk manager
in the system.
Speaker 3 (19:08):
Here's all I think it is.
Speaker 4 (19:09):
I think he's just simply willing to answer these questions,
whereas other people, for you know, whatever reason, Like I'm
sure Taylor Swift gets asked the exact same questions and
she's like, I don't know, don't ask me that question,
whereas Jamie Diamond seems to be willing to answer any
question that gets tossed his way.
Speaker 2 (19:26):
Blake, How can I never hear what Brian moynihan has
to say about anything?
Speaker 4 (19:29):
Yeah, you know, I don't know? Well again, because I
think Jamie diamonds of answering these questions. Do you even
know who the CEO of City Bank is right now?
Speaker 3 (19:37):
I do not know?
Speaker 2 (19:38):
Jane Frasier.
Speaker 3 (19:39):
I knew it was a woman. I couldn't remember her name.
Speaker 2 (19:42):
Honest question. Who is the CEO of Wells Fargo right now?
Speaker 3 (19:46):
Don't know?
Speaker 2 (19:47):
Yeah, let's take a quick break here. When we come
back we will give the answer to the trivia question.
We do know that, and we've got Wall Street Watch after.
Speaker 1 (19:56):
This, bringing the latest financial news straight to your radio.
Every day. It's the Financial Exchange on the Financial Exchange
(20:17):
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 6 (20:31):
FED meeting week is finally here, yay, and markets are
dipping into negative territory at the moment. Traders are also
ready for job openings data du out tomorrow morning, in
addition to more tech earnings from the likes of Oracle
and Broadcom. Right now, the Dow is down three tenths
of one percent or one and forty four points. SMP
(20:52):
five hundred is down a third of a percent or
twenty two points, Nasdaq down by two tenths of one percent,
RUSSA two thousand is up nearly two cents of one percent,
Tenure treas reeled up four basis points at four point
one eighty two percent, and crude oiled down over one
and a half percent lower, trading at fifty nine dollars
and fifteen cents a barrel. In a hostile takeover bid.
(21:14):
Paramount is now offering an all cash, thirty dollars per
share deal for all of Warner Brothers days after Warner
agreed to a deal with Netflix. Paramount argues its offer
is better for shareholders and more likely to be approved
by regulators than the Netflix offer. Paramount stock is rallying
seven percent, while Netflix shares are dropping by four percent.
Speaker 1 (21:35):
Meanwhile, we have.
Speaker 6 (21:36):
Some acquisition news in the tech sector this morning, after
IBM announced it is buying data streaming platform Confluent and
a deal worth eleven billion dollars. IBM shares are now
up over one percent, while Confluent stock is surging twenty
nine percent. Elsewhere, according to the information, Microsoft was in
talks of moving its custom chips business to Broadcom from
(21:58):
Marvel Technology. Burbellstock is down nine percent on that news,
while Broadcom shares are up over two percent. Berkshire Hathaway
announced the departure of an investment officer in Geico CEO
Todd Combs, who will be joining JP Morgan Chase. Berkshire
stock is down over two percent. In manufacturer CEE our
HVAC company, Comfort Systems in online car retailer Carvana are
(22:21):
all seeing gains following news that all three companies will
join the S and P five hundred on December twenty second.
I'm Tucker Silvan. That is Waltree Watch. And in the
previous segment we asked the trivia question, which you, as
president appointed Paul Volker as Chairman of the FED. They'll
be Jimmy Carter. Greg from Fitchburg, Mass is our winner today,
(22:42):
taking home a Financial Exchange Show t shirt. Congrats to Greg,
and we play trivia every day here on the Financial Exchanes.
See complete contest rules at Financial Exchange Show dot com.
Speaker 2 (22:53):
A couple questions who gave IBM eleven billion dollars? And
what's a confluent?
Speaker 6 (23:02):
Have you ever heard of data streaming platform?
Speaker 1 (23:04):
Chuck?
Speaker 6 (23:05):
Who are these people's data that streams.
Speaker 2 (23:08):
Eleven billion dollars? Like, that's a lot of money for
a company that, again, I've never heard of. I know
that I don't know every company out there, but I
never heard of this one. Yeah, IBM, their revenue has
dropped from one hundred and seven billion dollars a year
in early twenty twelve to sixty five billion today.
