August 28, 2025 • 38 mins
Chuck Zodda and Mike Armstrong discuss Nvidia predicting cooler growth after sales record. Is China getting closer to finding its own Nvidia? US weekly jobless claims fall amid layoffs. Q2 GDP revised to show stronger growth. Why the market doesn't care much about Trump firing Fed's Cook. Mexico to raise tariffs on imports from China after US push. Who's to blame for your higher power bill?
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Transcript
Episode Transcript
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Speaker 1 (00:00):
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(01:03):
This is the Financial Exchange with Chuck Zada and Mike Armstrong.
Speaker 2 (01:11):
Chuck, Mike and Tucker with you, and as we kick
off our Thursday show, we got a little bit of
economic data to get to, including an updated GDP report
and some jobless claims. But the top story for today
in Video reported earnings a little bit after the bell yesterday,
and market doesn't love them. They're not, you know, really
(01:33):
freaking out. It's basically, I mean, in Video is down
about two percent, which in vidio terms is like not
really worth getting out of bed for.
Speaker 3 (01:42):
No, but some disappointed people at the Nvidia earnings parties
last night. I would assume, now you know who the
most disappointed people are, Mike are the people that spend
a bunch of money on option Trimium today shop and
have gotten absolutely nowhere from it because the stocks just
not move very much. So in terms of what in
(02:02):
Video reported, their sales during the most recent quarter hit
forty six point seven billion dollars, basically in line with
analyst estimates.
Speaker 2 (02:11):
So that's nice. It was a touch higher, but you know, again,
not anything like what they used to do, where they'd
be like, hey, we had like sixteen billion in revenue
and you guys thought we'd have ten yeah, it's it's
not that net income rose to twenty six point four
billion dollars, a fifty nine percent growth rate compared to
the prior year, and their expectations for Q three revenue
(02:36):
are about fifty four billion dollars, which is a little
bit above expectations. So you look at Nvidian just kind
of how it's traded since then, and we'll get into,
you know, more of the specifics on what this means,
but pretty much right after the announcement, stock fell three
or four percent. Over the course of the rest of
the after hour session, kind of rallied back to being
(02:56):
down to open this morning pre market down around to
rally back to flat, and now you know, is down
a couple percentage points. So overall, I think that the
takeaway on this is, look, when you have a company
that's priced for a huge amount of growth, delivering on
the growth that's expected as good, but it doesn't really
move the needle as far as driving that next leg up.
Speaker 3 (03:18):
As a result of the news release yesterday, I don't
know if it's true or not, but the one piece
that every analyst and reporter out there is talking about
in terms of how they redeliver on that growth promise.
Is China any debate there?
Speaker 2 (03:37):
Well, yes, okay, And I think I think here's the
thing is, it's pretty clear that China would prefer to
not have to buy in video chips.
Speaker 3 (03:50):
I think that's pretty clear that well six to one
a half dozen the other Hijingping does not want these
companies to buy Chinese made here's China in video mas.
Speaker 2 (04:00):
That's the Chinese government, through Jijingping, does not want to
buy in video chips if they can avoid doing so.
The main reasons not because the chips are bad, but
simply because, quite honestly, I don't think they want the
United States to have a point of leverage over them
in any negotiations or dealings.
Speaker 3 (04:20):
Agreed.
Speaker 2 (04:21):
I think it's as simple as that. And so you know,
there's there's all this chatter about, you know, Jensen Huang
got asked a bunch of times, Hey, you know, what's
the deal with China? Are you gonna be able to
sell into them? What kind of revenue do you expect?
And you kind of tap danced around it in a
bunch of different ways. He said some interesting things, including
in video this morning saying, yeah, we're happy to give
(04:43):
the US government fifteen percent of revenue from all blackwell
sales if we can sell you know, the most recent
iteration of chips. But they also said yesterday in video, hey,
despite the you know agreement that was reached a couple
of weeks ago to give the US government fifteen percent revenue,
we're still working through it with counsel and with the
White House because there's no mechanism for us to do so,
(05:06):
and so we need to figure out how to actually
go about doing this.
Speaker 3 (05:11):
Are we putting the cart ahead of the horse here,
given that China has no interest in buying them in
any of those age twenty chips.
Speaker 2 (05:17):
Probably, but when has that ever stopped any enterprising young
CEO from saying, yeah, we we think we can do
this right and and so I think with Nvidiaya, the
China piece, maybe the short term is something that.
Speaker 3 (05:34):
Matters, but ultimately it's a red.
Speaker 2 (05:36):
Herring in my opinion, because the long term growth of
Nvidia is going to depend on the data center spend
by the mag seven companies more than anyone else, even
like you even talk about China and look and in
Videy's getting you two hundred billion dollars in revenue this year. Okay,
(05:58):
even if you think in Nvidia is gonna selly chip
to China that they're buying right now, the estimates that
you're seeing are maybe another fifty billion over a multi
year period.
Speaker 3 (06:07):
So then somebody explained to me, pull out your inner
Dan ives the biggest Nvidia bowl that I can think of? Yeaheah.
What is the long term growth story?
Speaker 1 (06:19):
Like?
Speaker 3 (06:19):
I would assume more data centers forever? Right, But yeah,
I guess that's my point. I would assume that once
I don't know, once JP Morgan has built their latest
and greatest artificial intelligence internal system on the backs of
Microsoft's data centers or whoever is that they are using,
they will need to continue to update it every year,
(06:40):
just like they do every other piece of their technology.
But I would assume that they're not going to need
the same number of semiconductors that they needed to get
that thing up and running as they will to update
it every year. So where does this perpetual long term
growth come from? I don't know, that's the right answer.
And this is the whole thing is like with the Internet,
(07:01):
once you laid off of the wire to create it,
the especially improvements were incremental well, you went from three
G to four G and nothing changed, and so tell
me what goes. What's the huge difference once we go
from Blackwell to next generation semiconductor ten years out from now,
and I'm struggling to start seeing the picture.
Speaker 2 (07:24):
This is the whole question, which is, look, you did
all the heavy lifting, like to compare to the Internet. Hey,
the shift from dial up to fiber optic was a
huge shift. The shift from ten megabits per second to
(07:46):
thirty okay, like if you're running lots of devices in
your house matters. The shift from thirty two. You know,
everyone is arguing like, oh, like a gigabit is what
you you don't need to I have like a fifty
megabit connection, and it's just for you know, doing a
lot of things that I need to, like anything. I
can be watching TV in one room, my wife can
(08:07):
be in another, I can be I can be freaking
doing the show.
Speaker 4 (08:11):
You know.
Speaker 2 (08:11):
If I'm you know, at home or whatever for a
certain day, there's no huge problem there. So when when
it comes to this, the question is, look, we're already
starting to see kind of a tailing off in terms
of okay, the first iteration of models great it needed
ex compute and it produced why result? Now you did
(08:32):
X squared in terms of the compute you know, you
increased it by a factor of ten, and you know, okay,
did it actually result in better performance?
Speaker 3 (08:41):
Yeah?
Speaker 2 (08:41):
It did, but it was like thirty percent better performance
for ten x the compute power. I don't when you
did it again and you got only a ten percent
incremental improvement there. And I don't want any of what
to take this to mean that we're missing the boat
on what artificial intelligence could mean.
Speaker 3 (08:56):
I am convinced that there are players out there. Remember
the MIT study from earlier this week that you know,
all these companies invested and only five percent of them
had seen any return on investment. That didn't surprise me. Like,
we're very early stages at this point.
Speaker 2 (09:10):
I am sure sure most companies didn't have a good
Internet strategy in nineteen ninety eighty either.
Speaker 3 (09:14):
Yeah, I'm sure there are many companies out there with
their own proprietary data sets that will build an artificial
intelligence that will change something significantly for that company and
perhaps the world. I'm less convinced that that means perpetual
giant growth for a company like in video unless they
have a different plan than modernizing their semiconductors. Because here's
(09:40):
the thing.