Speaker 3 (23:28):
Yeah, but Chuck, Ai, do you heard about this?
Speaker 2 (23:34):
When you put it that way?
Speaker 4 (23:36):
Sure, let's talk about this I'm sorry to tease that,
but like that seems to be the answer to everyone's
concerns and questions today.
Speaker 3 (23:45):
But yeah, Chuck, I mean, Ai.
Speaker 2 (23:47):
Here's the thing with IBM and aar Donald's quarter was
pretty bad.
Speaker 3 (23:51):
Yeah, Chuck, But Ai, I.
Speaker 2 (23:53):
Remember fifteen years ago hearing about Watson from IBM. Yeah,
and how it was going to revolutionize this, that and
everything so much for first to market.
Speaker 1 (24:01):
Huh.
Speaker 2 (24:02):
So, like, I forgive me if I just look at
IBM and AI and just kind of go eh, Yeah,
it's a maybe for you. America gets retirement wrong. Can
Vanguard fix that? Is a piece in Bloomberg Opinion? What
is the opinion of Bloomberg Opinion?
Speaker 3 (24:21):
Yes, with annuities.
Speaker 2 (24:24):
Discuss.
Speaker 4 (24:24):
Yeah, I'm not sure I agree with the columnists I
saw this last week. Yeah, So, the Vanguard and many
other four one K providers are toying with the idea
of putting pension like annuities into retirement plans. So again,
some form of income generation that will be a guaranteed
(24:47):
form of income generation for retirees at a certain age.
And I'm not sure that it's going to get off
the ground here, but I do fully understand the desire
for it. Right, We basically offloaded all Americans from the
pension system starting.
Speaker 3 (25:05):
Like fifty years ago and year migration.
Speaker 4 (25:09):
Yeah, without much of a great plan to replace it, right,
Like the four to one K came about, but it
wasn't really Hey, we're going to use this thing to
fully replace pensions. And so I see the desire. I
understand why, but there's a bunch of big questions that
I have about this. So one, I don't know how
(25:29):
putting a product like an annuity into a four oh
one K would work, given Americans propensity to change jobs
these days.
Speaker 2 (25:38):
And want to take early distributions from four to one
k's in a lot.
Speaker 3 (25:42):
Of cases, yeah, like these.
Speaker 4 (25:44):
You know, if you're not familiar with annuities, it's we
don't have enough time in a two hour program.
Speaker 3 (25:50):
To fully educate you.
Speaker 4 (25:51):
But there's a lot of different flavors, but the main
component to them is you are giving up in some way,
you access to your principle to ensure that you have
an income stream in the future.
Speaker 2 (26:03):
It's a contract with an insurance company.
Speaker 4 (26:05):
And so I just don't know how that fits within
today's world of constantly changing jobs. I also just don't
I don't think American consumers are generally good at assessing
how their four O one k's work now, and trying
to add something as complicated as an annuity into it
seems like it might be faced with some issues there.
(26:29):
And so what I don't like about it is putting
all of this on the individual person. There's gonna be
a if it's going to be successful in any meaningful way,
there's going to be a boatload of education that's going
to be need to be that's going to need to
be done that I don't see happening anywhere in our
education system or on the employer side of all of this.
So I'm not saying it's coming from a bad place
(26:50):
that they want to put a new like. I genuinely
don't believe that this is all about creating a new
revenue source for four one K plans, although that's clearly
contributing factor. But I think that it's not going to
go terribly well. Wan Americans have a terrible opinion of
annuities by and large. Two, it's really complicated.
Speaker 2 (27:14):
The other piece on this that I'll be curious to
see is what the expense structure looks like. And I'm
going to approach this from the opposite perspective that most
people do. Vanguard, I think, in general, has been a
real positive for the industry in terms of leading the
(27:36):
charge to reduce expenses. Sure, I think some of the
stuff that they are doing now is to the point
where it's gratuitous, to the point where it doesn't make
a difference for the individual investor, but prevents competition in
that Hey, if you cut a fee on a product
from one percent to half a percent over a forty
(28:00):
appeared that's a meaningful shift, sure in savings for investors.