Speaker 2 (09:40):
Even if you get even if you get to a
point where you've just got to, like, you know, replace
these data centers in perpetuity instead of growing them, Okay,
that's that's a replacement business. That's not a growth business anymore. Right,
you know, you become Cisco replacing Routers, who still runs
a really good business. But it's not what everyone thought
they were going to be back in two thousand and
when you know, they were one of the most valuable
(10:02):
companies on the planet. No one looks at Cisco now
and feels any kind of excitement, either positive or negative
about them. They just exist kind of like they make
a boatload of money. By the way, like I'm not
here to like pooh pooh Cisco. Like you take a
look at the company as a whole.
Speaker 3 (10:21):
The only negative thing we're saying about it is that
it's not as stock price isn't its stock is not
in Vidia.
Speaker 2 (10:25):
It's it's just boring now, which is fine. I mean again,
they make ten billion dollars a year in profit off
of sixty billion dollars a.
Speaker 3 (10:33):
Year in revenue.
Speaker 2 (10:34):
That's perfectly cromulent, like you can make a good living
off ten billion dollars. I hear it's you know, it's
it's perfectly fine, but it's not what people thought it
was going to be back in the tech bubble, the
highs of which Cisco is never surpassed by the way,
it's never gotten back to eighty dollars a share where
it traded back in you know, two thousands. So within VIDIA,
(10:57):
two things can be true. They can run it a
darn good business, and they still have a lot of
growth in front of them. But we talked about the
economics of this, and eventually you get to a point
where the buyers of these chips have to figure out
how do we make money off of them? And that's
where the question is actually going to be. The other
thing that's true, there's going to be a lot more
(11:18):
money spent on AI, and a lot of companies are
going to increase that spend dramatically in the next five
to ten years, and it still might not be enough
to actually cover all of this data center construction cost.
I mean, if you're talking about in the next five
years spending two to four trillion dollars on data center construction,
that's a lot of depreciation that you've got to cover
(11:40):
the cost of. It's a lot of depreciation that you've
got to cover the cost of. And this is before
we even get to the big problem in the US,
which is, hey, how do we turn the lights on
in these things? Because we don't build power plants as
quickly as data centers.
Speaker 3 (11:54):
Let's take a quick break.
Speaker 2 (11:55):
When we return, let's talk about some of the economic
data that came out today.
Speaker 3 (12:00):
Do you have anything else to add on nvidio. I
think you'll probably be revisiting it during artificially.
Speaker 2 (12:08):
I'm sure we'll talk about them sometime in the future,
so we'll do that, but right now, quick break, then
economic data.
Speaker 1 (12:16):
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Speaker 4 (12:42):
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(13:02):
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Speaker 2 (13:14):
All right, so we got a whole bunch of economic
data this morning. Let's start first with the new stuff
that came out. Jobless claims. Initial jobbles claims dropped just
a touch, going from a slightly revised two hundred and
thirty four thousand in the prior week down to two
hundred and twenty nine thousand, so that's always good news
to see. The continuing claims numbers also showed a modest drop,
(13:40):
going from one point nine to six one million to
one point nine to five four million. We still are
floating around like five to six percent year over year
growth on continuing claims, which is not really ideal, but
not to the point where you're really seeing signs of
any shift in the labor market.
Speaker 3 (13:59):
So probably all still means that we're sitting with an
unemployment right right around four point two percent, right maybe
four three, maybe four to one, depending on where you
get the reading. But a labor market that is, while stagnant,
pretty well balanced and for throughout you know, the last
thirty years of four point two percent unemployment rate, If
(14:20):
that's where we land next Friday, when we get it
exceedingly low, I'll make the case that on the whole.
Speaker 2 (14:27):
And again, I know there's you know, places that you
can look where you're like, Okay, this has gotten worse,
So this has gotten better. On the whole, the labor
market hasn't changed in a year. We're pretty much right
where we were hit like it's in September of last year.
Speaker 3 (14:41):
Just to give you feel a little different. It feels
different to me.
Speaker 2 (14:44):
It does because the only thing that is meaningfully different
is the pace of job growth. Yeah, but you can
make a case that that's because of demographics and deportations. Yeah,
and so like if you look at the labor market.
Speaker 3 (14:59):
I guess I guess that's my point though, is that's
why it feels different is the the growth is exceedingly
slow and it seems more challenging. I think it seems
more challenging today to find a new job than it
did a year ago. I'm not sure that's the case.
Speaker 2 (15:15):
I think I think there are just fewer people looking
for jobs. Just some some big numbers to give you.
A year ago, this is from the Jolts Report, the
layoffs and discharge rate was one point two percent now it's.
Speaker 3 (15:30):
One mey one point two percent of the total work
first was getting.
Speaker 2 (15:33):
Laid off in any given month. The highre's rate was
three to five, now it's three three. So layoffs got
a little bit worse, hires sir layoffs got a little better.
Hires got a little worse. The quits rate was one
point nine percent now it's two. It's not a meaningful
statistical shift when we go and take a look at
(15:54):
some of these employment ratios. This is, I think, kind
of gets at some of the stuff we've seen. Labor
force participate rate for prime age age twenty five to
fifty four was eighty three nine a year ago. It's
eighty three to four right now. It's a modest slow
down there, but no huge shift. Uh. The employment to
population ratio in that same demo eighty percent today versus
eighty point six a year ago, again modest ship labor
(16:17):
force participation rate broadly has gone from sixty two to
seven down to sixty two to two over that time. Okay,
it kind of messures with what we've been talking about
the ratio of job openings to unemployed a year ago
in August, because that's really what a year ago was
for jolts one point eight percent.
Speaker 3 (16:39):
The ratio, yes, one.
Speaker 2 (16:41):
Point eight people who one point eight job openings per
every person who is unemployed.
Speaker 3 (16:47):
Today it's one point oh six, the exact same. It's
pretty much the exact same.
Speaker 2 (16:51):
The unemployment rate a year ago again, I got I
got all kinds of these here. Unemployed rate a year
ago four to two. Today the U six, the underemployment
rate was seven nine, it's seven nine. About wages, wage
growth right now, I'm glad you asked, Michael, we're talking
about like wage growth, that's what you're.
Speaker 3 (17:12):
Looking for, looking for we're looking at in terms of
wage growth, I guess year over year last year compared
to now.
Speaker 2 (17:19):
So this is kind of a wiggly data series in
that like month to month, you get some fluctuations in here,
But when you look at it right now, just use
the BLS data, just because it's what I have front
and center right now, you're running at four point two
percent year over year wage growth according to the BLS.
I give you a few I mean, if you look
at the Indeed Wage Indeed Wage tracker, you're at two
to four, but right now you're at four point two percent.
(17:41):
If you go back a year ago, you were at
three six. So there's been a modest uptick in wage growth,
which could be represented by Hey, the labor market is
losing a lot of older people who are retiring and
a lot of people who are not in the country
legally who can't work anymore, and so as a result,
wages may be showing something on in terms of growth.
(18:04):
But the counter to that is, hey, the INDEED data
is showing things in the opposite direction. So maybe there's
just no real shift in wage growth and you're pretty
much in the same spot you were a year ago.
Either way, when you look at the labor market as
a whole, it's tough to conclusively feel things are very
different other than the rate of job growth is slowed,
but that might just be because there are fewer people
(18:25):
looking for jobs because of retirements and deportations. Other data
that we got this morning, second quarter GDP revised up
from three point one percent to three point three percent,
so a little bit stronger than initially reported. Obviously, it
doesn't affect you know what's going on today in the economy,
but good to see stronger growth in Q two than
(18:47):
we originally had there and pending home sales data also
came in at ten am this morning that was a
little bit weaker than expected, negative point four percent for
the month versus expectations of minus point one two point two.
We'll cover this later in the show with a piece
from Connor Sen, who really shares my view on housing
that this might be like a five to seven year
(19:09):
slog to get through the issues that are plaguing housing,
not in terms of there's probably not like any kind
of catastrophic drop in prices nationwide, but just a slow
slog to get back to affordability after it got so
out of whack in the last several years.
Speaker 3 (19:26):
We all got to move to Florida.
Speaker 2 (19:27):
That'll help affordability. Quick break here when we return. It's
Wall Street Watch.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch. A complete look at what's moving market so
far today right here on the Financial Exchange Network.
Speaker 4 (20:00):
Markets mostly quiet again today in a mixed territory as
traders react to mag seven earnings from chip maker and
AI Giant in video, in addition to fresh economic data
points including jobless claims and a new revision two second
quarter GDP. Right now, the Dow is off by two
tenths of one percent or eighty eight points lower s
(20:21):
and P five hundred is down merely two points. Nasdaq
is up a tenth of a percent or twenty four
points higher, Rusted two thousands up a tenth of a percent,
ten year Treasureial flat at four point two to three percent,
and crude oil retreating one percent. Today Training at sixty
three dollars and fifty one cents a barrel. While on
Video saw its quarterly sales reach new record highs, the
(20:44):
company's underwhelming outlook has increased worries about future demand, and
Video shares are currently down by two percent. Sticking with
the tech spase, where HP shares are climbing three percent
after it beat revenue forecast, driven by growing demand and
for AI enabled personal computers. Meanwhile, Cloud software and AI
platform company Snowflake also beat revenue expectations, sending that stock
(21:09):
jumping eighteen percent. Elsewhere, shares in Dollar General down modestly
after the discount retailer beat earnings and revenue estimates for
the previous quarter. The company also hiked its full year
earnings in revenue growth guidance. Another discount retailer in five
below also beat earnings and revenue forecasts, where its third
quarter outlook also impressed. Shares in five below a rising
(21:32):
by three percent. Dick Sporting Goods beat expectations in the
second quarter and upped its full year outlook. However, shares
are down by four percent at the moment, and CrowdStrike
shares are up two percent, despite the cybersecurity provider swinging
to a loss in giving revenue guidance for the current
quarter that fell below forecasts. I'm Tucker Silvan.
Speaker 1 (21:53):
That is wall Stree, watch Mike.
Speaker 2 (21:56):
Just one final word on in video. This is not
my own math. This is from bespoken Vest today. Do
you know that within video being a four point four
trillion dollar company now that is equivalent to six Walmarts, Yes,
eleven Costcos, twenty one, Disney's thirty eight Nikes forty five,
(22:20):
Starbucks is Starbucks', Starbucks's yea seventy eight, Chipotle's ninety four, Fords,
one hundred and two Targets, one hundred and three Ebays
two hundred and forty four, Dick Sporting Goods nine hundred
and eighty four Shake Shacks two thousand and ninety under armours.
(22:46):
Just to give you the scale of what we're talking
about here at the four point four trillion dollar company,
let's talk about this piece from the Wall Street Journal.
It's titled why the market doesn't care much about Trump
firing the Fed's cook. It's pretty simple in my book.
The first is they didn't fire the chef. No, they
didn't the different cook. They fired the cook, not the chef.
(23:08):
The first is very simple. It is really unclear legally
if the president is able to do this. And markets
have gotten in a whole bunch of trouble this year.
Not markets, Investors have gotten in a whole bunch of
trouble this year by reacting to headlines instead of the
ultimate resolution. And so I think markets have really learned
in the last six months. Don't pay attention to the headline,
(23:31):
pay attention to the eventual resolution. This by all accounts,
could take several months to play out and finally get
through the Supreme Court, who has already said you can't
touch anyone at the FED. And so I think, hey,
markets are looking at this and saying there's a decent
chance this doesn't end up happening. The second piece is, ultimately,
(23:53):
if you were concerned about FED independence before this, you're
still concerned today. I don't know how many new people
got to into the camp of hey, I'm now concerned
about this because you went and tried to fire Lisa.
Speaker 3 (24:05):
Cook, Right. I think, Look, most every serious investor and
economist out there believes that FED independence is very important.
I think that's fair to say. Even if you were
to pin down members of the Trump administration, they probably
can't say it with the pressure of the president, but
I do genuinely think most of them would admit that, yes,
(24:27):
FED independence is crucially important. The conclusion that I come
to is that the attempted firing of Cook hasn't made
those same people feel any more convinced that they FED
is no longer going to be independent. It hasn't moved
the needle for them.
Speaker 2 (24:44):
No, It's okay, like we already knew that you wanted
to do this, Like you've talked about this for the
last couple of weeks. Now you went and tried to
and we're going to see how it all plays out,
and we'll no more over the next few months. But
I would imagine sometime today or tomorrow Cook has already
fired filed a lawsuit looking for a stay or you know,
(25:06):
temporary restraining order on the action here, and so I
would imagine that that'll be in place pretty shortly, and
the FED is pretty much said, yeah, like she's still
you know, on the board at the moment. Well buy
by anything that any judge says, but ultimately, like this
is where we are.
Speaker 3 (25:21):
So I don't think we've we felt pretty close to j.
Powell himself being fired earlier this year, right we.
Speaker 2 (25:26):
Were there in I think it was early August or
late July, somewhere in that ballpark.
Speaker 3 (25:30):
I can't remember exactly where it was. So one more
point that I just want to make on this. I
made it on Tuesday. But none of this is to
minimize the accusations against Cook. Like, while a mortgage application
seems like a relatively small thing, anyone at the Federal
(25:50):
Reserve should be held to an extremely high standard, and
if she did, in fact falsify a mortgage application, she
should be fired. That would at least be my take,
And I feel the same way about a congress person,
a member of just about any government administration. That doesn't
diminish the fact that clearly the White House wants more
control over the FED. And so both of those things
can be true at the same time.
Speaker 2 (26:12):
Yes, she can have listed multiple residences as her primary residence,
which just is an unseemly look for someone at the
FED to do. Quite honestly, in my book, it doesn't
rise to the level of what Rosingrin and Kaplan were
doing where they were, you know, trading potentially based on
FED activity. Yep, Like that's something that represents more of
(26:33):
a conflict of interest. This is just, hey, you're trying
to help yourself out financially, which is unseemly and should
be prosecuted as needed based on whatever it is. But
is that something in my book that rises to the
letter to the level of you can't do your job
because of it. I just don't know about that.
Speaker 3 (26:54):
I don't think it puts her in a conflicted place
where she can't do the job. I just think that
you're held to you should be held to such a
high stand there where you can make a case that's
resigned because it's just too much of a distraction. If
it were true, it should be designed because let's be honest,
if a junior member of her staff had done it, yeah,
they'd be fired.
Speaker 2 (27:11):
It's it's just too much of a distraction, and you
know you shouldn't be there. Then that's different from is
there you know, the right to fire the person it is, yeah,
which is obviously where we are. So let's take no,
let's not take a quick break. Let's talk about this
next story here right now. Mexico raising tariffs on imports
from China after a push from the United States. This,
(27:32):
in my opinion, has been a major goal of the
Trump administration all along, which is to get countries to
build somewhat of a barrier around China in terms of
you know, not being able to just export cheap goods
somewhere else, to try to do an end run around
the United States.
Speaker 3 (27:47):
And by the way, if they were successful in this
in other countries, I would be ecstatic about the results.
We've talked about this sometimes since Trump administration. One point. Oh,
if this can be an end goal of all the
tariffs are saying, Hey, we are building consensus among major
US allies and trading partners that we should attack China
(28:09):
in this way by walling off some of their goods
into our country. I think that that would be the
best potential outcome of tariffs.
Speaker 2 (28:18):
And look, i think since the beginning of the year
I've kind of been in the same camp here that
the President and the President Trump and President Scheinbaum seem
to get along pretty darn well. Like they understand how
each other communicates, they understand what each other trying to do.
It seems like they have a pretty good working relationship actually,
(28:39):
And so this is not entirely surprising to me, just
because it's a.