If you cut an expense ratio from point zero five
percent to point zero four that doesn't really improve the
overall picture for the person investing in it, like it's negligible,
but it makes it harder for new competitors to come
into the market who might have a better way of
(28:23):
doing things. So this is why I kind of wonder
where they may go on this, because I do think
that when you look at how a lot of annuities
tend to be priced, they tend to be pretty steeply priced,
and I do think it's one area where if someone
could come in and improve the pricing structure, there sure
like I think that's great, But in other parts of
(28:44):
the market, I think they may be starting to kind
of abuse the market position they hold and preventing more
competition rather than encouraging it.
Speaker 4 (28:52):
Here's my conclusion overall, regardless of the success or failure
of annuities and retirement plans, retirement plans are about to change,
not just because of this. They've been changing quite a
bit for the last couple of years. I think they're
going to change at a more rapid pace over the
next few years. And my assessment is that most Americans
aren't going to be prepared for that change. But if
(29:13):
you want to be, and if you want to better
understand how your current retirement plan actually might work for
you in retirement and all the complications that come along
with that, please give the folks at Armstrong Advisory Group
a call. You can book your free consultation by calling
eight hundred three nine three for zero zero one. You
can go to Armstrong Advisory dot Com to schedule time
(29:36):
for us to call you back. But this is one
of the least understood topics that I discuss with clients
of mine and other people that I meet with, and
so I understand why folks have questions eight hundred three
nine three for zero zero one.
Speaker 1 (29:50):
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 make contact you to offer investment
advisory services.
Speaker 2 (30:05):
Could paper checks be on the way out like the penny?
Your thoughts, Michael god I hope so discuss I I I.
Speaker 4 (30:16):
Have somebody who is buying a space in a retirement
community soon and they only accept checks, like dump only
accept no wires, dump, no electronic funds, transfers, check only.
Speaker 2 (30:32):
Wait you Dump only accepts checks. That's correct, So no cash, cash,
no credit cards, no credit card checks, that's right for
a dump, that's correct. That's crazy, which they then throw
in the dump.
Speaker 1 (30:47):
You know.
Speaker 2 (30:47):
My first job was as a cashier and at a
at a grocery store, and you'd get one maybe two
people shift that would come in with a check in
order to buy their grocery. And it was always the
toughest thing to deal with because like there's a whole
process for like validating it, and it slowed the whole.
Speaker 3 (31:07):
Thing down, no kidding.
Speaker 2 (31:09):
And you know, at that time in my life, I
was I don't know what, like fourteen fifteen years however
old you are when you can, you know, first start
legally working. And I was like, okay, like get rid
of these the older I've gotten. I kind of like
writing checks now, Oh my god, I don't. I don't
go into the grocery store and buy them there.
Speaker 4 (31:30):
But I don't know's they are constant sources of fraud. Yes,
they are challenging to deal with, but everything is a
constant source of fraud. Yeah, but I mean really low
hanging fruit there for somebody to open your mail, find
the check and just rewrite it really easy, especially with AI.
Speaker 2 (31:53):
Right like here. Here is the thing I guess is
the real problem with the check is that it has
to have your full bank cold count number on it
in order for it to be a real check. It's
just fraught with issues, you know, like that there's a
real from a security perspective, if blockchain can do one
thing for me, it should be able to allow me
to make a payment without having to physically write out
(32:14):
of check. The counterpoint is there's also I now believe
value in the slowness of the check in that if
I realize something's gone wrong, yeah, I can stop payment
on it pretty easily. Fair And like I kind of
value that overall. Like, where are we going with this?
Speaker 3 (32:36):
Tucker?
Speaker 2 (32:37):
Can we put this on the board? Will there still
be checks in our lifetime?
Speaker 3 (32:41):
No?
Speaker 2 (32:41):
We cannot put that in. We can't put that on
the board. I don't think they're going anywhere anytime soon, agreed.
I think you're going to have them for at least
the next twenty thirty years. But after that it's a
hard maybe for me. Just take a quick break when
we come back. Stack Roulette.
Speaker 1 (32:57):
Here The Financial Exchange every day from a eleven to
noon Non 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 life on Sirius XM's business radio channel one thirty two.
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(33:19):
and full shows of the Financial Exchange on how are
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might have missed. This is the Financial Exchange Radio Network.
Speaker 6 (33:33):
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Speaker 2 (34:15):
Mike, what do you got for me?