Speaker 3 (28:44):
Little bit surprising me because of those links though. I mean,
China has been investing a lot in Mexico. They have
been investing in car manufacturing in Mexico, And maybe that's
the answer is, Hey, you know, the terriffs won't be
all that impactful because we are going to end up
constructing some Chinese made evs in Mexico. But the linkage
is there. While not as significant as those between the
(29:06):
United States and China. They do feel pretty significant in
terms of Chinese investment in Mexico over the course of
the last few years.
Speaker 2 (29:13):
They do. I still think, like if you looked at
if you look at Mexico's largest trading partners and just say, okay, like,
you know, how does this actually stack up as far
as you know, who's the biggest out there? Mexico's largest
trading partner by far as the United States. Eighty percent
of their exports go to the US, of course, and
(29:34):
so it kind of gets back to what we've talked
about in a number of cases, which is where's your
bread buttered? And in this case, it's buttered in the
United States. You know, so we got great butter.
Speaker 1 (29:45):
Yeah.
Speaker 3 (29:46):
I do feel as though many other countries would be
probably if it were laid out in this way. And
I don't think the Trump administration is willing to. But
if it were laid out in this way of hey,
we'll give you free trade or close to it, if
you are willing to put these barriers upon China, I
think many countries would say yes, not all of them,
but I think many would.
Speaker 2 (30:06):
If you talk about the ones that matter, it's the EU,
It's the EU would not okay, like let's EU and yeah,
I agree, the EU is kind of politically captive to
China in a number of respects when it comes to
their economy. I don't think. I don't think that the
(30:27):
EU is an objective, neutral third party when it comes
to China.
Speaker 3 (30:32):
So what are the other ones that would matter other
than the EU?
Speaker 2 (30:35):
So it's the the EU, Mexico, Canada, Japan, South Korea, Taiwan, Vietnam,
UK and India, like those are the top ten trading partners.
Of those, I think you could get Mexico is on board. Yeah,
I think you're going to struggle with Canada.
Speaker 3 (30:52):
I think so.
Speaker 2 (30:54):
The Canadian government has had like a whole bunch of
problems untangling itself from some political items related to China,
in my opinion, and I don't know that they would
be as resolute as you'd want them to be. So
I think there's some questions there. The EU, obviously, I think,
would be kind of a mess.
Speaker 3 (31:13):
Japan.
Speaker 2 (31:13):
I think if you had the right deal there, I
think they would do it in a heartbeat. There's no
love loss between Japan and China.
Speaker 1 (31:18):
True.
Speaker 2 (31:19):
South Korea, South Korea, same boat, Taiwan, same boat, but
I think you would have to have some kind of
defense commitment going there, and that I think could be
you know, problematic obviously in terms of war. Yes, you know,
like would there be like a firm commitment to defend
Taiwan in the event that China attacked it? Right the
UK coin flip, I think you could probably get them
(31:43):
on board. But I like, again, we had, you know,
this deal earlier this year that didn't spell things out
quite as strongly as you would have liked to see.
On China India, I genuinely have no idea. India is
a wild card right now. Yeah, Like the first six
months of the year, it seemed like we were like
all gung ho on deepening US India relations and building
(32:04):
that up. Is like, hey, here's how we can you know,
counterbalance China in the region. Then we threw that chuck
in tur I don't know what happened. It just seems
like the last eight weeks something went wrong and I
still can't figure.
Speaker 3 (32:16):
Out what it is.
Speaker 2 (32:16):
Yeah, let's take a quick break here. When we come back,
let's talk about power bills. They're going up.
Speaker 1 (32:25):
Text US six one, seven, three, six, two, thirteen eighty
five with your comments and questions about today's show, and
let us know what you think about the stories we
are covering. This is the Financial Exchange Radio Network, breaking
business and financial news first throughout the day, only here
on the Financial Exchange Radio Network.
Speaker 3 (32:54):
Mike KRUSTA blame for your higher power bill? I don't know.
But if you ask Democrats, it's Republicans. And if you
have to score Republicans, it's going to be Democrats, especially
next year leading up to elections.
Speaker 2 (33:03):
Well, let's not ask either of them that, yeah, because
I don't think that's a particularly useful I.
Speaker 3 (33:09):
Think the basic I think the basic foundations of economics
are to blame for higher power bills because, as we
have talked about, you have been pretty dramatically increasing demand
for electricity over the course of the last couple of years,
but yeah, several years, but last couple especially, and we
(33:30):
the correct answer is all of us are to blame. Yeah, Okay,
we make it.
Speaker 2 (33:34):
Way too hard to build new power sources in the
United States right now. And this is across the board now,
like we are all to blame on this. This is
this is whether you are talking about residents of Connecticut
and Massachusetts who say no sorry, we don't want any
gnatgas pipelines running through and so instead we have to
ferry in a bunch of l andng to Boston Harbor
(33:56):
in order to power you know, the region.
Speaker 3 (34:00):
Residentsive New Hampshire consistently vote down in the Northern past
idea that got voted down.
Speaker 2 (34:07):
This is if you're talking about people on both sides
of the political spectrum who say, no, we don't want
nuclear power, it's too dangerous. This is, you know, talking
about people who say, hey, we don't want any you know,
oil pipelines being built. You can go down the list.
This is people who say, no, I can't have offshore
wind because it looks ugly when I look out my
(34:28):
multi million dollar view on the islands like ooh, Like,
how am I ever gonna be able to deal with
something that spins? So we we all have like our
our things and look, quite honestly, if someone had a
nuclear power plant that fit in my basement and said, hey,
I'll give you a million dollars if you put this
thing in your basement, fine, I'll do it, because honestly,
(34:50):
if it blows up, I'm dead anyways, I won't know.
So what's the big deal. But in any case, we're
all to blame on this, and we need to find
and easier ways to allow for the creation of new
power construction because otherwise there's no way out of this.
Speaker 3 (35:10):
It's game. It's the same thing for housing folks. If
you want cheaper housing, then build more houses. If you
want cheaper power, then build more power plants.
Speaker 2 (35:19):
And by the way, you probably need all kinds of them.
You need nukes, you need solar power, you need nat gas,
you need wind, you probably even need some coal. I
know coal's been on the down, you know, going downhill
for a while. But look, you can make all of
these work cohesively in some kind of unit. But if
you just say no, I can't have that near me,
well then look we might as well just give up
(35:40):
and pay fifteen hundred dollars a month for electricity.
Speaker 3 (35:44):
Yeah. Sorry, I'm having a bit of a moment.
Speaker 4 (35:49):
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is almost September first, and in the city of Boston.
That means all of the out of towners bring the
big U hauls in to get ready for college and
move into their new apartments and stuff like that. And
that also means that as they go down Stoo Drive,
(36:55):
they get stuck under the low bridges, a process known
as storrowing that happens quite frequently despite a whole bunch
of signs telling people not to drive trucks on the road.
Speaker 3 (37:05):
Yeah, for those of you not from the Boston area,
you may not be familiar with this, but there's a
road called Sturo Drive and every year several trucks get.
Speaker 2 (37:15):
Not several, they've had thirty six of them so far
this so far this year.
Speaker 3 (37:19):
Thirty six. That's one a week. It's such a phenomenon
that a very popular brewery in the Boston area called
Trillium named one of their beers after being stowed, and
then subsequently one of their own drivers of their trucks
got stir rowed on Stero Drive and ruined one of
the one of their cargo trucks.
Speaker 2 (37:38):
Yeah, the beer was ruined. So ultimately, I think this
is one that has a very easy solution, which is
don't drive your truck where it says, don't drive your truck.
I know people will be like, well, why don't they
make the bridges higher. Sorry, that's kind of expensive to
do at this point. Just don't drive your truck where
you're not supposed to drive it.
Speaker 3 (37:59):
Plus, and then we wouldn't have the funny story to
cover about somebody driving their U haul on stoh driving
and getting total The.
Speaker 2 (38:05):
Bridges are obviously structurally sound based on the fact that
they keep destroying trucks, but are still able to be used,
so it's not like these things need to be replaced.
Right now, they're wrecking trucks left and right. Let's take
a quick break here. We got hour two coming up
in a little bit
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(01:03):
This is the Financial Exchange with Chuck Zada and Mike Armstrong.
Speaker 2 (01:11):
Chuck, Mike and Tucker with you, and as we kick
off our Thursday show, we got a little bit of
economic data to get to, including an updated GDP report
and some jobless claims. But the top story for today
in Video reported earnings a little bit after the bell yesterday,
and market doesn't love them. They're not, you know, really
(01:33):
freaking out. It's basically, I mean, in Video is down
about two percent, which in vidio terms is like not
really worth getting out of bed for.
Speaker 3 (01:42):
No, but some disappointed people at the Nvidia earnings parties
last night. I would assume, now you know who the
most disappointed people are, Mike are the people that spend
a bunch of money on option Trimium today shop and
have gotten absolutely nowhere from it because the stocks just
not move very much. So in terms of what in
(02:02):
Video reported, their sales during the most recent quarter hit
forty six point seven billion dollars, basically in line with
analyst estimates.
Speaker 2 (02:11):
So that's nice. It was a touch higher, but you know, again,
not anything like what they used to do, where they'd
be like, hey, we had like sixteen billion in revenue
and you guys thought we'd have ten yeah, it's it's
not that net income rose to twenty six point four
billion dollars, a fifty nine percent growth rate compared to
the prior year, and their expectations for Q three revenue
(02:36):
are about fifty four billion dollars, which is a little
bit above expectations. So you look at Nvidian just kind
of how it's traded since then, and we'll get into,
you know, more of the specifics on what this means,
but pretty much right after the announcement, stock fell three
or four percent. Over the course of the rest of
the after hour session, kind of rallied back to being
(02:56):
down to open this morning pre market down around to
rally back to flat, and now you know, is down
a couple percentage points. So overall, I think that the
takeaway on this is, look, when you have a company
that's priced for a huge amount of growth, delivering on
the growth that's expected as good, but it doesn't really
move the needle as far as driving that next leg up.
Speaker 3 (03:18):
As a result of the news release yesterday, I don't
know if it's true or not, but the one piece
that every analyst and reporter out there is talking about
in terms of how they redeliver on that growth promise.
Is China any debate there?
Speaker 2 (03:37):
Well, yes, okay, And I think I think here's the
thing is, it's pretty clear that China would prefer to
not have to buy in video chips.
Speaker 3 (03:50):
I think that's pretty clear that well six to one
a half dozen the other Hijingping does not want these
companies to buy Chinese made here's China in video mas.
Speaker 2 (04:00):
That's the Chinese government, through Jijingping, does not want to
buy in video chips if they can avoid doing so.
The main reasons not because the chips are bad, but
simply because, quite honestly, I don't think they want the
United States to have a point of leverage over them
in any negotiations or dealings.
Speaker 3 (04:20):
Agreed.
Speaker 2 (04:21):
I think it's as simple as that. And so you know,
there's there's all this chatter about, you know, Jensen Huang
got asked a bunch of times, Hey, you know, what's
the deal with China? Are you gonna be able to
sell into them? What kind of revenue do you expect?
And you kind of tap danced around it in a
bunch of different ways. He said some interesting things, including
in video this morning saying, yeah, we're happy to give
(04:43):
the US government fifteen percent of revenue from all blackwell
sales if we can sell you know, the most recent
iteration of chips. But they also said yesterday in video, hey,
despite the you know agreement that was reached a couple
of weeks ago to give the US government fifteen percent revenue,
we're still working through it with counsel and with the
White House because there's no mechanism for us to do so,
(05:06):
and so we need to figure out how to actually
go about doing this.
Speaker 3 (05:11):
Are we putting the cart ahead of the horse here,
given that China has no interest in buying them in
any of those age twenty chips.
Speaker 2 (05:17):
Probably, but when has that ever stopped any enterprising young
CEO from saying, yeah, we we think we can do
this right and and so I think with Nvidiaya, the
China piece, maybe the short term is something that.
Speaker 3 (05:34):
Matters, but ultimately it's a red.
Speaker 2 (05:36):
Herring in my opinion, because the long term growth of
Nvidia is going to depend on the data center spend
by the mag seven companies more than anyone else, even
like you even talk about China and look and in
Videy's getting you two hundred billion dollars in revenue this year. Okay,
(05:58):
even if you think in Nvidia is gonna selly chip
to China that they're buying right now, the estimates that
you're seeing are maybe another fifty billion over a multi
year period.
Speaker 3 (06:07):
So then somebody explained to me, pull out your inner
Dan ives the biggest Nvidia bowl that I can think of? Yeaheah.
What is the long term growth story?
Speaker 1 (06:19):
Like?
Speaker 3 (06:19):
I would assume more data centers forever? Right, But yeah,
I guess that's my point. I would assume that once
I don't know, once JP Morgan has built their latest
and greatest artificial intelligence internal system on the backs of
Microsoft's data centers or whoever is that they are using,
they will need to continue to update it every year,
(06:40):
just like they do every other piece of their technology.
But I would assume that they're not going to need
the same number of semiconductors that they needed to get
that thing up and running as they will to update
it every year. So where does this perpetual long term
growth come from? I don't know, that's the right answer.
And this is the whole thing is like with the Internet,
(07:01):
once you laid off of the wire to create it,
the especially improvements were incremental well, you went from three
G to four G and nothing changed, and so tell
me what goes. What's the huge difference once we go
from Blackwell to next generation semiconductor ten years out from now,
and I'm struggling to start seeing the picture.
Speaker 2 (07:24):
This is the whole question, which is, look, you did
all the heavy lifting, like to compare to the Internet. Hey,
the shift from dial up to fiber optic was a
huge shift. The shift from ten megabits per second to
(07:46):
thirty okay, like if you're running lots of devices in
your house matters. The shift from thirty two. You know,
everyone is arguing like, oh, like a gigabit is what
you you don't need to I have like a fifty
megabit connection, and it's just for you know, doing a
lot of things that I need to, like anything. I
can be watching TV in one room, my wife can
(08:07):
be in another, I can be I can be freaking
doing the show.
Speaker 4 (08:11):
You know.
Speaker 2 (08:11):
If I'm you know, at home or whatever for a
certain day, there's no huge problem there. So when when
it comes to this, the question is, look, we're already
starting to see kind of a tailing off in terms
of okay, the first iteration of models great it needed
ex compute and it produced why result? Now you did
(08:32):
X squared in terms of the compute you know, you
increased it by a factor of ten, and you know, okay,
did it actually result in better performance?
Speaker 3 (08:41):
Yeah?
Speaker 2 (08:41):
It did, but it was like thirty percent better performance
for ten x the compute power. I don't when you
did it again and you got only a ten percent
incremental improvement there. And I don't want any of what
to take this to mean that we're missing the boat
on what artificial intelligence could mean.
Speaker 3 (08:56):
I am convinced that there are players out there. Remember
the MIT study from earlier this week that you know,
all these companies invested and only five percent of them
had seen any return on investment. That didn't surprise me. Like,
we're very early stages at this point.
Speaker 2 (09:10):
I am sure sure most companies didn't have a good
Internet strategy in nineteen ninety eighty either.
Speaker 3 (09:14):
Yeah, I'm sure there are many companies out there with
their own proprietary data sets that will build an artificial
intelligence that will change something significantly for that company and
perhaps the world. I'm less convinced that that means perpetual
giant growth for a company like in video unless they
have a different plan than modernizing their semiconductors. Because here's
(09:40):
the thing.