Speaker 4 (34:15):
For stock Rich A text from a listener. AI is
not making us dumb yet, but it will. The example
is what is referred to as Google brain, the phenomenon
where people no longer seem to have the ability or
desire to remember common things because they'll just look them up.
When I was a kid, I remembered everybody's phone number.
Now I barely remember my wife's phone number. So I'm
going to debate this one. I again. I will acknowledge
(34:39):
that I think social media and AI might make us different,
but I'm not sure that this one adds up to
me right. Like I don't remember phone numbers now either.
Very rarely can I recall a phone number, but I
do remember passwords to some ten or fifteen different websites.
I do remember specific apps that I need to use
(35:01):
if I want to turn up or down the temperature
in my home.
Speaker 3 (35:04):
Like I feel like I've just replaced my phone number.
Speaker 4 (35:07):
Recall with other types of recall that I didn't use
to use, and so I don't like as society. Like
you know, if I'm sitting with a group of friends
and we're asking a question about, you know, something that
happened in nineteen eighty five, and somebody just googles it
and we no longer get to have the fun conversation.
But I don't know that that's because we're dumber. I
(35:30):
guess is where I'll leave it. And I'm not sure
that our ability to recall has also gone away because
of these technologies. But interesting thought exercise. I would be
interested to see if it's there's any evidence that our
ability to recall information has gone away.
Speaker 2 (35:44):
There is evidence out there that our ability to focus
has diminished because of smartphones and the reward system associated
with you know, notifications of positive reinforcement, and they're always
checking your phone to see if like something came in.
But I think that's that's different from recall.
Speaker 3 (35:59):
Inherently.
Speaker 2 (36:00):
I want to talk about online gambling, and not sports gambling,
but specifically digital casinos and digital slot machines. And here's
the thing. Pennsylvania collected over a billion dollars from digital
casinos last year, compared to one hundred and eighty eight
million from digital sports book apps.
Speaker 4 (36:18):
Sorry, hold on, this is the tax revenue or this
is tax revenue?
Speaker 2 (36:22):
Oh wow, tax revenue. Pennsylvania's entire state budget is fifty
billion dollars, so two percent of their budget for the
year came from digital casinos. So I have two feelings
on this. The first is, if I'm a resident of
Pennsylvania who does not use these online casinos, I'm like, fine,
you want to take money from all these people, fine,
(36:44):
like have at it, keep my taxes low. Like I
get that perspective. Unfortunately, the place that I come back
to that's more important, is man. The state is literally
like encouraging gambling addiction to the tune of a billion
dollar a year and its own residents in order to
figure out how to balance its budget without raising taxes
(37:07):
on people because they're too cowardly to do so or
cutting services because they're too cowardly to do so. And
that really sits badly with me. Yeah, that's a uh,
because I'm willing to bet that that billion dollars in
taxes from digital casinos, it's probably like five percent of
Pennsylvania residents that are ending up, you know, putting that in,
(37:30):
and it's not the wealthiest five percent.
Speaker 4 (37:32):
Going to say, think about the round trip that happens
here is you gamble all your money away on a
Maybe it's not state sponsored, but it's in some cases
it might be because.
Speaker 3 (37:42):
The lottery is, for example, are state sponsored.
Speaker 4 (37:44):
You gamble all your money away and the state collects
a bunch of revenue, at which point you are forced
to go on federal benefits because you're impoverished and have
no money.
Speaker 3 (37:56):
Like, this is a pretty bad system.
Speaker 2 (37:58):
Are you though, Because here's the thing, most of those
systems are based on income. If you have income that's
coming in, but you're just spending it gambling. I don't
know what you qualify for.
Speaker 4 (38:08):
Necessarily eventually medicaid, I mean like it might take a
little while, but yeah, you're not gonna earn income forever
either way.
Speaker 2 (38:16):
I look at this and like, the societal implications are
like the place I get to, the states want the revenue,
but they are too chicken to raise taxes or cut services,
and so they just end up basically hosing a small
portion of their population that can't stop gambling on their phones.
And that feels really bad to me. It feels really
(38:38):
bad to me. Let's take a quick break for the
rest of the day. We'll see it tomorrow with more
financial exchange.
Speaker 3 (39:00):
Ye
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