Speaker 2 (09:40):
Even if you get even if you get to a
point where you've just got to, like, you know, replace
these data centers in perpetuity instead of growing them, Okay,
that's that's a replacement business. That's not a growth business anymore. Right,
you know, you become Cisco replacing Routers, who still runs
a really good business. But it's not what everyone thought
they were going to be back in two thousand and
when you know, they were one of the most valuable
(10:02):
companies on the planet. No one looks at Cisco now
and feels any kind of excitement, either positive or negative
about them. They just exist kind of like they make
a boatload of money. By the way, like I'm not
here to like pooh pooh Cisco. Like you take a
look at the company as a whole.
Speaker 3 (10:21):
The only negative thing we're saying about it is that
it's not as stock price isn't its stock is not
in Vidia.
Speaker 2 (10:25):
It's it's just boring now, which is fine. I mean again,
they make ten billion dollars a year in profit off
of sixty billion dollars a.
Speaker 3 (10:33):
Year in revenue.
Speaker 2 (10:34):
That's perfectly cromulent, like you can make a good living
off ten billion dollars. I hear it's you know, it's
it's perfectly fine, but it's not what people thought it
was going to be back in the tech bubble, the
highs of which Cisco is never surpassed by the way,
it's never gotten back to eighty dollars a share where
it traded back in you know, two thousands. So within VIDIA,
(10:57):
two things can be true. They can run it a
darn good business, and they still have a lot of
growth in front of them. But we talked about the
economics of this, and eventually you get to a point
where the buyers of these chips have to figure out
how do we make money off of them? And that's
where the question is actually going to be. The other
thing that's true, there's going to be a lot more
(11:18):
money spent on AI, and a lot of companies are
going to increase that spend dramatically in the next five
to ten years, and it still might not be enough
to actually cover all of this data center construction cost.
I mean, if you're talking about in the next five
years spending two to four trillion dollars on data center construction,
that's a lot of depreciation that you've got to cover
(11:40):
the cost of. It's a lot of depreciation that you've
got to cover the cost of. And this is before
we even get to the big problem in the US,
which is, hey, how do we turn the lights on
in these things? Because we don't build power plants as
quickly as data centers.
Speaker 3 (11:54):
Let's take a quick break.
Speaker 2 (11:55):
When we return, let's talk about some of the economic
data that came out today.
Speaker 3 (12:00):
Do you have anything else to add on nvidio. I
think you'll probably be revisiting it during artificially.
Speaker 2 (12:08):
I'm sure we'll talk about them sometime in the future,
so we'll do that, but right now, quick break, then
economic data.
Speaker 1 (12:16):
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Speaker 4 (12:42):
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(13:02):
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Speaker 2 (13:14):
All right, so we got a whole bunch of economic
data this morning. Let's start first with the new stuff
that came out. Jobless claims. Initial jobbles claims dropped just
a touch, going from a slightly revised two hundred and
thirty four thousand in the prior week down to two
hundred and twenty nine thousand, so that's always good news
to see. The continuing claims numbers also showed a modest drop,
(13:40):
going from one point nine to six one million to
one point nine to five four million. We still are
floating around like five to six percent year over year
growth on continuing claims, which is not really ideal, but
not to the point where you're really seeing signs of
any shift in the labor market.
Speaker 3 (13:59):
So probably all still means that we're sitting with an
unemployment right right around four point two percent, right maybe
four three, maybe four to one, depending on where you
get the reading. But a labor market that is, while stagnant,
pretty well balanced and for throughout you know, the last
thirty years of four point two percent unemployment rate, If
(14:20):
that's where we land next Friday, when we get it
exceedingly low, I'll make the case that on the whole.
Speaker 2 (14:27):
And again, I know there's you know, places that you
can look where you're like, Okay, this has gotten worse,
So this has gotten better. On the whole, the labor
market hasn't changed in a year. We're pretty much right
where we were hit like it's in September of last year.
Speaker 3 (14:41):
Just to give you feel a little different. It feels
different to me.
Speaker 2 (14:44):
It does because the only thing that is meaningfully different
is the pace of job growth. Yeah, but you can
make a case that that's because of demographics and deportations. Yeah,
and so like if you look at the labor market.
Speaker 3 (14:59):
I guess I guess that's my point though, is that's
why it feels different is the the growth is exceedingly
slow and it seems more challenging. I think it seems
more challenging today to find a new job than it
did a year ago. I'm not sure that's the case.
Speaker 2 (15:15):
I think I think there are just fewer people looking
for jobs. Just some some big numbers to give you.
A year ago, this is from the Jolts Report, the
layoffs and discharge rate was one point two percent now it's.
Speaker 3 (15:30):
One mey one point two percent of the total work
first was getting.
Speaker 2 (15:33):
Laid off in any given month. The highre's rate was
three to five, now it's three three. So layoffs got
a little bit worse, hires sir layoffs got a little better.
Hires got a little worse. The quits rate was one
point nine percent now it's two. It's not a meaningful
statistical shift when we go and take a look at
(15:54):
some of these employment ratios. This is, I think, kind
of gets at some of the stuff we've seen. Labor
force participate rate for prime age age twenty five to
fifty four was eighty three nine a year ago. It's
eighty three to four right now. It's a modest slow
down there, but no huge shift. Uh. The employment to
population ratio in that same demo eighty percent today versus
eighty point six a year ago, again modest ship labor
(16:17):
force participation rate broadly has gone from sixty two to
seven down to sixty two to two over that time. Okay,
it kind of messures with what we've been talking about
the ratio of job openings to unemployed a year ago
in August, because that's really what a year ago was
for jolts one point eight percent.
Speaker 3 (16:39):
The ratio, yes, one.
Speaker 2 (16:41):
Point eight people who one point eight job openings per
every person who is unemployed.
Speaker 3 (16:47):
Today it's one point oh six, the exact same. It's
pretty much the exact same.
Speaker 2 (16:51):
The unemployment rate a year ago again, I got I
got all kinds of these here. Unemployed rate a year
ago four to two. Today the U six, the underemployment
rate was seven nine, it's seven nine. About wages, wage
growth right now, I'm glad you asked, Michael, we're talking
about like wage growth, that's what you're.
Speaker 3 (17:12):
Looking for, looking for we're looking at in terms of
wage growth, I guess year over year last year compared
to now.
Speaker 2 (17:19):
So this is kind of a wiggly data series in
that like month to month, you get some fluctuations in here,
But when you look at it right now, just use
the BLS data, just because it's what I have front
and center right now, you're running at four point two
percent year over year wage growth according to the BLS.
I give you a few I mean, if you look
at the Indeed Wage Indeed Wage tracker, you're at two
to four, but right now you're at four point two percent.
(17:41):
If you go back a year ago, you were at
three six. So there's been a modest uptick in wage growth,
which could be represented by Hey, the labor market is
losing a lot of older people who are retiring and
a lot of people who are not in the country
legally who can't work anymore, and so as a result,
wages may be showing something on in terms of growth.
(18:04):
But the counter to that is, hey, the INDEED data
is showing things in the opposite direction. So maybe there's
just no real shift in wage growth and you're pretty
much in the same spot you were a year ago.
Either way, when you look at the labor market as
a whole, it's tough to conclusively feel things are very
different other than the rate of job growth is slowed,
but that might just be because there are fewer people
(18:25):
looking for jobs because of retirements and deportations. Other data
that we got this morning, second quarter GDP revised up
from three point one percent to three point three percent,
so a little bit stronger than initially reported. Obviously, it
doesn't affect you know what's going on today in the economy,
but good to see stronger growth in Q two than
(18:47):
we originally had there and pending home sales data also
came in at ten am this morning that was a
little bit weaker than expected, negative point four percent for
the month versus expectations of minus point one two point two.
We'll cover this later in the show with a piece
from Connor Sen, who really shares my view on housing
that this might be like a five to seven year
(19:09):
slog to get through the issues that are plaguing housing,
not in terms of there's probably not like any kind
of catastrophic drop in prices nationwide, but just a slow
slog to get back to affordability after it got so
out of whack in the last several years.
Speaker 3 (19:26):
We all got to move to Florida.
Speaker 2 (19:27):
That'll help affordability. Quick break here when we return. It's
Wall Street Watch.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch. A complete look at what's moving market so
far today right here on the Financial Exchange Network.
Speaker 4 (20:00):
Markets mostly quiet again today in a mixed territory as
traders react to mag seven earnings from chip maker and
AI Giant in video, in addition to fresh economic data
points including jobless claims and a new revision two second
quarter GDP. Right now, the Dow is off by two
tenths of one percent or eighty eight points lower s
(20:21):
and P five hundred is down merely two points. Nasdaq
is up a tenth of a percent or twenty four
points higher, Rusted two thousands up a tenth of a percent,
ten year Treasureial flat at four point two to three percent,
and crude oil retreating one percent. Today Training at sixty
three dollars and fifty one cents a barrel. While on
Video saw its quarterly sales reach new record highs, the
(20:44):
company's underwhelming outlook has increased worries about future demand, and
Video shares are currently down by two percent. Sticking with
the tech spase, where HP shares are climbing three percent
after it beat revenue forecast, driven by growing demand and
for AI enabled personal computers. Meanwhile, Cloud software and AI
platform company Snowflake also beat revenue expectations, sending that stock
(21:09):
jumping eighteen percent. Elsewhere, shares in Dollar General down modestly
after the discount retailer beat earnings and revenue estimates for
the previous quarter. The company also hiked its full year
earnings in revenue growth guidance. Another discount retailer in five
below also beat earnings and revenue forecasts, where its third
quarter outlook also impressed. Shares in five below a rising
(21:32):
by three percent. Dick Sporting Goods beat expectations in the
second quarter and upped its full year outlook. However, shares
are down by four percent at the moment, and CrowdStrike
shares are up two percent, despite the cybersecurity provider swinging
to a loss in giving revenue guidance for the current
quarter that fell below forecasts. I'm Tucker Silvan.
Speaker 1 (21:53):
That is wall Stree, watch Mike.
Speaker 2 (21:56):
Just one final word on in video. This is not
my own math. This is from bespoken Vest today. Do
you know that within video being a four point four
trillion dollar company now that is equivalent to six Walmarts, Yes,
eleven Costcos, twenty one, Disney's thirty eight Nikes forty five,
(22:20):
Starbucks is Starbucks', Starbucks's yea seventy eight, Chipotle's ninety four, Fords,
one hundred and two Targets, one hundred and three Ebays
two hundred and forty four, Dick Sporting Goods nine hundred
and eighty four Shake Shacks two thousand and ninety under armours.
(22:46):
Just to give you the scale of what we're talking
about here at the four point four trillion dollar company,
let's talk about this piece from the Wall Street Journal.
It's titled why the market doesn't care much about Trump
firing the Fed's cook. It's pretty simple in my book.
The first is they didn't fire the chef. No, they
didn't the different cook. They fired the cook, not the chef.
(23:08):
The first is very simple. It is really unclear legally
if the president is able to do this. And markets
have gotten in a whole bunch of trouble this year.
Not markets, Investors have gotten in a whole bunch of
trouble this year by reacting to headlines instead of the
ultimate resolution. And so I think markets have really learned
in the last six months. Don't pay attention to the headline,
(23:31):
pay attention to the eventual resolution. This by all accounts,
could take several months to play out and finally get
through the Supreme Court, who has already said you can't
touch anyone at the FED. And so I think, hey,
markets are looking at this and saying there's a decent
chance this doesn't end up happening. The second piece is, ultimately,
(23:53):
if you were concerned about FED independence before this, you're
still concerned today. I don't know how many new people
got to into the camp of hey, I'm now concerned
about this because you went and tried to fire Lisa.
Speaker 3 (24:05):
Cook, Right. I think, Look, most every serious investor and
economist out there believes that FED independence is very important.
I think that's fair to say. Even if you were
to pin down members of the Trump administration, they probably
can't say it with the pressure of the president, but
I do genuinely think most of them would admit that, yes,
(24:27):
FED independence is crucially important. The conclusion that I come
to is that the attempted firing of Cook hasn't made
those same people feel any more convinced that they FED
is no longer going to be independent. It hasn't moved
the needle for them.
Speaker 2 (24:44):
No, It's okay, like we already knew that you wanted
to do this, Like you've talked about this for the
last couple of weeks. Now you went and tried to
and we're going to see how it all plays out,
and we'll no more over the next few months. But
I would imagine sometime today or tomorrow Cook has already
fired filed a lawsuit looking for a stay or you know,
(25:06):
temporary restraining order on the action here, and so I
would imagine that that'll be in place pretty shortly, and
the FED is pretty much said, yeah, like she's still
you know, on the board at the moment. Well buy
by anything that any judge says, but ultimately, like this
is where we are.
Speaker 3 (25:21):
So I don't think we've we felt pretty close to j.
Powell himself being fired earlier this year, right we.
Speaker 2 (25:26):
Were there in I think it was early August or
late July, somewhere in that ballpark.
Speaker 3 (25:30):
I can't remember exactly where it was. So one more
point that I just want to make on this. I
made it on Tuesday. But none of this is to
minimize the accusations against Cook. Like, while a mortgage application
seems like a relatively small thing, anyone at the Federal
(25:50):
Reserve should be held to an extremely high standard, and
if she did, in fact falsify a mortgage application, she
should be fired. That would at least be my take,
And I feel the same way about a congress person,
a member of just about any government administration. That doesn't
diminish the fact that clearly the White House wants more
control over the FED. And so both of those things
can be true at the same time.
Speaker 2 (26:12):
Yes, she can have listed multiple residences as her primary residence,
which just is an unseemly look for someone at the
FED to do. Quite honestly, in my book, it doesn't
rise to the level of what Rosingrin and Kaplan were
doing where they were, you know, trading potentially based on
FED activity. Yep, Like that's something that represents more of
(26:33):
a conflict of interest. This is just, hey, you're trying
to help yourself out financially, which is unseemly and should
be prosecuted as needed based on whatever it is. But
is that something in my book that rises to the
letter to the level of you can't do your job
because of it. I just don't know about that.
Speaker 3 (26:54):
I don't think it puts her in a conflicted place
where she can't do the job. I just think that
you're held to you should be held to such a
high stand there where you can make a case that's
resigned because it's just too much of a distraction. If
it were true, it should be designed because let's be honest,
if a junior member of her staff had done it, yeah,
they'd be fired.
Speaker 2 (27:11):
It's it's just too much of a distraction, and you
know you shouldn't be there. Then that's different from is
there you know, the right to fire the person it is, yeah,
which is obviously where we are. So let's take no,
let's not take a quick break. Let's talk about this
next story here right now. Mexico raising tariffs on imports
from China after a push from the United States. This,
(27:32):
in my opinion, has been a major goal of the
Trump administration all along, which is to get countries to
build somewhat of a barrier around China in terms of
you know, not being able to just export cheap goods
somewhere else, to try to do an end run around
the United States.
Speaker 3 (27:47):
And by the way, if they were successful in this
in other countries, I would be ecstatic about the results.
We've talked about this sometimes since Trump administration. One point. Oh,
if this can be an end goal of all the
tariffs are saying, Hey, we are building consensus among major
US allies and trading partners that we should attack China
(28:09):
in this way by walling off some of their goods
into our country. I think that that would be the
best potential outcome of tariffs.
Speaker 2 (28:18):
And look, i think since the beginning of the year
I've kind of been in the same camp here that
the President and the President Trump and President Scheinbaum seem
to get along pretty darn well. Like they understand how
each other communicates, they understand what each other trying to do.
It seems like they have a pretty good working relationship actually,
(28:39):
And so this is not entirely surprising to me, just
because it's a.
Speaker 3 (28:44):
Little bit surprising me because of those links though. I mean,
China has been investing a lot in Mexico. They have
been investing in car manufacturing in Mexico, And maybe that's
the answer is, Hey, you know, the terriffs won't be
all that impactful because we are going to end up
constructing some Chinese made evs in Mexico. But the linkage
is there. While not as significant as those between the
(29:06):
United States and China. They do feel pretty significant in
terms of Chinese investment in Mexico over the course of
the last few years.
Speaker 2 (29:13):
They do. I still think, like if you looked at
if you look at Mexico's largest trading partners and just say, okay, like,
you know, how does this actually stack up as far
as you know, who's the biggest out there? Mexico's largest
trading partner by far as the United States. Eighty percent
of their exports go to the US, of course, and
(29:34):
so it kind of gets back to what we've talked
about in a number of cases, which is where's your
bread buttered? And in this case, it's buttered in the
United States. You know, so we got great butter.
Speaker 1 (29:45):
Yeah.
Speaker 3 (29:46):
I do feel as though many other countries would be
probably if it were laid out in this way. And
I don't think the Trump administration is willing to. But
if it were laid out in this way of hey,
we'll give you free trade or close to it, if
you are willing to put these barriers upon China, I
think many countries would say yes, not all of them,
but I think many would.
Speaker 2 (30:06):
If you talk about the ones that matter, it's the EU,
It's the EU would not okay, like let's EU and yeah,
I agree, the EU is kind of politically captive to
China in a number of respects when it comes to
their economy. I don't think. I don't think that the
(30:27):
EU is an objective, neutral third party when it comes
to China.
Speaker 3 (30:32):
So what are the other ones that would matter other
than the EU?
Speaker 2 (30:35):
So it's the the EU, Mexico, Canada, Japan, South Korea, Taiwan, Vietnam,
UK and India, like those are the top ten trading partners.
Of those, I think you could get Mexico is on board. Yeah,
I think you're going to struggle with Canada.
Speaker 3 (30:52):
I think so.
Speaker 2 (30:54):
The Canadian government has had like a whole bunch of
problems untangling itself from some political items related to China,
in my opinion, and I don't know that they would
be as resolute as you'd want them to be. So
I think there's some questions there. The EU, obviously, I think,
would be kind of a mess.
Speaker 3 (31:13):
Japan.
Speaker 2 (31:13):
I think if you had the right deal there, I
think they would do it in a heartbeat. There's no
love loss between Japan and China.
Speaker 1 (31:18):
True.
Speaker 2 (31:19):
South Korea, South Korea, same boat, Taiwan, same boat, but
I think you would have to have some kind of
defense commitment going there, and that I think could be
you know, problematic obviously in terms of war. Yes, you know,
like would there be like a firm commitment to defend
Taiwan in the event that China attacked it? Right the
UK coin flip, I think you could probably get them
(31:43):
on board. But I like, again, we had, you know,
this deal earlier this year that didn't spell things out
quite as strongly as you would have liked to see.
On China India, I genuinely have no idea. India is
a wild card right now. Yeah, Like the first six
months of the year, it seemed like we were like
all gung ho on deepening US India relations and building
(32:04):
that up. Is like, hey, here's how we can you know,
counterbalance China in the region. Then we threw that chuck
in tur I don't know what happened. It just seems
like the last eight weeks something went wrong and I
still can't figure.
Speaker 3 (32:16):
Out what it is.
Speaker 2 (32:16):
Yeah, let's take a quick break here. When we come back,
let's talk about power bills. They're going up.
Speaker 1 (32:25):
Text US six one, seven, three, six, two, thirteen eighty
five with your comments and questions about today's show, and
let us know what you think about the stories we
are covering. This is the Financial Exchange Radio Network, breaking
business and financial news first throughout the day, only here
on the Financial Exchange Radio Network.
Speaker 3 (32:54):
Mike KRUSTA blame for your higher power bill? I don't know.
But if you ask Democrats, it's Republicans. And if you
have to score Republicans, it's going to be Democrats, especially
next year leading up to elections.
Speaker 2 (33:03):
Well, let's not ask either of them that, yeah, because
I don't think that's a particularly useful I.
Speaker 3 (33:09):
Think the basic I think the basic foundations of economics
are to blame for higher power bills because, as we
have talked about, you have been pretty dramatically increasing demand
for electricity over the course of the last couple of years,
but yeah, several years, but last couple especially, and we
(33:30):
the correct answer is all of us are to blame. Yeah, Okay,
we make it.
Speaker 2 (33:34):
Way too hard to build new power sources in the
United States right now. And this is across the board now,
like we are all to blame on this. This is
this is whether you are talking about residents of Connecticut
and Massachusetts who say no sorry, we don't want any
gnatgas pipelines running through and so instead we have to
ferry in a bunch of l andng to Boston Harbor
(33:56):
in order to power you know, the region.
Speaker 3 (34:00):
Residentsive New Hampshire consistently vote down in the Northern past
idea that got voted down.
Speaker 2 (34:07):
This is if you're talking about people on both sides
of the political spectrum who say, no, we don't want
nuclear power, it's too dangerous. This is, you know, talking
about people who say, hey, we don't want any you know,
oil pipelines being built. You can go down the list.
This is people who say, no, I can't have offshore
wind because it looks ugly when I look out my
(34:28):
multi million dollar view on the islands like ooh, Like,
how am I ever gonna be able to deal with
something that spins? So we we all have like our
our things and look, quite honestly, if someone had a
nuclear power plant that fit in my basement and said, hey,
I'll give you a million dollars if you put this
thing in your basement, fine, I'll do it, because honestly,
(34:50):
if it blows up, I'm dead anyways, I won't know.
So what's the big deal. But in any case, we're
all to blame on this, and we need to find
and easier ways to allow for the creation of new
power construction because otherwise there's no way out of this.
Speaker 3 (35:10):
It's game. It's the same thing for housing folks. If
you want cheaper housing, then build more houses. If you
want cheaper power, then build more power plants.
Speaker 2 (35:19):
And by the way, you probably need all kinds of them.
You need nukes, you need solar power, you need nat gas,
you need wind, you probably even need some coal. I
know coal's been on the down, you know, going downhill
for a while. But look, you can make all of
these work cohesively in some kind of unit. But if
you just say no, I can't have that near me,
well then look we might as well just give up
(35:40):
and pay fifteen hundred dollars a month for electricity.
Speaker 3 (35:44):
Yeah. Sorry, I'm having a bit of a moment.
Speaker 4 (35:49):
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is almost September first, and in the city of Boston.
That means all of the out of towners bring the
big U hauls in to get ready for college and
move into their new apartments and stuff like that. And
that also means that as they go down Stoo Drive,
(36:55):
they get stuck under the low bridges, a process known
as storrowing that happens quite frequently despite a whole bunch
of signs telling people not to drive trucks on the road.
Speaker 3 (37:05):
Yeah, for those of you not from the Boston area,
you may not be familiar with this, but there's a
road called Sturo Drive and every year several trucks get.
Speaker 2 (37:15):
Not several, they've had thirty six of them so far
this so far this year.
Speaker 3 (37:19):
Thirty six. That's one a week. It's such a phenomenon
that a very popular brewery in the Boston area called
Trillium named one of their beers after being stowed, and
then subsequently one of their own drivers of their trucks
got stir rowed on Stero Drive and ruined one of
the one of their cargo trucks.
Speaker 2 (37:38):
Yeah, the beer was ruined. So ultimately, I think this
is one that has a very easy solution, which is
don't drive your truck where it says, don't drive your truck.
I know people will be like, well, why don't they
make the bridges higher. Sorry, that's kind of expensive to
do at this point. Just don't drive your truck where
you're not supposed to drive it.
Speaker 3 (37:59):
Plus, and then we wouldn't have the funny story to
cover about somebody driving their U haul on stoh driving
and getting total The.
Speaker 2 (38:05):
Bridges are obviously structurally sound based on the fact that
they keep destroying trucks, but are still able to be used,
so it's not like these things need to be replaced.
Right now, they're wrecking trucks left and right. Let's take
a quick break here. We got hour two coming up
in a little bit
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